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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from -------------- to -----------
Commission File Number 1-4085
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POLAROID CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 04-1734655
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
549 Technology Square, Cambridge, Mass. 02139
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 386-2000
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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Common Stock, par value $1 per share New York Stock Exchange
Pacific Stock Exchange
Rights to Purchase Series A New York Stock Exchange
Participating Cumulative Preferred Stock Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 ------
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 10-K or any amendment
to this Form 10-K. [X]
Aggregate market value of voting stock held by non-affiliates as of
February 11, 1994: $1,503,802,893
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Common Stock outstanding as of February 11, 1994: 46,810,985 shares
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Documents incorporated by reference:
Polaroid Corporation Annual Report to Stockholders for 1993 -- Parts I, II
and IV
Polaroid Corporation 1994 Proxy Statement, dated March 15, 1994 -- Part
III
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PART I
ITEM 1. BUSINESS
GENERAL
Polaroid Corporation, a Delaware corporation founded in 1937, and its
subsidiaries (the "Company") comprise a worldwide enterprise with 1993 sales
of $2.24 billion. The Company designs, manufactures and markets a variety of
products primarily in instant image recording fields. These include instant
photographic cameras and films, electronic image recording devices,
videotapes, conventional films, and light polarizing filters and lenses. The
Company's products are used in amateur and professional photography, business,
industry, science, medicine and education.
PRODUCTS
Polaroid designs, manufactures and markets worldwide a variety of products,
including more than 50 different types of film and over 100 instruments,
camera backs, film holders and specialized equipment designed for a broad
range of applications in photographic imaging. In addition, the Company is
developing and producing high resolution imaging and electronic imaging
systems products.
During 1993, Polaroid introduced Captiva in the United States and JoyCam in
Japan, its new single lens reflex, autofocus instant system that features the
first in-camera picture storage compartment that allows up to ten instant
prints to develop inside the camera. To support the camera's introduction in
the United States, the Company ran an extensive advertising campaign in
consumer magazines and on network and cable television during the second half
of 1993. In the U.S. market, Polaroid introduced its first single use 35mm
camera called SideKick. Available in models with and without flash, the
cameras come pre-loaded with Polaroid 35mm High Definition film. Polaroid
augmented this product line with Talking SideKick, the first talking single
use camera.
The Company also introduced the MicroCam SLR in 1993. Designed to photograph
any specimen through virtually any light microscope, MicroCam is a fully-
automatic, single lens reflex instant camera with digital controls for
producing high quality black-and-white and color prints. The system can be
moved from microscope to microscope to serve an entire laboratory.
Polaroid's Polacolor Ultraviolet ID Film was introduced in 1993. Designed as a
new security identification film, Polacolor Ultraviolet ID Film produces
images for ID cards that are virtually tamper-proof and impossible to
duplicate. An invisible ultraviolet security pattern featuring the word
"Polaroid" is printed onto the film during manufacturing; the resulting random
pattern is visible only when viewed with a UV scanning light.
The first shipments of Polaroid's Helios 810 Laser Imaging System were made to
customers in the United States and Europe in 1993. This digital dry-process
laser imaging system produces 8x10-inch transparencies in 90 seconds and
eliminates the need for conventional silver halide film and its need for
proper disposal of toxic chemicals. A number of new digital imaging and
networking enhancements have been developed for the Helios 810 Laser Imaging
System. With the appropriate image management software, radiologists and
diagnosticians can direct images to Helios from multiple systems, through a
local area network, a removable disk system that enables Helios to print
images captured from mobile exams or remote locations, or a high resolution
video interface for connecting to nuclear medicine workstations.
In 1993, Polaroid completed its Mexican Voter Registration Program. This
comprehensive program incorporated specialized Polaroid Identifilm, specially-
made ID cameras, central image and data storage and retrieval, and on-the-spot
card issuance at more than 6,900 locations.
Polaroid won a five-year contract to implement an instant digital imaging
drivers license system for the State of Colorado in 1994. This digital system
will capture portraits, signatures, fingerprints and other data and will
produce an estimated one million Colorado driver's licenses each year.
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DISTRIBUTION
Worldwide sales of imaging products are made by the Company to photographic
stores, retail, food, drug, discount and department stores, wholesalers,
hospitals, original equipment manufacturers, independent agents and
distributors. Distributors of the Company include unrelated distributors and
subsidiaries of the Company.
COMPETITION
The worldwide market for imaging products is highly competitive in price,
quality, service and product performance. The Company has competitors
worldwide, ranging from large corporations to smaller and more specialized
companies.
RAW MATERIALS AND SUPPLIES
Sufficient raw materials and supplies were available in 1993 to maintain
operations of all manufacturing plants.
RESEARCH, ENGINEERING AND DEVELOPMENT
The Company continues to place great emphasis on research, engineering and
development. The amount expended for research, engineering and development
included in general and administrative expenses was $160.8 million during 1993
compared with $154.7 million in 1992 and $153.8 million in 1991. Manufacturing
development costs (previously called "start-up costs") for major new products
included in cost of sales were approximately $30 million in 1993, $40 million
in 1992, and $10 million in 1991.
PATENTS AND TRADEMARKS
The Company continued to obtain patents in 1993. In the judgment of the
Company, its patents are important to its business. The Company also owns a
number of valuable trademarks, including "Polaroid", which are important to
its business.
ENVIRONMENTAL COMPLIANCE
Approximately 11% of Polaroid's capital spending in 1994 will be for
environmental improvement projects.
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 $6.0 million as of
December 31, 1993. 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.
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
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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. The Company and other PRPs have initiated
litigation with the objective of minimizing their exposure with respect to the
Bridgeport Rental and Oil Services site.
In 1988, the United States of America, the State of New Hampshire and the
Commonwealth of Massachusetts commenced actions against the Company and other
PRPs in the United States District Court for Massachusetts. The plaintiffs
asked for recovery under Section 107 of CERCLA of response costs related to
four sites located in Bridgewater and Plymouth, Massachusetts, and Londonderry
and Nashua, New Hampshire. All of the sites are associated with the Cannons
Engineering Corporation, a company which was engaged in disposing of hazardous
wastes. The Company has entered into a consent decree to resolve the issues
raised in these actions. The consent decree has been entered by the court and
the court's decision has been affirmed in an appellate proceeding. Remediation
activities are under way.
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-settling 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 complaints.
In 1993, 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 asked for recovery under
CERCLA and Massachusetts General Laws Chapter 21E for response costs related
to the Silresim Chemical Corporation site in Lowell, 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 October 12,
1993.
Also 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 not
yet 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.
On August 16, 1988, the Company initiated litigation against certain of its
insurance carriers seeking defense costs and indemnification with respect to
the Silresim, Charles George and Cannons sites. On August 5, 1992, Commercial
Union Insurance Company, Fireman's Fund Insurance Company, and The Travelers
Indemnity Company filed a separate action against the Company seeking a
declaratory judgement that they "have neither the obligation to defend nor the
obligation to indemnify Polaroid with respect to any Environmental Claims
asserted or to be asserted against Polaroid by third parties", except for
those claims already in litigation with respect to the Silresim, Charles
George and Cannons sites. On April 7, 1993, the Supreme Judicial Court of the
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Commonwealth of Massachusetts held that the Company was not entitled to
indemnification under the involved policies for damage done to the Cannons
sites. On November 5, 1993, the Company settled all outstanding litigation
with its insurance carriers. The settlement agreements require that the terms
be held in confidence.
EMPLOYEES
The Company had 12,048 and 12,359 employees at December 31, 1993 and 1992,
respectively. The population included approximately 250 worldwide temporary
employees in 1993 and approximately 400 in 1992. In addition, the Company had
a non-employee temporary population in the U.S. of approximately 1,500 and
1,000 at December 31, 1993 and 1992, respectively.
INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND SIGNIFICANT CUSTOMERS
Please see note 13, "Segments of Business", on pages 44 and 45 of the Polaroid
Corporation Annual Report to Stockholders for 1993 (the "Annual Report").
ITEM 2. PROPERTIES
The Company's worldwide corporate headquarters is located in Cambridge,
Massachusetts, along with administrative offices, marketing, research and
engineering. The Cambridge properties consist of approximately 1,153,000
square feet of space owned in fee and leased premises, under leases expiring
between 1995 and 2003.*<F1>
Over 90% of the Company's space in the United States is located in Eastern
Massachusetts (Waltham, Norwood, New Bedford, Freetown, Newton and Needham).
These communities contain sites which house essentially all of the Company's
principal U.S. manufacturing facilities plus additional research and
engineering functions and warehousing operations. Following is a summary
description of such facilities:
Approximate Space
Location (Square Feet)
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Waltham 1,660,000
Norwood 788,000
New Bedford 739,000
Freetown 137,000
Newton 165,000
Needham 598,000
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4,087,000
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Approximately 93% of these U.S. manufacturing and warehousing facilities and
the land they occupy are owned by the Company. The Newton facility is leased
in its entirety and 54,000 square feet of the Waltham facility and 51,000
square feet of the Needham facility are leased.
The Company also currently maintains, in principal cities throughout the U.S.,
a network of three marketing and distribution centers (Atlanta, Chicago and
Santa Ana) and twenty regional sales offices in other locations.
Principal manufacturing facilities outside the U.S. are located in Dumbarton,
Scotland; Enschede, The Netherlands and Queretaro, Mexico. Following is a
summary description of such facilities:
Approximate Space
Location (Square Feet)
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Scotland 446,000
The Netherlands 527,000
Mexico 253,000
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1,226,000
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[FN]
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<F1>*All lease expiration dates are the end of the current term for leases not
containing a renewal option and the end of the last renewal term for leases
containing renewal options.
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Approximately 73% of these facilities are owned by the Company. This space
also houses certain administrative and marketing activities.
Marketing subsidiaries or sales offices are located in England, France,
Germany, Italy and eight other European countries. Additional marketing and
distribution facilities are established in Russia, the Western Hemisphere
(Canada, Puerto Rico, Mexico and Brazil) and in fifteen locations in the Asia
Pacific region (China, Australia -- four locations, Hong Kong -- two
locations, and Japan -- nine locations).
Manufacturing facilities operated at reasonable levels of production capacity
during 1993. The capacity of the facilities is sufficient to meet current
demand for the Company's products.
All the Company's premises are in good repair and its machinery and equipment
are maintained in good operating condition. The facilities are suitable for
the production of Company products.
The Company does not anticipate any difficulty in renewing outstanding leases
as they expire or in finding satisfactory alternative premises.
ITEM 3. LEGAL PROCEEDINGS
Please see note 14, "Contingencies", on pages 46 to 48, inclusive, of the
Annual Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None in the fourth quarter of 1993.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Please see the table entitled "Quarterly Financial Data" on page 49 of the
Annual Report.
ITEM 6. SELECTED FINANCIAL DATA
Please see the table entitled "Ten Year Financial Summary" on pages 50 to 51,
inclusive, of the Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Please see the section entitled "Management's Discussion and Analysis of
Operations" on pages 23 to 28, inclusive, of the Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Please see the section entitled "Independent Auditors" Report'' on page 29,
the sections entitled "Financial Statements" and "Notes to Consolidated
Financial Statements" on pages 30 to 48, inclusive, and the section entitled
"Supplementary Financial Information" on pages 48 to 51, inclusive in each
case, of the Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a) DIRECTORS - Please see the section entitled "Election of Directors" on
pages 3 to 7, inclusive, of the Polaroid Corporation 1994 Proxy Statement
(the "Proxy Statement").
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b) EXECUTIVE OFFICERS OF THE REGISTRANT - Listed below are the executive
officers of the Company. Officers are elected annually by the Board of
Directors. No family relationship exists between any of the officers.
<TABLE>
<CAPTION>
Name Office Age
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<S> <C> <C>
I. MacAllister Booth Chairman of the Board, President and Chief Executive Officer 62
Sheldon A. Buckler Vice Chairman of the Board 62
Bruce B. Henry Executive Vice President 54
Joseph R. Oldfield Executive Vice President 53
William J. O'Neill, Jr. Executive Vice President and Chief Financial Officer 51
Satish C. Agrawal Vice President 50
Graham M. Brown, Jr. Vice President and Treasurer 58
Richard F. deLima Vice President, Secretary and General Counsel 63
James A. Ionson Vice President and Director of Research 43
Michael J. LeBlanc Vice President 43
</TABLE>
Mr. Booth joined the Company in 1958. He was elected Assistant Vice President
and Assistant to the President in 1975, Vice President and Assistant to the
President in 1976, Senior Vice President in 1977, Executive Vice President in
1980, Executive Vice President and Chief Operating Officer in 1982, President,
Chief Operating Officer and Director in 1983, and to his present position as
President, Chief Executive Officer and Director in 1986. Mr. Booth was elected
Chairman of the Board in 1991.
Dr. Buckler joined the Company in 1964. He was elected Assistant Vice
President in 1969, Vice President in 1972, Group Vice President in 1975,
Senior Vice President in 1977, Executive Vice President in 1980, and to his
present position as Vice Chairman of the Board in 1990. He will retire in June
1994.
Mr. Henry joined the Company in 1967. He was elected Vice President in 1987.
He held the position of Chief Financial Officer from 1988 to 1990, and was
elected to his present position as Executive Vice President in 1992.
Mr. Oldfield joined the Company in 1966. He was elected to Vice President in
1987, and to his present position as Executive Vice President in 1992.
Mr. O'Neill joined the Company in 1969. He was elected Corporate Controller in
1980, Vice President and Controller in 1982, Group Vice President in 1984,
Group Vice President and Chief Financial Officer in 1990, and to his present
position as Executive Vice President and Chief Financial Officer in 1992.
Mr. Agrawal joined the Company in 1971. He was elected to his present position
as Vice President in 1992.
Mr. Brown joined the Company in 1969. He was elected Corporate Controller in
1984, Vice President and Controller in 1985, and to his present position as
Vice President and Treasurer in 1989.
Mr. deLima joined the Company as Secretary and Chief Resident Counsel in 1972.
He was elected Vice President and Secretary in 1975, and to his present
positions as Vice President, Secretary and General Counsel in 1989.
Dr. Ionson joined the Company in 1991 as Vice President and Director of
Research. Prior to joining the Company, Dr. Ionson was the director of the
Strategic Defense Initiative Organization's Office of Innovative Science
during the Reagan administration, and subsequent to this owned an advanced
technology management consulting company, JDC, Inc.
Mr. LeBlanc joined the Company in 1978. He was elected to his present position
as Vice President in 1991.
ITEM 11. EXECUTIVE COMPENSATION
Please see the section entitled "Executive Compensation" on pages 8 to 14,
inclusive, of the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Please see the section entitled "Beneficial Ownership of Shares" on pages 4 to
6, inclusive and the section entitled "Election of Directors" on pages 3 to 7,
inclusive, of the Proxy Statement.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Please see the section entitled "Election of Directors" on pages 3 to 7,
inclusive, of the Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
<TABLE>
a) 1. FINANCIAL STATEMENTS
<CAPTION>
Page No.
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<S> <C>
Independent Auditors' Report 29*<F1>
Consolidated Statement of Earnings
for the years ended December 31, 1993, 1992 and 1991 30*<F1>
Consolidated Balance Sheet - December 31, 1993 and 1992 31*<F1>
Consolidated Statement of Cash Flows
for the years ended December 31, 1993, 1992 and 1991 32*<F1>
Consolidated Statement of Changes in Common Stockholders' Equity
for the years ended December 31, 1993, 1992 and 1991 33*<F1>
Notes to Consolidated Financial Statements 34-48*<F1>
Supplementary Financial Information (Unaudited) 48-51*<F1>
a) 2. FINANCIAL STATEMENT SCHEDULES
Independent Auditors' Report 13
Schedule I - Marketable Securities - Other Investments 14
Schedule V - Property, Plant and Equipment 15
Schedule VI - Accumulated Depreciation and Amortization
of Property, Plant and Equipment 16
Schedule VIII - Valuation and Qualifying Accounts 17
Schedule IX - Short-term Borrowings 18
Schedule X - Supplementary Income Statement Information 35*<F1>
All other schedules are omitted inasmuch as they are either not required or
not applicable.
<FN>
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<F1>*Page references are to the Annual Report, which pages are incorporated herein
by reference. Except for such pages and other information in the Annual
Report specifically incorporated in this report by reference, the Annual
Report is not to be deemed filed as part of this report.
</TABLE>
<TABLE>
a) 3. EXHIBITS
<S> <C>
3.1 By-Laws of Polaroid Corporation amended and restated as of February 1, 1994.
3.2(a) Restated Certificate of Incorporation of Polaroid Corporation as of August 20, 1973.
(The Restated Certificate of Incorporation included as Exhibit 3.2(a) to Polaroid
Corporation Form 10-K for the year ended December 31, 1988 as filed on March 31, 1989
is hereby incorporated herein by reference.)
3.2(b) Amendments to the Restated Certificate of Incorporation of Polaroid Corporation as of
May 12, 1987. (The Amendments to the Restated Certificate of Incorporation included as
Exhibit 3.1 to Polaroid Corporation Form 10-Q for the quarter ended June 28, 1987 as
filed on August 12, 1987 are hereby incorporated herein by reference.)
3.2(c) Amendments to Polaroid Corporation Restated Certificate of Incorporation (Certificates
of Designation of Series B Cumulative Convertible Preferred Stock and Series C
Cumulative Convertible Pay-in-Kind Preferred Stock) as of January 30, 1989. (The
Amendments to the Restated Certificate of Incorporation included as Exhibit 3.2(c) to
Polaroid Corporation Form 10-K for the year ended December 31, 1988 as filed on March
31, 1989 are hereby incorporated herein by reference.)
3.2(d) Amendment to Polaroid Corporation Restated Certificate of Incorporation as of June 2,
1989. (The Amendment to the Restated Certificate of Incorporation included as Exhibit
3.1 to Polaroid Corporation Form 10-Q for the quarter ended July 2, 1989 as filed on
August 13, 1989 is hereby incorporated herein by reference.)
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3.2(e) Amendment to Polaroid Corporation Restated Certificate of Incorporation (Certificate of
Designation of Series D Cumulative Convertible Preferred Stock) as of October 31, 1991.
(The Amendment to the Restated Certificate of Incorporation included as Exhibit 3.2(e)
to Polaroid Corporation Form 10-K for the year ended December 31, 1991 as filed on
March 27, 1992 is hereby incorporated herein by reference.)
3.2(f) Amendment to Polaroid Corporation Restated Certificate of Incorporation (Certificates
of Elimination of Series B Cumulative Convertible Preferred Stock and Series C
Cumulative Convertible Pay-In-Kind Preferred Stock) as of October 31, 1991. (The
Amendment to the Restated Certificate of Incorporation included as Exhibit 3.2(f) to
Polaroid Corporation Form 10-K for the year ended December 31, 1991 as filed on March
27, 1992 is hereby incorporated herein by reference.)
4.1 Rights Agreement dated as of September 9, 1986 between Polaroid Corporation and Morgan
Shareholder Services Trust Company, as Rights Agent. (The Rights Agreement included as
Exhibit 1 to Polaroid Corporation Form 8-A as filed on September 15, 1986 is hereby
incorporated herein by reference.)
4.2 First Amendment dated as of August 16, 1988 to Rights Agreement dated as of September
9, 1986 between Polaroid Corporation and Morgan Shareholder Services Trust Company, as
Rights Agent. (The First Amendment included as Exhibit 4 to Polaroid Corporation Form 8
(Amendment No. 1 to Form 8-A filed on September 15, 1986) as filed on August 18, 1988
is hereby incorporated herein by reference.)
4.3 Second Amendment dated as of September 14, 1988 to Rights Agreement dated as of
September 9, 1986 between Polaroid Corporation and Morgan Shareholder Services Trust
Company, as Rights Agent. (The Second Amendment included as Exhibit 5 to Polaroid
Corporation Form 8 (Amendment No. 2 to the Form 8-A filed on September 15, 1986) as
filed on September 15, 1988 is hereby incorporated herein by reference.)
4.4 Supplemental Rights Agreement and Third Amendment dated as of January 30, 1989 to
Rights Agreement dated as of September 9, 1986 between Polaroid Corporation and Morgan
Shareholder Services Trust Company, as Rights Agent. (The Supplemental Rights Agreement
and Third Amendment included as Exhibit 6 to Polaroid Corporation Form 8 (Amendment No.
3 to the Form 8-A filed on September 15, 1986) as filed on January 30, 1989 is hereby
incorporated herein by reference.)
4.5 Fourth Amendment dated as of February 21, 1989 to Rights Agreement dated as of
September 9, 1986 between Polaroid Corporation and Morgan Shareholder Services Trust
Company, as Rights Agent. (The Fourth Amendment included as Exhibit 7 to Polaroid
Corporation Form 8 (Amendment No. 4 to the Form 8-A filed on September 15, 1986) as
filed on February 21, 1989 is hereby incorporated herein by reference.)
4.6 Fifth Amendment dated as of October 7, 1991 to the Rights Agreement dated as of
September 9, 1986 between Polaroid Corporation and First Chicago Trust Company (as
successor to Morgan Shareholder Services Trust Company), as Rights Agent. (The Fifth
Amendment included as Exhibit 8 to Polaroid Corporation Form 8 (Amendment No. 5 to the
Form 8-A filed on September 15, 1986) as filed on October 21, 1991 is hereby
incorporated herein by reference)).
4.7 Indenture dated as of December 15, 1991 between Polaroid Corporation and The First
National Bank of Boston, as Trustee, including form of Note. (Indenture included as
Exhibit 4.8 to Polaroid Corporation Form 10-K for the year ended December 31, 1991 as
filed on March 27, 1992 is hereby incorporated herein by reference.)
10.1 Stock Purchase Agreement dated July 12, 1988 between Polaroid Corporation and Boston
Safe Deposit and Trust Company, as Trustee under the Polaroid Stock Equity Plan. (The
Stock Purchase Agreement included as Exhibit 10(c) to Polaroid Corporation Form 8-K as
filed on July 22, 1988 is hereby incorporated herein by reference.)
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10.2 Credit Agreement (Working Capital) as of June 30, 1992 among Polaroid Corporation,
Morgan Guaranty Trust Company of New York, as Agent, and the Co-Agent and Banks named
therein. (The Agreement included as Exhibit 10.2 to Polaroid Corporation Form 10-K for
the year ended December 31, 1992 as filed on March 23, 1993 is hereby incorporated by
reference.)
10.3 Credit Agreement (ESOP Loan) as of June 30, 1992 among Polaroid Corporation, Morgan
Guaranty Trust Company of New York, as Agent, and the Co-Agent and Banks named therein.
(The Agreement included as Exhibit 10.3 to Polaroid Corporation Form 10-K for the year
ended December 31, 1992 as filed on March 23, 1993 is hereby incorporated by
reference.)
10.4 Amendment No. 1 dated as of December 18, 1992 to the Credit Agreement (ESOP Loan) dated
as of June 30, 1992. (The Amendment included as Exhibit 10.4 to Polaroid Corporation
Form 10-K for the year ended December 31, 1992 as filed on March 23, 1993 is hereby
incorporated by reference.)
10.5 Trust Agreement dated April 28, 1992 between Polaroid Corporation and Boston Safe
Deposit and Trust Company, as Trustee under the Polaroid Pension Plan. (The Agreement
included as Exhibit 10.5 to Polaroid Corporation Form 10-K for the year ended December
31, 1992 as filed on March 23, 1993 is hereby incorporated by reference.)
10.6 Polaroid Executive Incentive Compensation Plan, effective January 1, 1991, as amended
June 13, 1991. (The Plan included as Exhibit 10.6 to Polaroid Corporation Form 10-K for
the year ended December 31, 1992 as filed on March 23, 1993 is hereby incorporated by
reference.)
10.7 Polaroid Executive Equalization Retirement Plan, effective January 1, 1989, executed
March 28, 1989. (The Plan included as Exhibit 10.13 to Polaroid Corporation Form 10-K
for the year ended December 31, 1988 as filed on March 31, 1989 is hereby incorporated
herein by reference.)
10.8 Polaroid Officer's Compensation Exchange Plan, effective January 1, 1993, as amended
June 1, 1993.
10.9 Polaroid Stock Incentive Plan, effective January 1, 1992, as amended October 19, 1992.
(The Plan included as Exhibit 10.10 to Polaroid Corporation Form 10-K for the year
ended December 31, 1992 as filed on March 23, 1993 is hereby incorporated by
reference.)
10.10 The 1993 Polaroid Stock Incentive Plan, effective May 11, 1993, as amended June 1,
1993.
10.11 Polaroid Board of Directors Stock Option Plan, executed February 28, 1990, effective
April 1, 1990. (The Plan included as Exhibit 10.13 to Polaroid Corporation Form 10-K
for the year ended December 31, 1989 as filed on March 30, 1990 is hereby incorporated
herein by reference.)
10.12 Polaroid Board of Directors Retirement Plan, effective January 1, 1991 as amended June
13, 1991. (The Plan included as Exhibit 10.11 to Polaroid Corporation Form 10-K for the
year ended December 31, 1991 as filed on March 27, 1992 is hereby incorporated herein
by reference.)
10.13 Exchange Agreement dated as of October 7, 1991 between Polaroid Corporation and
Corporate Partners, L.P., Corporate Offshore Partners, L.P., and State Board of
Administration of Florida. (This Agreement included as Exhibit 2 to Polaroid
Corporation Form 8-K as filed on October 21, 1991 is hereby incorporated herein by
reference).
10.14 Amendment dated October 31, 1991 between Polaroid Corporation and Corporate Partners,
L.P., Corporate Offshore Partners, L.P., and State Board of Administration of Florida,
to an Exchange Agreement dated as of October 7, 1991, between the same parties. (The
Amendment included as Exhibit 1 to Polaroid Corporation Form 8-K as filed on November
7, 1991 is hereby incorporated herein by reference).
10.15 Retirement and Severance Agreement dated March 31, 1993 with Sheldon A. Buckler.
11. Computation of earnings per share.
13. Annual Report to Stockholders for 1993. (The Annual Report to Stockholders for 1993,
except for the portions thereof which are incorporated by reference in this report on
Form 10-K, is furnished for the information of the Securities and Exchange Commission
and is not to be deemed "filed" as part of this report on Form 10-K).
