<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
/X/ ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number 1-4085
POLAROID RETIREMENT SAVINGS PLAN
-------------------------------------------------------------
(Full title of the plan; address is the same as
that of the issuer named below)
POLAROID CORPORATION
549 TECHNOLOGY SQUARE
CAMBRIDGE, MASSACHUSETTS 02139
-------------------------------------------------------------
(Name of issuer of securities held pursuant to the plan
and the address of its principal executive office)
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES
Page
-----
Report of Independent Auditors........................................ F-1
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits -
as of December 31, 1998 and 1997................................. F-2
Statements of Changes in Net Assets Available for Benefits -
Years ended December 31, 1998 and 1997........................... F-3
Notes to Financial Statements......................................... F-4
<PAGE>
SUPPLEMENTARY SCHEDULES
Item 27a - Form 5500:
Schedule of Assets Held for Investment Purposes -
as of December 31, 1998.............................. F-18
Item 27d - Form 5500:
Schedule of Reportable Transactions
Year ended December 31, 1998........................ F-21
EXHIBIT INDEX
Exhibit 23 Consent of KPMG LLP.
- 2 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
POLAROID RETIREMENT SAVINGS PLAN
--------------------------------
(Name of plan)
June 28, 1998 /S/ Judith G. Boynton
- ------------- -----------------
Judith G. Boynton
Chairman
Fund Manager
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Financial Statements and Supplemental Schedules
December 31, 1998 and 1997
With Independent Auditors' Report Thereon
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees
Polaroid Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Polaroid Retirement Savings Plan as of December 31, 1998 and 1997, and
the related statements of changes in net assets available for benefits for the
years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1998 and 1997, and the changes in the net assets available for
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for purposes
of additional analysis and are not a required part of the basic financial
statements, but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
June 11, 1999
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31, 1998 and 1997
<TABLE>
<CAPTION>
ASSETS 1998 1997
---- ----
<S> <C> <C>
Investments (note 4) $ 824,836,887 955,999,600
Temporary cash investments 52,905 2,122,137
---------------- -----------
824,889,792 958,121,737
---------------- -----------
---------------- -----------
Receivables:
Accrued interest and dividends 1,649,210 1,303,502
Due from investments sold 61,581 268,849
---------------- -----------
Total receivables 1,710,791 1,572,351
---------------- -----------
Total assets 826,600,583 959,694,088
---------------- -----------
LIABILITIES
Administrative fees payable 176,963 162,002
Income distribution payable 741,641 308,915
---------------- -----------
Total liabilities 918,604 470,917
---------------- -----------
---------------- -----------
Net assets available for benefits $ 825,681,979 959,223,171
---------------- -----------
---------------- -----------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Additions to net assets attributed to:
Contributions:
Employers' contributions $ 24,228,792 --
Employees' 401(k) contributions 18,685,948 16,277,982
Employees' voluntary contributions 718,266 572,510
Rollover contributions 1,118,193 657,291
---------------- -----------
Total contributions 44,751,199 17,507,783
---------------- -----------
Investment income:
Dividends 33,304,596 25,117,412
Interest 8,731,025 8,906,959
Net (depreciation) appreciation in fair market value of
investments (note 4) (128,013,392) 114,476,177
---------------- -----------
Total investment (loss) income (85,977,771) 148,500,548
---------------- -----------
Transfer from other plan (note 1) -- 302,029,729
---------------- -----------
Total (deductions) additions (41,226,572) 468,038,060
---------------- -----------
Deductions from net assets attributed to:
Benefit payments 91,335,660 47,840,917
Administrative fees 978,960 891,947
---------------- -----------
Total deductions 92,314,620 48,732,864
---------------- -----------
Net (decrease) increase in net assets (133,541,192) 419,305,196
Net assets available for benefits:
Beginning of year 959,223,171 539,917,975
---------------- -----------
End of year $ 825,681,979 959,223,171
---------------- -----------
---------------- -----------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(1) PLAN DESCRIPTION
The Polaroid Retirement Savings Plan (the "Plan") is a defined
contribution plan sponsored by Polaroid Corporation (the
"Company") covering substantially all domestic employees. The Plan
is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA"). Plan assets are held in
safekeeping under a master trust contract with the Trustee, Boston
Safe Deposit and Trust Company. Fidelity Investments serves as the
Plan record keeper and as a sub-trustee of the Plan assets. State
Street Bank serves as the custodian and also a sub-trustee of the
shares of Polaroid Corporation common stock held in the Polaroid
ESOP Stock Fund and the Polaroid Common Stock Fund. The investment
advisors for the Plan are Fidelity Investments, Merganser Capital
Management Corporation, and Mellon Bank, N.A.
Effective December 1, 1997, the Polaroid Employee Stock Equity
Plan (the "ESOP") was merged with the Polaroid Profit Sharing
Retirement Plan. In connection with the merger, the Polaroid
Profit Sharing Retirement Plan was renamed the Polaroid Retirement
Savings Plan. As required by the Plan, the ESOP account is
separately maintained. The assets are currently maintained in the
Polaroid ESOP Stock Fund.
The following description of the Plan provides only general
information. Participants should refer to the Plan document for a
more complete description of the Plan's provisions.
(a) EMPLOYER CONTRIBUTIONS
Beginning on January 1, 1998, the Company contributed for each
plan participant an amount equal to 3% of their annual
compensation consisting of regular and overtime wages. These
contributions are invested according to each participant's
investment instructions. Until the investment instructions have
been established by the participant, these funds will be allocated
into the Merganser Money Market Fund and the Fidelity Retirement
Money Market Portfolio in approximately equal portions. For
purposes of calculating these contributions, compensation will be
subject to limitations established by the Internal Revenue
Service.
Also, beginning on January 1, 1998, the Company contributed for
each plan participant, an amount equal to 5% of their annual
compensation consisting of regular and overtime wages. These
contributions are automatically invested in participant balances
of the Polaroid ESOP Stock Fund. For purposes of calculating these
contributions, compensation will be subject to limitations
established by the Internal Revenue Service.
(b) EMPLOYEE 401(k) CONTRIBUTIONS
Employees may make elective pre-tax contributions of up to 14
percent of their pre-tax compensation through payroll deductions,
subject to limitations established by the Internal Revenue
Service. For purposes of calculating these contributions,
compensation is limited to $160,000.
4
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(c) EMPLOYEE VOLUNTARY CONTRIBUTIONS
Employees may voluntarily elect to make after-tax contributions of
up to 10 percent of their compensation through payroll deductions,
subject to limitations established by the Internal Revenue
Service. For purposes of calculating these contributions,
compensation is limited to $160,000.
(d) PARTICIPATION AND VESTING
Employees become participants upon their first day of employment
and are 100 percent vested in their accounts at all times.
(e) BENEFITS
Participants with account balances over $3,500 can elect to have
benefits paid in the form of a life annuity, a lump sum cash
payment, periodic installments, or stock for the stock portion of
the payment. Participants with accounts balances of $3,500 or
less, will receive their benefits in the form of a lump sum cash
payment.
