<PAGE>
RULE NO. 424(b)(2)
REGISTRATION NO. 333-0791
REGISTRATION NO. 33-44661
PRICING SUPPLEMENT NO. 1
(To Prospectus Supplement dated January 9, 1997
and Prospectus dated December 11, 1996)
$300,000,000
POLAROID CORPORATION
[LOGO]
$150,000,000 6 3/4% NOTES DUE JANUARY 15, 2002
$150,000,000 7 1/4% NOTES DUE JANUARY 15, 2007
INTEREST PAYABLE JANUARY 15 AND JULY 15
-----------------
Interest on the $150,000,000 principal amount of the 6 3/4% Notes due
January 15, 2002 (the "2002 Notes") and the $150,000,000 principal amount of
the 7 1/4% Notes due January 15, 2007 (the "2007 Notes", and together with the
2002 Notes, the "Notes") of Polaroid Corporation (the "Company") will be
payable semiannually on January 15 and July 15 of each year, commencing July
15, 1997. The Notes may not be redeemed prior to maturity and are not subject
to any sinking fund.
The 2002 Notes and the 2007 Notes each will be represented by one or more
global Securities (each a "Global Security" or "Book-Entry Note") registered
in the name of a nominee of The Depository Trust Company (the "U.S.
Depositary"). Beneficial interests in Book-Entry Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
U.S. Depositary and by its participants. Except as described in the
accompanying Prospectus Supplement, owners of beneficial interests in Notes
will not be entitled to physical delivery of individual certificates for their
Notes in definitive form. See "Description of Notes--Book-Entry System" in the
Prospectus Supplement. The Notes will trade in the U.S. Depositary's Same-Day
Funds Settlement System until maturity, and secondary market trading activity
in the Notes will therefore settle in immediately available funds. See
"Certain Terms of the Notes--Same-Day Settlement and Payment" in this Pricing
Supplement.
The Notes are part of the series of Debt Securities of the Company
designated "Medium-Term Notes, Series A" described in the accompanying
Prospectus and Prospectus Supplement. The Notes will constitute unsecured and
unsubordinated indebtedness of the Company and will rank on a parity with the
Company's other unsecured and unsubordinated indebtedness.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PRICING SUPPLEMENT OR THE
PROSPECTUS SUPPLEMENT OR PROSPECTUS TO WHICH IT RELATES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public(1) Discount(2) Company(1)(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2002 Note.......................... 99.528% .625% 98.903%
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Total.................................. $149,292,000 $937,500 $148,354,500
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Per 2007 Note........................... 99.432% .650% 98.782%
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Total................................... $149,148,000 $975,000 $148,173,000
</TABLE>
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(1) Plus accrued interest, if any, from January 14, 1997 to date of delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act of
1933, as amended.
(3) Before deducting expenses payable by the Company estimated at $625,000.
-----------------
The Notes offered by this Pricing Supplement are offered by the applicable
Underwriters, subject to prior sale, withdrawal, cancellation, or modification
of the offer without notice, to delivery to and acceptance by such
Underwriters and to certain further legal conditions. It is expected that
delivery of the Notes will be made through the facilities of The Depository
Trust Company on or about January 14, 1997.
LEHMAN BROTHERS J.P. MORGAN & CO.
-----------------
ABN AMRO CHICAGO CORPORATION
CREDIT LYONNAIS SECURITIES (USA) INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
January 9, 1997
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
RECENT DEVELOPMENTS
On October 30, 1996, the Company announced the sale, which was completed on
November 26, 1996, of its Helios medical diagnostic imaging equipment product
line to Sterling Dry Imaging Systems, Inc. ("SDIS"), a new subsidiary of SDI
Holding Corp. ("Sterling"). The Company has also acquired a minority
investment in Sterling and SDIS. Earlier in 1996, Sterling, through another
subsidiary, had acquired the medical diagnostic imaging business of E.I.
duPont de Nemours, and therefore the Helios transaction constitutes a product
line extension by Sterling.
