<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

    (Mark One)

       /X/          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                    SECURITIES EXCHANGE ACT OF 1934

                    For the quarterly period ended         July 2, 2000
                                                    ---------------------------

                                       OR

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

                    For the quarterly period ended            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)

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


     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 and 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 [ ]


                      Shares of Common Stock, $1 par value,
                    outstanding at August 4, 2000: 44,992,124

                    This document contains 38 pages. Exhibit
                           Index appears on page 35.


<PAGE>

                         PART I - FINANCIAL INFORMATION


ITEM 1.    FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Periods ended June 27, 1999 and July 2, 2000

<TABLE>
<CAPTION>

POLAROID CORPORATION AND SUBSIDIARY COMPANIES                        Second Quarter              Six Months
(IN MILLIONS, EXCEPT PER SHARE DATA)                                1999         2000         1999         2000
--------------------------------------------------------------- ------------ ------------ ------------ -------------
                                                                                   (UNAUDITED)
<S>                                                               <C>          <C>          <C>           <C>
NET SALES                                                         $ 486.8      $ 487.8      $ 865.8       $ 891.2

   Cost of goods sold                                               280.9        261.5        518.2         485.6
   Marketing, research, engineering and administrative
     expenses                                                       165.0        175.6        313.6         345.7
                                                                ------------ ------------ ------------ -------------

TOTAL COSTS                                                         445.9        437.1        831.8         831.3

PROFIT FROM OPERATIONS                                               40.9         50.7         34.0          59.9

   Other income/(expense)                                             1.1         11.6        (21.5)         20.2
   Interest expense                                                  19.3         21.3         37.2          41.2
                                                                ------------ ------------ ------------ -------------

PROFIT/(LOSS) BEFORE INCOME TAX EXPENSE/(BENEFIT)                    22.7         41.0        (24.7)         38.9
   Federal, state and foreign income tax expense/(benefit)            7.9         14.4         (8.7)         13.7
                                                                ------------ ------------ ------------ -------------

NET EARNINGS/(LOSS)                                               $  14.8      $  26.6      $ (16.0)      $  25.2
                                                                ============ ============ ============ =============

BASIC EARNINGS/(LOSS) PER COMMON SHARE                            $  0.33      $  0.59      $ (0.36)      $  0.56

DILUTED EARNINGS/(LOSS) PER COMMON SHARE                          $  0.33      $  0.59      $ (0.36)      $  0.56

CASH DIVIDENDS PER COMMON SHARE                                   $  0.15      $  0.15      $  0.30       $  0.30

Weighted average common shares used for basic earnings/(loss)
   per common share calculation (in thousands)                     44,227       44,826       44,148        44,749

Weighted average common shares used for diluted
   earnings/(loss) per common share calculation (in thousands)     44,229       45,176       44,148        45,102

Common shares outstanding at end of period (in thousands)          44,319       44,912       44,319        44,912

</TABLE>

See accompanying notes to condensed consolidated financial statements



                                                                               1
<PAGE>

CONDENSED CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>

POLAROID CORPORATION AND SUBSIDIARY COMPANIES                             December 31,        JULY 2,
(IN MILLIONS)                                                                 1999              2000
------------------------------------------------------------------------ ---------------- -----------------
                                                                                             (UNAUDITED)
<S>                                                                          <C>               <C>
ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                                                 $   92.0          $   68.1
   Receivables                                                                  489.7             419.6
   Inventories:
     Raw materials                                                               84.3              77.8
     Work-in-process                                                            135.8             165.9
     Finished goods                                                             175.5             214.3
                                                                         ---------------- -----------------
   Total inventories                                                            395.6             458.0
   Prepaid expenses and other current assets                                    139.6             152.5
                                                                         ---------------- -----------------
TOTAL CURRENT ASSETS                                                          1,116.9           1,098.2

PROPERTY, PLANT AND EQUIPMENT:
   Total property, plant and equipment                                        2,023.0           1,978.7
   Less accumulated depreciation                                              1,423.8           1,404.1
                                                                         ---------------- -----------------
NET PROPERTY, PLANT AND EQUIPMENT                                               599.2             574.6

DEFERRED TAX ASSETS                                                             243.7             243.8
OTHER ASSETS                                                                     80.2              75.5
                                                                         ---------------- -----------------
TOTAL ASSETS                                                                 $2,040.0          $1,992.1
                                                                         ================ =================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Short-term debt                                                           $  259.4          $  305.8
   Payables and accruals                                                        338.0             300.2
   Compensation and benefits                                                    138.1             100.7
   Federal, state and foreign income taxes                                       14.7              22.4
                                                                         ---------------- -----------------
TOTAL CURRENT LIABILITIES                                                       750.2             729.1

LONG-TERM DEBT                                                                  573.0             573.2
ACCRUED POSTRETIREMENT BENEFITS                                                 234.8             235.8
OTHER LONG-TERM LIABILITIES                                                     111.5              86.3

COMMON STOCKHOLDERS' EQUITY:
   Common stock, $1 par value                                                    75.4              75.4
   Additional paid-in capital                                                   395.2             384.1
   Retained earnings                                                          1,208.8           1,213.8
   Accumulated other comprehensive income                                       (48.9)            (64.7)
   Less:  Treasury stock, at cost                                             1,259.7           1,240.8
              Deferred compensation                                                .3                .1
                                                                         ---------------- -----------------
TOTAL COMMON STOCKHOLDERS' EQUITY                                               370.5             367.7
                                                                         ---------------- -----------------

TOTAL LIABILITIES AND COMMON STOCKHOLDERS' EQUITY                            $2,040.0          $1,992.1
                                                                         ================ =================

</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                                                               2
<PAGE>


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six month period ended June 27, 1999 and July 2, 2000

<TABLE>
<CAPTION>

POLAROID CORPORATION AND SUBSIDIARY COMPANIES                                       Six Months
(IN MILLIONS)                                                                 1999             2000
------------------------------------------------------------------------ ---------------- -----------------
                                                                                    (UNAUDITED)
<S>                                                                            <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net earnings/(loss)                                                         $(16.0)           $ 25.2
   Depreciation of property, plant and equipment                                 48.7              52.8
   Gain on the sale of real estate                                              (10.4)            (12.9)
   Other non-cash items                                                          43.6               9.4
   Decrease in receivables                                                        7.8              62.0
   Decrease/(increase) in inventories                                            50.4             (70.2)
   Increase in prepaids and other assets                                        (24.8)            (13.7)
   Decrease in payables and accruals                                            (55.1)            (39.8)
   Decrease in compensation and benefits                                        (48.9)            (60.2)
   Increase in federal, state and foreign income taxes payable                     .4               8.1
                                                                         ---------------- -----------------
   Net cash used by operating activities                                         (4.3)            (39.3)

CASH FLOWS FROM INVESTING ACTIVITIES
   Decrease in other assets                                                      26.1               4.7
   Additions to property, plant and equipment                                   (95.6)            (67.4)
   Proceeds from the sale of property, plant and equipment                       22.0              49.0
                                                                         ---------------- -----------------
   Net cash used by investing activities                                        (47.5)            (13.7)

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase/(decrease) in short-term debt (maturities of 90 days
     or less)                                                                   (46.9)             47.3
   Short-term debt (maturities of more than 90 days)
     Proceeds                                                                    17.6                --
     Payments                                                                   (17.4)               --
   Proceeds from issuance of long-term debt                                     268.2                --
   Repayment of long-term debt                                                 (200.0)               --
   Proceeds from issuance of stock incentives                                      --                .1
   Cash dividends paid                                                           (6.6)            (13.5)
                                                                         ---------------- -----------------
   Net cash provided by financing activities                                     14.9              33.9

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                            .8              (4.8)
                                                                         ---------------- -----------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                       (36.1)            (23.9)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                105.0              92.0
                                                                         ---------------- -----------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                     $ 68.9            $ 68.1
                                                                         ================ =================

</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                                                               3
<PAGE>

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Six Months Ended June 27, 1999 and July 2, 2000

1.  BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include the
accounts of Polaroid Corporation and its domestic and foreign subsidiaries, all
of which are either wholly owned or majority owned (collectively, "the
Company"). Intercompany transactions have been eliminated. This is an interim
unaudited report that is subject to year-end audit adjustments. The information
furnished, however, reflects all adjustments (consisting of normal recurring
accruals) which, in the opinion of management, are necessary for a fair
presentation of the results of the interim period. The information included in
the interim financial statements and notes in this Form 10-Q should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Company's 1999 Annual Report on Form 10-K which was filed with
the Securities and Exchange Commission on March 28, 2000.

