SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 2, 1995
-----------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-4085
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POLAROID CORPORATION
______________________________________________________________________
(Exact name of registrant as specified in its charter)
DELAWARE 04-1734655
- ---------------------------- -----------------
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
549 TECHNOLOGY SQUARE, CAMBRIDGE, MASSACHUSETTS 02139
______________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (6l7) 386-2000
______________________________________________________________________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
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Shares of Common Stock, $1 par value, outstanding as of May 5, 1995:
45,001,060 shares
______________________________________________________________________
This document contains 20 pages.
Exhibit index appears on page 13
______________________________________________________________________
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Earnings (Unaudited)
Periods ended April 2, 1995 and April 3, 1994
(In millions, except per share data)
First Quarter
1995 1994
Net sales:
United States $150.2 $211.4
International 259.4 251.2
- ----------------------------------------------------------------------------
Total net sales 409.6 462.6
- ----------------------------------------------------------------------------
Cost of sales 257.3 278.5
Marketing, research, engineering
and administrative expenses 183.9 177.2
Restructuring charge 77.0 -
- ---------------------------------------------------------------------------
Total costs 518.2 455.7
- ---------------------------------------------------------------------------
Profit/(loss) from operations (108.6) 6.9
Other income 4.6 3.8
Interest expense 12.7 10.6
- ---------------------------------------------------------------------------
Earnings/(loss) before income taxes (116.7) 0.1
Federal, state and foreign income tax
credit (40.9) (1.3)
- ---------------------------------------------------------------------------
Net earnings/(loss) ($75.8) $1.4
===========================================================================
Primary earnings/(loss) per common share ($1.66) $0.03
Fully diluted earnings per common share * *
- --------------------------------------------------------------------------
Cash dividends per common share $0.15 $0.15
Weighted average common shares used for primary
earnings per share calculation (in
thousands) 45,654** 47,242**
Common shares outstanding at end of period (in
thousands) 45,264 46,820
===========================================================================
* Fully diluted earnings per share are not stated because they are greater
than primary earnings per common share.
** The weighted average shares used to calculate primary earnings/(loss)
per common share include assumed conversion of options outstanding, as
appropriate.
2
<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Balance Sheet
(In millions)
(Unaudited) (Unaudited)
April 2, December 31, April 3,
Assets 1995 1994 1994
- ----------------------------------------------------------------------------
Current assets
Cash and cash equivalents $145.6 $143.3 $96.1
Short-term investments 45.1 85.6 31.5
Receivables 415.7 541.0 488.6
Inventories:
Raw materials 126.1 112.4 127.5
Work-in-process 247.1 231.2 259.8
Finished goods 308.0 233.8 236.2
- ---------------------------------------------------------------------------
Total inventories 681.2 577.4 623.5
Prepaid expenses and other assets 172.1 141.4 149.6
- ---------------------------------------------------------------------------
Total current assets 1,459.7 1,488.7 1,389.3
- ---------------------------------------------------------------------------
Property, plant and equipment:
Gross property, plant and
equipment 2,066.8 2,043.4 1,933.4
Less: accumulated depreciation 1,323.3 1,296.1 1,213.3
- ---------------------------------------------------------------------------
Net property, plant and equipment 743.5 747.3 720.1
- ---------------------------------------------------------------------------
Deferred tax assets 82.8 80.7 80.4
- ---------------------------------------------------------------------------
Total assets $2,286.0 $2,316.7 $2,189.8
==========================================================================
Liabilities and stockholders' equity
- ---------------------------------------------------------------------------
Current liabilities
Short-term debt $147.1 $117.1 $102.8
Current portion of long-term debt 35.9 35.9 32.6
Payables and accruals 256.1 275.7 235.5
Compensation and benefits 199.9 121.4 118.9
Federal, state and foreign income
taxes 30.8 51.8 64.7
- ---------------------------------------------------------------------------
Total current liabilities 669.8 601.9 554.5
- ---------------------------------------------------------------------------
Long-term debt 566.0 566.0 602.4
- ---------------------------------------------------------------------------
Accrued postretirement benefits 251.9 247.2 235.2
Accrued postemployment benefits 39.1 37.2 35.2
- ---------------------------------------------------------------------------