(f) ADMINISTRATIVE EXPENSES
Administrative expenses are paid by the Plan unless the Company
elects to pay them. In 1998 and 1997, this election was not made.
(g) PARTICIPANT LOANS
Active employees of the Company who participate in the Plan are
eligible to take a loan from their account balance. Participants
may borrow up to 50% of their account balance, subject to a $1,000
minimum and $50,000 maximum loan amount. Loan balances are repaid
through after-tax payroll deductions and interest is charged on
outstanding loan balances at a rate of prime plus 1% (8.75% - 9.5%
in 1998 and 9.25% - 9.5% in 1997).
(h) RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of funds managed by Boston
Safe Deposit and Trust Company or Fidelity Investments. Boston
Safe Deposit and Trust Company is the trustee and Fidelity
Investments is a sub-trustee as defined by the Plan, and
therefore, these transactions qualify as party-in-interest.
(i) PARTICIPANT ACCOUNTS
A separate account is established for each participant at the time
of enrollment in the Plan. Each participant's account is credited
with the participant's contribution and an allocation of Plan
earnings and charged with an allocation of administrative
expenses. Allocations are based on account balances. The
participant's contribution is credited in accordance with the
directions given by the participant in one or more of the
following funds:
5 (Continued)
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
MERGANSER MONEY MARKET FUND
The Fund's goal is to obtain the highest level of current income
possible, consistent with the preservation of capital and a stable
share price. The Fund invests in the highest quality money market
instruments of U.S. and foreign issuers, including short-term
corporate obligations, certificates of deposit, and U.S.
government obligations.
FIDELITY RETIREMENT MONEY MARKET PORTFOLIO
The Fund strives to provide current income while maintaining a
stable investment value. It invests in high quality money market
instruments of U.S. and foreign issuers, including short-term
corporate obligations, U.S. government obligations and
certificates of deposit.
MERGANSER CONSERVATIVE BOND FUND
The Fund's goal is to earn returns that exceed inflation over a
market cycle with a low variability of returns and low risk of
principal loss. The Fund will maintain an average maturity of less
than three years and will invest in a diversified selection of
fixed-income securities of investment grade quality. The Fund was
formerly known as the Stable Income Fund.
FIDELITY INVESTMENT GRADE BOND FUND
The Fund seeks a rate of current income consistent with reasonable
risk. It invests in a broad array of fixed-income obligations that
are primarily "investment grade" and of any maturity. "Investment
grade" refers to bonds rated with medium to high quality.
MELLON/MERGANSER BALANCED FUND
The Fund is designed to provide long-term growth through interest
and dividend income, plus appreciation from stocks. The Fund
invests approximately 50% of its assets in a S&P 500-Registered
Trademark- index, and 50% in high quality bonds.
FIDELITY GROWTH & INCOME PORTFOLIO
The Fund seeks to provide long-term growth, current income, and
growth of income consistent with reasonable risk through
investment in mostly equity securities, from both the U.S. and
abroad, that offer growth of earnings while paying current
dividends.
FIDELITY PURITAN-Registered Trademark- Fund
The goal of the Fund is to provide as much income as possible
while preserving the value of the investments. The Fund invests in
high yielding U.S. and foreign securities, including those in
emerging markets which may involve additional risks, common and
preferred stocks as well as bonds of any quality or maturity.
MELLON COMMON STOCK FUND
The Fund is designed to provide long-term growth of capital
through investment in companies that comprise the S&P
500-Registered Trademark-.
6 (Continued)
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
FIDELITY BLUE CHIP GROWTH FUND
The Fund seeks growth through investment in common stocks of
well-known, established growth companies that are generally
considered industry leaders.
FIDELITY CONTRAFUND
The Fund is considered an aggressive growth fund and seeks to
achieve its objective of long-term capital growth by investing
primarily in common stocks from companies both in the U.S. and
abroad, which the Fund's manager believes are undervalued or out
of favor.
FIDELITY MAGELLAN-Registered Trademark- Fund
As an aggressive growth fund, the Fund attempts to achieve
long-term capital growth through investment primarily in common
and preferred stocks of all types of companies in the U.S. and
abroad. The Fund is limited to investing 20% of its holdings in
bonds, with latitude as to any quality level.
FIDELITY INTERNATIONAL GROWTH & INCOME FUND
The Fund seeks both capital growth and current income through
investment in companies who mostly operate outside the United
States.
FIDELITY OVERSEAS FUND
The Fund seeks capital growth through investment in common stock,
convertible securities, and debt instruments of companies that
have their principal business activity outside of the United
States.
MELLON ASSET MANAGED FUND
The Fund strives for long-term growth through investments in
stocks, bonds, and money market investments.
MELLON CAP GTAA FUND
The Fund became available to participants on August 1, 1998. The
Fund's investment objective is to provide capital appreciation
across global markets with reduced risk across the long-term.
FIDELITY ASSET MANAGER-TM-
The Fund is designed to provide a high total return with reduced
risk over the long term. It is an aggressively managed asset
allocation fund with holdings in domestic and foreign stocks,
bonds, and short term investments.
7 (Continued)
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
POLAROID COMMON STOCK FUND
The Fund was established December 1, 1997. The assets of the Fund
are invested in Polaroid Corporation common stock. Participants
who are 55 or over may transfer amounts from this Fund into other
funds.
POLAROID ESOP STOCK FUND
The Fund holds shares of Polaroid Corporation common stock that
have been allocated to participants from 1988 to present. For
participants who are at least 55 years of age and have ten or more
years of participation in the Polaroid Employee Stock Equity Plan,
the Company will gradually move shares from a restricted category
into an unrestricted category within the Fund. This transfer
allows the participant to retain the stock or transfer the asset
to other investment options.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION
The accompanying financial statements have been prepared on an
accrual basis. Benefits payable at year-end are not required to be
accrued, as they are considered to be a component of the net
assets available for benefits.
(b) INVESTMENTS
Investments are stated at fair market value. The fair market value
of marketable securities is based on quotations obtained from
national securities exchanges. Certain short-term obligations are
valued at cost, which when combined with accrued interest
receivable approximates fair market value. Participant loans are
valued at cost which approximates fair market value.
Securities transactions are recognized on the trade date (the date
the order to buy or sell is executed). Interest income is recorded
on the accrual basis and dividend income is recorded on the
ex-dividend date.
Net appreciation or depreciation of investments includes both
realized and unrealized gains and losses.
(c) PAYMENT OF BENEFITS
Benefits are recorded when paid.
(d) USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires the plan
administrator to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of additions to and deductions
from net assets during the reporting period. Actual results could
differ from those estimates.
8 (Continued)
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(3) FEDERAL INCOME TAX
On September 12, 1995, the Internal Revenue Service (the "IRS") issued a
Determination letter which stated that the Polaroid Profit Sharing
Retirement Plan and its underlying trust qualify under Section 401(a) of
the Internal Revenue Code (the "Code") and therefore, is exempt from
federal income taxes under Section 501(a) of the Code. On August 9, 1995,
the IRS issued a Determination letter which stated that the Polaroid
Employee Stock Equity Plan and its underlying trust qualify under Section
401(a) of the Code and therefore, is exempt from federal income taxes
under Section 501(a) of the Code. As discussed in note 1, these plans
merged on December 1, 1997. However, the Plan sponsor believes the Plan
is designed and is currently being operated in compliance with applicable
requirements of the Code.