<PAGE>
<PAGE>
22. Subsidiaries.
23. Consent of KPMG Peat Marwick.
Exhibits are not included in copies of this Form 10-K except those filed
with the Securities and Exchange Commission. A copy of these documents will
be furnished to stockholders upon written request.
b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the quarter ended December
31, 1993.
<PAGE>
<PAGE>
</TABLE>
<TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
By I. MACALLISTER BOOTH
------------------------------------------
I. MACALLISTER BOOTH, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<S> <C> <C>
Chairman of the Board, President
and Chief Executive Officer;
I. MACALLISTER BOOTH Director March 22, 1994
-----------------------------------
I. MACALLISTER BOOTH
Vice Chairman of the
SHELDON A. BUCKLER Board; Director March 22, 1994
-----------------------------------
SHELDON A. BUCKLER
Executive Vice President and Chief
WILLIAM J. O'NEILL, JR. Financial Officer March 22, 1994
-----------------------------------
WILLIAM J. O'NEILL, JR.
RALPH M. NORWOOD Vice President and Controller March 22, 1994
-----------------------------------
RALPH M. NORWOOD
YEN-TSAI FENG Director March 22, 1994
-----------------------------------
YEN-TSAI FENG
RALPH E. GOMORY Director March 22, 1994
-----------------------------------
RALPH E. GOMORY
FRANK S. JONES Director March 22, 1994
-----------------------------------
FRANK S. JONES
JAMES D. MAHONEY Director March 22, 1994
-----------------------------------
JAMES D. MAHONEY
HENRY NECARSULMER Director March 22, 1994
-----------------------------------
HENRY NECARSULMER
KENNETH H. OLSEN Director March 22, 1994
-----------------------------------
KENNETH H. OLSEN
LESTER POLLACK Director March 22, 1994
-----------------------------------
LESTER POLLACK
CHARLES P. SLICHTER Director March 22, 1994
-----------------------------------
CHARLES P. SLICHTER
RALPH Z. SORENSON Director March 22, 1994
-----------------------------------
RALPH Z. SORENSON
DELBERT C. STALEY Director March 22, 1994
-----------------------------------
DELBERT C. STALEY
ALFRED M. ZEIEN Director March 22, 1994
-----------------------------------
ALFRED M. ZEIEN
</TABLE>
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
POLAROID CORPORATION:
Under the date of February 1, 1994, we reported on the consolidated
balance sheet of Polaroid Corporation and subsidiary companies as of
December 31, 1993 and 1992, and the related consolidated statement of
earnings, cash flows, and changes in common stockholders' equity for each
of the years in the three-year period ended December 31, 1993, as
contained in the 1993 annual report to stockholders. These consolidated
financial statements and our report thereon are incorporated by reference
in the annual report on Form 10-K for the year 1993. In connection with
our audits of the aforementioned consolidated financial statements, we
also have audited the related financial statement schedules as listed in
Item 14(a)2 of this Report. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statement schedules based on our
audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth
therein.
As discussed in Notes 3 and 11 in the consolidated financial statements,
in 1993 the Company changed its method of accounting for income taxes and
for certain postretirement and postemployment benefits.
KPMG PEAT MARWICK
Boston, Massachusetts
February 1, 1994
<PAGE>
<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
SCHEDULE I - MARKETABLE SECURITIES - OTHER INVESTMENTS
December 31, 1993
(In millions)
<TABLE>
<CAPTION>
AMOUNT AT WHICH EACH
PORTFOLIO OF EQUITY
NUMBER OF SHARES MARKET VALUE SECURITY ISSUES AND
NAME OF ISSUER OR UNITS - PRINCIPAL OF EACH ISSUE EACH OTHER SECURITY
AND TITLE OF AMOUNT OF BONDS COST OF AT BALANCE ISSUE CARRIED IN
EACH ISSUE AND NOTES EACH ISSUE SHEET DATE THE BALANCE SHEET
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Time deposits $24.5 $24.5 $24.5 $24.5
----- ----- ----- -----
Total $24.5 $24.5 $24.5 $24.5
================================================================================================================================
</TABLE>
<PAGE>
<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
Years ended December 31, 1993, 1992 and 1991
(In millions)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING ADDITIONS OTHER CHARGES END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS ADD (DEDUCT)*<F1> PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Land $ 32.1 $ -- $ -- $ .4 $ 32.5
Buildings 274.7 .8 (.8) 34.3 309.0
Machinery and equipment 1,246.9 7.9 30.5 114.5 1,338.8
Construction in process 219.8 156.9 -- (149.2) 227.5
-------- ------ ------- ----- -------
Total $1,773.5 $165.6 $ (31.3) $ -- $1,907.8
===================================================================================================================================
1992
Land $ 32.1 $ .1 $ (.1) $ -- $ 32.1
Buildings 261.1 .9 (1.8) 14.5 274.7
Machinery and equipment 1,137.2 6.3 (25.0) 128.4 1,246.9
Construction in process 168.5 194.2 -- (142.9) 219.8
-------- ------ ------- ----- -------
Total $1,598.9 $201.5 $ (26.9) $ -- $1,773.5
===================================================================================================================================
1991
Land $ 23.4 $ 8.7 $ -- $ -- $ 32.1
Buildings 251.7 1.1 (.8) 9.1 261.1
Machinery and equipment 1,069.2 6.5 (16.1) 77.6 1,137.2
Construction in process 95.7 159.5 -- (86.7) 168.5
-------- ------ ------- ----- -------
Total $1,440.0 $175.8 $ (16.9) $ -- $1,598.9
===================================================================================================================================
<FN>
- ----------
<F1>*Amounts primarily represent completed construction charged to respective
capital asset accounts.
</TABLE>
DEPRECIATION METHODS
The cost of buildings and machinery and equipment is depreciated, primarily by
accelerated depreciation methods, over the estimated useful lives of such
assets, as follows:
Buildings: 20 - 40 years
Machinery and equipment: 3 - 12 years
<PAGE>
<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
Years ended December 31, 1993, 1992 and 1991
(In millions)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER CHARGES END OF
DESCRIPTION OF PERIOD EXPENSES RETIREMENTS ADD (DEDUCT) PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Buildings $ 179.6 $ 10.4 $ (.8) $ -- $ 189.2
Machinery and equipment 936.6 89.9 (23.2) (2.9) 1,000.4
-------- ------ ------ ----- -------
Total $1,116.2 $100.3 $(24.0) $ (2.9) $1,189.6
===================================================================================================================================
1992
Buildings $ 171.9 $ 9.3 $ (1.6) $ -- $ 179.6
Machinery and equipment 877.6 79.8 (22.0) 1.2 936.6
-------- ------ ------ ----- -------
Total $1,049.5 $ 89.1 $(23.6) $ 1.2 $1,116.2
===================================================================================================================================
1991
Buildings $ 163.7 $ 8.9 $ (.7) $ -- $ 171.9
Machinery and equipment 815.3 76.6 (14.7) .4 877.6
-------- ------ ------ ----- -------
Total $ 979.0 $ 85.5 $(15.4) $ .4 $1,049.5
===================================================================================================================================
</TABLE>
<PAGE>
<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1993, 1992 and 1991
(In millions)
<TABLE>
<CAPTION>
ADDITIONS
-----------------------------
BALANCE AT CHARGED TO CHARGED TO DEDUCTIONS BALANCE AT
BEGINNING COSTS AND OTHER CHARGED TO END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS RESERVES PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Doubtful accounts $11.6 $11.7 -- $ (7.6) $15.7
Cash discounts 6.6 -- $ 29.5 (28.5) 7.6
====================================================================================================================================
1992
Doubtful accounts $10.4 $ 7.3 $ -- $ (6.1) $11.6
Cash discounts 7.0 -- 28.9 (29.3) 6.6
===================================================================================================================================
1991
Doubtful accounts $ 8.3 $ 4.7 $ 8.4 $(11.0) $10.4
Cash discounts 6.2 -- 29.8 (29.0) 7.0
===================================================================================================================================
</TABLE>
<PAGE>
<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
SCHEDULE IX - SHORT-TERM BORROWINGS
Years ended December 31, 1993, 1992 and 1991
(In millions)
<TABLE>
<CAPTION>
MAXIMUM AVERAGE WEIGHTED
WEIGHTED AMOUNT AMOUNT AVERAGE
BALANCE AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE AT END OF INTEREST DURING THE DURING THE DURING THE
SHORT-TERM BORROWINGS PERIOD RATE PERIOD*<F1> PERIOD*<F1> PERIOD*<F1>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Notes payable to banks $106.2 7.4% $174.3 $135.5 9.1%
===================================================================================================================================
1992
Notes payable to banks $126.3 11.6% $190.4 $159.5 11.5%
===================================================================================================================================
1991
Notes payable to banks $145.9 11.0% $223.5 $160.2 10.1%
Commercial paper $ -- --% $ 31.5 $ 9.1 6.6%
===================================================================================================================================
<FN>
- ----------
<F1>*Computed on a month-end basis.
</TABLE>
DESCRIPTION OF SHORT-TERM BORROWINGS:
The Company maintains a domestic working capital line of credit of $150
million and there were no amounts outstanding at December 31, 1993.
Notes payable to banks include unsecured obligations of the Company's foreign
subsidiaries (normally maturing within 180 days) and borrowings under the
working capital portion of the credit agreement.
POLAROID CORPORATION
________________
BY-LAWS
________________
Amended and Restated as of February 1, 1994
<PAGE>
BY-LAWS
of
POLAROID CORPORATION
(Incorporated under the Laws of the State of Delaware)
Amended and Restated as of February 1, 1994
ARTICLE I.
OFFICES
1. The Principal Office. The principal office shall be in the
City of Dover, County of Kent, State of Delaware, and the name
of the resident agent in charge thereof is The Prentice-Hall
Corporation System, Inc., 32 Loockerman Square, Dover, Kent
County, Delaware.
2. Other Offices. The Company may also have offices in the city
of Boston, State of Massachusetts, and at such other places
within or without the State of Delaware as the Board of
Directors may from time to time appoint, or as the business of
the Company may require.
ARTICLE II.
STOCKHOLDERS' MEETINGS
1. Place of Meeting. All meetings of the stockholders shall be
held at the principal office of the Company in the City of
Dover, County of Kent, State of Delaware, or at such other
place, within or without the State of Delaware, as shall be
determined from time to time, by the Board of Directors, and
the place at which such meeting shall be held shall be stated
in the notice and call of the meeting.
2. Annual Meetings. The annual meeting of the stockholders of
the Company for the election of directors and for the
transaction of such other business as may properly come before
the meeting shall be held each year on a date to be designated
by the Board of Directors, at a time to be specified by the
Chairman of the Board of Directors, or, in his absence, by the
officer of the Company so authorized by the Board of
Directors. If the annual meeting of the stockholders is not
held on the date designated by the Board of Directors, the
election of directors may be held at any meeting thereafter
called pursuant to these By-Laws.
<PAGE>
At all meetings of stockholders, the voting may be viva voce,
but any qualified voter may demand a stock vote, whereupon
such stock vote shall be taken by ballot, each of which shall
state the name of the stockholder voting and the number of
shares voted by him, and if such ballot be cast by a proxy, it
shall also state the name of such proxy.
3. Order of Business. The order of business at any meeting of
stockholders shall be determined by the presiding officer of
such meeting.
4. Special Meetings. Special meetings of the stockholders of the
Company may be called only by the Chairman of the Board of
Directors, the President or the Board of Directors. Only
those matters set forth in the notice of the special meeting
may be considered or acted upon at a special meeting of
stockholders of the Company, unless otherwise provided by law.
5. Notice. Notice of the time and place of the annual meeting of
stockholders shall be given by mailing a written or printed
notice of the same at least ten days, and not more than sixty
days, prior to the meeting, and notice of the time and place
of special meetings shall be given by written or printed
notice of the same at least ten days, and not more than sixty
days, prior to the meeting, with postage prepaid, to each
stockholder of record of the Company entitled to vote at such
meeting, and addressed to the stockholder's last known post
office address, or to the address appearing on the corporate
books of the Company. The Board of Directors may fix in
advance a date, not exceeding sixty days preceding the date of
any meeting of stockholders, as a record date for the
determination of the stockholders entitled to notice of and to
vote at such meeting. No notice of the time, place or purpose
of any meeting of stockholders, whether prescribed by law, by
the Certificate of Incorporation, or by these By-Laws need be
given to any stockholder who attends in person or by proxy, or
who executes a waiver of such notice which is filed with the
records of the meeting either before or after the holding
thereof.
When any annual or special meeting of stockholders is
adjourned to another hour, date or place, notice need not be
given of the adjourned meeting other than an announcement at
the meeting at which the adjournment is taken of the hour,
date and place to which the meeting is adjourned; provided,
however, that if the adjournment is for more than 30 days, or
if after the adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at such
meeting and each stockholder who, by law or under the
Certificate of Incorporation or these By-Laws, is entitled to
such notice.
6. Quorum. The holders of shares of capital stock of the Company
representing a majority of the voting power of the outstanding
shares of capital stock issued, outstanding and entitled to
vote under the Certificate of Incorporation, represented in
person or by proxy, shall constitute a quorum at any annual or
<PAGE>
special meeting of stockholders; but if less than a quorum is
present at a meeting, the holders of capital stock
representing a majority of the voting power present at the
meeting or the presiding officer may adjourn the meeting from
time to time, and the meeting may be held as adjourned without
further notice, except as provided in Section 5 of this
Article II. At such adjourned meeting at which a quorum is
present, any business may be transacted which might have been
transacted at the meeting as originally noticed. The
stockholders present at a duly constituted meeting may
continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave
less than a quorum.
7. Voting Procedures and Inspectors of Election. The Company
shall, in advance of any meeting of stockholders, appoint one
or more inspectors to act at the meeting and make a written
report thereof. The Company may designate one or more persons
as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate is able to act at a meeting
of stockholders, the presiding officer shall appoint one or
more inspectors to act at the meeting. Any inspector may, but
need not, be an officer, employee or agent of the Company.
Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to
the best of his or her ability. The inspectors shall perform
such duties as are required by the General Company Law of the
State of Delaware, as amended from time to time, including the
counting of all votes and ballots. The inspectors may appoint
or retain other persons or entities to assist the inspectors
in the performance of their duties.
8. Notification of Nominations. Subject to the rights of the
holders of any class or series of capital stock having a
preference over the Common Stock of the Company as to
dividends or upon liquidation, nominations for the election of
directors may be made (a) by the Board of Directors or a
designated committee thereof or (b) by any holder of record
(both as of the time notice of such nomination is given by the
stockholder as set forth below and as of the record date for
the annual meeting in question) of any shares of the capital
stock of the Company who complies with the procedures set
forth in this Section. Any stockholder who seeks to make such
a nomination, or his or her representative, must be present in
person at the annual meeting. Only persons nominated in
accordance with the procedures set forth in this Section shall
be eligible for election as Directors at an annual meeting of
stockholders.
Nominations, other than those made by the Board of Directors
or a designated committee thereof, shall be made pursuant to
timely notice in writing to the Secretary of the Company as
set forth in this Section. To be timely, a stockholder's
notice shall be delivered to, or mailed and received, at the
principal executive offices of the Company (a) not less than
90 days prior to the anniversary of the immediately preceding
annual meeting of stockholders (the "Anniversary") or (b) in
the event that the annual meeting of stockholders is called
for a date more than 20 days prior to the Anniversary, not
later than the close of business on (i) the 20th day (or if
<PAGE>
that day is not a business day for the Company, on the next
succeeding business day) following the first date on which the
date of such meeting was publicly disclosed or (ii) if such
date of public disclosure occurs more than 90 days prior to
such scheduled date of such meeting, then the later of (1) the
20th day (or if that day is not a business day for the
Company, on the next succeeding business day) following the
first date of public disclosure of the date of such meeting or
(2) the 90th day prior to such scheduled date of such meeting
(or if that day is not a business day for the Company, on the
next succeeding business day). Any public disclosure of the
scheduled date of the meeting made by the Company by means of
a press release, a report or other document filed with the
Securities and Exchange Commission, or a letter or report sent
to stockholders of record of the Company, shall be deemed to
be sufficient public disclosure of the date of such meeting
for purposes of these By-Laws.
Such stockholder's notice shall set forth (a) the name and
address of the stockholder who intends to make the nomination
and of the person or persons to be nominated; (b) a
representation that the stockholder is a holder of record of
stock of the Company and intends to appear in person or by
proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all arrangements
or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made
by the stockholder; (d) the consent of each nominee to serve
as a director of the Company if so elected; (e) the name, age,
business address and residence address of each nominee; (f)
the principal occupation or employment of each nominee during
the past five years; and (g) a description of any of the
following events that has occurred within the last five years
and that is material to the evaluation of the ability or
integrity of each proposed nominee: (i) a petition under
federal bankruptcy laws or any state insolvency laws was filed
by or against such person; (ii) such person was convicted in
a criminal proceeding or was a named subject of a criminal
proceeding (excluding traffic violations and other minor
offenses); (iii) such person was found by any court of
competent jurisdiction to have violated any federal or state
securities law or federal commodities law, which judgment or
finding has not been subsequently reversed, suspended or
vacated; or (iv) such person was the subject of any order,
judgment or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction or of any
federal or state governmental or quasi-governmental agency,
authority or commission enjoining him or otherwise limiting
him from engaging in any type of business practice or in any
activity in connection with the purchase or sale of any
security or commodity. The presiding officer or the Board of
Directors shall refuse to recognize the nomination of any
person not made in compliance with the foregoing procedures.
9. Purposes of Annual Meetings. At any annual meeting of the
stockholders of the Company, any business properly brought
before the meeting may be transacted. To be properly brought
before an annual meeting, business (a) must be specified in
the notice of the meeting (or any supplement thereto) given by
or at the direction of the Board of Directors; (b) otherwise
<PAGE>
properly brought before the meeting by or at the direction of
the Board of Directors; or (c) otherwise properly brought
before the meeting by any holder of record (both as of the
time notice of such proposal is given by the stockholder as
set forth below and as of the record date for the annual
meeting in question) of any shares of capital stock of the
Company who complies with the procedures set forth in this
Section.
In addition to any other applicable requirements, for business
to be properly brought before an annual meeting by a holder of
record of any shares of capital stock entitled to vote at such
annual meeting, each stockholder must have given timely notice
thereof in writing to the Secretary of the Company as set
forth in this Section and such stockholder or his or her
representative must be present at the annual meeting. To be
timely, a stockholder's notice must be delivered to, or mailed
and received at, the principal executive offices of the
Company (a) not less than 90 days prior to the Anniversary or
(b) in the event that the annual meeting of stockholders is
called for a date more than 20 days prior to the Anniversary,
not later than the close of business on (i) the 20th day (or
if that day is not a business day of the Company, on the next
succeeding business day) following the first date on which the
date of such meeting was publicly disclosed or (ii) if such
date of public disclosure occurs more than 90 days prior to
such scheduled date of such meeting, then the later of (1) the
20th day (or if that day is not a business day for the
Company, on the next succeeding business day) following the
first date of public disclosure or (2) the 90th day prior to
such scheduled date of such meeting (or if that day is not a
business day for the Company, on the next succeeding business
day). Any public disclosure of the scheduled date of the
meeting made by the Company by means of a press release, a
report or other document filed with the Securities and
Exchange Commission, or a letter or report sent to
stockholders of record of the Company, shall be deemed to be
sufficient public disclosure of the date of such meeting for
purposes of these By-Laws.
Such stockholder's notice shall set forth as to each matter
the stockholder proposes to bring before the annual meeting
(a) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such
business at the meeting and in the event that such business
includes a proposal to amend either the Certificate of
Incorporation or By-Laws of the Company, the language of the
proposed amendment; (b) the name and address of the
stockholder proposing such business; (c) a representation that
the stockholder is a holder of record of stock of the Company
entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to propose such business;
and (d) any material interest of the stockholder in such
business. Notwithstanding the foregoing provisions of this
Section, such stockholder shall also comply with all
applicable requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder
(the "Exchange Act"), with respect to the matters set forth in
this Section. Nothing in this Section shall be deemed to
affect any rights of stockholders to request inclusion of
proposals in the Company's proxy statement pursuant to Rule
14a-8 under the Exchange Act.
<PAGE>
No business shall be conducted at an annual meeting of
stockholders except in accordance with this Section, and the
presiding officer or the Board of Directors shall refuse to
permit any business to be brought before an annual meeting
without compliance with the foregoing procedures.
ARTICLE III.
STOCK
1. Stock Certificates. Certificates of stock shall be issued in
numerical order, and each stockholder shall be entitled to a
certificate signed by the President or Vice President and the
Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary certifying to the number of shares owned
by him. Where, however, such certificate is countersigned (a)
by a transfer agent other than the Company or its employee or
(b) by a registrar other than the Company or its employee, any
other signature on the certificate may be a facsimile.
In case any officer, transfer agent, or registrar who has
signed a certificate (or whose facsimile signature has been
placed upon a certificate) shall cease to serve as an officer,
transfer agent or registrar before such certificate is issued,
such certificate may nevertheless be adopted and issued and
delivered by the Company with the same force and effect as
though the officer, transfer agent or registrar who signed
such certificate (or whose facsimile signature or signatures
shall have been used thereon) continued to serve as an
officer, transfer agent or registrar at the date of issue.
2. Stock Transfers. Transfers of stock shall be made only upon
the transfer books of the Company, kept at the office of the
Company or of the respective transfer agents designated to
transfer the several classes of stock, and before a new
certificate is issued, the old certificates shall be
surrendered for cancellation.
3. Registered Stockholders. Registered stockholders only shall
be entitled to be treated by the Company as the holders in
fact of the stock standing in their respective names, and the
Company shall not be bound to recognize any equitable or other
claim to or interest in any share on the part of any other
person, whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of Delaware.
4. Loss or Destruction of Stock Certificates. In case of loss or
destruction of any certificate of stock, another may be issued
in its place, upon proof of such loss or destruction, and upon
the giving of a satisfactory bond of indemnity to the Company
and/or to the transfer agent and registrar of such stock, in
such sum as the Board of Directors may provide.
<PAGE>
5. Regulations. The Board of Directors shall have power and
authority to make all such rules and regulations as it may
deem expedient concerning the issue, transfer, conversion, and
registration of certificates for shares of the capital stock
of the Company, not inconsistent with the laws of Delaware,
the Certificate of Incorporation, and these By-Laws.
The Board of Directors may appoint a transfer agent and a
registrar for each class of stock, and may require all stock
certificates to bear the signatures of such transfer agent and
of such registrar.
6. Closing of Transfer Books. Except as may otherwise be
provided in the Certificate of Incorporation, the stock
transfer books may be closed for meetings of the stockholders
during such periods, not exceeding sixty days, as from time to
time may be fixed by the Board of Directors, and during such
periods no stock shall be transferable. The Board of
Directors, without closing the books of the Company, may,
however, fix a day not more than sixty days prior to the date
of holding any meeting of stockholders, as the day as of which
stockholders entitled to notice of and to vote at such meeting
shall be determined; and only stockholders of record on such
day shall be entitled to notice of or to vote at such meeting.
If a closing or determining day so fixed shall be a Sunday or
holiday, then the closing or determining day shall be the
following business day.
ARTICLE IV.
BOARD OF DIRECTORS
1. Management. The management of all the affairs, property and
interest of the Company shall be vested in a Board of
Directors, consisting of such number of persons as shall be
fixed from time to time by the affirmative vote of a majority
of the directors, which persons shall be elected, except as
otherwise provided in the Certificate of Incorporation, for a
term of one year, and shall hold office until their successors
are elected and qualify.
2. Vacancies. All vacancies in the Board of Directors, whether
caused by resignation, death, or otherwise, may, except as
otherwise may be provided in the Certificate of Incorporation,
be filled by the remaining directors or a majority of the
remaining directors attending a regular or special meeting
called for that purpose, even though less than a quorum be
present, or by the stockholders at any regular or special
meeting held prior to the filling of such vacancy by the Board
of Directors as above provided. A director thus elected to
fill any vacancy shall hold office for the unexpired term of
his predecessor, and until his successor is elected and
qualified. Whenever the number of directors shall be
increased pursuant to law, such increase shall be deemed to
create vacancies in the Board to be filled in the manner above
described.
<PAGE>
3. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at the principal office the
Company, or at such other place or places, within or without
the State of Delaware, as the Board of Directors may from time
to time designate.
4. Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman of the Board of
Directors or the President, or in their absence, by the Vice
Chairman of the Board or any Vice President, or by any three
directors, to be held at the principal office of the Company,
or at such other place or places, within or without the State
of Delaware, as the directors may from time to time designate.
All actions of the Executive Committee shall be reported to
the Board of Directors at its next meeting, and shall be
subject to revision or alteration by the Board, provided that
no rights or acts of third parties shall be affected by any
such revision or alteration.
5. Notice. Notice of any special meeting of the Board of
Directors may be served personally upon each director or
telecopied, cabled or telegraphed to him, not less than three
(3) hours prior to the hour set for the meeting, or mailed to
him not less than forty-eight (48) hours prior to the hour set
for the meeting, at his business or home address appearing
upon the books of the Company. Such notice may also be
telephoned, not less than three (3) hours prior to the hour
set for the meeting, provided that such director so notified
shall actually be reached by telephone. Neither the business
to be transacted at, nor the purpose of any regular or special
meeting of the Board of Directors, need be specified in the
notice or waiver of notice of such meeting.
6. Quorum. A majority of the members of the Board of Directors
shall be necessary to constitute a quorum for the transaction
of business at any meeting of the Board of Directors; but less
than a quorum may adjourn any meeting, which may be held on a
subsequent date without further notice, provided that a quorum
be present at such deferred meeting.
