Polaroid Annual Report

ANNUAL REPORT 2011

ITS HIP TOB E

SQUARE

ANNUAL & SUSTAINABILITY REPORT 2011

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

Supercolorpercolor

Polaroid

POLAROID CORPORATION Annual & Sustainability Report 2011

Our commitment to sustainability reporting

Polaroid will continue to collect information to improve our sustainability reporting as we have

in the past 13 years of environmental report ing. We are committed to achieving the goals of

sustainability and plan to continue reporting our progress on a regular basis.

General Inquiries on RecyclingPLR IP Holdings, LLC has an ongoing goal to protect the environment and we encourage all of

our customers to recycle their used consumer electronic items in compliance with all regulations.

Please contact your local municipality for information about how and where to recycle consumer

electronics in your area.

Prepared by Jessica Garrett

page 2 Polaroid Timeline A brief timeline about the history of the Polaroid Company

page 6 The Revolution that saved Polaroid The Impossible Project, and the Save Polaroid Project

page 8 Corporate Officers A look at the new Polaroid’s Officers

page 10 Letter to Shareholders Relating to Sustainability

Annual Report to Shareholders 2011

page 14 Introduction

page 20 Company profile Who we are (including a description of our Health, Safety and the Environment staff), what we do and where we are located

page 24 Vision and strategy Our plan to be a leader in providing instant digital image capture, sharing and printing with minimal impact on the environment

page 26 Review of Operations New creative outlook - Lady Gaga Listing of our latest products

page 30 Economic Performance

page 36 Spotlight - Andy Warhol

Sustainability Report 2011

page 42 Introduction

page 44 Social Responsibility

page 42 Spotlight - Ansel Adams

page 48 Executive summary and key indicators How we performed in the environmental, and social aspects of our business

page 54 Policies, organization and management system The why and how of what we do

page 64 Stockholder Information

Content Summary

2 POLAROID ANNUAL REPORT 2011

TIMELINE OF POLAROID

1926

Edwin H. Land leaves Harvard after his freshman year to pursue his own work on light polarization. Two years later, he creates the first synthetic sheet polarizer.

1937

The Polaroid Corporation is formed.

1938

Polaroid announces the Vectograph, a 3-D system using polarized spectacles. It is shown at the New York World’sFair the next year and later used by the military.

1941-1944

Polaroid concentrates its efforts on products for the war.

1947

On February 21, Land demonstrates the one-step process of producing finished photographs within one minute at the Optical Society of America meeting.

1949

Photographic sales of the first Land Model 95 camera exceed $5 million in the first year (1948). This model is the prototype for all Polaroid Land cameras produced for the next 15 years. Land hires Ansel Adams as a film consultant, initiating a long tradition of working with and supporting photographic artists. Several young photographers including Paul Caponigro, William Clift, Nick Dean, and John Benson will join the company in the 1950s and 1960s.

1950-1954

Polaroid sales exceed $23 million and over 4,000 dealers in the US alone sell Polaroid cameras, films, and accessories. Polaroid leases additional office space in Cambridge and also opens a new manufacturing plant in Waltham.

1956-1958

The company spends most of its advertising budget on network television programs, while the one-millionth camera rolls off the assembly line. Polaroid products are now distributed in over 45 countries worldwide. The Waltham manufacturing site is expanded with the construction of an additional building.

1961

Polaroid Positive/Negative 4x5” film Type 55 is introduced, the first black and white film that produces both a positive and a negative.

1963

Polaroid introduces Polacolor, as instant color film is invented. The Model 100 Land camera, the first fully automatic pack film camera to include automatic exposure control, and Type 48 and Type 38 Polacolor Land roll films are introduced.

1965

The inexpensive Swinger camera is released, a $20 camera that takes wallet-sized black and white photographs.

1967

The company leases 784 Memorial Drive in Cambridge for engineering and research, as an expansion program is announced with new facilities planned in New Bedford, Norwood, and Waltham.

1968

The Polaroid Collection is officially founded, as ongoing acquisitions of selected prints taken with Polaroid products is initiated with a group of Polaroid employees acting as the selection committee.

1971

The Polaroid Foundation is established as a charitable organization.

Across several generations, people regard Polaroid as one of the most trusted, well-respected and recognizable brands when it comes to instant photography. The Polaroid brand has been around for more than 70 years starting with polarized sunglasses which then evolved into instant film, camera and camera accessories, marking the beginning of the well recognized Polaroid Classic Border Logo. In recent years, the Polaroid brand has expanded into flat panel televisions, portable DVD players, digital photo frames, digital HD camcorders, waterproof digital cameras and more. People can expect to see new Polaroid products that will deliver the fun, instant gratification and value for which the brand has long stood.

3

1972

Polaroid SX-70 Land Camera, the first automatic, motorized, folding, single-lens reflex camera which makes self developing instant color prints, is introduced. Lawrence Olivier acts as an advertising spokesman for the camera, Life Magazine features the camera and Land on its cover.

1977

Land is awarded his 500th patent. The OneStep Land camera is introduced and advertised in a series of successful television and print ads featuring Mariette Hartley and James Garner. This inexpensive fixed-focus camera becomes the best-selling camera in the US, instant or conventional.

1978

Polavision, an instant color motion picture system, is introduced.

1979

Time Zero, a faster-developing film, replaces SX-70 film.

1980

Land retires as CEO, and becomes Consulting Director of Basic Research in Land Photograph.

1983

Polaroid flourishes with 13,402 employees, $1.3 billion in sales, and more than 1,000 patent.

1987

Polaroid Corporation celebrates its 50th Anniversary.

1991

Edwin Land dies at the age of 82.

1998-1999

Digital camera sales make Polaroid the number one digital camera seller in the United States. Introduction of the I-zone, JoyCam, and PopShots cameras and films is successful.

2001

Polaroid Corporation files for Chapter 11 bankruptcy restructuring on October 12.

2002

On July 31, Polaroid Corporation is purchased by One Equity Partners, creating a new company that now operates under the Polaroid Corporation name, thereby launching a new era for Polaroid.

2008

Polaroid caesed production of all instant film. Polaroid filed for Chapter 11 bankruptcy protection in December after its owner, Tom Petters, was arrested for running a $3.65 billion Ponzi scheme.

In October 2008 The Impossible Project saved the last Polaroid production plant for integral instant film in Enschede (NL) and started to invent and produce totally new instant film materials for traditional Polaroid cameras.

2009

The company named Lady Gaga its creative director a year ago, not long after it was bought by PLR IP Holdings in a bankruptcy auction in May.

2010Impossible saved analog instant photography from extinction by releasing various, brand new and unique instant films. There with Impossible prevents more than 300.000.000 perfectly functioning Polaroid cameras from becoming obsolete, changes the world of photography and keeps variety, tangibility and analogue creativity and possibilites alive.

