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     September 29, 1996	      
                                               -------------------------

                                        OR

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

                 For the transition period from           to 	
                                               -----------  ----------

                          Commission File Number  1-4085
                                                 --------

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

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


                549 TECHNOLOGY SQUARE, CAMBRIDGE, MASSACHUSETTS  02139      
____________________________________________________________________________


                (Address of principal executive offices)         (Zip Code)

       Registrant's telephone number, including area code:    (6l7)  386-2000
________________________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act 
of 1934 during the preceding 12 months, and (2) has been subject to 
such filing requirements for the past 90 days.
                         
                          YES   X       NO 
                             ------       ------

                  Shares of Common Stock, $1 par value,
           outstanding as of November 1, 1996: 45,447,183 shares
____________________________________________________________________________


                     	This document contains 29 pages.
                     	Exhibit index appears on page 18
________________________________________________________________________________

<PAGE>

                      PART I.   FINANCIAL INFORMATION
                      Item 1.   Financial Statements

              POLAROID CORPORATION AND SUBSIDIARY COMPANIES
         Condensed Consolidated Statement of Earnings (Unaudited)
           Periods ended SEPTEMBER 29, 1996 and OCTOBER 1, 1995
                   (In millions, except per share data)


                                Third Quarter              Nine Months

                                  1996       1995           1996         1995
                              --------   --------      ---------    ---------

Net sales:
 United States                 $270.3     $268.2          $725.6       $690.1
 International                  298.8      311.8           886.2        872.0
------------------------------------------------------------------------------
Total net sales                 569.1      580.0         1,611.8      1,562.1
------------------------------------------------------------------------------
 Cost of sales                  294.3      320.0           896.9        899.0

 Marketing, research, engineering and
  administrative expenses       209.5      209.7           589.0        603.3

 Restructuring and other            -          -           110.0         77.0
------------------------------------------------------------------------------
Total costs                     503.8      529.7         1,595.9      1,579.3
------------------------------------------------------------------------------
Profit/(loss)
  from operations                65.3       50.3            15.9        (17.2)
                                                                          0.0
 Other income                     4.5        0.4            26.4          9.4

 Interest expense                12.3       12.6            35.6         38.7
------------------------------------------------------------------------------
Earnings/(loss)
  before income taxes            57.5       38.1             6.7        (46.5)

 Federal, state and foreign income
    tax expense/(benefit)        23.3       14.4             4.7        (17.3)
------------------------------------------------------------------------------
Earnings/(loss) before
   extraordinary item            34.2       23.7             2.0        (29.2)

Extraordinary Item                -          -             (54.5)        -
------------------------------------------------------------------------------
Net earnings/(loss)             $34.2      $23.7          ($52.5)      ($29.2)
==============================================================================


Primary earnings/(loss) per common share:

Earnings/(loss) before
    extraordinary item          $0.74      $0.51           $0.04       ($0.64)

Extraordinary Item                  -          -           (1.20)           -
                               --------   --------      ---------    ---------
Net earnings/(loss)             $0.74      $0.51          ($1.16)      ($0.64)


Fully diluted earnings
   per common share             $0.71      $0.50               *            *
------------------------------------------------------------------------------
Cash dividends
   per common share             $0.15      $0.15           $0.45        $0.45

Weighted average common shares used for primary
   earnings/(loss) per share calculation
   (in thousands)              46,426 **  46,326 **       45,545       45,387


Common shares outstanding at end of period
   (in thousands)              45,587     45,399          45,587       45,399
==============================================================================



*    Fully diluted earnings per share are not stated because they
     are greater than primary earnings per common share.

**   The weighted average shares used to calculate primary earnings
     per common share include the dilutive effect of
     stock options outstanding.

                                     - 2 -
<PAGE>


           POLAROID CORPORATION AND SUBSIDIARY COMPANIES
              Condensed Consolidated Balance Sheet
                        (In millions)

                                    (Unaudited)                   (Unaudited)
                                    September 29,  December 31,    October 1,
Assets                                     1996           1995           1995
-------------------------------------------------------------------------------

Current assets

 Cash and cash equivalents                $50.4          $73.3          $56.0
 Short-term investments                     5.4            9.8           10.7
 Receivables                              504.7          550.4          470.1
 Inventories:
   Raw materials                          124.6          137.2          149.2
   Work-in-process                        241.8          233.7          262.0
   Finished goods                         276.3          244.6          290.1
-------------------------------------------------------------------------------
 Total inventories                        642.7          615.5          701.3
 Prepaid expenses
   and other assets                       216.7          208.5          181.9
-------------------------------------------------------------------------------
Total current assets                    1,419.9        1,457.5        1,420.0
-------------------------------------------------------------------------------
Property, plant and equipment
 Gross property, plant
   and equipment                        2,167.3        2,164.4        2,136.4
 Less accumulated depreciation          1,501.3        1,473.4        1,366.9
-------------------------------------------------------------------------------
 Net property, plant
   and equipment                          666.0          691.0          769.5
-------------------------------------------------------------------------------
Deferred tax assets                       113.0          113.3           82.8
-------------------------------------------------------------------------------
Total assets                           $2,198.9       $2,261.8       $2,272.3
==============================================================================