7. Salary of Directors. By resolution of the Board of Directors
a fixed sum, on an annual or other basis, plus out-of-pocket
expenses, may be allowed to directors who are not employees of
the Company, for their services as directors or as members of
the Executive Committee or as members of other standing
committees or special committees. Nothing herein contained
shall be construed to preclude any director from serving the
Company in any other capacity and receiving compensation
therefor.
8. Closing of Transfer Books. The Board of Directors may fix in
advance a date, not exceeding sixty days preceding the date
for the allotment of rights, or the date when any change or
conversion or exchange of capital stock shall go into effect,
as a record date for the determination of the stockholders
<PAGE>
entitled to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion, or exchange
of capital stock.
9. Executive and Other Committees. The Board of Directors may
appoint from its members, by resolution passed by a majority
of the whole Board of Directors, an Executive Committee of two
(2) or more members, and may designate a Chairman for such
committee, and may elect such other committees as it may deem
advisable, and may discontinue any such committee at its
pleasure.
(a) Powers of Executive Committee. During the intervals
between the meetings of the Board of Directors, the
Executive Committee, if elected, shall possess and may
exercise all the powers of the Board of Directors in the
management and direction of the business of the Company,
except as to matters wherein action of the Board of
Directors is specifically required by law, in such manner
as the Executive Committee shall deem best for the
interest of the Company in all cases in which specific
directions shall not have been given by the Board of
Directors.
(b) Meetings. Any committee elected or appointed by the
Board shall meet upon such day or days and at such hour
or hours, as may be designated from time to time by
resolution of such committee and whenever called together
by its Chairman upon notice given to each member of the
committee in the manner specified in Section 5 of this
Article IV. Upon the written request of any two members
of any such committee, the Chairman thereof shall call a
special meeting of such committee. The presence of at
least a majority of the members of any committee shall be
necessary to constitute a quorum for the transaction of
business. The affirmative vote of at least a majority of
the members of any committee shall be necessary to adopt
any resolution.
10. Telephonic Meetings. The Board of Directors and any committee
of the Board of Directors may hold regular or special meetings
by use of conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting
pursuant to this Section shall constitute presence in person
at the meeting.
ARTICLE V.
OFFICERS
1. Officers. The officers of the Company shall be a President,
one or more Vice Presidents, a Secretary and a Treasurer, who
shall be elected for one year by the Board of Directors at
their first meeting after the annual meeting of stockholders
and who shall hold office until their successors are elected
and qualify. In the same manner and for the same term the
Board of Directors shall also elect a Chairman of the Board of
<PAGE>
Directors and may also elect a Vice Chairman of the Board of
Directors. The offices of Chairman of the Board of Directors
and President, or any of Vice Chairman, Vice President,
Secretary and Treasurer, may be united in one person. The
officers, other than the President, need not be directors.
2. Chairman. The Chairman shall preside at all meetings of
stockholders and directors. Except where by law the signature
of the President is required, the Chairman shall have the
power and authority to sign or countersign all certificates,
contracts and other instruments of the Company as authorized
by the Board of Directors. He shall make reports to the Board
of Directors and stockholders and perform all such other
duties as are incident to his office or as are properly
required of him by the Board of Directors.
3. President. The President shall have general supervision over
the operations of the Company. In the absence of the Chairman
of the Board of Directors he shall preside at all meetings of
stockholders and directors. Except where by law the signature
of the Chairman is required, the President shall have the
power and authority to sign or countersign all certificates,
contracts and other instruments of the Company as authorized
by the Board of Directors. He shall make reports to the Board
of Directors and stockholders and perform all such other
duties as are incident to his office or as are properly
required of him by the Board of Directors.
4. Chief Executive Officer. The President shall be appointed
Chief Executive Officer of the Company by the Board of
Directors. The Chief Executive Officer shall have general
supervision over the business and affairs of the Company, its
financial policies and property. He shall make reports to the
Board of Directors and stockholders and perform all such other
duties as are incident to his office or as are properly
required of him by the Board of Directors.
5. Vice Presidents. During the absence or disability of the
President, the Vice Presidents, in the order designated by the
Board of Directors, shall exercise all the functions of the
President. Each Vice President shall have such powers and
discharge such duties as may be assigned to him from time to
time by the Board of Directors. One or more Vice Presidents
of the Company may be designated by the Board as Executive
Vice President or Senior Vice President.
6. Secretary. The Secretary shall issue notices for all
meetings, but notice for special meetings of directors called
at the request of three directors, as provided in Section 4,
Article IV, of the By-Laws, may be issued by such directors.
The Secretary shall keep minutes of all meetings, shall have
charge of the seal and the corporate books, and shall make
such reports and perform such other duties as are incident to
his office, or as are properly required of him by the Board of
Directors.
7. Treasurer. The Treasurer shall have the custody of all moneys
and securities of the Company, and shall keep regular books of
account. He shall disburse the funds of the Company in
<PAGE>
payment of the just demands against the Company, or as may be
ordered by the Board of Directors, taking proper vouchers for
such disbursements, and shall render to the Board of Directors
from time to time as may be required of him, an account of all
his transactions as Treasurer and of the financial condition
of the Company. He shall perform all duties incident to his
office, or as are properly required of him by the Board of
Directors.
8. Substitutes. In case any officer of the Company, and any
person herein authorized to act in his place, is absent or
unable to act, the Board of Directors may from time to time
delegate the powers or duties of such officer to any other
officer, director, or other person whom it may select.
9. Vacancies. Vacancies in any office arising from any cause may
be filled by the Board of Directors at any regular or special
meetings.
10. Other Officers. The Board of Directors may appoint such other
officers and agents, who need not be directors, as it shall
deem necessary or expedient, who shall hold their offices for
such terms, and shall exercise such powers and perform such
duties, as shall be determined from time to time by the Board
of Directors.
11. Salaries. The salaries of all officers of the Company shall
be determined by or at the direction of the Board of
Directors.
12. Term of Office. The officers of the Company shall hold office
until their successors are chosen and qualify. Any officer
elected or appointed by the Board of Directors may be removed
at any time, with or without cause, by the affirmative vote of
a majority of the whole Board of Directors.
13. Sureties. The Board of Directors may, by resolution, require
any or all of the officers to give bonds to the Company, with
sufficient surety or sureties, conditioned for the faithful
performance of the duties of their respective offices, and to
comply with such other conditions as may from time to time be
required by the Board of Directors.
ARTICLE VI.
DIVIDENDS AND FINANCE
1. Dividends. Dividends may be declared by the Board of
Directors at any regular or special meeting and paid out of
the net assets of the Company in excess of its capital, or out
of the net profits of the Company to the extent permitted by
the laws of the State of Delaware, and subject to the
conditions and limitations imposed by the Certificate of
Incorporation. The stock transfer books may be closed for the
payment of dividends during such periods, not exceeding sixty
days as from time to time may be fixed by the Board of
Directors. The Board of Directors, however, without closing
<PAGE>
the books of the Company, may declare dividends payable only
to the holders of record at the close of business, on any
business day not more than sixty days prior to the date on
which the dividend is paid.
2. Reserve Fund. Before making any distribution of profits,
there may be set aside out of the net profits of the Company,
such sum or sums as the Board of Directors from time to time
in its absolute discretion deems expedient, as a reserve fund
to meet contingencies, or for equalizing dividends, or for
maintaining any property of the Company, or for any other
purpose, and any profits of any year not distributed as
dividends shall be deemed to have been thus set apart until
otherwise disposed of by the Board of Directors.
3. Execution of Instruments. The Board of Directors or the
Executive Committee, except as in these By-Laws otherwise
provided, may authorize any officer or officers, agent or
agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Company and
such authority may be general or confined to specific
instances; and unless so authorized by the Board of Directors
or the Executive Committee or by the provisions of these
By-Laws, no officer, agent, or employee shall have any power
or authority to bind the Company by any contract or engagement
or to pledge its credit or to render it liable pecuniarily for
any purpose or to any amount.
4. Deposits. All funds of the Company shall be deposited from
time to time to the credit of the Company in such banks, trust
companies, or other depositories as the Board of Directors or
the Executive Committee may select or as may be selected by
any officer or officers, or agent or agents of the Company to
whom such power may from time to time be delegated by the
Board of Directors or by the Executive Committee; and for the
purpose of such deposit the President, a Vice President, the
Treasurer, an Assistant Treasurer, the Secretary, or any other
officer or agent to whom such power may be delegated by the
Board of Directors or by the Executive Committee, may endorse,
assign and deliver checks, drafts and other orders for the
payment of money which are payable to the order of the
Company.
5. Checks, Drafts, Etc. All checks, notes, drafts and other
instruments in writing, for the payment of money, shall be
signed by the President or the Treasurer or an Assistant
Treasurer, or such other officer or officers as shall be
designated by resolution of the Board of Directors or of the
Executive Committee.
6. Fiscal Year. The fiscal year of the Company shall date from
January 1st of each year, unless otherwise provided by the
Board of Directors.
<PAGE>
ARTICLE VII.
BOOKS AND RECORDS
The books, accounts and records of the Company, except as may
be otherwise required by the laws of the State of Delaware,
may be kept outside of the State of Delaware, at such place or
places as the Board of Directors may from time to time
appoint. The Board of Directors shall determine whether and
to what extent the accounts and books of the Company, or any
of them, other than the stock ledger, shall be open to the
inspection of the stockholders, and no stockholder shall have
any right to inspect any account or book or document of the
Company, except as conferred by law or by resolution of the
stockholders or the Board of Directors.
ARTICLE VIII.
NOTICES
1. Notices. Whenever the provisions of law, the Certificate of
Incorporation or these By-Laws require notice to be given to
any director, officer, or stockholder, they shall not be
construed to mean personal notice, except as otherwise
provided pursuant to Section 5 of Article IV; such notice may
be given in writing by depositing the same in a post office or
letter box, in a postpaid, sealed wrapper, addressed to such
director, officer, or stockholder at his or her address as the
same appears in the books of the Company, and the time when
the same shall be mailed shall be deemed to be the time of the
giving of such notice.
2. Waivers of Notice. A waiver of any notice in writing, signed
by a stockholder, director, or officer, whether signed before
or after a meeting, shall be deemed equivalent to a notice
required to be given to any director, officer, or stockholder.
ARTICLE IX.
SEAL
The corporate seal of the Company shall consist of two
concentric circles, between which shall be the name of the
Company, and in the center shall be inscribed the year of its
incorporation and the words "Corporate Seal, Delaware".
<PAGE>
ARTICLE X.
INDEMNIFICATION
1. To the extent not inconsistent with Delaware or other
applicable law in effect from time to time, the Company shall
indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
right of the Company) by reason of the fact that he is or was
a director, officer, employee or agent of the Company, or is
or was serving at the request of the Company as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company,
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed
to the best interests of the Company, and, with respect to any
criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
2. To the extent not inconsistent with Delaware or other
applicable law in effect from time to time, the Company shall
indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action
or suit by or in the right of the Company to procure a
judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the Company, or is
or was serving at the request of the Company as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement
of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the
best interests of the Company and except that no
indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to
be liable to the Company unless and only to the extent that
the Court of Chancery or the court in which such action or
suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
3. To the extent that a director, officer, employee or agent of
the Company has been successful on the merits or otherwise in
defense of any action, suit or proceeding
<PAGE>
referred to in subsections 1 and 2, or in defense of any
claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
4. Any indemnification under subsections 1 and 2 (unless ordered
by a court) shall be made by the Company only as authorized in
the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of
conduct set forth in subsections 1 and 2. Such determination
shall be made (a) by the Board of Directors by a majority vote
of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or (b) if such a quorum is
not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal
counsel in a written opinion, or (c) by the stockholders.
5. Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the Company in advance of
the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall
ultimately be determined that he is not entitled to be
indemnified by the Company as authorized in this Article X.
6. The indemnification and advancement of expenses provided by,
or granted pursuant to, the other subsections of this Article
X shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may
be entitled as a matter of law or which may lawfully be
granted under any agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office.
7. The Company shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity,
or arising out of his status as such, whether or not the
Company would have the power to indemnify him against such
liability under the provisions of this Article X.
8. For purposes of this Article X, references to "the Company"
shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or
is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise, shall stand in the same position under the
provisions of this Article X with respect to the resulting or
<PAGE>
surviving corporation as he would have with respect to such
constituent corporation if its separate existence had
continued.
9. For purposes of this Article X, references to "other
enterprises" shall include employee benefit plans; reference
to "fines" shall include any excise taxes assessed on a person
with respect to any employee benefit plan; and references to
"serving at the request of the Company" shall include any
service as a director, officer, employee or agent of the
Company which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an
employee benefit plan, its participants or beneficiaries; and
a person who acted in good faith and in a manner he reasonably
believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of
the Company" as referred to in this Article X.
10. The indemnification and advancement of expenses provided by or
granted pursuant to this Article X shall, unless otherwise
provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE XI.
AMENDMENTS
The By-Laws of the Company may be amended or repealed by the
affirmative vote of a majority of the members of the Board of
Directors at any regular meeting of the Board or at any
special meeting thereof called for that purpose. Any
provision of the By-Laws adopted by the Board of Directors may
be amended or repealed by the holders of not less than a
majority of the combined voting power of the outstanding
shares of capital stock of the Company entitled to vote
thereon at any annual or special meeting which is called in
accordance with the provisions of these By-Laws and for which
notice of such business has been properly given.
POLAROID CORPORATION
OFFICER'S COMPENSATION EXCHANGE PLAN
TABLE OF CONTENTS
ARTICLE I THE PLAN
1.01 Establishment of the Plan . . . . . . . . . .- 1 -
1.02 Purpose . . . . . . . . . . . . . . . . . . .- 1 -
1.03 Application of Plan . . . . . . . . . . . . .- 1 -
ARTICLE II DEFINITIONS
2.01 Additional Award. . . . . . . . . . . . . . .- 1 -
2.02 Award . . . . . . . . . . . . . . . . . . . .- 1 -
2.03 Beneficiary . . . . . . . . . . . . . . . . .- 2 -
2.04 Board of Directors. . . . . . . . . . . . . .- 2 -
2.05 Code. . . . . . . . . . . . . . . . . . . . .- 2 -
2.06 Committee . . . . . . . . . . . . . . . . . .- 2 -
2.07 Common Stock. . . . . . . . . . . . . . . . .- 2 -
2.08 Company . . . . . . . . . . . . . . . . . . .- 2 -
2.09 Distribution Date . . . . . . . . . . . . . .- 2 -
2.10 Election Date . . . . . . . . . . . . . . . .- 2 -
2.11 Employee. . . . . . . . . . . . . . . . . . .- 3 -
2.12 Estate. . . . . . . . . . . . . . . . . . . .- 3 -
2.13 Fair Market Value . . . . . . . . . . . . . .- 3 -
2.14 Long-Term Disability. . . . . . . . . . . . .- 3 -
2.15 Participant . . . . . . . . . . . . . . . . .- 4 -
2.16 Plan Year . . . . . . . . . . . . . . . . . .- 4 -
2.17 Spouse. . . . . . . . . . . . . . . . . . . .- 4 -
2.18 Stock Equity Plan . . . . . . . . . . . . . .- 4 -
2.19 Subsidiary. . . . . . . . . . . . . . . . . .- 4 -
ARTICLE III PARTICIPATION
3.01 Participant . . . . . . . . . . . . . . . . .- 4 -
3.02 Vesting . . . . . . . . . . . . . . . . . . .- 4 -
3.03 Participant is Not a Shareholder. . . . . . .- 5 -
3.04 Effect of Termination of Employment . . . . .- 5 -
3.05 Death of Participant. . . . . . . . . . . . .- 5 -
ARTICLE IV BENEFITS
4.01 Award . . . . . . . . . . . . . . . . . . . .- 5 -
4.02 Special Award . . . . . . . . . . . . . . . .- 5 -
4.03 Forfeitures from Stock Equity . . . . . . . .- 6 -
4.04 Stock Split, Special Dividends, etc . . . . .- 6 -
ARTICLE V DISTRIBUTION OF BENEFITS
5.01 Value of Distribution . . . . . . . . . . . .- 7 -
5.02 Distribution Date . . . . . . . . . . . . . .- 7 -
5.03 Timing of Distribution. . . . . . . . . . . .- 7 -
5.04 Form of Distribution. . . . . . . . . . . . .- 8 -
<PAGE>
ARTICLE VI FINANCING . . . . . . . . . . . . . . . . . .- 8 -
6.01 Financing . . . . . . . . . . . . . . . . . .- 8 -
6.02 Unsecured Interest. . . . . . . . . . . . . .- 8 -
ARTICLE VII ADMINISTRATION
7.01 Administrator . . . . . . . . . . . . . . . .- 8 -
7.02 Duties of Administrator . . . . . . . . . . .- 8 -
ARTICLE VIII REVIEW PROCEDURE
8.01 Claims for Benefits . . . . . . . . . . . . .- 9 -
8.02 Review Procedure. . . . . . . . . . . . . . .- 9 -
8.03 Decision on Review of Claim Denial. . . . . .- 9 -
8.04 Standard of Review. . . . . . . . . . . . . - 10 -
ARTICLE IX MISCELLANEOUS PROVISIONS
9.01 Applicable Law. . . . . . . . . . . . . . . - 10 -
9.02 Expenses. . . . . . . . . . . . . . . . . . - 10 -
9.03 Limitation of Rights. . . . . . . . . . . . - 10 -
9.04 Gender and Number . . . . . . . . . . . . . - 10 -
9.05 Illegality of a Particular Provision. . . . - 11 -
9.06 Non-Assignability . . . . . . . . . . . . . - 11 -
9.07 Nontransferability. . . . . . . . . . . . . - 11 -
9.08 Indemnification . . . . . . . . . . . . . . - 11 -
9.09 Taxes . . . . . . . . . . . . . . . . . . . - 11 -
ARTICLE X EFFECTIVE DATE, AMENDMENT AND TERMINATION AND
LIMITATION OF RIGHTS
10.01 Effective Date. . . . . . . . . . . . . . . - 12 -
10.02 Right to Amend, Modify or Terminate . . . . - 12 -
<PAGE>
Document Control No.: OCEP #4
POLAROID CORPORATION
OFFICER'S COMPENSATION EXCHANGE PLAN
Originally Effective January 1, 1988
As Amended January 1, 1993
<PAGE>
POLAROID CORPORATION
OFFICER'S COMPENSATION EXCHANGE PLAN
ARTICLE I
THE PLAN
1.01 Establishment of the Plan. Polaroid Corporation hereby
establishes an unfunded deferred compensation plan called the
"Officer's Compensation Exchange Plan" (the "Plan").
1.02 Purpose. The purpose of the Officer's Compensation Exchange Plan
is to promote the interests of Polaroid Corporation (the
"Company") and its stockholders by attracting and retaining
management. The Plan is designed to align the interests of the
Officers participating in the Plan with the interests of
shareholders by exchanging five percent of their base pay for an
Award under this Plan and therefore offering an incentive
compensation vehicle based upon the growth of shareholders'
equity and the value of the Company.
1.03 Application of Plan. The terms of this Plan apply only to
Participants in current employment of the Company or a Subsidiary
on or after September 1, 1988.
ARTICLE II
DEFINITIONS
2.01 Additional Award. Additional Award shall mean an additional
benefit allocated to a Participant's account as defined in
Section 4.03 hereof.
2.02 Award. Award shall mean the benefit allocated each Allocation
Period to a Participant's account as defined in Section 4.01
hereof.
<PAGE>
2.03 Beneficiary. Beneficiary shall mean the person or persons
designated by a Participant to receive any residual benefits owed
the Participant under this Plan upon his death (identified by
filing the proper designation form with the Company). In the
event that the Beneficiary is not specifically designated, the
Spouse shall be the deemed Beneficiary. If the Participant does
not have a Spouse and has not designated a person to be the
Beneficiary, the deemed Beneficiary shall be the Participant's
Estate.
2.04 Board of Directors. Board of Directors shall mean the Board of
Directors of the Company.
2.05 Code. Code shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations and rulings
thereunder.
2.06 Committee. Committee shall mean the committee selected by the
Chief Executive Officer of the Company which is comprised of a
Chairman and at least two members as defined in Section 7.01
hereof.
2.07 Common Stock. Common Stock shall mean the authorized common
stock of the Company having a par value of $1.00 per share.
2.08 Company. Company shall mean Polaroid Corporation, a Delaware
corporation.
2.09 Distribution Date. Distribution Date shall mean the date when a
Participant shall be entitled to receive his account as defined
in Section 5.02 of this Plan.
2.10 Election Date. Election Date shall mean the date on which a
Participant selects a Distribution Date. This election must be
<PAGE>
made in writing to the Committee on or before August 31, 1997,
and shall be irrevocable.
2.11 Employee. Employee shall mean any "Full-Time Permanent" employee
and any "Part-Time Permanent" employee of the Company, as defined
by the Company in a uniform and non-discriminatory manner.
2.12 Estate. Estate shall mean:
(a) The formal estate of a decedent; or,
(b) Any other person or entity designated by the Plan
Administrator of the Stock Equity Plan or a court of
competent jurisdiction to receive benefits to be paid to the
decedent's estate.
2.13 Fair Market Value. Fair Market Value shall mean the higher of:
(a) The closing price on the New York Stock Exchange for Common
Stock on the trading day immediately preceding the
Distribution Date; or,
(b) The average of the means of the high and low prices of
Common Stock on the New York Stock Exchange for each of the
five trading days immediately preceding the Distribution
Date.
2.14 Long-Term Disability. Long-Term Disability shall mean a physical
or mental condition arising after an Employee has become a
Participant which totally prevents, and for an indefinite period
of time will prevent, the Participant from engaging for
remuneration or profit in any occupation or employment other than
an occupation or employment engaged in for the purpose of
rehabilitation and which is not incompatible with a finding of
total disability. The determination as to whether a Participant
is so disabled shall be made pursuant to the terms of the Stock
Equity Plan, and under the policy adopted thereunder.
<PAGE>
2.15 Participant. Participant shall mean an Employee qualified to
participate in the Plan in accordance with Section 3.01 hereof.
A Participant ceases to be a Participant when all funds which he
is entitled to receive under this Plan have been distributed in
accordance with its terms.
2.16 Plan Year. Plan Year shall mean a calendar year.
2.17 Spouse. Spouse shall mean with respect to a Participant, the
person to whom such Participant is legally married, and with
respect to a deceased Participant, the widow or widower of such
deceased Participant who was legally married to such Participant
on the date of his death and who, if such death was due to
illness rather than accident or other reason, was legally married
to such Participant for not less than six months immediately
preceding such death.
2.18 Stock Equity Plan. Stock Equity Plan shall mean the Polaroid
Stock Equity Plan, originally effective January 1, 1988 and as
amended from time to time.
2.19 Subsidiary. Subsidiary shall mean any corporation of which more
than fifty percent (50%) of the outstanding shares of voting
stock are beneficially owned directly or indirectly by the
Company.
ARTICLE III
PARTICIPATION
3.01 Participant. A current Employee designated by the Compensation
Committee of the Board of Directors, in its sole discretion,
shall become a Participant no later than the date he has his base
pay reduced for the purpose of participation in this Plan.
3.02 Vesting. Subject to claims of general creditors of the Company
as set forth in Article VI hereof, a Participant shall have a
<PAGE>
nonforfeitable right to benefits allocated to his account under
this Plan.
3.03 Participant is Not a Shareholder. A Participant shall not have
any rights as a stockholder with respect to any benefit allocated
to his account.
3.04 Effect of Termination of Employment. If a Participant's
employment terminates prior to his Distribution Date, he shall be
entitled to an Award for the Allocation Period in which he
terminates only if he is entitled to an allocation of Common
Stock under the Stock Equity Plan. A terminated Participant
shall not be entitled to any further Award.
3.05 Death of Participant. If a Participant's Distribution Date is
based on the Participant's death, the Participant's account
balance shall be distributed to his Beneficiary as soon as
practicable after the Committee is notified of his death.
ARTICLE IV
BENEFITS
4.01 Award. Every time there is an allocation based on Compensation
under Section 5.01 of the Stock Equity Plan, a Participant shall
receive an allocation of units equal to fifty percent (50%) of
the Common Stock which would be allocated to him under the Stock
Equity Plan based on the formula set forth therein and
disregarding any limitations imposed by the Code (including but
not limited to the Section 415 limits, and the $200,000 (indexed)
limit on the definition of compensation) and presuming the
Participant is a participant in the Stock Equity Plan.
4.02 Special Award.
(a) With the exception of Subsection 4.02(b) below, every time
there is a special allocation or distribution of earnings
based upon participant account balances in the Stock Equity
<PAGE>
Plan, an equivalent Special Award of units shall be made in
this Plan on the basis of the Participant's account balance.
(b) Consistent with the special allocation in the Stock Equity
Plan as a result of the 1989 Polaroid Self-Tender, a Special
Award shall be made to each Participant on an equivalent
basis as the allocation in the Stock Equity Plan, using the
account balances in this Plan and assuming for purposes of
the calculation of this Special Award that each Participant
tendered.
4.03 Forfeitures from Stock Equity. In the event that a Participant
is unable to receive his full allocation of Common Stock in the
Stock Equity Plan using the allocation formula in such plan
because of limitations imposed by the Code (including but not
limited to the Section 415 limits, and the $200,000 (indexed)
limit on the definition of compensation); the Participant shall
receive an Additional Award equal to the difference between the
amount in (a) and (b) stated below:
(a) The allocation under the Stock Equity Plan disregarding any
limitations on such allocation imposed by the Code; and,
(b) The amount of the allocation under the Stock Equity Plan
which is actually made.
4.04 Stock Split, Special Dividends, etc. In the event of a
reorganization, recapitalization, stock split, stock dividend,
combination of shares, exchange of shares, merger, consolidation,
rights offering, or any other change in the corporate structure
or shares of Common Stock that effects the Common Stock in the
Stock Equity Plan, the Committee, in its sole discretion, shall
make adjustments to Participant's Accounts in a manner consistent
with the manner Common Stock is handled in the Stock Equity Plan.
<PAGE>
ARTICLE V
DISTRIBUTION OF BENEFITS
5.01 Value of Distribution. The value of each Participant's account
shall be equal to a Participant's account on the Distribution
Date multiplied by the Fair Market Value on such Date.