(4) INVESTMENTS
The following table presents investments at fair market value.
Investments that represent 5 percent or more of the Plan's net assets are
separately identified:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
U.S. Government and Agency Obligations $ 6,565,361 7,546,482
Certificates of Deposit 4,193,978 --
Short-term Corporate Debt 35,177,462 37,571,155
Long-term Corporate Debt 62,746,303 60,642,869
Other Investments 7,548,276 5,380,949
Polaroid Corporation Common Stock 135,759,974 357,017,378
Pooled Funds:
Mellon Daily Opening Asset Allocation Fund 114,223,542 96,440,549
Mellon Daily Opening Stock Index Fund 74,667,077 64,139,615
Other pooled funds 8,015,896 5,051,992
Mutual Funds:
Fidelity Contrafund 63,964,680 56,504,983
Fidelity Magellan-Registered Trademark- Fund 43,746,491 33,763,471
Fidelity Puritan-Registered Trademark- Fund 38,145,141 37,545,028
Fidelity Blue Chip Growth Fund 71,677,130 56,465,058
Fidelity Growth & Income Portfolio 68,429,194 56,251,466
Other mutual funds 77,052,965 69,866,761
Participants' loans 12,923,417 11,811,844
------------------- -----------
Total investments $ 824,836,887 955,999,600
------------------- -----------
------------------- -----------
</TABLE>
9 (Continued)
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
Net (depreciation) appreciation in fair market value of investments for
the years ended December 31, 1998 and 1997, is as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
U.S. Government and Agency Obligations $ (85,688) 124,591
Short-term Corporate Debt (48,073) 55,458
Long-term Corporate Debt 322,809 451,857
Other Investments (104,519) 102,940
Polaroid Corporation Common Stock (214,869,392) 45,168,981
Pooled Funds 37,492,232 33,065,913
Mutual Funds 49,279,239 35,506,437
------------------- -----------
Net (depreciation) appreciation of investments $ (128,013,392) 114,476,177
------------------- -----------
------------------- -----------
</TABLE>
10 (Continued)
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(5) UNIT AND SHARE VALUATION
Participants' accounts in the Polaroid Common Stock Fund and the
Polaroid ESOP Stock Fund are maintained by the "share accounting"
concept. Participant assets in remaining funds are maintained on the
"unit accounting" concept. Unit and share values and the total units
and shares (in 000s) used in valuing participants' accounts for each
quarter since December 31, 1997 are listed below.
<TABLE>
<CAPTION>
FIDELITY FIDELITY
MERGANSER RETIREMENT MERGANSER INVESTMENT MELLON/
MONEY MONEY CONSERVATIVE GRADE MERGANSER
MARKET MARKET BOND BOND BALANCED
FUND PORTFOLIO FUND FUND FUND
----------------- ----------------- ---------------- ------------ --------------
UNIT UNIT UNIT UNIT UNIT
DATE UNITS VALUE UNITS VALUE UNITS VALUE UNITS VALUE UNITS VALUE
- --------- ------ ------- -------- ------ ------- ------- ------ ----- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/97 51,570 $1.00 26,421 $1.00 3,703 $12.42 1,447 $7.28 2,267 $17.42
3/31/98 50,819 1.00 27,016 1.00 3,549 12.61 1,856 7.30 2,256 18.89
6/30/98 51,927 1.00 27,885 1.00 3,436 12.82 1,876 7.35 2,212 19.44
9/30/98 57,133 1.00 28,584 1.00 3,356 13.15 2,006 7.49 2,122 18.74
12/31/98 60,096 1.00 28,790 1.00 3,288 13.29 2,075 7.39 2,054 20.90
<CAPTION>
FIDELITY
FIDELITY MELLON BLUE
GROWTH & FIDELITY COMMON CHIP
INCOME PURITAN STOCK GROWTH
PORTFOLIO FUND FUND FUND
-------------- -------------- -------------- --------------
UNIT UNIT UNIT UNIT
DATE UNITS VALUE UNITS VALUE UNITS VALUE UNITS VALUE
- --------- ----- ------ ----- ------- ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/97 1,476 $38.10 1,937 $19.38 1,995 $21.80 1,431 $39.46
3/31/98 1,526 42.84 1,953 20.78 2,045 24.78 1,419 44.98
6/30/98 1,541 44.01 1,900 21.14 2,011 25.59 1,404 46.88
9/30/98 1,511 38.62 1,939 18.13 1,970 23.08 1,457 40.85
12/31/98 1,494 45.84 1,901 20.07 1,855 28.04 1,422 50.39
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
INTERNATIONAL MELLON POLAROID POLAROID MELLON
FIDELITY FIDELITY GROWTH & FIDELITY ASSET FIDELITY COMMON ESOP CAP
CONTRAFUND MAGELLAN INCOME OVERSEAS MANAGED ASSET STOCK STOCK GTAA
FUND FUND FUND FUND FUND MANAGER FUND FUND FUND
------------ ------------- ------------ ------------ ------------- ----------- ------------- ------------- --------------
UNIT UNIT UNIT UNIT UNIT UNIT SHARE SHARE UNIT
DATE UNITS VALUE UNITS VALUE UNITS VALUE UNITS VALUE UNITS VALUE UNITS VALUE SHARES VALUE SHARES VALUE SHARES VALUE
- -------- ----- ------ ----- ------- ----- ------ ----- ------ ------ ------ ----- ----- ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/97 1,212 $46.63 354 $ 95.27 322 $19.70 326 $32.54 4,949 $19.67 870 $18.35 277 $48.68 7,056 $48.68 -- $ --
3/31/98 1,137 52.28 355 108.81 297 22.09 332 37.09 4,939 21.65 865 19.59 266 44.00 6,857 44.00 -- --
6/30/98 1,117 54.61 362 109.63 298 22.52 331 37.70 4,861 22.54 840 19.54 268 35.56 6,840 35.56 -- --
9/30/98 1,095 49.51 357 97.52 290 18.60 311 31.14 4,742 21.47 809 18.24 349 24.56 6,814 24.56 2 101.14
12/31/98 1,126 56.79 362 120.82 287 20.91 305 35.98 4,686 24.56 916 17.39 428 18.69 6,837 18.69 2 114.57
</TABLE>
11 (Continued)
<PAGE>
(6) FORM 5500 RECONCILIATION
Under generally accepted accounting principles, benefits payable to
participants represent a component of net assets available for benefits
and not a liability of the Plan. Benefits payable to participants are,
however, recorded as a liability of the Plan for Form 5500 filing
purposes. A reconciliation of net assets available for benefits as of
December 31, 1998 and 1997, presented in accordance with generally
accepted accounting principles, as reflected in the accompanying
financial statements and Form 5500, is as follows:
<TABLE>
<CAPTION>
NET ASSETS AVAILABLE NET ASSETS AVAILABLE
FOR BENEFITS FOR BENEFITS
DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- --------------------
<S> <C> <C>
Per accompanying financial statements $ 825,681,979 959,223,171
ESOP stock fund dividends payable at year end -- (2,116,860)
----------------- ----------------
Per Form 5500 $ 825,681,979 957,106,311
----------------- ----------------
----------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
DECREASE IN NET ASSETS
AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED
DECEMBER 31, 1998
----------------------
<S> <C>
Per accompanying financial statements $ 133,541,192
Less: ESOP stock fund dividends payable at December 31, 1997 (2,116,860)
----------------
Per Form 5500 $ 131,424,332
----------------
----------------
</TABLE>
(7) PLAN TERMINATION
Although it has expressed no intent to do so, the Company has the right
under the Plan to terminate the Plan. If the Plan were terminated, all
participants would remain 100 percent vested in their accounts. Upon
termination of the Plan, all accounts would be distributed to the
participants or their beneficiaries.