“DO NOT UNDERTAKE THE PROGRAM UNLESS THE GOAL IS MANIFESTLY IMPORTANT AND IT’S ACHIEVEMENT IS NEARLY IMPOSSIBLE. DO NOT DO ANYTHING THAT ANYONE ELSE CAN DO READILY.” - EDWARD LAND 1980

Polaroid Timeline


The Impossible Project began in 2008, and saved the last Polaroid production plant for integral instant film in Enschede (NL) and started to invent and produce completely new instant film materials for traditional Polaroid cameras. In 2010, Impossible saved analog instant photography from extinction releasing varous, brand new and unique instant films also preventing more than 300,000,000 perfectly functioning Polaroid cameras from becoming obsolete. The fact that the demand for instant film is still so high, keepsvariety, tangibility and analogue creativity possibilites alive.

The Impossible Project started with a small team of the very best 10 former Polaroid employees who shared our passion as well as the belief in our Impossible dream. Every single one of them has a long time of expertise in the field of instant film production - more than 500 years of accumulated experience and knowledge. Without their work and support IP would not have had the slightest chance to make the Impossible possible. The Impossible Project currently employs 25 people in the factory in Enschede.

The exciting opening of the Impossible Poject Space NYC is a gallery housing Impossible Art Works, which are none other than Polaroids assembled by Artists, creatives, Photographers, and amateurs recent works or from past decades. The gallery has been so successfull in bringing Polaroid lovers together offering workshops, selling film, not a place to experience the death of Instant film, rather the celebration of the past and the pursuit of Instant film for the future.

Phttp://the-impossible-project.com/

The Revolution that helped save Polaroid

The new SILVER SHADE and COLOR SHADE film develpoed by IMPOSSIBLE

7

http://www.savepolaroid.com/home

When Polaroid announced the discontinued production of Instant film, the effort to ressurect the Polaroid was instantaneous. The home base savepolaroid.com was born, and initially the site was not about saving Polaroid, the company, rather the remarkable invention of Edwin Land, the instant film that made Polaroid a household name. Thousands of instant film lovers banded together and actively shared their love stories of Polaroid online, and sought out the help of all other supporters to do whatever they could to save Polaroid. People participated and took action which included printing and filling out a premade action pack that allowed people to write pursuasive letters to pre-addressed companies and manufacturers, participating in surveys, signing petitions, and shooting/ sharing as much instant photography as possible. The task was almost Impossible; Polaroid had gone bankrupt with many lose ends, but ater much intervention from consumers themselves, Polaroid was able to surface again with a whole new outlook.

SAVE

PO

LA

RO

ID

Save Polaroid. Save the World.

The Revolution that helped save Polaroid

Scott HardyChairman and Chief Executive Officer

Henry AnconaExecutive Vice President

William J. O’Neill, Jr.Executive Vice President

Serafino PosaExecutive Vice President

Carole J. UhrichExecutive Vice President

Robert M. DelahuntSenior Vice President

Thomas M. LembergSenior VP, General Counsel and Secretary

CORPORATE OFFICERS 2011

Bernece D.L. StromChief Financial Officer

James R. BarronVice President

F. Richard CottrellVP , Senior Engineering and Research

Satish C. AgrawalGroup Vice President

Michael J. LeBlancVice President

Chris A. De BleserVice President

John R. JenkinsVice President

Paul E. LambertVice President and Progra Fellow

Marian J. StanleyVice President


At Polaroid, environmental sustainability means using our resources wisely to continue to meet our ongoing business needs for the future. We are committed to the development of sustainable business practices, and will continue to report on our progress in achieving our environmental goals, as we have for more than 10 years now.

The year 2010 was a very important transition year for the company, with record camera sales since the halt of instant film and exciting new product lines featuring our digital imag-ing products. We also continued to improve some measures of our environmental perfor-mance as we worked diligently to improve revenue, earnings and cash flow. We also continued to improve our environmental and safety performance amid a highly competitive business climate. Employees, for instance, set a new safety record with our lowest OSHA-recordable incident rate 1.36 per 100 employees. We had a modest increase in our Toxics Release Inventory numbers while we continued a decline in total energy use, greenhouse gas emissions and solid non-hazardous waste generation. Looking ahead at 2012, the company faces substantial challenges in several areas, most importantly the environment. We started this year off with a sharp decline in our tradi-tional instant film business, as major customers trimmed inventories and reduced orders. Consequently, we are faced with maintaining production and environmental efficiency as inventories change to meet the change in customer order patterns.

Polaroid is in the midst of a financial and operational restructuring. This we anticipate will be quite a wdifficult undertaking, and we are focusing all of our short-term efforts on the cash generation and cash management, as we implement a number of initiatives aimed at strengthening our overall financial performance.

As we move forward, we plan to continue our commitment to the environment. Amid our daily challenges, we remain steadfastly committed to health and safety of our employees as well as the community and environment in which we work. Thank you for your interest in Polaroid and for your continued support.

Signed,

Scott HardyPresident, Polaroid October, 2010

Letter to Shareholders

11Letter to Shareholders

INSTANTSTRENGTH

THE TASK AT HAND IS RESURRECTING

PRODUCTION OF POLAROID INSTANT FILM


The Annual Report also includes all major Polaroid activities for the year 2011, including the manufacture of instant film, cameras, digital imaging devices, and ID systems. Virtually all of the company’s 2011 revenues were derived from the sale of Polaroid products or real estate sales.

The company owns and operates facilities that are subject to certain federal, state and local laws and regulations relating to environmental protection, including those govern-ing the investigation and remediation of contamination resulting from past or present releases of hazardous substances. Certain of these laws and regulation 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 Respon-sible 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 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.

2011 Annual Report to Shareholders

15

INSTANTATTRACTION

Our Progress


PRODUCTION OF POLAROID INSTANT FILM

Measuring our progress At Polaroid, our concern for people goes well beyond the workplace. We recognize the importance of supporting training programs for people who need it most in our local Massachusetts communities. Our primary aim is to help adult literacy and build worker skills. Much of the financial assistance we offer comes through the Polaroid Foundation, which is a key corporate contributor to Mass. INC, a non-profit organization dedicated to these objectives.

Tracking environmental costs Polaroid tracks certain environmental costs, such as labor costs, environmental capital expenditures and waste-disposal costs. Polaroid uses an enterprise resource-planning database provided by SAP America to collect information from all of its manufacturing activities, which can be used to determine specific financial costs. This, in turn, helps the company make better-informed decisions about capital investment, product development and introduction, energy and materials use, and waste management. Polaroid measures progress toward environmental goals in relationship to production units within the company. Energy and water usage is also normalized to units of production. Production indexes are typically based on square feet of film sold.

AuditingAudits are a routine management tool for Finance, Quality, and HSE. There is an HSE corporate audit committee which commissions independent, third party HSE audits of Polaroid’s U.S. facilities and ensures the quality, consistency and effectiveness of internal self-audits, which are used at all our facilities. In 2000, all HSE audits conducted were led and staffed by outside independent individuals or organizations. All of the audit teams included at least one Polaroid Corporate HSE professional and one divisional HSE representative.

Detailed results serve as a guide for corrective actions; not shared beyond the managers who need to know. Managers of audited facilities and divisions receive immediate feed-back, and are required to respond with an appropriate action plan correcting deficiencies. The HSE corporate audit committee monitors implementation of these plans.