5.02 Distribution Date.
(a) The Distribution Date shall mean any date, or alternative
dates, selected by a Participant on his Election Date. Such
Distribution Date must be at least:
1. One year after the Participant's Election Date;
2. Six months after any award (i.e., Award, Special Award,
or Additional Award) is made; and,
3. For active Participant's, under no circumstance may
such date be prior to August 31, 1998, unless such date
is based on the Participant's death, retirement,
termination or Long-Term Disability.
(b) If the Participant has failed to select a Distribution Date,
the Distribution Date shall be the earlier of:
1. The date of the Participant's retirement from the
Company, and/or any Subsidiary, if applicable;
2. The date six months after the last award following the
Participant's date of termination from the Company,
and/or any Subsidiary, if applicable;
3. The date of the Participant's separation of service
from the Company or Subsidiary by reason of Long-Term
Disability;
4. The date of the Participant's death; or,
5. For an allocation which occurs after a Participant's
retirement, death, or separation from service by reason
of Long-Term Disability, the date of such allocation.
5.03 Timing of Distribution. Payment of a Participant's account
balance shall be made as soon as practical after the Distribution
Date.
<PAGE>
5.04 Form of Distribution. The form of distribution of the benefits
under this Plan shall be in cash.
ARTICLE VI
FINANCING
6.01 Financing. The benefits under this Plan shall be paid out of the
general assets of the Company.
6.02 Unsecured Interest. No Participant hereunder shall have any
interest whatsoever in any specific asset of the Company. To the
extent that any person acquires a right to receive payments under
this Plan, such right shall be no greater than the right of any
unsecured general creditor of the Company.
ARTICLE VII
ADMINISTRATION
7.01 Administrator. The Plan shall be administered by the Committee
designated by the Chief Executive Officer of the Company and
shall consist of not less than a Chairman and at least two other
members.
7.02 Duties of Administrator.
(a) The Committee shall administer the Plan in accordance with
its terms and shall have all the powers necessary to carry
out the provisions of the Plan. The Committee shall have
the exclusive discretionary authority to interpret the Plan
for any questions which may arise, including without
limitation questions relating to eligibility for or the
amount of benefits. Notwithstanding the foregoing, any
member of the Committee who is a Participant under the Plan
shall not vote on any question relating exclusively to
himself. Any exercise of discretion by the Committee shall
be exercised in a non-discriminatory manner.
<PAGE>
(b) The Committee shall keep a permanent record of its actions
with respect to the Plan which shall be available for
inspection by appropriate parties as may be required by law.
(c) The Committee may engage and consult with counsel,
accountants, specialists and other persons as the Committee
deems necessary and desirable. Members of the Committee
shall be indemnified by the Company with respect to any
action taken or omitted by the Committee in good faith
reliance on the advice of such persons provided that the
Committee has acted prudently in selecting or retaining such
persons, to which end the Committee shall periodically
review such persons' performance.
ARTICLE VIII
REVIEW PROCEDURE
8.01 Claims for Benefits. All claims for benefits should be made
through the Benefits Office.
8.02 Review Procedure. If a Participant is denied benefits, wholly or
partially under this Plan, the Participant or Beneficiary may
file a written request for review with the Compensation Committee
of the Board of Directors within sixty (60) days following the
date of denial. The Participant or Beneficiary shall have the
right:
(a) To review pertinent documents; and,
(b) To submit written comments.
8.03 Decision on Review of Claim Denial. Within sixty (60) days of
receiving a request to review a denial of benefits under this
Plan, the Compensation Committee of the Board of Directors shall
render a decision, unless special circumstances exist which
require an extension of time for processing the claim. If
additional time is necessary, the Participant or Beneficiary will
be notified of the delay within sixty (60) days and will receive
<PAGE>
a decision in no later than 120 days from the day of the initial
request.
8.04 Standard of Review. The interpretation and construction by the
Compensation Committee of the Board of Directors of any
provisions of this Plan regarding any Awards granted, or any
award distribution pursuant to this Plan, shall be final, binding
and conclusive, unless arbitrary or capricious or otherwise
prohibited by law. Any exercise of discretion by the
Compensation Committee of the Board of Directors shall be
exercised in a non-discriminatory manner.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01 Applicable Law. This instrument shall be construed in accordance
with and governed by the laws of the Commonwealth of
Massachusetts to the extent not superseded by the laws of the
United States.
9.02 Expenses. The cost of benefit payments from this Plan and the
expenses of administering the Plan shall be borne by the Company.
9.03 Limitation of Rights. Neither the adoption and maintenance of
the Plan, nor anything contained herein, shall, with respect to
any present or former Participant, or other officer, Employee or
employee of any Subsidiary, be deemed to:
(a) Limit the right of Polaroid or any Subsidiary to discharge
or discipline any such person or otherwise terminate or
modify the terms of his employment; or,
(b) Create any contract or other right or interest under the
Plan or in any funds hereunder other than as specifically
provided herein.
9.04 Gender and Number. Unless the context clearly requires
otherwise, the masculine pronoun whenever used shall include the
feminine and neuter pronoun, the singular shall include the
plural, and vice versa.
<PAGE>
9.05 Illegality of a Particular Provision. The illegality of any
particular provision of this document shall not affect the other
provisions, and the document shall be construed in all respects
as if such invalid provision were omitted.
9.06 Non-Assignability. A Participant's interest under this Plan
shall not be subject at any time or in any manner to alienation,
sale, transfer, assignment, pledge, attachment, garnishment or
encumbrance of any kind and any attempt to deliver, sell,
transfer, assign, pledge, attach, garnish or otherwise encumber
such interest shall be void and any interest so encumbered will
terminate.
9.07 Nontransferability. In no event shall the Company make any
payment under this Plan to any assignee or creditor of a
Participant or of a Beneficiary, except as otherwise required by
law. Prior to the time of a payment hereunder, a Participant or
a Beneficiary shall not have any rights by way of anticipation or
otherwise to assign or otherwise dispose of any interest under
this Plan, nor shall rights be assigned or transferred by
operation of law (other than by laws of descent and distribution,
if applicable).
9.08 Indemnification. Members of the Board of Directors or the
Committee shall not be liable for any action or determination
taken or made in good faith with respect to this Plan, any Awards
granted or any award distributions under this Plan. Each member
of the Board of Directors and the Committee shall be indemnified
by the Company against any losses incurred in such administration
of the Plan, unless his action constitutes serious and willful
misconduct.
9.09 Taxes. The Company shall have the right to deduct from the award
distributions any federal, state or local taxes required by law
to be withheld with respect to such distribution.
<PAGE>
ARTICLE X
EFFECTIVE DATE, AMENDMENT AND
TERMINATION AND LIMITATION OF RIGHTS
10.01 Effective Date. This Plan, originally adopted by the Board of
Directors on July 25, 1989, effective as of January 1, 1988, is
amended effective January 1, 1993.
10.02 Right to Amend, Modify or Terminate. The Company reserves the
right to amend, modify or terminate the Plan or payments
thereunder at any time by action of the Board of Directors and
does not intend to submit any amendments or modifications to the
Plan to stockholders of the Company for their approval. However,
without the consent of any Participant or his Beneficiary, if
applicable, no such amendment or termination shall reduce or
diminish such person's right to receive any benefit accrued
hereunder prior to the date of such amendment or termination.
Notwithstanding the foregoing:
(a) The Chief Executive Officer may adopt any amendments to the
Plan that do not materially and adversely affect the
benefits to a Participant accrued under the Plan and may
adopt any amendments to the Plan that do not materially
affect the cost to the Company (excluding any amendment that
relates exclusively to himself); and,
(b) Under no circumstance shall this Plan be amended more than
once every six months, other than to comport with changes in
the Code or ERISA.
IN WITNESS WHEREOF, Polaroid has caused this instrument to be executed
this 1st day of June, 1993, to be effective as of January 1, 1993.
ATTEST: POLAROID CORPORATION
RICHARD F. deLIMA By: I. M. BOOTH
Secretary Chief Executive Officer
THE 1993 POLAROID STOCK INCENTIVE PLAN
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
1.01 Award . . . . . . . . . . . . . . . . . . . . .(1)
1.02 Board or Board of Directors . . . . . . . . . .(1)
1.03 Code. . . . . . . . . . . . . . . . . . . . . .(1)
1.04 Committee . . . . . . . . . . . . . . . . . . .(2)
1.05 Company . . . . . . . . . . . . . . . . . . . .(2)
1.06 Disinterested Person. . . . . . . . . . . . . .(2)
1.07 Exchange Act. . . . . . . . . . . . . . . . . .(2)
1.08 Fair Market Value . . . . . . . . . . . . . . .(2)
1.09 Incentive Stock Option. . . . . . . . . . . . .(2)
1.10 Nonstatutory Stock Option . . . . . . . . . . .(2)
1.11 Option. . . . . . . . . . . . . . . . . . . . .(2)
1.12 Option Price. . . . . . . . . . . . . . . . . .(2)
1.13 Participant . . . . . . . . . . . . . . . . . .(3)
1.14 Plan. . . . . . . . . . . . . . . . . . . . . .(3)
1.15 Restricted Stock Awards . . . . . . . . . . . .(3)
1.16 Securities Act. . . . . . . . . . . . . . . . .(3)
1.17 Stock . . . . . . . . . . . . . . . . . . . . .(3)
1.18 Stock Appreciation Right. . . . . . . . . . . .(3)
1.19 Stock Incentive Agreement or Agreement. . . . .(4)
1.20 Subsidiary. . . . . . . . . . . . . . . . . . .(4)
ARTICLE II PARTICIPATION
2.01 Participation . . . . . . . . . . . . . . . . .(4)
ARTICLE III SHARES OF STOCK SUBJECT TO THE PLAN
3.01 Limitations . . . . . . . . . . . . . . . . . .(4)
3.02 Availability of Shares Once Issued Under the
Plan. . . . . . . . . . . . . . . . . . . . .(5)
3.03 Adjustments To Grants Once Issued . . . . . . .(5)
3.04 Grants and Agreement. . . . . . . . . . . . . .(6)
ARTICLE IV OPTIONS
4.01 Option Exercise . . . . . . . . . . . . . . . .(6)
4.02 Nonstatutory Stock Options. . . . . . . . . . .(6)
4.03 Vesting of Options. . . . . . . . . . . . . . .(6)
ARTICLE V INCENTIVE STOCK OPTIONS
5.01 General . . . . . . . . . . . . . . . . . . . .(7)
ARTICLE VI STOCK APPRECIATION RIGHTS
6.01 Grant and Exercise of Stock Appreciation
Rights. . . . . . . . . . . . . . . . . . . .(7)
6.02 Terms and Conditions of Stock Appreciation
Rights. . . . . . . . . . . . . . . . . . . .(8)
<PAGE>
ARTICLE VII RESTRICTED STOCK AWARDS
7.01 Agreement . . . . . . . . . . . . . . . . . . .(8)
7.02 Rights as a Shareholder . . . . . . . . . . . .(8)
7.03 Restrictions. . . . . . . . . . . . . . . . . .(9)
7.04 Vesting of Restricted Stock . . . . . . . . . .(9)
ARTICLE VIII STOCK CERTIFICATES
8.01 Stock Certificates. . . . . . . . . . . . . . (10)
ARTICLE IX DIVIDENDS
9.01 Dividends . . . . . . . . . . . . . . . . . . (10)
ARTICLE X PLAN ADMINISTRATION
10.01 Plan Administration . . . . . . . . . . . . . (11)
ARTICLE XI MISCELLANEOUS PROVISIONS
11.01 Applicable Law. . . . . . . . . . . . . . . . (12)
11.02 Expenses. . . . . . . . . . . . . . . . . . . (12)
11.03 Gender and Number . . . . . . . . . . . . . . (12)
11.04 Headings Not Part of the Plan . . . . . . . . (12)
11.05 Indemnification . . . . . . . . . . . . . . . (12)
11.06 Limitation of Rights. . . . . . . . . . . . . (12)
11.07 No Distribution Until Compliance with Legal
Requirements. . . . . . . . . . . . . . . . (13)
11.08 Timing of Grants. . . . . . . . . . . . . . . (13)
11.09 Non-Assignability . . . . . . . . . . . . . . (13)
11.10 Nontransferability. . . . . . . . . . . . . . (13)
11.11 Other Compensation Plans. . . . . . . . . . . (13)
11.12 Plan Binding on Successors. . . . . . . . . . (14)
11.13 Tax Withholding . . . . . . . . . . . . . . . (14)
11.14 Non-Contravention of Securities Laws. . . . . (14)
11.15 Unenforceability of a Particular Provision. . (15)
ARTICLE XII CHANGE OF CONTROL
12.01 Acceleration. . . . . . . . . . . . . . . . . (15)
12.02 Special Rights. . . . . . . . . . . . . . . . (15)
12.03 Limitation on Special Rights. . . . . . . . . (17)
12.04 Termination of Participant; Modification of
the Plan. . . . . . . . . . . . . . . . . . (17)
12.05 Event Price . . . . . . . . . . . . . . . . . (18)
12.06 Trigger Date. . . . . . . . . . . . . . . . . (19)
12.07 1990 Plan Options . . . . . . . . . . . . . . (19)
ARTICLE XIII PERMANENCY OF THE PLAN AND PLAN TERMINATION
13.01 Effective Date. . . . . . . . . . . . . . . . (19)
13.02 Termination, Amendment, and Modification of
the Plan. . . . . . . . . . . . . . . . . . (19)
<PAGE>
Document Control No.: STK-93-1
THE 1993 POLAROID STOCK INCENTIVE PLAN
POLAROID CORPORATION
Cambridge, Massachusetts
Effective May 11, 1993
<PAGE>
THE 1993 POLAROID STOCK INCENTIVE PLAN
The purpose of the Plan is to advance the interests of the
Company and its shareholders by affording officers and other key
employees and former officers and other key employees of the
Company and its Subsidiaries an opportunity to increase their
proprietary interest in the Company by the grant of Awards to
such employees under the terms set forth herein. The Company
seeks to motivate present employees as well as attract highly
competent individuals whose judgement, initiative, leadership,
and continued effort contribute to the success of the Company and
its Subsidiaries. The Company believes that this Plan can give
an incentive to managers to increase revenues and profits.
ARTICLE I
DEFINITIONS
1.01 Award. Award shall mean an incentive award granted under the
Plan, whether in the form of Options, Stock Appreciation Rights,
Restricted Stock or any other form of consideration (which may
provide for settlement in shares of Stock, cash and/or a
combination thereof) determined by the Committee to be consistent
with the purposes of the Plan, including but not limited to
restricted units, phantom stock, performance awards, performance
units, performance shares, stock appreciation shares, limited
stock appreciation rights, stock acquisition rights, valuation
protection rights, reload options or any other type of award or
combination or derivative of various types of awards.
1.02 Board or Board of Directors. Board or Board of Directors shall
mean the Board of Directors of the Company.
1.03 Code. Code shall mean the Internal Revenue Code of 1986, as
amended, unless otherwise specifically provided herein.
<PAGE>
1.04 Committee. Committee shall mean a Committee of the Board
consisting of members of the Board of Directors who are
Disinterested Persons.
1.05 Company. Company shall mean Polaroid Corporation, a Delaware
corporation, and any successor thereof.
1.06 Disinterested Person. Disinterested Person shall have the
meaning set forth in Rule 16b-3(c)(2)(i) promulgated under the
Exchange Act.
1.07 Exchange Act. Exchange Act shall mean the Securities Exchange
Act of 1934, as amended.
1.08 Fair Market Value. Fair Market Value of the Stock shall mean the
last sale price at which Stock is traded on any given date or, if
no Stock is traded on such date, the most recent prior date on
which Stock was traded, as reflected in the New York Stock
Exchange Composite Transactions Index.
1.09 Incentive Stock Option. Incentive Stock Option shall have the
meaning given to it by Section 422 of the Code and as further
defined in Article V hereof.
1.10 Nonstatutory Stock Option. Nonstatutory Stock Option shall mean
any Option granted by the Company pursuant to this Plan which is
not an Incentive Stock Option.
1.11 Option. Option shall mean an option granted by the Company to
purchase Stock pursuant to the provisions of this Plan and the
Agreement executed pursuant hereto.
1.12 Option Price. Option Price shall mean the price per share of
Stock purchasable under an Option. The Option Price shall be
determined by the Committee at the time of grant but, in the case
<PAGE>
of an Incentive Stock Option, shall not be less than the Fair
Market Value on the date of grant.
1.13 Participant. Participant shall mean an employee or former
employee of the Company or one of its Subsidiaries who has
received an Award granted by the Committee hereunder.
1.14 Plan. Plan shall mean the 1993 Polaroid Stock Incentive Plan.
1.15 Restricted Stock Awards. A Restricted Stock Award shall mean a
grant made by the Committee entitling the Participant to acquire,
at no cost or for a purchase price determined by the Committee at
the time of grant, shares of Stock subject to such restrictions
and conditions as the Committee may determine at the time of
grant ("Restricted Stock").
1.16 Securities Act. Securities Act shall mean the Securities Act of
1933, as amended from time to time.
1.17 Stock. Stock shall mean common stock, par value $1 per share,
issued by the Company.
1.18 Stock Appreciation Right. A Stock Appreciation Right shall mean
a grant entitling the Participant to receive an amount in cash or
shares of Stock or a combination thereof having a value equal to
(or if the Committee shall so determine at the time of a grant,
less than) the excess of the Fair Market Value of a share of
Stock on the date of exercise over the Fair Market Value of a
share of Stock on the date of grant (or over the Option Price, if
the Stock Appreciation Right was granted in tandem with an
Option) multiplied by the number of shares with respect to which
the Stock Appreciation Right shall have been exercised, with the
Committee having sole discretion to determine the form of
payment. A Stock Appreciation Right is further defined in
Article VI hereof.
<PAGE>
1.19 Stock Incentive Agreement or Agreement. Stock Incentive
Agreement or Agreement shall mean the agreement as described in
Section 3.04 of the Plan between the Company and the Participant
under which such Participant receives an Award pursuant to this
Plan.
1.20 Subsidiary. Subsidiary shall mean any corporation of which more
than fifty percent of the outstanding shares of voting stock are
beneficially owned directly or indirectly by the Company.
ARTICLE II
PARTICIPATION
2.01 Participation. A grant under this Plan may be made by the
Committee to:
(A) Any officer or other key employee of the Company or a
Subsidiary; or,
(B) Any former officer or other key employee of the Company or
Subsidiary whose employment ceased during the twelve months
immediately preceding the date of such grant.
ARTICLE III
SHARES OF STOCK SUBJECT TO THE PLAN
3.01 Limitations.
(A) Subject to adjustments pursuant to the provisions of Section
3.03 hereof, the number of shares of Stock or Stock
equivalents which may be granted hereunder to Participants
under all forms of Awards shall not exceed 3,000,000 shares
plus the number of shares available for grant under the
Polaroid Stock Incentive Plan approved by the Company's
shareholders in 1990 (the "1990 Plan"), as of the date of
approval of this Plan by the Company's stockholders (the
"Approval Date"), plus the number of shares that become
available under the 1990 Plan after the Approval Date due to
the lapse, termination or forfeiture of grants under the
1990 Plan, including shares issued in lieu of or upon
<PAGE>
reinvestment of dividends arising from grants. No grants
will be made under the 1990 Plan after the Approval Date.
(B) For purposes of this Section 3.01, the shares of Stock that
shall be counted toward such limitation shall include all
Stock:
(1) Issued or issuable pursuant to Options that have been
or may be exercised;
(2) Subject to Stock Appreciation Rights that have been or
may be exercised (other than Stock Appreciation Rights
granted in tandem with outstanding Options or any
limited stock appreciation rights deemed to be granted
pursuant to Article XII); and,
(3) Issued as, or subject to issuance as Restricted Stock.
(C) Shares of Stock subject to grants under this Plan shall be
authorized and unissued shares of Stock or treasury stock.
3.02 Availability of Shares Once Issued Under the Plan. Once grants
of Awards have lapsed, terminated or have been forfeited, the
Committee shall have the sole discretion to issue a new grant to
any Participant, covering the number of shares to which such
lapsed, terminated or forfeited grant related, provided that the
Participant has received no monetary benefits of ownership
therefrom, such as dividends.
3.03 Adjustments To Grants Once Issued. In the event that the
outstanding shares of Stock are changed into or exchanged for a
different number or kind of shares or other securities of the
Company or of another corporation by reason of merger,
consolidation, other reorganization, recapitalization,
reclassification, combination of shares, stock split-up, or stock
dividend, the Committee shall make such corresponding
adjustments, if any, as deemed appropriate in its sole
discretion. The Committee may adjust the number and kind of
shares which may be granted under the Plan, the maximum number
and kind of shares which may be granted to any one eligible
<PAGE>
Participant, and the number, the Option Price, and the kind of
shares or property subject to each outstanding grant.
3.04 Grants and Agreement. Each grant of an Award under this Plan
shall be evidenced by a written Stock Incentive Agreement dated
as of the date of the grant and executed by the Company and the
Participant. This Agreement shall set forth the terms and
conditions of such Award, as may be determined by the Committee
consistent with this Plan, and if such Agreement relates to the
grant of an Option, shall indicate whether the Option that it
evidences, if applicable, is intended to be an Incentive Stock
Option or a Nonstatutory Stock Option.
ARTICLE IV
OPTIONS
4.01 Option Exercise. Subject to Federal and State statutes then
applicable, the terms and procedures by which an Option may be
exercised shall be set forth in the Participant's Agreement or in
procedures established by the Committee. The Committee may
permit payment of the Option Price to be made through the tender
of cash or securities, the withholding of Stock or cash to be
received through Awards, or any other arrangement satisfactory to
the Committee.
4.02 Nonstatutory Stock Options. The Committee may grant Nonstatutory
Stock Options under this Plan. Such Nonstatutory Stock Options
must comply with all requirements of this Plan except for those
contained in Article V, Article VI, and Article VII hereof.
4.03 Vesting of Options. The Stock Incentive Agreement shall specify
the date or dates on which the Participant may begin to exercise
all or a portion of his Option. Subsequent to such date or
dates, the option shall be deemed "vested." Notwithstanding the
terms of any Stock Incentive Agreement, the Committee at any time
<PAGE>
may accelerate such date or dates and otherwise waive or amend
any conditions of the grant.
A Participant's subsequent transfer or disposition of any
Stock secured through the grant shall be subject to any Federal
and State laws then applicable, specifically securities laws.
ARTICLE V
INCENTIVE STOCK OPTIONS
5.01 General. All Incentive Stock Options shall comply with all of
the restrictions and limitations set forth in Section 422 of the
Code and this Article. To the extent that any Option does not
qualify as an Incentive Stock Option, it shall constitute a
Nonstatutory Stock Option.
ARTICLE VI
STOCK APPRECIATION RIGHTS
6.01 Grant and Exercise of Stock Appreciation Rights. Stock
Appreciation Rights may be granted to Participants by the
Committee in tandem with, or independently of, any Option granted
pursuant to Article IV or Article V of this Plan. In the case of
a Stock Appreciation Right granted in tandem with a Nonstatutory
Stock Option, such Stock Appreciation Right may be granted either
at or after the time of the grant of such Nonstatutory Stock
Option. In the case of a Stock Appreciation Right granted in
tandem with an Incentive Stock Option, such Stock Appreciation
Right may be granted only at the time of the grant of such
Incentive Stock Option.
A Stock Appreciation Right, or applicable portion thereof
granted in tandem with an Option, shall terminate and no longer
be exercisable upon the termination or exercise of the related
Option. However, if a Stock Appreciation Right is granted with
respect to less than the full number of shares covered by a
related Option, such Stock Appreciation Right shall terminate
only if and to the extent that the number of shares covered by
<PAGE>
the exercise or termination of the related Option exceeds the
number of shares not covered by such Stock Appreciation Right.
6.02 Terms and Conditions of Stock Appreciation Rights. Stock
Appreciation Rights shall be subject to such terms and conditions
as shall be determined from time to time by the Committee and
embodied in the Agreements and in procedures established by the
Committee. The Committee at any time may accelerate the
exercisability of any Stock Appreciation Right and otherwise
waive or amend any conditions of the grant of a Stock
Appreciation Right.
ARTICLE VII
RESTRICTED STOCK AWARDS
7.01 Agreement. If the purchase of Restricted Stock is required by
the Agreement, a Participant who is granted a Restricted Stock
Award shall not have any rights with respect to such grant unless
the Participant shall have accepted the grant within 60 days (or
such shorter time as the Committee may specify) following the
date of the grant by making payment to the Company by certified
or bank check or other instrument acceptable to the Committee in
an amount equal to the specified purchase price, if any, of the
shares covered by the grant and by executing and delivering to
the Company an Agreement in such form as the Committee shall
determine.
7.02 Rights as a Shareholder. After the Restricted Stock has been
recorded in the stock ledger of the Company and:
(A) Upon complying with Section 7.01 above, if the purchase of
Restricted Stock is required by the Agreement; or,
(B) Immediately, if no purchase of Restricted Stock is required
by the Agreement,
a Participant shall have all the rights of a shareholder with
respect to such Restricted Stock including voting and dividend
rights, subject to non-transferability restrictions and Company
<PAGE>
repurchase or forfeiture rights described in this Section and
Section 7.03, and subject to such other conditions (including but
not limited to condition on voting and dividend rights) as are
contained in the Agreement. Unless the Committee shall otherwise
determine, certificates evidencing shares of Restricted Stock
shall remain in the possession of the Company until such shares
are vested as provided in Section 7.04 below and the Agreement.
7.03 Restrictions. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged, or otherwise encumbered or
disposed of except as specifically provided herein. Restrictions
on shares of Restricted Stock shall be set forth in a Stock
Incentive Agreement and may include such vesting restrictions as
the Committee shall determine, including but not limited to
restrictions related to timing, profitability of the Company, and
growth of the share price. In the event of a Participant's
termination of employment with the Company and its Subsidiaries
for any reason (including death) prior to the date shares of
Restricted Stock awarded to such Participant become vested, the
Company shall have the right, at the discretion of the Committee,
to repurchase such shares at their purchase price, or to require
forfeiture of such shares to the Company if acquired at no cost,
from such Participant or Participant's legal representative.