Certain prior year information has been reclassified to conform with the current
year presentation.

2.  EARNINGS PER SHARE

<TABLE>
<CAPTION>

                                                                                              PER SHARE
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)               NET EARNINGS          SHARES              AMOUNT
--------------------------------------------------- ------------------ ------------------ -------------------
<S>                                                           <C>                 <C>                 <C>
Quarter ended June 27, 1999

   Basic earnings per share                                   $14.8               44.2                $.33
                                                    ================== ================== ===================

   Diluted earnings per share                                 $14.8               44.2                $.33
                                                    ================== ================== ===================

QUARTER ENDED JULY 2, 2000

   BASIC EARNINGS PER SHARE                                   $26.6               44.8                $.59
                                                    ================== ================== ===================

   DILUTED EARNINGS PER  SHARE                                $26.6               45.2                $.59
                                                    ================== ================== ===================

</TABLE>


                                                                               4
<PAGE>


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

2.  EARNINGS PER SHARE (CONTINUED)

<TABLE>
<CAPTION>

                                                          NET
                                                        EARNINGS/                             PER SHARE
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)                   (LOSS)            SHARES              AMOUNT
--------------------------------------------------- ------------------ ------------------ -------------------
<S>                                                         <C>                   <C>               <C>
Six months ended June 27, 1999

   Basic loss per share                                     $(16.0)               44.1              $(.36)
                                                    ================== ================== ===================

   Diluted loss per share                                   $(16.0)               44.1              $(.36)
                                                    ================== ================== ===================

SIX MONTHS ENDED JULY  2, 2000

   BASIC EARNINGS PER SHARE                                 $ 25.2                44.8              $ .56
                                                    ================== ================== ===================

   DILUTED EARNINGS PER  SHARE                              $ 25.2                45.1              $ .56
                                                    ================== ================== ===================

</TABLE>

Stock options for shares of the Company's common stock were outstanding but were
not included in the calculations of diluted earnings per share because the
effects were anti-dilutive. In addition, performance shares were outstanding but
not included in the calculations of diluted earnings per share because all of
the necessary performance conditions had not been satisfied. The stock options
and performance shares not included in the calculation of diluted earnings per
share were as follows:

<TABLE>
<CAPTION>

                                                                  STOCK               PERFORMANCE
(IN MILLIONS)                                                    OPTIONS                 SHARES
---------------------------------------------------------- ---------------------- ---------------------
<S>                                                                     <C>                    <C>
Quarter ended June 27, 1999                                             5.4                    .3
QUARTER ENDED JULY 2, 2000                                              5.8                    .4

Six months ended June 27, 1999                                          5.6                    .3
SIX MONTHS ENDED JULY  2, 2000                                          6.0                    .4

</TABLE>


                                                                               5
<PAGE>

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

3.  COMPREHENSIVE INCOME

The Company's total comprehensive income/(loss) was as follows:

<TABLE>
<CAPTION>

                                                          Quarter Ended                 Six Month Period Ended
                                                     June 27,         JULY 2,          June 27,         JULY 2,
(IN MILLIONS)                                         1999              2000             1999              2000
----------------------------------------------- ----------------- ---------------- ----------------- ----------------
<S>                                                     <C>              <C>             <C>               <C>
Net earnings/(loss)                                     $14.8            $26.6           $(16.0)           $ 25.2

Other comprehensive income:
   Currency translation adjustment                       (6.1)            (8.7)           (21.1)            (15.3)
   Unrealized gain/(loss) on
     available-for-sale securities, net of tax             .3               .1              (.3)              (.5)
                                                ----------------- ---------------- ----------------- ----------------
Total comprehensive income/(loss)                       $ 9.0            $18.0           $(37.4)           $  9.4
                                                ================= ================ ================= ================

</TABLE>

4.  SEGMENTS

The following is a summary of information related to the Company's segments:

<TABLE>
<CAPTION>

                                                          Quarter Ended                 Six Month Period Ended
                                                     June 27,         JULY 2,          June 27,          JULY 2,
(IN MILLIONS)                                          1999            2000              1999             2000
----------------------------------------------- ----------------- ---------------- ----------------- ----------------
<S>                                                    <C>              <C>               <C>             <C>
Net sales to customers:
   Americas Region                                     $301.2           $312.7            $528.3          $552.1
   European Region                                      107.4             99.8             193.9           185.9
   Asia Pacific Region                                   78.2             75.3             143.6           153.2
   Global Operations                                       --               --                --              --
   Research and Development                                --               --                --              --
                                                ----------------- ---------------- ----------------- ----------------
Segment net sales to customers                          486.8            487.8             865.8           891.2
   Corporate                                               --               --                --              --
                                                ----------------- ---------------- ----------------- ----------------
Total net sales to customers                           $486.8           $487.8            $865.8          $891.2
                                                ================= ================ ================= ================

Profit/(loss) from operations:
   Americas Region                                     $ 91.2           $ 98.2            $149.7          $159.1
   European Region                                       22.5             14.8              38.4            25.2
   Asia Pacific Region                                   21.2             20.0              35.0            41.5
   Global Operations                                    (38.1)           (25.7)            (82.0)          (50.3)
   Research and Development                             (23.1)           (19.2)            (43.8)          (40.0)
                                                ----------------- ---------------- ----------------- ----------------
Segment profit from operations                           73.7             88.1              97.3           135.5
   Corporate                                            (32.8)           (37.4)            (63.3)          (75.6)
                                                ----------------- ---------------- ----------------- ----------------
Total profit from operations                           $ 40.9           $ 50.7            $ 34.0          $ 59.9
                                                ================= ================ ================= ================

</TABLE>



                                                                               6
<PAGE>

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

5.  RESTRUCTURING AND OTHER CHARGES

In 1997, the Company recorded restructuring and other charges of $340 million
which consisted of severance costs, impairment losses on certain long-lived
assets, other asset write-downs and exit costs associated with certain
businesses. Of this amount, approximately $17 million represented inventory
write-downs which were included in cost of goods sold. In 1998, the Company
recorded a $50 million restructuring charge related to an expansion of the
severance component of the 1997 program. These charges (collectively, the "1997
Program") were allocated to the non-segment Corporate category and were
undertaken as the result of management's assessment of the Company's
infrastructure, to strengthen its competitive cost position, to streamline
operations and to improve profitability by consolidating and selling
manufacturing facilities and reducing corporate overhead. The strategic
objective of the 1997 Program was to reduce the cost of developing,
manufacturing, selling and distributing the Company's products; to change and
improve business processes; to deliver new products more efficiently; to improve
financial performance; and to fundamentally alter how the Company conducts
business globally.

The balance of reserves established for the 1997 Program and related charges are
as follows:

<TABLE>
<CAPTION>

                                                                PENSION
(IN MILLIONS)                               SEVERANCE        ENHANCEMENTS        EXIT COSTS        TOTAL
----------------------------------------- --------------- -------------------- --------------- --------------
<S>                                             <C>                   <C>             <C>           <C>
Balance at January 1, 1998                      $142.4                $  --           $ 9.5         $151.9

   Restructuring and other                        47.4                  2.6              --           50.0
   Reclassification of pension
     enhancements                                 (2.4)                 2.4              --             --
   Cash charges                                  (69.2)                  --            (7.1)         (76.3)
   Non-cash charges                                 --                 (5.0)             --           (5.0)
                                          --------------- -------------------- --------------- --------------

Balance at December 31, 1998                     118.2                   --             2.4          120.6

   Reclassification of pension
     enhancements                                  (.7)                  .7              --             --
   Cash charges                                  (68.9)                  --             (.2)         (69.1)
   Non-cash charges                                 --                  (.7)             --            (.7)
                                          --------------- -------------------- --------------- --------------

Balance at December 31, 1999                    $ 48.6                $  --           $ 2.2         $ 50.8

</TABLE>


                                                                               7
<PAGE>


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

5.  RESTRUCTURING AND OTHER CHARGES (CONTINUED)

<TABLE>
<CAPTION>

                                                                PENSION
(IN MILLIONS)                               SEVERANCE        ENHANCEMENTS        EXIT COSTS        TOTAL
----------------------------------------- --------------- -------------------- --------------- --------------
<S>                                            <C>                    <C>             <C>           <C>
Balance at December 31, 1999                   $ 48.6                 $  --           $ 2.2         $ 50.8

   Cash charges                                 (15.0)                   --             (.5)         (15.5)
                                          --------------- -------------------- --------------- --------------

Balance at April 2, 2000                         33.6                    --             1.7           35.3

   CASH CHARGES                                 (12.2)                   --             (.9)         (13.1)
                                          --------------- -------------------- --------------- --------------

BALANCE AT JULY 2, 2000                        $ 21.4                 $  --           $  .8         $ 22.2
                                          =============== ==================== =============== ==============

</TABLE>

Approximately $150 million of the charges recorded in 1997 for the 1997 Program
related to an involuntary severance program under which approximately 1,800
employees were expected to leave the Company. The 1998 extension to this
involuntary severance program added approximately 1,000 additional employees.
Approximately 2,600 of the 2,800 terminations under the 1997 Program had
occurred at July 2, 2000, with most of the terminations expected to occur by the
end of 2000. Approximately $165.3 million of cash payments related to the
severance component of the 1997 Program had been made at July 2, 2000 with the
remaining severance payments of approximately $21.4 million expected to be
substantially completed by the end of 2000.