Common stockholders' equity
Common stock, $1 par value 75.4 75.4 75.4
Additional paid-in capital 387.6 387.2 385.8
Retained earnings 1,609.6 1,692.1 1,596.6
Less: Treasury stock, at cost 1,197.9 1,174.5 1,145.3
Deferred compensation 115.5 115.8 150.0
- ---------------------------------------------------------------------------
Total common stockholders' equity 759.2 864.4 762.5
- ---------------------------------------------------------------------------
Total liabilities and stockholders' $2,286.0 $2,316.7 $2,189.8
equity
===========================================================================
3
<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Cash Flows
Periods ended April 2, 1995 and April 3, 1994
(In millions)
(Unaudited)
First Quarter
Cash flows from operating activities 1995 1994
- -----------------------------------------------------------------------------
Net earnings/(loss) ($75.8) $1.4
Depreciation of property, plant and equipment 33.3 30.4
Decrease in receivables 145.0 81.6
Increase in inventories (103.8) (45.3)
Increase in prepaids and other assets (28.0) (9.8)
Decrease in payables and accruals (35.0) (16.0)
Increase/(decrease) in compensation and benefits 56.9 (2.3)
Decrease in federal, state and foreign income
taxes payable (22.0) (15.1)
Other non cash items 27.1 12.0
- ----------------------------------------------------------------------------
Net cash provided/(used) by operating activities (2.3) 36.9
- ----------------------------------------------------------------------------
Cash flows from investing activities
- ---------------------------------------------------------------------------
(Increase)/decrease in short-term investments 40.4 (6.7)
Additions to property, plant and equipment (31.0) (32.3)
- ---------------------------------------------------------------------------
Net cash provided/(used) by investing activities 9.4 (39.0)
- ---------------------------------------------------------------------------
Cash flows from financing activities
- ----------------------------------------------------------------------------
Net increase/(decrease) in short-term debt
(maturities 90 days or less) 23.6 (15.0)
Short-term debt having maturities more than 90
days
Proceeds - 5.8
Payments - -
Cash dividends paid (6.9) (7.0)
Stock options exercised 0.8 0.4
Purchase of treasury stock (23.8) -
- ---------------------------------------------------------------------------
Net cash used by financing activities (6.3) (15.8)
- ---------------------------------------------------------------------------
Effect of exchange rate changes on cash 1.5 (0.4)
- ---------------------------------------------------------------------------
Net increase/(decrease) in cash and cash equivalents 2.3 (18.3)
Cash and equivalents at beginning of period 143.3 114.4
- ---------------------------------------------------------------------------
Cash and cash equivalents at end of period $145.6 $96.1
===========================================================================
4
<PAGE>
POLAROID CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Changes in
Common Stockholders' Equity (Unaudited)
Periods Ended April 2, 1995 and April 3, 1994
(In millions)
First Quarter
1995 1994
Common stock
Balance at the beginning of the period $75.4 $75.4
Balance at the end of the period 75.4 75.4
- --------------------------------------------------------------------------
Additional paid-in capital
Balance at the beginning of the period 387.2 385.6
Stock options exercised 0.4 0.2
Balance at the end of the period 387.6 385.8
- --------------------------------------------------------------------------
Retained earnings
Balance at the beginning of the period 1,692.1 1,602.0
Net earnings/(loss) (75.8) 1.4
Dividends declared-common stock (6.9) (7.0)
ESOP dividend tax benefit received 0.2 0.2
Balance at the end of the period 1,609.6 1,596.6
- --------------------------------------------------------------------------
Less:
Treasury stock
Balance at the beginning of the period 1,174.5 1,145.5
Repurchase of common shares 23.8 -
Stock options exercised (0.4) (0.2)
Balance at the end of the period 1,197.9 1,145.3
- -------------------------------------------------------------------------
Deferred compensation
Balance at the beginning of the period 115.8 150.2
Stock options - 1993 (0.3) (0.2)
Balance at the end of the period 115.5 150.0
- -------------------------------------------------------------------------
Total common stockholders' equity $759.2 $762.5
=========================================================================
5
<PAGE>
Polaroid Corporation and Subsidiary Companies
Notes to Condensed Consolidated Financial Statements (Unaudited)
Basis of Presentation
- ---------------------
The condensed consolidated financial statements include the accounts
of the Company's domestic and foreign subsidiaries, all of which are
either wholly owned or majority owned. Intercompany accounts and
transactions are eliminated. This is an interim unaudited report,
subject to year-end audit and adjustments. The information furnished,
however, reflects all adjustments (consisting of normal recurring
accruals) which, in the opinion of management, are necessary for a
fair presentation of the results of the interim period.