In connection with the Helios sale, the Company received a cash payment of
$29.5 million and 10% of the Common Stock of SDIS. The Company retains the
Helios film product line and has entered into a long-term requirements
contract to manufacture and supply Helios medical diagnostic film exclusively
to SDIS. The Company and SDIS have also entered into a laser diode supply
agreement, a technology research and development agreement and related
arrangements intended to support SDIS in developing and expanding the Helios
medical diagnostic imaging equipment product line. The Company has also agreed
to a non-competition restriction. The Company expects to record a pre-tax
charge of approximately $25.0 million for the fourth quarter of 1996 for
severance, inventory and fixed assets write offs and other costs related to
the Helios transaction.
As part of this transaction, the Company is investing $35.0 million ($20.0
million at closing and $15.0 million one year later) in SDIS 12.5% preferred
stock (nonvoting). The SDIS preferred stock will begin to accrue dividends,
which may be in the form of further shares of such preferred stock, when SDIS
accumulates $15.0 million of tangible net worth as defined on a GAAP basis.
The SDIS preferred stock does not have a scheduled redemption date. While the
Company believes SDIS currently has limited common equity, the ultimate value
of SDIS stock will depend on its future results.
Further, the Company has also purchased 50,000 shares of Sterling
Convertible Preferred Stock (convertible into 50,000 shares of Sterling Common
Stock) at a cost of $150 per share. The Company has also been granted the
right to purchase a total of 25,000 shares of Sterling Common Stock (which it
intends to exercise) at a cost of $250 per share from Sterling and Sterling
stockholders.
The Company believes the potential value of these transactions will be
primarily reflected in its equity in Sterling and SDIS, which are privately
owned companies, rather than through the sale of Helios film under the film
supply contract.
In addition to the disposition of assets of Helios, the Company expects to
record a pre-tax charge of approximately $15.0 million for the fourth quarter
of 1996 to write down parts and capital equipment under development for a
printer project and other costs. The Company has shifted its strategy relating
to the development of desktop printers for the home and office market to
emphasize alliances with leading printer manufacturers.
A Current Report on Form 8-K describing the Helios transaction, including
unaudited pro forma condensed consolidated financial information with respect
to the Helios transaction, and the write-down relating to the printer project
and other costs was filed on December 11, 1996, by the Company with the
Securities and Exchange Commission and is incorporated by reference in the
accompanying Prospectus.
On December 20, 1996, the Company gave notice that it is repurchasing all
$140.0 million principal amount of its 8% Convertible Subordinated Debentures
Due 2001 (the "Debentures"). The repurchase of the Debentures
PS-2
<PAGE>
will cost the Company approximately $144.0 million and is expected to occur on
January 22, 1997. The approximately $4.0 million pre-tax premium included in
such cost is expected to be recorded as an expense for the fourth quarter of
1996. See the Company's Quarterly Report on Form 10-Q for the quarterly period
ended September 29, 1996, incorporated by reference in the accompanying
Prospectus, for additional information regarding the Debentures. The Company
intends to use a portion of the proceeds of the sale of the Notes to fund the
repurchase of the Debentures. See "Use of Proceeds."
For further information with respect to the Company, see in the accompanying
Prospectus "The Company", "Factors That May Affect Future Results", "Ratio of
Earnings to Fixed Charges" and "Incorporation of Certain Documents by
Reference".
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Notes
principally (i) for the payment at maturity of $150,000,000 aggregate
principal amount of the Company's 7 1/4% Notes due January 15, 1997 (the "7
1/4% Notes"), (ii) for the repurchase, which is expected to occur on January
22, 1997, of the Debentures, at a cost of approximately $144,000,000, and
(iii) the balance of such net proceeds for general corporate purposes. After
giving effect to the issuance of the Notes, both the Notes and the 7 1/4%
Notes will be outstanding until a portion of the proceeds of the Notes is
applied to retire the 7 1/4% Notes. Accordingly, the Company and the lenders
under the Company's bank credit agreements have amended the covenants in such
credit agreements to permit the issuance of the Notes in advance of the
payment of the 7 1/4% Notes.