Restructuring and Other Charges are discussed in Part I, Item 2 of this filing
on Form 10-Q. Refer to the section "Restructuring and Other Charges" within
Management's Discussion and Analysis of Financial Condition and Results of
Operations for additional information.



                                                                               8
<PAGE>

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

6.  NEW ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Financial
Accounting Standards Board Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("FAS 133"), that establishes accounting and
reporting requirements for derivative instruments and for hedging activities.
FAS 133 requires companies to recognize all derivatives as either assets or
liabilities in the statement of financial position at fair value. If certain
conditions are met, a derivative may be specifically designated as a hedge of
the exposures to changes in fair value of recognized assets or liabilities or
unrecognized firm commitments, a hedge of the exposure to variable cash flows of
a forecasted transaction, or a hedge of the foreign currency exposure of a net
investment in a foreign operation, unrecognized firm commitments, an
available-for-sale security or a foreign-currency denominated forecasted
transaction. The accounting for changes in fair value under FAS 133 depends on
the intended use of the derivative and the resulting designation.

In June 1999, the FASB issued FAS 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133," which delayed the effective date of FAS 133 by one year to fiscal years
beginning after June 15, 2000. In June 2000, the FASB issued FAS 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities -
an amendment of FASB Statement No. 133." ("FAS 138"), which will be adopted
concurrently with FAS 133. FAS 138 amends the accounting and reporting standards
of FAS 133 for certain derivative instruments and hedging activities and
incorporates decisions made by the FASB related to the Derivatives
Implementation Group process. The Company is currently evaluating the effect of
FAS 133 and FAS 138 on its results of operations and financial position.

In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101"), that expresses the views of the SEC staff regarding the
application of generally accepted accounting principles to certain revenue
recognition issues. In June 2000, the SEC issued SAB No. 101B, "Second
Amendment: Revenue Recognition in Financial Statements," which delayed the
effective date of SAB 101 to periods no later than the fourth quarter of fiscal
years beginning after December 15, 1999. The Company will adopt SAB 101 at the
beginning of the fourth quarter of 2000 but does not believe that the adoption
of SAB 101 will have a material impact on its results of operations or financial
position.



                                                                               9
<PAGE>


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

6.  NEW ACCOUNTING STANDARDS (CONTINUED)

In March 2000, the FASB issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation - an Interpretation of APB Opinion No.
25" ("FIN 44"), which must be applied prospectively to new stock option awards,
exchanges of awards in a business combination, modifications to outstanding
awards and changes in grantee status that occur on or after July 1, 2000. The
Company does not believe that the adoption of FIN 44 will have a material impact
on its results of operations or financial position.

In March 2000, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 00-2, "Accounting for Web Site Development Costs" which is effective
for fiscal quarters beginning after June 30, 2000. This accounting applies to
the cost of developing a web site and applies to web sites used to promote or
advertise products or services, supplant manual processes or services, sell
products (including software) or services, or to do a combination of all three.
The Company does not believe that the adoption of EITF Issue No. 00-2 will have
a material effect on its results of operations or financial position.

In May 2000, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 00-14, "Accounting for Certain Sales Incentives" which is effective
for periods no later than the fourth quarter of fiscal years beginning after
December 15, 1999. This accounting applies to the recognition, measurement and
income statement classification of sales incentives offered to customers such as
discounts, coupons, rebates and free products or services. The Company will
adopt EITF Issue No. 00-14 at the beginning of the fourth quarter of 2000 and is
currently evaluating the requirements of EITF Issue No. 00-14 and the effect on
the Company's results of operations and financial position.

7.  LEGAL PROCEEDINGS

The Company is involved in various legal proceedings and claims arising in the
ordinary course of business. The Company believes that the disposition of these
matters will not have a materially adverse effect on its results of operations
or financial condition. The significant developments during the second quarter
of 2000 are described below. All other legal proceedings which could have a
material impact on the Company are discussed in Part II, Item 1 of this filing
on Form 10-Q.

In April 1999, a tribunal of the International Chamber of Commerce's
International Court of Arbitration (the "ICC") entered a ruling against the
Company's wholly-owned subsidiary, Polaroid Far East Limited, in an arbitration
proceeding brought by Columbia Enterprises for breach of two distributor
agreements regarding the distribution of photographic equipment in the
Philippines in 1996. In May 2000, the ICC issued a damage award against the
Company. The amount of the award did not have a material impact on the Company's
results of operations or financial position.



                                                                              10
<PAGE>


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

7.  LEGAL PROCEEDINGS (CONTINUED)

In June 1999, the Company received a Notice of Service of Process in a patent
infringement action filed against it and many others by the Lemelson Medical,
Education and Research Foundation alleging that a broad range of the Company's
manufacturing equipment and products infringe a number of patents. The Company
resolved this action in the second quarter of 2000. The resolution of this
action did not have a material impact on the Company's results of operations or
financial position.

8.  INDEPENDENT AUDITORS' REPORT

The June 27, 1999 and July 2, 2000 condensed consolidated financial statements
included in this filing on Form 10-Q have been reviewed by KPMG LLP, independent
certified public accountants, in accordance with established professional
standards and procedures for such review. The report by KPMG LLP commenting upon
their review of the condensed consolidated financial statements appears on the
following page.



                                                                              11
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Polaroid Corporation:

We have reviewed the condensed consolidated balance sheet of Polaroid
Corporation and subsidiary companies as of July 2, 2000 and the related
condensed consolidated statements of earnings for the three and six month
periods ended June 27, 1999 and July 2, 2000, and the cash flows for the six
month periods then ended. These condensed consolidated financial statements are
the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Polaroid Corporation and subsidiary
companies as of December 31, 1999, and the related consolidated statements of
earnings, cash flows and changes in common stockholders' equity for the year
then ended (not presented herein); and in our report dated January 24, 2000,
except for Note 8 for which the date is February 14, 2000, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of December 31, 1999 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.



                                                              /S/ KPMG LLP



Boston, Massachusetts
July 18, 2000



                                                                              12
<PAGE>


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

GENERAL

Polaroid Corporation and subsidiary companies ("the Company") is managed in five
primary segments: the Americas Region; the European Region; the Asia Pacific
Region; Global Operations; and Research and Development. The Americas Region is
comprised of all the countries in North and South America. The European Region
includes all the countries of continental Europe, the United Kingdom, Russia,
the middle-eastern countries and the African continent. The Asia Pacific Region
includes Japan, Australia and the Asian continent, excluding Russia. These three
regions consist of sales and marketing operations. Global Operations consists of
worldwide activities associated with manufacturing, distribution, logistics,
developing manufacturing processes for new products and inventory management.
Research and Development is comprised of corporate research and engineering
activities.

Additionally, the Company has one category called Corporate, which it does not
consider to be a segment. This category includes central marketing, general and
administrative costs and certain other corporate costs, including worldwide
restructuring and other charges and other credits.

The Company evaluates the performance of its segments based on profit from
operations with consideration of assets employed. In the regional sales and
marketing segments, profit from operations is based on standard product costs
excluding intercompany margins and therefore reflects contribution to worldwide
Company profits from third party sales. Non-standard manufacturing costs along
with the cost of developing manufacturing processes for new products and
regional warehousing and distribution costs are reported as incurred in the
Global Operations segment. Costs related to research, engineering and
development are reported as incurred in the Research and Development segment.

The Company discusses sales and profit from operations in terms of its core
instant business, other core products and non-core businesses. The core instant
business consists of instant cameras and film. Other core products consist of
digital cameras and other digital products, unique ID products, conventional
35mm cameras and film, videotapes, medical imaging products and sunglasses.
Non-core businesses consist of businesses exited by the Company and include
graphics which was contributed to a joint venture in 1999 and polarizer and
holography which had been exited by the end of the first quarter of 2000.