Restructuring Charge
- --------------------
As previously announced, in the first quarter of 1995 the Company
implemented a restructuring plan which resulted in a pre-tax charge of
$77 million. The Company offered an early retirement program to
certain qualified employees and a voluntary severance program to all
employees, both of which were open from February 13, 1995 to March 31,
1995. As a result of these programs, approximately 930 employees will
terminate their employment. The pre-tax costs related to the
voluntary severance program were approximately $56 million.
Additionally, approximately $18 million represents enhanced retirement
benefits provided under the early retirement program that will be
funded from the Company's pension plans, and therefore has been
reflected as a non-cash item on the Company's statement of cash flows.
The functions of the terminating employees are as follows:
U.S. Non- Total
U.S.
---------- -------- --------
Manufacturing 442 118 560
Marketing, reseach,
engineering and administrative 323 47 370
--- --- ---
Total 765 165 930
=== === ===
Approximately 740 of these terminations and $35 million of related
cash severance payments are expected to be completed in the second
quarter of 1995. Approximately $13 million of additional cash
severance payments are expected to be paid in the second half of 1995
with the remaining balance expected to be paid in the first quarter of
1996. The remainder of the restructuring charge consisted of a pre-
tax charge of approximately $3 million for exit costs related to the
shutdown of certain facilities.
Legal Proceedings
- -----------------
Certain legal proceedings to which the Company is a party are
discussed in Part II, Item 1 of this filing on Form 10-Q.
Independent Auditors' Report
- ----------------------------
The April 2, 1995 and April 3, 1994 condensed consolidated financial
statements included in this filing on Form 10-Q have been reviewed by
KPMG Peat Marwick LLP, independent certified public accountants, in
accordance with established professional standards and procedures for
such review. The report by KPMG Peat Marwick LLP commenting upon
their review of the condensed consolidated financial statements
appears on page 7.
6
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors
Polaroid Corporation
We have reviewed the condensed consolidated balance sheet of Polaroid
Corporation and subsidiaries as of April 2, 1995 and April 3, 1994,
and the related condensed consolidated statements of earnings, cash
flows and changes in common stockholders' equity for the three-month
periods ended April 2, 1995 and April 3, 1994. These condensed
consolidated financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the condensed consolidated financial statements
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Polaroid
Corporation and subsidiaries as of December 31, 1994, and the related
consolidated statements of earnings, cash flows and changes in common
stockholders' equity for the year then ended (not presented herein);
and in our report dated January 31, 1995, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1994, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from
which it has been derived.
KPMG Peat Marwick LLP
Boston, Massachusetts
April 18, 1995
7
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
------------------------------------------------
First Quarter Results
- ---------------------
Worldwide sales of Polaroid Corporation and its subsidiaries decreased
11% to $409.6 million in the first quarter of 1995 compared with sales
of $462.6 million in the first quarter of 1994, primarily reflecting
the effect of the Company's previously-announced dealer inventory
adjustment program. The focus of this program is to enable the
Company to exercise better control over its distribution channels,
strengthen retail sales by increasing consumer promotions, and sharply
reduce the "gray market" for Polaroid products. Implementing this
program in the first quarter of 1995 has caused dealer inventory
levels to decline and "gray market" prices for Polaroid products to
rise.
