SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS

                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE

                       SECURITIES AND EXCHANGE ACT OF 1934

(Mark One)

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1998
                                       OR

            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

             For the transition period from _________ to ___________

                          Commission File Number 1-4085

                              POLAROID CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                  Delaware                                 04-1734655
       -------------------------------                --------------------
       (State or other jurisdiction of                  (I.R.S. Employer
       incorporation or organization)                 Identification No.)

784 Memorial Drive, Cambridge, Massachusetts                 02139
--------------------------------------------              -----------
(Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code:   (781) 386-2000
                                                      ---------------

Securities registered pursuant to Section 12(b) of the Act:

                                                 Name of each exchange on
         Title of each class                         which registered
         -------------------                         ----------------
Common Stock, par value $1 per share             New York Stock Exchange
                                                  Pacific Stock Exchange
       11-1/2% Notes due 2006                    New York Stock Exchange

     Rights to Purchase Series A                 New York Stock Exchange
Participating Cumulative Preferred  Stock        Pacific Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.

                               Yes [X]     No [ ]

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Aggregate market value of voting stock held by non-affiliates of registrant as
of March 15, 1999:   $1.0 billion
                     ------------

        Common Stock outstanding as of March 15, 1999:  44,100,466 shares
                                                        -----------------
Documents incorporated by reference:

Polaroid Corporation Annual Report to Stockholders for 1998--Parts I, II and IV
Polaroid Corporation 1999 Proxy Statement, dated April 9, 1999--Part III

<PAGE>

From time to time Polaroid Corporation, together with its consolidated
subsidiaries (the "Company"), and its representatives may provide information,
whether orally or in writing, including certain statements incorporated by
reference or included in this Form 10-K under "Business" and "Management's
Discussion and Analysis of Operations", which are deemed to be "forward-looking"
within the meaning of the Private Securities Litigation Reform Act of 1995
("Litigation Reform Act"). These forward-looking statements and other
information relating to the Company are based on the beliefs of management as
well as assumptions made by and information currently available to management.

The words "anticipate," believe", "estimate", "except", "intend", "will" and
similar expressions, as they relate to the Company or the Company's management,
including such items discussed in "Factors that may affect future results" set
forth on pages 31 to 34 of the Company's 1998 Annual Report to Stockholders,
which pages are incorporated herein by reference, are intended to identify
forward-looking statements. Such statements reflect the current views of the
Company with respect to future events and are subject to certain risks,
uncertainties, and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated or expected. The Registrant does not intend to update these
forward-looking statements.

In accordance with the provisions of the Litigation Reform Act, the Company is
making investors aware that such "forward-looking" statements, because they
relate to future events, are by their very nature subject to many important
factors which could cause actual results to differ materially from those
contained in the "forward-looking" statements.

                                     PART I

Item 1.  Business

General Business

The Company, incorporated in 1937 as a Delaware corporation, generated worldwide
net sales in 1998 of approximately $1.8 billion. The Company is the leading
instant imaging company in the world and is the only United States manufacturer
of traditional silver-halide, or chemical-based, instant cameras and film. The
Company designs, develops, manufactures and markets instant and digital imaging
and related products worldwide including digital peripherals, software and
systems solutions. The Company also designs, develops, manufactures and/or
markets hardware accessories for the instant imaging market; conventional film;
sunglasses; polarizers; and digital media products for the pre-press portion of
the graphics imaging industry. The cornerstone of the Company's strategy is to
increase its revenues and profits by exploiting its leading position in instant
imaging products, widely recognized brand name, global distribution network and
imaging and other technical expertise. To implement this strategy, the Company
plans to become more competitive and better able to introduce new products
quickly by streamlining its operations and improving operating efficiencies.

The Company's digital imaging products and technology, combined with its widely
recognized brand name and imaging and other technical expertise well position
the Company to continue to penetrate selected niches of the growing digital
imaging business. Businesses and governments are increasingly adopting digital
imaging systems and solutions because of the advantages they offer compared to
traditional instant and conventional photography, such as the ability to provide
more accurate images and images which can be manipulated, transmitted rapidly
over long distances electronically and stored as computer files and combined
with text and other codes.
<PAGE>

The Company believes that it will have significant opportunities as customers
adopt hybrid imaging products and solutions. Because digital imaging products
create new and enhanced applications of traditional photography, many customers
are buying digital imaging products to use with their existing instant and
conventional photography equipment. Because the Company offers a variety of
instant chemical-based and digital imaging products and has the technology and
expertise to develop new ones, the Company believes that it is well positioned
to address the imaging needs of its customers for digital and hybrid products
and solutions.

In leveraging its technology base, the Company also markets sunglasses,
polarizers and products for the graphics imaging market. The Company is
commercializing portions of its technology portfolio to develop new imaging
products and applications by considering strategic alliances, licensing of its
patents, joint ventures, distribution agreements, partnerships and sale of
ownership interests. The Company believes that these initiatives will enable it
to better manage the cost and risks of developing its existing technology and to
introduce products to markets and distribution channels to which it would
otherwise have limited access.

The Company plans to improve its operating efficiencies by continuing to reduce
selling, general and administrative expenses, by rationalizing manufacturing
operations and by upgrading its data management systems.

Worldwide Business Operations

The Company, as the leading instant imaging company in the world, manages
certain functions on a worldwide basis while decentralizing its sales and
marketing operations on a regional basis.

The Company manages its research and engineering activities ("Research and
Development") and manufacturing, distribution, logistics and inventory
management activities ("Global Operations") on a worldwide functional basis. The
Company's sales and marketing activities are decentralized into three regions to
facilitate decision making consistent with local market conditions. As a result
of this organizational structure, the Company is managed in five business
segments: the Americas Region, the European Region, the Asia-Pacific Region,
Research and Development and Global Operations.

In addition, the Company has a Corporate category which is not a segment. This
category includes central marketing, corporate general and administrative
functions and worldwide restructuring and other activities. The Company's
treasury function, which is part of the Corporate category, is also managed on a
worldwide basis. This includes capital funding, cash management and foreign
exchange management. As a result, funding of working capital needs of the
segments is managed centrally.

For more information, see the "Financial Liquidity and Capital Resources" and
"Foreign Currency Exchange" sections of the section entitled "Management's
Discussion and Analysis of Operations" on pages 28 to 31, inclusive, of the
Polaroid Corporation Annual Report to Stockholders for 1998 (the "Annual
Report").

For Financial Information about Segments, see note 13, "Business," on page 53 to
54, inclusive, of the Annual Report.

The Company's products are manufactured for worldwide consumption and are
tailored, often changing packaging and cosmetic features, for regional
customers. In addition, since the Company's major competitors are large global
organizations, it competes with them in all regions in which it operates.