The Company has reclassified certain prior year information to conform with the
current year presentation.



                                                                              13
<PAGE>

2000 SECOND QUARTER RESULTS

SALES

Worldwide net sales to customers were essentially the same at $488 million in
the second quarter of 2000 compared with $487 million in the second quarter
of 1999. In the second quarter of 2000, the Company had higher sales of
instant cameras and, to a lesser degree, higher sales of digital cameras
compared with the second quarter of 1999. The increases were offset by the
absence of sales from non-core businesses that the Company exited, a small
percentage decline in dollar sales of instant film due to changes in the
product mix of new and traditional film sold in the second quarter of 2000
and, to a lesser degree, the unfavorable impact of foreign exchange.

Worldwide sales to customers for the second quarter of 2000 included
approximately $98 million related primarily to new instant cameras and film,
digital cameras and other commercial imaging products introduced in the last
three years that include the I-Zone Instant Pocket Camera and film, the
JoyCam Instant Camera and film, the PhotoMAX line of digital cameras and the
SP-350 retail document photo system. New instant camera and film products are
priced to appeal to a broader range of customers and, in general, carry lower
average selling prices than the traditional lines of cameras and film.

In the second quarter of 2000, on a unit basis, worldwide shipments to
customers of instant cameras increased approximately 65% to 2.8 million units
from 1.7 million units for the same period in 1999 while unit shipments to
customers of instant film increased by approximately 7% compared with the
second quarter of 1999.

Sales in the Americas Region increased 4% to $313 million in the second
quarter of 2000 compared with $301 million in the second quarter of 1999. The
increase was due to higher sales of instant cameras and higher sales of other
core products, primarily digital cameras sold in the United States. The
increases were offset, in part, by lower sales of instant film and the
absence of sales from non-core businesses that the Company exited. Instant
film sales in the Region decreased due to changes in the product mix of new
and traditional film formats as higher unit sales were more than offset by
the impact of the lower average selling prices of the newer film products.

In the Americas Region, on a unit basis, shipments to customers of instant
cameras increased approximately 150% while unit shipments to customers of
instant film increased by approximately 5% in the second quarter of 2000
compared with the second quarter of 1999.



                                                                              14
<PAGE>

Sales in the European Region decreased 7% to $100 million in the second
quarter of 2000 compared with $108 million in the second quarter of 1999. The
decrease was due to the unfavorable impact of foreign exchange and, to a
lesser degree, lower sales of instant film and the absence of sales from
non-core businesses that the Company exited. The decreases were offset, in
part, by higher sales of instant cameras. Instant film sales in the Region
decreased due to changes in the product mix of new and traditional film
formats as higher unit sales were more than offset by the impact of the lower
average selling prices of the newer film products.

In the European Region, on a unit basis, shipments to customers of instant
cameras increased approximately 135% while unit shipments to customers of
instant film increased by approximately 5% in the second quarter of 2000
compared with the second quarter of 1999.

Sales in the Asia Pacific Region decreased 4% to $75 million in the second
quarter of 2000 compared with $78 million in the second quarter of 1999. The
decrease was due to lower sales from instant cameras and the absence of sales
from non-core businesses that the Company exited. These decreases were offset,
in part, by the favorable impact of foreign exchange. The decrease in sales of
instant cameras was due primarily to a product transition in Japan from the
original Xiao and JoyCam cameras to the next generation of I-Zone and JoyCam
cameras.

In the Asia Pacific Region, on a unit basis, shipments to customers of instant
cameras decreased approximately 30% while unit shipments to customers of instant
film increased by approximately 10% in the second quarter of 2000 compared with
the second quarter of 1999.

PROFIT/(LOSS) FROM OPERATIONS

Worldwide profit from operations in the second quarter of 2000 was $51 million
compared with a profit from operations of $41 million in the second quarter of
1999. The increase was due to lower manufacturing costs, including savings from
restructuring and other efficiencies, the impact of higher sales of instant
cameras and, to a lesser degree, the absence of losses incurred by non-core
businesses that the Company exited. The increases were offset, in part, by a
planned increase in spending on advertising and promotional activities
supporting new products, higher corporate costs related to centralized
information systems and central marketing activities and, to a lesser degree,
the unfavorable impact of foreign exchange.



                                                                              15
<PAGE>

Profit from operations in the Americas Region was $98 million in the second
quarter of 2000 compared with $91 million in the second quarter of 1999. The
increase was due to higher sales of instant cameras and, to a lesser degree,
the impact of higher sales of other core products, the absence of losses
incurred by non-core businesses that the Company exited and improved margins
on instant film. The increases were offset, in part, by a planned increase in
spending on advertising and promotional activities supporting new products
and, to a lesser degree, the impact of changes in product mix on instant film
as described above.

Profit from operations in the European Region was $15 million in the second
quarter of 2000 compared with $23 million in the second quarter of 1999. The
decrease was due to the unfavorable impact of foreign exchange and, to a lesser
degree, an increase in planned spending on advertising and promotional
activities supporting new products. The decreases were offset, in part, by the
impact of higher sales of instant cameras.

Profit from operations in the Asia Pacific Region was essentially unchanged at
$20 million in the second quarter of 2000 compared with $21 million in the
second quarter of 1999.

Global Operations costs were $26 million in the second quarter of 2000
compared with $38 million in the second quarter of 1999. The decrease was due
to continued cost savings and manufacturing efficiencies. This reduction was
a significant component of the Company's improvement in gross margin as a
percentage of net sales which increased to 46% for the second quarter of 2000
compared with 42% for the same period in 1999.

Research and Development costs were $19 million in the second quarter of 2000
compared with $23 million in the second quarter of 1999. The decrease was due
primarily to the absence of costs for research and engineering activities
associated with non-core businesses that the Company exited.

Corporate costs were $37 million in the second quarter of 2000 compared with $33
million in the second quarter of 1999. The increase was due primarily to higher
expenses, including depreciation, for centralized information systems and a
planned increase in spending for central marketing activities primarily in
support of the Company's new product activities.

Other income was $12 million in the second quarter of 2000 compared with $1
million for the same period of 1999. Other income in the second quarter of 2000
included approximately $10 million of gains on the sale of real estate.



                                                                              16
<PAGE>

Interest expense increased to $21 million in the second quarter of 2000 compared
with $19 million for the same period in 1999. The increase was due to higher
average interest rates on outstanding debt. The average debt outstanding during
the second quarter of 2000 was essentially the same as the average debt
outstanding during the second quarter of 1999.

Income tax expense in the second quarter of 2000 was $14 million or 35% of
reported earnings before income taxes compared with income tax expense of $8
million or 35% of reported earnings before income taxes in the second quarter of
1999.

In the second quarter of 2000, the Company recorded net income of $27 million,
or $.59 basic earnings per common share compared with net income of $15 million,
or $.33 basic earnings per common share in the second quarter of 1999. Diluted
earnings per common share was the same as basic earnings per common share in the
second quarter of 2000 and 1999.

2000 SIX MONTH RESULTS

SALES

Worldwide net sales to customers increased 3% to $891 million in the first
half of 2000 compared with $866 million in the first half of 1999. The
increase was due to higher sales of instant cameras and, to a lesser degree,
higher sales of other core products, primarily digital cameras. The increases
were offset, in part, by the absence of sales from non-core businesses that
the Company exited and, to a lesser degree, the unfavorable impact of foreign
exchange.

Worldwide sales to customers for first half of 2000 included approximately
$176 million related primarily to new instant cameras and film, digital
cameras and other commercial imaging products introduced in the last three
years that include the I-Zone Instant Pocket Camera and film, the JoyCam
Instant Camera and film, the PhotoMAX line of digital cameras and the SP-350
retail document photo system. New instant camera and film products are priced
to appeal to a broader range of customers and, in general, carry lower
average selling prices than the traditional lines of cameras and film.

In the first half of 2000, on a unit basis, worldwide shipments to customers
of instant cameras increased approximately 79% to 5.2 million units from 2.9
million units for the same period in 1999 while unit shipments to customers
of instant film increased by approximately 13% compared with the first half
of 1999.

                                                                              17
<PAGE>

Sales in the Americas Region increased 5% to $552 million in the first half
of 2000 compared with $528 million in the first half of 1999. The increase
was due to higher sales of instant cameras and higher sales of other core
products, primarily digital cameras sold in the United States. The increases
were offset, in part, by the absence of sales from non-core businesses that
the Company exited and, to a lesser degree, lower sales of instant film.
Instant film sales in the Region decreased due to changes in the product mix
of new and traditional film formats as higher unit sales were more than
offset by the impact of the lower average selling prices of the newer film
products.