In the first quarter of 1995, the impact of the dealer inventory
adjustment program on sales in the United States was in line with
management's expectations. However, the impact of this program on
sales in Western Europe was greater than expected. In connection with
the dealer inventory adjustment program, the Company, with
participating dealers, is focusing its advertising and promotions on
consumers of its cameras and film. This transition is expected to be
completed by the end of 1995.
In the first quarter of 1995, sales in the United States were $150.2
million, a decrease of 29% compared with $211.4 million in the first
quarter of 1994. U.S. shipments of cameras, film, including instant
and conventional, and videotapes in the first quarter of 1995 were
substantially lower than in the first quarter of 1994. U.S. sales in
the first quarter of 1995 were also affected by the fact that the
Easter holiday fell in the second quarter instead of the first.
International sales increased 3% to $259.4 million in the first
quarter of 1995 from $251.2 million in the same period a year ago. In
the first quarter of 1995, continuing improvements in sales in
emerging markets such as Russia offset the weaker than expected sales
in Western Europe that resulted from the implementation of the dealer
inventory adjustment program. Sales in Russia accounted for 15% of
the international sales in the first quarter of 1995 compared to 9% in
the first quarter of 1994. While the Company believes that emerging
markets present particularly attractive opportunities, such markets
tend to be significantly less stable than more established markets.
There can be no assurance that emerging markets will continue to
produce favorable results.
Gross margins as a percent of sales were 37% and 40% for the first
quarter of 1995 and 1994, respectively. The decrease in the gross
margin in the first quarter of 1995 compared with the first quarter of
1994 was primarily attributable to a significant decrease in worldwide
shipments of high margin instant films. Marketing, research,
engineering and administrative expenses for the first quarter of 1995
were $183.9 million compared to $177.2 million in the same period of
1994.
As previously announced, in the first quarter of 1995 the Company
implemented a restructuring plan which resulted in a pre-tax charge of
$77 million. The Company offered an early retirement program to
certain qualified employees and a voluntary severance program to all
employees, both of which were open from February 13, 1995 to March 31,
1995. As a result of these programs, approximately 930 employees will
terminate their employment. The pre-tax costs related to the
voluntary severance program were approximately $56 million.
Additionally, approximately $18 million represents enhanced retirement
benefits provided under the early retirement program that will be
funded from the Company's pension plans, and therefore has been
reflected as a non-cash item on the Company's statement of cash flows.
8
<PAGE>
First Quarter Results (continued)
- ---------------------------------
Approximately 740 of these terminations and $35 million of related
cash severance payments are expected to be completed in the second
quarter of 1995. Approximately $13 million of additional cash
severance payments are expected to be paid in the second half of 1995
with the remaining balance expected to be paid in the first quarter of
1996. The savings from the severance and early retirement programs
are expected to be about $46 million on an annualized basis, of which
$25 million is expected to be realized in 1995. The remainder of the
restructuring charge consisted of a pre-tax charge of approximately $3
million for exit costs related to the shutdown of certain facilities
Excluding the restructuring charge of $77.0 million, the 1995 first
quarter loss from operations of $31.6 million was primarily the result
of the dealer inventory adjustment program. With the restructuring
charge, the loss from operations for the first quarter of 1995 was
$108.6 million compared with a profit from operations of $6.9 million
for the first quarter of 1994.
Other income was $4.6 million in the first quarter of 1995 compared
with $3.8 million in the first quarter of 1994. Interest expense
increased to $12.7 million in the first quarter of 1995 from $10.6
million in the first quarter of 1994 as a result of lower amounts of
interest capitalized on qualifying assets.
The pre-tax loss of $116.7 million for the first quarter of 1995
generated a tax credit of $40.9 million. For the first quarter of
1994, the income tax credit of $1.3 million on pre-tax earnings of $.1
million was primarily attributable to the beneficial tax effect of
foreign currency exchange. The net after-tax foreign currency gain
from balance sheet translation amounted to $.1 million and $.4 million
in the first quarter of 1995 and 1994, respectively.
The net loss for the 1995 first quarter was $75.8 million or $1.66 per
common share compared with net earnings of $1.4 million or $.03 per
common share for the first quarter of 1994. Excluding the
restructuring charge, the net loss per common share would have been
$.57 for the first quarter of 1995.