Liabilities and stockholders' equity
-------------------------------------------------------------------------------
Current liabilities

 Short-term debt                         $125.6         $160.4         $155.3
 Current portion
   of long-term debt                       58.1           39.7           37.8
 Notes payable
   due January 1997                       149.9           -              -
 Payables and accruals                    263.8          274.9          240.1
 Compensation and benefits                261.7          197.4          153.2
 Federal, state and
   foreign income taxes                    43.8           46.6           28.9
-------------------------------------------------------------------------------
Total current liabilities                 902.9          719.0          615.3
-------------------------------------------------------------------------------
Long-term debt                            339.9          526.7          547.0
-------------------------------------------------------------------------------
Accrued postretirement benefits           249.9          257.2          254.9

Accrued postemployment benefits            41.7           41.2           42.5
-------------------------------------------------------------------------------
Common stockholders' equity

 Common stock, $1 par value                75.4           75.4           75.4
 Additional paid-in capital               408.4          401.9          398.7
 Retained earnings                      1,453.1        1,525.8        1,643.1

 Less: Treasury stock, at cost          1,212.1        1,205.4        1,207.0
       Deferred compensation               60.3           80.0           97.6
-------------------------------------------------------------------------------
 Total common stockholders'
    equity                                664.5          717.7          812.6
-------------------------------------------------------------------------------
Total liabilities and
  stockholders' equity                 $2,198.9       $2,261.8       $2,272.3
==============================================================================

                                       - 3 -
<PAGE>

                POLAROID CORPORATION AND SUBSIDIARY COMPANIES
           Condensed Consolidated Statement of Cash Flows (Unaudited)
          Periods Ended September 29, 1996 and October 1, 1995
                            (In millions)

                                                             Nine Months
                        
Cash flows from operating activities                       1996         1995
-----------------------------------------------------------------------------
  Net loss                                              ($52.5)       ($29.2)
  Depreciation of property, plant
    and equipment                                         92.5         100.1
  Decrease in receivables                                 37.6          83.2
  Increase in inventories                                (27.2)       (123.9)
  Increase in prepaids and other assets                  (10.8)        (40.2)
  Decrease in payables and accruals                       (5.5)        (46.0)
  Increase in compensation and benefits                    3.3           5.1
  Decrease in federal, state
    and foreign income taxes payable                      (0.8)        (20.5)
  Gain on sale of real estate                            (23.2)            -
  Other non cash items                                    80.3          59.2
-----------------------------------------------------------------------------
  Net cash provided/(used)
    by operating activities                               93.7         (12.2)
-----------------------------------------------------------------------------

Cash flows from investing activities
-----------------------------------------------------------------------------
  Decrease in short-term investments                       4.4          74.8
  Additions to property, plant and equipment             (81.1)       (127.1)
  Proceeds from sale of real estate                       35.4           2.1
-----------------------------------------------------------------------------
  Net cash used by investing activities                  (41.3)        (50.2)
-----------------------------------------------------------------------------

Cash flows from financing activities
-----------------------------------------------------------------------------
  Net increase/(decrease) in short-term 
    debt (maturities 90 days or less)                    (30.4)         36.4
  Repayments of long-term debt                           (19.6)        (17.5)
  Cash dividends paid                                    (20.5)        (20.2)
  Stock options exercised                                  8.4          16.3
  Purchase of treasury stock                             (10.4)        (37.3)
-----------------------------------------------------------------------------
  Net cash used by financing activities                  (72.5)        (22.3)
-----------------------------------------------------------------------------
Effect of exchange rate changes on cash                   (2.8)         (2.6)
-----------------------------------------------------------------------------
Net decrease in cash and cash equivalents                (22.9)        (87.3)

Cash and equivalents at beginning of period               73.3         143.3
-----------------------------------------------------------------------------
Cash and cash equivalents at end of period               $50.4         $56.0
=============================================================================


                                  - 4 -

<PAGE>


             POLAROID CORPORATION AND SUBSIDIARY COMPANIES
                  Condensed Consolidated Statement of
            Changes in Common Stockholders' Equity   (Unaudited)
            Periods Ended September 29, 1996 and October 1, 1995
                           (In millions)

                                      Third Quarter           Nine Months

                                      1996       1995       1996       1995
                                    --------   --------   --------   --------
Common stock

  Balance at the
    beginning of the period            $75.4      $75.4      $75.4      $75.4
  Balance at the
    end of the period                   75.4       75.4       75.4       75.4
------------------------------------------------------------------------------
Additional paid-in capital

  Balance at the
    beginning of the period            407.6      391.8      401.9      387.2
  Stock options exercised
    - tax benefit                        0.1        2.0        1.2        3.0
  Issuance of shares in connection with
    stock incentive plan                 0.7        4.9        5.3        8.5
  Balance at the
    end of the period                  408.4      398.7      408.4      398.7
------------------------------------------------------------------------------
Retained earnings