In the Americas Region, on a unit basis, shipments to customers of instant
cameras increased approximately 125% while unit shipments to customers of
instant film increased by approximately 10% in the first half of 2000
compared with the first half of 1999.

Sales in the European Region decreased 4% to $186 million in the first half
of 2000 compared with $194 million in the first half of 1999. The decrease
was due to the unfavorable impact of foreign exchange and, to a lesser
degree, the absence of sales from non-core businesses that the Company exited
and lower sales of instant film. The decreases were offset, in part, by
higher sales of instant cameras. Instant film sales in the Region decreased
due to changes in the product mix of new and traditional film formats as
higher unit sales were more than offset by the impact of the lower average
selling prices of the newer film products.

In the European Region, on a unit basis, shipments to customers of instant
cameras increased approximately 160% while unit shipments to customers of
instant film increased by approximately 10% in the first half of 2000 compared
with the first half of 1999.

Sales in the Asia Pacific Region increased 6% to $153 million in the first half
of 2000 compared with $144 million in the first half of 1999. The increase was
due to higher sales of instant film and, to a lesser degree, the favorable
impact of foreign exchange. The increases were offset by the absence of sales
from non-core businesses that the Company exited.

In the Asia Pacific Region, on a unit basis, shipments to customers of instant
cameras decreased approximately 2% while unit shipments to customers of instant
film increased by approximately 20% in the first half of 2000 compared with the
first half of 1999.



                                                                              18
<PAGE>

PROFIT/(LOSS) FROM OPERATIONS

Worldwide profit from operations in the first half of 2000 was $60 million
compared with profit from operations of $34 million in the first half of 1999.
The increase was due to lower manufacturing costs, including savings from
restructuring and other efficiencies and, to a lesser degree, the impact of
higher sales of instant cameras. The increases were offset, in part, by a
planned increase in spending on advertising and promotional activities
supporting new products and, to a lesser degree, higher corporate costs related
to centralized information systems and central marketing activities.

Profit from operations in the Americas Region was $159 million in the first half
of 2000 compared with $150 million in the first half of 1999. The increase was
due to the impact of higher sales of instant cameras, improved margins on
instant film and, to a lesser degree, the absence of losses incurred by non-core
businesses that the Company exited. The increases were offset, in part, by a
planned increase in spending on advertising and promotional activities
supporting new products.

Profit from operations in the European Region was $25 million in the first half
of 2000 compared with $38 million in the first half of 1999. The decrease was
due to the unfavorable impact of foreign exchange and a planned increase in
spending on advertising and promotional activities supporting new products. The
decreases were offset, in part, by the impact of higher sales of instant
cameras.

Profit from operations in the Asia Pacific Region was $42 million in the first
half of 2000 compared with $35 million in the first half of 1999. The increase
was due to the impact of higher sales of instant film and the favorable impact
of foreign exchange. The increase in instant film was due primarily to higher
unit sales in the first half of 2000 compared with the same period of 1999.

Global Operations costs were $50 million in the first half of 2000 compared
with $82 million in the first half of 1999. The decrease was due to continued
cost savings and manufacturing efficiencies. This reduction was a significant
component of the Company's improvement in gross margin as a percentage of net
sales which increased to 46% for the first half of 2000 compared with 40% for
the same period in 1999.

Research and Development costs were $40 million in the first half of 2000
compared with $44 million in the first half of 1999. The decrease was due
primarily to the absence of costs for research and engineering activities
associated with non-core businesses that the Company exited.



                                                                              19
<PAGE>

Corporate costs were $76 million in the first half of 2000 compared with $63
million in the first half of 1999. The increase was due primarily to higher
expenses, including depreciation, for centralized information systems and a
planned increase in spending for central marketing activities primarily in
support of the Company's new product activities.

The net of other income and expense was income of $20 million in the first half
of 2000 compared with expense of $22 million in the same period of 1999. Other
income in the first half of 2000 included approximately $13 million of gains on
the sale of real estate and also included, to a lesser degree, gains on the sale
of investments. In the first half of 1999, other expense included a non-cash
charge of $35 million to write-off the carrying value of the Company's preferred
stock investment in Sterling Dry Imaging Systems, Inc. offset, in part, by
approximately $10 million of gains on the sale of real estate.

Interest expense increased to $41 million in the first half of 2000 compared
with $37 million for the same period in 1999. The increase was due to higher
average interest rates on outstanding debt. The average debt outstanding during
the first half of 2000 was essentially the same as the average debt outstanding
during the first half of 1999.

Income tax expense in the first half of 2000 was $14 million or 35% of reported
earnings before income taxes compared with an income tax benefit of $9 million
or 35% of a reported loss before income taxes in the first half of 1999.

In the first half of 2000, the Company recorded net income of $25 million, or
$.56 basic earnings per common share compared with a net loss of $16 million, or
$.36 basic loss per common share in the first half of 1999. Diluted
earnings/loss per common share was the same as basic earnings/loss per common
share in the first half of 2000 and 1999.

RESTRUCTURING AND OTHER CHARGES

In 1997, the Company recorded restructuring and other charges of $340 million
which consisted of severance costs, impairment losses on certain long-lived
assets, other asset write-downs and exit costs associated with certain
businesses. Of this amount, approximately $17 million represented inventory
write-downs which were included in cost of goods sold. In 1998, the Company
recorded a $50 million restructuring charge related to an expansion of the
severance component of the 1997 program. These charges (collectively, the "1997
Program") were allocated to the non-segment Corporate category and were
undertaken as the result of management's assessment of the Company's
infrastructure, to strengthen its competitive cost position, to streamline
operations and to improve profitability by consolidating and selling
manufacturing facilities and reducing corporate overhead. The strategic
objective of the 1997 Program was to reduce the cost of developing,
manufacturing, selling and distributing the Company's products; to change and
improve business processes; to deliver new products more efficiently; to improve
financial performance; and to fundamentally alter how the Company conducts
business globally.



                                       20
<PAGE>

Approximately $150 million of the charges recorded in 1997 for the 1997 Program
related to an involuntary severance program under which approximately 1,800
employees (consisting of sales and marketing employees in the regional segments:
Americas - 16%; Europe - 24%; Asia Pacific - 9%; primarily manufacturing
employees in Global Operations - 36%; research and engineering employees in
Research and Development - 5%; and administrative employees in the non-segment
Corporate category - 10%) were expected to leave the Company. The 1998 extension
to this involuntary severance program added approximately 1,000 additional
employees (consisting of sales and marketing employees in the regional segments:
Americas - 7%; Europe - 14%; Asia Pacific - 3%; primarily manufacturing
employees in Global Operations - 65%; research and engineering employees in
Research and Development - 10%; and administrative employees in the non-segment
Corporate category - 1%). Approximately 2,600 of the 2,800 terminations under
the 1997 Program had occurred at July 2, 2000, with most of the terminations
expected to occur by the end of 2000. Approximately $166 million of cash
payments related to the severance component of the 1997 Program had been made at
July 2, 2000 with the remaining severance payments of approximately $21 million
expected to be substantially completed by the end of 2000. Of the total amount
provided for severance, approximately $10 million related to pension curtailment
costs and $5 million related to pension enhancement costs incurred primarily for
certain non-U.S. employees expected to be terminated under this program.

In the Americas, European and Asia Pacific segments, the major impact of the
1997 Program consists of reducing the number of employees associated with sales
and marketing activities. The impact of the 1997 Program in the European segment
also consists of consolidating back office activities in a centralized location.

The impact of the 1997 Program in Global Operations consists of reducing the
number of direct and indirect employees located at manufacturing facilities in
both the United States and Europe that are associated with the manufacture of
instant film and, to a lesser degree, instant hardware, along with employees
required to procure goods and services and distribute finished products. The
1997 Program in Global Operations also included employees at the Company's
chemical manufacturing facility in Freetown, Massachusetts that the Company sold
in February 1998.

The impact of the 1997 Program in the Research and Development segment consists
of reducing the number of employees associated with research, engineering and
development activities in the United States and to focus the Company's research
and development activities on its core imaging business.

The 1997 Program affects the non-segment Corporate category by reducing the
number of employees in the United States that support functions such as central
marketing, finance, legal, information management, administration, human
resources and facilities support.



