under the Prior Credit Agreement were secured by substantially all of Panavision's assets. The Prior Credit Agreement comprised two facilities, the Term Facility and the Revolving Facility. As of December 31, 2003, amounts outstanding under the Prior Credit Agreement were $151.8 million and $99.2 million for the Term Facility and Revolving Facility, respectively. As described below, the Prior Credit Agreement was replaced with the Amended and Restated Credit Agreement pursuant to the January 2004 Refinancing.

January 2004 Refinancing

On January 16, 2004, Panavision consummated a series of transactions to refinance its indebtedness under the Prior Credit Agreement (the "January 2004 Refinancing"). As part of the January 2004 Refinancing, Panavision sold, in a private placement, $104.2 million of senior secured notes (the "Senior Notes") bearing interest at a rate of 12.50%, payable quarterly, with a maturity date of January 16, 2009. The Senior Notes were sold at an original issue discount of approximately 4% for an aggregate purchase price of $100.0 million. The Senior Notes are secured by a second-priority lien on substantially all of the Company's assets. The indenture pursuant to which the Senior Notes were issued (the "2004 Indenture") requires that, among other provisions, Panavision achieve certain EBITDA levels and abide by certain other restrictive covenants, including limitations on indebtedness, liens, disposition of assets, and certain restricted payments including dividends to stockholders. Upon certain events of default under the 2004 Indenture, the Senior Notes will bear interest at 2.5% above the rate otherwise applicable.

Also as part of the January 2004 Refinancing, Panavision issued to PX Holding Corporation ("PX Holding") 215,274 shares of new Series D Preferred Stock in exchange for (a) 159,644 shares of Series C Cumulative Pay-in-kind Preferred Stock, par value $0.01 per share (the "Series C Preferred Stock"), of Panavision, held by PX Holding (together with approximately $13.2 million of accumulated dividends thereon); (b) $23.0 million in cash; (c) the retirement of all principal and interest (an aggregate of $10,180,930) owed as of January 16, 2004 under the MacAndrews Line; (d) 33.3 shares of common stock of PANY Rental having a fair market value of $0.7 million (such that, as of January 16, 2004, Panavision owned 100% of the outstanding shares of PANY Rental); (e) the retirement of all amounts (consisting of $630,780 in principal and $82,913 in accrued and unpaid interest) owed by PANY Rental to PX Holding pursuant to a certain promissory note held by PX Holding; and (f) the retirement of all amounts (consisting of $7.8 million in principal and unpaid interest) owed to MacAndrews & Forbes Holdings under a certain promissory note in the principal amount of $6.7 million, dated July 1, 2002, issued by Panavision to M & F Worldwide and subsequently acquired by MacAndrews & Forbes Holdings. The Series D Preferred Stock was non-voting, had a liquidation preference of $1,000 per share plus accrued and unpaid dividends, and entitled the holder to cumulative dividends at a rate of 10% per annum regardless of whether declared or earned. Additionally, the Series D Preferred Stock was subject to redemption in certain circumstances upon a change of control. Panavision also issued to PX Holding 1,381,690 shares of new Series E Non-Cumulative Perpetual Participating Preferred Stock, par value $0.01 per share, (the "Series E Preferred Stock") in exchange for 1,381,690 shares of Series A Non-Cumulative Perpetual Participating Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"). The Series E Preferred Stock was entitled to one vote per share, voting together with the Common Stock as a single class, had a liquidation preference of $1.00 per share plus accrued and unpaid dividends, and provided for non-cumulative cash dividends at an annual rate of $0.05 per share if declared by Panavision. As a result of the January 2004 Refinancing transactions, all of the outstanding shares of Series A and Series C Preferred Stock were transferred to Panavision. In addition, MacAndrews & Forbes Inc. increased the amount of the Second MacAndrews Line to $20.0 million and extended the maturity date to April 16, 2009.

Panavision used proceeds from the sale of the Senior Notes and the issuance of Series D Preferred Stock to reduce the indebtedness under the Prior Credit Agreement by $115.4 million, and replaced the Prior Credit Agreement with an Amended and Restated Credit Agreement (the "Amended Credit Agreement") with the lenders under the Prior Credit Agreement. The Amended Credit Agreement provides for a single term loan facility in the principal amount of $135.6 million repayable in quarterly installments with a final maturity of January 12, 2007, except that the term facility shall be due on December 1, 2005 if any of the 9 5/8% Notes remain outstanding on that date. Panavision is considering various alternatives with respect to the repayment or refinancing of the 9 5/8% Notes. While there can be

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no assurance, Panavision expects that the 9 5/8% Notes will be refinanced or otherwise repaid by December 1, 2005. PX Holding has committed (the "9 5/8% Notes Commitment"), in the event that the 9 5/8% Notes are not repaid, retired or refinanced prior to December 1, 2005, or the applicable provision of the Amended Credit Agreement is not amended by such time such that Panavision's term loans do not become immediately due and payable, to provide financial support sufficient to allow the repayment, retirement or refinancing of the 9 5/8% Notes.

The term facility bears interest at either the ABR or Eurodollar Rate (as defined in the Amended Credit Agreement) plus a margin of 5.25% in the case of ABR loans or 6.25% in the case of Eurodollar Loans. The term facility under the Amended Credit Agreement is secured on substantially the same basis as indebtedness under the Prior Credit Agreement. In connection with the Amended Credit Agreement Panavision paid fees to lenders and professional advisors of approximately $3.5 million, including an original issue discount fee of approximately $2.0 million. Approximately $3.1 million of the fees paid were expensed in 2004.

Under the Amended Credit Agreement, Panavision is required to repay $7.2 million in principal in 2005. In addition, the Amended Credit Agreement revised certain financial tests and other restrictive covenants set forth in the Prior Credit Agreement, including required EBITDA (as defined therein), limitations on indebtedness, and other provisions. As defined in the Amended Credit Agreement and 2004 Indenture, EBITDA includes adjustments for certain severance expenses, refinancing expenses, foreign exchange (gain) loss, other non-cash charges and the proforma effect of acquisitions and dispositions. As compliance with EBITDA levels is a material aspect of the Amended Credit Agreement and the 2004 Indenture, the calculation of EBITDA pursuant to these agreements for the year ended 2004 is set forth below, with the calculation for the year ended 2003 provided for comparative purposes (in millions):

				Year ended December 31,
				2004				2003
Net loss from continuing operations					($21.2	)			($16.5	)
Net interest expense					31.8				29.7
Income tax provision (benefit)					(7.5	)			(5.7	)
Depreciation and amortization					40.5				39.5
Severance expense					—				4.6
Refinancing expense					6.2				1.5
Foreign exchange (gain) loss					(0.3	)			0.6
Non-cash charges					2.3				—
Asset purchase/sale adjustments					6.5				0.1
EBITDA				$	58.3			$	53.8

The required level of EBITDA, as defined, for the years ended December 31, 2004 and 2003, respectively, was $54.0 million and $50.0 million pursuant to the Amended Credit Agreement and $50.0 million for both years pursuant to the 2004 Indenture. As defined in the Amended Credit Agreement and 2004 Indenture, the above table reflects EDITDA from continuing operations. Certain amounts in previously issued financial statements, including the presentation of EFILM, have been excluded from continuing operations.

Amendments to Amended Credit Agreement and 2004 Indenture

EFILM

Principally to provide a mechanism for the reinvestment of the proceeds of the EFILM Sale, as described below, on August 11, 2004, Panavision and the other parties to the Amended Credit Agreement entered into an amendment and waiver to the Amended Credit Agreement ("First Amendment and Waiver"). To provide a similar mechanism for the reinvestment of the proceeds of the EFILM Sale under the 2004 Indenture, on August 11, 2004, Panavision and Wilmington Trust Company, as Trustee, entered into a supplemental indenture ("Supplemental Indenture"). On September 30, 2004, in accordance with the terms of the Amended Credit Agreement and the 2004 Indenture, upon repayment of $1.3 million to

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Federal Financial Credit Inc., PANY Rental and TFN Lighting Corp. (each subsidiaries of Panavision) became guarantors under those debt instruments.

DHD

On September 16, 2004, Panavision purchased from Sony a 49% interest in DHD Ventures, making DHD a wholly-owned subsidiary of Panavision. Following this acquisition, DHD was converted to a limited partnership, DHD Ventures, LP, the limited partner of which is Panavision and the general partner is DHD Holdings, Inc. DHD Ventures, LP and DHD Holdings, Inc. both became guarantors under the Amended Credit Agreement and the 2004 Indenture on September 30, 2004.

Preferred Stock Exchange

On November 16, 2004, Panavision issued 30,610,810 shares of common stock, par value $.01 per share to PX Holding Corporation, in exchange for all Series D Preferred Stock and all Series E Preferred Stock held by PX Holding (the "Exchange"). The Exchange was completed pursuant to a letter agreement, dated November 16, 2004, between Panavision and PX Holding (the "Letter Agreement").

In the transaction, Panavision issued:

•	29,229,120 shares of Common Stock in exchange for all 215,274 shares of Series D Preferred Stock held by PX Holding at an exchange ratio of 125 shares of Common Stock for each $1,000 of outstanding liquidation preference or accrued and unpaid dividends, valuing the Common Stock at $8.00 per share; and

•	1,381,690 shares of Common Stock in exchange for all 1,381,690 shares of Series E Preferred Stock held by PX Holding.

The transaction was unanimously approved by an independent Special Committee of Panavision's Board of Directors. In the Letter Agreement, PX Holding agreed, among other things, to certain restrictions on its ability to acquire Panavision's remaining Common Stock or to transfer the shares it holds. After giving effect to the transaction, PX Holding holds approximately 96.3% of the Common Stock. The transaction follows a May 13, 2004 offer by MacAndrews & Forbes Holdings initially valuing the Common Stock at $7.00 per share.

Following the consummation of the Exchange, no shares of Series D Preferred Stock or Series E Preferred Stock were outstanding. Accordingly, effective November 16, 2004, Panavision eliminated the certificates of designation for the Series D Preferred Stock and Series E Preferred Stock.

The Special Committee was represented by independent counsel and retained Peter J. Solomon Company L.P. as its independent financial advisor. In connection with its recommendation that the Board of Directors approve the transaction, the Special Committee received an opinion from Peter J. Solomon Company L.P. that the consideration paid by PX Holding in the transaction was fair, from a financial point of view, to Panavision.

In addition, in connection with the Exchange, Panavision entered into a Second Amendment and Consent, dated as of November 15, 2004, with respect to Panavision's Amended Credit Agreement.