2011 Progress

17

During 2000, HSE audits were performed at all major U.S. manu-facturing operations to assess performance related to particular health, safety and environmental issues and various HSE program areas, such as regulatory compliance, equipment safety, hazardous waste and safety management systems. In recent years, the audit program has generally focused on compliance with U.S. government regulations.

Approaches to improving management qualityPolaroid uses management consultants to provide insight and new approaches for managing and improving the way we do business. Additionally, we participate with national and local associations on innovative methods for management of environmental issues and product design. Polaroid also participates in CERES and attends its annual meeting to learn more about sustainable business practices.

The company measures its progress in the HSE area through an “environmental report card,” lost-time and injury reporting and audit programs. In addition, many of Polaroid’s products and processes meet the highest international standards. At our manufacturing facility in The Netherlands, for instance, the company has an environmental management system certified to ISO 14001, and other plants are preparing for ISO 14000 certifications. ISO 9000 certification is common to most plants. During 2000, Polaroid maintained 12 certified ISO 9000 management systems, five MQA certificates (Marketing Quality Assessment 9001 Plus Marketing and Sales Requirements), and one ISO14001 management system. Currently, program managers for ISO 9000 and ISO 14000 are working together to merge these programs where practical.

Product StewardshipDuring 2000, the company formalized its management of Product Stewardship. Recognizing our responsibility to the environment and a need for it to be integrated within the business, we created a team of internal experts from all business areas to carry out the task at hand. This was done with the help of the marketing organization since Polaroid products and associated packaging are subject to an increasing array of legal restrictions and environmental regulations worldwide. These regulations include design considerations, material restrictions, labelling requirements, mandatory take-back, eco tax payments, and extensive reporting.

Our Progress


If these issues are not managed appropriately, they will impact revenues and profit margins, cause delays in our new product introductions, generate adverse customer reaction, and adversely impact the environ-ment. Garnering the support of employees in all aspects of the product delivery process helps us become efficient and sustainable.

Supplier relationsPolaroid’s Purchasing organization has established procedures for the selection of vendors regardless of the service or goods being purchased. In addition to matters of cost and availability, environmental, health and safety issues are reviewed to ensure that the supplier is meeting its obligations. A Purchasing manager works in Polaroid’s Corporate HSE to stay current with issues and regulations that may affect how Purchasing conducts its business.

Polaroid uses criteria established in the company’s “Global Sourcing Principles” for evaluating suppliers who are asked to answer labor, health, safety and environmental questions. Suppliers’ commitments to specific environmental improvements are incorporated into their contracts with Polaroid. The company takes a three-tiered approach to evaluating suppliers gathering information independently, asking direct questions of the supplier and visiting selected suppliers, depending on their logistical significance and the nature of their operations. Hazardous waste disposal vendors automatically receive site visits as part of the evaluation process.

Plant closingsPolaroid has closed some manufacturing plants due economic necessity. Polaroid has moved some manufacturing to lower cost locations, more typically has consolidated manufacturing locations for greater operational efficiency. Polaroid consolidated three coating operations into two and closed a building after sale of the division.

In these situations, employees are offered relocation when positions are available or severance packages commensurate with their seniority in the company. Facility closure is subject to strict environmental standards and careful review ensure that Polaroid company does not incur potential liability, problems were left behind.

2011 Progress (continued)

19

Stakeholder relationshipsPolaroid works diligently with its shareholders to ensure that we understand their needs and concerns and that, in turn, the company is profitable and successful in how we conduct our business and manufacture our products.

Shareholder and stakeholder feedback and involvement is vitally important to the company, especially in formulating our action plans. We gather input through a variety of channels, including our marketing organization, where employees work with specific customers or focus groups on new product development and ideas; participation in numerous groups and government agencies to learn their desires and communicate what we do; regular meetings with industry analysts, stakeholders and shareholders; annual community meetings at our various plants; customer service; extensive use of our web site, and finally, through our community involvement with the Polaroid Foundation.

These actions are a regular part of our business activity and each has a schedule of its own. Polaroid uses these events to learn about the concerns and interests of our key customer groups, and what action we need to take to improve and meet their needs.

In areas specific to the environment, Polaroid participates in a variety of communication forums with the community, government, industry, environmental agencies and non-gov-ernmental organizations (NGO) to gather feedback. While not surveyed in a formal way, the Corporate HSE offices uses their findings from these meetings in formulating their plans for strategic performance.

To ensure our voice is being heard, Polaroid also participates in the local regulatory process to provide a business perspective on new laws or regulations being formed. We have long been a working partner with various environmental organizations and, most recently helped create a coalition of business, institutions, agencies and NGOs to improve water quality in a local river of major importance. We are also workin with other companies as well as the Massachusetts secretary of Environmental Affairs to restore our world’s important wetlands. See www.cleancharles.org for more on the “Charles River Cleanup”.

Our Progress


Company Profile

Across several generations, people regard Polaroid as one of the most trusted, well-respected and recognizable brands when it comes to instant photography. The Polaroid brand has been around for more than 70 years starting with polarized sunglasses which then evolved into instant film, camera and camera accessories, marking the beginning of the well recognized Polaroid Classic Border Logo. In recent years, the Polaroid brand has expanded into flat panel televisions, portable DVD players, digital photo frames, digital HD camcorders, waterproof digital cameras and more. People can expect to see new Polaroid products that will deliver the fun, instant gratification and value for which the brand has long stood.

Polaroid Corporation designs, manufactures and markets worldwide a variety of products. Primarily instant film, instant and digital cameras, digital peripherals and secure identification systems with software and system solutions. These do include instant photographic cameras and films, digital imaging systems, conventional films and light polarizing filters and lenses. The principal products of the company are used in amateur and professional photography, industry, graphic arts, science, medicine, government and education. Each year, in October, Polaroid releases its environmental report for the previous year, we may include U.S. Toxics Release Inventory data. Except where noted, this report covers all wholly owned Polaroid manufacturing operations worldwide and one joint venture in Shanghai, China.

In the year 2011, in addition to its Cambridge headquarters, Polaroid Co maintained sites in several other Massachusetts communities—including one of each in Bedford, New Bedford, Norton, Newton and Norwood, Wayland, two are in Waltham, and several buildings in Cambridge. Outside the U.S., Polaroid operates wholly owned manufacturing subsidiaries in Queretaro, Mexico; Enschede, The Netherlands; and the Vale of Leven, Dumbarton, Scotland. We also have a joint venture manufacturing plant in Shanghai, China, as noted above.

20

21Corporate Profile

INSTANTCLASSIC


Health, Safety and Environmental (HSE) In 2010, Polaroid Company’s staff of 34 environmental professionals included nine employees with corporate-wide responsibilities; with 3 environmental regultory experts, an environmental regulatory expert with purchasing experience and respon-sibility, 2 safety experts, an industrial hygiene expert, an HSE attorney, and an divisional VP. Others assigned to the environmental or health and safety management in specific facilities worldwide, reporting into line management. These employees are qualified in education, regulatory work experience, and knowledge, also the ability to manage a group of people.