                                       2
<PAGE>

Products

The Company designs, develops, manufactures and markets instant and digital
imaging and related products worldwide. The Company's principal products are:
instant and digital cameras; instant film, including over 75 varieties; and,
digital peripherals, software and systems solutions. For the year ended December
31, 1998, the Company's principal products, which are sold across all of the
Company's regional segments, represented approximately 85% of its net sales
while instant cameras and film generated approximately 75% of net sales.

In 1998, the Company introduced more than 25 new products or product line
extensions. These products include:

o  the Polaroid Pocket Camera, the world's smallest instant camera and film;

o  the Polaroid JoyCam Camera, a low cost version of the Polaroid Captiva camera
   and film;

o  the Polaroid ColorShot digital photo printer, the fastest digital photo
   printer on the market;

o  the Polaroid PDC 640 digital camera and the VGA digital camera, each of which
   operates with Polaroid PhotoMax Image Maker software; and

o  the Polaroid PopShots Single-Use Camera, the first single-use instant camera.

The Company plans to introduce the Polaroid PopShots Single-Use Camera globally
in the first half of 1999. The Company plans to introduce the Polaroid Pocket
Camera and the Polaroid JoyCam camera globally in the second half of 1999.

The Company is also actively pursuing opportunities in certain markets where it
can capitalize on its proven technology base. These markets include sunglasses,
polarizers, and graphics imaging.

Competition

The Company competes in the worldwide imaging market. The niches in which the
Company operates are highly competitive in design, product performance, quality,
service and price. Both conventional silver-halide and digital imaging products
from other manufacturers compete directly with the Company in meeting customers'
and end-users' imaging needs. The Company has competitors worldwide, ranging
from large corporations to smaller and more specialized companies. Although
there are situations where the Company faces competition from local and regional
companies, it typically competes with global organizations in all of its
regions. In the instant imaging market, the Company faces competition from Fuji
Photo Film Co., Ltd. ("Fuji"), which has announced that it will introduce
selected instant imaging products in Japan and Europe. In the digital imaging
market, the Company faces competition from Eastman Kodak Company, Fuji,
Hewlett-Packard Company, Canon U.S.A., Inc., Sony Corporation and others. Many
of the Company's competitors are larger and have greater financial and other
resources. The other markets in which the Company operates are more fragmented
and, thus, it is more difficult to assess the competitive risk that the Company
faces. In general, the effect of competition causes price pressure on the
Company's existing products and shortens the life cycle of products.

                                       3
<PAGE>

Customers

One customer, Wal-Mart Stores, Inc., accounted for approximately 11.9%, 12.5%
and 13.0% of the Company's total net sales in 1996, 1997 and 1998, respectively.
These sales were recorded primarily in the Americas Region. No other customer
accounted for more than 10% of the Company's total net sales during those
periods.

Employees

At December 31, 1996, 1997 and 1998, the Company had 10,046, 10,011 and 9,274
employees, respectively. In addition, at December 31, 1996, 1997 and 1998, the
Company had 743, 500 and 532 non-employee temporary workers, respectively.

Regional Operations

The Company competes in selected markets of the worldwide imaging industry in
each of its geographic segments: the Americas Region, European Region, and Asia
Pacific Region. In each region, the Company has two principal markets for its
traditional chemical-based instant imaging products: the market for instant
cameras and film for personal photography and the market for commercial
applications. While the products in each of the regions are similar, the mix
between the personal photography and commercial applications varies by region
and between countries within the regions.

In order to leverage the marketing of the Company's technology and products, the
Company manages its sales and marketing operations on a regional basis: the
Americas, Europe and Asia-Pacific. This alignment affords each region the
opportunity to develop advertising and promotional programs, organize its
distribution structure, target its communications messages, and tailor its
product portfolio to address the needs of the market place. This strategy
enables the Company to deliver products to customers in a cost-effective manner
and form which affords the greatest chance of commercial success.

Americas Region

Customers

The Americas Region sells its products through mass merchandisers, food, drug,
discount and department stores; specialty photography stores; wholesalers;
original equipment manufacturers; independent agents; and distributors. The ten
largest customers in the Americas Region accounted for approximately 40% of the
Region's net sales in 1996, 1997 and 1998.

Employees

The Americas Region had approximately 1,250, 1,200 and 1,050 employees at
December 31, 1996, 1997 and 1998, respectively. In addition, the Americas Region
had approximately 240, 150 and 110 non-employee temporary workers at December
31, 1996, 1997 and 1998, respectively.

Real Estate

In the Americas Region as of December 31, 1998, the Company occupied
approximately 390,000 square feet of space, of which approximately 20% was owned
by the Company.

                                       4
<PAGE>

European Region

Customers

The European Region sells its products primarily through wholly-owned marketing
subsidiaries in Western Europe and to unaffiliated distributors, generally on an
exclusive basis, in countries outside of Western Europe. No customer in the
European Region accounted for more than 10% of the Company's total net sales in
1996, 1997 or 1998.

Employees

The European Region had approximately 950, 1,000 and 850 employees at December
31, 1996, 1997 and 1998, respectively.

Real Estate

In the European Region as of December 31, 1998, the Company occupied
approximately 260,000 square feet of space, of which approximately 40% was owned
by the Company.

Asia Pacific Region

Customers

The Asia Pacific Region sells its products primarily through wholly-owned
marketing subsidiaries and unaffiliated distributors, generally on an exclusive
basis. No customer in the Asia Pacific Region accounted for more than 10% of the
Company's total net sales in 1996, 1997 or 1998.

Employees

The Asia Pacific Region had approximately 500, 500 and 450 employees at December
31, 1996, 1997 and 1998, respectively.

Real Estate

In the Asia Pacific Region as of December 31, 1998, the Company occupied
approximately 175,000 square feet of space, all of which was leased by the
Company.

Global Operations

The Global Operations segment includes the Company's manufacturing, distribution
logistics and inventory management functions that are managed on a worldwide
basis. Portions of the Company's products other than instant film have been
outsourced to third party manufacturers. It is the Company's strategy to
manufacture in house those products which are proprietary in nature or for which
the Company maintains a core competency. The Company also manages the logistics
function on a worldwide basis. The Company's primary distribution facilities are
located in the United States and the Netherlands. The Company makes product
sourcing decisions on a worldwide basis in an effort to optimize cost and
customer service.

                                       5
<PAGE>

Employees

Global Operations had approximately 5,850, 5,800 and 5,400 employees at December
31, 1996, 1997 and 1998, respectively. In addition, Global Operations had
approximately 320, 250 and 350 non-employee temporary workers at December 31,
1996, 1997 and 1998, respectively.