  Balance at the
    beginning of the period          1,425.6    1,625.9    1,525.8    1,692.1
  Net earnings/(loss)                   34.2       23.7      (52.5)     (29.2)
  Dividends declared
    - common stock                      (6.8)      (6.6)     (20.5)     (20.2)
  ESOP dividend tax
    benefit received                     0.1        0.1        0.3        0.4
  Balance at the
    end of the period                1,453.1    1,643.1    1,453.1    1,643.1
------------------------------------------------------------------------------

Less:

Treasury stock

  Balance at the
    beginning of the period          1,212.6    1,206.3    1,205.4    1,174.5
  Repurchase of common
    shares                                 -        4.9       10.4       40.2
  Issuance of shares in connection with
    stock incentive plan               (0.5)      (4.2)      (3.7)      (7.7)
  Balance at the
    end of the period                1,212.1    1,207.0    1,212.1    1,207.0
------------------------------------------------------------------------------
Deferred compensation

  Balance at the
    beginning of the period             60.6       97.8       80.0      115.8
  Stock options - 1993                  (0.2)      (0.2)      (0.7)      (0.7)
  Restricted stock                      (0.1)         -        0.4          -
  Loan repayment from
    ESOP Trust                             -          -      (19.4)     (17.5)
  Balance at the
    end of the period                   60.3       97.6       60.3       97.6
------------------------------------------------------------------------------
Total common stockholders'
  equity                              $664.5     $812.6     $664.5     $812.6
=========================================================================



                              - 5 -

<PAGE>



Polaroid Corporation and Subsidiary Companies
Notes to Condensed Consolidated Financial Statements    (Unaudited)


Basis of Presentation
---------------------

The condensed consolidated financial statements include the accounts of the 
Company's domestic and foreign subsidiaries, all of which are either wholly 
owned or majority owned.  Intercompany accounts and transactions are eliminated.
This is an interim unaudited report, subject to year end audit and 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.


Restructuring and Other
-----------------------

In December 1995, the Company announced a plan to make fundamental changes in 
its operating structure. The plan features three principal components: program 
reductions in certain product, research and manufacturing areas; strategic 
refocusing of the Company's digital imaging businesses for the medical 
diagnostic and graphic arts markets; and a reduction in corporate overhead 
expenses. The total pre-tax special charge related to this plan was $280.0 
million. Of that amount, $110.0 million was recorded in the first quarter of 
1996 and $170.0 million was recorded in the fourth quarter of 1995.  The 
December 1995 early retirement and severance programs are expected to result 
in the elimination of a total of approximately 1,515 positions worldwide
(approximately 695 from manufacturing and 820 from marketing, research, 
engineering and administrative functions).  Total cash severance payments 
related to the December 1995 program will be approximately $110.4 million.  
By the end of the third quarter of 1996, 1,199 of these terminations and 
$52.8 million of related cash severance payments were made.  
Approximately $19.0 million of additional cash severance payments are 
expected to be paid in the fourth quarter of 1996 with the 
remaining balance expected to be paid in 1997.


Extraordinary Item
------------------

In 1991, the Company issued $140.0 million of 8% Subordinated Convertible 
Debentures due 2001 (the Debentures) as partial consideration for the 
repurchase of its convertible preferred stock and warrants originally 
issued in 1989. Subsequently, the holders of the Debentures created a
trust under which they retained conversion rights to convert the Debentures
into approximately 4.3 million shares of common stock of the Company, 
but sold to institutional investors the right to principal and 
interest payments on the Debentures.

In the second quarter of 1996, the Company purchased the conversion rights for 
$53.8 million and redeemed $.5 million of principal of the Debentures.  A total
principal amount of $139.5 million of the Debentures remains outstanding.  As 
the holder of the conversion rights, the Company may redeem the Debentures at 
any time on or before September 30, 1998.  If the Debentures are not redeemed 
by the Company by September 30, 1998, the conversion rights revert to the 
holders of the Debentures. The transaction has been determined to be a 
substantive modification of the terms of the Debentures and has 
been accounted for as an extinguishment of debt and the issuance of 
new debt.  The cost of the conversion rights and the amount of the
fair value of the new debt over the carrying value of the extinguished 
debt was recorded as an extraordinary loss of $54.5 million,
net of a tax benefit of $.4 million, on the Company's Consolidated 
Statement of Earnings in the second quarter of 1996.


                                   -6-
<PAGE>


Polaroid Corporation and Subsidiary Companies
Notes to Condensed Consolidated Financial Statements  (Unaudited) (continued)


Legal Proceedings 
-----------------

Certain legal proceedings to which the Company is a party are discussed in 
Part II, Item 1 of this filing on Form 10-Q.


Independent Auditors' Report
----------------------------

The September 29, 1996 and October 1, 1995 condensed consolidated financial 
statements included in this filing on Form 10-Q have been reviewed by KPMG Peat 
Marwick LLP, independent certified public accountants, in accordance with 
established professional standards and procedures for such review.  The report 
by KPMG Peat Marwick LLP commenting upon their review of the condensed 
consolidated financial statements appears on page 8 



                                     -7-
<PAGE>


                           Independent Auditors' Report
                           ----------------------------

The Board of Directors
Polaroid Corporation

We have reviewed the condensed consolidated balance sheet of Polaroid 
Corporation and subsidiaries as of September 29, 1996 and October 1, 1995, and 
the related condensed consolidated statements of earnings, cash flows and 
changes in common stockholders' equity for the three-month and nine-month 
periods ended September 29, 1996 and October 1, 1995.  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 
subsidiaries as of December 31, 1995, 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 30, 1996, 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, 1995, is fairly stated, in all 
material respects, in relation to the consolidated balance sheet from which it 
has been derived.