Contingencies (Environmental)As stated in the Polaroid Corporation’s 2009 Annual Report,“The company, together with other parties, currently designated a Potentially Responsible Party (PRP) by the US Environmental Protection Agency and certain state agencies with respect to the response costs for environmental remediation at several sites. Due to the wide range of estimates with regard to high response costs at those sites and various other uncertainties, the company cannot establish the ultimate liability concerning those sites. Where a range of comparably likely exposures exists, the company has included in its reserve for at least the minimum amount of the range. The company’s aggregate reserve for these liabilities as of December 31, 2009 and December 31, 2010 was $1.4 million, and $.8 million respectively, and the company currently estimates that the majority of the reserve will be payable over the next 2-3 years.”

Company RestructuringMajor changes have occurred in the past few years that effect the way we operate. For example, at the end of 1997, Polaroid began a series of broad-based programs to streamline the worldwide operations and enhance earnings by consolidating and selling manufacturing facilities and reducing its corporate overhead struture. That effort continues today. In 2009, the company sold its Graphics Imaging business along with other less profitable businesses as it began to refocus. We expanded film production in Mexico and Europe.

Company Profile (continued)

23Corporate Profile

Relevant facts about Polaroid over the past years: 2000 2004 2009 2011 Yearly Revenue (billions) $1.85 $1.2 $1.0 $1.3 Total Worldwideemployees 8,865 4,000 750 2,850 *Sales by region: - - - -

N. America $1.13 $1.23 $1.28 $1.32

S. America $0.14 $0.12 $0.11 $0.10

Austrailia $1.9 $1.7 $1.5 $2.0

Europe $0.45 $0.43 $0.35 $0.38

Asia Pacific $0.27 $0.32 $0.29 $0.31

Polaroid publishes financial and environmental data annually. You can find

out more on these issues by logging on to our Web site, www.polaroid.com,

and looking under “Company Information”.

Federal law provides that PRPs may be help jointly and 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.

*Sales based on reports submited by the Polaroid Holding co. subsidaries globally over the last 12 years.


Polaroid’s vision for the future is to be to digital imaging, what it was to opticalimaging. That is, we will provide simple, easy-to-use, instant, picture-printing devices– and, specifically, the consumable media for instant digital printing.

In support of this vision, we will conduct our business in compliance with app-licable requirements and in a sustainable manner. We define “sustainability” as:

“Using resources today in a manner that meets our needs without compromising future generations.”

This means we will be efficient in our use of resources with minimal impact to the environment from both our manufacturing processes and products. Polaroid will use profits from its business to support community and social programs that benefit people outside the financial umbrella of our wage and local tax payments. We will use partnerships and joint ventures to leverage our strengths through other relevant companies to be efficient and innovative. We will maintain our core policies that support this vision.

Our business strategy is to provide our customers with digital image printing solutions, while managing our business for efficiency and profitability. To accom-plish this, we will design, manufacture and manage our products and run our business consistent with our established policies. In summary, they detail the value we place on our employees, our ethical standards for running our business and working with our vendors, our commitment to providing a safe workplace, sound products and protection of the environment.

Vision and Strategy

24

25

INSTANTINSIGHT

Vision and Strategy


INSTANTGENERATION

After being named Polaroid’s Creative Director in January 2010, Lady Gaga and Polaroid collaborated to define a new direction for the line that blended the brand’s core values with Lady Gaga’s creativity. Stemming from “Greige Goods”, a fashion industry term for fabric in its purest form, the Polaroid Grey Label line embodies Polaroid’s heritage of delivering simplicity with the style, wit and sensibility of Lady Gaga.

Committed to bringing originality back to product design across all genres, Lady Gaga articulated that all Polaroid Grey Label products communicate three essential elements of self-expression:

CREATIVITY All Polaroid Grey Label products are designed with the idea that sharing and creativity go hand in hand, in both the digital and the physical world.

INSTANT ARTISTRYAll features found in Polaroid’s new Grey Label products celebrate, express, and bring an element of artistry and originality to the act of image making. FASHIONIntended to be just as much everyday fashion accessories as are innovative imaging tools, all Grey Label products feature unexpected design elements such as leather touch points, brushed metal and exposed mechanical details.

The Polaroid Grey Label Evolution

27

“THE POLAROID GREY LABEL LINE EMBODIES THE POLAROID BRAND, WITH AN INJECTION OF THE FUTURE-LOOKING FASHION AND DESIGN MANTRA OF LADY GAGA THAT SIMPLY CAN’T BE REPLICATED.”

- PRESIDENT SCOTT HARDY

Generation Evolution


Introducing the new Polaroid Grey Label Products:

GL10 Instant Mobile Printer: (available now, May 2011)• Advanced Technology: The newest instant printing experience begins with the embedded dye-crystal ZINK® Zero Ink® Technology from ZINK Imaging. Patented ZINK PaperTM is an advanced composite material with cyan, yellow, and magenta dye crystals embedded inside. Before printing, the embedded dye crystals are clear, so ZINK Paper®, looks like regular white photo paper. The GL10 Instant Mobile Printer uses heat to activate and colorize these crystals. • Superb Print Quality: The GL10 Instant Mobile Printer uses ZINK’s second-generation thermal technology, delivering image quality rivalinga photo-lab. Prints emerge fully developed and protected by a smudge-proof, water-resistant coating. • Aesthetically Pleasing and Environmentally Responsible: Designed for both form and function for use both in the present and future. ZINK tech-nology requires no messy ribbons, toner or inkjet cartridges. GL30 Instant Digital Camera: (available later this year)• Brings the Polaroid Instant Experience to Life: Introducing a new generation the joy of instant photography, the GL30 uses next generation ZINK Zero Ink Technology from ZINK Imaging.• Fuses the Digital and Physical Worlds: Featuring the benefits of a digital camera, instant photo printer and digital display, the GL30 is a creative tool that delivers the best of the two worlds.• Pays Tribute to Polaroid’s Legacy: Reminiscent of Polaroid cameras of the past, the GL30 is clearly a significant departure from a typical camera. Designed for longevity, the GL30 is not only for the future, it’s an object of desire. Users can select from a number of filters and bordersto create truly original images that instantly fit in the palm of your hand. GL20 Camera Glasses: (available later this year)• Merges Fashion With Photography: Never before has been seen fashion, photography and technology come together in one, singular product.• Tells Your Story to the World: Users can instantly capture or upload photos with the built-in camera and then display the images on the glasses’ LCD screens for others to see.• Expresses True Artistry and Originality: Only Lady Gaga could create a hybrid that’s part fashion statement, part revolutionary technology and part tool for self-expression.