(8) PLAN AMENDMENTS
The Plan may be amended at any time by the Company. However, no amendment
can reduce the amount of any participant's account or the participant's
vested percentage on that account. In addition, notices of all amendments
shall be given in writing to each participant, or beneficiary of deceased
participants of the Plan.
12
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(9) NET ASSETS AVAILABLE FOR BENEFITS BY FUND AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
FIDELITY FIDELITY
MERGANSER RETIREMENT MERGANSER INVESTMENT MELLON/
MONEY MARKET MONEY MARKET CONSERVATIVE GRADE MERGANSER
FUND PORTFOLIO BOND FUND BOND FUND BALANCED FUND
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments 59,995,665 28,792,722 43,154,611 15,337,689 42,530,713
Temporary cash investments -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total investments 59,995,665 28,792,722 43,154,611 15,337,689 42,530,713
---------- ---------- ---------- ---------- ----------
Receivables
Accrued interest and dividends 793,099 -- 473,139 -- 382,972
Due from investments sold -- -- 55,300 -- 6,281
---------- ---------- ---------- ---------- ----------
Total receivables 793,099 -- 528,439 -- 389,253
---------- ---------- ---------- ---------- ----------
Total assets 60,788,764 28,792,722 43,683,050 15,337,689 42,919,966
---------- ---------- ---------- ---------- ----------
Liabilities:
Administrative fees payable -- -- (8,851) -- --
Income distribution payable 693,167 2,391 -- -- --
---------- ---------- ---------- ---------- ----------
Total liabilities 693,167 2,391 (8,851) -- --
---------- ---------- ---------- ---------- ----------
Net assets available for benefits 60,095,597 28,790,331 43,691,901 15,337,689 42,919,966
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
<CAPTION>
FIDELITY FIDELITY
GROWTH & FIDELITY MELLON BLUE CHIP FIDELITY
INCOME PURITAN COMMON GROWTH CONTRAFUND
PORTFOLIO FUND STOCK FUND FUND FUND
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments 68,429,194 38,145,141 52,040,972 71,677,130 63,964,680
Temporary cash investments -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total investments 68,429,194 38,145,141 52,040,972 71,677,130 63,964,680
---------- ---------- ---------- ---------- ----------
Receivables
Accrued interest and dividends -- -- -- -- --
Due from investments sold -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total receivables -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total assets 68,429,194 38,145,141 52,040,972 71,677,130 63,964,680
---------- ---------- ---------- ---------- ----------
Liabilities:
Administrative fees payable -- -- 17,605 -- --
Income distribution payable -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total liabilities -- -- 17,605 -- --
---------- ---------- ---------- ---------- ----------
Net assets available for benefits 68,429,194 38,145,141 52,023,367 71,677,130 63,964,680
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
13
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(9) Net Assets Available for Benefits by Fund as of December 31, 1998,
(Continued)
<TABLE>
<CAPTION>
Fidelity
Fidelity International Fidelity Mellon Mellon Cap
Magellan Growth & Overseas Asset Managed GTAA
Fund Income Fund Fund Fund Fund
---------------- ------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments $ 43,746,491 6,001,133 10,991,821 115,242,223 173,711
Temporary cash investments -- -- -- -- --
---------------- ------------- -------------- -------------- -----------
Total investments 43,746,491 6,001,133 10,991,821 115,242,223 173,711
---------------- ------------- -------------- -------------- -----------
Receivables
Accrued interest and dividends -- -- -- -- --
Due from investments sold -- -- -- --
---------------- ------------- -------------- -------------- -----------
Total receivables -- -- -- -- --
---------------- ------------- -------------- -------------- -----------
Total assets 43,746,491 6,001,133 10,991,821 115,242,223 173,711
---------------- ------------- -------------- -------------- -----------
Liabilities:
Administrative fees payable -- -- -- 168,209 --
Income distribution payable -- -- -- -- --
---------------- ------------- -------------- -------------- -----------
Total liabilities -- -- -- 168,209 --
---------------- ------------- -------------- -------------- -----------
Net assets available for benefits 43,746,491 6,001,133 10,991,821 115,074,014 173,711
---------------- ------------- -------------- -------------- -----------
---------------- ------------- -------------- -------------- -----------
<CAPTION>
Fidelity Polaroid Polaroid
Asset Common Stock ESOP Stock Participant
Manager Fund Fund Loan Fund Total
--------------- ------------ ----------------- ----------------- --------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments 15,929,600 7,992,032 127,767,942 12,923,417 824,836,887
Temporary cash investments -- -- 52,905 -- 52,905
--------------- ------------ ----------------- ----------------- --------------------
Total investments 15,929,600 7,992,032 127,820,847 12,923,417 824,889,792
--------------- ------------ ----------------- ----------------- --------------------
Receivables
Accrued interest and dividends -- -- -- -- 1,649,210
Due from investments sold -- -- -- -- 61,581
--------------- ------------ ----------------- ----------------- --------------------
Total receivables -- -- -- -- 1,710,791
--------------- ------------ ----------------- ----------------- --------------------
Total assets 15,929,600 7,992,032 127,820,847 12,923,417 826,600,538
--------------- ------------ ----------------- ----------------- --------------------
Liabilities:
Administrative fees payable -- -- -- -- 176,963
Income distribution payable -- -- 46,083 -- 741,641
--------------- ------------ ----------------- ----------------- --------------------
Total liabilities -- -- 46,083 -- 918,604
--------------- ------------ ----------------- ----------------- --------------------