Real Estate

In Global Operations as of December 31, 1998, the Company occupied approximately
4.6 million square feet of space, of which approximately 80% was owned by the
Company.

Raw Materials and Supplies

The Company uses a variety of raw materials and supplies in the manufacture of
its products, including chemicals, polyester film base, specialty papers and
electronic components. The Company purchases these products from several sources
and manufactures a few raw materials that it uses in low volumes. In the past
several years, these raw materials and supplies have been available in
sufficient quantities and at satisfactory prices to meet the requirements of the
Company's manufacturing operations.

Manufacturing

Global Operations has manufacturing sites located in Waltham, Norwood, and New
Bedford, Massachusetts; Dunbarton, Scotland; Enschede, The Netherlands;
Queretaro, Mexico; and Shanghai, China. Approximately 5,500, 5,400 and 5,000
employees at December 31, 1996, 1997 and 1998, respectively, were involved in
Global Operations manufacturing activities worldwide. The manufacture of instant
film is a vertically integrated process that has two major steps: the production
of photographic materials, principally photographic negatives; and the assembly
of film packs.

The Company makes photographic negatives by purchasing and producing custom
chemicals and coating them on film sheets using its own proprietary technology.
In addition, the Company's instant integral films carry their own battery rather
than placing it in the camera. The Company conducts these processes in the
United States because the production of the necessary chemicals is capital
intensive, the manufacturing process uses the Company's own proprietary
technology and the process of coating film requires clean and controlled
conditions which the Company can better control locally.

The assembly of film packs, by contrast, is highly mechanized. The Company
assembles film packs in the United States, The Netherlands, Scotland and Mexico.
The Company allocates the production of film packs to each of these four sites
to reduce the time to market and the total cost depending on the intended
market.

The Company manufactures cameras using a proprietary plastic lens molding
technology that optimizes product performance and controls the cost of
production. The Company performs the final assembly of cameras for personal
photography at its facilities in Scotland and China or contracts final assembly
to third parties, such as for Polaroid Pocket Cameras sold in Japan.

The Company manufactures digital imaging products that use the Company's
proprietary technology at its facilities in Scotland and the United States. The
Company purchases other digital imaging products from original equipment and
other manufacturers.

                                       6
<PAGE>

The Company believes that the capacity of the Company's manufacturing facilities
is sufficient to meet current demand for its products. All of the Company's
premises are in good repair and its machinery and equipment are maintained in
good operating condition.

Environmental Compliance

The Company's environmental compliance is primarily associated with the Global
Operations and Research and Development segments. Approximately 3% of the
Company's anticipated capital spending in 1999 is expected to be for
environmental compliance projects.

The Company owns and/or operates facilities primarily related to the Global
Operations and Research and Development segments that are subject to certain
federal, state and local laws and regulations relating to environmental
protection, including those governing the investigation and remediation of
contamination resulting from past or present releases of hazardous substances.
Certain of these laws and regulations may impose joint and several liabilities
on the Company for the costs of investigation or remediation of such
contamination, regardless of fault or the legality of original disposal.

The Company, together with other parties, is currently designated a Potentially
Responsible Party ("PRP") by the United States Environmental Protection Agency
(the "EPA") and certain state agencies with respect to the response costs for
environmental remediation at several sites. The Company believes that its
potential liability with respect to any site and with respect to all sites in
the aggregate will not have a materially adverse effect on the financial
condition or operating results of the Company.

Due to a wide range of estimates with regard to response costs at those sites
and various other uncertainties, the Company cannot firmly establish its
ultimate liability concerning those sites. In each case in which the Company is
able to determine the likely exposure, such amount has been included in the
Company's reserve for environmental liabilities. Where a range of comparably
likely exposures exists, the Company has included in its reserve at least the
minimum amount of the range. The Company's aggregate reserve for these
liabilities as of December 31, 1998 was $1.5 million, the majority of which the
Company currently expects to be payable over the next two to three years. The
Company reviews the analysis of the data that supports the adequacy of this
reserve on a quarterly basis. The reserve for such liability does not provide
for associated litigation costs, which, if any, are expected to be
inconsequential in comparison with the amount of the reserve. The Company will
continue to accrue in its reserve appropriate amounts from time to time as
circumstances warrant. This reserve does not take into account potential
recoveries from third parties.

Federal law provides that PRPs may be held jointly and severally liable for
response costs. Based on current estimates of those costs and after
consideration of the potential estimated liabilities of other PRPs with respect
to those sites and their respective estimated levels of financial
responsibility, the Company does not believe its potential liability will be
materially enlarged by the fact that liability is joint and several.

The Company reviews its recurring internal expenditures on environmental
matters, as well as capital expenditures related to environmental compliance, on
a monthly basis, and reviews its third-party expenditures on environmental
matters on a quarterly basis. The Company believes that these expenditures have
not had and will not have a materially adverse effect on the financial condition
or operating results of the Company.

                                       7
<PAGE>

Research and Development

The Research and Development segment is managed centrally and charged with the
mission of creating value through technology with multiple applications. It is
from this technology base that the Company develops and introduces new products
each year.

Research and Development costs were $116.3, $122.8, and $126.6 million in 1996,
1997, and 1998, respectively. In 1999, the Company expects to spend
approximately $100 million in the Research and Development segment.

Research and Development activities have historically played an important role
for the Company. Since 1995, however, the Company has shifted its focus
regarding research, engineering and development toward more selected,
commercially-oriented applications. To meet its goal of developing and
introducing several new products each year, the Company has trained and equipped
its research, engineering and development personnel to adapt its existing
technology to new products and applications. In addition, the Company is seeking
to exploit its intellectual property by licensing patents and by entering joint
development efforts with third parties to reduce its exposure to competitive
forces and new emerging technologies.

Employees

Research and Development had approximately 850, 900 and 660 employees at
December 31, 1996, 1997 and 1998, respectively. In addition, Research and
Development had approximately 100, 80 and 20 non-employee temporary workers at
December 31, 1996, 1997 and 1998, respectively.

Real Estate

In Research and Development as of December 31, 1998, the Company occupied
approximately 600,000 square feet of space, of which approximately 40% was owned
by the Company.

Corporate

The Corporate category, which is not a segment, includes central marketing,
general and administrative activities and certain other corporate activities,
including worldwide restructuring and other. It also includes the Company's
patent, license and trademark activities.