Review of Operations

28

29

The new GL10 Instant Mobile Printer (available now)

Review of Operations

Our products consist of digital cameras, portable DVD players, LCD televisions, portable media players, digital picture frames and unique media backup storage solutions. The new Polaroid has embraced the Polaroid Mission, the company’s mantra since the first instant camera was conceived:

“To put the latest cutting edge technology in the peoples’ hands and give them the power to use it comfortably, affordably… and in an instant.” -Edward Land’s philosophy since 1943

The next generation of the Polaroid instant printing experience, the Polaroid Grey Label GL10 instant mobile printer frees digital images trapped on hard drives and cell phones. Marrying the convenience of today’s digital images and the original Polaroid instant experience, the 15-ounce printer works from most mobile phones wirelessly via Bluetooth and from most digital cameras, Windows PCs and Macs via a USB cable and provides the classic Polaroid instant experience using ZINK® Technology. The first product in Polaroid and Lady Gaga’s new Polaroid Grey Label line, the GL10 features a small size, intuitive design and easy-to-use feature set that produces full bleed and contemporary 3x4” photos in the Polaroid Classic Border logo in less than one minute - making it a portable photo booth that allows you to bring Polaroid magic wherever.


Economic Performance 2011 - Financial Highlights

2009 2010 2011

Net Sales $2,275.2 $2,236.9 $2,312.5

Profit 201.8 89.2 200.3

Restructuring 110.0 247.0 -

Special charges 33.0* - -

Profit (loss) 51.8 (157.8) 200.3

Earnings (loss) 31.2 (201.4) 160.7 Net Earnings (loss) (41.1) (140.2) 117.2

Earnings common share 2.27* .45 2.49

Cash dividends .60 .60 .60

Advertising 134.6 124.1 121.2

Research, development 116.3 165.5 165.7

Cash Equivalents 72.8 73.3 143.3

Short-term investments 5.5 9.8 85.6

Working Capital 623.3 730.3 879.7

Stockholders equity 658.2 717.7 864.4

Property addition 121.8 167.9 146.7

Depreciation 118.3 132.7 118.2

Earnings (loss, %) .7% (6.3%) 5.1%

Polaroid Corporation and Subsidiary Companies (In millions, except per share and percent data the last 3 years)

32

33

SALES NET EARNINGS/ (-) DILUTED EARN

YEAR (MILLIONS) PER COMMON SHARE INGS/ (-) (MILLIONS)

2011 $989.1 $65 $0.21

2010 $825.6 $31.2 $0.55

2009 $625.5 $58.4 $0.98

2008 $587.3 $65.1 $1.19

2007 $728.9 $23.2 $1.21

2006 $923.5 ($28.2) $0.35

2005 $1,002.8 $1.23 $0.67

2004 $1,303.6 $42.1 $0.47

2003 $1,004.2 $12.2 $0.53

2002 $992.5 $60 $0.61

2001 $1,096.3 $21.2 $0.33 2000 $1,855.6 $37.7 $0.84

1999 $1,978.6 $8.7 $0.20

1998 $1,845.9 ($51.0) ($1.15)

1997 $2,003.2 $47.2 $0.76

1996 $2,009.2 $31.2 $0.83

Accumulated earnings over the last 16 years:

Financial Highlights


Economic Performance 2011

Performance of suppliersPolaroid’s “Supplier Principles of Conduct” begins with a note to our suppliers that:

“It is important that we conduct business in a manner that recognizes universal standards of human right, environmental protection safe andhealthy work environments and high principles of business ethics. The Supplier Principles cover environment and safety, work practices, compensation, a no gift policy, management leadership and vendor assistance.”

Outsourcing is an important part of Polaroid’s manufacturing and marketing operations. From substrates for making negative and positive, to solvents, metals, plastic resins, fasteners and packaging, parts and components from vendors are integral parts of Polaroid’s manufacturing process. Polaroid focuses its own manufacturing only those activities that are central to its technology. For example, we would not manufacture the web materials we coat, but concentrate on coating the web with our proprietary photoactive coatings. Polaroid outsources production of digital cameras, many of its smaller instant cameras and all of the parts for its instant cameras, produced in the Vale of Leven, Dumbarton, Scotland or Shanghai, China. While Polaroid does not have a formal auditing process for its vendors, engineers and purchasing managers do inspect the vendor’s operations and verify conformance with the supplier principles as a condition of vendor pre-qualification or during routine vendor inspections.

Products and servicesThere are no major economic issues and impacts associated with the use of Polaroid’s principal products and services, including disposal. The instant photo process is stable and does not release chemicals into the environment. Even the residue left over is purposefully safe. One family of instant films is completely self-contained, and all our instant film products are designed for stability and longevity. The silver emulsions are stable and do not leach into the environment.

Polaroid’s digital products are designed to be safe and environmentally sound. With the major environmental impacts managed the factory, digital imaging minimizes the use materials in image capture, sharing and printing. Recycling of a digital image requires only a tiny input of electricity to purge the memory file.

31

INSTANTSUCCESS

Economic Performance 2011


Pricing of Instant Film from 1943 - 2011 (US Dollars $0 - $50.00)

35Financial Highlights


Can you think of a better marriage between contemporary artistry and iconic technology?

After all, Warhol reveled in mass-produced art as well as the fabulosity of instant (and instantly disposable) celebrity. The Polaroid camera allowed him to put those beliefs into point-and-shoot practice, and churned out images by the thousands.

In 1970, Warhol purchased a Polaroid Big Shot camera, which had a fixed focal length of just three feet. With his characteristic voracity, he turned his new toy on everyone, from the famous to the completely anonymous. Most of Warhol’s Polaroids were never formally exhibited during his lifetime, since most of Warhol’s Polaroids were used as studies for eventual silk-screen portraits. The artist would cover his subjects’ faces in white kabuki-like makeup to conceal wrinkles and blemishes.

The artist intended his Polaroids to serve as time-capsule glimpses of a specific era namely, the ‘70s and early ‘80s when he was at the height of his fame. The fact that we at Polaroid had no choice but to discontinue the line of signature cameras, in turn renders these photographs doubly historic, a long-gone era as captured by a once dead but now resurrected technology.

Andy Warhol remains one of the most influential figures in contemporary art and culture. Warhol’s life and work inspires creative thinkers worldwide thanks to his en-during imagery, his artfully cultivated celebrity, and the ongoing research of dedicated scholars. His impact as an artist is far deeper than his one prescient observation that “everyone will be world famous for fifteen minutes.” His omnivorous curiosity resulted in an enormous body of work that spanned every available medium and most impor-tantly contributed to the collapse of boundaries between high and low culture.

ANDY WARHOL & THE POLAROID CAMERA

IN THE SPOTLIGHT:

36

37Andy Warhol and Polaroid

INSTANT ICON


“Big Shots” Celebrity Polaroids by Andy Warhol. Blondie, 1976

39Andy Warhol and Polaroid

“THEY ALWAYS SAY ‘TIME CHANGES THINGS’, BUT YOU ACTUALLY HAVE TO CHANGE THEM YOURSELF.” - ANDY WARHOL

Still life Polaroids. 1977

&ART CHEMISTRYCOMBINED

...................IS POLAROID INSTANT FILM

W/ CREATIVE GENIOUS


Sustainability Report 2011

Polaroid’s definition of “sustainability” continues to evolve, as our understanding of what is sustainable improves with time and experience. In short, we do not want to compromise our future generation’s ability to use resources because of our poor stewardship in protecting the environment or in the way we carry out our business. As previously mentioned, we embraced this notion early on in 1977 as part of our original statement on the environment; then again in1994, when we formally adopted the concept of sustainability as part of Polaroid’s Environmental Vision.