WFW

In connection with the Panavision acquisition of the WFW camera inventory in Canada (the "WFW Acquisition"), Panavision entered into a Third Amendment, dated as of December 29, 2004 with respect to Panavision's Amended Credit Agreement. In addition, in connection with the WFW Acquisition, Panavision entered into a Fourth Supplemental Indenture, dated as of December 29, 2004, with respect to the 2004 Indenture.

March 2005 Amendment

In addition, Panavision entered into a Fourth Amendment, dated as of March 30, 2005, to the Amended Credit Agreement and Fifth Supplemental Indenture, dated as of March 30, 2005, with respect to the 2004 Indenture. This amendment and indenture supplement was entered into principally to (a) provide a mechanism for the potential acquisition of the camera, lighting and grip assets of a company in

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the United Kingdom (the "UK Acquisition"), (b) reduce required EBITDA levels, as provided in the Amended Credit Agreement, to $52.0 million, $54.0 million, $54.0 million and $58.0 million for the twelve-month periods ended March 31, 2005, June 30, 2005, September 30, 2005 and December 31, 2005, respectively, (c) extend the date on which the term facility under the Amended Credit Agreement shall be due if the 9 5/8% Notes remain outstanding from September 1, 2005 to December 1, 2005, (d) increase the limitation on capital expenditure, as defined in the Amended Credit Agreement, from $25.0 million to $37.5 million and (e) increase the Second MacAndrews Line to $32.0 million, plus an amount for the potential UK Acquisition, if necessary.

As a result of the January 2004 Refinancing, in accordance with Statement of Financial Accounting Standards No. 6, "Classification of Short-Term Obligations Expected to be Refinanced" ("SFAS 6"), the Company reclassified $246.0 million of the refinanced debt to long-term debt as of December 31, 2003.

Panavision has certain cash obligations and other commercial commitments that will affect its short- and long-term liquidity. Such obligations and commitments were as follows (in thousands):

								Payments due by Period
Contractual Obligations				Total				Less than 1 year				1-3 years				4-5 years				After 5 years
Long-term debt				$	303,999			$	7,411			$	192,421			$	104,167			$	—
Capital leases					10,040				2,571				4,763				2,433				273
Operating leases					35,390				9,755				12,038				7,358				6,239
Purchase obligations					6,800				—				6,800				—				—
Total contractual cash obligations				$	356,229			$	19,737			$	216,022			$	113,958			$	6,512

For information on Panavision's long-term debt obligations, see the discussion herein and in Note 12 of the Notes to the Consolidated Financial Statements included elsewhere in this Form 10-K. The above table does not include interest on long-term debt.

Commitments and Contingencies – Panavision periodically records the estimated impacts of various conditions, situations or circumstances involving uncertain outcomes. These events are called "contingencies," and Panavision's accounting for such events is prescribed by SFAS No. 5, "Accounting for Contingencies."

The accrual of a contingency involves considerable judgment on the part of management. Panavision uses its internal expertise, and outside experts (such as lawyers and tax specialists), as necessary, to help estimate the probability that a loss has been incurred and the amount (or range) of the loss. Panavision currently does not have any material contingencies that it believes require accrual or disclosure in its Consolidated Financial Statements.

Seasonality

Panavision's revenues are subject to seasonal fluctuations. In North America, episodic television programs cease filming in the second quarter for several months, and typically resume production in August. Feature film production activity typically reaches its peak in the third and fourth quarters.

Impact of Inflation

Panavision's results of operations and financial condition are presented based upon historical cost. While it is difficult to measure accurately the impact of inflation due to the imprecise nature of the estimates required, Panavision believes that the effects of inflation, if any, on its results of operations and financial condition have been minor.

Critical Accounting Policies

Panavision reviews the accounting policies it uses in reporting its financial results on a regular basis. The preparation of these financial statements requires Panavision to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of

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contingent assets and liabilities. On an ongoing basis, Panavision evaluates its estimates, including those related to accounts receivable, investments, rental assets, intangible assets, income taxes, contingencies and litigation. Panavision bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. These estimates form the basis for Panavision 's judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Results may differ from these estimates if actual outcomes are different from the estimates on which Panavision based its assumptions. These estimates and judgments are reviewed by management on an ongoing basis. Panavision believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the Consolidated Financial Statements of Panavision.

Revenue Recognition – Panavision recognizes revenue over the related equipment rental period using prices that are negotiated at the time of rental. Revenue from product sales is recognized upon shipment. Panavision does not have a history of significant product returns or revenue adjustments.

Allowance for Doubtful Accounts – Panavision maintains allowances for doubtful accounts for estimated losses resulting from the inability or unwillingness of its customers to make required payments. If the financial condition of Panavision's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventory Allowance – Panavision reviews its inventories for both obsolescence and quantities in excess of needs based upon usage and demand forecasts within a specific time horizon and reserves are established accordingly.

Income Taxes – Panavision estimates its actual current tax liabilities together with temporary differences resulting from differing treatment of items, such as net operating losses and depreciation, for tax and accounting purposes. These temporary differences result in deferred tax assets and liabilities. Panavision must then assess the likelihood that its deferred tax assets will be recovered from future taxable income and to the extent Panavision believes that recovery is not likely, it must establish a valuation allowance. At December 31, 2004, Panavision had a $8.1 million valuation allowance established against its deferred tax assets. To the extent Panavision establishes a valuation allowance or changes this allowance in a period, it must reflect the change to the allowance within the tax provision in the consolidated statement of operations. Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against its net deferred tax assets.

Long-Lived Assets – Panavision assesses the impairment of property, plant and equipment (comprised principally of its rental assets), goodwill, and other identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Some factors Panavision considers important which could trigger an impairment review include the following:

•	Significant underperformance relative to expected historical or projected future operating results;

•	Significant changes in the manner of Panavision's use of the acquired assets or the strategy for its overall business; and

•	Significant negative industry or economic trends.

Panavision determines whether the carrying value of its long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment. Panavision measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in its current business model. In accordance with Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," ("SFAS 142"), on January 1, 2002 Panavision ceased to amortize goodwill and its trade name since both are believed to have an indefinite life. In lieu of amortization, Panavision performs an annual review of its goodwill and trade name (more frequently if impairment indicators exist). If Panavision determines at any point in the impairment review process that goodwill or its trade name has been impaired, Panavision would record an impairment charge in its consolidated statement of operations.

Recent Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 151, "Inventory Costs – an amendment of ARB No. 43, Chapter 4" ("SFAS 151"). SFAS 151 amends the

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existing guidance to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs and spoilage. Whereas existing guidance stated that under some circumstances the amount of these items may be so abnormal as to warrant treatment as a current period expense, SFAS 151 requires treatment as current period expense regardless of the "so abnormal" criterion. SFAS 151 also requires the allocation of fixed production overheads be based on the normal capacity of the production facilities. SFAS 151 will be effective for Panavision's 2006 fiscal year. Panavision believes that implementation of SFAS 151 will not have a material impact on its consolidated financial position, results of operations or cash flows.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets – an amendment of APB No. 29" ("SFAS 153"). The existing guidance is based on the principle that exchanges of nonmonetary assets should be based on the fair value of the assets exchanged with certain exceptions. SFAS 153 amends existing guidance to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS 153 will be effective for Panavision's 2006 fiscal year. As the provisions of SFAS 153 are to be applied to prospective transactions, Panavision cannot ascertain at this time whether implementation of SFAS 153 will have any impact on its consolidated financial position, results of operations or cash flows.

In December 2004, the FASB issued revised SFAS No. 123R, "Share-Based Payment." SFAS No. 123R sets accounting requirements for "share-based" compensation to employees and requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based compensation. SFAS No. 123R is effective in interim or annual periods beginning after June 15, 2005. The Company will be required to adopt SFAS No. 123R in its third quarter of fiscal 2005 and currently discloses the effect on net (loss) income and (loss) earnings per share of the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." The Company is currently evaluating the impact of the adoption of SFAS 123R on its financial position and results of operations.

Forward-Looking Statements

This annual report on Form 10-K for the year ended December 31, 2004, as well as certain of Panavision's other public documents and statements and oral statements, contain forward-looking statements that reflect management's current assumptions and estimates of future performance and economic conditions. Such statements are made in reliance upon safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Panavision cautions investors that forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those projected, stated, or implied by the forward-looking statements. In addition, estimates of cost savings included in this Form 10-K are based on various assumptions that are subject to inherent uncertainty and actual cost savings could vary from these estimates. Further, Panavision encourages investors to read the summary of its critical accounting policies included elsewhere herein.

In addition to factors described in Panavision's Securities and Exchange Commission filings and others, the following factors could cause Panavision's actual results to differ materially from those expressed in any forward-looking statements made by Panavision: (a) a significant reduction in the number of feature film, commercial or series television productions; (b) competitive pressures arising from changes in technology, customer requirements, price competition and industry standards; (c) an increase in expenses related to new product initiatives and product development efforts; (d) unfavorable foreign currency fluctuations; (e) significant increases in interest rates; (f) lower-than-expected cash flows from operations; (g) difficulties or delays in developing and introducing new products or failure of Panavision's customers to accept new product offerings; (h) difficulties or delays in implementing improvements in operating efficiencies; (i) delays in customer acceptance of digital laboratory services; or (j) the inability to secure capital contributions or loans from affiliates, refinance its indebtedness or sell its equity securities. Panavision assumes no responsibility to update the forward-looking statements contained in this filing.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Panavision is exposed to market risk from changes in foreign currency exchange rates and interest rates, which could affect its business, results of operations and financial condition. Panavision manages its exposure to these market risks through its regular operating and financing activities.

As of December 31, 2004 and 2003, Panavision's primary net foreign currency market exposures include the Euro, British pound, Canadian dollar, Australian dollar and the New Zealand dollar. At the present time, the Company does not generally hedge against foreign currency fluctuation. Management does not foresee nor expect any significant changes in foreign currency exposure in the near future.

As of December 31, 2004 and 2003, a 10% appreciation in foreign currency exchange rates from the prevailing market rates would increase the related net unrealized gain on intercompany balances by $1.9 million and $2.6 million, respectively. Conversely, a 10% depreciation in these currencies from the prevailing market rates would decrease the related net unrealized loss on intercompany balances by $1.7 million and $2.6 million, respectively, as of December 31, 2004 and 2003.