A total of approximately 2,800 employees are expected to be terminated under the
Company's involuntary severance program as part of the December 1997
restructuring (including the extension to it in 1998), of which approximately
half have terminated as of December 31, 1998. Of this total, approximately 13%
will be from the Americas Region; 20% from the European Region; 7% from the Asia
Pacific Region; 46% from Global Operations; 7% from Research and Development,
with the remainder terminating from the Corporate category.

Patents and Trademarks

The Company believes that its patents are important to its business. In 1998,
the Company continued to obtain patents and to pursue efforts to license a
portion of its portfolio of over 1,500 active U.S. patents. In addition, the
Company owns a number of valuable trademarks, including the trademark
"Polaroid," which are important to its business.

                                       8
<PAGE>

Item 2. Properties

The Company's worldwide corporate headquarters is located in Cambridge,
Massachusetts. The Company has manufacturing facilities and marketing and
distribution centers throughout the world. At December 31, 1998, most of the
Company's corporate, research, marketing and administrative offices were located
in Cambridge, Waltham, Norwood and Newton, Massachusetts. The Cambridge
properties have leases that expire between 1999 and 2003, with 63% of them
terminating in 1999. During the first half of 1999, the Company plans to
relocate many of the employees currently located in a leased facility in
Cambridge to a facility in Wayland, Massachusetts, which the Company will lease
for a term of ten years. The Wayland facility replaces property that the Company
sold in Norwood, Massachusetts in 1998 to which the Company had planned to
relocate some of the employees from the Cambridge facility. In addition, in
early 1999 the Company entered into a sale and leaseback transaction for a new
distribution facility in Norton, Massachusetts.

Since 1996, the Company has sold 14 properties for a total of approximately $220
million in net proceeds, benefiting from the high real estate prices in the
Boston area, and reinvested $42 million of those proceeds in existing and newly
leased properties.

At December 31, 1998, over 95% of the Company's property in the United States
was located in eastern Massachusetts. These properties are summarized in the
chart below.

                            Massachusetts Properties
                              At December 31, 1998

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Location:                            Owned         Leased      Total
--------------------------------------------------------------------------------
                                      (in thousands of square feet)
<S>                                  <C>            <C>        <C>
 Waltham                             1,612           45        1,657
 Cambridge                              90          796          886
 Norwood                               535          253         788
 New Bedford                           739          --           739
 Needham                              --            466          466
 Newton                               --            165          165
 Bedford                              --            125          125
                                     -----         -----       -----
    Total                            2,976         1,850       4,826
                                     =====         =====       =====
</TABLE>

The Company also currently maintains a network of three Global Operations
distribution centers in Oakbrook, Illinois, Needham, Massachusetts and Santa
Ana, California. The Company plans to relocate the operations at the Needham
facility to a new facility in Norton, Massachusetts in the first half of 1999.
In addition, the Americas Region has eight regional sales offices in other
locations throughout the United States.

The Company's main properties located outside the United States house the Global
Operations manufacturing facilities and regional marketing subsidiaries and
sales offices. The principal foreign manufacturing facilities are located in
Enschede, The Netherlands; Dunbarton, Scotland; Queretaro, Mexico; and Shanghai
China. The Company owns over 90% of these facilities on a square foot basis.
These facilities also contain some administrative and regional marketing
activities and are summarized in the chart below.

                                       9
<PAGE>

                        Manufacturing Facilities Outside

                                the United States

                              At December 31, 1998
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                                          Approximate
                 Location                                    Space
--------------------------------------------------------------------------------
       (in thousands of square feet)
    <S>                                                    <C>
    The Netherlands                                          518
    Scotland                                                 390
    Mexico                                                   255
    China                                                    106
                                                           -----
       Total                                               1,269
                                                           =====
</TABLE>

The European Region marketing subsidiaries and sales offices are located in
England, France, Germany, Italy, Scotland, Spain, Russia and other European
countries. The Asia Pacific Region has marketing subsidiaries and sales offices
in Australia, China, Hong Kong, Japan, Korea and Malaysia. The Americas Region
has marketing subsidiaries and sales offices in Argentina, Brazil, Canada,
Columbia, Mexico, Peru and Puerto Rico.

The capacity of the Company's manufacturing facilities is sufficient to meet
current demand for the Company's products. All of the Company's premises are in
good repair and its machinery and equipment are maintained in good operating
condition.

Item 3. Legal Proceedings

See "Environmental Compliance" under Item 1. Business, above and note 14,
"Contingencies", on page 54 and 55, inclusive, of the Annual Report.

Item 4. Submission of Matters to a Vote of Security Holders

None in the fourth quarter of 1998.

                                     PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder
        Matters

See the table entitled "Quarterly Financial Data" on page 55 of the Annual
Report.

Item 6. Selected Financial Data

See the table entitled "Ten Year Financial Summary" on pages 56 to 57,
inclusive, of the Annual Report.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

See the section entitled "Management's Discussion and Analysis of Operations" on
pages 23 to 36, inclusive, of the Annual Report.

Item 7A. Quantitative and Qualitative Disclosure

                                       10
<PAGE>

Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to market risk from changes in interest rates and foreign
currency exchange rates relative to its market risk sensitive instruments and
positions as described below. To reduce the risk and costs associated with its
nonfunctional currency operating activities, the Company manages its exposures
to foreign currency exchange rate changes through its operating and financing
activities. In this regard, the Company utilizes nonfunctional foreign
currency-denominated borrowings to reduce the impact of exchange on its
nonfunctional currency net balance sheet exposures. In addition, the Company
utilizes foreign currency call options to protect a portion of its expected
foreign currency-denominated revenues from adverse foreign currency exchange
rate movements. The Company does not utilize financial instruments for trading
or other speculative purposes.

Interest Rate Risks

The Company is exposed to interest rate risk primarily related to its borrowing
activities. The Company borrows U.S. Dollars to fund its working capital and
investment requirements. The Company borrows foreign currencies primarily to
manage its nonfunctional currency net asset exposures. Typically, the Company's
short-term borrowings are in variable rate debt and the Company's long-term
borrowings are in fixed rate debt. The following table summarizes principal
payments, related average interest rates by contractual maturity date and fair
value information as of December 31, 1998 relative to the Company's borrowing
activities:

     Principal Payments and Interest Rates by Maturity Dates (in $ millions)
     -----------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                  Due                   12/31/98
                              1999       2000      2001    2002      2003      Thereafter     Total     Fair Value
                              ----       ----      ----    ----      ----      ----------     -----     ----------
<S>                            <C>        <C>      <C>      <C>       <C>          <C>         <C>          <C>
Short-term debt:
----------------
Variable rate (U.S. dollars)   $220       --       --       --        --           --          $220         $220
   Average interest rate       6.9%                                                            6.9%

Variable rate
 (non-U.S. dollars)            $112       --       --       --        --           --          $112         $112
   Average interest rate       4.0%                                                            4.0%

Long-term debt
--------------
   Fixed rate (U.S. dollars)   $200       --       --      $150                   $150         $500         $478
   Average interest rate       8.0%                       6.75%                  7.25%         7.4%
</TABLE>

From time to time the Company may use over-the-counter currency exchange swaps
to slightly reduce the interest expense incurred on its foreign
currency-denominated debt. Since these contracts were not material to the
financial position or results of operations of the Company for the year ended
December 31, 1998, an adverse movement in the underlying interest rate
differentials for these contracts of 10% would not have a material impact on the
financial position or results of operations of the Company.