Financial Liquidity and Capital Resources
- -----------------------------------------
At April 2, 1995, the Company's cash and cash equivalents and short-
term investments amounted to $190.7 million, compared with $ 228.9
million at December 31, 1994. In addition, working capital decreased
to $789.9 million at April 2, 1995 from $886.8 million at December 31,
1994. Cash flows from investing activities for the first three months
of 1995 more than offset cash used by operating activities and
financing activities. The decrease in receivables and increase in
inventories from December 31, 1994 to April 2, 1995 were primarily
attributable to the dealer inventory adjustment program. During the
first three months of 1995, capital spending was $31.0 million and
depreciation expense was $33.3 million. Total capital expenditures in
1995 are expected to be approximately $165 million. The Company
expended cash during the first three months of 1995 to purchase $23.8
million of treasury stock and to pay dividends to common stockholders.
No cash payments were made under the Company's 1995 severance program
in the first quarter of 1995. Approximately $35 million of cash
payments related to this program are expected to be made in the second
quarter of 1995. Approximately $13 million of additional cash
severance payments are expected to be paid in the second half of 1995
with the remaining balance expected to be paid in the first quarter of
1996.
9
<PAGE>
Financial Liquidity and Capital Resources (continued)
- -----------------------------------------------------
At April 3, 1994, cash and cash equivalents and short-term investments
were $127.6 million and working capital was $834.8 million. During
the period from April 3, 1994 to April 2, 1995, cash generated from
profitable operations more than offset cash used by investing and
financing activities. Capital spending during the period from April
3, 1994 to April 2, 1995 was $145.4 million, which exceeded
depreciation expense of $121.1 million. The Company expended cash
during the twelve month period from April 3, 1994 to April 2, 1995 to
reduce borrowings, to purchase treasury stock, and to pay dividends to
common stockholders.
The Company maintains a five year $150 million domestic working
capital line of credit for general corporate purposes which expires in
1999. At April 2, 1995, the entire $150 million of borrowing capacity
under this facility remained available to meet working capital needs.
Additional unused, uncommitted lines of credit for international
operations at April 2, 1995 were $155.0 million. The Company also has
$100 million of unsold debt securities remaining from its existing
shelf registration, filed in January 1992, available for general
corporate purposes. The Company's total borrowing capacity is limited
by certain debt covenants.
As of January 1, 1995, the Company had an unexpended balance of $25.4
remaining from its prior stock repurchase program. In January 1995,
the Board of Directors approved a program to repurchase an additional
$100 million of the Company's common stock on the open market, in
privately negotiated transactions or otherwise (which may include
transactions with Polaroid stock option holders and with Polaroid
retirement plans, including the employee stock ownership plan). In
the first quarter of 1995, the Company repurchased 766,700 shares for
$23.8 million leaving an unexpended balance of $101.6 million as of
April 2, 1995. The timing and amounts of any future purchases under
these programs depend upon many factors, including market conditions,
as well as the Company's business and financial condition.
The Company believes that its borrowing capacity and other existing
corporate resources are adequate for at least the next twelve months
to meet working capital needs, to fund planned capital expenditures,
to pursue future growth opportunities, and to fund other corporate
requirements.
Foreign Currency Exchange
- -------------------------
The Company generates a substantial portion of its revenues in
international markets, which subjects its operations to the exposure
of foreign currency fluctuations. The impact of currency fluctuations
can be positive or negative in any given period. The Company's
ability to counteract foreign currency exchange movement is primarily
dependent on pricing.
To minimize the adverse impact of foreign currency fluctuations on its
foreign currency-denominated net assets, the Company may engage in
foreign currency-denominated borrowings. The Company determines the
aggregate amount of such borrowings based on its forecast of the
Company's net asset position and the relative strength of the U.S.
dollar as compared to foreign currencies. These borrowings create
foreign currency-denominated liabilities that hedge the Company's
foreign currency-denominated net assets. Upon receipt of the borrowed
foreign currency-denominated funds, the Company converts those funds
to U.S. dollars at the spot exchange rate. Exchange gains and losses
on the foreign currency-denominated borrowings are recognized in
earnings as incurred. At April 2, 1995 and April 3, 1994, the amount
of the Company's outstanding short-term foreign currency-denominated
borrowings were $123.2 million and $96.8 million, respectively.