                                                   /s/  KPMG Peat Marwick LLP




Boston, Massachusetts
October 15, 1996



                                    -8-

<PAGE>


                  Item 2. Management's Discussion and Analysis
               of Financial Condition and Results of Operations
               ------------------------------------------------

Third quarter Results
---------------------

Worldwide sales of Polaroid Corporation and its subsidiaries decreased 2% to 
$569.1 million in the third quarter of 1996 compared to sales of $580.0 million
in the third quarter of 1995.  The decline was due primarily to substantially 
lower sales in Russia.  In the third quarter of 1996, worldwide shipments of 
instant film and videotapes decreased moderately compared to the same period 
last year.  Worldwide shipments of instant cameras were substantially lower and
worldwide shipments of conventional film were significantly higher in the third
quarter of 1996 than in the third quarter of 1995.  Excluding the impact of the
Russian sales decline and licensing income on patents, sales in the third 
quarter of 1996 would have been slightly higher than a year ago.

In the third quarter of 1996, United States sales increased 1% to $270.3 
million from $268.2 million in the third quarter of 1995.  
However, excluding licensing income on patents, U.S. sales in
the third quarter of 1996 would have been down moderately compared 
to the third quarter of 1995.  The Company is focusing 
attention on its substantial portfolio of more than 1,500 active U.S. patents 
in order to create value through licensing income and partnerships.  
The first result of these efforts generated $10 million to $20 million 
in the third quarter of 1996.  Although this particular licensing 
income will not provide a continued stream of income, the Company 
intends to pursue other methods of generating revenues from its patents, 
including future licensing agreements.  Instant film shipments in 
the U.S. in the third quarter of 1996 were down moderately against 
the same period a year ago.  U.S. instant camera shipments 
were down substantially in the third quarter of 1996 compared to the third 
quarter of 1995.  U.S. retail sales of instant cameras and film were down 
moderately from the prior year during the quarter.  U.S. dealer 
inventories were comparable with year ago levels.  

International sales decreased 4% to $298.8 million in the third quarter of 1996
from $311.8 million in the same period a year ago. International shipments of 
instant film decreased slightly and instant cameras decreased substantially in 
the third quarter of 1996 compared to the same period last year.  In the third 
quarter of 1996, strong sales in Japan and certain developing markets were 
offset by a substantial decline in sales in Russia and the negative impact of 
foreign currency translation, particularly the yen.  While the Company believes
that developing markets in total present particularly attractive opportunities,
such markets tend to be significantly less stable than more established 
markets.  There can be no assurance that developing markets will 
continue to produce favorable results.

Gross margins as a percent of sales increased to 48.3% for the third quarter of
1996 from 44.8% for the third quarter of 1995, reflecting the impact of savings
from restructuring and licensing income on patents.  Marketing, research, 
engineering and administrative expenses of $209.5 million in the third quarter 
of 1996 were flat compared to $209.7 million in the same period of 1995.  In 
the third quarter of 1996, lower research, engineering, and 
development expenses were offset by higher marketing expenses.  
Profit from operations for the third quarter of 1996 was $65.3 million,
a 30% increase over $50.3 million in the third quarter of 1995.  


                                    -9-

<PAGE>


Third quarter Results (continued)
---------------------------------

In medical diagnostic imaging, shipments of the Helios 1417 Laser Imaging 
System continued to ramp up, following the system's introduction a year ago.
As discussed in the section "Other Matters" on page 16, the Company and 
Sterling Diagnostic Imaging Inc. entered into a definitive agreement 
on October 30, 1996 relating to the Company's medical imaging business.  

During the third quarter, Polaroid Graphics Imaging signed agreements with two 
additional partners: Creo Products Inc. and Gerber Systems Corporation.  These 
agreements, among other things, will enable the partners' systems for making 
separation films to use Polaroid's Dry Tech Imagesetting Film.

In the third quarter of 1996, other income increased to $4.5 million compared 
to $.4 million in the third quarter of 1995, primarily reflecting a 
$3.5 million gain on the sale of real estate.  Included in other income was 
a foreign currency loss of $.4 million from balance sheet translations in the 
third quarter of 1996 compared to a foreign currency loss of $.8 million in 
the same period last year.  Interest expense was $12.3 million in the 
third quarter of 1996 compared to $12.6 million in the third quarter of 1995.

Income tax expense was $23.3 million in the 1996 third quarter compared to 
$14.4 million in the 1995 third quarter.  The effective tax rate for 
the third quarter of 1996 was 41%, compared to 38% for the third 
quarter of 1995.  The net after-tax foreign currency loss from 
balance sheet translation amounted to $.5 million, or $.01 per common 
share in the third quarter of 1996 compared to a loss of $1.6 million, 
or $.03 per common share in the third quarter of 1995.