As of the date of this report, the Company also had issued and outstanding $275
million aggregate principal amount of its 11-1/2 % Notes due 2006. For
information about the Company's 11-1/2% Notes due 2006, see note 8, "Long-term
Debt," on pages 48 to 49, inclusive, of the Annual Report.

                                       11
<PAGE>

For more information on the Company's foreign currency-denominated short-term
borrowings and currency exchange swap contracts, see note 3, "Financial
Instruments" on pages 45 and 46, inclusive of the Annual Report.

Foreign Currency Exchange Rate Risk

The Company utilizes foreign currency call options to reduce the impact of
adverse exchange rate movements on a portion of its expected non-functional
currency denominated revenues. These contracts are primarily denominated in
German Marks and Japanese Yen. Assuming a 10% adverse change in the foreign
currency exchange rates relative to these contracts outstanding at December 31,
1998, the estimated change in fair value of these contracts would not be
material to the financial position or results of operations of the Company.

For more information on the Company's foreign currency call options, see note 3,
"Financial Instruments" on pages 45 and 46, inclusive, of the Annual Report.

Item 8. Financial Statements and Supplementary Data

See the section entitled "Independent Auditors' Report" on page 37, the section
entitled "Financial Statements" on pages 38 to 41, inclusive, the section
entitled "Notes to Consolidated Financial Statements" on pages 42 to 55,
inclusive, and the section entitled "Supplementary Financial Information" on
pages 55 to 57, inclusive, of the Annual Report.

Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure

None.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

a) Directors - See the section entitled "Election of Directors" on pages 3 to 5,
   inclusive, of the Polaroid Corporation 1999 Proxy Statement (the "Proxy
   Statement").

b) Executive Officers of the Registrant - Listed below are the executive
   officers of the Company as of January 31, 1999. Officers are elected annually
   by the Board of Directors. No family relationship exists between any of the
   officers.

<TABLE>
<CAPTION>
Name                     Office                                             Age
<S>                      <C>                                                <C>
Gary T. DiCamillo        Chairman, Chief Executive Officer and Director     48
Judith G. Boynton        Executive Vice President and Chief Financial       43
                           Officer
William J. O'Neill, Jr.  Executive Vice President                           56
Carole J. Uhrich         Executive Vice President                           55
Jeremiah Noonan          Senior Vice President                              39
Thomas M. Lemberg        Senior Vice President, General Counsel and         52
                           Secretary
Joseph G. Parham         Senior Vice President                              49
</TABLE>

Mr. DiCamillo is Chief Executive Officer and Chairman of the Board of Directors
of the Company and has been a director since 1995. Prior to joining the Company
in 1995, he was employed at Black & Decker Corporation (a global marketer and
manufacturer of products for consumer and commercial applications). From 1993 to
1995, he was Group Vice President of Black & Decker Corporation and President of
its Power Tools and Accessories business. From 1988 to 1993, he was President of
the North America Power Tools business at Black & Decker Corporation.

                                       12
<PAGE>

Ms. Boynton joined the Company in 1998 as Executive Vice President and Chief
Financial Officer. Prior to joining the Company, she was employed as Vice
President and Controller at Amoco Corporation. Prior to becoming Vice President
and Controller, she held various finance management positions within Amoco.

Mr. O'Neill joined the Company in 1969. He has served in various capacities. In
August 1997, Mr. O'Neill was named Executive Vice President and President of
Corporate Business Development. He was elected Corporate Controller in 1980,
Vice President and Controller in 1982, Group Vice President in 1984, Group Vice
President and Chief Financial Officer in 1992, and to his present position in
1997.

Ms. Uhrich was appointed to her present position of Executive Vice President and
Assistant Chief Operating Officer in September 1998. She joined the Company in
1966 and has served in various capacities since then, including Executive Vice
President, Commercial Imaging Group between 1992 and 1996.

Mr. Lemberg joined the Company as Senior Vice President, General Counsel and
Secretary in September 1996. Prior to joining the Company, he served as Vice
President, General Counsel and Secretary at Lotus Development Corporation from
1987 to 1995.

Mr. Parham was appointed to his present position of Senior Vice President, and
President, Polaroid Eyewear, Inc. in January 1999. He joined the Company in 1973
and has served in various capacities within the Company.

c) Compliance With Section 16(a) of the Securities Exchange Act of 1934 - Form 3
   and 4 Reporting Obligation

   See the section entitled "Compliance with Section 16(a) of the Securities
   Exchange Act of 1934 - Form 3 and 4 Reporting Obligation" on page 16 of the
   Proxy Statement.

Item 11. Executive Compensation

See the section entitled "Executive Compensation" on pages 9 to 13, inclusive,
of the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management

See the section entitled "Beneficial Ownership of Shares" on pages 6 to 7,
inclusive and the section entitled "Election of Directors" on pages 3 to 5,
inclusive, of the Proxy Statement.

Item 13. Certain Relationships and Related Transactions

See the section entitled "Election of Directors" on pages 3 to 5, inclusive, of
the Proxy Statement.

                                       13
<PAGE>

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

<TABLE>
<CAPTION>
a) 1. Financial Statements                                          Page No.
<S>                                                                   <C>
      Independent Auditors' Report                                      37*
      Consolidated Statement of Earnings
         for the years ended December 31, 1996, 1997 and 1998           38*
      Consolidated Balance Sheet as of December 31, 1997 and 1998       39*
      Consolidated Statement of Cash Flows
         for the years ended December 31, 1996, 1997 and 1998           40*
      Consolidated Statement of Changes in Common Stockholders'
        Equity for the years ended December 31, 1996, 1997 and 1998     41*
      Notes to Consolidated Financial Statements                      42-55*
      Supplementary Financial Information (Unaudited)                 55-57*

a) 2. Financial Statement Schedule
            Independent Auditors' Report                                 i
            Schedule II - Valuation and Qualifying Accounts             ii
</TABLE>

All other schedules are omitted, as they are either not required or not
applicable.

