Polaroid Posts $38 Million Operating Loss, Excluding Restructuring Charges

-- Results Within Company's Projection;

Generates $17 Million Free Cash Flow in Quarter --



Apr 19, 2001, 01:00 ET from Polaroid Corporation

    CAMBRIDGE, Mass., April 19 /PRNewswire/ -- Polaroid Corporation
 (NYSE:   PRD) today posted an operating loss of $38 million for the first
 quarter of 2001, excluding $80 million in restructuring and other charges.
 Results are within the range projected by the company in January.  Last year
 Polaroid realized an operating profit of $9 million for the first quarter in
 what is traditionally the company's weakest quarter.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/19990816/PRDLOGO )
     Gary T. DiCamillo, chairman and chief executive officer, said that
 Polaroid continued to implement its five-point plan, announced in December
 2000, to cut costs and reduce debt.  "Despite the operating profit loss and
 excluding restructuring, we delivered $17 million in free cash flow -- defined
 as operating profit before tax, plus changes in working capital, plus
 depreciation, less capital expenditures.  We remain clearly focused on cash
 generation by completing the restructuring, reducing working capital,
 consolidating manufacturing, reducing capital spending and selling assets.
 Specifically, we delivered significant progress in generating positive free
 cash flow on several fronts:
 
     -- Working capital improved by $45 million on a comparable basis versus
        both year-ago and Q4 2000;
 
     -- Capital expenditures of $17 million were about half what they were in
        the first quarter last year;
 
     -- Overhead costs decreased by $13 million versus the same period last
        year," he said.
 
     Polaroid reported a diluted loss-per-share of $1.98 for the quarter
 compared to a diluted loss-per-share of $0.03 for the first quarter last year.
 Excluding the restructuring and other charges, the company posted a diluted
 loss-per-share of $0.85 for the first quarter of 2001.
     Polaroid generated revenues of $331 million for the first quarter, down
 18 percent from $402 million for the same period in 2000.  Relatively flat
 sales in the United States were offset by declines in international markets
 reflecting primarily retailer inventory reductions and less demand for
 traditional instant cameras and film.  Foreign exchange reduced total sales by
 approximately $7 million or 2 percent.
     Revenues in the Americas region totaled $225 million for the first
 quarter, down 6 percent compared to the same period last year.  Within the
 Americas, sales in the U.S. were $199 million, down 2 percent versus the first
 quarter of 2000.  Revenues in Europe totaled $61 million, down 29 percent
 compared to the same quarter last year.  Asia Pacific sales were $45 million,
 down 42 percent from the first quarter in 2000.
     "A significant portion of the first quarter sales decline was due to
 channel inventory reductions, especially in the Europe and Asia Pacific
 regions.  In the U.S., we continue to market the four top-selling cameras in
 the mass merchandising category accounting for about 27 percent of all cameras
 sold in this channel, according to Information Resources, Inc. (IRI).
 Revenues are targeted to improve later in the year driven by a planned
 multi-million-dollar advertising and promotion campaign for Polaroid's
 traditional and new instant products," DiCamillo added.
     During the first quarter, Polaroid announced a restructuring to reduce the
 workforce by approximately 950 positions or 11 percent by the end of this
 year.  As a result, the company recorded an $80 million charge consisting of
 $50 million to cover severance-related expenses and $30 million to write-off
 fixed assets and other items.  Polaroid expects to save $60 million on an
 annualized basis from the restructuring.
     Net debt -- comprised of gross debt less cash -- rose to $862 million at
 the end of the quarter from $840 million at the end of 2000 largely due to
 interest and severance payments offsetting the positive free cash flow from
 operations.  In the past two quarters, Polaroid has lowered its working
 capital significantly and is on track to reduce that number by $100 million
 this year, about $30 million more than the company's originally announced
 target.
     Throughout the first quarter, Polaroid continued its research and
 development efforts to prepare for the digital future.  Next month the company
 will reveal several new products, including two new instant digital printing
 platforms.  Polaroid already has a strong retail presence in the digital
 imaging category with a leading 70 percent share of digital cameras sold in
 U.S. food, drug and mass merchandising channels, according to IRI.
     Polaroid Corporation, with annual sales of approximately $1.9 billion, is
 the worldwide leader in instant imaging.  Polaroid supplies instant
 photographic cameras and films; digital imaging hardware, software and media;
 secure identification systems; and sunglasses to markets worldwide.  Visit the
 Polaroid web site at www.polaroid.com .
     "Polaroid" is a registered trademark of Polaroid Corporation, Cambridge,
 Mass. 02139
 