Net earnings for the third quarter of 1996 were $34.2 million, a 44% increase 
compared to $23.7 million in the same period of 1995.  Primary earnings per 
common share were $.74 per common share in the third quarter of 1996 
compared to $.51 per common share in the third quarter of 1995.  
Fully diluted earnings per common share were $.71 and $.50 for the 
third quarter of 1996 and 1995,respectively.


Nine Month Review
-----------------

Worldwide sales for the first nine months of 1996 increased 3% to $1.61 billion
from $1.56 billion for the first nine months of 1995.  In the first nine months
of 1996, worldwide shipments of instant film increased slightly and worldwide 
shipments of instant cameras decreased moderately compared to the same period 
last year.  Worldwide shipments of conventional film were significantly higher 
and worldwide shipments of videotapes were moderately higher in the first nine 
months of 1996 compared to the first nine months of 1995.  

U.S. sales increased 5% to $725.6 million for the first nine months of 1996 
compared to $690.1 million for the same period in 1995.  In the first nine 
months of 1996, instant film shipments in the U.S. were slightly higher and 
instant camera shipments in the U.S. were moderately lower than in the first 
nine months of 1995.   Sales in the U.S. in the first nine months of 1996 also 
includes licensing income on patents. 


                                    -10-

<PAGE>


Nine month Review (continued)
-----------------------------

International sales increased 2% to $886.2 million for the first nine months of
1996, compared to $872.0 million for the same period in 1995.  International 
shipments of instant film increased slightly and instant cameras decreased 
slightly during the first nine months of 1996 compared to the same period last 
year.  In the first nine months of 1996, strong sales in Europe, Asia Pacific 
and Latin America more than offset the decline in sales in Russia, which 
decreased more than 40% compared to the first nine months of 1995, and the 
negative impact of foreign currency translation.  To address the decline in 
Russian sales, the Company is seeking to double the number of distributors, 
hire new sales representatives and broaden its marketing.

Gross margin as a percent of sales was 44.4% for the first nine months of 1996 
and 42.4% for the first nine months of 1995, reflecting the impact of savings 
from restructuring and favorable pricing. Marketing, research, engineering and 
administrative expenses for the first nine months of 1996 decreased to $589.0 
million compared to $603.3 million in the first nine months of 1995.  Lower 
research, engineering and development expenses more than offset increased 
marketing expenses.

In December 1995, the Company announced a plan to make fundamental changes in 
its operating structure. This plan features three principal components: program
reductions in certain product, research and manufacturing areas; strategic 
refocusing of the Company's digital imaging businesses for the medical 
diagnostic and graphic arts markets; and a reduction in corporate overhead 
expenses. The total pre-tax special charge for restructuring and other expenses
is $280.0 million. Of that amount, $110.0 million was recorded in the first 
quarter of 1996 and $170.0 million was recorded in the fourth quarter of 1995.
The December 1995 early retirement and severance programs are expected to 
result in the elimination of a total of approximately 1,515 positions
worldwide (695 from manufacturing and 820 from marketing, research, 
engineering and administrative functions). 

The 1996 first quarter pre-tax special charge of $110.0 million represents the 
balance of severance and pension enhancement costs and inventory write downs
related to the December 1995 program.  In the first quarter of 1996, 
the pre-tax costs related to the severance program were approximately 
$55.4 million.  Additionally, approximately $44.6 million represents 
enhanced retirement benefits provided under the early retirement 
program that will be funded from the Company's pension plans, 
and therefore has been reflected as a non-cash item on the 
Company's consolidated statement of cash flows.

Excluding the special charges for restructuring and other expenses of $110.0 
million and $77.0 million in the first nine months of 1996 and 1995, 
respectively, profit from operation would have been $125.9 million in the first
nine months of 1996 compared to $59.8 million in the first nine months of 1995.
With the special charges, profit from operations were $15.9 million in the 
first nine months of 1996 compared to a loss from operations of 
$17.2 million in the first nine months of 1995.

Although the Company does not as a matter of course disclose projected 
financial information, the Company has stated that it expects that 1996
full year operating profit, excluding special charges, will be
approximately $200 million. The ability of the Company to achieve this 
result is subject to numerous factors and uncertainties, many of 
which are beyond the control of the Company.  Some of 
these factors are summarized below under "Factors That May Affect Future 
Results".  The Company currently does not intend to update or revise the 
foregoing information.


                                    -11-

<PAGE>


Nine month Review (continued)
-----------------------------

Other income for the first nine months of 1996 increased to $26.4 million 
compared to $9.4 million for the first nine months of 1995.  This increase 
primarily reflects a $23.2 million gain on the sale of real estate partially 
offset by lower interest income.  Included in other income was a foreign 
currency loss of $1.6 million from balance sheet translation in the first nine 
months of 1996 compared to a foreign currency loss of $.8 million in the same 
period last year.  Interest expense decreased to $35.6 million in the first 
nine months of 1996 from $38.7 million in the same period in 
1995 primarily as a result of lower average borrowings and lower 
average interest rates.