*  Page references are to the Annual Report, which pages are incorporated herein
   by reference. Except for such pages and other information in the Annual
   Report specifically incorporated in this report by reference, the Annual
   Report is not to be deemed filed as part of this report.

a) 3. Exhibits

3.1(a)         Restated Certificate of Incorporation of Polaroid Corporation as
               of August 20, 1973. (The Restated Certificate of Incorporation,
               included as Exhibit 3.2(a) to Polaroid Corporation's Form 10-K
               for the year ended December 31, 1988, is hereby incorporated
               herein by reference.)

3.1(b)         Amendments to the Restated Certificate of Incorporation of
               Polaroid Corporation as of May 12, 1987. (The Amendments to the
               Restated Certificate of Incorporation, included as Exhibit 3.1 to
               Polaroid Corporation's Form 10-Q for the quarter ended June 28,
               1987, are hereby incorporated herein by reference.)

3.1(c)         Amendment to Polaroid Corporation Restated Certificate of
               Incorporation as of June 2, 1989. (The Amendment to the Restated
               Certificate of Incorporation, included as Exhibit 3.1 to Polaroid
               Corporation's Form 10-Q for the quarter ended July 2, 1989, is
               hereby incorporated herein by reference.)

3.1(d)         Amendment to Polaroid Corporation Restated Certificate of
               Incorporation (Certificate of Designation of Series D Cumulative
               Convertible Preferred Stock) as of October 31, 1991. (The
               Amendment to the Restated Certificate of Incorporation, included
               as Exhibit 3.2(e) to Polaroid Corporation's Form 10-K for the
               year ended December 31, 1991, is hereby incorporated herein by
               reference.)

                                       14
<PAGE>

a) 3. Exhibits (continued)

3.2            By-Laws of Polaroid Corporation amended and restated as of
               February 1, 1994. (The By-Laws amended and restated, included as
               Exhibit 3.1 to Polaroid Corporation's Form 10-K for the year
               ended December 31, 1993, are hereby incorporated herein by
               reference.)

4.1            Rights Agreement dated as of September 9, 1986 between Polaroid
               Corporation and Morgan Shareholder Services Trust Company, as
               Rights Agent. (The Rights Agreement, included as Exhibit 1 to
               Polaroid Corporation's Form 8-A as filed on September 15, 1986,
               is hereby incorporated herein by reference.)

4.2            First Amendment dated as of August 16, 1988 to Rights Agreement
               dated as of September 9, 1986 between Polaroid Corporation and
               Morgan Shareholder Services Trust Company, as Rights Agent. (The
               First Amendment, included as Exhibit 4 to Polaroid Corporation
               Form 8 (Amendment No. 1 to Form 8-A filed on September 15, 1986)
               as filed on August 18, 1988, is hereby incorporated herein by
               reference.)

4.3            Second Amendment dated as of September 14, 1988 to Rights
               Agreement dated as of September 9, 1986 between Polaroid
               Corporation and Morgan Shareholder Services Trust Company, as
               Rights Agent. (The Second Amendment, included as Exhibit 5 to
               Polaroid Corporation's Form 8 (Amendment No. 2 to the Form 8-A
               filed on September 15, 1986) as filed on September 15, 1988, is
               hereby incorporated herein by reference.)

4.4            Supplemental Rights Agreement and Third Amendment dated as of
               January 30, 1989 to Rights Agreement dated as of September 9,
               1986 between Polaroid Corporation and Morgan Shareholder Services
               Trust Company, as Rights Agent. (The Supplemental Rights
               Agreement and Third Amendment, included as Exhibit 6 to Polaroid
               Corporation's Form 8 (Amendment No. 3 to the Form 8-A filed on
               September 15, 1986) as filed on January 30, 1989, is hereby
               incorporated herein by reference.)

4.5            Fourth Amendment dated as of February 21, 1989 to Rights
               Agreement dated as of September 9, 1986 between Polaroid
               Corporation and Morgan Shareholder Services Trust Company, as
               Rights Agent. (The Fourth Amendment, included as Exhibit 7 to
               Polaroid Corporation's Form 8 (Amendment No. 4 to the Form 8-A
               filed on September 15, 1986) as filed on February 21, 1989, is
               hereby incorporated herein by reference.)

4.6            Supplemental Rights Agreement and Fifth Amendment dated as of
               October 7, 1991 to the Rights Agreement dated as of September 9,
               1986 between Polaroid Corporation and First Chicago Trust Company
               (as successor to Morgan Shareholder Services Trust Company), as
               Rights Agent. (The Supplemental Rights Agreement and Fifth
               Amendment, included as Exhibit 8 to Polaroid Corporation's Form 8
               (Amendment No. 5 to the Form 8-A filed on September 15, 1986) as
               filed on October 21, 1991, is hereby incorporated herein by
               reference.)

4.7            Sixth Amendment (previously designated as the Fifth Amendment)
               dated as of March 23, 1993 to the Rights Agreement dated as of
               September 9, 1986 between Polaroid Corporation and First Chicago
               Trust Company, as Rights Agent. (The Sixth Amendment (previously
               designated as the Fifth Amendment), included as Exhibit 9
               (previously designated as Exhibit 8) to Polaroid Corporation's
               Form 8 (Amendment No. 6 (previously designated as Amendment No.
               5) to the Form 8-A filed on September 15,

                                       15
<PAGE>

a) 3. Exhibits (continued)

               1986) as filed on July 2, 1993, is hereby incorporated herein by
               reference.)

4.8            Amendment dated as of June 30, 1993 to the Fifth Amendment dated
               as of March 23, 1993 to the Rights Agreement dated as of
               September 9, 1986 between Polaroid Corporation and First Chicago
               Trust Company, as Rights Agent. (The Amendment to the Sixth
               Amendment, included as Exhibit 10 to Polaroid Corporation's Form
               8 (Supplement to Amendment No. 5 and redesignation thereof as
               Amendment No. 6 to the Form 8-A filed on September 15, 1986) as
               filed on July 2, 1993, is hereby incorporated herein by
               reference.)

4.9            Seventh Amendment dated as of July 13, 1998 to the Rights
               Agreement Dated as of September 9, 1986 between Polaroid
               Corporation and BankBoston, N.A. (as successor to First Chicago
               Trust Company), as Rights Agent. (The Seventh Amendment, included
               as Exhibit 11 to Polaroid Corporation's Registration Statement on
               Form 8-A/A (Amendment No. 7 to Form 8-A filed on September 15,
               1986) as filed on July 13, 1998, is hereby incorporated herein by
               reference.)