While a later, more detailed definition of sustainability will include concepts such as conservation, renewability and reusability as well as the human element affected by our business, the optimum approach for balancing these factors with financial, market and business issues has not yet been determined. Many initiatives within the company today, particularly in the areas of energy conservation and improved manufacturing yields, address some aspects of sustainability, including acquisition of raw materials, manufacturing, distribution, and product use and disposal.

Beyond our everyday business, Polaroid also cares about the well being of people and the communities in which we work. The company provides competitive salaries and benefits to its employees, and through company donations and the Polaroid Found-ation, aims to improve the lives of those around us.

In addition, Polaroid has long recognized that it has a responsibility to all of its stake-holders. In our first environmental report for reporting year 1988, for instance, our CEO stated, “ For more than 50 years, Polaroid’s corporate philosophy has stressed responsible citizenship. That citizenship obligation, which is especially important in the communities where our employees live and work, includes a concern for the environment...” As seen here, although we may have not talked about sustainability in those exact words, Polaroid employees have lived it through our actions as part of our corporate philosophy.

44

45

INSTANTRESPONSIBILITY

Sustainibility Report


State Electronics Recycling Information

CaliforniaResidents of California visit the California eRecycle website at www.erecycle.org

MaineResidents of Maine please visit the please visit the Maine Department of Environmental Protection website at www.maine.gov/dep/rwm/ewaste.

New YorkNew York requires manufacturers of certain electronic devices to offer free disposal of the devices effective April 1, 2011. If your electronic device has internal memory on which personal or other confidential data may be stored, you may want to perform a data sani-tization process before you dispose of your device to assure another party cannot access your personal data. Data sanitization varies by the type of product and its software, and you may want to research the best sanitization process for your device before disposal. You may also check with your local recycling facility to determine their data sanitization procedures during the recycling process.

IllinoisIllinois law makes electronics manufacturers responsible for the cost of recycling millions of pounds of residential electronic waste (e-waste) every year. (The law does not cover e-waste generated in non-residential sectors.) Manufacturers must either charge nothing to individuals bringing in their equipment, or, if there is a fee, give you a dollar-for-dollar coupon you can use to reduce the cost of your new equipment.*

Go to http://www.epa.state.il.us/land/electronic-waste-recycling/consumer-education.html, a one-page fact sheet with a link to the list of sites, as well as the addresses and phone numbers of the collectors managing those sites. Call them for operating hours and the list of electronic devices accepted.

The Illinois EPA assigns an annual recycling goal to each electronics manufacturer. Once that goal is achieved, a manufacturer may charge for electronics recycling. Your local collector can tell you if free e-waste recycling is still available in your area, or if you can avoid any charges by holding equipment until the following year. For more information, please visit the Illinois Environmental Protection Agency at http://www.epa.state.il.us/land/electronic-waste-recycling/

Social Responsibility

47

INSTANTLANDSCAPE

Social Responsibility


Polaroid might not have been successfull with the quality of their cameras and instant film, if it had not been for American landscape photographer Ansel Adams. He began serving as a Polaroid consultant the year that the Polaroid camera was first marketed in 1948, testing the qualiy of new films and equipment . A friend of Edward Land, Adams was able to work for Polaroid after his experimental and creative years as a photographer; he pioneered using Polaroid Type 55 positive/negative film during this time. He continued to use the process for the rest of his career – surprisingly, given Adams’ methodical approach to photography and his renowned fondness for long exposure time.

Adams’s technical mastery was the stuff of legend. More than any creative photographer before or since, he reveled in the theory and practice of the medium. He developed the highly complex “zone system” of controlling and relating exposure and development, enabling photographers to creatively visualize an image and produce a photograph that matched and expressed that visualization. He produced ten volumes of technical manuals on photography, which are the most influential books ever written on the subject.

Adams was an unremitting activist for the cause of wilderness and the environment. His black and white nature portraits became the symbols, the veritable icons, of wild America. He fought for new parks and wilderness areas, for the Wilderness Act, for wild Alaska and his beloved Big Sur coast of central California, for the mighty redwoods, for endangered sea lions and sea otters, and for clean air and water. An advocate of balanced, restrained use of resources, Adams also fought relentlessly against overbuilt highways, billboards, and all manner of environmental mendacity and shortsightedness.

“ONE LOOK AT THE TONAL QUALITY OF PRINTS I HAVE ACHIEVED, SHOULD CONVINCE THE UNINITIATED OF THE TRULY SUPERIOR QUALITY OF POLAROID FILM.” - ANSEL ADAMS

IN THE SPOTLIGHT:

48

49

ANSEL ADAMSAnsel Adams and Polaroid

INSTANT MASTER


Sustainability MeasurementPolaroid uses three primary methods to measure the environmental impact of its operations: an annual environmental compliance scorecard, a program of internal audits and the SARA Toxics Release Inventory. Here is a listing of the important key indicators of our performance followed by brief descriptions below.

Economic Sales Profit

Social OSHA numbers Donations

Environmental Energy Water Waste Greenhouse Gases (GHG) Toxics Release Inventory (TRI) data

Year 2011 Priorities Audit Program Safety record Management Performance HSE Management System Upgrade Product Stewardship Worldwide HSE meeting Community Involvement Local Environmental Performance Greenhouse Gas Reduction

Year 2011 AccomplishmentsAmong many notable accomplishments, Polaroid earned high ratings for its Health, Safety and Environmental (HSE) performance, continued to maintain its superior safety record, began the second year of a second- generation energy management and conser-vation program. We also continued the implementation of five-year HSE strategy, and held a worldwide HSE meeting with updated HSE guidelines.

Executive summary and key indicators

51Executive Summary and Key Indicators

INSTANTRENEWAL


EconomicIn 2010, Polaroid ended the year with worldwide profits of $109 mil, compared with $108 million in 1999. Worldwide net sales decreased six percent to $1.85 million in 2000 com-pared with $1.98 million in 1999. Our new products strategy continued to gain momen-tum, while at the same time, we saw a decline in our traditional instant film business. Our digital cameras held the number one position within its category in the U.S. food, drug and mass merch-andise distribution channel.

SocialAs seen in the chart below, Polaroid measures employee safety through monitoring OSHA-recordable incidents and worker lost time worldwide. This year, despite a highly competitive business climate, employees set a new safety record with our lowest ever OSHA- recordable incident rate, 1.36 per 100 employees.

DonationsPolaroid continued its donations to community from the company and employees as well as through the Polaroid Fund of The Boston Foundation. A total of $2.839 million was in financial grants, product donations and other disbursements, compared to $2,345,000 in 1999, was given to non-profit organizationsin order to help disadvantaged people improve their lives.