                                                                              21
<PAGE>

In addition to severance, the asset impairment portion of the 1997 Program
amounted to approximately $163 million. Of the $163 million, approximately $106
million was related to the write-down of the Company's underutilized New Bedford
coating facility to an independently determined fair value of approximately $18
million. The New Bedford coating facility was designed and specially built to
manufacture large volumes of high quality media for the Company's graphics and
medical diagnostic imaging businesses. However, growth of these businesses did
not materialize as planned and, as a result, the Company continues to pursue
several strategic options for the future use of this facility, including
outright sale. Approximately $22 million of the asset impairment related to the
write-off of battery assembly equipment that was not required to support
anticipated production requirements. This equipment was initially constructed in
anticipation of significant growth in instant film sales in the emerging markets
of Russia and Asia. During 1997, it became clear that these volume assumptions
were no longer valid based on weakness in demand and an unfavorable outlook in
those emerging markets. In 1997, the Company abandoned this special-purpose
equipment in place because it believed that it had no future use or salvage
value and sale to a third party was not likely.

The $163 million also included a loss of approximately $22 million on the sale
of the Company's underutilized chemical manufacturing facility in Freetown,
Massachusetts. The Freetown facility was used to manufacture certain chemical
components of the Company's instant film. Because of competitive changes in the
specialty chemical industry and the fact that the Company's expectation of
future sales of instant film in certain emerging markets did not materialize,
the Company sought the outright sale of the Freetown facility. The write-down of
the Freetown facility was based on the terms of a purchase and sale agreement
and the terms of a long-term supply agreement under which the Company agreed to
purchase certain chemicals used to manufacture its instant film. The Company
entered the purchase and sale agreement and the long-term supply agreement in
the fourth quarter of 1997. The sale of the Freetown facility was completed in
the first quarter of 1998. Additionally, the asset impairment portion of the
1997 Program included approximately $13 million related to other fixed assets
which were not individually material. The write-down of these fixed assets
occurred because the assets were no longer required in its U.S. manufacturing
operations due primarily to the consolidation of certain manufacturing
operations. The assets related to the asset impairment portion of the 1997
Program were primarily located in Global Operations. The Company also recorded
approximately $4 million for exit costs and, to a lesser degree, severance
liabilities related to the sale of the Freetown facility.

In addition to the severance and asset write-downs, the balance of the 1997
Program consisted of approximately $17 million of inventory write-downs and
approximately $6 million of exit costs. The inventory write-downs consisted of
reserves for chemical inventories made obsolete by the sale of the Freetown
facility, lower of cost or market provisions on inventories of a first
generation digital camera and, to lesser degree, inventory reserves related to
the Company's decision to exit a portion of its holography business. The exit
costs related primarily to lease and contract terminations and other costs
directly related to restructuring.


                                                                              22
<PAGE>

Under the 1997 Program, the Company realized benefits of approximately $115
million through the end of 1999 and expects to further benefit by approximately
$25 million in 2000 bringing the estimated total benefit from the 1997 Program
to $140 million on an annualized basis after the benefits are fully realized.

FINANCIAL LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents were $68 million at July 2, 2000 and $92
million at December 31, 1999. Net cash used by operating activities in the first
half of 2000 was $39 million. Net earnings for the first half of 2000, adjusted
for non-cash items (depreciation, gains from the sale of real estate and other
non-cash items) provided $75 million to cash flow from operating activities. A
decrease in receivables related to the Company's efforts to strengthen its
balance sheet, including reducing the days sales outstanding provided an
additional $62 million of cash flow to operating activities. These increases
were offset by a decrease in payables and accruals and liabilities for
compensation and benefits totaling $100 million. The decrease in these
liabilities was due to $27 million of severance payments made under the 1997
Program and the timing of payments for various operating expenses. An increase
in inventories of $70 million also offset the increases to cash flow described
above. The build-up of inventories was generally consistent with the seasonality
of the Company's sales and to support the Company's new product strategy.

Net cash used by investing activities was $14 million for the first half of 2000
and consisted primarily of $67 million of additions to property, plant and
equipment offset, in part, by $49 million of proceeds related primarily to the
sale of real estate and the Company's technical polarizer and display film
business. Net cash provided by financing activities was $33 million for the
first half of 2000 and was due to an increase in short-term debt of $47 million
offset, in part, by $14 million of dividend payments.

Working capital (defined as current assets less current liabilities) was
essentially unchanged at $369 million at July 2, 2000, compared with $367
million at December 31, 1999. Movements in working capital during the quarter
included increases from the change in inventories, payables and accruals and
liabilities for compensation and benefits offset by the changes in
receivables and short-term debt noted above.

In the first half of 2000, capital spending totaled $67 million compared with
$96 million in the first half of 1999. The decrease in capital spending was the
result of lower spending on the Company's enterprise-wide software system, new
products (consistent with the Company's new product launch schedule) and capital
improvements related to the consolidation of the Company's real estate holdings.
The decreases were offset, in part, by higher spending on the Company's Internet
initiatives. The Company continues to expect total capital spending in 2000 to
be approximately $150 million.



                                                                              23
<PAGE>

The Company has financed its operations with the following sources of debt: the
Amended Credit Agreement (defined below); the U.K. Credit Agreement (defined
below); short-term lines of credit; and the Company's outstanding 6 3/4% Notes
due 2002 (the "2002 Notes"), 7 1/4% Notes due 2007 (the "2007 Notes") and
11 1/2% Notes due 2006 (the "2006 Notes").

At July 2, 2000, the Company had $306 million outstanding in short-term debt.
The amounts outstanding were comprised of $295 million under the Amended Credit
Agreement and $11 million under uncommitted short-term lines of credit.

In December 1998, the Company entered into a credit agreement for a maximum
commitment of $350 million on a revolving basis through December 31, 2001. The
credit agreement provided the lenders the right to incorporate covenants given
to the holders of notes or other securities of the Company which, in the lenders
judgment are more restrictive. The lenders exercised their rights to
incorporate certain covenants of the 2006 Notes in Amendment No. 1 dated March
31, 1999, to the credit agreement (hereinafter referred to as the "Amended
Credit Agreement").

Funds borrowed under the Amended Credit Agreement bear interest, at the
Company's option, at either the prime rate of Morgan Guaranty Trust Company
("Prime") plus a margin or LIBOR on euro-dollar loans plus a margin. The
margins range from 0.085% to 2.0% for Prime-based loans and from 0.275% to
3.0% for euro-dollar loans based on the Company's credit rating. In addition,
the Company pays the lenders a commitment fee on unused commitments ranging
from 0% to 0.025% on an annual basis depending on the Company's credit
rating, and a fee to the administrative agent. The weighted average interest
rate on amounts outstanding under the Amended Credit Agreement was 8.0% at
July 2, 2000.

In connection with the Amended Credit Agreement, the Company entered into a
collateral agreement and certain related documents that granted the lenders a
first security interest in certain of the Company's domestic inventories and
trade accounts receivable. Under the collateral agreement, the security will be
released if the Company's credit rating is BBB- or higher by Standard and Poor's
("S&P") and Baa3 or higher by Moody's Investor's Services, Inc. ("Moody's").
Currently, the Company's credit ratings are BB by S&P and Duff & Phelps Credit
Ratings Co. ("Duff & Phelps") and Ba2 by Moody's. In addition, the Company's
long-term debt is rated BB- by S&P, BB by Duff & Phelps and Ba3 by Moody's. In
the first quarter of 2000, S&P and Moody's upgraded their outlook from negative
to stable.


                                                                              24
<PAGE>

In August 1999, the Company's wholly-owned subsidiary, Polaroid (U.K.) Limited
("Polaroid U.K."), as borrower, and the Company, as guarantor, entered into a
new loan agreement for a maximum commitment of 72.5 million euros (approximately
$68 million at July 2, 2000) (the "U.K. Credit Agreement") that is scheduled to
mature on December 31, 2001. Several of the Company's foreign subsidiaries
granted the lenders under this facility a security interest in certain foreign
inventories and receivables. Borrowings under the U.K. Credit Agreement bear a
margin of approximately 25 basis points higher than that paid under the Amended
Credit Agreement.

The Amended Credit Agreement and the U.K. Credit Agreement require the Company
to maintain financial ratios related to the maximum level of debt to earnings
before interest, taxes, depreciation, and amortization and minimum interest
coverage. In addition to financial ratios, the Amended Credit Agreement and the
U.K. Credit Agreement restrict, among other things, the Company's ability to do
the following: make certain capital expenditures; make certain payments; incur
debt in addition to the 2006 Notes; incur certain liens; make certain
investments; enter into certain sale leaseback transactions; merge, consolidate,
sell or transfer all or substantially all of the Company's assets subject to
certain financial conditions; and to enter into certain transactions with
affiliates. The Company met all of the requirements of the Amended Credit
Agreement and the U.K. Credit Agreement in the first half of 2000, and based on
information currently available, believes it is likely to meet the requirements
for the balance of 2000.