Net assets available for benefits 15,929,600 7,992,032 127,774,764 12,923,417 825,681,979
--------------- ------------ ----------------- ----------------- --------------------
--------------- ------------ ----------------- ----------------- --------------------
</TABLE>
14
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(9) Changes in Net Assets Available for Benefits by Fund for the Year Ended
December 31, 1998
<TABLE>
<CAPTION>
Fidelity Fidelity
Merganser Retirement Merganser Investment Mellon/
Money Market Money Market Conservative Grade Merganser
Fund Portfolio Bond Fund Bond Fund Balanced Fund
--------------- -------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Contributions:
Employer's contributions $ 1,289,835 1,040,671 401,123 129,497 354,032
Employees' 401 (k) contributions 1,006,475 723,367 679,391 350,490 764,441
Employees' voluntary contributions 124,461 36,997 78,839 12,204 46,560
Rollover contributions 47,717 36,804 65,232 27,052 10,344
--------------- -------------- -------------- -------------- ----------------
Total contributions 2,468,488 1,837,839 1,224,585 519,243 1,175,377
Investment income:
Dividends -- 1,456,207 851,527 379,195
Interest 3,335,374 -- 2,949,725 -- 1,302,210
Net appreciation (depreciation) in
fair market value of investments (145,680) 3,973 136,601 173,348 5,870,942
--------------- -------------- -------------- -------------- ----------------
Total investment income (loss) 3,189,694 1,460,180 3,086,326 1,024,875 7,552,347
--------------- -------------- -------------- -------------- ----------------
Total (deductions) additions 5,658,182 3,298,019 4,310,911 1,544,118 8,727,724
--------------- -------------- -------------- -------------- ----------------
Deductions from net assets attributed to:
Benefit payments 6,863,994 5,059,077 6,355,685 1,911,587 3,428,415
Administrative fees 160,287 15,471 97,376 5,513 57,982
--------------- -------------- -------------- -------------- ----------------
Total deductions 7,024,281 5,074,548 6,453,061 1,917,100 3,486,397
--------------- -------------- -------------- -------------- ----------------
Net increase (decrease) before
interfund transfers (1,366,099) (1,776,529) (2,142,150) (372,982) 5,241,327
Loans issued (739,660) (429,036) (439,215) (75,512) (486,843)
Loans repaid 941,339 599,312 388,016 97,001 320,295
Exchange in 60,474,218 30,909,308 4,568,264 11,215,549 2,096,202
Exchange out (50,783,918) (26,933,290) (4,671,859) (6,063,205) (3,736,006)
--------------- -------------- -------------- -------------- ----------------
Net transfers 9,891,979 4,146,294 (154,794) 5,173,833 (1,806,352)
--------------- -------------- -------------- -------------- ----------------
Net increase (decrease) 8,525,880 2,369,765 (2,296,944) 4,800,851 3,434,975
Net assets available for benefits:
Beginning of year 51,569,717 26,420,566 45,988,845 10,536,838 39,484,991
--------------- -------------- -------------- -------------- ----------------
End of year $ 60,095,597 28,790,331 43,691,901 15,337,689 42,919,966
--------------- -------------- -------------- -------------- ----------------
--------------- -------------- -------------- -------------- ----------------
<CAPTION>
Fidelity Fidelity
Growth & Fidelity Mellon Blue Chip Fidelity
Income Puritan Common Growth Contrafund
Portfolio Fund Stock Fund Fund Fund
-------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Contributions:
Employer's contributions 889,828 446,961 596,780 964,675 834,183
Employees' 401 (k) contributions 2,395,132 1,205,939 1,393,622 2,496,365 2,384,707
Employees' voluntary contributions 60,943 48,118 43,412 63,427 46,968
Rollover contributions 236,987 71,709 33,252 255,463 121,280
-------------- -------------- ------------- ------------- --------------
Total contributions 3,582,890 1,772,727 2,067,066 3,779,930 3,387,138
Investment income:
Dividends 3,763,574 4,126,238 801,442 3,274,573 5,424,756
Interest -- -- 23,992 -- --
Net appreciation (depreciation) in
fair market value of investments 11,732,084 1,647,565 11,293,090 15,683,156 10,277,709
-------------- ------------------------------ ------------- --------------
Total investment income (loss) 15,495,658 5,773,803 12,118,524 18,957,729 15,702,465
-------------- -------------- ------------- ------------- --------------
Total (deductions) additions 19,078,548 7,546,530 14,185,590 22,737,659 19,089,603
-------------- -------------- ------------- ------------- --------------
Deductions from net assets attributed to:
Benefit payments 7,692,622 4,098,074 4,574,204 5,422,383 4,453,821
Administrative fees 20,128 8,002 23,140 8,022 2,547
-------------- -------------- ------------- ------------- --------------
Total deductions 7,712,750 4,106,076 4,597,344 5,430,405 4,456,368
-------------- -------------- ------------- ------------- --------------
Net increase (decrease) before
interfund transfers 11,365,798 3,440,454 9,588,246 17,307,254 14,633,235
Loans issued (766,581) (316,726) (465,971) (794,533) (628,413)
Loans repaid 663,319 326,643 399,478 722,599 603,903
Exchange in 17,181,793 5,815,849 8,400,079 10,102,656 29,610,411
Exchange out (16,266,601) (8,666,107) (9,384,902) (12,125,904) (36,759,439)
------------- -------------- ------------- ------------- --------------
Net transfers 811,930 (2,840,341) (1,051,316) (2,095,182) (7,173,538)
------------- -------------- ------------- ------------- --------------
Net increase (decrease) 12,177,728 600,113 8,536,930 15,212,072 7,459,697
Net assets available for benefits:
Beginning of year 56,251,466 37,545,028 43,486,437 56,465,058 56,504,983
-------------- -------------- ------------- ------------- --------------
End of year 68,429,194 38,145,141 52,023,367 71,677,130 63,964,680
-------------- -------------- ------------- ------------- --------------
-------------- -------------- ------------- ------------- --------------
</TABLE>
15
<PAGE>
POLAROID RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(9) Changes in Net Assets Available for Benefits by Fund for the Year Ended