In the first nine months of 1996, income tax expenses was $4.7 million on pre-
tax earnings of $6.7 million before extraordinary item.  In the first nine 
months of 1995, the pre-tax loss of $46.5 million before extraordinary item 
generated a tax benefit of $17.3 million. The net after-tax foreign currency 
loss from balance sheet translation was $3.0 million, or $.06 per common share 
in the first nine months of 1996 compared to a gain of $.5 million, or $.01 per
common share in the first nine months of 1995.

Earnings before extraordinary item for the first nine months of 1996 was $2.0 
million compared to a loss of $29.2 million in the same period of 1995. 
In June 1996, the Company purchased the conversion rights for 
$53.8 million and redeemed $.5 million of principal of the 8% 
Subordinated Convertible Debentures due 2001 (the Debentures.)  
A total principal amount of $139.5 million of the Debentures remains 
outstanding.  As the holder of the conversion rights, the Company may
redeem the Debentures at any time on or before September 30, 1998.  If the 
Debentures are not redeemed by the Company by September 30, 1998, the 
conversion rights revert to the holders of the Debentures.  
The transaction has been determined to be a substantive modification 
of the terms of the Debentures and has been accounted for as an 
extinguishment of debt and the issuance of new debt.  The cost of the
conversion rights and the amount of the fair value of the new debt 
over the carrying value of the extinguished debt was recorded 
as an extraordinary loss of $54.5 million, net of a tax benefit of 
$.4 million.  In the first nine months of 1996, the net loss was $52.5 
million compared to a net loss of $29.2 million in the same 
period a year ago.

On a primary basis, earnings before extraordinary item was $.04 per common 
share in the first nine months of 1996 compared to a $.64 loss per common 
share in the same period a year ago.  In the first nine months of 1996, the
extraordinary item was a $1.20 loss per common share.  The net loss 
in the first nine months of 1996 was $1.16 per common share compared 
to a net loss of $.64 per common share for the first nine 
months of 1995.  Fully diluted earnings per common 
share were not reported in the first nine months of 1996 and 1995 
because they were greater than primary loss per common share.


Financial Liquidity and Capital Resources
-----------------------------------------

As of September 29, 1996, the Company's cash and cash equivalents and 
short-term investments amounted to $55.8 million, compared to 
$83.1 million at December 31, 1995.  In addition, working 
capital decreased to $517.0 million at September 29,
1996 from $738.5 at December 31, 1995.  This decrease reflects the 
reclassification of the Company's $150.0 million of Notes due January 15, 1997 
from a long-term liability to a current liability and an increase in the 
compensation and benefits liability as a result of the December 1995 early 
retirement and severance programs.  The primary source for cash in the first 
nine months of 1996 was net cash provided by a decrease in receivables and 
proceeds from the sale of real estate.  Capital spending during the first nine 
months of 1996 of $81.1 million was less than depreciation expense of $92.5 
million.  Total capital expenditures in 1996 are expected to be approximately 
$110.0 million.


                                    -12-

<PAGE>


Financial Liquidity and Capital Resources (continued)
-----------------------------------------------------

During the first nine months of 1996, the Company also expended cash to 
purchase the conversion rights of the Debentures for $53.8 
million, to make severance payments of $9.0 million under the 
1995 first quarter severance program and $52.8 million under 
the December 1995 severance program, to reduce short and long-term 
debt, to purchase $10.4 million of the Company's common stock and to 
pay $20.5 million of dividends to common stockholders.  Total cash severance 
payments related to the December 1995 program are expected to be approximately 
$110.4 million of which approximately $19.0 million is expected to be paid in 
the fourth quarter of 1996.  The remaining balance of cash severance payments 
of $38.6 million is expected to be paid in 1997.

As of October 1, 1995, cash and cash equivalents and short-term investments 
were $66.7 million and working capital was $804.7 million.   
During the period from October 1, 1995 to September 29, 1996, 
net cash provided by operating activities was offset by cash
used by investing and financing activities.  Capital spending
during the period from October 1, 1995 to September 29, 1996 was 
$121.9 million, which was less than depreciation expense of 
$125.1 million.  The Company expended cash during the twelve month
period from October 1, 1995 to September 29, 1996 to purchase the
conversion rights of the Debentures, to make cash 
severance payments under the 1995 first quarter severance program and the 
December 1995 severance program, to reduce borrowings, to purchase treasury 
stock, and to pay dividends to common stockholders.

The Company maintains a five year $150 million working capital line of credit 
for general corporate purposes which expires in 1999.  At the end of the third 
quarter of 1996 and 1995, there were no borrowings under this facility.  As of 
September 29, 1996, gross borrowings from the Company's international 
uncommitted lines of credit were $125.6 million.  There were no borrowing from 
the Company's U.S. uncommitted lines of credit as of September 29, 1996.  
Additional available, uncommitted lines of credit for U.S. and international 
operations were $160.0 million and $195.5 million, respectively, at September 
29, 1996.  As of October 1, 1995, gross borrowings from U.S. and international 
uncommitted lines of credit were $15.0 million and $140.3 million, 
respectively.  Additional available, uncommitted lines of credit 
for U.S. and international operations were $145.0 and $137.1 million,
respectively at October 1, 1995.  The Company is reviewing its 
plan for payment of $150 million of 7-1/4% Notes due 
January 15, 1997, which may not be redeemed prior to maturity.  The Company's 
available borrowing capacity is limited by certain debt covenants. 