     Statements in this release may be forward-looking.  Actual events will be
 dependent upon factors and risks including, but not limited to, the Company's
 ability to:  market its core imaging products; penetrate new demographic
 markets; develop and implement its digital imaging strategy; compete
 successfully in the instant imaging market against larger and stronger
 competitors; manage or reduce its debt; implement its strategies to reduce
 costs and improve cash flow; comply with the covenants in the Amended Credit
 Agreement, the U.K. Credit Agreement, the indenture governing the 2002 Notes,
 2006 Notes and 2007 Notes manage the impact of foreign exchange and the
 effects of retail buying patterns; as well as the Company's ability to manage
 uncertainties and risk factors, including those described from time to time in
 the Company's filings with the Securities & Exchange Commission, specifically,
 the Company's 2000 Form 10-K and its most recent Form 10-Qs.
 
 
                 POLAROID CORPORATION AND SUBSIDIARY COMPANIES
                  Condensed Consolidated Statement of Earnings
                 Periods ended April 2, 2000 and April 1, 2001
                      (In millions, except per share data)
 
                                                        First Quarter
                                                         (Unaudited)
                                                      2000         2001
 
     Net sales                                       $402.3       $330.8
      Cost of sales                                   224.3        213.2
      Marketing, research, engineering and
       administrative expenses                        168.8        155.6
      Restructuring and other                            --         80.0
     Total costs                                      393.1        448.8
     Profit/(loss) from operations                      9.2       (118.0)
      Other income                                      8.6          1.3
      Interest expense                                 19.9         23.1
     Loss before income taxes                          (2.1)      (139.8)
      Federal, state and foreign income tax benefit    (0.7)       (48.9)
     Net loss                                         ($1.4)      ($90.9)
     Basic loss per common share                      ($.03)      ($1.98)
     Diluted loss per common share                    ($.03)      ($1.98)
     Cash dividends per common share                   $.15        $  --
     Weighted average common shares used for
      basic loss per share calculation
       (in thousands)                                44,674       45,816
     Weighted average common shares used
      for diluted loss per share calculation
       (in thousands)                                44,674       45,816
     Common shares outstanding at end of
      period (in thousands)                          44,760       46,171
 
 
                 POLAROID CORPORATION AND SUBSIDIARY COMPANIES
                      Supplementary Financial Information
                                 (In millions)
 
                                                         (Unaudited)
                                                         Three Months
     Selected Cash Flow Data                          2000         2001
      Additions to property, plant, and equipment     $32.7        $17.4
      Depreciation                                    $26.3        $27.1
 
                                                    At End of First Quarter
     Balance Sheet                                    2000         2001
      Current assets:
       Cash and cash equivalents                      $64.8        $87.7
       Receivables                                    416.1        295.8
       Inventories:
            Raw materials                              84.8         91.2
            Work-in-process                           143.8        190.2
            Finished goods                            204.4        220.0
               Total inventories                      433.0        501.4
       Prepaid expenses and other assets              157.6        117.8
               Total current assets                 1,071.5      1,002.7
 
      Net property, plant and equipment               576.1        524.5
      Deferred tax assets                             243.8        309.1
      Other assets                                     74.2         76.8
      Total assets                                 $1,965.6     $1,913.1
 
 
       Current liabilities:
        Short-term debt                              $302.7       $525.4
        Payables and accruals                         276.7        261.5
        Compensation and benefits                     102.7        123.7
        Federal, state and foreign income taxes        21.5          0.7
               Total current liabilities              703.6        911.3
 
       Long-term debt                                 573.1        423.9
       Accrued postretirement benefits                235.8        221.9
       Other long-term liabilities                     92.9         73.5
 
       Common stockholders' equity:
        Common stock, $1 par value                     75.4         75.4
        Additional paid-in capital                    388.8        336.1
        Retained earnings                           1,200.7      1,128.6
        Accumulated other comprehensive income        (56.1)       (75.9)
         Less: Treasury stock, at cost              1,248.5      1,181.8
                     Deferred compensation               .1          (.1)
             Total common stockholders' equity        360.2        282.5
       Total liabilities and common
        stockholders' equity                       $1,965.6     $1,913.1
 