7.04 Vesting of Restricted Stock. The Committee at the time of grant
shall specify the date or dates (which may depend upon or be
related to the attainment of performance goals and other
conditions) on which the restrictions imposed upon the Restricted
Stock and the Company's right of repurchase or forfeiture shall
lapse. Subsequent to such date or dates, the shares on which all
restrictions have lapsed shall no longer be Restricted Stock and
shall be deemed "vested." The Committee at any time may
accelerate such date or dates and otherwise waive or amend any
conditions of the grant. A Participant may transfer or dispose
<PAGE>
of any Restricted Stock that has vested, subject to any Federal
and State laws then applicable, specifically securities laws.
ARTICLE VIII
STOCK CERTIFICATES
8.01 Stock Certificates. The Company shall not be required to issue
or deliver any certificate for shares of Stock under this Plan or
of any portion thereof prior to fulfillment of all of the
following conditions:
(A) The admission of such shares to listing on all stock
exchanges on which the Stock is then listed, if any;
(B) The completion of any registration or other qualification of
such shares under any Federal or State law, under the
rulings or regulations of the Securities and Exchange
Commission, or under any other governmental regulatory
agency which the Committee shall in its sole discretion
determine to be necessary or advisable;
(C) The obtaining of any approval or other clearance from any
Federal or State governmental agency which the Committee
shall in its sole discretion determine to be necessary or
advisable; and,
(D) The lapse of such reasonable period of time following the
exercise of the grant as the Committee from time to time may
establish for reasons of administrative convenience.
If these conditions are not satisfied, the employee may lose his
rights to such Stock as determined by the Committee.
ARTICLE IX
DIVIDENDS
9.01 Dividends. At the time of each grant of an Award the Committee
may, in its sole discretion, determine whether the grant shall
provide a dividend or a dividend equivalent and the terms and
conditions under which any such dividend or dividend equivalent
is to be provided, including but not limited to permitting or
<PAGE>
requiring immediate payment, deferral or investment of dividends
or dividend equivalents.
ARTICLE X
PLAN ADMINISTRATION
10.01 Plan Administration. The Plan and all Agreements shall be
administered, and all grants under this Plan shall be awarded, by
the Committee. The Committee shall have full authority and
absolute sole discretion:
(A) To determine, consistent with the provisions of this Plan,
which of the employees shall be granted Awards; the form and
terms of such Awards; the timing of such grants; the number
of shares subject to each Award and the Option Price of
Stock covered by each Option (if applicable); and the period
over which the Awards shall become and remain exercisable
(if applicable);
(B) To construe and interpret the Plan and the Agreements;
(C) To determine the terms and provisions of each respective
Stock Incentive Agreement, which need not be identical;
(D) To make all other determinations and take all other actions
deemed necessary or advisable for the proper administration
of the Plan;
(E) To adopt, alter, and repeal such rules, guidelines, and
practices for administration of the Plan and for its own
acts and proceedings as it shall deem advisable;
(F) To interpret the terms and provisions of the Plan and any
grant (including related Agreements);
(G) To make all determinations it deems advisable for the
administration of the Plan;
(H) To decide all disputes arising in connection with the Plan;
and,
(I) To otherwise supervise the administration of the Plan.
<PAGE>
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01 Applicable Law. To the extent that state law shall not have been
preempted by any laws of the United States, the Plan shall be
construed, regulated, interpreted and administered according to
the laws of the State of Delaware.
11.02 Expenses. The cost of benefit payments from this Plan and the
expenses of administering the Plan shall be borne by the Company.
11.03 Gender and Number. Unless the context clearly requires
otherwise, the masculine pronoun whenever used shall include the
feminine and neuter pronoun, the singular shall include the
plural, and vice versa.
11.04 Headings Not Part of the Plan. Headings of Articles and Sections
are inserted for convenience and reference; they constitute no
part of this Plan.
11.05 Indemnification. No member of the Board of Directors or the
Committee shall be liable for any action or determination taken
or made in good faith with respect to this Plan nor shall any
member of the Board of Directors or the Committee be liable for
any Agreement issued pursuant to this Plan or any grants under
this Plan. Each member of the Board of Directors and the
Committee shall be indemnified by the Company against any losses
incurred in such administration of the Plan, unless his action
constitutes serious and willful misconduct.
11.06 Limitation of Rights. Neither the adoption and maintenance of
the Plan or Agreement nor anything contained herein, with respect
to any Participant, shall be deemed to:
(A) Limit the right of the Company or any Subsidiary to
discharge or discipline any such person, or otherwise
terminate or modify the terms of his employment; or,
<PAGE>
(B) Create any contract or other right or interest under the
Plan, or in any funds hereunder, other than as specifically
provided in the Plan and the Agreement.
11.07 No Distribution Until Compliance with Legal Requirements. The
Committee may require each Participant acquiring shares pursuant
to a grant to represent to and agree with the Company in writing
that such Participant is acquiring the shares without a view to
distribution thereof.
No shares of Stock shall be issued pursuant to a grant until
all applicable securities laws and other legal and stock exchange
requirements have been satisfied. The Committee may require the
placing of such stop-orders and restrictive legends on
certificates for Stock and grants as it deems appropriate.
11.08 Timing of Grants. All Awards granted under this Plan shall be
granted on or prior to May 31, 1997.
11.09 Non-Assignability. A Participant's interest under this Plan
shall not be subject at any time, or in any manner, to
alienation, sale, transfer, assignment, pledge, attachment,
garnishment or encumbrance of any kind and any attempt to
deliver, sell, transfer, assign, pledge, attach, garnish or
otherwise encumber such interest shall be void and any interest
so encumbered will terminate.
11.10 Nontransferability. An Award shall not be transferable by the
Participant other than by will or the laws of descent and
distribution. During the lifetime of the Participant, such Award
shall be exercisable or perfected only by the Participant in
accordance with the terms of this Plan and the Agreement.
11.11 Other Compensation Plans. The adoption of the Plan shall not
affect any other existing or future incentive or compensation
plans for directors, officers or employees of the Company or its
<PAGE>
Subsidiaries. Moreover, the adoption of this Plan shall not
preclude the Company or its Subsidiaries from:
(A) Establishing any other forms of incentive or other
compensation for directors, officers or employees of the
Company or its Subsidiaries; or,
(B) Assuming any forms of incentives or other compensation of
any person or entity in connection with the acquisition of
the business or assets, in whole or in part, of any person
or entity.
11.12 Plan Binding on Successors. This Plan shall be binding upon the
successors and assigns of the Company.
11.13 Tax Withholding. Each Participant shall, no later than the date
as of which the value of a grant or of any Stock or other amount
received thereunder first becomes includable in the gross income
of the Participant for Federal income tax purposes, pay to the
Company, or make arrangements satisfactory to the Committee
regarding payment of any Federal, State, or local taxes of any
kind required by law to be withheld with respect to such income.
The Committee may permit payment of such taxes to be made through
the tender of cash or securities, the withholding of Stock or
cash to be received through Awards or any other arrangement
satisfactory to the Committee. The Company and its Subsidiaries
shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the
Participant.
11.14 Non-Contravention of Securities Laws. Notwithstanding anything
to the contrary expressed in this Plan, any provisions hereof
that vary from or conflict with any applicable Federal or State
securities laws (including any regulations promulgated
thereunder) shall be deemed to be modified to conform to and
comply with such laws.
<PAGE>
11.15 Unenforceability of a Particular Provision. The unenforceability
of any particular provision of this document shall not affect the
other provisions and the document shall be construed in all
respects as if such unenforceable provision were omitted.
ARTICLE XII
CHANGE OF CONTROL
12.01 Acceleration. Unless the Committee shall otherwise expressly
provide in the Agreement relating to an Award:
(A) Upon the occurrence of a Trigger Date (as hereinafter
defined):
(1) In the case of Options and Stock Appreciation Rights,
each such Option and Stock Appreciation Right shall
automatically become fully exercisable;
(2) Restrictions and conditions applicable to Restricted
Stock shall automatically be deemed waived, and the
recipients of such grants shall become entitled to
receipt of the Stock subject to such grants; and,
(3) In the case of any other Award, the occurrence of such
Trigger Date shall have such effect on such Award as
may be provided in the Agreement related thereto or in
the Committee's procedures; and,
(B) The Committee may at any time accelerate the exercisability
of any Awards (if applicable) and may waive restrictions and
conditions on Awards (if applicable) to the extent it shall
in its sole discretion determine.
12.02 Special Rights. Anything in this Plan and the 1990 Plan to the
contrary notwithstanding, but subject to Section 12.03, during
the 90-day period from and after a Trigger Date (the "Change of
Control Exercise Period") a Participant (other than a Participant
who initiated the event that resulted in the occurrence of such
Trigger Date in a capacity other than as an officer or director
of the Company) shall have the following rights, unless the
<PAGE>
Committee shall otherwise expressly provide in the Agreement
relating to an Award:
(A) With respect to any Option or 1990 Plan Option (or portion
thereof) granted to such Participant and unaccompanied by a
Stock Appreciation Right, such Participant shall have the
right (by giving written notice to the Company) to elect
(within the Change of Control Exercise Period) to surrender
all or a portion of such Option or 1990 Plan Option (as the
case may be) to the Company and to receive in cash, for each
share of Stock in respect of which such Option or 1990 Plan
Option (as the case may be) is surrendered, an amount equal
to the amount by which the Event Price exceeds the Option
Price (as such term is defined in the 1990 Plan in the case
of a 1990 Plan Option) for such share;
(B) With respect to any Stock Appreciation Right granted to such
Participant, such Participant shall have the right (by
giving written notice to the Company) to elect (within the
Change of Control Exercise Period) to surrender such Stock
Appreciation Right to the Company and to receive in cash an
amount equal to the amount such Participant would have
received if such Stock Appreciation Right had been exercised
and the Fair Market Value of a share of Stock on the date of
exercise had been the Event Price;
(C) With respect to any Restricted Stock granted to such
Participant in respect of which such Participant has paid
the required purchase price (if any), such Participant shall
have the right (by giving written notice to the Company) to
elect (within the Change of Control Exercise Period) to
surrender all or a portion of such Restricted Stock to the
Company and receive in lieu thereof a cash payment equal to
the Event Price for each share of Restricted Stock so
surrendered; and,
(D) With respect to any other type of Award granted to such
Participant, such Participant shall have the right to take
such action or make such election as may be permitted upon a
<PAGE>
Trigger Date in the Agreement relating to such Award or in
the Committee's procedures.
12.03 Limitation on Special Rights. If a Participant is subject to the
restrictions of Section 16(b) of the Exchange Act and has been
granted (or is deemed to have been granted) an Award under this
Plan during the six months prior to a Trigger Date, then the
Change of Control Exercise Period referred to in Section 12.02
shall, in respect of such Award, begin on the Trigger Date and
end 90 days after the date six months after the later of the
Approval Date or the date such Award was granted. If a Trigger
Date occurs prior to six months after the Approval Date, then the
Change of Control Exercise Period referred to in Section 12.02
shall, in respect of 1990 Plan Options, begin on the Trigger Date
and end 90 days after the date six months after the Approval
Date. The Committee may at any time prior to the occurrence of a
Trigger Date provide that any or all of the exercises,
surrenders, elections and other actions that may be taken by
Participants pursuant to Section 12.02 shall occur automatically
with respect to Participants (or particular categories of
Participants) subject to Section 16(b) of the Exchange Act.
12.04 Termination of Participant; Modification of the Plan. The rights
of a Participant under Section 12.02 with respect to Awards or
1990 Plan Options, may be exercised during the Change of Control
Exercise Period referred to therein (or, if applicable, in
Section 12.03) notwithstanding the termination of the
Participant's employment by the Company, unless provided
otherwise in the Agreement relating to such Award. Anything in
this Plan to the contrary notwithstanding, no termination,
amendment or modification of this Plan after the occurrence of a
Trigger Date shall in any manner adversely affect any
Participant's rights under this Article XII in respect of such
Trigger Date without the written consent of the affected
Participant.
<PAGE>
12.05 Event Price. In connection with a Trigger Date and an exercise,
surrender, election or other action contemplated by Section 12.02
with respect to an Award or a 1990 Plan Option, Event Price shall
mean a price per share of Stock equal to the higher of:
(A) The highest Fair Market Value of the Stock during the period
beginning 90 days prior to such Trigger Date and ending on
and including the last trading day prior to such exercise,
surrender, election or other action; or,
(B) Whichever of the following is applicable (or the highest if
more than one is applicable):
(1) The highest per share price paid or to be paid in any
tender or exchange offer which is in effect at any time
during such period referred to in clause (A);
(2) The fixed or formula price for the acquisition of
shares of Stock in a merger or similar agreement
approved by the Company's stockholders or the Board, if
such price is determinable on the date of such
exercise, surrender, election or other action; and/or,
(3) The highest price per share paid or to be paid to any
stockholder of the Company in a transaction or group of
transactions (including any tender or exchange offer)
giving rise to the occurrence of such Trigger Date;
provided, however, that a Participant may at the time of an
election pursuant to Section 12.02 request that certain of the
foregoing parameters be disregarded (which may include shortening
applicable time periods) in determining the Event Price
applicable to one or more of the Awards held by such Participant,
so long as disregarding such parameters does not increase the
Event Price.
Any securities or property which are part or all of the
consideration paid or to be paid for shares of Stock in
connection with any event contemplated by clauses (B) (1), (2),
and (3) above shall be valued in determining the Event Price at
the higher of (x) the valuation placed on such securities or
property by the person or entity which paid or is to pay such
<PAGE>
price or (y) the valuation placed on such securities or property
by the Committee.
12.06 Trigger Date. Trigger Date shall have the meaning assigned to
such term in the Polaroid Extended Severance Plan adopted by the
Company effective July 28, 1987 and amended from time to time,
and as it may be further amended from time to time.
12.07 1990 Plan Options. 1990 Plan Options shall mean "Options", as
such term is defined in the 1990 Plan.
ARTICLE XIII
PERMANENCY OF THE PLAN AND PLAN TERMINATION
13.01 Effective Date. This Plan became effective as of May 11, 1993,
upon a resolution by the Board of Directors for its adoption,
subject to the approval of the shareholders within 1993.
13.02 Termination, Amendment, and Modification of the Plan. The Board
of Directors may at any time terminate or suspend, and may at any
time and from time to time and in any respect amend or modify,
the Plan; provided, however, that no such action of the Board of
Directors without approval of the shareholders of the Company may
increase the total number of shares of Stock subject to the Plan
except as contemplated in Section 3.03 hereof.
IN WITNESS WHEREOF, this Plan is hereby adopted effective May 11, 1993
and executed this 1st day of June, 1993.
Attest: POLAROID CORPORATION
RICHARD F. deLIMA By: I. M. BOOTH
Secretary Chief Executive Officer
31 March 1993
Mr. I. MacAllister Booth
Chairman, President and
Chief Executive Officer
POLAROID CORPORATION
549 Technology Square
Cambridge, Massachusetts 02139
Dear Mac:
At your initiation, we have recently had a series of
discussions to determine the date and conditions of my retirement
from Polaroid, as well as my principal duties and
responsibilities as Vice Chairman until that time.
We have agreed that I will retire on 31 May 1994 or somewhat
later if I elect to use earned vacation days after that date, but
no later than 30 September 1994 under the conditions described
below.
The conditions of my retirement to which we have agreed are
based on the concept that the advantages and benefits of the
current severance program which terminates on 31 March 1993 will
apply to me at the time of my retirement. These conditions
include:
(1) I will receive the severance payment calculated for me as of
31 March 1993, which is $581,015. I will designate the time
to receive this payment as constructive receipt between 31
December 1993 and 15 January 1995 as may be optimum for my
financial planning.
(2) My enhancement of monthly pension payment will be $1,936,
over that calculated for me as my normal pension at the time
of my retirement. This enhancement is the amount calculated
for me in the current severance program ending 31 March 1993.
(3) I will receive stock option awards in 1993 and 1994 calculated
for my current position and then current salary at the Vice
Chairman role. All stock options awarded to me will be fully
vested at the time of my retirement and will be viable for
three years from that date. During that period, I will
receive the established dividend payments. At the expiration
of the options, I will receive a terminal payment of dividends
on unexercised options at a present value rate modeled after
that to be used for beneficiaries of the current severance
program.
<PAGE>
<PAGE>
I. MacAllister Booth
Page Two
31 March 1993
(4) I will be eligible for base pay increases in 1993 and 1994
based on my value and performance as determined by you and
the Compensation Committee of the Board.
(5) I will participate in the 1994 annual bonus award as Vice
Chairman on a prorata basis determined by 1994 service to the
date of my retirement.
(6) Medical and dental benefits to be extended for two years from
the date of my retirement in the same manner as those which
were part of the 1993 Severance Program.
As time goes by, I realize that changes may be required as is
generally the case. However, I look forward to full involvement in
these areas and intend to make my final chapter as a Polaroid
Officer highly productive, positive, and memorable.
Sincerely,
Sheldon A. Buckler
SAB/pce
Accepted: I. MacAllister Booth
--------------------
I. MacAllister Booth
Chairman, President and C.E.O.
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
-----------------------------------------------
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
FOURTH QUARTER, 1993
ON COMMON SHARES
PRIMARY COMPUTATION OUTSTANDING
- ------------------- ----------------
Net earnings per statement of earnings: $ 39.2
======
Weighted average number of common
shares outstanding 46.8
Weighted average number of common
stock equivalents .5
------
Weighted average number of common
shares, as adjusted 47.3
======
Primary earnings per common share $ .83
======
<PAGE>
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
FOURTH QUARTER, 1993
ASSUMING CONVERSION
FULLY DILUTED COMPUTATION OF DEBENTURES
- ------------------------- -------------------
Net earnings per statement of earnings $39.2
Add - effect of after-tax interest expense
on convertible debentures 1.7
-----
Net earnings, as adjusted $40.9
=====
Weighted average number of common
shares outstanding 46.8
Weighted average number of common
stock equivalents .5
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 $ .79
=====
(A) Assumes conversion of convertible debentures at a price of $32.50 per
common share in accordance with the convertible debenture exchange
agreement.
<PAGE>
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1993
ON COMMON SHARES
PRIMARY COMPUTATION OUTSTANDING
- ------------------- ----------------
Net loss per statement of earnings: $ (51.3)
========
Weighted average number of common
shares outstanding 46.7
========
Primary loss per common share $ (1.10)
========
<PAGE>
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1993
ASSUMING CONVERSION
FULLY DILUTED COMPUTATION OF DEBENTURES
- ------------------------- -------------------
Net loss per statement of earnings $ (51.3)
Add: effect of after-tax interest expense
on convertible debentures 6.8
-------
Net loss, as adjusted $(44.5)
=======
Weighted average number of common
shares used for primary computation 46.7
Weighted average number of common
stock equivalents .5
Add: effect of converting 8% debentures
into common stock 4.3 (A)
-------
Weighted average number of common shares
outstanding, as adjusted 51.5
=======
Fully diluted loss per common share $ (.86) (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-K 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.
<PAGE>
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
FOURTH QUARTER, 1992
ON COMMON SHARES
PRIMARY COMPUTATION OUTSTANDING
- ------------------- ----------------
Net earnings per statement of earnings: $ 29.6
======
Weighted average number of common
shares outstanding 46.8
Weighted average number of common
stock equivalents .4
------
Weighted average number of common
shares, as adjusted 47.2
======
Primary earnings per common share $ .63
======
<PAGE>
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
FOURTH QUARTER, 1992
ASSUMING CONVERSION
FULLY DILUTED COMPUTATION OF DEBENTURES
- ------------------------- -------------------
Net earnings per statement of earnings $29.6
Add - effect of after-tax interest expense
on convertible debentures 1.7
-----
Net earnings, as adjusted $31.3
=====
Weighted average number of common
shares outstanding 46.8
Weighted average number of common
stock equivalents .4
Add - effect of converting 8% debentures
into common stock 4.3 (A)
-----
Weighted average number of common shares
outstanding, as adjusted 51.5
=====
Fully diluted earnings per common share $ .61
=====
(A) Assumes conversion of convertible debentures at a price of $32.50 per
common share in accordance with the convertible debenture exchange
agreement.
<PAGE>
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1992
ON COMMON SHARES
PRIMARY COMPUTATION OUTSTANDING
- ------------------- ----------------
Net earnings per statement of earnings: $ 99.0
======
Weighted average number of common
shares outstanding 47.7
Weighted average number of common
stock equivalents .3
------
Weighted average number of common
shares, as adjusted 48.0
======
Primary earnings per common share $ 2.06
======
<PAGE>
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1992
ASSUMING CONVERSION
FULLY DILUTED COMPUTATION OF DEBENTURES
- ------------------------- -------------------
Net earnings per statement of earnings $ 99.0
Add: effect of after-tax interest expense
on convertible debentures 6.8
------
Net earnings, as adjusted $105.8
======
Weighted average number of common
shares used for primary computation 47.7
Weighted average number of common
stock equivalents .4
Add: effect of converting 8% debentures
into common stock 4.3 (A)
------
Weighted average number of common shares
outstanding, as adjusted 52.4
======
Fully diluted earnings per common share $ 2.02
======
(A) Assumes conversion of convertible debentures at a price of $32.50 per
common share in accordance with the convertible debenture exchange
agreement.
Financial Review:
Polaroid Corporation and Subsidiary Companies
23 Management's Discussion and Analysis of Operations
29 Independent Auditors' Report
29 Management's Report
Financial Statements:
30 Consolidated Statement of Earnings
31 Consolidated Balance Sheet
32 Consolidated Statement of Cash Flows
33 Consolidated Statement of Changes in
CommonStockholders' Equity
Notes to Consolidated Financial Statements:
34 1. Summary of Significant Accounting Policies
35 2. Supplemental Information
36 3. Income Taxes
38 4. Inventories
38 5. Short-term Debt
39 6. Payables and Accruals
39 7. Long-term Debt
40 8. Redeemable Preferred Stock Equity
40 9. Common Stockholders' Equity
40 10. Incentive Compensation and Stock Incentive Plans
42 11. Benefit Plans
44 12. Rental Expense and Lease Commitments
44 13. Segments of Business
46 14. Contingencies
48 15. Supplementary Financial Information
Supplementary Financial Information:
49 Quarterly Financial Data
50-51 Ten-Year
22
<PAGE>
<PAGE>
Management's Discussion and Analysis of Operations
The following table summarizes the relation to net sales of income and expense
items included in the Consolidated FinancialStatements for 1993, 1992, and 1991
and the changes in those items from the respective prior years.
<TABLE>
<CAPTION>
Income and Expense Items Percent Increase/(Decrease)
as a Percent of Net Sales 1992 1991 1990
to to to
1993 1992 1991 Income and Expense Items 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <S> <C> <C> <C>
Net Sales:
53% 53% 54% United States 3% 3% 5%
47 47 46 International 6 5 5
- --------------------------------------------------------------------------------------------------------------------------------
100 100 100 Total net sales 4 4 5
58 55 52 Cost of goods sold 10 9 7
34 35 36 Marketing, research, engineering, and administrative expenses - 3 10
2 - - Early retirement and other expenses 100 - -
- --------------------------------------------------------------------------------------------------------------------------------
6 10 12 Profit from operations (34) (13) (13)
- --------------------------------------------------------------------------------------------------------------------------------
- - 42 Litigation settlement, net of employee incentives - (100) 100
1 1 1 Other income (5) (67) 56
2 3 3 Interest expense (18) - (28)
- --------------------------------------------------------------------------------------------------------------------------------
5 8 52 Earnings before income taxes (38) (85) 397
2 3 19 Federal, state and foreign income taxes (47) (84) 496
- --------------------------------------------------------------------------------------------------------------------------------
3% 5% 33% Earnings before cumulative effect of changes in accounting principle (31)% (86)% 353%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
<PAGE>
1993 Worldwide Results Compared with 1992
Worldwide sales of Polaroid Corporation and its subsidiaries increased 4% to
$2.24 billion in 1993 compared with $2.15 billion in 1992. Sales in the United
States increased 3% and international sales increased 6%.
The new instant camera system, called Captiva in the U.S., was an important
contributor to the 4.9 million cameras shipped worldwide in 1993, a 23% increa-
se over the previous year. This is the largest number of cameras shipped in more
than ten years. Worldwide, 1993 instant film sales were up slightly reflecting
healthy growth in integral film sales partly offset by a continuing decline in
sales of the older peel-apart pack film.
Gross margins as a percent of sales were 42% for 1993 and 45% for 1992. The
gross margin decline was primarily the result of planned higher manufacturing
costs for new products (the new instant camera and film system and the Helios
medical laser imaging system), including planned start-up expenditures, and
product mix related to the new instant camera. The 1993 gross margin was also
impacted by approximately $10 million of the $20 million recurring incremental
charge for FAS 106 ("Employers' Accounting for Postretirement Benefits Other
than Pensions"), and approximately $2 million of the $4 million recurring in-
cremental charge for FAS 112 ("Employers' Accounting for Postemployment Bene-
fits").
The balance of the FAS 106 and FAS 112 charges are recorded in marketing, re-
search, engineering and administrative expenses which were $763 million in 1993
and $761 million in 1992. Higher marketing and launch costs for new products we-
re offset by tight control of other overhead costs, which in many cases, were
reduced. Research and engineering expenses were $161 million in 1993 and $155
million in 1992, while manufacturing development costs (previously called
"start-up costs") for major new products included in cost of sales were approxi-
mately $30 million in 1993 and $40 million in 1992. In 1993, the Company recor-
ded charges of $40 million for an early retirement and severance program and $4
million to write down certain non-strategic assets. Profit from operations in-
cluding these charges was $141 million as compared with $214 million in 1992.
Without these charges, the operating profit for 1993 would have been $185 mi-
llion.
Other income was $8 million in both 1993 and 1992.