Panavision is exposed to changes in interest rates on its variable rate debt. A hypothetical 10% increase in the interest rates applicable to 2004 and 2003 would have resulted in an increase to interest expense of approximately $1.1 million and $1.6 million, respectively. Conversely, a hypothetical 10% decrease in the interest rates applicable to 2004 and 2003 would have decreased interest expense by approximately $1.1 million and $1.6 million, respectively. As of December 31, 2004, Panavision believes that the carrying value of its amounts payable under the Amended Credit Agreement approximate fair value.

The fair value of Panavision's fixed rate long-term debt is sensitive to changes in interest rates. Based upon a hypothetical 10% increase in the interest rate, assuming all other conditions affecting market risk remain constant, the market value of Panavision's fixed rate debt would decrease approximately $1.9 million and $0.8 million at December 31, 2004 and 2003, respectively. Conversely, a hypothetical 10% decrease in the interest rate, assuming all other conditions affecting market risk remain constant, would result in an increase in market value of approximately $1.9 million and $0.8 million over the same period. Management does not foresee nor expect any significant change in its exposure to interest rate fluctuations or in how such exposure is managed in the future.

Panavision manages its fixed and floating rate debt with the objective of achieving a mix that management believes is appropriate. To manage this mix in a cost-effective manner, Panavision, from time to time, has entered into interest rate swap agreements, in which it agrees to exchange various combinations of fixed and/or variable interest rates based upon agreed upon notional amounts. Panavision had no interest rate swap agreements in effect at December 31, 2004.

Panavision believes the carrying value of its debt securities approximates fair value.

Item 8. Financial Statements and Supplementary Data

An index to financial statements and required financial statement schedules is set forth in Item 15(a).

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosures

None.

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Item 9A. Controls and Procedures

(a)

Disclosure Controls and Procedures. Panavision 's management, with the participation of the its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, Panavision's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, such disclosure controls and procedures are effective in accurately recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b)

Changes in Internal Control Over Financial Reporting. There have not been any changes in Panavision 's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth fiscal quarter ended December 31, 2004 that have materially affected, or are reasonably likely to materially affect, Panavision's internal control over financial reporting.

Item 9B. Other Information

On March 30, 2005, the Company received the 9 5/8% Notes Commitment from PX Holding. For a description of the 9 5/8% Notes Commitment, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Long-Term Debt. A copy of the 9 5/8% Notes Commitment is attached to this Form 10-K as Exhibit 99.1 and is incorporated herein by reference.

On March 30, 2005, Panavision entered a Fourth Amendment to the Amended Credit Agreement, a Fifth Supplemental Indenture to the 2004 Indenture and an amendment and restatement of the Second MacAndrews Line. For a discussion of these instruments, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Long-Term Debt. Copies of the Fourth Amendment, the Fifth Supplemental Indenture and the Second Amended and Restated MacAndrews Line are attached to this Form 10-K as Exhibits 4.13, 4.14 and 4.4, respectively, and are each incorporated herein by reference.

PART III

Panavision will provide the information otherwise set forth in Part III, Items 10 through 14, of Form 10-K in its definitive proxy statement for its 2005 annual meeting of stockholders, which will be filed no later than April 30, 2005.

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PART IV

Item 15.	Exhibits and Financial Statement Schedules

(a)(1) & (2)	The consolidated financial statements of this Annual Report on Form 10-K can be found beginning on page F-1.

(a)(3)	Exhibits

Exhibit Number				Description
3.				Certificate of Incorporation and By-Laws
3.1				Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999). **
3.2				Restated By-Laws of the Company (incorporated herein by reference to Exhibit 3.2 to Panavision's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999).**
3.3				Certificate of Designations, Powers, Preferences and Rights of Series D Cumulative Pay-in-Kind Preferred Stock of Panavision Inc. (incorporated herein by reference to Exhibit 3.6 to Panavision's Annual Report on Form 10-K for the year ended December 31, 2003).**
3.4				Certificate of Designations, Powers, Preferences and Rights of Series E Non-Cumulative Perpetual Participating Preferred Stock of Panavision Inc. (incorporated herein by reference to Exhibit 3.7 to Panavision's Annual Report on Form 10-K for the year ended December 31, 2003).**
3.5				Certificate of Elimination of Series D Preferred Stock (incorporated herein by reference to Exhibit 3.1 to Panavision's Current Report on Form 8-K filed on November 17, 2004).**
3.6				Certificate of Elimination of Series E Preferred Stock (incorporated herein by reference to Exhibit 3.2 to Panavision's Current Report on Form 8-K filed on November 17, 2004).**
4.				Instruments defining the rights of security holders, including indentures.
4.1				Indenture, dated as of February 11, 1998, between PX Escrow and The Bank of New York, as Trustee, relating to the Company's 9 5/8% Senior Subordinated Discount Notes Due 2006 (incorporated herein by reference to Exhibit 4.1 to Panavision's Registration Statement on Form S-1, Registration No. 333-59363 filed with the Securities and Exchange Commission on July 17, 1998).**
4.2				First Supplemental Indenture dated June 4, 1998, among PX Escrow, Panavision and the Trustee, amending the Indenture identified at Exhibit 4.1 (incorporated herein by reference to Exhibit 4.2 to Panavision's Registration Statement on Form S-1, Registration No. 333-59363 filed with the Securities and Exchange Commission on July 17, 1998).**
4.3				Amended and Restated Senior Subordinated Line of Credit Agreement dated January 16, 2004, between Panavision Inc. and MacAndrews & Forbes Holdings Inc. (incorporated herein by reference to Exhibit 4.16 to Panavision's Annual Report on Form 10-K for the year ended December 31, 2003).**
4.4				Second Amended and Restated Senior Subordinated Line of Credit Agreement dated January 16, 2004, amended and restated as of March 30, 2005, between Panavision Inc. and MacAndrews & Forbes Inc. (formerly MacAndrews & Forbes Holdings, Inc.).*

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Exhibit Number				Description
4.5				Indenture, dated as of January 16, 2004, between Panavision Inc. and Wilmington Trust Company, as Trustee, relating Panavision's 12.50% Senior Secured Notes due 2009 (incorporated herein by reference to Exhibit 4.17 Panavision's Annual Report on Form 10-K for the year ended December 31, 2003).**
4.6				Form of 12.50% Senior Secured Note due 2009 (incorporated herein by reference from to Exhibit 4.17 to Panavision's Annual Report on Form 10-K for the year ended December 31, 2003).**
4.7				Amended and Restated Credit Agreement, dated as of May 28, 1998, as amended and restated as of January 16, 2004, among Panavision Inc., the several lenders named therein, and JP Morgan Chase Bank, as Administrative Agent (incorporated herein by reference to Exhibit 4.19 to Panavision's Annual Report on Form 10-K for the year ended December 31, 2003).**
4.8				First Amendment and Waiver, dated as of August 11, 2004, with respect to the Amended and Restated Credit Agreement, dated as of May 28, 1998, as amended and restated as of January 16, 2004, among Panavision Inc., the several lenders named therein, and JP Morgan Chase Bank, as Administrative Agent. (incorporated herein by reference from Exhibit 4.21 from Panavision's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)**
4.9				First Supplemental Indenture and Waiver, dated as of August 11, 2004, with respect to Indenture, dated as of January 16, 2004, between Panavision Inc. the subsidiary guarantors and Wilmington Trust Company, as Trustee and Collateral Trustee, relating to Panavision's 12.50% Senior Secured Notes due 2009. (incorporated herein by reference from Exhibit 4.22 from Panavision's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).**
4.10				Second Amendment and Consent, dated as of November 15, 2004, with respect to the Amended and Restated Credit Agreement, dated as of May 28, 1998, as amended and restated as of January 16, 2004, among Panavision Inc., the several banks and other financial institutions or entities from time to time parties thereto and JPMorgan Chase Bank, as administrative agent. (incorporated herein by reference from Exhibit 10.2 to Panavision's Current Report on Form 8-K filed on November 17, 2004).**
4.11				Third Amendment, dated as of December 29, 2004, with respect to the Amended and Restated Credit Agreement, dated as of May 28, 1998, as amended and restated as of January 16, 2004, among Panavision Inc., the several banks and other financial institutions or entities from time to time parties thereto and JPMorgan Chase Bank, as administrative agent. (incorporated herein by reference from Exhibit 10.1 to Panavision's Current Report on Form 8-K filed on January 4, 2005).**
4.12				Fourth Supplemental Indenture, dated as of December 29, 2004 with respect to the Indenture, dated as of January 16, 2004, among Panavision Inc. the subsidiary guarantors and Wilmington Trust Company, as Trustee and Collateral Trustee, related to Panavision's 12.50% Senior Secured Notes due 2009. (incorporated herein by reference from Exhibit 10.2 to Panavision's Current Report on Form 8-K filed on January 4, 2005).**
4.13				Fourth Amendment, dated as of March 30, 2005, with respect to the Amended and Restated Credit Agreement, dated as of May 28, 1998, as amended and restated as of January 16, 2004, among Panavision Inc., the several banks and other financial institutions or entities from time to time parties thereto and JPMorgan Chase Bank, as administrative agent.*
4.14				Fifth Supplemental Indenture, dated as of March 30, 2005, with respect to the Indenture, dated as of January 16, 2004, among Panavision Inc., the subsidiary guarantors and Wilmington Trust Company, as Trustee and Collateral Trustee, related to Panavision's 12.50% Senior Secured Notes due 2009.*