During the first six months of 1996, the Company repurchased 244,765 shares of 
its common stock for $4.9 million.  No shares were repurchased during the third
quarter of 1996.  As of September 29, 1996, the unexpended balance under the 
Company's $100 million common stock repurchase program, which was approved by 
the Board of Directors in January 1995, was $74.8 million.  The Company may 
repurchase its common stock on the open market, in privately negotiated 
transactions or otherwise (which may include transactions with Polaroid stock 
option holders and with Polaroid retirement plans, including the employee stock
ownership plan).  The timing and amounts of any future purchases under this 
program depend upon many factors, including market conditions as well as the 
Company's business and financial condition.

The Company believes that its borrowing capacity and other existing corporate 
resources are adequate for at least the next twelve months to meet working 
capital needs, to fund planned capital expenditures, to pursue future growth 
opportunities, and to fund other corporate requirements, including cash 
severance payments for the December 1995 restructuring program. 

                                    -13-

<PAGE>


Foreign Currency Exchange
-------------------------

The Company generates a substantial portion of its revenues in international 
markets, which subjects its operations to the exposure of foreign currency 
fluctuations.  The impact of currency fluctuations can be positive or negative 
in any given period.  The Company's ability to counteract foreign currency 
exchange movement is primarily dependent on pricing.

To minimize the adverse impact of foreign currency fluctuations on its foreign 
currency-denominated net assets, the Company may engage in foreign currency-
denominated borrowings.  The Company determines the aggregate amount of such 
borrowings based on its forecast of the Company's net asset position and the 
relative strength of the U.S. dollar as compared to foreign currencies.  These 
borrowings create foreign currency-denominated liabilities that hedge the 
Company's foreign currency-denominated net assets.  Upon receipt of the  
borrowed foreign currency-denominated funds, the Company converts those funds 
to U.S. dollars at the spot exchange rate.  Exchange gains and losses on the
foreign currency-denominated borrowings are recognized in earnings as incurred.
At September 29, 1996 and October 1, 1995, the amount of the Company's 
outstanding short-term foreign currency-denominated borrowings were $115.5 
million and $117.8 million, respectively.

From time to time, the Company may use over-the-counter foreign exchange swaps 
to reduce the interest expense incurred on its overseas borrowings.  When a 
foreign exchange swap is used, the currency received by the Company in the spot
market component of the foreign exchange swap is used to close out borrowings
in a similar currency and, simultaneously, the original borrowing position is
reinstituted through a forward contract (not exceeding six months).  The net 
interest value of the foreign exchange swap contract is amortized to earnings 
over the life of the contract.  Exchange gains or losses on the foreign 
currency component of the forward contract are recognized in earnings as 
incurred in each accounting period.  The Company does not enter
into foreign exchange swaps for trading purposes.  The 
aggregate notional value of the Company's short-term foreign 
exchange swap contracts was $10.1 million and $3.4 million at September 
29, 1996 and October 1, 1995, respectively.

When the Company may not have sufficient flexibility to increase prices in 
local currency to reflect any appreciation of the U.S. dollar, the 
Company may, from time to time, also purchase U.S. dollar call options. 
The term of these call options typically does not exceed one year.
The Company's purchase of call options allows it to protect a portion 
of its expected foreign currency-denominated revenues from adverse 
foreign currency exchange movement.  The Company does not buy call 
options which can be exercised prior to the expiration
date, nor does it write options or purchase call options for trading purposes.
The Company defers premiums and any gains for its call options activity until 
the option exercise date.  No option contracts were outstanding at September 
29, 1996.  At October 1, 1995, option contracts with a notional value of 
$59.4 million were outstanding.

The Company maintains a Monetary Control Center (the MCC), which operates under
written policies and procedures defining day-to-day operating guidelines, 
including exposure limits, to contract for the foreign currency-denominated 
borrowings, foreign exchange swaps and call options described above.  The MCC 
is subject to random independent audits and reports to a supervisory committee
comprised of members of the Company's management.  The MCC publishes monthly 
reports to the Company's management detailing the foreign currency 
activities it has engaged in for the prior month.

                                    -14-

<PAGE>

 
Impact of Inflation
-------------------

Inflation continues to be a factor in many countries in which the Company does 
business.  The Company's pricing strategy has offset to a considerable degree 
inflation and normal cost increases.  The overall inflationary impact on 
earnings has been immaterial.


Factors That May Affect Future Results
--------------------------------------

From time to time, information and statements provided by the Company may 
contain "forward-looking statements" as defined by the Private Securities 
Litigation Reform Act of 1995 (the "Act").  The Company desires to take 
advantage of the "safe harbor" provisions of the Act.  The Company therefore 
cautions shareholders and investors that actual results may differ materially 
from those projected or suggested in any forward-looking statement as the 
result of a wide variety of factors, which include but are not 
limited to the factors and conditions set forth below.  Many of 
the important factors below have been discussed in prior 
Securities and Exchange Commission filings by the Company.