Interest expense decreased to $48 million in 1993 from $58 million in 1992 due
to lower interest rates and a reduction in short-term borrowings.
Income tax expense in 1993 was $34 million compared with $64 million in 1992.
The worldwide effective tax rate was 33% in 1993 (before cumulative accounting
adjustments) and 39% in 1992. The decrease in the tax rate was due primarily to
the increase of prepaid tax assets related to the increase in the U.S. statutory
tax rate from 34% to 35% and the beneficial tax effect of foreign currency ex-
change in 1993. There was an after-tax foreign currency exchange loss on the
translation of balance sheet items of $1 million in 1993 compared with a loss of
$3 million in 1992.
In 1993, the Company adopted Financial Accounting Standards Board Statement No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions"
(FAS 106) and Financial Accounting Standards Board Statement No. 109 "Accoun-
ting for Income Taxes" (FAS 109). The cumulative effects at adoption of FAS 106
and FAS 109 on an after-tax basis were a charge of $133 million (net of income
taxes of $85 million) and a credit of $34 million, respectively. In the fourth
quarter of 1993, the Company also adopted Financial Accounting Standards Board
Statement No. 112, "Employers' Accounting for Postemployment Benefits"
(FAS 112) retroactive to January 1, 1993. The cumulative effect of this change
in accounting resulted in a one-time after-tax charge of $20 million (net of
income taxes of $13 million.)
24
<PAGE>
<PAGE>
The Company recorded a net loss for 1993 of $51 million or $1.10 per share,
compared to net earnings in 1992 of $99 million or $2.06 per share. Excluding
the early retirement and severance charges, the asset write-down, and accounting
changes, net earnings would have been approximately $108 million or $2.29 per
share for 1993. Fully diluted earnings per common share are not presented for
1993 because they were greater than primary earnings per common share. Fully di-
luted earnings per common share were $2.02 in 1992.
Due to factors such as uncertainties associated with U.S. government changes in
healthcare and the complexities of marketing to a new audience, the Company did
not achieve its 1993 shipment goal for its Helios medical laser imaging system.
Although the healthcare uncertainties will continue, the Company stated that it
expects to increase its shipments in 1994 to several hundred units.
In the first half of 1994, the Company expects only slow growth in European eco-
nomies, a stronger U.S. dollar and start-up costs associated with the scale-up
of a new coating facility for High Resolution Imaging products. These factors
are expected to affect operating profit adversely, particularly during the first
quarter. However for the full year, the Company expects to improve operating
profit significantly in 1994 as compared with 1993.
Operations by Geographic Area
Sales in the United States increased 3% to $1.17 billion in 1993 compared with
1992, primarily due to higher instant camera shipments. Sales in international
markets increased 6% to $1.07 billion in 1993 compared to 1992. Sales in the
European region decreased 6% to $598 million. Contributing to this decrease was
a weak economy in Western Europe which offset strong sales in Eastern Europe,
including Russia, and the negative effects of foreign currency translation,
which could not be completely offset by price increases. Sales in the Asia/Paci-
fic and Western Hemisphere regions increased 25% to $468 million in 1993. The
increase is primarily attributable to sales to the Mexican government for the
recently completed voter registration program, sales of the new instant camera
system, and the positive effects of foreign currency translation.
Fourth Quarter Results
Consolidated worldwide sales in the fourth quarter of 1993 were
$673 million, up 4% from $649 million in the same period a year earlier. Sales
in the United States were 5% higher than in the comparable 1992 period primarily
due to sales of the new Captiva camera system. International sales increased 1%
in 1993 over the fourth quarter of 1992. Although the Company achieved
significant increases in international camera and film shipments in the fourth
quarter of 1993, especially in Eastern Europe including Russia, international
revenues increased only slightly. The 1992 fourth quarter included significant
hardware sales associated with the recently completed Mexican voter registration
program. In addition, the negative effects of foreign currency translation from
Western Europe were mostly offset by the positive effects of foreign currency
translation from the Asia/Pacific region.
Gross margins as a percent of sales were 42% in the fourth quarters of 1993 and
1992. The gross margin in the fourth quarter of 1993 was affected by higher re-
venues from photographic imaging products offset by planned higher manufacturing
costs, including planned start-up expenditures and changes in product mix rela-
ted to the new instant camera system. The 1993 fourth quarter gross margin was
also impacted by approximately $3 million of the $5 million recurring incremen-
tal charge for FAS 106. Marketing, research, engineering and administrative ex-
penses were $205 million in the 1993 fourth quarter and $210 million in the 1992
fourth quarter. Profit from operations for the 1993 fourth quarter was $77 mi-
llion, compared with $63 million for the fourth quarter of 1992.
25
<PAGE>
<PAGE>
The Company incurred $2 million of other
expense in the fourth quarter of 1993 compared to other income of $3 million
recorded in the fourth quarter of 1992. The change in other income was the
result of the negative effects of foreign currency exchange from balance sheet
translations. Interest expense decreased to $12 million in 1993 from $15 million
in 1992. The decrease is the result of lower interest rates and a reduction in
short-term borrowings.
Income tax expense for the fourth quarter of 1993 was $24 million compared with
$21 million in 1992. The worldwide effective tax rate for the fourth quarter was
38% in 1993 and 41% in 1992. The decrease in the tax rate was due primarily to
the beneficial tax effect of foreign currency exchange in 1993. There was an af-
ter-tax foreign currency exchange loss on the translation of the balance sheet
of $4 million in the fourth quarter of 1993, compared with a loss of $3 million
in 1992.
Net earnings in the fourth quarter of 1993 were $39 million compared to $30 mi-
llion in the same period of 1992. Primary earnings per common share were $.83
for the fourth quarter of 1993 compared to $.63 per share in 1992. Fully diluted
earnings per common share were $.79 and $.61 in the fourth quarter of 1993 and
1992, respectively.
1992 Worldwide Results Compared with 1991
Worldwide sales of Polaroid Corporation and its subsidiaries increased to $2.15
billion in 1992 compared with $2.07 billion in 1991. Sales in the United States
increased 3% and international sales increased 5%.
Polaroid sold approximately 4.0 million consumer cameras worldwide in 1992 com-
pared with about 3.9 million consumer cameras in 1991. Total instant film sales
increased slightly and conventional film sales showed a substantial increase.
Gross margins as a percent of sales were 45% for 1992 and 48% for 1991. The
gross margin decline was a result of planned higher start-up costs for new pro-
ducts. Overhead spending was $761 million in 1992 amounting to 35% of sales,
compared to $742 million in 1991, or 36% of sales. Planned higher marketing ex-
penses were somewhat offset by reduced general and administrative expenses.
Research and engineering expenses included in general and administrative expen-
ses were approximately $155 million in both 1992 and 1991, while start-up costs
for major new products included in cost of sales were approximately $40 million
in 1992 and $10 million in 1991. Profit from operations was $214 million in 1992
and $247 million in 1991.
On July 15, 1991, the Company received $925 million in settlement of patent in-
fringement litigation against Eastman Kodak Company. The amount was recorded as
a separate line in other income, net of related employee incentive awards and
payroll taxes. The Company allocated to employees $50 million of pre-tax incen-
tive awards attributable to the settlement.
Other income, excluding the net Kodak litigation settlement, decreased from $23
million in 1991 to $8 million in 1992. The higher income in 1991 resulted prima-
rily from interest earned on the Kodak litigation settlement proceeds, and the
receipt of an $11 million insurance settlement related to past litigation ex-
penses. Interest expense was $58 million in both 1992 and 1991.
Income tax expense in 1992 was $64 million compared with $400 million in 1991.
The higher tax expense in 1991 was related primarily to tax on the Kodak litiga-
tion settlement proceeds. The worldwide effective tax rate was 39% in 1992 and
37% in 1991. The increase in the tax rate was due primarily to the adverse
effects of foreign currency exchange.
26
<PAGE>
<PAGE>
Net earnings for 1992 were $99 million compared to $684 million in 1991. There
was an after-tax foreign currency exchange loss of $3 million in 1992 compared
with a loss of $.5 million in 1991. Primary earnings per common share were $2.06
in 1992 compared to $12.54 in 1991. Fully diluted earnings per common share were
$2.02 in 1992 and $10.88 in 1991.
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 fluc-
tuations. The impact of currency fluctuations can be positive or negative in any
given period. The Company carefully considers the impact of currency fluctua-
tions 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 exchan-
ge swaps and options, are used to minimize the impact of currency fluctuations
on the Company's financial position.
Inflation continues to be a factor in many countries. The Company's pricing
strategy has been sufficient to offset inflation and normal cost increases.
Therefore, the overall inflationary impact on earnings is not material.
Financial Liquidity and Capital Resources
At December 31, 1993, the Company's cash and cash equivalents plus short term
investments amounted to $139 million, compared to $190 million at December 31,
1992. During 1993, the Company used cash to make capital expenditures of $166
million, to pay down long-term debt in the amount of $32 million, to make cash
payments under the 1993 severance program, and to pay $28 million in dividends.
During 1992, the Company repaid $173 million in long-term debt and received $347
million from the issuance of long-term public notes. The Company made cash out-
lays in 1992 of $29 million for cash dividends, $202 million for capital expen-
ditures, and $64 million for the repurchase of common stock. Capital expenditu-
res in 1993 and 1992 were for ongoing capital programs, environmental improve-
ments, continuing expenditures for the new instant camera system, called Captiva
in the U.S., and a new coating facility for High Resolution Imaging technology.
Capital expenditures in 1994 are expected to be approximately the same as 1993.
The Company maintains a $150 million three-year revolvingcredit facility for ge-
neral corporate purposes. As of December 31, 1993 and 1992, the entire $150 mi-
llion of additional borrowing capacity under the working capital line of credit
remained available to meet working capital needs. In addition, available unused,
uncommitted lines of credit for international and U.S. operations at December
31, 1993 were $161 million and $125 million, respectively.
The Company also has $100 million remaining from its existing shelf registra-
tion, filed in January 1992, available for general corporate purposes. The Com-
pany's total borrowing capacity is limited by certain debt covenants.
As of December 31, 1993, a cumulative total of 3.4 million shares had been re-
purchased for approximately $94 million under the Company's $150 million stock
repurchase program, leaving an unexpended balance of approximately $56 million.
During 1993, the Company did not repurchase any shares of common stock. The ti-
ming and amounts of any future purchases under this program depend upon many
factors, including market conditions as well as the Company's business and fi-
nancial 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.
Other Matters
The Company, together with other parties, is currently designated a Potentially
Responsible Party by the United States Environmental Protection Agency and cer-
tain state agencies with respect to the costs of investigation and remediation
of pollution at several Superfund 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 $6 million as of December 31, 1993.
27
<PAGE>
<PAGE>
As of January 1, 1993 the Company adopted FAS 109. The favorable cumulative ad-
justment of $34 million is the result of recognizing the tax benefit of future
deductions based upon a "more likely than not criterion," instead of the more
stringent criteria of FAS 96, the Company's previous standard of accounting for
income taxes. Prior years' financial statements were not restated to apply the
provisions of FAS 109. As of December 31, 1993, the net of deferred tax assets,
$168 million, and deferred income tax liabilities, $4 million, reflected on the
balance sheet was a net tax asset of $164 million. The net of deferred income
tax assets, $152 million, and deferred income tax liabilities, $9 million, re-
flected on the consolidated balance sheet as of January 1, 1993 (restated) was a
net tax asset of $143 million.
Valuation allowances of $8 million as of December 31, 1993 and $10 million as of
January 1, 1993 were established for all of the prepaid taxes related to a capi-
tal loss carryforward and to those temporary differences which most likely will
produce capital losses upon reversal. Capital losses may be used only to offset
capital gains. Capital losses may be carried back 3 years and forward 5 years.
The Company does not believe it is more likely than not that it would generate
sufficient capital gains within the appropriate time period to offset those
capital losses.
Management believes the Company will obtain the full benefit of the deferred tax
assets on the basis of its evaluation of the Company's anticipated profitability
over the period of years that the temporary differences are expected to become
tax deductions; and they believe that sufficient book and taxable income will be
generated to realize the benefit of these tax assets. This assessment of profi-
tability takes into account the Company's present and anticipated split of do-
mestic and international earnings, its previously announced strategic invest-
ments, and the fact that the deductible temporary differences related to pos-
tretirement and postemployment benefits reverse over a period of 30 to 40 years.
Management also considered the fact that as of the end of 1993, the Company had
only an alternative minimum tax credit which does not expire for regular tax
purposes. Otherwise, the Company had no credit carryforwards for regular tax
purposes and the Company has no history of net operating losses for tax purpo-
ses. However, there can be no assurance that the Company will generate any spe-
cific level of continuing earnings or where those earnings will be generated.
As of January 1, 1993, the Company adopted FAS 106.
The Company elected immediate recognition of the accumulated liability at adop-
tion. FAS 106 requires the expensing on an accrual basis, of all medical and
life insurance benefits the Company provides to its retirees and their depen-
dents. Previous to 1993, the Company recognized these costs on a pay-as-you-go
basis. This resulted in a one-time, after-tax charge at adoption of $133 mi-
llion (net of income taxes of $85 million). After recognition of the cumulative
liability at adoption, the effect of this change in accounting on 1993 opera-
ting results was a pre-tax expense of $29 million, approximately $20 million
more than the previous pay-as-you-go method of accounting. There was no cash
flow impact associated with the adoption of FAS 106.
In the fourth quarter of 1993, the Company adopted FAS 112 retroactive to Janua-
ry 1, 1993. This standard requires the expensing, on an accrual basis, of all
benefits provided to former or inactive employees, their beneficiaries and cove-
red dependents, after employment but before retirement. Previous to 1993, the
Company recognized these disability and survivor-related benefits on a pay-as-
you-go basis. The cumulative effect of this change in accounting resulted in a
one-time after-tax charge at adoption of $20 million (net of income taxes of $13
million.) After recognition of the cumulative liability at adoption, the effect
of FAS 112 on 1993 operating results was a pre-tax charge of $6 million, appro-
ximately $4 million more than the previous pay-as-you-go method of accounting.
There was no cash flow impact associated with the adoption of FAS 112.
The Company offered an early retirement program and a severance program to em-
ployees. The programs resulted in the departure of approximately 450 employees
at a cost to the Company of $40 million, which was recorded in 1993. The Company
also recorded a charge of $4 million for the write down of some non-strategic
assets, in 1993.
28
<PAGE>
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
Polaroid Corporation:
We have audited the accompanying consolidated balance sheet of
Polaroid Corporation and subsidiary companies as of December 31, 1993 and 1992,
and the related consolidated statement of earnings, cash flows and changes in
common stockholders' equity for each of the years in the three-year period ended
December 31, 1993. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Polaroid Corporation
and subsidiary companies at December 31, 1993 and 1992, and the results of their
operations and cash flows for each of the years in the three-year period ended
December 31, 1993, in conformity with generally accepted accounting principles.
As discussed in Notes 3 and 11 to the consolidated financial statements, in 1993
the Company changed its method of accounting for income taxes and for certain
postretirement and postemployment benefits.
KPMG Peat Marwick
Boston, Massachusetts
February 1, 1994
Management's Report
Financial Reporting and Controls
The financial statements presented in this report were prepared in accordance
with generally accepted accounting principles. The Company maintains a number of
measures to assure the accuracy of its financial information. To that end, a
system of internal accounting controls and procedures has been developed to pro-
vide reasonable assurance that assets are safeguarded and that transactions are
recorded and reported properly. The Company also maintains financial policies
and procedures, and a program of internal audits, management reviews and careful
selection and training of qualified personnel.
The Audit Committee is composed entirely of outside directors. As such, it is in
a position to provide additional, independent reviews of the adequacy of inter-
nal controls and the quality of financial reporting.
I. MacAllister Booth
Chairman, President and
Chief Executive Officer
William J. O'Neill, Jr.
Executive Vice President and
Chief Financial Officer
29
<PAGE>
<PAGE>
Financial Statements
<TABLE>
<CAPTION>
Consolidated Statement of Earnings
Polaroid Corporation and Subsidiary Companies Years ended December 31,
(In millions, except per share data) 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales
United States $1,178.8 $1,145.7 $1,113.6
International 1,066.1 1,006.6 957.0
-------- -------- --------
Total net sales 2,244.9 2,152.3 2,070.6
-------- -------- --------
Cost of goods sold 1,296.5 1,178.0 1,082.5
Marketing, research, engineering and administrative expenses (Note 2) 763.0 760.5 741.5
Early retirement and other (Note 11) 44.0 - -
-------- -------- --------
Total costs 2,103.5 1,938.5 1,824.0
-------- -------- --------
Profit from operations 141.4 213.8 246.6
-------- -------- --------
Other income/(expense)
Litigation settlement, net of employee incentives - - 871.6
Interest income 7.7 15.9 25.6
Other .5 (8.1) (2.2)
-------- -------- --------
Total other income 8.2 7.8 895.0
Interest expense 47.9 58.5 58.4
-------- -------- --------
Earnings before income taxes and cumulative effect of changes in accounting principle 101.7 163.1 1,083.2
Federal, state and foreign income taxes (Note 3) 33.8 64.1 399.5
-------- -------- --------
Earnings before cumulative effect of changes in accounting principle 67.9 99.0 683.7
Cumulative effect to January 1, 1993 of changes in accounting principle for:
Postretirement benefits other than pensions, net of tax of $85.0 million (Note 11) (132.9) - -
Income taxes (Note 3) 33.6 - -
Postemployment benefits, net of tax of $12.7 million (Note 11) (19.9) - -
-------- -------- --------
Net earnings/(loss) $ (51.3) $ 99.0 $ 683.7
======== ======== ========
Primary earnings/(loss) per common share: (Note 1)
Earnings before cumulative effect of changes in accounting principle $ 1.45 $ 2.06 $ 12.54
Cumulative effect to January 1, 1993 of changes in accounting principle for:
Postretirement benefits other than pensions (2.84) - -
Income taxes 0.72 - -
Postemployment benefits (0.43) - -
-------- -------- --------
Net earnings/(loss) $ (1.10) $ 2.06 $ 12.54
Fully diluted earnings per common share (Note 1) - $ 2.02 $ 10.88
Cash dividends per common share $ .60 $ .60 $ .60
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
30
<PAGE>
<PAGE>
Consolidated Balance Sheet
<TABLE>
<CAPTION>
Polaroid Corporation and Subsidiary Companies
December 31,
(In millions) 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents (Note 5) $ 114.4 $ 109.1
Short-term investments 24.5 80.4
Receivables, less allowances of $23.3 in 1993 and $18.2 in 1992 557.6 493.0
Inventories (Note 4) 578.2 586.3
Prepaid expenses and other assets (Note 3) 139.0 82.0
-------- --------
Total current assets 1,413.7 1,350.8
Property, plant and equipment
Land 32.5 32.1
Buildings 309.0 274.7
Machinery and equipment 1,338.8 1,246.9
Construction in process 227.5 219.8
-------- --------
Total property, plant and equipment 1,907.8 1,773.5
Less accumulated depreciation 1,189.6 1,116.2
-------- --------
Net property, plant and equipment 718.2 657.3
Prepaid taxes-non-current (Note 3) 80.4 -
-------- --------
Total assets $2,212.3 $2,008.1
======== ========
- ------------------------------------------------------------------------------------------------------------------------------
Liabilities and stockholders' equity
Current liabilities
Short-term debt (Note 5) $ 106.2 $ 126.3
Current portion of long-term debt (Note 7) 32.6 29.5
Payables and accruals (Note 6) 243.5 237.9
Compensation and benefits (Notes 10 and 11) 118.3 105.8
Federal, state and foreign income taxes (Note 3) 79.5 62.3
-------- --------
Total current liabilities 580.1 561.8
-------- --------
Long-term debt (Note 7) 602.3 637.4
Accrued postretirement benefits 229.1 -
Accrued postemployment benefits 33.5 -
-------- --------
Total liabilities 1,445.0 1,199.2
-------- --------
Preferred stock, Series A and Series D, $1 par value, authorized 20,000,000 shares; all shares unissued - -
-------- --------
Common stockholders' equity (Note 9)
Common stock, $1 par value, authorized 150,000,000 shares 75.4 75.4
Additional paid-in capital 385.6 379.5
Retained earnings 1,602.0 1,680.3
Less: Treasury stock, at cost 1,145.5 1,147.1
Deferred compensation 150.2 179.2
-------- --------
Total common stockholders' equity 767.3 808.9
-------- --------
Total liabilities and stockholders' equity $2,212.3 $2,008.1
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
31
<PAGE>
<PAGE>
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Polaroid Corporation and Subsidiary Companies
Year Ended December 31,
(In millions) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net cash flows from operating activities
Net earnings/(loss) $ (51.3) $ 99.0 $ 683.7
Cumulative effect of changes in accounting principle 119.2 - -
Depreciation of property, plant and equipment 100.3 89.1 85.5
Increase in receivables (83.6) (54.0) (35.0)
(Increase)/decrease in inventories 8.0 (62.0) (5.3)
(Increase)/decrease in prepaids and other assets (2.8) 7.2 (13.0)
Increase in payables and accruals 15.3 29.6 11.7
Increase/(decrease) in compensation and benefits 2.1 (22.5) 8.1
Increase/(decrease) federal, state, and foreign income taxes payable 27.4 (38.7) 63.4
Other non-cash items 46.0 32.4 23.0
------- ------- -------
Net cash provided by operating activities 180.6 80.1 822.1
------- ------- -------
Cash flows from investing activities
Decrease in short-term investments 55.3 1.2 32.5
Additions to property, plant and equipment (165.6) (201.5) (175.8)
Proceeds from sale of fixed assets 1.4 - -
------- ------- -------
Net cash used by investing activities (108.9) (200.3) (143.3)
------- ------- -------
Cash flows from financing activities
Net increase/(decrease) in short-term debt (maturities 90 days or less) (8.7) 19.7 (10.2)
Short-term debt (maturities over 90 days):
Proceeds _ 68.7 46.5
Payments - (88.2) (58.1)
Proceeds from issuances of long-term debt (Notes 2 and 7) - 347.1 -
Repayments of long-term debt (26.8) (173.1) (228.8)
Cash dividends paid (28.0) (29.0) (38.9)
Purchase of treasury stock - (67.5) (26.5)
Proceeds from the issuance of stock in connection with stock incentive plan 3.3 .1 -
Repurchase of preferred stock (Notes 2 and 7) - - (281.6)
------- ------- -------
Net cash provided by/(used by) financing activities (60.2) 77.8 (597.6)
------- ------- -------
Effect of exchange rate changes on cash (6.2) (11.4) (2.1)
------- ------- -------
Net increase/(decrease) in cash and cash equivalents 5.3 (53.8) 79.1
Cash and cash equivalents at beginning of year 109.1 162.9 83.8
------- ------- -------
Cash and cash equivalents at end of year $ 114.4 $ 109.1 $ 162.9
======= ======= =======
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
32
<PAGE>
<PAGE>
Consolidated Statement of Changes in Common Stockholders' Equity
<TABLE>
<CAPTION>
Polaroid Corporation and Subsidiary Companies
Year Ended December 31,
(In millions, except number of shares) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common stock
Balance at January 1 (75,427,550 shares in 1993, 1992 and 1991) $ 75.4 $ 75.4 $ 75.4
-------- -------- --------
Balance at December 31 75.4 75.4 75.4
-------- -------- --------
Additional paid-in capital
Balance at January 1 379.5 379.5 379.5
Stock options-1993 (Note 10) 4.1 - -
Stock options exercised 1.7 - -
Stock options exercised-tax benefit .3 - -
-------- -------- --------
Balance at December 31 385.6 379.5 379.5
-------- -------- --------
Retained earnings
Balance at January 1 1,680.3 1,609.9 1,038.3
Net earnings/(loss) (51.3) 99.0 683.7
Dividends declared-common stock (28.0) (28.6) (29.9)
Dividends declared-preferred stock Series B - - (8.5)
Pay-in-kind dividends-preferred stock Series C - - (22.7)
ESOP dividend tax benefit 1.0 - -
Repurchase of redeemable preferred stock Series B and C (Note 8) - - (51.0)
-------- -------- --------
Balance at December 31 1,602.0 1,680.3 1,609.9
-------- -------- --------
Less:
Treasury stock
Balance at January 1 (28,759,335 shares in 1993, 26,508,489 shares in 1992,
and 25,357,689 shares in 1991) 1,147.1 1,083.7 1,053.1
Repurchase of shares on the open market (2,257,911 shares in 1992 and
1,150,800 shares in 1991) - 63.5 30.6
Issuance of shares in connection with stock incentive plan (137,930 shares in 1993,
7,065 shares in 1992) (1.6) (.1) -
-------- -------- --------
Balance at December 31 (28,621,405 shares in 1993, 28,759,335 shares in 1992,
and 26,508,489 shares in 1991) 1,145.5 1,147.1 1,083.7
-------- -------- --------
Balance at January 1 179.2 208.2 232.4
Deferred compensation
Stock options-1993 (Note 10) 3.5 - -
Loan repayments from ESOP Trust (32.5) (29.0) (24.2)
-------- -------- --------
Balance at December 31 150.2 179.2 208.2
-------- -------- --------
Total common stockholders' equity $ 767.3 $ 808.9 $ 772.9
======== ======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
33
<PAGE>
<PAGE>
Notes to Consolidated Financial Statements
Polaroid Corporation and Subsidiary Companies
1. Summary of Significant Accounting Policies
Principles of Consolidation:
The consolidated financial statements include the accounts of the domstic and
foreign subsidiaries, all of which are wholly owned. Intercompany accounts and
transactions are eliminated.
Cash Equivalents:
The Company considers all highly liquid securities with maturities of three
months or less when purchased to be cash equivalents.
Short-term Investments:
Short-term investments are highly liquid investments with maturities of more
than three months when purchased, and are carried at cost, which approximates
market.
Inventories:
Inventories are valued on a first-in, first-out basis at the lower of cost or
market value. Market value is determined by replacement cost or net realizable
value.