 

SOURCE Polaroid Corporation
    CAMBRIDGE, Mass., April 19 /PRNewswire/ -- Polaroid Corporation
 (NYSE:   PRD) today posted an operating loss of $38 million for the first
 quarter of 2001, excluding $80 million in restructuring and other charges.
 Results are within the range projected by the company in January.  Last year
 Polaroid realized an operating profit of $9 million for the first quarter in
 what is traditionally the company's weakest quarter.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/19990816/PRDLOGO )
     Gary T. DiCamillo, chairman and chief executive officer, said that
 Polaroid continued to implement its five-point plan, announced in December
 2000, to cut costs and reduce debt.  "Despite the operating profit loss and
 excluding restructuring, we delivered $17 million in free cash flow -- defined
 as operating profit before tax, plus changes in working capital, plus
 depreciation, less capital expenditures.  We remain clearly focused on cash
 generation by completing the restructuring, reducing working capital,
 consolidating manufacturing, reducing capital spending and selling assets.
 Specifically, we delivered significant progress in generating positive free
 cash flow on several fronts:
 
     -- Working capital improved by $45 million on a comparable basis versus
        both year-ago and Q4 2000;
 
     -- Capital expenditures of $17 million were about half what they were in
        the first quarter last year;
 
     -- Overhead costs decreased by $13 million versus the same period last
        year," he said.
 
     Polaroid reported a diluted loss-per-share of $1.98 for the quarter
 compared to a diluted loss-per-share of $0.03 for the first quarter last year.
 Excluding the restructuring and other charges, the company posted a diluted
 loss-per-share of $0.85 for the first quarter of 2001.
     Polaroid generated revenues of $331 million for the first quarter, down
 18 percent from $402 million for the same period in 2000.  Relatively flat
 sales in the United States were offset by declines in international markets
 reflecting primarily retailer inventory reductions and less demand for
 traditional instant cameras and film.  Foreign exchange reduced total sales by
 approximately $7 million or 2 percent.
     Revenues in the Americas region totaled $225 million for the first
 quarter, down 6 percent compared to the same period last year.  Within the
 Americas, sales in the U.S. were $199 million, down 2 percent versus the first
 quarter of 2000.  Revenues in Europe totaled $61 million, down 29 percent
 compared to the same quarter last year.  Asia Pacific sales were $45 million,
 down 42 percent from the first quarter in 2000.
     "A significant portion of the first quarter sales decline was due to
 channel inventory reductions, especially in the Europe and Asia Pacific
 regions.  In the U.S., we continue to market the four top-selling cameras in
 the mass merchandising category accounting for about 27 percent of all cameras
 sold in this channel, according to Information Resources, Inc. (IRI).
 Revenues are targeted to improve later in the year driven by a planned
 multi-million-dollar advertising and promotion campaign for Polaroid's
 traditional and new instant products," DiCamillo added.
     During the first quarter, Polaroid announced a restructuring to reduce the
 workforce by approximately 950 positions or 11 percent by the end of this
 year.  As a result, the company recorded an $80 million charge consisting of
 $50 million to cover severance-related expenses and $30 million to write-off
 fixed assets and other items.  Polaroid expects to save $60 million on an
 annualized basis from the restructuring.
     Net debt -- comprised of gross debt less cash -- rose to $862 million at
 the end of the quarter from $840 million at the end of 2000 largely due to
 interest and severance payments offsetting the positive free cash flow from
 operations.  In the past two quarters, Polaroid has lowered its working
 capital significantly and is on track to reduce that number by $100 million
 this year, about $30 million more than the company's originally announced
 target.
     Throughout the first quarter, Polaroid continued its research and
 development efforts to prepare for the digital future.  Next month the company
 will reveal several new products, including two new instant digital printing
 platforms.  Polaroid already has a strong retail presence in the digital
 imaging category with a leading 70 percent share of digital cameras sold in
 U.S. food, drug and mass merchandising channels, according to IRI.
     Polaroid Corporation, with annual sales of approximately $1.9 billion, is
 the worldwide leader in instant imaging.  Polaroid supplies instant
 photographic cameras and films; digital imaging hardware, software and media;
 secure identification systems; and sunglasses to markets worldwide.  Visit the
 Polaroid web site at www.polaroid.com .
     "Polaroid" is a registered trademark of Polaroid Corporation, Cambridge,
 Mass. 02139
 