EnvironmentalThe environmental scorecard helps us monitor and report on instances of non-compli-ance. This tool targets improvement in achieving full and sustainedcompliance with all applicable laws and regulations. The company’s plant managers have been required to submit a written account of all excursions and incidents that occur at their facilities as well as appropriate corrective measures itended to prevent recurrence. “Zero excursions” is the corporate goal with“excursions and incidents ” defined as legal discharges that exceed permit limitations and spills or releases.

Executive summary and key indicators (continued)

52

53

Reportable Lost-time Lost-time Year Incidents Rate Days $Donations

1999 1.40 0.56 5.77 $1,978,000

2004 1.51 0.53 5.06 $2,345,000

2011 1.36 0.75 4.50 $2,839,000

Environment & Energy Use

Greenhouse Gases (GHG) Square meters Year Gigajoules tonnes (metric) Film sold

1999 2,254,810 219,920 0.166

2004 2,348,49 217,271 0.161

2011 2,426,840 229,064 0.180

Non-hazardous Water use Waste Toxics Release Year solid waste (T) (cubic meters) (tonnes) Inventory (TRI)

1999 8,163 769,829 348 2,185

2004 9,705 734,124 147 2,162

2011 10,143 669,852 452 2,366

(Note: Shown here are totals of regulated chemical waste and unregulated solid waste. This data is incomplete for this year, but will be compiled for future reports. Only data on non-U.S. chemical waste along with total unregulated solid waste was available at time of publication.)

Annual OSHA-reportable injury rates (per 100 employees). Data Type

SALES NET EARNINGS/ (-) DILUTED EARN- Year (millions) Per common share INGS/ (-) (millions)

1999 $1,845.9 $51.0 ($1.15)

2004 $1,978.6 $8.7 $0.20

2011 $1,855.6 $37.7 $0.84

In combining the GRI guidelines with CERES questions from the previous year to present our 2000 data on the environment, we hope this report will

provide a more useful document for stakeholders to chart our progress.

Executive Summary and Key Indicators


Year 2011 program prioritiesPolaroid’s top priority for its Health, Safety and Environmental (HSE) program is to sus-tain and improve HSE performance as the company emerges from major structural change. Two programs for achieving this goal are: the Product Stewardship Program and upgrad-ing the HSE Management System. Efforts to manage our performance also continue.

Audit programFormal Health, Safety and Environmental (HSE) audits were performed, results were provided to senior and division management and used to propagate best practices across di-visional boundaries. The HSE corporate audit committee ensures the quality, consistency and effectiveness of the HSE audits. A significant change was the use of auditors instead of internal auditors to perform audits on the company’s U.S. facilities.

Safety recordPolaroid had its best-ever OSHA-reportable injury and accident rates in 2011. While OSHA statistics are U.S. based, the same calculating method was applied worldwide at our manufacturing plants. Contributing factors for our success include better methods of investigating and learning from workplace injuries, and expanding ergonomics and training programs which is designed to stress individual responsibility for safety in the workplace.

Managing performancePolaroid is in the midst of changing the way it operates to meet goals of operation. A major challenge for HSE professionals within the new organization is to position envi-ronmental and safety issues effectively to ensure that they remain visible, relevant, and central to the company’s business focus. The creation of the Product Stewardship council, which directs implementation of the Product Stewardship policy, is a major step toward this goal. The policy outlines the responsibility of business unit managers for meeting and maintaining HSE goals.

Executive summary and key indicators (continued)

55

HSE Management System upgradeThroughout the next two years, Polaroid’s Office of Health, Safety and Environmental (HSE) Affairs will continue implementing the HSE strategy and upgrade the HSE Manage-ment System to increase efficiency.

Product StewardshipWe have required that design teams incorporate health, safety and environmental con-cerns into the design process from the earliest stages of new product development. Part of this process, we have established safety and environmental design criteria aimed at creat-ing products with the least impact to the environment. The continuing challenge here is to anticipate and manage the numerous regulatory requirements that countries worldwide have enacted to ensure sound business decisions are made every step of the way while we reduce cost.

Worldwide HSE meetingThe company brought together HSE members from facilities worldwide for sharing and strategic planning sessions. Polaroid’s CEO addressed the group, which also included many product designers and managers of Product Teams. He spoke about the role each of us has managing the many requirements for environment and safety that products must meet in today’s worldwide marketplace.

Community involvementPolaroid continued with our long-standing policy of environmental communication and commitment to the communities around our production plants through community meet-ings and sponsoring events such as celebrating Earth Day. Polaroid also continued active participation in two highly important Massachusetts environmental organizations; the Environmental Federation of New England and the Charles River Watershed Association.

Executive Summary and Key Indicators


Policies, Organization, and Management Systems

A brief history of Polaroid policiesAll Polaroid environmental policies are worldwide inscope to the extent appropriate and practical. HSE performance is monitored at all manufacturing locations. All sites are encouraged to exceed local standards for compliance. Where preferred technologies for waste management are not available, Polaroid facilities are encouraged to use the best available alternative technology.

In addition, many Polaroid HSE policies and guidelines set standards that exceed regul-atory limits. For example, company guidelines for employee exposure to potentially hazardous materials are more restrictive than industry norms. Also, Material Safety Data Sheets for all production chemicals are provided, including chemicals that do not meet the definition of “hazardous” under the Hazard Communication Standard of some of the countries in which we manufacture.

Throughout its history, Polaroid has put into place policies that put people first. These policies were innovative and leading edge when introduced. They recognized the value and contribution every employee can make to the company when given the opportunity, and that belief still prevails today.

We continue our philosophy in present versions of our policies. In 1967, for instance, we instituted our basic personnel policy, commonly known by employees throughout the company as “PP101,” aimed at creating a diverse workforce. In 1977, based on these principles, we adopted our first environmental policy setting the standard for health, safety and environmental considerations in our product design, manu-facturing and waste disposal. In 1997, we revised and updated personnel policies, adding “Principles of Conductand Business Ethics” manual and training. In 1998, we added a Product Stewardship policy and also revised the Environmental policy to address health and safety concerns further. All of these reflect our concern for people and the environment. Early on, Polaroid’s 1977 Environmental policy on the environment established lasting values and principles that have been reflected in every policy developed since then. Later, we then transformed this policy into a vision for the future.

56

59

INSTANTAPPROACH



The Health, Safety and Environmental (HSE) strategy aligns environmental objectives with the company’s business objectives, while integrating health, safety and environ-mental protection with protection of company assets. This integration is a key aspect of improved, efficient and “sustainable” business processes.

SustainabilityPolaroid’s definition of “sustainability” continues to evolve, as our understanding of what is sustainable improves with time and experience. In short, we do not want to compromise our future generation’s ability to use resources because of our poor stewardship in protecting the environment or in the way we carry out our business. As previously mentioned, we embraced this notion early on in 1977 as part of our original statement on the environment; then again in1994, when we formally adopted the concept of sustainability as part of Polaroid’s Environmental Vision.