33

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Exhibit Number				Description
10.				Material Contracts.
10.1				Panavision Inc. 1999 Stock Option Plan (incorporated herein by reference from Annex A Panavision's 1999 Definitive Proxy Statement dated March 31, 1999). **
10.2				Panavision Inc. 2003 Executive Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.2 to Panavision's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003).**
10.3				Lease, dated June 13, 1995, between the Company and Trizec Warner Inc. (incorporated herein by reference to Exhibit 10.5 to Panavision's Registration Statement on Form S-1/A, Registration No. 333-12235 filed with the Securities and Exchange Commission on October 31, 1996). **
10.4				Letter Agreement, dated as of March 27, 2003, between MacAndrews & Forbes Inc., PX Holding Corporation and Panavision Inc. (incorporated herein by reference to Exhibit 10.3 from the Company's Annual Report on Form 10-K for the year ended December 31, 2002).**
10.5				Letter Agreement, dated as of January 31, 2003, between MacAndrews & Forbes Inc., PX Holding Corporation and Panavision Inc. (incorporated herein by reference to Exhibit 10.3 from the Company's Annual Report on Form 10-K for the year ended December 31, 2002).**
10.6				Registration Rights Agreement, dated as of December 3, 2002, by and between PX Holding Corporation and Panavision Inc. (incorporated herein by reference to Exhibit 3 from Panavision's form SC 13D filed on December 9, 2002).**
10.7				Employment Agreement, dated April 1, 2003, between Panavision Inc. and Robert L. Beitcher, President and (as of September 7, 2003), Chief Executive Officer (incorporated herein by reference to Exhibit 10.30 to Panavision's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003).**
10.8				Amended & Restated Employment Agreement, dated May 9, 2003, between Panavision Inc. and Bobby G. Jenkins, Executive Vice President and Chief Financial Officer (incorporated herein by reference to Exhibit 10.32 to Panavision's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003). **
10.9				Amended & Restated Employment Agreement, dated May 9, 2003, between Panavision Inc. and Eric W. Golden, Executive Vice President and General Counsel (incorporated herein by reference to Exhibit 10.31 to Panavision's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003). **
10.10				Separation Agreement, dated as of January 10, 2005, between Panavision and Eric W. Golden, formerly the Company's Executive Vice President, General Counsel and Secretary.*
10.11				Letter Agreement, dated as of November 16, 2004, by and between Panavision Inc. and PX Holding Corporation (incorporated herein by reference from Exhibit 10.1 to Panavision's Current Report on Form 8-K filed on November 17, 2004).**
10.12				Loan Out Service Agreement, dated April 10, 2003, and made effective March 26, 2003, between Panavision Inc., and Ziffren, Brittenham, Branca, Fischer, Gilbert-Lurie & Stiffelman LLP (incorporated herein by reference to Exhibit 10.15 to Panavision's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003).**
10.13				Stock and Warrant Purchase Agreement dated July 26, 2000 by and between Sony Electronics Inc. and Panavision Inc. (incorporated herein by reference to Exhibit 10.17 to Panavision's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).**

34

---

Exhibit Number				Description
10.14				Warrant No. W-1, dated July 26, 2000, Warrant for Purchase of Shares of Common Stock from Panavision Inc. by Sony Electronics Inc. (incorporated herein by reference to Exhibit 10.18 to Panavision's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).**
10.15				Panavision Inc. Stockholders Agreement dated July 26, 2000 by and among Panavision Inc., Sony Electronics Inc. and PX Holding Corporation (incorporated herein by reference to Exhibit 10.19 to Panavision's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).**
10.16				Registration Rights Agreement dated July 26, 2000 by and between Panavision Inc. and Sony Electronics Inc. (incorporated herein by reference to Exhibit 10.20 to Panavision's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).**
10.17				Letter Agreement, dated as of November 16, 2004, by and between Panavision Inc. and PX Holding Corporation (incorporated herein by reference from Exhibit 10.1 to Panavision's Current Report on Form 8-K filed on November 17, 2004).**
10.18				Letter Agreement, dated as of January 16, 2004, among Mafco Holdings Inc., MacAndrews and Forbes Holdings Inc., PX Holding Corporation and Panavision Inc. (incorporated herein by reference to Exhibit 4.20 to Panavision's Annual Report on Form 10-K for the year ended December 31, 2004)**
21.				Subsidiaries.
21.1				Subsidiaries of Panavision. *
23.				Consents.
23.1				Consent of Ernst & Young LLP, independent registered public accounting firm.*
24.				Powers of Attorney.
24.1				Power of Attorney executed by Ronald O. Perelman.*
24.2				Power of Attorney executed by Robert L. Beitcher.*
24.3				Power of Attorney executed by Howard Gittis.*
24.4				Power of Attorney executed by Edward Grebow.*
24.5				Power of Attorney executed by Ed Gregory Hookstratten.*
24.6				Power of Attorney executed by James R. Maher.*
24.7				Power of Attorney executed by Martin D. Payson.*
24.8				Power of Attorney executed by John A. Scarcella.*
24.9				Power of Attorney executed by Robert S. Wiesenthal.*
24.10				Power of Attorney executed by Kenneth Ziffren.*

35

---

Exhibit Number				Description
31.				Section 302 Certifications.
31.1				Certification of Robert L. Beitcher, Chief Executive Officer, dated March 31, 2005.*
31.2				Certification of Bobby G. Jenkins, Chief Financial Officer, dated March 31, 2005.*
32.				Section 906 Certifications.
32.1				Certification of Robert L. Beitcher, Chief Executive Officer, dated March 31, 2005, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (furnished herewith)
32.2				Certification of Bobby G. Jenkins, Chief Financial Officer, dated March 31, 2005, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (furnished herewith)
99.				Other Exhibits
99.1				PX Holding Corporation 9 5/8% Notes Commitment Letter, dated as of March 30, 2005.*

*	Filed herewith.

**	Previously filed.

36

---

SIGNATURES

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

PANAVISION INC.

Date: March 31, 2005

By: /s/ ROBERT L. BEITCHER                     Robert L. Beitcher President and Chief Executive Officer

By: /s/ BOBBY G. JENKINS                            Bobby G. Jenkins Executive Vice President, Chief Financial Officer and Principal Accounting Officer

37

---

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

Signature		Title		Date
*		Co-Chairman of the Board and Director		March 31, 2005
Ronald O. Perelman
*		Co-Chairman and Director		March 31, 2005
Kenneth Ziffren
*		Vice Chairman and Director		March 31, 2005
Howard A. Gittis
/s/ ROBERT L. BEITCHER		President and Chief Executive Officer and Director		March 31, 2005
Robert L. Beitcher
/s/ BOBBY G. JENKINS		Executive Vice President, Chief Financial Officer and Principal Accounting Officer		March 31, 2005
Bobby G. Jenkins
*		Director		March 31, 2005
Edward Grebow
*		Director		March 31, 2005
Ed Gregory Hookstratten
*		Director		March 31, 2005
James R. Maher
*		Director		March 31, 2005
Martin D. Payson
*		Director		March 31, 2005
John A. Scarcella
*		Director		March 31, 2005
Robert S. Wiesenthal

*Bobby G. Jenkins, by signing his name hereto, does hereby execute this Form 10-K on behalf of the directors of the Registrant indicated above by asterisks, pursuant to powers of attorney duly executed by such directors and filed as exhibits to the Form 10-K.

By: /s/ BOBBY G. JENKINS

Name: Bobby G. Jenkins

Title: Executive Vice President, Chief Financial Officer and Principal Accounting Officer

38

---

INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES

				Page
Report of Independent Registered Public Accounting Firm					F-2
Consolidated Statements of Operations — Years ended December 31, 2004, 2003, and 2002					F-3
Consolidated Balance Sheets — Year Ended December 31, 2004 and 2003					F-4
Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) — Years Ended December 31, 2004, 2003 and 2002					F-6
Consolidated Statements of Cash Flows — Years ended December 31, 2004, 2003, and 2002					F-7
Notes to Consolidated Financial Statements					F-10

Financial Statement Schedules:

All schedules are included in the Notes to Consolidated Financial Statements or are omitted because they are not required by the regulations or related instructions or are not applicable.

F-1

---

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Panavision Inc.

We have audited the accompanying consolidated balance sheets of Panavision Inc. as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders' equity and comprehensive income (loss), and cash flows for each of the three years in the period ended December 31, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Panavision Inc. at December 31, 2004 and 2003, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

ERNST & YOUNG LLP

Los Angeles, California

March 30, 2005

F-2

---

Panavision Inc.
Consolidated Statements of Operations

(In thousands, except per share amounts)

				Year ended December 31,
				2004				2003				2002
Camera rental				$	125,976			$	118,686			$	122,223
Lighting rental					42,730				38,757				32,844
Sales and other					38,746				33,697				31,212
Total rental revenue and sales					207,452				191,140				186,279
Cost of camera rental					71,268				62,620				62,482
Cost of lighting rental					36,670				34,667				27,524
Cost of sales and other					22,344				19,268				17,380
Gross margin					77,170				74,585				78,893
Selling, general and administrative expenses					65,879				61,829				48,631
Research and development expenses					6,065				5,072				4,436
Operating income					5,226				7,684				25,826
Interest income					522				356				429
Interest expense					(32,284	)			(30,011	)			(34,951	)
Foreign exchange gain (loss)					338				(604	)			943
Refinancing expense					(6,191	)			(1,505	)			(4,523	)
Other income, net					3,726				1,864				1,463
Loss from continuing operations before income taxes					(28,663	)			(22,216	)			(10,813	)
Income tax benefit					7,463				5,693				2,464
Net loss from continuing operations					(21,200	)			(16,523	)			(8,349	)
Discontinued operations:
Income (loss) from EFILM (net of income tax (provision) benefit of $(462), $721 and $1,681)					715				(1,233	)			(2,730	)
Gain on disposal of EFILM (net of income tax (provision) of $(6,682), $0 and $0)					10,330				—				—
Net income (loss) from discontinued operations					11,045				(1,233	)			(2,730	)
Net loss				$	(10,155	)		$	(17,756	)		$	(11,079	)
Net loss from continuing operations attributable to common stockholders				$	(40,524	)		$	(30,308	)		$	(11,206	)
Net loss from continuing operations per share — basic and diluted				$	(3.21	)		$	(3.46	)		$	(1.28	)
Net loss per share — basic and diluted				$	(2.34	)		$	(3.60	)		$	(1.59	)
Shares used in computation — basic and diluted					12,617				8,770				8,770

See accompanying notes.

F-3

---

Panavision Inc.
Consolidated Balance Sheets

(In thousands, except share data)

				December 31,
				2004				2003
ASSETS
Current assets:
Cash and cash equivalents				$	6,593			$	6,770
Accounts receivable (net of allowance of $1,618 in 2004 and $2,586 in 2003)					28,897				27,272
Inventories					14,926				11,794
Prepaid expenses					3,912				4,211
Note receivable					826				—
Due from related parties					106				—
Other current assets					2,081				1,255
Total current assets					57,341				51,302
Property, plant and equipment, net					230,795				210,251
Goodwill, net					259,909				259,208
Patents and trademarks, net					66,266				66,389
Other assets					6,349				12,907
Net assets of discontinued operations					—				11,489
Total assets				$	620,660			$	611,546

See accompanying notes.