December 31, 1998, (Continued)
<TABLE>
<CAPTION>
Fidelity
Fidelity International Fidelity Mellon Mellon
Magellan Growth & Overseas Asset Managed GTAA
Fund Income Fund Fund Fund Fund
-------------- -------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Contributions:
Employer's contributions $ 673,792 133,933 226,345 877,553 2,354
Employees' 401 (k) contributions 1,657,637 348,019 607,908 2,113,771 4,641
Employees' Voluntary contributions 36,449 11,393 12,719 74,689 160
Rollover contributions 93,696 33,091 19,530 65,228 --
-------------- -------------- ------------- --------------- -------------
Total contributions 2,461,574 526,436 866,502 3,131,241 7,155
Investment income:
Dividends 2,077,200 246,576 216,766 3,463,698 2,854
Interest -- -- -- 40,929 --
Net appreciation (depreciation) in
fair market value of investments 9,025,592 298,689 1,047,390 20,404,970 6,353
-------------- -------------- ------------- --------------- -------------
Total investment income (loss) 11,102,792 545,265 1,264,156 23,909,597 9,207
-------------- -------------- ------------- --------------- -------------
Total (deductions) additions 13,564,366 1,071,701 2,130,658 27,040,838 16,362
-------------- -------------- ------------- --------------- -------------
Deductions from net assets attributed to:
Benefit payments 3,788,591 654,320 1,109,813 9,108,764 478
Administrative fees 1,854 34 87 569,285 --
-------------- -------------- ------------- --------------- -------------
Total deductions 3,790,445 654,354 1,109,900 9,678,049 478
-------------- -------------- ------------- --------------- -------------
Net increase (decrease) before
interfund transfers 9,773,921 417,347 1,020,758 17,362,789 15,884
Loans issued (584,514) (71,484) (174,919) (1,025,371) (3,702)
Loans repaid 535,930 65,815 149,324 731,284 695
Exchange in 16,721,460 944,076 6,886,322 11,234,074 321,919
Exchange out (16,463,777) (1,695,212) (7,495,982) (10,573,817) (161,085)
-------------- -------------- ------------- --------------- -------------
Net transfers 209,099 (756,805) (635,255) 366,170 157,827
--------------- -------------- ------------- --------------- -------------
Net increase (decrease) 9,983,020 (339,458) 385,503 17,728,959 173,711
Net assets available for benefits:
Beginning of year 33,763,471 6,340,591 10,606,318 97,345,055 --
-------------- -------------- ------------- --------------- -------------
End of year $ 43,746,491 6,001,133 10,991,821 115,074,014 173,711
-------------- -------------- ------------- --------------- -------------
-------------- -------------- ------------- --------------- -------------
<CAPTION>
Polaroid
Fidelity Common Polaroid
Asset Stock ESOP Stock Participant
Manager Fund Fund Loan Fund Total
------------- ------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Contributions:
Employer's contributions 211,282 12,945 15,143,003 -- 24,228,792
Employees' 401 (k) contributions 526,783 27,260 -- -- 18,685,948
Employees' Voluntary contributions 19,388 1,539 -- -- 718,266
Rollover contributions -- 808 1,118,193
------------- ------------- ---------------- -------------- ---------------
Total contributions 757,453 42,552 15,143,003 -- 44,751,199
Investment income:
Dividends 2,964,329 175,531 4,080,130 -- 33,304,596
Interest -- -- -- 1,078,795 8,731,025
Net appreciation (depreciation) in
fair market value of investments (601,782) (9,131,607) (205,735,785) -- (128,013,392)
------------- ------------- ---------------- -------------- ---------------
Total investment income (loss) 2,362,547 (8,956,076) (201,655,655) 1,078,795 (85,977,771)
------------- ------------- ---------------- -------------- ---------------
Total (deductions) additions 3,120,000 (8,913,524) (186,512,652) 1,078,795 (41,226,572)
------------- ------------- ---------------- -------------- ---------------
Deductions from net assets attributed to:
Benefit payments 1,700,902 668,668 23,957,681 486,581 91,335,660
Administrative fees 5,329 463 3,440 -- 978,960
------------- ------------- ---------------- -------------- ---------------
Total deductions 1,706,231 669,131 23,961,121 486,581 92,314,620
------------- ------------- ---------------- -------------- ---------------
Net increase (decrease) before
interfund transfers 1,413,769 (9,582,655) (210,473,773) 592,214 (133,541,192)
Loans issued (149,324) (52,007) (112,489) 7,316,300 --
Loans repaid 196,736 46,459 8,793 (6,796,941) --
Exchange in 1,674,680 5,990,979 89,347 -- 224,237,186
Exchange out (3,168,709) (1,879,362) (7,408,011) -- (224,237,186)
------------- ------------- ---------------- -------------- ---------------
Net transfers (1,446,617) 4,106,069 (7,422,360) 519,359 --
------------- ------------- ---------------- -------------- ---------------
Net increase (decrease) (32,848) (5,476,586) (217,896,133) 1,111,573 (133,541,192)
Net assets available for benefits:
Beginning of year 15,962,448 13,468,618 345,670,897 11,811,844 959,223,171
------------- ------------- ---------------- -------------- ---------------
End of year 15,929,600 7,992,032 127,774,764 12,923,417 825,681,979
------------- ------------- ---------------- -------------- ---------------
------------- ------------- ---------------- -------------- ---------------
</TABLE>
16
<PAGE>
SCHEDULE 1
POLAROID RETIREMENT SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
ISSUER RATE MATURITY PAR/SHARES COST FAIR VALUE
------ ---- -------- ---------- ---- ----------
<S> <C> <C> <C> <C> <C>
CERTIFICATE OF DEPOSIT
ABN amro bk Chicago Instl CD 5.450% 1/13/99 1,534,000 $ 1,533,871 $ 1,533,871
First National Bank MD Instl CD 6.050% 10/28/99 2,150,000 2,160,313 2,160,313
Royal Bank CDA NY Instl CD 5.645% 3/9/99 500,000 499,794 499,794
---------------- --------------
Total Certificate of Deposit 4,193,978 4,193,978
---------------- --------------
U.S. GOVERNMENT AND
AGENCY OBLIGATIONS:
FHLMC Multiclass CTF 1339B 8.000% 6/15/99 696,365 699,635 699,635