Income Taxes: Income tax expense is based upon earnings reported in the
financial statements. As of January 1, 1993, the Company adopted Financial
Accounting Standards Board Statement No. 109, "Accounting for Income Taxes" to
determine amounts related to income taxes. Under Statement 109, prepaid and
deferred taxes reflect the impact of temporary differences between the amounts
of assets and liabilities recognized for financial reporting purposes and the
amounts recognized for tax purposes. These deferred taxes are measured by
applying currently enacted tax rates. A valuation allowance reduces deferred tax
assets when it is "more likely than not" that some portion or all of the
deferred tax assets will not be recognized.
Provision for U.S. income taxes on the undistributed earnings of foreign subsi-
diaries is made only on those amounts in excess of the funds considered to be
permanently reinvested.
Property, Plant and Equipment:
The cost of buildings, machinery and equipment is depreciated, primarily by
accelerated depreciation methods, over the estimated useful lives of such
assets as follows: buildings, 20-40 years; machinery and equipment, 3-12 years.
Foreign Currency Translation:
The Company's foreign operations are measured by reflecting financial results
of these operations as if they had taken place within a U.S. dollar based eco-
nomic environment. Inventory, property, plant and equipment, cost of goods sold
and depreciation are remeasured from foreign currencies to U.S. dollars at his-
torical exchange rates. All other accounts are translated at current exchange
rates. Gains and losses resulting from remeasurement are included in income.
Patents and Trademarks:
Patents and trademarks are valued at $1.
Product Warranty:
Estimated product warranty costs are accrued at the time the products are sold.
Earnings Per Common Share:
Primary earnings per common share are computed by dividing net income
available to common stockholders (net income less preferred dividends) by the
weighted average number of common shares and dilutive common stock equivalents
outstanding for the period. Series C preferred stock, the warrants and stock
options are considered common stock equivalents. The number of shares used to
compute primary earnings per common share were (in thousands) 46,737 in 1993,
48,021 in 1992, and 53,860 in 1991.
34
<PAGE>
<PAGE>
Fully diluted earnings per common share reflect the maximum dilution that would
have resulted from the exercise of both Series B and Series C preferred stock,
the warrants, stock options, and the convertible debentures. Fully diluted earn-
ings per common share are computed by dividing net income, after adding back the
after-tax interest on the convertible debentures, by the weighted average number
of common shares and all dilutive securities. Fully diluted earnings per common
share were not reported in 1993 because they were greater than primary earnings
per common share. The number of shares used to compute fully diluted earnings
per common share were (in thousands) 52,419 in 1992 and 63,018 in 1991.
2. Supplemental Information
(In millions) 1993 1992 1991
- ------------------------------------------------------------------------------
Advertising $97.2 $103.4 $109.0
Research, engineering and
development 160.8 154.7 153.8
Maintenance and repairs 56.9 60.7 57.1
Taxes, other than payroll
and income taxes 12.7 11.6 12.5
Manufacturing Development Costs:
In addition to the research, engineering and development costs included in mar-
keting, research, engineering and administrative expenses, there were planned
manufacturing development costs (previously called "start-up costs") for major
new products included in costs of sales of approximately $30 million, $40 mi-
llion and $10 million in 1993, 1992 and 1991, respectively.
Interest Capitalization:
The Company has capitalized interest costs relating to certain qualifying
assets. In 1993, 1992 and 1991, the amounts of interest costs capitalized were
$12.6 million, $10.0 million, and $6.9 million, respectively.
Cash Flow Information:
Cash payments for interest and income taxes were:
(In millions) 1993 1992 1991
- ------------------------------------------------------------------------------
Interest $58.0 $57.6 $57.7
Income taxes 52.0 85.3 351.1
The 1991 issuance of $140 million of Subordinated Convertible Debentures in
connection with the repurchase of Series B and Series C redeemable preferred
stock has been treated as a non-cash transaction.
Certain prior year information has been reclassified to conform with current
year presentation of data.
Fair Value of Financial Instruments:
The carrying amounts of cash, cash equivalents, short-term investments, trade
receivables, short-term debt and trade payables approximate fair value because
of the short maturity of these financial instruments, and are therefore not in-
cluded in the information presented below. The Company utilizes foreign exchange
swaps to reduce the interest cost of its short-term foreign currency debt. The
swaps involve a simultaneous spot and forward contract normally with short expi-
ration dates. Foreign exchange gains or losses associated with such contracts
are included in current period earnings, but are by their nature not material to
the financial statements both in terms of the carrying value and the fair value.
The contract values of the foreign exchange swaps, which had expiration dates of
less than one month, were $42.1 million and $24.3 million at December 31, 1993
and 1992, respectively.
35
<PAGE>
<PAGE>
The fair value of the Company's long-term debt is estimated based on the quoted
market prices for the same or similar issues or on the current rates offered to
the Company for debt of the same remaining maturities. The estimated fair value
of the Company's long-term debt as of December 31 was as follows:
(In millions) 1993 1992
- -------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- -------- -------- ------
Long-term debt $634.9 $705.6 $666.9 $711.4
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These estima-
tes are subjective in nature and involve uncertainties and matters of signifi-
cant judgement and, therefore, cannot be determined with precision. Changes in
assumptions could significantly affect estimates.
Concentration of Credit Risk:
The Company places its temporary cash investments in highly rated financial ins-
truments and financial institutions and by policy, limits the amount of credit
exposure to any one financial institution. The Company's investment policy li-
mits its exposure to concentrations of credit risk.
The Company would be exposed to credit risk if a counterparty to a foreign ex-
change swap were to fail to meet its contractual obligation. The Company belie-
ves that the risk of financial loss due to the inability of a counterparty to
meet its obligation is remote and that any such loss would not be material. The
Company minimizes its risk exposure from foreign exchange swaps by limiting
counterparties to carefully selected major financial institutions.
The Company markets a substantial portion of its products to customers in the
retail industry, a market in which a number of companies are highly leveraged.
The Company continually evaluates the credit risk of these customers and belie-
ves that its allowances for doubtful accounts relative to its customer receiva-
bles are adequate.
3. Income Taxes
As of January 1, 1993, the Company adopted Financial Accounting Standards Board
Statement No. 109 "Accounting for Income Taxes," (FAS 109). The favorable cumu-
lative adjustment of $33.6 million is the result of recognizing the tax benefit
of future deductions based upon a "more likely than not criterion," instead of
the more stringent criteria of FAS 96, the Company's previous standard of
accounting for income taxes. Prior years' financial statements were not restated
to apply the provisions of FAS 109.
An analysis of income tax expense follows:
(In millions)
1993 Current Deferred Total
- -------------------------------------------------------------------------------
Federal $ (6.0) $ (7.6) $(13.6)
Statutory Rate Change - (3.3) (3.3)
State .9 (2.6) (1.7)
Foreign 58.2 (5.8) 52.4
------ ------- -------
Total $53.1 $(19.3) $ 33.8
====== ======= =======
1992
- -------------------------------------------------------------------------------
Federal $ 9.1 $ 2.8 $11.9
State 1.3 .6 1.9
Foreign 37.2 13.1 50.3
------ ------- -------
Total $47.6 $16.5 $64.1
====== ======= =======
1991
- -------------------------------------------------------------------------------
Federal $286.6 $(15.0) $271.6
State 87.2 .3 87.5
Foreign 43.5 (3.1) 40.4
------ ------- -------
Total $417.3 $(17.8) $399.5
====== ======= =======
36
<PAGE>
<PAGE>
Prepaid income taxes and deferred income taxes result from future tax benefits
and expenses related to the difference between the tax basis of assets and lia-
bilities and the amounts reported in the financial statements. These differences
predominately relate to U.S. operations. Carryforwards, tax overpayments and re-
funds due are also included in prepaid income taxes. The net of deferred income
tax assets and deferred income tax liabilities reflected on the consolidated ba-
lance sheet was $163.9 million as of December 31, 1993 and $143.0 million as of
January 1, 1993 (restated). Significant components of those amounts shown on the
balance sheet are as follows:
(Restated)
(In millions) December 31,1993 January 1, 1993
- ------------------------------------------------------------------------------
Deferred tax assets:
Property, plant & equipment
and trademarks $(27.5) $(24.4)
Inventory 36.1 44.5
Compensation and benefits 26.4 22.3
Postretirement and
postemployment benefits 109.9 97.7
All other 31.6 21.6
------- -------
Subtotal 176.5 161.7
Valuation allowance (8.3) (9.9)
------- -------
Total deferred tax assets $168.2 $151.8
======= =======
Deferred tax liabilities:
Property, plant & equipment
and trademarks $2.3 $3.0
Inventory - 2.8
Compensation and benefits 1.4 1.7
All other .6 1.3
------- -------
Total deferred tax liability 4.3 8.8
------- -------
Net deferred tax asset $163.9 $143.0
======= =======
Valuation allowances of $8.3 million as of December 31, 1993and $9.9 million as
of January 1, 1993 were established for all of the prepaid taxes related to a
capital loss carryforward and to those temporary differences which most likely
will produce capital losses upon reversal. Capital losses may be used only to
offset capital gains. Capital losses may be carried back 3 years and forward 5
years. The Company does not believe it is more likely than not that it will ge-
nerate sufficient capital gains within the appropriate time period to offset
those capital losses.
Management believes the Company will obtain the full benefit of the deferred tax
assets on the basis of its evaluation of the Company's anticipated profitability
over the period of years that the temporary differences are expected to become
tax deductions; it believes that sufficient book and taxable income will be ge-
nerated to realize the benefit of these tax assets. This assessment of profita-
bility takes into account the Company's present and anticipated split of domes-
tic and international earnings, the Company's previously announced strategic in-
vestments, and the fact that the deductible temporary differences related to
postretirement and other postemployment benefits reverse over a period of 30 to
40 years.
Management also considered the fact that as of the end of 1993, the Company had
only an alternative minimum tax credit which does not expire for regular tax
purposes. Otherwise, the Company had no credit carryforwards for regular tax
purposes and the Company has no history of net operating losses for tax pur-
poses. Of course, there can be no assurance that the Company will generate any
specific level of continuing earnings or where earnings will be generated.
37
<PAGE>
<PAGE>
An analysis of earnings before income taxes follows:
(In millions) 1993 1992 1991
- ------------------------------------------------------------------------------
Domestic $11.2 $59.6 $962.8
Foreign 90.5 103.5 120.4
------- ------- ---------
Total $101.7 $163.1 $1,083.2
======= ======= =========
A reconciliation of differences between the statutory U.S. federal
income tax rate and the Company's effective tax rate follows:
1993 1992 1991
- ------------------------------------------------------------------------------
U.S. statutory rate 35.0% 34.0% 34.0%
State taxes .5 .5 6.5
Impact of statutory rate change
on deferred taxes (3.3) - -
Valuation allowance change (1.6) - -
Tax effect resulting from
foreign activities 3.9 4.2 (1.8)
Other (1.2) .6 (1.8)
------- ------- -------
Effective tax rate 33.3% 39.3% 36.9%
======= ======= =======
Foreign activities include the effect of remeasuring foreign currency. The im-
pact on the tax rate for 1993 was an increase of 7.9 percentage points; for
1992, an increase of 1.7 percentage points; and for 1991, an increase of .1 per-
centage points.
At the end of 1993, the Company had an alternative minimum tax credit carryfor-
ward of $3.2 million which does not expire. The Company has no other credit ca-
rryforwards for regular tax purposes. For alternative minimum tax purposes, the
Company had a foreign tax credit carryforward at the end of 1993 of $69.3 mi-
llion; $5.7 million expires in 1994, $31.7 million expires in 1995, $3.9 million
expires in 1996, $6.6 million expires in 1997, and $21.4 million expires in
1998.
Undistributed earnings of foreign subsidiaries held for reinvestment in overseas
operations amounted to $418.9 million at December 31, 1993. Additional U.S. in-
come taxes may be due upon remittance of those earnings (net of foreign tax re-
ductions because of the distribution), but it is impractical to determine the
amount of any such additional taxes. If all those earnings were distributed as
dividends, foreign withholding taxes of approximately $21.5 million would be
payable.
Federal income tax returns of the Company for all years through 1988 have been
closed and all matters have been resolved. The Federal income tax returns of
1989 through 1991 are currently under audit.
4. Inventories
The classification of inventories at December 31 follows:
(In millions) 1993 1992
- --------------------------------------------------------------------
Raw materials $122.9 $125.2
Work-in-process 252.5 233.9
Finished goods 202.8 227.2
------- -------
Total $578.2 $586.3
======= =======
5. Short-term Debt
Short-term debt includes unsecured notes payable to banks of $106.2 million and
$126.1 million at December 31, 1993 and 1992, respectively, incurred by the Com-
pany's foreign subsidiaries to manage its foreign currency balance sheet exposu-
re. The Company also enters into foreign exchange swap transactions to manage
its international cash and debt positions (see Note 2).
During 1993 and 1992, the Company had an agreement for a $150 million domestic
working capital line of credit. There were no amounts outstanding under this
agreement at December 31, 1993 and 1992, respectively (see Note 7). The Company
maintains unsecured, uncommitted lines of credit for its international and U.S.
operations. Available unused, uncommitted lines of credit for international ope-
rations were $161.1 million at December 31, 1993 and $160.3 million at December
31, 1992. Cash balances of $1.8 million and $16.2 million at December 31, 1993
and 1992, respectively, were required to support international borrowings.
Available unused, uncommitted lines of credit for U.S. operations were $125.0
million at December 31, 1993. The Company's total borrowing capacity is limited
by certain debt covenants.
Interest expense on international short-term borrowings was $12.0 million in
1993, $18.3 million in 1992, $14.5 million in 1991. The average interest rates
in 1993 ranged from 7.5% to 10.3% and from 9.6% to 13.6% in 1992.
38
<PAGE>
<PAGE>
6. Payables and Accruals
The following items are included in payables and accruals at December 31:
(In millions) 1993 1992
- --------------------------------------------------------------------
Trade accounts payable $133.0 $140.8
Other accrued expenses and
current liabilities 110.5 97.1
------- -------
Total $243.5 $237.9
======= =======
7. Long-term Debt
Principal amounts of long-term debt outstanding as of December 31 are as
follows:
(In millions)
1993 Long-term Current Total
- -------------------------------------------------------------------------------
ESOP loan $114.2 $32.6 $146.8
7 1/4% Notes 149.3 - 149.3
8% Notes 198.6 - 198.6
8% Subordinated Convertible
Debentures 140.0 - 140.0
Other .2 - .2
------- ------- -------
Total $602.3 $32.6 $634.9
======= ======= =======
1992 Long-term Current Total
- -------------------------------------------------------------------------------
ESOP loan $149.7 $29.5 $179.2
7 1/4% Notes 149.2 - 149.2
8% Notes 198.3 - 198.3
8% Subordinated Convertible
Debentures 140.0 - 140.0
Other .2 - .2
------- ------- -------
Total $637.4 $29.5 $666.9
======= ======= =======
In 1992, the Company renegotiated its credit agreement. At December 31, 1993 the
Company had a working capital line of credit (see Note 5), and a long-term ESOP
loan. Borrowing costs under the credit agreements are tied to the Company's
long-term public debt ratings. The interest rates on the loans are based on va-
rious alternative interest indices at the Company's option and will fluctuate
over time. The agreements contain various restrictions, including the ability
of the Company to incur or guarantee debt. The Company is required to maintain a
certain net worth and to meet certain leverage and interest coverage ratios.
Under the ESOP loan, which was used to finance the leveraged Polaroid ESOP (see
Note 9), scheduled principal payments will be made semi-annually in gradually
increasing amounts through 1997 when a final payment of $38.5 million is due. To
date, common stock dividends paid to the plan trustee for ESOP-held shares have
been used to repay the principal amount outstanding. Interest expense on the
ESOP loan was $6.2 million in 1993, $8.3 million in 1992, and $13.5 million in
1991. The weighted average interest rate on the loan was 3.6%, 4.1%, and 6.0%
during 1993, 1992 and 1991, respectively.
In 1991, the Company retired its outstanding Series B and C preferred stock,
and the related warrants, in exchange for $280 million in cash and the issuance
of $140 million principal amount of Subordinated Convertible Debentures (the De-
bentures) due 2001. The Debentures carry an annual interest rate of 8% and are
convertible to common stock at $32.50 per share. The Debentures are redeemable
by the Company after September 30, 1998, and sooner if the current market price
per share of common stock is greater than or equal to $48.75 (appropriately ad-
justed for stock splits, combinations, dividends or similar events) for at least
20 of 30 consecutive trading days, at which time the Company has the right to
redeem the Debentures, in whole or part, at the end of the 30-day period. The
Debentures are redeemable by the Company and by the holder under certain circum-
stances. The Debentures are subordinated in right of payment to all existing
debt of the Company.
39
<PAGE>
<PAGE>
The Company filed a registration statement with the Securities and
Exchange Commission in January 1992 to issue from time to time in one or more
series, debt securities not to exceed $450 million principal amount. Each series
of debt securities will be offered on terms to be determined at the time of
sale. In January 1992, the Company issued $150 million 7 1/4% Notes (the 7 1/4%
Notes) due January 15, 1997. The 7 1/4% Notes were issued with a discount, at a
price of 99.30% of par with a yield of 7.42%, and may not be redeemed prior to
maturity. The proceeds were used in February 1992 to retire all of the Company's
outstanding $150 million 8 7/8% Notes due April 1, 1993. In March 1992, the
Company issued $200 million 8% Notes (the 8% Notes) due March 15, 1999. The 8%
Notes were issued with a discount, at a price of 99.054% of par with a yield of
8.18%, and may not be redeemed prior to maturity. The remaining $100 million may
be used to reduce outstanding indebtedness and, together with internally
generated funds, for capital expenditures and for working capital and other
corporate purposes.
The aggregate scheduled repayments on the long-term debt outstanding at December
31, 1993 are as follows:
1994- $ 32.6 million
1995- $ 36.0 million
1996- $ 39.7 million
1997- $188.6 million
1998- $ 0
1999 and thereafter- $340.0 million
8. Redeemable Preferred Stock Equity
In 1989, the Company sold $300 million of redeemable, cumulative, convertible
preferred stock to a private investor group. This preferred stock consisted of
$100 million (1,000 shares) of Series B Stock and $200 million (2,000 shares) of
Series C Stock. The Company issued pay-in-kind dividends of 220 Series C shares
($22.0 million) in 1991. In 1991, the Company retired all of its outstanding Se-
ries B and C preferred stock valued at $370.6 million and the related warrants
in exchange for $280.0 million in cash and $140.0 million of Debentures (See No-
te 7). The $49.4 million payment over the recorded value of the preferred stock
and $1.6 million in related expenses were recorded as reductions of retained
earnings in 1991.
9. Common Stockholders' Equity
As of December 31, 1993, the Company had repurchased a cumulative total of
approximately 3.4 million shares of its common stock for $94.0 million under its
$150 million stock repurchase program. During 1993, the Company did not
repurchase shares of common stock. The timing and amounts of the remaining
purchases will depend upon varying factors, including current market conditions,
as well as the Company's business and financial condition.
Deferred Compensation was $150.2 million and $179.2 million at December 31, 1993
and 1992, respectively. Deferred compensation included $146.7 million in 1993
and $179.2 million in 1992 for an employee stock ownership plan (ESOP) covering
substantially all domestic employees. These amounts which were recorded as
deductions from common stockholders' equity, represent amounts receivable in the
future from the ESOP Trust. Dividends on shares held by the ESOP Trust used to
repay the ESOP loan were $5.7 million in 1993, $5.9 million in 1992, and $6.0
million in 1991. An additional $3.5 million of deferred compensation was
recorded in 1993 for stock options (see Note 10).
10. Incentive Compensation and Stock Incentive Plans
The Company maintains annual cash incentive plans covering substantially all
domestic employees (Employee Incentive Compensation Plan), employees of manu-
facturing subsidiaries in the United Kingdom and the Netherlands (International
Manufacturing Plans) and substantially all executives (Executive Incentive Com-
pensation Plan).
Amounts charged to operations for incentive compensation plans are as follows:
(In millions) 1993 1992 1991
- ------------------------------------------------------------------------------
Employee Incentive Compensation Plan $6.2 $8.1 $12.3
International Manufacturing Plans .9 1.2 1.9
Executive Incentive Compensation Plan - 3.6 4.5
1988 Target Award Program - - (.6)
In addition, under the 1991 Special Incentive Plan the Company made a one-time
pretax award of $50 million to employees as a result of the Kodak litigation
settlement. This amount was charged to other income and reported as a reduction
of the litigation settlement proceeds.
40
<PAGE>
<PAGE>
In 1990, the Company adopted The Polaroid Stock Incentive Plan (the 1990 Plan)
under which officers and other key employees may be granted stock options, stock
appreciation rights and restricted stock as incentives to increase revenues and
profits. Stock options granted may be either non-qualified or incentive stock
options. Up to 3,000,000 shares of the Company's common stock have been autho-
rized for use under the 1990 Plan.
Effective May 1993, the Company adopted The 1993 Polaroid Stock Incentive Plan
(the 1993 Plan) under which officers and other key employees may be granted
awards in the form of stock options, stock appreciation rights, restricted
stock, and any other form determined by the Board of Directors to be consistent
with the 1993 Plan, as incentives to increase revenues and profits. Stock op-
tions granted may be either non-qualified or incentive stock options. A maximum
of 3,000,000 shares of the Company's common stock have been authorized for use
under the 1993 Plan, plus the unissued shares from the 1990 Plan. On June 15,
1993, the non-employee members of the Board approved the issuance of 848,122 op-
tions at an option price of $32.25 per share. This reflects the fair market va-
lue of the Company's common stock on April 26, 1993 which was the fifth business
day after the first quarter earnings release. That date corresponds to the date
on which options have been granted historically. Since the fair market value on
June 15, 1993 was $37.00 per share, $4.1 million was recorded as deferred com-
pensation, and is being amortized to compensation expense over the options' four
year vesting period. During 1993, $.6 million was recorded as compensation
expense.
The non-employee members of the Board of Directors are the administrator for the
1990 Plan and the 1993 Plan and, as such, can at the time of the grant determine
the vesting period, the period the option shall remain exercisable (or a stock
shall remain restricted), and may designate if a dividend equivalent payment (or
a dividend for restricted stock) will be paid on the grant equal to the dividend
payment made on a share of the Company's common stock. Data for the 1990 Plan
and the 1993 Plan is summarized below:
Number of Exercise Price
Options per Option
- -------------------------------------------------------------------------------
Outstanding at December 31,
1990 499,180 $43.75
1991 Activity:
Granted 916,820 $24.375 - $26.25
Cancelled (20,475) $24.375 - $43.75
Exercised - -
Outstanding at December 31, ------------
1991 1,395,525 $24.375 - $43.75
1992 Activity:
Granted 942,500 $25.25
Cancelled (40,665) $24.375 - $43.75
Exercised (7,065) $24.375
Outstanding at December 31, ------------
1992 2,290,295 $24.375 - $43.75
1993 Activity:
Granted 848,122 $32.25
Cancelled (54,697) $24.375 - $43.75
Exercised (137,930) $24.375 - $26.25
Outstanding at December ------------
31, 1993 2,945,790 $24.375 - $43.75
Exercisable at December ============
31, 1993 1,067,027 $24.375 - $43.75
============
Dividend equivalent payments of $1.7 million, $1.2 million, and $.7 million were
made in 1993, 1992 and 1991, respectively. The number of common shares reserved
for granting of future options was 2,902,035, 696,820, and 1,603,255 at December
31, 1993, 1992 and 1991, respectively.
41
<PAGE>
<PAGE>
The options awarded under the 1990 Plan and the 1993 Plan vest ratably each year
over approximately a four year period and are exercisable for approximately a
ten year period from the date of grant, if the holder remains in the employ of
the Company. If the option holder's employment terminates for reasons other than
change of control or retirement, no further vesting can occur. When an option
holder's employment terminates for any reason other than retirement, death or
disability, all vested options must be exercised within three months from the
termination date or approximately ten years from the date of the grant, which-
ever is earlier.
In 1990, the Company adopted the Polaroid Board of Directors' Stock Option Plan
(the Directors' Plan), which granted each non-employee director an option to
purchase 3,000 shares of the Company's common stock. For any new non-employee
director the date of the grant is the date the director joins the Board.
Under the Directors' Plan, options vest ratably each year over a four year pe-
riod from the date the director joins the Board and are exercisable for a ten
year period from the date of grant. Vesting ceases when an individual terminates
as a director, and a former director must exercise his or her vested options
within three years from the date of termination or ten years from the date of
grant whichever is earlier. Up to 100,000 shares of the Company's authorized
common stock may be issued under The Directors' Plan.
Since 1990, 42,000 options have been issued at prices ranging from $37.375 to
$43.75 under the Directors' Plan. At December 31 of 1993, 1992 and 1991, 39,000,
37,500, and 36,000 options were exercisable, respectively. None of the options
granted have been exercised. At December 31, 1993, a total of 58,000 shares of
the Company's authorized common stock were reserved for possible future grants
under The Directors' Plan.
11. Benefit Plans
The Company maintains a qualified noncontributory trusteed pension plan covering
substantially all domestic employees. The benefits are based on years of service
and final average compensation at retirement. The Company's general policy is to
fund the domestic pension trust to the extent such contributions would be deduc-
tible under the funding standards established under the Internal Revenue Code.
Plan assets consist primarily of high quality corporate and U.S. government
bonds, asset-backed securities and common stocks.
Employees of Polaroid's manufacturing subsidiaries in the United Kingdom and the
Netherlands are covered by trusteed, contributory pension plans. Amounts are
funded in accordance with local laws and economic conditions. Employees of most
other foreign subsidiaries are covered by insured plans. Related expenses, obli-
gations, and assets of these other non-manufacturing plans are not material and
therefore are not included in the information below.