CERTAIN TERMS OF THE NOTES
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE NOTES SUPPLEMENTS,
AND TO THE EXTENT INCONSISTENT THEREWITH SUPERSEDES, THE DESCRIPTIONS OF THE
GENERAL TERMS AND PROVISIONS OF THE SERIES OF DEBT SECURITIES OF THE COMPANY
DESIGNATED "MEDIUM-TERM NOTES, SERIES A" (THE "MEDIUM-TERM NOTES") SET FORTH
UNDER "DESCRIPTION OF NOTES" IN THE PROSPECTUS SUPPLEMENT AND UNDER
"DESCRIPTION OF THE DEBT SECURITIES" IN THE PROSPECTUS. CERTAIN CAPITALIZED
TERMS USED HEREIN WITHOUT DEFINITION ARE DEFINED IN THE PROSPECTUS SUPPLEMENT
AND PROSPECTUS.
Each of the 2002 Notes and the 2007 Notes will bear interest at the rate set
forth with respect thereto on the cover page of this Pricing Supplement from
January 14, 1997, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for. The Interest Payment Dates for
the Notes will be January 15 and July 15 of each year, commencing July 15,
1997. The Regular Record Date with respect to each Interest Payment Date will
be the January 1 or July 1, as the case may be, immediately preceding such
Interest Payment Date.
The Stated Maturity of the 2002 Notes will be January 15, 2002. The Stated
Maturity of the 2007 Notes will be January 15, 2007. The Notes may not be
redeemed prior to maturity and are not subject to any sinking fund. The
Original Issue Date of the Notes will be January 14, 1997. Each of the 2002
Notes and the 2007 Notes will be issued in the form of Global Securities. All
principal of and interest on the Notes will be payable in U.S. Dollars. The
interest rates on the Notes are not subject to reset by the Company, the Notes
are not subject to repayment at the option of the Holder, and the Stated
Maturities of the Notes are not subject to extension by the Company. The Notes
will not be "Amortizing Notes," "Original Issue Discount Notes" or "Reset
Notes" (as such terms are used in the Prospectus Supplement).
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal of and interest on Global
Securities will be made by the Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, while the
Notes are registered in the name of the U.S. Depositary or its nominee, the
Notes will trade in the U.S. Depositary's Same-Day Funds Settlement System,
and secondary market trading activity in the Notes will therefore be required
by the U.S. Depositary to settle in immediately available funds. No assurance
can be given as to the effect, if any, of settlement in immediately available
funds on trading activity in the Notes.
PS-3
<PAGE>
OFFERING AND SALE
The Company has entered into a Purchase Agreement dated January 9, 1997 (the
"2002 Purchase Agreement") with respect to the 2002 Notes with Lehman Brothers
Inc. and J.P. Morgan Securities Inc., and a Purchase Agreement dated January
9, 1997 (such Purchase Agreement, together with the 2002 Purchase Agreement,
the "Purchase Agreements") with respect to the 2007 Notes with Lehman Brothers
Inc., J.P. Morgan Securities Inc., ABN AMRO Chicago Corporation, Credit
Lyonnais Securities (USA) Inc. and First Chicago Capital Markets, Inc. (the
"Underwriters"). Subject to the terms and conditions set forth in the
respective Purchase Agreements, the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters has severally agreed to
purchase, the principal amounts of Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITERS OF 2002 NOTES OF 2007 NOTES
------------ ---------------- ----------------
<S> <C> <C>
Lehman Brothers Inc. ...................... $ 75,000,000 $ 66,000,000
J.P. Morgan Securities Inc. ............... 75,000,000 66,000,000
ABN AMRO Chicago Corporation............... 0 6,000,000
Credit Lyonnais Securities (USA) Inc....... 0 6,000,000
First Chicago Capital Markets, Inc. ....... 0 6,000,000
------------ ------------
Total.................................... $150,000,000 $150,000,000
============ ============
</TABLE>
The Purchase Agreements provide that the obligations of the applicable
Underwriters to pay for and accept delivery of the Notes are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The applicable Underwriters are committed to take and pay for all
of the 2002 Notes, if any of the 2002 Notes are taken, and to take and pay for
all of the 2007 Notes, if any of the 2007 Notes are taken. The sale of each
issue of the Notes is not conditioned on the sale of the other issue of the
Notes.