     Statements in this release may be forward-looking.  Actual events will be
 dependent upon factors and risks including, but not limited to, the Company's
 ability to:  market its core imaging products; penetrate new demographic
 markets; develop and implement its digital imaging strategy; compete
 successfully in the instant imaging market against larger and stronger
 competitors; manage or reduce its debt; implement its strategies to reduce
 costs and improve cash flow; comply with the covenants in the Amended Credit
 Agreement, the U.K. Credit Agreement, the indenture governing the 2002 Notes,
 2006 Notes and 2007 Notes manage the impact of foreign exchange and the
 effects of retail buying patterns; as well as the Company's ability to manage
 uncertainties and risk factors, including those described from time to time in
 the Company's filings with the Securities & Exchange Commission, specifically,
 the Company's 2000 Form 10-K and its most recent Form 10-Qs.
 
 
                 POLAROID CORPORATION AND SUBSIDIARY COMPANIES
                  Condensed Consolidated Statement of Earnings
                 Periods ended April 2, 2000 and April 1, 2001
                      (In millions, except per share data)
 
                                                        First Quarter
                                                         (Unaudited)
                                                      2000         2001
 
     Net sales                                       $402.3       $330.8
      Cost of sales                                   224.3        213.2
      Marketing, research, engineering and
       administrative expenses                        168.8        155.6
      Restructuring and other                            --         80.0
     Total costs                                      393.1        448.8
     Profit/(loss) from operations                      9.2       (118.0)
      Other income                                      8.6          1.3
      Interest expense                                 19.9         23.1
     Loss before income taxes                          (2.1)      (139.8)
      Federal, state and foreign income tax benefit    (0.7)       (48.9)
     Net loss                                         ($1.4)      ($90.9)
     Basic loss per common share                      ($.03)      ($1.98)
     Diluted loss per common share                    ($.03)      ($1.98)
     Cash dividends per common share                   $.15        $  --
     Weighted average common shares used for
      basic loss per share calculation
       (in thousands)                                44,674       45,816
     Weighted average common shares used
      for diluted loss per share calculation
       (in thousands)                                44,674       45,816
     Common shares outstanding at end of
      period (in thousands)                          44,760       46,171
 
 
                 POLAROID CORPORATION AND SUBSIDIARY COMPANIES
                      Supplementary Financial Information
                                 (In millions)
 
                                                         (Unaudited)
                                                         Three Months
     Selected Cash Flow Data                          2000         2001
      Additions to property, plant, and equipment     $32.7        $17.4
      Depreciation                                    $26.3        $27.1
 
                                                    At End of First Quarter
     Balance Sheet                                    2000         2001
      Current assets:
       Cash and cash equivalents                      $64.8        $87.7
       Receivables                                    416.1        295.8
       Inventories:
            Raw materials                              84.8         91.2
            Work-in-process                           143.8        190.2
            Finished goods                            204.4        220.0
               Total inventories                      433.0        501.4
       Prepaid expenses and other assets              157.6        117.8
               Total current assets                 1,071.5      1,002.7
 
      Net property, plant and equipment               576.1        524.5
      Deferred tax assets                             243.8        309.1
      Other assets                                     74.2         76.8
      Total assets                                 $1,965.6     $1,913.1
 
 
       Current liabilities:
        Short-term debt                              $302.7       $525.4
        Payables and accruals                         276.7        261.5
        Compensation and benefits                     102.7        123.7
        Federal, state and foreign income taxes        21.5          0.7
               Total current liabilities              703.6        911.3
 
       Long-term debt                                 573.1        423.9
       Accrued postretirement benefits                235.8        221.9
       Other long-term liabilities                     92.9         73.5
 
       Common stockholders' equity:
        Common stock, $1 par value                     75.4         75.4
        Additional paid-in capital                    388.8        336.1
        Retained earnings                           1,200.7      1,128.6
        Accumulated other comprehensive income        (56.1)       (75.9)
         Less: Treasury stock, at cost              1,248.5      1,181.8
                     Deferred compensation               .1          (.1)
             Total common stockholders' equity        360.2        282.5
       Total liabilities and common
        stockholders' equity                       $1,965.6     $1,913.1
 
 SOURCE  Polaroid Corporation