Due principally to the overfunding of its pension plan trusts, the Company has
recognized pretax credits to earnings. Components of the net pension credit are
as follows:
(In millions) 1993 1992 1991
- ------------------------------------------------------------------------------
Service cost $25.4 $23.3 $20.2
Interest cost 56.1 53.1 47.9
Actual return on assets (90.9) (68.1) (128.5)
Net amortization and deferral 5.2 (12.5) 56.5
------ ------ ------
Net pension credit $(4.2) $(4.2) $(3.9)
====== ====== ======
The following table sets forth the plans' funded status and amounts recognized
in the Company's balance sheet at December 31:
(In millions) 1993 1992
- ------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Vested benefit obligation $662.0 $525.1
Non-vested benefit obligation 43.3 41.6
------- -------
Accumulated benefit obligation 705.3 566.7
Effect of projected pay increases 138.2 121.2
------- -------
Projected benefit obligation 843.5 687.9
Plan assets at fair market value 922.1 865.1
------- -------
Plan assets in excess of projected obligations 78.6 177.2
Unrecognized prior service cost 27.2 8.3
Unrecognized net gain (18.5) (82.2)
Unrecognized net assets at transition, net of
amortization (92.3) (104.1)
------- -------
Net pension liability $(5.0) $(.8)
======= =======
The assumptions used by the Company for pension accounting as of December 31
were as follows:
1993 1992 1991
- ------------------------------------------------------------------------------
Weighted average discount rate 7.5% 8.3% 8.5%
Weighted average rate of increase
in compensation levels 5.4% 5.8% 5.8%
Expected long-term rate of return
on assets 9.3% 9.3% 8.9%
42
<PAGE>
<PAGE>
In 1988, the Company's Board of Directors approved the Polaroid ESOP for the
benefit of employees (see Notes 7 and 9). The number of shares available for
allocation to individual accounts in any period is based on principal and
interest payments made on the ESOP loan. Amounts charged to operating expense
for this plan were $26.9 million, $23.2 million, and $18.3 million in 1993,
1992, and 1991, respectively.
The Company currently provides certain health and life insurance benefits to
eligible retired employees. Substantially all domestic employees who retire from
the Company, and meet the minimum age and service requirements of 55 and 10
years, respectively, become eligible for these benefits. The plans are currently
unfunded and may be modified in accordance with the terms of the plan documents.
The Company funds these benefits on a pay-as-you-go basis. Eligible retirees
under age 65 are required to contribute to the cost of their health care bene-
fits. Upon reaching age 65, eligible retirees' health care benefit coverage is
coordinated with Medicare. Eligible retirees are not required to contribute to
the cost of their life insurance benefits. Employees of most of the Company's
subsidiaries outside of the United States are covered by government programs.
As of January 1, 1993, the Company adopted Financial Accounting Standards Board
Statement No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" (FAS 106). This standard requires the expensing, on an accrual basis,
of all medical and life insurance benefits the Company provides to its retirees
and their dependents. The Company elected immediate recognition of the accumu-
lated liability at adoption. This resulted in a one-time, after-tax charge of
$132.9 million (net of income taxes of $85.0 million). There was no cash flow
impact associated with the adoption of FAS 106. After recognition of the cumu-
lative liability at adoption, the effect of FAS 106 on 1993 operating results
was a pre-tax expense of $28.8 million, approximately $20 million more than the
previous pay-as-you-go method of accounting. Prior to 1993, the cost of retiree
health care and life insurance benefits was recognized as an expense as claims
were paid. These costs totaled $8.8 million in 1992 and $8.0 million in 1991.
Components of the Company's net periodic postretirement benefit cost for the
year ended December 31, 1993 are as follows:
(In millions)
- ------------------------------------------------------------------------------
Service cost $11.2
Interest cost 17.6
Net periodic postretirement benefit cost $28.8
The following table sets forth the status of
the plan and amounts recognized in the Company's balance sheet at December 31,
1993:
(In millions)
- ------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $101.5
Fully eligible active plan participants 87.4
Other active plan participants 72.5
-------
Total accumulated postretirement benefit obligation 261.4
Unrecognized net loss 22.9
-------
Net postretirement benefit liability $238.5
=======
The discount rates used to determine the Accumulated Postretirement Benefit
Obligation (APBO) at December 31, 1993 and the expense for 1993 were 7.5% and
8.25%, respectively. The assumed health care cost trend rate used in measuring
the December 31, 1993 APBO and 1993 expense was 12% declining gradually over ten
years to an ultimate rate of 6%. These trend rates reflect the Company's current
experience and expectation that future rates will decline. If the health care
cost trend rate assumptions were increased by 1%, the APBO as of December 31,
1993 would increase by approximately $34.2 million. The effect of a 1% change on
the aggregate of service and interest cost for 1993 would have been an increase
of approximately $4.8 million.
The Company maintains the Polaroid Board of Directors' Retirement Plan (The Di-
rectors' Retirement Plan) which is a non-qualified deferred compensation plan
under which fully vested (at least five complete years of service on the Board)
non-employee members of the Board who retire receive annual lump sum payments
equal to the retainer amount they were paid in the last full year prior to reti-
rement. A participant or surviving spouse may receive payments under The Direc-
tors' Retirement Plan for the lesser of twenty-five years or the number of years
that the person served as a non-employee member of the Board prior to his or her
seventy-third birthday.
43
<PAGE>
<PAGE>
The estimated present value of future benefits under The Directors' Retirement
Plan is accrued annually based on credited service up to the participants'
actual retirement dates and is charged to expense. In 1993, 1992, and 1991,
$.1 million per year was charged to expense for current years' service.
In the fourth quarter of 1993, the Company adopted Financial Accounting Stan-
dards Board Statement No. 112, "Employer's Accounting for Postemployment Bene-
fits" (FAS 112) retroactive to January 1, 1993. This standard requires the ex-
pensing, on an accrual basis, of all benefits provided to former or inactive
employees, their beneficiaries and covered dependents after employment but be-
fore retirement. Previous to 1993, the Company recognized these disability and
survivor-related benefits on a pay-as-you-go basis. The cumulative effect of
this change in accounting for postemployment benefits resulted in a one-time
after-tax charge of $19.9 million (net of income taxes of $12.7 million.) The
effect of FAS 112 on 1993 operating results was a pre-tax charge of $6.3 mi-
llion, approximately $3.8 million more than the previous pay-as-you-go method of
accounting. There was no cash flow impact associated with the adoption of FAS
112.
The Company offered an early retirement program and a severance program to em-
ployees. The programs resulted in the departure of approximately 450 employees
at a cost to the Company of $40 million, which was recorded in 1993. The Company
also recorded, in 1993, a charge of $4 million to write down certain non-
strategic assets.
12. Rental Expense and Lease Commitments
Minimum annual rental commitments at December 31, 1993, under noncancellable
leases, principally for real estate, are payable as follows:
(In millions)
- ------------------------------------------------------------------------------
1994 $16.3
1995 12.6
1996 10.1
1997 9.1
1998 5.5
1999 and thereafter 7.1
Total minimum lease payments $60.7
Minimum payments have not been reduced by minimum sublease rentals of $2.7
million due in the future under noncancellable subleases.
Many of the leases contain renewal options and some contain escalation clauses
which require payments of additional rent to the extent of increases in the re-
lated operating costs.
Rental and lease expenses consisted of the following:
(In millions) 1993 1992 1991
- ------------------------------------------------------------------------------
Minimum rentals $23.8 $21.6 $18.7
Contingent rentals 7.4 5.8 7.5
------ ------ ------
Total $31.2 $27.4 $26.2
====== ====== ======
Sublease income amounted to $1.5 million in 1993, $2.0 million in 1992, and $1.8
million in 1991.
13. Segments of Business
The Company is engaged primarily in one line of business, the manufacture and
sale of instant imaging products. During 1993, sales to one customer, Wal-Mart
Stores, Inc., amounted to 11.6% of the Company's total sales.
Intercompany sales between geographic areas are accountedfor at prices repre-
sentative of unaffiliated party transactions.
The net after-tax effect of foreign currency exchange amounted to losses of $.9
million in 1993, $3.1 million in 1992 and $.5 million in 1991.
Total assets outside the United States, excluding cash and cash equivalents and
short-term investments, at December 31, were $772.9 million in 1993, $776.0
million in 1992, and $714.5 million in 1991.
The following table shows certain financial information relating to the
Company's operations in various geographic areas:
44
<PAGE>
<PAGE>
Geographic Areas
<TABLE>
<CAPTION>
Year Ended December 31,
(In millions) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales
United States
Customers $1,178.8 $1,145.7 $1,113.6
Intercompany 511.8 456.5 438.5
-------- -------- --------
1,690.6 1,602.2 1,552.1
======== ======== ========
Europe
Customers 597.9 632.8 624.6
Intercompany 347.3 312.6 287.3
-------- -------- --------
945.2 945.4 911.9
======== ======== ========
Asia/Pacific and Western Hemisphere
Customers 468.2 373.8 332.4
Intercompany 56.5 79.7 51.0
-------- -------- --------
524.7 453.5 383.4
-------- -------- --------
Eliminations (915.6) (848.8) (776.8)
-------- -------- --------
Net sales $2,244.9 $2,152.3 $2,070.6
======== ======== ========
- -----------------------------------------------------------------------------------------------------
Profits
United States $ 44.1 $ 118.7 $ 120.9
Europe 43.7 72.5 94.4
Asia/Pacific and Western Hemisphere 56.8 44.1 40.3
General corporate expense (12.4) (16.6) (18.0)
Eliminations 9.2 (4.9) 9.0
-------- -------- --------
Profit from operations 141.4 213.8 246.6
Other income/expense (39.7) (50.7) 836.6
-------- -------- --------
Earnings before income taxes $ 101.7 $ 163.1 $1,083.2
======== ======== ========
- -----------------------------------------------------------------------------------------------------
Assets
United States $1,532.7 $1,319.9 $1,153.9
Europe 556.0 562.7 548.7
Asia/Pacific and Western Hemisphere 216.9 213.3 165.8
Corporate assets
(cash, cash equivalents and short-term investments) 138.9 189.5 245.2
Eliminations (232.2) (277.3) (224.3)
-------- -------- --------
Total assets $2,212.3 $2,008.1 $1,889.3
======== ======== ========
</TABLE>
45
<PAGE>
<PAGE>
14. Contingencies
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 of 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. The plaintiff appealed this dismissal to the
Court of Appeals for the First Circuit on September 27, 1993. 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 has received a letter alleging that a broad range of the Company's
manufacturing equipment and products infringe a number of patents owned by
Jerome H. Lemelson. The letter proposes that the Company enter into licensing
negotiations to pay substantial past and future royalties under those patents.
The Company is studying the allegations.
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 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 ulti-
mate 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 $6.0 million as of December 31, 1993. The Com-
pany's analysis of data which underlies its establishment of this reserve is un-
dertaken on a quarterly basis. The reserve for such liability does not provide
for associated litigation costs, which, if any, are expected to be inconsequen-
tial 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 res-
ponse 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.
46
<PAGE>
<PAGE>
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; and Old
Southington Landfill in Southington, Connecticut; to which were allegedly deli-
vered hazardous substances generated or transported by or otherwise related to
the Company and those other PRPs. The Company and other PRPs have initiated
litigation with the objective of minimizing their exposure with respect to the
Bridgeport Rental and Oil Services site.
In 1988, the United States of America, the State of New Hampshire and the
Commonwealth of Massachusetts commenced actions against the Company and other
PRPs in the United States District Court for Massachusetts. The Plaintiffs asked
for recovery under Section 107 of CERCLA of response costs related to four sites
located in Bridgewater and Plymouth, Massachusetts, and Londonderry and Nashua,
New Hampshire. All of the sites are associated with the Cannons Engineering Cor-
poration, a company which was engaged in disposing of hazardous wastes. The Com-
pany has entered into a consent decree to resolve the issues raised in these ac-
tions. The consent decree has been entered by the court and the court's decision
has been affirmed in an appellate proceeding. Remediation activities are under
way.
In 1989, the United States of America and the Commonwealth of Massachusetts
commenced actions against the Company and other PRPs in the United States Dis-
trict Court for Massachusetts. The plaintiffs asked 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 re-
solve the issues raised in these actions. The consent decree was entered by the
court on May 24, 1993. An appeal by non-settling 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 an action 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 complaints.
In 1993, the United States of America and the Commonwealth of Massachusetts
commenced actions against the Company and other PRPs in the United States Dis-
trict Court for Massachusetts. The plaintiffs asked for recovery under CERCLA
and Massachusetts General Laws Chapter 21E for response costs related to the
Silresim Chemical Corporation site in Lowell, 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 October 12, 1993.
Also in 1993, the United States of America commenced an action against the Com-
pany 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 not yet 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.
47
<PAGE>
<PAGE>
On August 16, 1988, the Company initiated litigation against certain of its
insurance carriers seeking defense costs and indemnification with respect to
the Silresim, Charles George and Cannons sites. On August 5, 1992, Commercial
Union Insurance Company, Fireman's Fund Insurance Company, and The Travelers
Indemnity Company filed a separate action against the Company seeking a decla-
ratory judgement that they "have neither the obligation to defend nor the obli-
gation to indemnify Polaroid with respect to any Environmental Claims asserted
or to be asserted against Polaroid by third parties", except for those claims
already in litigation with respect to the Silresim, Charles George and Cannons
sites. On April 7, 1993, the Supreme Judicial Court of the Commonwealth of
Massachusetts held that the Company was not entitled to indemnification under
the involved policies for damage done to the Cannons sites. On November 5, 1993,
the Company settled all outstanding litigation with its insurance carriers.
The settlement agreements require that the terms be held in confidence.
15. Supplementary Financial Information
The section on pages 49-51 entitled Supplementary Financial Information has not
been audited by the Company's independent auditors. Those auditors have,
however, made a limited review of the 1993 and 1992 quarterly data on page 49 in
accordance with standards established by the American Institute of Certified
Public Accountants and that information is incorporated herein by reference.
Since the independent auditors did not audit the quarterly data for either year,
they express no opinion on such data.
48
<PAGE>
<PAGE>
Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
Polaroid Corporation and Subsidiary Companies
1993 (In millions, except per share and stock price data) First* Second* Third* Fourth Year
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $468.5 $569.9 $533.9 $672.6 $2,244.9
Profit/(loss) from operations (31.2) 54.0 41.3 77.3 141.4
Early retirement and other 44.0 - - - 44.0
Net earnings/(loss) (143.2) 28.1 24.6 39.2 (51.3)
Primary earnings/(loss) per common share (3.07) .60 .52 .83 (1.10)
Fully diluted earnings per common share** - .58 .51 .79 -
Cash dividends per common share .15 .15 .15 .15 .60
Stock prices***
High 31.25 38.63 38.75 37.25 38.75
Low 25.75 27.75 33.25 31.50 25.75
1992 First Second Third Fourth Year
- ------------------------------------------------------------------------------------------------------------------------------
Net sales $431.3 $557.7 $514.1 $649.2 $2,152.3
Profit from operations 26.8 65.0 59.2 62.8 213.8
Net earnings 6.2 35.5 27.7 29.6 99.0
Primary earnings per common share .13 .74 .59 .63 2.06
Fully diluted earnings per common share .13 .71 .57 .61 2.02
Cash dividends per common share .15 .15 .15 .15 .60
Stock prices***
High 31.50 28.75 33.63 35.00 35.00
Low 23.88 23.63 26.88 29.00 23.63
Stockholders of record as of February 11, 1994...................12,615
<FN>
* Restated for FAS 112.
** Fully diluted earnings per common share are not disclosed
for the first quarter and total year because they are
greater than primary earnings per common share.
*** Recorded on the New York Stock Exchange, the principal
market for the Company's common stock.
</TABLE>
49
<PAGE>
<PAGE>
Ten Year Financial Summary (Unaudited)
Polaroid Corporation and Subsidiary Companies
<TABLE>
<CAPTION>
Years ended December 31
(Dollar amounts in millions, except per share data) 1993 1992 1991
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consolidated Statement of Earnings
Net sales
United States $ 1,178.8 $ 1,145.7 $ 1,113.6
International 1,066.1 1,006.6 957.0
--------- --------- ---------
Total net sales 2,244.9 2,152.3 2,070.6
--------- --------- ---------
Cost of goods sold 1,296.5 1,178.0 1,082.5
Marketing, research, engineering, and
administrative expenses 763.0 760.5 741.5
Restructuring and other expense 44.0 - -
--------- --------- ---------
Total costs 2,103.5 1,938.5 1,824.0
--------- --------- ---------
Profit from operations 141.4 213.8 246.6
--------- --------- ---------
Litigation settlement, net of employee incentives - - 871.6
Other income 8.2 7.8 23.4
Interest expense 47.9 58.5 58.4
--------- --------- ---------
Earnings before income taxes 101.7 163.1 1,083.2
Federal, state and foreign income taxes 33.8 64.1 399.5
--------- --------- ---------
Net earnings/(loss)**** $ 67.9 $ 99.0 $ 683.7
========= ========= =========
Primary earnings/(loss) per common share** $ (1.10) $ 2.06 $ 12.54
Fully diluted earnings per common share*** - 2.02 10.88
Cash dividends per common share** $ .60 $ .60 $ .60
Common shares outstanding at end of year
(in thousands)** 46,806 46,668 48,919
Selected Balance Sheet Information
Working capital $ 833.6 $ 789.0 $ 695.3
Net property, plant and equipment 718.2 657.3 549.4
Total assets 2,212.3 2,008.1 1,889.3
Long-term debt 602.3 637.4 471.8
Redeemable preferred stock equity - - -
Common stockholders' equity 767.3 808.9 772.9
Other Statistical Data
Additions to property, plant and equipment $ 165.6 $ 201.5 $ 175.8
Depreciation $ 100.3 $ 89.1 $ 85.5
Payroll and benefits $ 699.2 $ 670.2 $ 690.6
Number of employees, end of year 12,048 12,359 12,003
Return on average common stockholders' equity**** 9.3% 12.7% 148.6%
<FN>
* Restated for FAS 96.
** Amounts for years prior to 1987 have been restated to reflect the 1987
two-for-one stock split.
*** Fully diluted earnings per common share are not disclosed for 1993 and
years prior to 1991 because they are either greater than primary
earnings per common share or they do not include dilutive securities.
**** 1993 is shown prior to the cumulative effects of FAS 106,109 and 112.
</TABLE>
50
<PAGE>
<PAGE>
Ten Year Financial Summary (Unaudited) (Continued)
<TABLE>
<CAPTION>
Years ended December 31
1990 1989 1988 1987* 1986* 1985* 1984
- -------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
$ 1,058.3 $ 1,091.8 $ 1,048.3 $ 1,009.3 $ 964.3 $ 779.3 $ 743.5
913.4 812.9 814.6 754.6 664.9 515.9 528.0
--------- --------- --------- --------- --------- --------- ---------
1,971.7 1,904.7 1,862.9 1,763.9 1,629.2 1,295.2 1,271.5
--------- --------- --------- --------- --------- --------- ---------
1,011.8 966.0 1,003.1 956.2 921.7 756.0 735.2
675.6 634.5 686.0 653.9 571.8 505.6 492.6
- 40.5 151.9 - - - -
--------- --------- --------- --------- --------- --------- ---------
1,687.4 1,641.0 1,841.0 1,610.1 1,493.5 1,261.6 1,227.8
--------- --------- --------- --------- --------- --------- ---------
284.3 263.7 21.9 153.8 135.7 33.6 43.7
- - - - - - -
15.0 35.1 28.0 16.7 18.1 28.9 39.5
81.3 86.2 29.0 15.0 18.6 22.3 20.9
--------- --------- --------- --------- --------- --------- ---------
218.0 212.6 20.9 155.5 135.2 40.2 62.3
67.0 67.6 43.5 30.3 27.0 42.6 36.6
--------- --------- --------- --------- --------- --------- ---------
$ 151.0 $ 145.0 $ (22.6) $ 125.2 $ 108.2 $ (2.4) $ 25.7
========= ========= ========= ========= ========== ========= =========
$ 2.20 $ 1.96 $ (.34) $ 2.02 $ 1.75 $ (.04) $ .42
- - - - - - -
$ .60 $ .60 $ .60 $ .60 $ .50 $ .50 $ .50
50,070 52,110 71,635 61,918 61,918 61,918 61,918
$ 609.1 $ 642.0 $ 980.0 $ 652.6 $ 602.4 $ 658.5 $ 734.2
461.0 430.9 433.8 395.6 357.7 349.0 306.6
1,701.3 1,776.7 1,957.2 1,599.4 1,444.6 1,345.4 1,346.0
513.8 602.2 402.3 - - 124.6 124.5
348.6 321.9 - - - - -
207.7 148.8 1,011.5 1,048.2 960.1 882.9 916.3
$ 120.9 $ 94.5 $ 127.0 $ 116.6 $ 82.9 $ 104.5 $ 82.7
$ 87.2 $ 87.4 $ 81.9 $ 75.7 $ 71.2 $ 56.9 $ 50.8
$ 587.6 $ 546.7 $ 725.9 $ 585.0 $ 548.2 $ 510.2 $ 475.4
11,768 11,441 11,613 13,662 14,765 12,932 13,402
63.3% 33.5% (2.2)% 12.5% 11.7% (.3)% 2.8%
</TABLE>
51
Appendix to Annual Report
(Graphic material omitted from electronic filing)
Page Description of information omitted
- ---- -----------------------------------
24 Two bar graphs showing "Sales by Geographic Area" and
"Profit from Operations" from 1989-1993.
Sales by Geographic Area
Asia/Pacific and
U.S. Europe Western Hemisphere Total
-------- -------- ------------------ --------
1989 $1,091.8 $504.5 $308.4 $1,904.7
1990 1,058.3 598.5 314.9 1,971.7
1991 1,113.6 624.6 332.4 2,070.6
1992 1,145.7 632.8 373.8 2,152.3
1993 $1,178.8 $597.9 $468.2 $2,244.9
Profit from Operations
----------------------
1989 $263.7 *
1990 $284.3
1991 $246.6
1992 $213.8
1993 $141.4 **
* Includes impact of $40.5 million of Shamrock expense
incurred in 1989.
** Includes impact of $44.0 million of charges from
early retirement and other expenses.
25 Two bar graphs showing "Cash and Cash Equivalents" and
"Capital Expenditures/Depreciation" from 1989-1993.
Cash and Cash Equivalents
-------------------------
1989 $131.2
1990 $ 83.8
1991 $162.9
1992 $109.1
1993 $114.4
For data on capital expenditures and depreciation see
"Ten Year Financial Summary" on pages 50 and 51 of the Annual
Report.
26 Two bar graphs showing "Primary Earning/(Loss) per
Common Share" and "Return on Average Common Stockholders'
Equity" from 1989-1993.
Primary Earning/(Loss) per Common Share
---------------------------------------
1989 $ 1.96*
1990 $ 2.20
1991 $12.54**
1992 $ 2.06
1993 $ 1.45***
* Includes impact of $40.5 million of Shamrock
expense incurred in 1989.
** Includes impact of Kodak litigation settlement
proceeds of $871.6 million before taxes.
*** Includes impact of $44.0 million of charges from
early retirement and other expenses, but
excludes the effect of cumulative changes in accounting
principle.
Return on Average Common Stockholders' Equity
---------------------------------------------
1989 33.5%*
1990 63.3%
1991 148.6%**
1992 12.7%
1993 9.3%***
* Includes impact of $40.5 million of Shamrock
expense incurred in 1989.
** Includes impact of Kodak litigation settlement
proceeds of $871.6 million before taxes.
*** Excludes the effect of cumulative changes in
accounting principle.
EXHIBIT 22. SUBSIDIARIES.
Polaroid Corporation and Subsidiary Companies
Place of
Name of Subsidiary Incorporation
- ---------------------------------------------------------------------
Inner City, Inc. Delaware
Polint, Inc. Delaware
PMC, Inc. Massachusetts
Polaroid Caribbean Corporation Delaware
Polaroid Asia Pacific International Inc. Delaware
Polaroid Asia Pacific Limited Delaware
Polaroid Europe Limited Netherlands
Polaroid Foundation Delaware
Polaroid Graphics Imaging, Inc. Delaware
Polaroid Canada Inc. Canada
Polaroid Gesellschaft mit beschrankter Haftung Germany
Polaroid Australia Pty. Limited Australia
Polaroid Gesellschaft m.b.H. Austria
Polaroid Far East Limited Hong Kong
Nippon Polaroid Kabushiki Kaisha Japan
Polaroid (Norge) A/S Norway
Polaroid de Mexico S.A. de C.V. Mexico
Polaroid Aktiebolag Sweden
Polaroid A.G. Switzerland
Polaroid (U.K.) Limited United Kingdom
Polaroid A/S Denmark
Polaroid International B.V. Netherlands
Polaroid (Italia) S.p.A. Italy
Polaroid (France) S.A. France
Polaroid (Belgium) N.V. Belgium
Polaroid (Europa) B.V. Netherlands
Polaroid Nederland B.V. Netherlands
Svetozor Russia
Polaroid do Brasil Ltda. Brazil
Polaroid Singapore Private Limited Singapore
Polaroid Oy Finland
Polaroid Espana, S.A. Spain
Polaroid Foreign Sales B.V. Netherlands
Polaroid India, Inc. Delaware
Polint International, Inc. Delaware
Polaroid of Shanghai Limited China
Subsidiaries of subsidiary companies are indented and listed below the
respective companies through which they are controlled.
Exhibit 23
----------
Independent Auditors' Consent
-----------------------------
The Board of Directors
Polaroid Corporation:
We consent to incorporation by reference in the registration
statements No. 33-36384 on Form S-8, No. 33-44661 on Form S-3, and No.
33-51173 on Form S-8 of our reports dated February 1, 1994, relating
to the consolidated balance sheets of Polaroid Corporation and
subsidiary companies as of December 31, 1993 and 1992, and the related
consolidated statements of earnings, cash flows, and changes in common
stockholders' equity and the related financial statement schedules for
each of the years in the three-year period ended December 31, 1993,
which reports appear in the December 31, 1993 annual report on Form
10-K of Polaroid Corporation.
Our report dated February 1, 1994 contains an explanatory paragraph
that states that in 1993 the Company changed its method of accounting
for income taxes and for certain postretirement and postemployment
benefits.
KPMG PEAT MARWICK
Boston Massachusetts
March 29, 1994