F-4

---

Panavision Inc.
Consolidated Balance Sheets

(In thousands, except share data)

				December 31,
				2004				2003
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable				$	8,634			$	6,554
Accrued liabilities					28,119				26,697
Due to related parties					—				1,190
Current maturities of long-term debt					9,557				5,885
Total current liabilities					46,310				40,326
Long-term debt					290,740				312,388
Notes payable to affiliate					9,154				21,401
Deferred tax liabilities, net					28,201				30,060
Other liabilities					3,323				2,701
Commitments and contingencies
Stockholders' equity:
Series A Non-Cumulative Perpetual Participating Preferred Stock, $0.01 par value; 1,500,000 shares authorized; 1,381,690 shares issued and outstanding at December 31, 2003 (liquidation preference of $1 per share, or $1,382, plus declared and unpaid dividends)					—				14
Series C Cumulative Pay-in Kind Preferred Stock, $0.01 par value; 200,000 shares authorized; 159,644 shares issued and outstanding at December 31, 2003 (liquidation preference of $1,000 per share, or $159,644, plus accrued and unpaid dividends)					—				2
Common Stock, $0.01 par value; 50,000,000 shares authorized; 39,380,729 and 8,769,919 shares issued and outstanding at December 31, 2004 and 2003, respectively					394				88
Additional paid-in capital					374,780				329,127
Revaluation capital					333,199				333,199
Accumulated deficit					(471,950	)			(461,795	)
Accumulated other comprehensive income					6,509				4,035
Total stockholders' equity					242,932				204,670
Total liabilities and stockholders' equity				$	620,660			$	611,546

See accompanying notes

F-5

---

Panavision Inc.
Consolidated Statements of Stockholders' Equity
and Comprehensive Income (Loss)
(In thousands, except share amount)

Preferred Stock

Common Stock

Shares Issued And Outstanding

Series A/E Amount

Shares Issued and Outstanding

Series C/D Amount

Shares Issued and Outstanding

Amount

Additional Paid-in Capital

Revaluation Capital

Accumulated Deficit

Accumulated Other Comprehensive Income (Loss)

Stockholders' Equity/ Comprehensive Income (Loss)

Balance at January 1, 2002

1,382

$

14

–

$

–

8,770

$

88

$

187,151

$

333,135

$

(432,960

)

$

(12,103

)

$

75,325

Comprehensive loss:

Net loss

–

–

–

–

–

–

–

–

(11,079

)

–

(11,079

)

Foreign currency translation adjustment

–

–

–

–

–

–

–

–

5,494

5,494

Total comprehensive loss

–

–

–

–

–

–

–

–

–

–

(5,585

)

Accreted dividend on Redeemable Series B Preferred Stock

–

–

–

–

–

–

(2,857

)

–

–

–

(2,857

)

Non-cash distribution to M&F Worldwide in connection With Las Palmas purchase

–

–

–

–

–

–

(1,414

)

–

–

–

(1,414

)

Revaluation capital adjustment

–

–

–

–

–

–

–

64

–

–

64

Contribution of net operating loss carryforwards by M&F Worldwide

–

–

–

–

–

–

6,521

–

–

–

6,521

Other

–

–

–

–

–

–

75

–

–

–

75

Balance at December 31, 2002

1,382

14

–

–

8,770

88

189,476

333,199

(444,039

)

(6,609

)

72,129

Comprehensive loss:

Net loss

–

–

–

–

–

–

–

–

(17,756

)

–

(17,756

)

Foreign currency translation adjustment

–

–

–

–

–

–

–

–

–

10,644

10,644

Total comprehensive loss

–

–

–

–

–

–

–

–

–

–

(7,112

)

Accreted dividend on Redeemable Series B Preferred Stock

–

–

–

–

–

–

(1,319

)

–

–

–

(1,319

)

Issuance of Series C Non-Cumulative Perpetual Preferred Stock

–

–

160

2

–

–

142,470

–

–

–

142,472

Adjustment to 2002 contribution of net operating loss carryforwards by M&F Worldwide

–

–

–

–

–

–

(1,650

)

–

–

–

(1,650

)

Other

–

–

–

–

–

–

150

–

–

–

150

Balance at December 31, 2003

1,382

14

160

2

8,770

88

329,127

333,199

(461,795

)

4,035

204,670

Comprehensive loss:

Net loss

–

–

–

–

–

–

–

–

(10,155

)

–

(10,155

)

Foreign currency translation adjustment

–

–

–

–

–

–

–

–

–

2,474

2,474

Total comprehensive loss

–

–

–

–

–

–

–

–

–

–

(7,681

)

Exchange of Series A for Series E and Series C

(1,382

)

(14

)

(160

)

(2

)

–

–

–

–

–

–

–

for Series D Preferred Stock

1,382

14

215

2

–

–

–

–

–

–

–

Parent capital contribution

–

–

–

–

–

–

22,710

–

–

–

22,710

Parent non-cash contribution of related party notes and 1 – 3 interest in PANY Rental

–

–

–

–

–

–

19,033

–

–

–

19,033

EFILM disposition

–

–

–

–

–

–

4,641

–

–

–

4,641

Exchange of Common Stock for Series A and Series D Preferred Stock

(1,382

)

(14

)

(215

)

(2

)

30,611

306

(818

)

–

–

–

(528

)

Other

–

–

–

–

–

–

87

–

–

–

87

Balance at December 31, 2004

–

$

–

–

$

39,381

$

394

$

374,780

$

333,199

$

(471,950

)

$

6,509

$

242,932

See accompanying notes

F-6

---

Panavision Inc.
Consolidated Statements of Cash Flows

(In thousands)

				Year ended December 31,
				2004				2003				2002
Operating activities
Net loss from continuing operations				$	(21,200	)		$	(16,523	)		$	(8,349	)
Adjustments to derive net cash provided by operating activities:
Depreciation and amortization					40,527				39,566				40,110
Gain on dispositions of property and equipment					(3,236	)			(1,507	)			(1,696	)
Write-off of deferred financing costs					3,436				—				—
Amortization of deferred financing costs					1,072				4,831				1,559
Dividends from equity method investees					1,112				—				—
Amortization of discount on subordinated notes					—				—				1,480
Deferred income tax benefit					(8,175	)			(10,755	)			(7,369	)
Changes in operating assets and liabilities:
Accounts receivable					(97	)			547				(5,126	)
Inventories					(3,129	)			(825	)			(270	)
Prepaid expenses and other current assets					(1,865	)			(1,902	)			(1,452	)
Due from affiliate					(106	)			105				(1,570	)
Accounts payable					1,757				(262	)			204
Accrued liabilities					1,146				1,255				7,621
Due to affiliate					(801	)			97				(1,563	)
Other, net					(1,758	)			(879	)			(4,846	)
Net cash provided by continuing operating activities					8,683				13,748				18,733
Investing activities
Capital expenditures					(38,328	)			(22,269	)			(16,150	)
Acquisition of businesses					(7,782	)			9				—
Net proceeds from sale of EFILM					25,300				—				—
Proceeds from collection of notes receivable					3,729				—				—
Proceeds from dispositions of fixed assets					5,010				2,377				2,896
Net cash used in investing activities					(12,071	)			(19,883	)			(13,254	)
Financing activities
Borrowings under credit agreement					135,600				—				32,226
Proceeds from issuance of Senior Notes					100,000				—				—
Borrowings under notes payable to affiliates					10,450				14,500				—
Repayment under notes payable to affiliates					(4,839	)			(1,500	)			—
Capital contribution					22,730				—				—
Repayments of long-term debt, including capital leases					(264,275	)			(23,313	)			(35,816	)
Deferred financing costs					(1,579	)			(4,087	)			(2,228	)
Sale of note receivable to affiliate					5,000				—				—
Proceeds from issuance of Series B Preferred Stock*					—				4,372				10,000
Proceeds from issuance of Series C Preferred Stock*					—				9,725				—
Notes payable to Deluxe Laboratories, Inc					—				580				—
Net cash provided by financing activities					3,087				277				4,182
Effect of exchange rate changes on cash					124				726				158
Net increase (decrease) in cash and cash equivalents					(177	)			(5,132	)			9,819
Cash and cash equivalents at beginning of period					6,770				11,902				2,083
Cash and cash equivalents at end of period				$	6,593			$	6,770			$	11,902

	* net of transaction costs

See accompanying notes

F-7

---

    

				Year ended December 31,
				2004				2003				2002
Supplemental cash flow information
Interest paid during the period, net of amounts capitalized				$	30,574			$	26,921			$	23,299
Income taxes paid during the period					1,868				2,360				2,597

Supplemental non-cash financing activities

As described in Note 13 of the Notes to Consolidated Financial Statements, in January, 2004 the Company issued to PX Holding Corporation ("PX Holding") 1,381,690 shares of new Series E Non-Cumulative Perpetual Participating Preferred Stock, par value $0.01, ("Series E Preferred Stock") in exchange for 1,381,690 shares of Series A Non-Cumulative Perpetual Participating Preferred Stock, par value $0.01, ("Series A Preferred Stock"), which constituted all of the outstanding Series A Preferred Stock.

As described in Note 13 of the Notes to Condensed Consolidated Financial Statements, in January, 2004 the Company issued to PX Holding 215,274 shares of new Series D Cumulative Pay-in-Kind Preferred Stock, par value $0.01, ("Series D Preferred Stock") in exchange for, among other consideration, 159,644 shares of Series C Cumulative Pay-in-Kind Preferred Stock, par value $0.01, ("Series C Preferred Stock") held by PX Holding, which constituted all of the outstanding Series C Preferred Stock. The other consideration included the contribution of MacAndrews & Forbes Holdings, Inc.'s, formerly known as Mafco Holdings Inc., one-third interest in the common stock of PANY Rental Inc. ("PANY Rental") and the contribution or retirement of various related party notes. Total book value, which approximates fair value, of the non-cash consideration, excluding the Series C Preferred Stock issued, was approximately $19.0 million.

In connection with the August, 2004 sale of its 80% interest in EFILM, LLC ("EFILM"), the Company received, in addition to cash proceeds, a promissory note for $5 million that was subsequently sold to MacAndrews & Forbes Holdings. In connection with a May, 2004 sale of property and equipment, the Company received, in addition to cash proceeds, promissory notes totaling approximately $1.5 million, of which approximately half was collected during 2004.

During the year ended December 31, 2004, the Company acquired rental equipment by entering into capital leases totaling approximately $9.7 million.

On March 27, 2003, MacAndrews & Forbes Holdings contributed $90.9 million principal amount of the 9 5/8% Senior Subordinated Discount Notes Due 2006 (the "9 5/8% Notes") and $10.0 million in cash to the Company in exchange for 102,220 shares of Series C Cumulative Pay in Kind Preferred Stock, which it contributed to the capital of PX Holding, and PX Holding contributed to the Company 53,571 shares of Series B Preferred Stock in exchange for 57,424 shares of Series C Preferred Stock. As a result of this transaction, all of the outstanding Series B Preferred Stock was transferred to the Company. In connection with the contribution of 9 5/8% Notes by the majority shareholder, deferred tax assets associated with the 9 5/8% Notes of $18.0 million were charged against additional paid-in capital.