The Company sells and markets its products worldwide.  The worldwide market for
imaging products, particularly products in electronic and medical imaging, is 
highly competitive in price, quality, service and product performance.  The 
Company has competitors worldwide, ranging from large corporations to smaller 
and more specialized companies.  The most significant competitors, Eastman 
Kodak Company and Fuji Photo Film Co., Ltd., are considerably larger than 
the Company and thus have more resources.  The impact of these 
factors can cause varied results.

The Company is affected by retail demand for its products, particularly in the 
United States and Europe.  Additional factors including fluctuation of foreign 
exchange rates, economic factors, political activity, changes in laws and 
regulations, particularly in the environmental arena, could affect the 
Company's results from operations.  The Company believes 
that developing markets, such as Russia and China, in total present 
particularly attractive opportunities.  However, such markets 
tend to be considerably less stable than more established markets and 
there can be no assurance that developing markets will produce 
favorable results for the Company.  For the first nine months of 1996, 
sales in Russia have  declined and cannot be predicted with any certainty. 

The Company anticipates that price competition from conventional film and other
imaging technologies will place continued pressure on instant products.  
Furthermore the profit of the Company's instant photography business have been 
generally derived from the sale of instant film, not from the sale of instant 
cameras. 

The Company is continuing to develop digital imaging products for medical, 
graphic arts and other applications.  The profits of the Company's basic 
instant photography business have been higher than the Company's total 
profit from operations due to the operating losses of these digital 
imaging businesses.  Markets for digital imaging products are 
increasing rapidly and over time may erode either the growth or the 
absolute size of the Company's instant photography business.  
The markets for digital imaging products are highly competitive and 
there is no assurance that the Company will attain the level of 
success in these markets that it has achieved with respect to instant 
photography.  Included in the digital imaging losses are costs 
associated with the Company's new coating facility which was 
brought on-line in 1994 and is operating at low levels of 
production capacity.  The Company is consolidating its coating 
facilities, shifting capacity from some of its oldest to its newer, 
more efficient facilities.  The timing and impact of this consolidation are 
uncertain.
                                    -15-

<PAGE>


Factors That May Affect Future Results (continued)
--------------------------------------------------

The future prospects of the Company's digital imaging businesses are uncertain 
and they are likely to continue to affect the Company's financial results 
adversely for the next few years.  The Company's ability to reduce its digital 
imaging losses is also dependent on its ability to develop new products in a 
timely manner and to market them effectively.  The Company continues to study 
the different areas of its businesses, including their cost structures, and is 
exploring prospects for aligning itself in various business relationships to 
improve financial results.  



Other Matters
-------------

On October 30, 1996, the Company and Sterling Diagnostic Imaging Inc. 
(Sterling) entered into a definitive agreement relating to the sales, 
marketing, and development of dry diagnostic imaging technology and products.

The far-reaching agreement contains the following key elements:

*  The Company is entering into a long-term exclusive arrangement with Sterling
   to develop new technologies and products for the medical diagnostic imaging 
   marketplace.  The first of these products is expected to enter the market in
   1997.
 
*  Sterling is acquiring the assets relating to hardware manufacturing, 
   worldwide marketing, sales and servicing of Helios Laser Imaging systems 
   from the Company.
 
*  The Company is supplying Sterling with Helios media, a dry, digital film 
   manufactured at its New Bedford, Mass. facility under a long-term supply  
   agreement.
 
*  The Company is acquiring a minority equity interest in Sterling's parent 
   corporation.
 
The agreement is expected to close by the end of November.  The Company expects
to record a special charge of an estimated $15 million to $20 million in the 
fourth quarter of 1996 to cover an adjustment of inventory values, fixed 
assets, employee severance programs, and other costs associated 
with this agreement.


                                   -16-

<PAGE>


                        PART II.  OTHER INFORMATION
                        Item 1. - Legal Proceedings

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 these sites 
and various other uncertainties, the Company cannot firmly establish its 
ultimate liability concerning these sites. In each case in which the Company 
is able to determine its 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 the minimum 
amount of the range. The Company's aggregate reserve for these liabilities as 
of September 29, 1996 and October 1, 1995 was $5.1 million and $5.2 million, 
respectively. The Company currently estimates that the majority of the $5.1 
million amount reserved for environmental liabilities on September 29, 1996 
will be payable over the next two to three years. The Company's analysis
of data which underlies its establishment of this reserve is undertaken 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 such amounts as 
management believes appropriate 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 the liability is joint and several.  

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

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


                                    -17-

<PAGE>


                  Item 6.  Exhibits and Reports on Form 8-K
                  -----------------------------------------

(a)	Exhibits:

    (11)	Computation of earnings per share.

    (15)	Letter from KPMG Peat Marwick LLP re unaudited interim financial 
         information.

    (27)	Financial Data Schedule 

(b)	Reports on Form 8-K:

    During the third quarter of 1996, the Company filed a Current Report on 
    Form 8-K, dated July 19, 1996. 



                                   -18-

<PAGE>




                                SIGNATURES





Pursuant to the requirements 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)






November 12, 1996            /s/ William J. O'Neill, Jr.		
                                 -----------------------
                                 William J. O'Neill, Jr.
                                 Executive Vice President and 
                                 Chief Financial Officer



                                   -19-