4.10           Indenture dated as of December 15, 1991 between Polaroid
               Corporation and The First National Bank of Boston, as Trustee,
               including form of Note. (The Indenture, included as Exhibit 4.8
               to Polaroid Corporation's Form 10-K for the year ended December
               31, 1991, is hereby incorporated herein by reference.)

4.11           Indenture dated as of January 9, 1997 between Polaroid
               Corporation and State Street Bank and Trust Company, as Trustee,
               including form of Note. (The Indenture, included as Exhibit 4 to
               Polaroid Corporation's form 10-Q for the quarter ended March 30,
               1997, is hereby incorporated herein by reference.)

4.12           First Supplemental Indenture dated as of February 17, 1999 by and
               between Polaroid Corporation and State Street Bank and Trust
               Company, as Trustee. (The Supplemental Indenture, included as
               Exhibit 4.2 to Polaroid Corporation's Current Report on Form 8-K
               filed on February 17, 1999, is hereby incorporated herein by
               reference.)

4.13           Form of Global Notes representing the 11-1/2% Notes due 2006.
               (The Form of Global Notes representing the 11-1/2% Notes,
               included as Exhibit 4.3 to Polaroid Corporation's Current Report
               on Form 8-K filed on February 17, 1999, is hereby incorporated
               herein by reference.)

10.1(**)       $350,000,000 Amended and Restated Credit Agreement dated as of
               December 11, 1998 among Polaroid Corporation, Morgan Guaranty
               Trust Company of New York, as Agent, and the Banks listed
               therein. (The Amended and Restated Credit Agreement, included as
               Exhibit 10.1 to Polaroid Corporation's Current Report on Form 8-K
               filed on January 21, 1999 is hereby incorporated herein by
               reference.)

10.2(**)       Polaroid Incentive Plan For Executives, effective January 1,
               1998.

10.3(**)       Polaroid Executive Equalization Retirement Plan, effective
               January 1, 1984, as amended December 21, 1994. (The Plan,
               included as Exhibit 10.8 to Polaroid Corporation's Form 10-K for
               the year ended December 31, 1994, is hereby incorporated herein
               by reference.)

                                       16
<PAGE>

a) 3. Exhibits (continued)

10.4(**)       Polaroid Officer's Compensation Exchange Plan, effective January
               1, 1994, as amended December 21, 1994. (The Plan, included as
               Exhibit 10.9 to Polaroid Corporation's Form 10-K for the year
               ended December 31, 1994, is hereby incorporated herein by
               reference.)

10.5(**)       Polaroid Stock Incentive Plan, effective January 1, 1992, as
               amended October 19, 1992. (The Plan, included as Exhibit 10.10 to
               Polaroid Corporation's Form 10-K for the year ended December 31,
               1992, is hereby incorporated by reference.)

10.6(**)       The 1993 Polaroid Stock Incentive Plan, effective March 19, 1997,
               as restated and amended March 27, 1997. (The Amendment, included
               as Exhibit 10.4 to Polaroid Corporation's Form 10-Q for the
               quarter ended March 30, 1997, is hereby incorporated herein by
               reference.)

10.7(**)       Polaroid Board of Directors Stock Plan, effective January 1,
               1997. (The Plan, included as Exhibit 10.2 to Polaroid
               Corporation's Form 10-Q for the quarter ended March 30, 1997, is
               hereby incorporated herein by reference.)

10.8(**)       Polaroid Board of Directors Retirement Plan, effective January 1,
               1997 as restated and amended May 12, 1997. (The restated and
               amended Plan, included as Exhibit 10.3 to Polaroid Corporation's
               Form 10-Q for the quarter ended March 30, 1997, is hereby
               incorporated herein by reference.)

10.9(**)       Polaroid Non-Qualified Deferred Compensation Trust dated as of
               March 31, 1997 between Polaroid Corporation and State Street Bank
               and Trust Company (The Trust included as Exhibit 10.6 to Polaroid
               Corporation's Form 10-Q for the quarter ended March 30, 1997, is
               hereby incorporated herein by reference.)

10.10(**)      Executive Deferred Compensation Plan, dated May 12, 1997,
               effective January 1, 1997. (The Plan, included as Exhibit 10.5 to
               Polaroid Corporation's Form 10-Q for the quarter ended March 30,
               1997, is hereby incorporated herein by reference.)

10.11(**)      Employment Agreement dated October 20, 1995 between Gary T.
               DiCamillo and Polaroid Corporation. (The Agreement, included as
               Exhibit 10.1 to Polaroid Corporation's Form 8-K as filed on
               January 16, 1996, is hereby incorporated herein by reference.)

10.12(**)      Amendment of Employment Agreement dated as of December 21, 1995
               between Gary T. DiCamillo and Polaroid Corporation. (The
               Amendment, included as Exhibit 10.2 to Polaroid Corporation's
               Form 8-K as filed on January 16, 1996, is hereby incorporated
               herein by reference.)

10.13(**)      Employment Agreement amended and restated as of May 12, 1997
               between Polaroid Corporation and Gary T. DiCamillo. (The
               Amendment, included as Exhibit 10.9 to Polaroid Corporation's
               Form 10-Q for the quarter ended March 30, 1997, is hereby
               incorporated herein by reference.)

10.14(**)      Employment Agreement dated as of March 19, 1998 between Polaroid
               Corporation and Judith G. Boynton. (The Amendment, included as
               Exhibit 10.1 to Polaroid Corporation's Form 10-Q for the quarter
               ended March 29, 1998, is hereby incorporated herein by
               reference.)

                                       17
<PAGE>

a) 3. Exhibits (continued)

10.15(**)      Change in Control Severance Agreement dated as of April 3, 1998
               between Polaroid Corporation and Judith G. Boynton. (The
               Agreement, included as Exhibit 10.2 to Polaroid Corporation's
               Form 10-Q for the quarter ended March 29, 1998, is hereby
               incorporated herein by reference.)

10.16(**)      Employment Agreement dated as of May 12, 1997 between Polaroid
               Corporation and Thomas M. Lemberg. (The Agreement, included as
               Exhibit 10.8 to Polaroid Corporation's Form 10-Q for the quarter
               ended March 30, 1997, is hereby incorporated herein by
               reference.)

10.17(**)      Change in Control Severance Agreement dated as of April 25, 1997
               between Polaroid Corporation and William J. O'Neill, Jr. (The
               Agreement, included as Exhibit 10.10 to Polaroid Corporation's
               Form 10-Q for the quarter ended March 30, 1997, is hereby
               incorporated herein by reference.)