10
<PAGE>
Foreign Currency Exchange (continued)
- -------------------------------------
From time to time, the Company may use over-the-counter foreign
exchange swaps to reduce the interest expense incurred through the
borrowings described above and to replace the hedge created by those
borrowings. When a foreign exchange swap is used to replace a hedge,
the currency received by the Company in the spot market component of
the foreign exchange swap is used to close out the borrowings and
simultaneously, the hedge is reinstituted through a forward contract
(not exceeding six months). The net interest value of the foreign
exchange swap contract is amortized to earnings over the life of the
contract. Exchange gains or losses on the foreign currency obligation
component of the forward contract are recognized in earnings as
incurred in each accounting period. The Company does not enter into
foreign exchange swaps for trading purposes. The aggregate notional
value of these short-term foreign exchange swap contracts outstanding
at April 2, 1995 and April 3, 1994 was $17.3 million and $45.6
million, respectively.
When the Company may not have sufficient flexibility to change prices,
the Company may, from time to time, also purchase U.S. dollar call
options. The term of these call options typically does not exceed one
year. The Company's purchase of call options allows it to protect a
portion of its expected foreign currency-denominated revenues from
adverse foreign currency exchange movement. The Company does not buy
call options which can be exercised prior to the expiration date, nor
does it write options or purchase call options for trading purposes.
The Company defers premiums and any gains for its call options
activity until the option exercise date. At April 2, 1995, option
contracts with a notional value of $139.2 million were outstanding.
No option contracts were outstanding at April 3, 1994.
The Company maintains a Monetary Control Center (the MCC), which
operates under written policies and procedures defining day-to-day
operating guidelines, including exposure limits, to contract for the
foreign currency-denominated borrowings, foreign exchange swaps and
call options described above. The MCC is subject to random
independent audits and reports to a supervisory committee comprised of
members of the Company's management. The MCC publishes monthly
reports to the Company's management detailing the foreign currency
activities it has engaged in for the prior month.
Impact of Inflation
- -------------------
Inflation continues to be a factor in many countries in which the
Company does business. The Company's pricing strategy has offset to a
considerable degree inflation and normal cost increases. The overall
inflationary impact on earnings has been immaterial.
11
<PAGE>
PART II. OTHER INFORMATION
Item 1. - Legal Proceedings
---------------------------
The Company, together with other parties, is currently designated a
Potentially Responsible Party (PRP) by the United States Environmental
Protection Agency and certain state agencies with respect to the
response costs for environmental remediation at several sites. 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
in which the Company is able to determine the likely exposure, such
amount has been included in the Company's reserve for environmental
liabilities. 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 as of April 2,
1995 was $5.5 million, the majority of which the Company currently
expects to be payable over the next two to three years. 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 such
amounts as management believes appropriate from time to time as
circumstances warrant. This reserve does not take into account
potential recoveries from third parties.
The Company reviews its recurring internal expenditures on
environmental matters, as well as capital expenditures related to
environmental compliance, on a monthly basis, and reviews its third-
party expenditures on environmental matters on a quarterly basis. The
Company believes that these expenditures have not had and will not
have a materially adverse effect on the financial condition or
operating results of the Company.
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 the
liability is joint and several.
The Company is involved in various other legal proceedings and claims
arising in the ordinary course of business. Management believes that
the disposition of these matters will not have a materially adverse
effect on the financial condition or results of operations of the
Company.
12
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits:
(11) Computation of earnings per share.
(15) Letter from KPMG Peat Marwick LLP re unaudited interim
financial information.
(27) Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports on Form 8-K during the quarter ended April
2, 1995.
13
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
POLAROID CORPORATION
------------------------------------
(Registrant)
May 15, 1995 William J. O'Neill, Jr.
------------ ------------------------------------
William J. O'Neill, Jr.