FHLMC Group #16-1056 9.250% 9/1/08 4,440 4,326 4,704
FHLMC Group #18-3143 7.000% 3/1/09 690,642 694,527 705,104
FHLMC Group #54-4327 7.000% 5/1/06 36,388 37,480 37,384
FHLMC Group #85-0082 9.000% 10/1/05 659,875 706,479 684,620
FHLMC Group #B7-0069 8.000% 4/1/08 335,047 352,637 346,096
FNMA Pool #0049622 6.000% 7/1/14 92,245 94,090 91,914
FNMA Pool #0062431 7.500% 3/1/09 348,040 354,566 358,930
FNMA Pool #0107048 7.500% 8/1/04 152,283 157,523 156,113
FNMA Pool #0173835 6.500% 11/1/02 1,705 1,748 1,716
GNMA Pool #0024840 8.250% 5/15/08 36,045 33,950 37,705
Guaranteed Expt Tr 93-C Cl A 5.200% 10/15/04 533,333 533,333 535,835
Guaranteed ExptFr 94-F 8.190% 12/15/04 1,575,561 1,627,505 1,695,280
Resolution Tr Corp 92-15 Cl A1 6.730% 7/25/27 180,976 180,831 184,855
US Treasury Notes 5.250% 8/15/03 100,000 1,029,141 1,025,470
---------------- --------------
Total U.S. Government
and Agency Obligations 6,507,771 6,565,361
---------------- --------------
SHORT-TERM CORPORATE DEBT:
General MTR Accept Corp BDS 5.625% 1/25/99 942,000 941,630 941,630
AI Cr Corp Disc 1/11/99 1,000,000 998,361 998,361
Associates Corp Nort Amer Nt 6.375% 8/15/99 575,000 578,042 578,042
Banque Gen Du Lux Disc 1/7/99 3,000,000 2,997,225 2,997,225
Bayeri Vereinsbk Disc 1/14/99 599,000 597,756 597,756
CIT Group Hldgs Mtn Sr 6.125% 11/15/99 2,000,000 1,998,240 2,019,864
Capital Equip Rec Tr 96-1 6.110% 7/15/99 2,143,315 2,144,248 2,144,341
Central Ill Lt Co Disc 1/25/99 1,300,000 1,295,147 1,295,147
Central Ill Lt Co Disc 1/26/99 1,000,000 996,111 996,111
Chase Manhattan Bank Mtn 5.875% 8/4/99 750,000 751,884 751,884
Chemical Bkg Mtn Tr 1/25/99 3,000,000 2,999,354 2,999,354
Ciesco L P Disc 1/6/99 750,000 749,417 749,417
Coop Assn Trac A Disc 1/22/99 1,000,000 996,588 996,588
</TABLE>
(Continued)
17
<PAGE>
SCHEDULE 1
POLAROID RETIREMENT SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
ISSUER RATE MATURITY PAR/SHARES COST FAIR VALUE
------ ---- -------- ---------- ---- ----------
<S> <C> <C> <C> <C> <C>
Coop Assn Trac B Disc 1/5/99 2,000,000 1,998,762 1,998,762
General Elec Cap Disc 1/11/99 850,000 848,666 848,666
General Elec Cap Disc 1/21/99 518,000 516,302 516,302
General Motors Accept Mtn 7.500% 8/5/99 450,000 454,189 454,189
Goldman Sachs LP Disc 1/8/99 2,500,000 2,497,375 2,497,375
Household Bk Fsb Mtn 6.250% 4/1/99 1,300,000 1,301,838 1,301,838
Household Fin Corp Mtn 5.747% 3/8/99 1,000,000 1,000,457 1,000,457
Idaho PWR Co Disc 1/7/99 900,000 899,012 899,012
Idaho PWR Co Disc 1/8/99 700,000 699,224 699,224
Key Bk N A Mtn Tr 6.125% 2/3/99 600,000 600,224 600,224
Norwest Finl Inc NT 6.250% 3/15/99 1,400,000 1,402,417 1,402,417
Premier Auto 97.2 NTS Cl A-2 6.010% 11/6/99 169,814 169,947 169,947
Queensland Treas Disc 1/19/99 3,000,000 2,991,587 2,991,587
Salomon Inc Nts 5.500% 1/15/99 307,000 306,947 306,947
Standard Credit Card 5.500% 1/7/99 1,175,000 1,174,936 1,174,936
Standard Cr CD Mstr Tr 5.900% 2/7/99 250,000 249,859 249,859
---------------- --------------
Total Short-Term Corporate Debt 35,155,745 35,177,462
---------------- --------------
LONG-TERM CORPORATE DEBT:
General Mtrs Accept Corp NTS 5.630% 2/25/00 2,000,000 1,964,140 2,005,000
At&T Univ Card Master 5.633% 6/18/01 650,000 649,391 649,391
American Express Master CL A 6.600% 5/15/00 1,925,000 1,931,844 1,931,844
Arcadia Audo Rec 97-B Cl A-4 6.700% 2/15/05 1,300,000 1,326,000 1,339,680
Associated Corp MTN Sr 00877 7.580% 4/12/04 1,000,000 1,082,490 1,095,000
Associated Corp MTN Sr 00085 8.625% 11/15/04 1,000,000 1,142,760 1,156,250
Associated Corp MTN Sr 00119 8.180% 2/15/05 1,000,000 1,051,250 1,133,750
Bear Stearns Co Inc Sr NTS 6.500% 7/5/00 2,500,000 2,495,450 2,531,250
California Infrastructure 6.010% 6/25/01 1,187,491 1,189,605 1,189,605
Chase Manhattan Cr Cd 4/15/02 350,000 349,945 349,945
Chase Cr Crd Master Tr 96-3Cla 7.090% 2/15/09 1,000,000 999,844 1,095,693
Chevy Chase Auto Rec Tr 95-1 6.000% 12/15/01 236,878 236,804 237,053
Chevy Chase Auto Rec 96-1 Cl 6.600% 12/15/02 570,659 571,016 575,098
Deutsche Bk Finl Bk GTD 7.500% 4/25/09 1,000,000 1,103,550 1,106,250
Discover Card Master TR I Cl A 5.400% 11/16/01 864,583 864,190 864,190
Fifth Third Bk Auto Tr 96A Cla 6.200% 9/1/01 445,942 446,430 447,641
First Security TR 95-A Cl A 6.250% 1/15/01 157,772 157,698 157,849
First Un Corp Sr NT 8.000% 11/15/02 2,000,000 2,172,500 2,174,460
Ford Motor Credit Co 6.125% 4/28/03 1,000,000 998,090 1,026,250
Ford Mtr Cr Mtn #TR 00613 6.620% 2/27/06 1,000,000 949,850 1,050,000
GE Home Equity Ln A/B CTF 91-1 7.200% 9/15/11 65,123 67,077 65,124
General Elec Cap Corp Mtn 7.750% 6/9/09 1,000,000 1,053,050 1,172,360
</TABLE>
(Continued)
18
<PAGE>
SCHEDULE 1
POLAROID RETIREMENT SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
ISSUER RATE MATURITY PAR/SHARES COST FAIR VALUE
------ ---- -------- ---------- ---- ----------
<S> <C> <C> <C> <C> <C>
General Elec Cap Corp NT 7.875% 11/22/04 1,000,000 1,118,230 1,125,000
Heller Equip Asset 97-1 CL A-2 6.390% 5/25/05 1,200,610 1,209,427 1,210,479
Household Affinity Cr Card Cla 9/15/00 750,000 750,000 750,000
Household Private CC II 7.800% 9/20/03 1,672,222 1,684,530 1,684,530
IBM CR Receivables 6.550% 7/15/01 171,133 171,206 171,206
Inter Amern Dev Bk 12.250% 12/15/08 1,000,000 1,389,250 1,535,000
Intl Lease Fin Cp MTN TR00181 8.150% 10/1/04 1,000,000 1,098,130 1,116,250
International Lease Fin Corp 5.930% 6/15/01 1,500,000 1,496,145 1,518,750
Lehman Bros Hldgs MTN 00256 6.375% 10/23/00 2,500,000 2,500,470 2,517,575
Lehman Bros Hldgs MTN 00295 6.150% 3/15/00 1,000,000 999,790 998,750
MBNA Master Cr Card Tr 1993-3 5.400% 9/15/00 1,032,500 1,031,871 1,031,871
Merrill Lynch Mtg Invs Inc 89E 9.400% 9/15/09 1,416,220 1,487,505 1,478,579
Merrill Lynch Mtg Invs 90F-A 9.650% 9/15/10 110,460 117,738 115,324
Merrill Lynch MTG Ser 90 CL A 9.250% 1/15/11 412,503 414,058 414,059
Mid-St Tr II Meg BCKD NY 9.625% 4/1/03 1,800,000 1,936,800 1,916,586
Mobil Oil Corp ESOP Tr Deb 9.170% 2/29/00 245,250 261,868 247,090