For the year ended December 31, 2003, the Company recorded an accreted dividend of $1.3 million on the Series B Preferred Stock.

In 2002, M&F Worldwide Corp. contributed net operating loss carryforwards amounting to $6.5 million (See Note 7 to the Notes to the Consolidated Financial Statements). Such amounts were reduced by $1.6 million in 2003.

In June 2002, the Company issued 49,199 shares of Series B Cumulative Pay in Kind Preferred Stock in exchange for $10.0 million in cash and $37.7 million principal amount at maturity of 9 5/8% plus unpaid accrued interest of $1.5 million. For the year ended December 31, 2002, an accreted dividend of $2.9 million was recorded on the Series B Preferred Stock. For the year ended December 31, 2003, the Company recorded an accreted dividend of $1.3 million on the Series B Preferred Stock.

F-8

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In July 2002, the Company purchased Las Palmas Productions, Inc. from M&F Worldwide by issuing a $6.7 million note payable (see Note 2 to the Notes to Consolidated Financial Statements).

In 2002 and 2003, adjustments were recorded to goodwill and deferred tax liabilities relating to differences in the book and tax basis of assets not recorded at the time of the M&F Purchase. These adjustments resulted in an increase in goodwill of $7.6 million and an increase in deferred tax liabilities of $7.2 million at December 31, 2003.

See accompanying notes

F-9

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Panavision Inc.
Notes to Consolidated Financial Statements

(In thousands, except share data)

1. Summary of Significant Accounting Policies

Description of Business and Basis of Presentation

Panavision Inc. ("Panavision" or the "Company") is a leading designer, manufacturer and supplier of high-precision camera systems, comprising cameras, lenses and accessories, for the motion picture and television industries. The Company rents its products through its owned-and-operated facilities in North America, Europe, and the Asia Pacific region, as well as through a worldwide agent network. In addition to manufacturing and renting camera systems, the Company also rents lighting, lighting grip, power distribution, generation and related transportation equipment and sells lighting filters and other color correction and diffusion filters.

The Company is an indirect majority-owned subsidiary of MacAndrews & Forbes Holdings Inc. ("MacAndrews & Forbes Holdings" or "Parent"), previously known as Mafco Holdings Inc. ("Mafco Holdings"), a corporation whose sole stockholder is Ronald O. Perelman. All of the Company's operations are conducted through its subsidiaries.

As also described in Note 2, on April 19, 2001, M&F Worldwide Corp. ("M&F Worldwide") purchased from PX Holding Corporation ("PX Holding"), a wholly-owned subsidiary of MacAndrews & Forbes Holdings, all 7,320,225 shares (the "Purchased Shares") of the Company's Common Stock held by PX Holding (the "M&F Purchase"). The Purchased Shares constituted approximately 83.5% of the Company's then outstanding Common Stock. The aggregate consideration for the Purchased Shares consisted of (a) 1,500,000 shares of M&F Worldwide common stock; (b) 6,182,153 shares of M&F Worldwide preferred stock; and (c) $80.0 million in cash. As a result of the purchase, MacAndrews & Forbes Holdings increased its indirect interest in M&F Worldwide to a majority position.

In connection with the M&F Purchase, the carrying values of Panavision's assets and liabilities were changed to reflect the fair values of the assets and liabilities as of the acquisition date to the extent of M&F Worldwide's 83.5% controlling interest. The remaining 16.5% was reported using Panavision's historical basis.

During 2001, certain stockholders of M&F Worldwide brought lawsuits against M&F Worldwide and its directors challenging the M&F Purchase as an alleged breach of fiduciary duty and sought, among other things, rescission of the M&F Purchase transaction. One of the stockholders dismissed his lawsuit pursuant to a settlement.

On December 3, 2002, the remaining parties to the litigation consummated a Stipulation of Settlement (the "M&F Settlement") whereby MacAndrews & Forbes Holdings acquired (1) through PX Holding, the shares of the Company's Common Stock that M&F Worldwide had purchased in April 2001, (2) the shares of the Company's Series A Non-Cumulative Perpetual Participating Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock") that M&F Worldwide acquired in December of 2001, (3) the 9 5/8% Senior Subordinated Discount Notes due 2006 (the "9 5/8% Notes") that a subsidiary of M&F Worldwide acquired in November of 2001, and (4) the note in the amount of $6.7 million (the "Las Palmas Note") that the Company issued to M&F Worldwide on its acquisition of the shares of Las Palmas Productions, Inc. ("Las Palmas"). In addition, all agreements to which M&F Worldwide entered into in connection with the M&F Purchase and the December 2001 issuance of the Series A Preferred Stock were terminated.

Thus, after the consummation of the M&F Settlement, the Company ceased being a subsidiary of M&F Worldwide. MacAndrews & Forbes Holdings, after giving effect to the M&F Settlement, indirectly controlled 85.7% of the voting shares of the Company. The M&F Settlement did not have a significant impact on the recorded values of the Company's assets or liabilities since the transaction was between parties under common control.

On May 30, 2003, the Company purchased an additional 1/3 interest in PANY Rental Inc. ("PANY Rental") for a combined purchase price of approximately $0.6 million including transaction costs. This

F-10

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

purchase increased the Company's ownership interest from a 1/3 interest to a 2/3 interest. As a result of this increased ownership interest, the Company consolidated the financial position and results of operation of PANY Rental in the accompanying consolidated financial statements, the effects of which were immaterial. In addition, on May 30, 2003, PX Holding, the holder of approximately 83.5% of the Company's voting stock, purchased the remaining 1/3 interest in PANY Rental for a purchase price of $0.7 million and purchased a promissory note payable by PANY Rental with a principal amount plus accrued interest of approximately $0.7 million.

As discussed in Note 13 of the Consolidated Financial Statements, in January 2004 the Company issued to PX Holding 215,274 shares of Series D Preferred Stock in exchange for, among other items, the remaining 1/3 interest in PANY Rental. As a result, as of January 16, 2004 the Company owned 100% of the outstanding shares of PANY Rental. PANY Rental holds an exclusive license to rent the Company's camera systems in the New York market and a license to use the Panavision trademark in connection with the rental of camera systems and related equipment to customers.

The consolidated financial statements include the accounts of Panavision and its majority-owned subsidiaries. All significant intercompany amounts and transactions have been eliminated.

Certain amounts in previously issued financial statements have been reclassified to conform to the 2004 presentation, including, but not limited to, the presentation of EFILM, LLC ("EFILM") and its holding company, LPPI, LLC, as discontinued operations for all periods presented.

Translation of Foreign Currencies

The functional currency for the Company's foreign subsidiaries is the local currency. All assets and liabilities denominated in foreign functional currencies are translated into U.S. dollars at rates of exchange in effect at the balance sheet date. Statement of operations items are translated at the average rate of exchange prevailing during the period. Translation gains and losses are recorded as a component of accumulated other comprehensive income (loss) in the accompanying statements of stockholders' equity and comprehensive income (loss). Gains and losses resulting from transactions in other than functional currencies are reflected in operating results.

Cash Equivalents

The Company considers all highly liquid debt instruments purchased with original maturity dates of three months or less and investments in money market funds to be cash equivalents. The carrying amounts reported in the balance sheets for cash and cash equivalents approximate fair value.

Inventories

Inventories are valued at the lower of cost or market value and are determined principally under the first-in, first-out method. Inventories are reviewed for excess and obsolescence based upon demand forecasts within a specific time horizon and reserves are established accordingly.

Property, Plant and Equipment

With the exception of rental assets, which were adjusted in connection with the M&F Purchase, property, plant and equipment are stated at cost. Maintenance and repairs are charged to expense as incurred. Additions, improvements and replacements that extend asset life are capitalized.

Depreciation is provided on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the useful life of the related asset or the remaining lease term. Cost and accumulated depreciation applicable to assets retired or otherwise disposed of are eliminated from the accounts, and any gain or loss on such disposition is reflected in operating results.

F-11

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

Depreciation is provided principally over the following useful lives:

Buildings and improvements				10–30 years
Rental assets				3–20 years
Machinery and equipment				3–10 years
Furniture and fixtures				5–10 years

Depreciation expense totaled $38.9 million, $37.1 million, and $37.4 million for the years ended December 31, 2004, 2003, and 2002, respectively.

Goodwill and Intangible Assets

Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject to annual impairment tests. Other intangible assets are amortized over their estimated useful lives.

The Company performed an impairment test relating to its goodwill and tradename as of December 31, 2004 and December 31, 2003, and found that the fair values of its goodwill and its tradename are in excess of carrying value.

As of December 31, 2004 and 2003, goodwill was $259.9 million and $259.2 million, respectively, net of accumulated amortization of $9.1 million for both years. Goodwill is principally related to the M&F Purchase (see Note 2).

Patents are being amortized on a straight-line basis over their estimated useful lives ranging from 5 to 12 years. Amortization expense amounted to $0.3 million, $0.4 million and $0.4 million for 2004, 2003, and 2002, respectively. Accumulated amortization was $4.5 million and $4.4 million at December 31, 2004 and 2003, respectively.

Accounting for Long-Lived Assets

The Company assesses on an ongoing basis the recoverability of long-lived tangible and intangible assets based on estimates of future undiscounted cash flows compared to net book value. If the future undiscounted cash flow estimates were less than net book value, net book value would then be reduced to estimated fair value, which generally approximates discounted cash flows. The Company also evaluates the amortization periods of assets to determine whether events or circumstances warrant revised estimates of useful lives.

Income Taxes

Income taxes are accounted for using the liability method in accordance with Statement of Financial Accounting Standard ("SFAS") No. 109, "Accounting for Income Taxes" (see Note 7). Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. As of December 31, 2004, the Company has provided deferred income taxes, including withholding taxes, on undistributed earnings from Canada totaling approximately $4.2 million. All other foreign earnings are permanently reinvested.

Financial Instruments

Most of the Company's customers are in the entertainment industry. The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. The Company does not generally require collateral. Actual losses and allowances have been within management's expectations.

The carrying amounts for cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and debt approximate fair value.

F-12

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

Revenue Recognition

Rental revenue is recognized over the related equipment rental period. Sales revenue is recognized upon shipment. Returns and allowances, which have not been significant, are provided for in the period of sale.

Advertising Costs

For the years ended December 31, 2004, 2003 and 2002, advertising costs amounted to $2.4 million, $1.9 million, and $1.6 million, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations. Advertising costs are expensed as incurred.