The Amended Credit Agreement and the U.K. Credit Agreement also restrict the
Company's ability to pay dividends and repurchase stock. The agreements limit
the payment of dividends and repurchase of Company stock to: $3.75 million per
quarter on an aggregate basis since December 31, 1998 plus; up to an additional
$3.75 million in the current quarter from the exercise of stock options and the
lesser of 6% of the Company's domestic payroll or the fair value of the shares
of the Company's stock issued to employee stock ownership plans plus; the
aggregate proceeds from the exercise of stock options and the lesser of 6% of
the Company's domestic payroll or the fair value of the shares of the Company's
stock issued to employee stock ownership plans, without limitation, for all
prior quarters since December 31, 1998. Based on information currently
available, the Company believes that this provision will not prevent it from
continuing the current dividend payment of $.60 per share per annum.

The indenture, pursuant to which the 2006 Notes were issued, contains certain
covenants that restrict, among other things, the Company's ability to do the
following: make certain restricted payments, including dividends on and the
purchase of the Company's common stock and certain other payments; incur
additional debt and issue preferred stock; incur certain liens; enter into sale
leaseback transactions; enter into certain transactions with affiliates; and
enter into certain mergers and consolidations or sell all or substantially all
of the properties or assets of the Company.


                                                                              25
<PAGE>

At July 2, 2000, the Company had $573 million outstanding in long-term debt. The
amounts outstanding were comprised of $149 million under the 2002 Notes, $149
million under the 2007 Notes and $275 million under the 2006 Notes.

The Company filed a shelf registration statement with the Securities and
Exchange Commission in the first quarter of 2000 to expand the type and
increase the amount of securities it may offer up to $500 million. The types
of securities that the Company can issue under the shelf registration are
debt securities, preferred stock, depositary shares, common stock, preferred
stock rights, stock purchase contracts, stock purchase units, warrants and
warrant units. The Company's ability to issue securities under the shelf
registration statement are subject to limitations imposed by the Amended
Credit Agreement, the U.K Credit Agreement and the 2006 Notes.

The Company believes that the availability of funds under the Amended Credit
Agreement, the U.K. Credit Agreement, short-term lines of credit, funds
generated from operations and its additional borrowing capacity will be adequate
for at least the next twelve months to meet working capital needs, fund spending
for growth and maintenance of existing operations and make severance payments
associated with the 1997 Program.

FOREIGN CURRENCY EXCHANGE

The Company generates a substantial portion of its revenues in international
markets, which subjects its operations to the exposure of currency exchange
fluctuations. The impact of currency exchange rate movement can be positive or
negative in any given period. The Company's ability to counteract currency
exchange rate movement is primarily dependent on pricing in local markets and,
to a lesser degree, in the short-term, on hedging through nonfunctional currency
denominated borrowings, forward exchange contracts and the purchase of currency
options.

The Company maintains a Monetary Control Center (the "MCC") which operates under
written policies and procedures that define the day-to-day operating guidelines,
including exposure limits to contract for nonfunctional currency denominated
borrowings, currency exchange swaps, forward exchange contracts and currency
options. The MCC is subject to random independent audits and reports to a
supervisory committee comprised of members of the Company's senior management.
The MCC publishes regular reports to the supervisory committee detailing foreign
currency activities.


                                                                              26
<PAGE>

To minimize the impact of currency fluctuations on net monetary assets
denominated in currencies other than the relevant functional currency
("nonfunctional currencies"), the Company engages in nonfunctional currency
denominated borrowings. The Company determines the aggregate amount of such
borrowings based on forecasts of each entity's nonfunctional currency
denominated net monetary asset position and the relative strength of the
functional currencies compared with the nonfunctional currencies. These
borrowings create nonfunctional currency denominated liabilities that hedge the
Company's nonfunctional currency denominated net monetary assets. Upon receipt
of the borrowed nonfunctional currency denominated funds, the Company converts
those funds to the functional currency at the spot exchange rate. Exchange gains
and losses on the nonfunctional currency denominated borrowings are recognized
in earnings as incurred. The amount of the Company's outstanding short-term debt
incurred for hedging purposes was $11 million at July 2, 2000.

Alternatively, the Company may use forward exchange contracts to minimize the
impact of currency fluctuations on its net monetary assets denominated in
nonfunctional currencies. The term of these contracts typically does not exceed
six months. The Company does not enter into forward exchange contracts for
trading purposes. At July 2, 2000, the aggregate notional value of the Company's
outstanding forward exchange contracts was $111 million.

The Company has limited flexibility to increase prices in local currencies and
offset the adverse impact of foreign exchange. As a result, the Company
purchases U.S. dollar call/foreign currency put options which allows it to
protect a portion of its expected foreign currency denominated revenues from
adverse currency exchange movement. The term of purchased options typically does
not exceed 18 months, and all of the option contracts outstanding at July 2,
2000 expire in 2000. The Company does not write options or purchase options for
trading purposes. The notional value of the Company's outstanding option
contracts, all of which were denominated in Japanese yen, was $95 million at
July 2, 2000.

IMPACT OF INFLATION

Inflation continues to be a factor in many countries in which the Company does
business. The Company's pricing strategy and continuing efficiency improvements
have offset inflation and normal cost increases to a considerable degree. The
overall inflationary impact on the Company's earnings has not been material.



                                                                              27
<PAGE>

NEW ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Financial
Accounting Standards Board Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("FAS 133"), that establishes accounting and
reporting requirements for derivative instruments and for hedging activities.
FAS 133 requires companies to recognize all derivatives as either assets or
liabilities in the statement of financial position at fair value. If certain
conditions are met, a derivative may be specifically designated as a hedge of
the exposures to changes in fair value of recognized assets or liabilities or
unrecognized firm commitments, a hedge of the exposure to variable cash flows of
a forecasted transaction, or a hedge of the foreign currency exposure of a net
investment in a foreign operation, unrecognized firm commitments, an
available-for-sale security or a foreign-currency denominated forecasted
transaction. The accounting for changes in fair value under FAS 133 depends on
the intended use of the derivative and the resulting designation.

In June 1999, the FASB issued FAS 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133," which delayed the effective date of FAS 133 by one year to fiscal years
beginning after June 15, 2000. In June 2000, the FASB issued FAS 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities -
an amendment of FASB Statement No. 133." ("FAS 138"), which will be adopted
concurrently with FAS 133. FAS 138 amends the accounting and reporting standards
of FAS 133 for certain derivative instruments and hedging activities and
incorporates decisions made by the FASB related to the Derivatives
Implementation Group process. The Company is currently evaluating the effect of
FAS 133 and FAS 138 on its results of operations and financial position.

In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101"), that expresses the views of the SEC staff regarding the
application of generally accepted accounting principles to certain revenue
recognition issues. In June 2000, the SEC issued SAB No. 101B, "Second
Amendment: Revenue Recognition in Financial Statements," which delayed the
effective date of SAB 101 to periods no later than the fourth quarter of fiscal
years beginning after December 15, 1999. The Company will adopt SAB 101 at the
beginning of the fourth quarter of 2000 but does not believe that the adoption
of SAB 101 will have a material impact on its results of operations or financial
position.

In March 2000, the FASB issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation - an Interpretation of APB Opinion No.
25" ("FIN 44"), which must be applied prospectively to new stock option awards,
exchanges of awards in a business combination, modifications to outstanding
awards and changes in grantee status that occur on or after July 1, 2000. The
Company does not believe that the adoption of FIN 44 will have a material impact
on its results of operations or financial position.


                                                                              28
<PAGE>

In March 2000, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 00-2, "Accounting for Web Site Development Costs" which is effective
for fiscal quarters beginning after June 30, 2000. This accounting applies to
the cost of developing a web site and applies to web sites used to promote or
advertise products or services, supplant manual processes or services, sell
products (including software) or services, or to do a combination of all three.
The Company does not believe that the adoption of EITF Issue No. 00-2 will have
a material effect on its results of operations or financial position.

In May 2000, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 00-14, "Accounting for Certain Sales Incentives" which is effective
for periods no later than the fourth quarter of fiscal years beginning after
December 15, 1999. This accounting applies to the recognition, measurement and
income statement classification of sales incentives offered to customers such as
discounts, coupons, rebates and free products or services. The Company will
adopt EITF Issue No. 00-14 at the beginning of the fourth quarter of 2000 and is
currently evaluating the requirements of EITF Issue No. 00-14 and the effect on
the Company's results of operations and financial position.