Nationsbank Corp Sub Notes 7.750% 8/15/15 500,000 527,813 576,250
Navistar Finl 95-A CL A-2 6.550% 11/20/01 230,153 230,045 231,489
Navistar Finl Asset 95-B CL A3 6.050% 4/15/02 2,345,221 2,350,629 2,350,629
Old Kent Auto Rec Tr 95-A CL 6.200% 8/15/01 562,382 562,841 562,841
Pemex Expt Grantor Tr Ser 95-A 7.660% 8/15/01 1,308,114 1,303,902 1,348,223
Premier Auto Tr NY 96-2 CL A-3 6.350% 1/6/00 398,106 398,385 398,385
Salomon Inc Nts 7.000% 3/15/01 1,000,000 1,053,550 1,056,250
Salomon Inc MTN # SR 00070 6.625% 11/30/00 2,500,000 2,499,500 2,546,874
Sears CR Acct Master Tr 95-2 8.100% 6/15/04 2,425,000 2,532,754 2,496,200
Sears Credit Acct 6.250% 1/15/03 1,984,167 1,984,608 1,984,608
Swiss Bank Corp NY Mtn #TR00012 7.375% 6/15/17 1,000,000 1,040,010 1,072,500
Textron Finl 97-A Nts Cl A 6.050% 3/16/09 506,140 505,469 508,813
Travelers Mtg Sec Ser 84-1 Z-2 12.000% 3/1/14 366,427 415,322 413,494
UACSC Auto TR 96-D CL A-1 5.960% 10/10/00 961,815 960,478 960,478
Yamaha Mtr Master TR 94-1 CL 6.250% 9/17/01 2,000,000 2,002,597 2,002,597
Yamaha Mtr Tr D 1995-1 Cl A 6.200% 5/15/03 3,000,000 2,992,500 3,051,940
---------------- --------------
Total Long-Term Corporate Debt 61,830,395 62,746,303
---------------- --------------
POLAROID CORPORATION COMMON STOCK:
Polaroid Corporation* 7,265,046 231,815,400 135,759,974
---------------- --------------
</TABLE>
(Continued)
19
<PAGE>
SCHEDULE 1
POLAROID RETIREMENT SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
ISSUER RATE MATURITY PAR/SHARES COST FAIR VALUE
------ ---- -------- ---------- ---- ----------
<S> <C> <C> <C> <C> <C>
LOANS TO PARTICIPANTS:
2,207 outstanding loans
(Interest rate 8.75% - 9.5%) 12,923,417 12,923,417 12,923,417
---------------- --------------
OTHER INVESTMENTS:
Hydro-Quebec GTD DebUS $ 9.000% 3/7/01 1,000,000 1,070,310 1,072,000
Hydro Quebec MYN Tr 00049 7.740% 2/26/99 500,000 501,325 501,325
Hydro Quebec MTN TR 00051 7.710% 2/26/99 1,000,000 1,003,326 1,003,326
Israel State NTS 6.375% 12/15/05 800,000 771,440 778,000
Midland BK Plc shelf 7.625% 6/15/06 1,000,000 997,620 1,108,750
Quebec Prov Cda Mtn #TR 00007 8.690% 2/22/01 2,900,000 3,205,834 3,084,875
---------------- --------------
Total Other Investments 7,549,855 7,548,276
---------------- --------------
POOLED FUNDS:
Mellon Temp Inv Fund* 1,230 1,230 1,230
Mellon Cap GTAA Fund* 1,518 164,721 173,711
Mellon Daily Opening Stock Index Fund* 248,108 33,562,586 74,667,077
Mellon Daily Opening Asset Allocation Fund* 535,492 58,307,086 114,223,542
TBC Inc Pooled Employee Funds* 7,840,955 7,840,955 7,840,955
---------------- --------------
Total Pooled Funds 99,876,578 196,906,515
---------------- --------------
MUTUAL FUNDS:
Fidelity International Growth & Income Fund* 287,002 5,311,025 6,001,133
Fidelity Asset Manager* 916,033 14,304,701 15,929,600
Fidelity Contrafund Fund* 1,126,366 44,902,647 63,964,680
Fidelity Investment Grade Bond Fund* 2,075,485 15,004,875 15,337,689
Fidelity Magellan Fund* 362,098 30,154,732 43,746,491
Fidelity Retirement Money Market Portfolio* 28,792,722 28,792,722 28,792,722
Fidelity Overseas Fund* 305,514 9,502,407 10,991,821
Fidelity Puritan Fund* 1,900,609 31,606,945 38,145,141
Fidelity Growth & Income Portfolio* 1,492,834 44,907,808 68,429,194
Fidelity Blue Chip Growth Fund* 1,422,471 44,329,632 71,677,130
---------------- --------------
Total Mutual Funds 268,817,494 363,015,601
---------------- --------------
Total Assets Held for Investment Purposes $ 728,670,633 $ 824,836,887
---------------- --------------
---------------- --------------
</TABLE>
*Denotes party-in-interest.
See accompanying auditors' report.
20
<PAGE>
SECHEDULE 2
POLAROID RETIREMENT SAVINGS PLAN
Item 27d - Schedule of Reportable Transactions
Year ended December 31, 1998
<TABLE>
<CAPTION>
(a) IDENTITY OF PARTY (c) PURCHASE (d) SELLING
INVOLVED (b) DESCRIPTION OF ASSET PRICE PRICE
- ---------------------------- ----------------------------------- ----------------- ------------------
<S> <C> <C> <C>
Mellon Trust* Polaroid Common Stock $ 23,423,153 --
Mellon Trust* Polaroid Common Stock -- 20,529,673
Mellon Trust* Daily Liquidity Funds 244,344,190 --
Mellon Trust* Daily Liquidity Funds -- 241,554,507
Fidelity Investments* Merganser Money Market 66,970,474 --
-- 58,444,596
Fidelity Investments* Fidelity Contrafund 38,287,710 --
-- 41,844,221
Fidelity Investments* Fidelity Growth and Income 25,243,269 --
Portfolio -- 24,745,931
Fidelity Investments* Fidelity Retirement Money 34,806,640 --
Market Portfolio -- 32,436,875
</TABLE>
<TABLE>
<CAPTION>
(f) CURRENT
VALUE
OF ASSET ON (g) NET
(a) IDENTITY OF PARTY (e) COST OF TRANSACTION GAIN OR
INVOLVED ASSET DATE (LOSS)
- ---------------------------- ------------------ ------------------ ---------------
<S> <C> <C> <C>
Mellon Trust* 23,423,153 23,423,153 --
Mellon Trust* 22,648,529 20,529,673 (2,118,856)
Mellon Trust* 244,344,190 244,344,190 --
Mellon Trust* 241,554,507 241,554,507 --
Fidelity Investments* 66,970,474 66,970,474 --
58,369,441 58,444,596 75,155
Fidelity Investments* 38,287,710 38,287,710 --
38,151,760 41,844,221 3,692,461
Fidelity Investments* 25,243,269 25,243,269 --
20,093,244 24,745,931 4,652,687
Fidelity Investments* 34,806,640 34,806,640 --
32,436,875 32,436,875 --
</TABLE>
*Denotes party-in-interest
See accompanying auditors' report.
21
<PAGE>
EXHIBIT 23
Independent Auditors' Consent
The Board of Directors
Polaroid Corporation:
We consent to the incorporation by reference in registration statement
No. 333-32285 on Form S-8 with respect to the Polaroid Retirement Savings
Plan (the Plan) of our report dated June 11, 1999, relating to the statements
of net assets available for plan benefits of the Plan as of December 31, 1998
and 1997, and the related statements of changes in net assets available
for plan benefits for the years then ended, which report appears in the
December 31, 1998 annual report on Form 11-K of the Polaroid Retirement
Savings Plan.
/s/ KPMG LLP
------------
Boston, Massachusetts
June 28, 1999