Freight Costs

For the years ended December 31, 2004, 2003 and 2002, freight costs amounted to $2.0 million, $1.5 million, and $1.8 million, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

Stock-Based Benefits

The Company follows the provisions of SFAS Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), which permit companies to either expense the estimated fair value of stock options, or to continue to follow the intrinsic value method set forth in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), but disclose the pro forma effects on net income (loss) had the fair value of the options been expensed. Through the year ended December 31, 2004, the Company has elected to continue to apply APB 25 in accounting for its stock option grants.

In accordance with APB 25 and related interpretations, compensation expense for stock options is recognized in income based on the excess, if any, of the quoted market price of the stock at the grant date of the award or other measurement date over the amount an employee must pay to acquire the stock. Generally, the exercise price for stock options granted to employees equals or exceeds the fair market value of the Company's common stock at the date of grant, thereby resulting in no recognition of compensation expense by the Company. For awards that generate compensation expense as defined under APB 25, the Company calculates the amount of compensation expense and recognizes the expense over the vesting period of the award.

In December 2002, SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure" ("SFAS 148"), which amends SFAS 123, was issued. SFAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require more prominent and more frequent disclosures in financial statements about the effects of stock-based compensation. The Company has complied with the disclosure requirements of SFAS 148 and has elected not to adopt the fair value based method of accounting for stock-based employee compensation prescribed by SFAS 148. As described below in New Accounting Pronouncements the Company will be required to adopt SFAS 123 (R) in the third quarter of 2005.

Investments

Investments of approximately $0 and $5.0 million at December 31, 2004 and 2003, respectively, accounted for under the equity method, are included in other assets in the accompanying consolidated balance sheets. The Company's share of earnings (losses) of its equity investees of approximately $(72,000), $137,000, and ($83,000) for the years ended December 31, 2004, 2003, and 2002, respectively, is included in other, net in the accompanying consolidated statements of operations.

F-13

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

New Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 151, "Inventory Costs — an amendment of ARB No. 43, Chapter 4" ("SFAS 151"). SFAS 151 amends the existing guidance to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs and spoilage. Whereas existing guidance stated that under some circumstances the amount of these items may be so abnormal as to warrant treatment as a current period expense, SFAS 151 requires treatment as current period expense regardless of the "so abnormal" criterion. SFAS 151 also requires the allocation of fixed production overheads be based on the normal capacity of the production facilities. SFAS 151 will be effective for the Company's 2006 fiscal year. The Company believes that implementation of SFAS 151 will not have a material impact on its consolidated financial position, results of operations or cash flows.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets — an amendment of APB No. 29" ("SFAS 153"). The existing guidance is based on the principle that exchanges of nonmonetary assets should be based on the fair value of the assets exchanged with certain exceptions. SFAS 153 amends existing guidance to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS 153 will be effective for the Company's 2006 fiscal year. As the provisions of SFAS 153 are to be applied to prospective transactions, the Company cannot ascertain at this time whether implementation of SFAS 153 will have any impact on its consolidated financial position, results of operations or cash flows.

In December 2004, the FASB issued revised SFAS No. 123R, "Share-Based Payment." SFAS No. 123R sets accounting requirements for "share-based" compensation to employees and requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based compensation. SFAS No. 123R is effective in interim or annual periods beginning after June 15, 2005. The Company will be required to adopt SFAS No. 123R in its third quarter of fiscal 2005 and currently discloses the effect on net (loss) income and (loss) earnings per share of the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." The Company is currently evaluating the impact of the adoption of SFAS 123R on its financial position and results of operations.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including the collectibility of receivables and the realizability of assets such as fixed assets and deferred taxes. Actual results could differ from such estimates.

Accounting for Derivative Instruments

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), as amended by SFAS 137, requires the Company to recognize all derivatives as either assets or liabilities and measure those instruments at fair value. It further provides criteria for derivative instruments to be designated as fair value, cash flow and foreign currency hedges and establishes respective accounting standards for reporting changes in the fair value of the derivative instruments. All hedging instruments are to be adjusted to fair value in the balance sheet and the offsetting gains or losses are recognized as adjustments to net loss or other comprehensive loss, as appropriate. The Company did not hold any derivative instruments at December 31, 2004 and 2003, and did not recognize any gains or losses on derivative instruments for the years ended December 31, 2004, 2003 and 2002.

2.    Transactions with M&F Worldwide Corp.

On April 19, 2001, M&F Worldwide purchased from PX Holding all 7,320,225 shares (the "Purchased Shares") of the Company's Common Stock held by PX Holding (the "M&F Purchase"). The Purchased

F-14

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

Shares constituted approximately 83.5% of the Company's then outstanding Common Stock. The aggregate consideration for the Purchased Shares consisted of (a) 1,500,000 shares of M&F Worldwide common stock; (b) 6,182,153 shares of M&F Worldwide preferred stock; and (c) $80.0 million in cash. As a result of the purchase, MacAndrews & Forbes Holdings increased its indirect interest in M&F Worldwide to a majority position.

The Company, PX Holding and M&F Worldwide entered into a letter agreement (the "Registration Rights Agreement Transfer Letter"), dated as of April 19, 2001, which confirmed that, upon acquisition of the Purchased Shares, M&F Worldwide or its designated affiliate, PVI Acquisition Corp., became a "Holder" under the Registration Rights Agreement dated as of June 5, 1998, between the Company and PX Holding (the "Registration Rights Agreement"), and that all Purchased Shares became "Registrable Securities" under such agreement. The Registration Rights Agreement Transfer Letter was terminated on December 3, 2002, in connection with the M&F Settlement.

In connection with the M&F Purchase, the carrying values of Panavision's assets and liabilities were changed to reflect the fair values of the assets and liabilities as of the acquisition date to the extent of M&F Worldwide's 83.5% controlling interest. The remaining 16.5% is accounted for at Panavision's historical basis. As a result of the purchase price allocation for assets and liabilities representing 83.5% of the totals, the following adjustments were recorded as of the acquisition date to adjust the historical carrying values (in thousands):

				Increase (Decrease)
Property, plant and equipment				$	40,783
Goodwill					260,006
Trademarks					68,612
Other					(2,838	)
Long-term debt					3,847
Deferred tax assets					15,553
Deferred tax liabilities					45,134

In 2002 and 2003, adjustments were recorded to goodwill and deferred tax liabilities relating to differences in book and tax basis of assets not recorded at the time of the M&F purchase. These adjustments resulted in an increase in goodwill of $7.6 million and an increase in deferred tax liabilities of $7.2 million at December 31, 2003.

At the closing of the M&F Purchase, Ronald O. Perelman, MacAndrews & Forbes Holdings' sole shareholder, delivered a letter to M&F Worldwide in which Mr. Perelman agreed that, if M&F Worldwide determined in its good faith reasonable judgment that Panavision were unable to make required payments of principal or interest under its Prior Credit Agreement or its 9 5/8% Notes, he or corporations under his control would provide such financial support to M&F Worldwide as may be required by Panavision in connection with such payments of principal and interest. Pursuant to the M&F Settlement, this letter agreement was terminated on December 3, 2002.

In satisfaction of the obligation of M&F Worldwide under another agreement entered into contemporaneously with the closing of the M&F Purchase, MacAndrews & Forbes Holdings and M&F Worldwide entered into a letter agreement, and M&F Worldwide and the Company entered into a letter agreement, both dated as of December 21, 2001, pursuant to which M&F Worldwide purchased from PX Holding $22.0 million principal amount of 9 5/8% Notes for an aggregate purchase price of $8.14 million, and M&F Worldwide delivered to the Company an aggregate of $24.5 million principal amount of 9 5/8% Notes in exchange for 1,381,690 shares of Series A Preferred Stock of the Company. The Series A Preferred Stock was issued at a value of approximately $9.3 million, which represented M&F Worldwide's cost to purchase the 9 5/8% Notes delivered to the Company. Because M&F Worldwide delivered the 9 5/8% Notes to the Company in satisfaction of obligations under an agreement entered into concurrent with the

F-15

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

M&F Purchase, the difference between M&F Worldwide's cost and the Company's book value of the 9 5/8% Notes was recorded as a reduction of goodwill.

The Company and M&F Worldwide entered into a letter agreement (the "Registration Rights Agreement Amendment Letter"), dated as of December 21, 2001, pursuant to which the Company and M&F Worldwide agreed to amend the Registration Rights Agreement to, among other things, include the Series A Preferred Stock within the definition of "Registrable Securities."

During 2001, certain stockholders of M&F Worldwide brought lawsuits against M&F Worldwide and its directors challenging the M&F Purchase as an alleged breach of fiduciary duty and sought, among other things, rescission of the M&F Purchase transaction. One of the stockholders dismissed his lawsuit pursuant to a settlement. On December 3, 2002, the remaining parties to the litigation consummated a Stipulation of Settlement (the "M&F Settlement") whereby MacAndrews & Forbes Holdings acquired, through PX Holding, (1) the shares of the Company's Common Stock that M&F Worldwide had purchased in April 2001, (2) 1,381,690 shares of the Company's Series A Preferred Stock that M&F Worldwide acquired in December of 2001, (3) $11.4 million principal amount of 9 5/8% Notes that a subsidiary of M&F Worldwide acquired in November of 2001, and (4) the Las Palmas Note in the amount of $6.7 million that the Company issued to M&F Worldwide on its acquisition of the shares of Las Palmas (see Note 14 of the Notes to Consolidated Financial Statements). In addition, all agreements to which M&F Worldwide entered into in connection with the M&F Purchase and the December 2001 issuance of the Series A Preferred Stock were terminated.

Thus, after the consummation of the M&F Settlement, the Company ceased being a subsidiary of M&F Worldwide. The M&F Settlement did not have a significant impact on the recorded values of the Company's assets or liabilities since the transaction was between parties under common control.

On November 16, 2004, the Company issued to PX Holding 30,610,810 shares of common stock, par value $.01 per share ("Common Stock"), in exchange for 215,274 shares of Series D Cumulative Pay-In-Kind Preferred Stock, par value $.01 per share ("Series D Preferred Stock"), and 1,381,690 shares of Series E Non-Cumulative Perpetual Participating Preferred Stock, par value $.01 per share ("Series E Preferred Stock"), such shares representing all outstanding shares of each series (the "Exchange").

