http://www.boston.com/news/daily/10/polaroid.htm

Trading of Polaroid shares halted amid reports that bankrupcy is imminent

By Associated Press and Boston.com Staff, 10/10/01

BOSTON - Trading in shares of instant image company Polaroid, which is widely expected to be on the verge of a bankruptcy filing, was halted today pending a news announcement.

The trading halt came following published reports that a bankruptcy filing is expected this week. The Wall Street Journal reported that it could come as early as Wednesday.

Polaroid has seen its core instant film business slip dramatically in recent years. It is rushing to develop new instant printing technology, but analysts have expressed doubts it would be ready in time to save the company from reorganization.

Polaroid has been exploring a variety of strategic alternatives, including a sale of the company as it struggles to dig itself out of mounting debt estimated at $950 million dollars which it owes to banks and bondholders.

After missing payments, Polaroid has won concessions from both groups of creditors. But the company must still renegotiate the debt, because it cannot keep up with the scheduled payments and is in violation of loan agreements. Without further concessions, Polaroid may be forced to seek protection from creditors in US Bankruptcy Court.

Polaroid lost $109.9 million in the quarter ending July 2, or $2.36 per share.

The Boston Globe reported on October 3 that Polaroid has told employees that the company's pension plan is underfunded, possibly threatening benefits to company retirees and current employees.

In a memo sent to employees last week that was obtained by the Globe, the company said the plan had more than $900 million in assets on Oct. 1. But that's approximately only enough to pay 90 percent of all of the benefits accrued by employees under the pension plan. If all beneficiaries suddenly retired and sought pension benefits, there wouldn't be enough money to pay the obligations.

The company blamed the pension situation on two recent rounds of layoffs, which are intended to bring total employment from 8,865 in December to about 5,500 by the end of next year. The layoffs increased the "payout volume" of the plan, the memo said.

One analyst told the Journal that there is no reason to believe that a bankruptcy filing would discourage potential buyers. In fact, the analyst says it might enhance the prospect of a sale.

The company has said it is looking to sell all or part of its operations.

Polaroid's stock dropped another 15 cents yesterday to close at just 28 cents a share. The stock was unchanged in early trading today.

-- Anonymous, October 10, 2001