Executive Vice President and
Chief Financial Officer
14
<PAGE>
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
FIRST QUARTER, 1995
PRIMARY COMPUTATION
Net loss per statement of earnings $ (75.8)
=========
Weighted average number of common
shares outstanding 45.7
Weighted average number of common
stock equivalents --
---------
Weighted average number of common
shares, as adjusted 45.7
=========
Primary loss per common share $ (1.66)
=========
15
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
FIRST QUARTER, 1995
FULLY DILUTED COMPUTATION
Net loss per statement of earnings $(75.8)
Add: effect of elimination of after-tax interest expense
on $140 million 8% convertible debentures 1.7
------
Net loss, as adjusted $(74.1)
=======
Weighted average number of common
shares outstanding 45.7
Weighted average number of common
stock equivalents .5
Add: effect of converting $140 million
8% debentures into common stock 4.3 (A)
------
Weighted average number of common
shares, as adjusted 50.5
======
Fully diluted loss per common share $(1.47) (B)
======
(A) Assumes conversion of $140 million 8% convertible debentures at a price
of $32.50 per common share in accordance with the convertible debenture
exchange agreement.
(B) This computation is submitted as an exhibit to the Company's Form
10-Q in accordance with Regulation S-K item 601(b)(11),
although presenting the computation is not in accord
with paragraph 40 of APB Opinion 15 because the computation
produces an antidilutive result.
16
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
FIRST QUARTER, 1994
PRIMARY COMPUTATION
Net earnings per statement of earnings $ 1.4
======
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 $ .03
======
17
<PAGE>
POLAROID CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (Continued)
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
FIRST QUARTER, 1994
FULLY DILUTED COMPUTATION
Net earnings per statement of earnings $ 1.4
Add: effect of elimination of after-tax interest expense
on $140 million 8% convertible debentures 1.7
------
Net earnings, as adjusted $ 3.1
======
Weighted average number of common
shares outstanding used for primary computation 46.8
Weighted average number of common
stock equivalents .4
Add: effect of converting $140 million
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 $ .06 (B)
=======
(A) Assumes conversion of $140 million 8% convertible debentures at a
price of $32.50 per common share in accordance with the convertible
debenture exchange agreement.
(B) This computation is submitted as an exhibit to the Company's Form 10-Q
in accordance with Regulation S-K item 601(b)(11), although presenting
the computation is not in accord with paragraph 40 of APB Opinion 15
because the computation produces an antidilutive result.
18
<PAGE>
Exhibit 15
The Board of Directors
Polaroid Corporation
Ladies and Gentlemen:
Re: Registration Statements No. 33-36384, No. 33-44661 and No. 33-51173
With respect to the subject registration statements, we
acknowledge our awareness of the use therein of our report dated
April 18, 1995, related to our review of interim financial
information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such
report is not considered part of a registration statement prepared
or certified by an accountant or a report prepared or certified by
an accountant within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
KPMG Peat Marwick LLP
Boston, Massachusetts
May 15, 1995
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from S.E.C. Form 10-Q for quarter ended April 2, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> APR-02-1995
<CASH> 145,600
<SECURITIES> 45,100
<RECEIVABLES> 437,600
<ALLOWANCES> (21,900)
<INVENTORY> 681,200
<CURRENT-ASSETS> 1,459,700
<PP&E> 2,066,800
<DEPRECIATION> (1,323,300)
<TOTAL-ASSETS> 2,286,000
<CURRENT-LIABILITIES> 669,800
<BONDS> 566,000
<COMMON> 75,400
0
0
<OTHER-SE> 683,800
<TOTAL-LIABILITY-AND-EQUITY> 2,286,000
<SALES> 409,600
<TOTAL-REVENUES> 409,600
<CGS> 257,300
<TOTAL-COSTS> 518,200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,500
<INTEREST-EXPENSE> 12,700
<INCOME-PRETAX> (116,700)
<INCOME-TAX> (40,900)
<INCOME-CONTINUING> (75,800)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (75,800)
<EPS-PRIMARY> (1.66)
<EPS-DILUTED> 0
</TABLE>