10.18(**)      Change in Control Severance Agreement dated as of April 25, 1997
               between Polaroid Corporation and Carole J. Uhrich. (The
               Agreement, included as Exhibit 10.11 to Polaroid Corporation's
               Form 10-Q for the quarter ended March 30, 1997, is hereby
               incorporated herein by reference.)

10.19(*)(**)   Employment Agreement dated as of June 26, 1996 between Polaroid
               Corporation and Jeremiah J. Noonan.

10.20(*)(**)   Change in Control Severance Agreement dated as of July 10, 1997
               between Polaroid Corporation and Jeremiah J. Noonan.

10.21(**)      Promissory Note dated as of April 2, 1998 between Polaroid
               Corporation and Joseph G. Parham, Jr. (The Note, included as
               Exhibit 10.3 to Polaroid Corporation's Form 10-Q for the quarter
               ended March 29, 1998, is hereby incorporated by reference.)

10.22(**)      Change in Control Severance Agreement dated as of April 25, 1997
               between Polaroid Corporation and Joseph G. Parham. (The
               Agreement, included as Exhibit 10.21 to Polaroid Corporation's
               Form 10-K for the year ended December 31, 1997, is hereby
               incorporated herein by reference.)

10.23(*)(**)   Separation and Mutual General Release dated as of December 17,
               1998 between Polaroid Corporation and Serafino Posa.

11             Statement of Computation of Earnings Per Share. (The Statement of
               Computation of Earnings Per Share is included in Note 1 on page
               35 of the Annual Report.)

12(*)          Ratio of Earnings to Fixed Charges.

13(*)          Annual Report to Stockholders for 1998. (The Annual Report to
               Stockholders for 1998, except for the portions thereof which are
               specifically incorporated by reference in this report on Form
               10-K, is furnished for the information of the Securities and
               Exchange Commission and is not to be deemed filed as part of this
               report on Form 10-K.)

21(*)          Subsidiaries of Polaroid Corporation.

                                       18
<PAGE>

23(*)          Consent of KPMG Peat Marwick LLP.

27(*)          Financial Data Schedule.

--------------------
(*)  Filed herewith.

(**) Management contract or compensatory plan or arrangement required to be
     filed as an exhibit to Form 10-K pursuant to Item 14(c).

Exhibits are not included in copies of this Form 10-K except those copies filed
with the Securities and Exchange Commission. A copy of these exhibits will be
furnished to stockholders upon written request.

b)       Reports on Form 8-K

         During the fourth quarter of 1998, the Company filed a Current Report
         on Form 8-K, dated December 16, 1998, containing a press release
         announcing the closing of the Amended Credit Agreement.

                                       19
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                    POLAROID CORPORATION
                    (Registrant)
                    By   /s/ GARY T. DICAMILLO
                         ---------------------
                         Gary T. DiCamillo
                         Chairman of the Board and Chief Executive Officer
                         March 30, 1999

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<S>                                <C>                                <C>

/s/ GARY T. DICAMILLO              Chairman of the Board, Chief       March 30, 1999
---------------------------        Executive Officer and Director
GARY T. DICAMILLO

/s/ WILLIAM J. O'NEILL, Jr.        Executive Vice President           March 30, 1999
---------------------------
WILLIAM J. O'NEILL, Jr.

/s/ JUDITH G. BOYNTON              Executive Vice President           March 30, 1999
---------------------------        and Chief Financial Officer
JUDITH G. BOYNTON

/s/ CARL L. LUEDERS                Vice President and Controller      March 30, 1999
---------------------------
CARL L. LUEDERS

/s/ RALPH E. GOMORY                Director                           March 30, 1999
---------------------------
RALPH E. GOMORY

                                   Director
---------------------------
FRANK S. JONES

/s/ STEPHEN P. KAUFMAN             Director                           March 30, 1999
---------------------------
STEPHEN P. KAUFMAN

/s/ JOHN W. LOOSE                  Director                           March 30, 1999
---------------------------
JOHN W. LOOSE

                                   Director
---------------------------
ALBIN F. MOSCHNER

/s/ RONALD F. OLSEN                Director                           March 30, 1999
---------------------------
RONALD F. OLSEN

/s/ RALPH Z. SORENSON              Director                           March 30, 1999
---------------------------
RALPH Z. SORENSON

/s/ CAROL F. St. MARK              Director                           March 30, 1999
---------------------------
CAROL F. St. MARK

/s/ DELBERT C. STALEY              Director                           March 30, 1999
---------------------------
DELBERT C. STALEY

/s/ BERNEE D.L. STROM              Director                           March 30, 1999
---------------------------
BERNEE D.L. STROM

/s/ ALFRED M. ZEIEN                Director                           March 30, 1999
---------------------------
ALFRED M. ZEIEN
</TABLE>

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
     POLAROID CORPORATION:

Under the date of January 20, 1999, except for Note 8 to which the date is
February 17, 1999, we reported on the consolidated balance sheet of Polaroid
Corporation and subsidiary companies as of December 31, 1998 and 1997, and the
related consolidated statements of earnings, cash flows, and changes in common
stockholders' equity for each of the years in the three-year period ended
December 31, 1998, as contained in the 1998 annual report to stockholders. These
consolidated financial statements and our report thereon are incorporated by
reference in the annual report on Form 10-K for the year 1998. In connection
with our audits of the aforementioned consolidated financial statements, we also
have audited the related financial statement schedule as listed in Item 14(a)2
of this Report. This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

                                                       /s/ KPMG PEAT MARWICK LLP

Boston, Massachusetts

January 20, 1999, except for Note 8 to which the date is February 17, 1999

                                      -2-
<PAGE>

Polaroid Corporation and Subsidiary Companies Schedule II - Valuation and
Qualifying Accounts 

Years ended December 31, 1996, 1997 and 1998 

(In millions)

<TABLE>
<CAPTION>
                                              Additions
                                              ---------
                      Balance at       Charged to       Charged to       Deductions        Balance at
                       Beginning        Costs and            Other       Charged to            End of
Description            of Period         Expenses         Accounts         Reserves            Period
------------------------------------------------------------------------------------------------------
<S>                        <C>               <C>              <C>            <C>                <C>
1996
Doubtful accounts          $20.2             $3.9             $ --           $(8.8)             $15.3
Cash discounts               7.8               --             31.9           (30.9)               8.8
======================================================================================================
1997
Doubtful accounts          $15.3             $6.2             $ --           $(4.4)             $17.1
Cash discounts               8.8               --             28.3           (28.6)               8.5
======================================================================================================
1998
Doubtful accounts          $17.1            $19.3             $ --           $(3.6)             $32.8
Cash discounts               8.5               --             27.5           (26.8)               9.2
======================================================================================================
</TABLE>


                                      -ii-