EURO CONVERSION

On January 1, 1999, eleven of the fifteen member countries of the European Union
established fixed conversion rates between their existing sovereign currencies
(the "legacy currencies") and one common currency (the "euro"). The
participating countries adopted the euro as their common currency on January 1,
1999. The euro is now traded on currency exchanges and may be used in business
transactions. On January 1, 2002, new euro-denominated bills and coins will be
issued by the participating countries. The legacy currencies will then be
withdrawn and will cease to be legal tender effective June 30, 2002. During the
period from January 1, 1999 to June 30, 2002, parties may use either the euro or
a participating country's legacy currency as legal tender.

In 1998, the Company formed an Economic and Monetary Union Steering Committee
and Project Team (the "EMU Committee"). The EMU Committee has analyzed the
impact of the euro conversion on the Company in a number of areas, including the
Company's information systems, product pricing, finance and banking resources,
foreign exchange management, contracts and accounting and tax departments. While
the Company is in the process of making certain adjustments to its business and
its operations to accommodate the euro conversion, the EMU Committee believes,
based on information available at this time and on several assumptions, that the
euro conversion process will not have a material adverse impact on the Company's
results of its operations or financial position.


                                                                              29
<PAGE>


FACTORS THAT MAY AFFECT FUTURE RESULTS

Some statements in this report may be forward looking in nature, or
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995 (the "Act"). These statements may be identified by the use of
forward-looking words or phrases such as "expect", "anticipate", "plan",
"outlook", "intend", "will", "estimate" and "potential" among others. The
Company desires to take advantage of the "safe harbor" provisions of the Act.
Many of the important factors below have been discussed in prior filings by the
Company with the Securities and Exchange Commission. The Company therefore
cautions shareholders and investors that actual results may differ materially
from those projected in or implied by any forward-looking statement as a result
of a wide variety of factors which include, but are not limited to the Company's
ability:

    -    to revitalize the core imaging business which requires, among other
         things;
         >>   introducing a number of new products each year;
         >>   expanding certain profitable businesses;
         >>   increasing revenues while managing the mix of new and traditional
              products; and
         >>   continuing to reduce costs through operating efficiencies,
              including savings from restructuring;

    -    to penetrate new demographic markets such as children, teens and young
         adults for its products and new technologies through product
         innovations, marketing campaigns and expanded distribution;

    -    to develop and implement its digital imaging strategy which requires,
         among other things:

         >>   applying the Company's technology and expertise in instant imaging
              to the developing market for digital imaging products;
         >>   marketing of successful new digital imaging products;
         >>   successfully developing partnerships and alliances with other
              companies in the digital imaging market; and
         >>   accurately anticipating and responding to trends in the rapidly
              changing digital imaging market;

    -    to compete successfully in the instant imaging market against larger
         and stronger competitors like Fuji Photo Film Co., Ltd. ("Fuji"), and
         in the digital imaging market against competitors like Eastman Kodak
         Company, Fuji, Hewlett-Packard Company, Cannon U.S.A., Inc. and Sony
         Corporation;

    -    to avoid periods of net losses which could require the Company to
         find additional sources of financing to fund operations, implement
         its business strategy, meet anticipated capital expenditures,
         research and development costs and financing commitments;



                                                                              30
<PAGE>


    -    to manage or reduce its debt which would reduce the Company's
         vulnerability to general adverse economic conditions; increase its
         ability to compete with competitors that are less leveraged; increase
         its ability to fund future working capital needs, capital expenditures,
         acquisitions, research and development costs and other general
         corporate requirements; and increase its flexibility to react to
         changes in the businesses and industry in which it operates;

    -    to comply with the covenants in the Amended Credit Agreement, the U.K.
         Credit Agreement, the indenture governing the 2006 Notes and certain of
         the agreements governing short-term lines of credit the failure of
         which could result in an event of default;

    -    to generate sufficient cash in order to make payments on and to
         refinance its debt, to execute its business strategy, to make capital
         expenditures and to fund research and development costs;

    -    to retain its top customers at essentially their current purchasing
         levels;

    -    to sell and market its products worldwide particularly in light of the
         major risks associated with worldwide operations such as various local
         laws and customs and fluctuation of foreign exchange rates,
         particularly the Japanese yen and euro;

    -    to further reduce its cycle time in bringing new products to market;

    -    to retain certain sole source suppliers, or find timely alternatives,
         for raw materials, supplies and finished goods necessary for the
         manufacture and sale of its products, including chemicals, polyester
         film base, specialty paper and certain components;

    -    to develop and continue to protect ownership of, and license as
         appropriate, valuable intellectual property rights;

    -    to comply with the large number of federal, state and local
         environmental laws and regulations that govern, among other things, the
         discharge of hazardous materials into the air and water as well as the
         handling, storage and disposal of such materials; and;



                                                                              31
<PAGE>

    -    to retain a number of key senior managers and to be able to attract and
         retain qualified senior managers who can implement the Company's
         business strategy.

There can be no assurance that the Company will be successful in accomplishing
its objectives and meeting the challenges summarized above. If the Company is
not successful, the Company's business and results of operations could be
negatively impacted.

                           PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

LEGAL PROCEEDINGS

The Company is currently involved in several lawsuits, the unfavorable
disposition of which could have a material adverse effect on the financial
condition or operating results of the Company.

In April 1999, a tribunal of the International Chamber of Commerce's
International Court of Arbitration (the "ICC") entered a ruling against the
Company's wholly-owned subsidiary, Polaroid Far East Limited, in an arbitration
proceeding brought by Columbia Enterprises for breach of two distributor
agreements regarding the distribution of photographic equipment in the
Philippines in 1996. In May 2000, the ICC issued a damage award against the
Company. The amount of the award did not have a material impact on the Company's
results of operations or financial position.

A consolidated suit has been filed in United States District Court for the
District of Massachusetts against the Company and certain of its officers by
individuals claiming to have purchased stock in the Company and purporting to
represent a class of its shareholders in actions alleging violations of federal
securities law regarding public disclosure of information about the Company's
business during a time between April 16, 1997 and August 28, 1998. The Company
believes that these suits are without merit and intends to defend them
vigorously.

In June 1999, the Company received a Notice of Service of Process in a patent
infringement action filed against it and many others by the Lemelson Medical,
Education and Research Foundation alleging that a broad range of the Company's
manufacturing equipment and products infringe a number of patents. The Company
resolved this action in the second quarter of 2000. The resolution of this
action did not have a material impact on the Company's results of operations or
financial position.


                                                                              32
<PAGE>

In addition, the Company is involved in various other legal proceedings and
claims arising in the ordinary course of business. The Company believes that the
disposition of these matters will not have a materially adverse effect on the
results of operations or financial condition of the Company.

ENVIRONMENTAL COMPLIANCE

The Company owns and operates facilities 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 liability 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
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 July 2, 2000 was $1.4 million. The Company currently estimates
that the majority of $1.4 million reserved for environmental liabilities will 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.


                                                                              33
<PAGE>

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.


ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS

a) Not applicable.

b) Not applicable.

c) Not applicable.

d) Not applicable.


ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


ITEM 5.    OTHER INFORMATION

Not applicable.



                                                                              34
<PAGE>

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

a)   EXHIBITS


        Exhibit No.                                            Description
        -----------                                            -----------

           4             Rights Agreement dated as of July 1, 2000, between
                         Polaroid Corporation and Fleet National Bank, as Rights
                         Agent. (The Rights Agreement, included as Exhibit 1 to
                         Polaroid Corporation's Form 8-A as filed on June 29,
                         2000, is hereby incorporated by reference).

          12 (*)         Ratio of Earnings to Fixed Charges.

          15 (*)         Letter re Unaudited Interim Financial Information.

          27 (*)         Financial Data Schedule.


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

b)   REPORTS ON FORM 8-K

     During the second quarter of 2000, the Company filed a Current Report on
     Form 8-K dated June 6, 2000 announcing the following:

          -    that the Board of Directors of the Company amended certain
               by-laws of the Company; and

          -    that the Board of Directors of the Company declared a dividend in
               the form of a Right, whose terms are set forth in the Rights
               Agreement, to purchase 1/100th of a share of Series B
               Participating Cumulative Preferred Stock.



                                                                              35
<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/ JUDITH G. BOYNTON
                                    ---------------------
                                    Judith G. Boynton
                                    Executive Vice President, Business
                                       Development and Chief Financial Officer





                                                                              36