The applicable Underwriters propose to offer each of the 2002 Notes and the
2007 Notes in part directly to the public at the initial public offering price
with respect thereto set forth on the cover page of this Pricing Supplement,
and in part to certain dealers at such price less a concession not in excess
of .375% of the principal amount of the 2002 Notes or not in excess of .400%
of the principal amount of the 2007 Notes, as the case may be. The applicable
Underwriters may allow, and such dealers may reallow, a concession not in
excess of .250% of the principal amount of the 2002 Notes or the 2007 Notes,
as the case may be, to certain brokers and dealers. After the Notes are
released for sale to the public, the offering prices and other selling terms
may from time to time be varied by the applicable Underwriters.
The Notes are new issues of securities with no established trading market.
Prior to the date hereof, no Medium-Term Notes have been sold pursuant to the
Distribution Agreement dated as of January 9, 1997, between the Company and
the agents named therein. The Company has been advised by each Underwriter
that it presently intends to make a market in the Notes for which it is acting
as Underwriter, although none of the Underwriters is obligated to do so and
may discontinue any market-making at any time without notice. No assurance can
be given as to the liquidity of the trading market for the Notes, or that an
active trading market for the Notes will develop. If an active public market
does not develop, the market prices and liquidity of the Notes may be
adversely affected.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
The Underwriters and their affiliates have performed and may in the future
perform investment banking, commercial banking and other financial services
for the Company and certain of its affiliates in the ordinary course of
business. Morgan Guaranty Trust Company of New York, an affiliate of J.P.
Morgan Securities Inc., is the agent bank and a lender under each of the
Company's $150,000,000 Credit Agreement dated as of August 24, 1994, as
amended (the "August 1994 Credit Agreement"), and the Company's $130,022,336
Credit Agreement dated as of November 29, 1994, as amended (the "November 1994
Credit Agreement"). ABN AMRO Bank N.V., an affiliate of ABN AMRO Chicago
Corporation, is a lender under the August 1994 Credit Agreement and the
November 1994 Credit Agreement. The First National Bank of Chicago, an
affiliate of First Chicago Capital Markets, Inc., is a lender under the August
1994 Credit Agreement. Credit Lyonnais New York Branch, an affiliate of Credit
Lyonnais Securities (USA) Inc., is a lender under the November 1994 Credit
Agreement.
PS-4
<PAGE>
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR INCOR-
PORATED BY REFERENCE IN THIS PRICING SUPPLEMENT, THE PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PRICING SUPPLEMENT,
THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH IN-
FORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY AGENT OR UNDERWRITER. NEITHER THE DELIVERY OF THIS PRIC-
ING SUPPLEMENT, THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF. THIS PRICING SUPPLEMENT, THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
DO NOT CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAK-
ING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
Page
----
PRICING SUPPLEMENT
Recent Developments........................................................ PS-2
Use of Proceeds ........................................................... PS-3
Certain Terms of the Notes................................................. PS-3
Offering and Sale ......................................................... PS-4
PROSPECTUS SUPPLEMENT
Description of Notes ...................................................... S-2
Foreign Currency Risks .................................................... S-23
Multi-Currency Notes ...................................................... S-24
Certain United States Federal Income Tax Considerations.................... S-25
Supplemental Plan of Distribution ......................................... S-31
Legal Matters ............................................................. S-32
PROSPECTUS
Available Information....................................................... 2
Incorporation of Certain Documents
by Reference............................................................... 2
The Company................................................................. 3
Factors That May Affect Future Results...................................... 3
Ratio of Earnings to Fixed Charges.......................................... 4
Use of Proceeds............................................................. 5
Description of the Debt Securities.......................................... 5
Plan of Distribution........................................................ 16
Experts..................................................................... 17
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$300,000,000
POLAROID CORPORATION
POLAROID
$150,000,000 6 3/4% NOTES DUE JANUARY 15, 2002
$150,000,000 7 1/4% NOTES DUE JANUARY 15, 2007
-----------------
PRICING SUPPLEMENT NO. 1
January 9, 1997
-----------------
LEHMAN BROTHERS
J.P. MORGAN & CO.
-----------------
ABN AMRO CHICAGO CORPORATION
CREDIT LYONNAIS SECURITIES (USA) INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
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