A later, more detailed definition of sustainability will clearly include concepts such as conservation, renewability and reusability as well as the human element affected by our business, the optimum approach for balancing these factors with financial, market and business issues has not yet been determined. Many initiatives within the company today, particularly in the areas of energy conservation and improved manufacturing yields, address some aspects of sustainability, including acquisition of raw materials, manufacturing, distribution, and product use and disposal.

Polaroid’s Product Stewardship council is managing Polaroid’s evolving definition of sustainability. At the bottom of all sustainability deliberations is the concept of ensuring that the environment is not compromised for future generations and that we understand there are implications from every action we take.

Beyond our everyday business, Polaroid also cares about the wellbeing of people and the communities in which we work. The company provides competitive salaries and benefits to its employees, and through company donations and the Polaroid Foundation, aims to improve the lives of those around us.

Policies, Organization, and Management Systems (continued)

60

57

Our Environmental Vision, adopted in 1994, defines key challenges for the 21st century. We developed this vision even before “sustainability” became the norm. The concept was embodied in our 1977 Environmental Policy. It is:

“We strive to conduct our business in harmony with nature to preserve a healthy planet for future generations.”

The company’s Product Stewardship policy, signed by Polaroid’s CEO and disseminated company-wide in 1998, clearly establishes the roles and responsibilities of business unit managers in ensuring that Polaroid meets its environmental commitments in product manufacturing and product stewardship. It stresses not only compliance issues, but also the link between environmental concerns and more traditional business issues such as cost and competitiveness.

To achieve this goal, we are committed to the following Product Stewardship code:To design our facilities, processes and products with a minimum adverse impact on human health, safety and the environment, To provide employees with information and training to better do their job, To eliminate, reduce, or control hazardous materials we use, To update HSE policies and programs as appropriate, To anticipate the hazards of our activities, To be accountable, conserve resources. Finally, the basic tenets of Polaroid’s Guide to Business Conduct are: Respect for one another, customers, suppliers, shareholders and the communities in which we work. The company treats all of its stakeholders with respect and dignity to create a work environment where individual and cultural differences are valued and harassment is not tolerated.

Policies are supported by detailed guidelines. The policies and guidelines are reviewed and updated as appropriate. Polaroid has had its policies and guidelines available in print from as far back as the late 1970s, but most were created or revised in the 1980s. Polaroid has further updated many of these policies and guidelines and makes them available to all employees through our company Intranet.



External chartersPolaroid signed the Coalition of Environmentally Responsible Economies (CERES) Principles in 1994, because they were complementary with our environmental, health and safety policy and objectives. The principles are a 10-point code of conduct that companies follow to help become responsible stewards of the environment. For more information, you can also reach the CERES group web site at www.ceres.org.

Certified Management SystemsPolaroid has a number of ISO certified operations, including ISO 9000, and one manu-facturing operation certified to ISO 14001. Polaroid is a CERES signatory and prepares an annual environmental report on how it meets the CERES Principles. Managers are held accountable for carrying out environmental initiatives. For instance, specific performance standards for managers include safety and environmental management along with cost, quality, scheduling, inventory and diversity. These standards govern annual pay performance reviews.

Management systemsPolaroid has management systems and a variety of programs in place to manage perfor-mance and ensure compliance with the numerous laws, regulations and requirements that apply to our business. Specific operations include: Manufacturing, Finance, Human Resources, Environmental, Health and Safety and Quality.

In addition, the company conducts a large number of programs and related training for specific business needs, including operational and support activities. For instance, employees receive regular training in computer systems, safety and the environment. There are numerous written Health, Safety and Environmental programs, which willsoon be available on the company’s Intranet, available to all employees. The company also regularly trains product teams on product design and related environmental issues, and publishes “Product Stewardship News Notes,” a publication for employees, which covers emerging issues impacting Polaroid products worldwide.

Policies, Organization, and Management Systems (continued)

61

In addition, Polaroid has long recognized that it has a responsibility to all of its stakehold-ers. In our first environmental report for reporting year 1988, for instance, our CEO stated:

“ For more than 50 years, Polaroid’s corporate philosophy has stressed responsible citizenship. That citizenship obligation, which is especially important in the communities where our employ-ees live and work, includes a concern for the environment...”

Precautionary measuresIn addition to our policies, Polaroid takes certain precautionary measures to ensure we con-duct our business in the most responsible way. The company defines precaution as:

“Using science and experience to assess whether or not an activity should be carried out, and to determine the appropriate safety measures to take when performing the activity under consideration.”

Accordingly, we screen all new chemicals developed in preparation for use and agency approval by European or U.S. governments. We also established employee exposure levels that are twice as protective as existing consensus-based standards. We will not use chemicals that pose an exposure risk to employees during manufacture or to customers when they use our products. We design products to be safe for our customers’ use at all times.

Organizational structureThe vice president of Health, Safety and Environmental Affairs (HSE) is responsible for updating environmental policies. Furthermore, technical experts in the Corporate HSE office advise on updating these policies. The vice president of HSE reports to the senior vice president of Manufacturing. We believe communication within the business organization is important for successful implementation of our policies and business objectives. Accordingly, manufacturing directors and key plant managers receive regular updates on environmental performance. This is done through monthly reports on environmental performance and quarterly reports on safety performance.


TOITS HIP

B SQUARE

S2

Stockholder Information

Executive Office549 Technology SquareCambridge, Massachusetts 02139(617) 386-2000

Investor Relations575 Technology SquareCambridge, Massachusetts 02139(617) 386-6589

Independent AuditorsKPMG Peat Marwick LLP99 High StreetBoston, Massachusetts 02110 Transfer Agent and Registrar for Common StockThe First National Bank of Bostonc/o Boston EquiServe L.P.Shareholder ServicesPost Office Box 8040Boston, MA 02266-8040(617) 575-3170 or 1-800-730-4001Stock Exchange Listings for Common Stock

New York Stock ExchangePacific Stock ExchangeAnnual Report on Form 10-K

A copy of Polaroid’s Annual Report on Form 10-K to the Securities and Exchange Commission may be obtained without charge by contacting Polaroid’s Transfer Agent as listed above.

Dividend Reinvestment PlanA Dividend Reinvestment Plan is available to stockholders of Polaroid Corporation. Additional information and an authorization card may be obtained by contacting Polaroid’s Transfer Agent as listed above.

Contact InformationPolaroid publishes financial and environmental data annually. You can find out more about these issues by logging on to our Web site at, www.polaroid.com

CP-80, CP-90, DryJet, Dry Tech, Imagix, Inkognito, Live for the Moment, OneStep, Palette, PDC, Polacolor, Polaroid, Polaroid Macro, Polaroid Make-A-Memory, Polaroid Make-A-Print, Polaroid PhotoPad, Polaview,See What Develops, SprintScan, Studio Express, Studio Polaroid, The Dry Prepress by Polaroid and XOOR are trademarks of Polaroid Corporation.EVA is a trademark of Stern, Stewart and Company.

All other product names may be the property of their respective owners.

Documents

Polaroid Annual Report