In the Exchange, the Company issued 29,229,120 shares of Common Stock in exchange for all shares of Series D Preferred Stock held by PX Holding at an exchange ratio of 125 shares of Common Stock for each $1,000 of outstanding liquidation preference or accrued and unpaid dividends; and 1,381,690 shares of Common Stock in exchange for all 1,381,690 shares of Series E Preferred Stock held by PX Holding. After giving effect to the transaction, PX Holding holds approximately 96.3% of the Common Stock.

3.    Discontinued Operations

In August 2004, the Company disposed of its 80% interest in EFILM. Accordingly, both EFILM and its holding company, LPPI, LLC, are presented as discontinued operations in the consolidated financial statements and the accompanying notes.

F-16

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

Revenue and income (loss) before income taxes from discontinued operations for the years ended December 31, 2004, 2003 and 2002 were as follows (in thousands):

				Year ended December 31,
				2004				2003				2002
Revenue				$	15,488			$	16,817			$	6,903
Income (loss) before income taxes					1,177				(1,954	)			(4,411	)

4.    Other Income, net

The components of Other income, net for the years ended December 31, 2004, 2004 and 2002 were as follows (in thousands):

				Year ended December 31,
				2004				2003				2002
Net gain on sales of property and equipment				$	2,489			$	1,027			$	1,396
Minority interest income					18				320				1
Earnings (loss) of equity affiliates					(72	)			137				191
Insurance settlements					1,083				763				37
Fees from related party					420				—				—
Other expense					(212	)			(383	)			(162	)
Total other income, net				$	3,726			$	1,864			$	1,463

5.    Comprehensive Loss

Components of accumulated other comprehensive loss were as follows (in thousands):

				Year ended December 31,
				2004				2003				2002
Net loss				$	(10,155	)		$	(17,756	)		$	(11,079	)
Foreign currency translation adjustment					2,474				10,644				5,494
Total comprehensive loss				$	(7,681	)		$	(7,112	)		$	(5,585	)

6.    Earnings Per Share

Basic earnings per share is based upon the weighted-average number of common shares outstanding. Diluted earnings per share is based upon the weighted-average number of common shares and dilutive potential common shares outstanding. Potential common shares, consisting of outstanding stock options and warrants are considered in the calculation under the treasury stock method.

F-17

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

The following table sets forth the computation for basic and diluted earnings per share (in thousands, except per share data):

				Year ended December 31,
				2004				2003				2002
Numerators:
Net loss from continuing operations				$	(21,200	)		$	(16,523	)		$	(8,349	)
Accreted dividends on Redeemable Series B Preferred Stock					—				(1,319	)			(2,857	)
Series C Preferred Stock accumulated dividend					(765	)			(12,466	)			—
Series D Preferred Stock accumulated dividend					(18,559	)			—				—
Net loss from continuing operations attributable to common stockholders					(40,524	)			(30,308	)			(11,206	)
Net income (loss) from discontinued operations					11,045				(1,233	)			(2,730	)
Net income (loss) attributable to common stockholders				$	(29,479	)		$	(31,541	)		$	(13,936	)
Denominator:
Denominator for basic loss per share- weighted average shares					12,617				8,770				8,770
Effect of dilutive securities – stock options and warrants					—				—				—
Denominator for diluted loss per share - adjusted weighted average shares					12,617				8,770				8,770
Income (loss) per share, basic and diluted:
Continuing operations				$	(3.21	)		$	(3.46	)		$	(1.28	)
Discontinued operations					0.87				(0.14	)			(0.31	)
Income (loss) per share, basic and diluted				$	(2.34	)		$	(3.60	)		$	(1.59	)

Outstanding stock options to purchase 614,000 shares, 642,000 shares and 992,000 shares of common stock at December 31, 2004, 2003 and 2002, respectively, were excluded from the calculation of diluted loss per share as their effect would have been antidilutive. Warrants outstanding at December 31, 2004, 2003 and 2002 to purchase 714,300 shares of common stock were excluded from the calculation of diluted loss per share as their effect would have been antidilutive.

7.    Income Taxes

Under applicable Internal Revenue Service regulations, the Company may not join in filing a consolidated federal income tax return with either MacAndrews & Forbes Holdings or the Company's subsidiaries until May 2006 without consent from the Internal Revenue Service. Accordingly, since the effective date of the M&F Settlement of December 3, 2002, the Company has filed separate federal income tax returns for the Company and each of its incorporated subsidiaries.

For the period from April 19, 2001 through December 31, 2001 and for the period from January 1, 2002 through December 3, 2002, the closing date of the M&F Settlement, the Company, for federal income tax purposes, has been included in the affiliated group of which M&F Worldwide is the common parent, and the Company's federal taxable income is included in such group's consolidated tax return filed by M&F Worldwide. The Company was also included in certain state and local tax returns of M&F Worldwide or its subsidiaries. As of April 19, 2001, the Company and M&F Worldwide entered into a tax sharing agreement (the "M&F Worldwide Tax Sharing Agreement"), pursuant to which M&F Worldwide

F-18

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

agreed to indemnify the Company against federal, state or local income tax liabilities of the consolidated or combined group of which M&F Worldwide (or a subsidiary of M&F Worldwide other than the Company or its subsidiaries) is the common parent for taxable periods beginning after April 19, 2001 during which the Company or a subsidiary of the Company was a member of such group. Pursuant to the M&F Worldwide Tax Sharing Agreement, for all taxable periods beginning on or after April 19, 2001 and ending December 3, 2002, the Company was obligated to pay to M&F Worldwide amounts equal to the taxes that the Company would otherwise have to pay if it were to file separate federal, state or local income tax returns (including any amounts determined to be due as a result of a redetermination arising from an audit or otherwise of the consolidated or combined tax liability relating to any such period which is attributable to the Company), except that the Company was not entitled to carry back any losses to taxable periods ending prior to April 19, 2001. No payments were required under the M&F Worldwide Tax Sharing Agreement as the Company had sufficient net operating loss carryforwards to offset its taxable income. The M&F Worldwide Tax Sharing Agreement will continue in effect after December 3, 2002 only as to matters such as audit adjustments and indemnities.

For the period from February 1, 1999 through April 19, 2001, the Company, for federal income tax purposes, had been included in the affiliated group of which MacAndrews & Forbes Holdings was the common parent, and for such period the Company's federal taxable income and loss had been included in such group's consolidated tax return filed by MacAndrews & Forbes Holdings. As of February 1, 1999, the Company and certain of its subsidiaries and MacAndrews & Forbes Holdings, formerly known as Mafco Holdings, entered into a tax sharing agreement (the "Mafco Holdings Tax Sharing Agreement") containing terms and conditions substantially the same as those in the M&F Worldwide Tax Sharing Agreement. The Mafco Holdings Tax Sharing Agreement governed tax matters between the Company and MacAndrews & Forbes Holdings for the period from February 1, 1999 through April 19, 2001 and continues in effect as to post MacAndrews & Forbes Holdings consolidation matters such as audit adjustments and indemnities.

Since the M&F Purchase constituted a deconsolidation event under the Mafco Tax Sharing Agreement, federal and state net operating loss carryforwards of approximately $31.8 million and $17.3 million, respectively, are no longer available for use by the Company.

Although the Company had taxable income on a consolidated basis for the tax years ending December 3, 2002 and December 31, 2001, current operating losses and net operating loss carryforwards of M&F Worldwide were used to offset this income before the Company's net operating loss carryforwards were utilized due to the ordering rules set forth in the Internal Revenue Code. Consequently, upon leaving the M&F Worldwide consolidated group on December 3, 2002, the Company took approximately $60.1 million of net operating loss carryforwards, of which $15.1 million relates to net operating loss carryforwards that otherwise would have been used prior to December 3, 2002 but for the ordering rules. The Company has accounted for these additional net operating loss carryovers as a contribution to capital by M&F Worldwide.

Subsequent to December 31, 2001, new tax legislation was enacted that will allow for utilization of alternative minimum tax net operating losses to fully offset alternative minimum taxable income for 2001 and 2002. The impact relating to this new legislation, which was recorded in the first quarter of 2002, primarily resulted in accelerating utilization of alternative minimum tax net operating losses.

F-19

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

The (provision) benefit for income taxes comprises the following (in thousands):

				Year ended December 31,
				2004				2003				2002
Current (provision) benefit:
Federal				$	—			$	—			$	—
State					(48	)			—				(299	)
Foreign					(1,491	)			(1,447	)			(3,019	)
Total current provision					(1,539	)			(1,447	)			(3,318	)
Deferred (provision) benefit:
Federal					8,117				6,825				4,528
State					885				315				1,254
Foreign					—				—				—
Total deferred benefit					9,002				7,140				5,782
Total tax benefit				$	7,463			$	5,693			$	2,464

For financial statement purposes, loss before income taxes includes the following components (in thousands):

				Year ended December 31,
				2004				2003				2002
Income (loss) before income taxes:
Domestic				$	(24,974	)		$	(19,469	)		$	(12,121	)
Foreign					(3,689	)			(2,747	)			1,308
				$	(28,663	)		$	(22,216	)		$	(10,813	)

The difference between the income tax (provision) benefit and the amount computed by applying the Federal statutory rate (35%) to loss before income taxes is explained below (in thousands):

				Year Ended December 31,
				2004				2003				2002
Tax at federal statutory rate				$	10,032			$	7,776			$	3,785
State income tax benefit					837				315				955
Decrease/(increase) in valuation allowance					(781	)			(474	)			441
Change in tax credits					—				449				(4,343	)
Recognition of foreign net loss carryforwards					—				—				6,159
Non-deductible items					(79	)			(77	)			(53	)
Foreign income taxed at varying rates including foreign losses for which no benefit was received					(2,223	)			(3,038	)			(2,561	)
Other, net					(323	)			742				(1,919	)
				$	7,463			$	5,693			$	2,464

F-20

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

Significant components of the Company's deferred tax assets and liabilities as of December 31, 2004 and 2003 are as follows (in thousands):

				December 31,
				2004				2003
Deferred tax assets:
Debt original issue discount				$	230			$	403
Domestic net operating loss carryforwards					29,703				26,054
Foreign net operating loss carryforwards					7,133				6,573
Tax credit carryforwards (primarily alternative minimum tax credits)					10,355				10,973
Expense accruals					669				1,440
State income taxes and other					3,982				3,845
Total deferred tax assets					52,072				49,288
Valuation allowance					(8,114	)			(7,333	)
Net deferred tax assets					43,958				41,955
Deferred tax liabilities:
Fixed assets					(41,543	)			(41,083	)
Unremitted foreign earnings					(2,415	)			(2,731	)
Intangibles					(28,201	)			(28,201	)
Total deferred tax liabilities					(72,159	)			(72,015	)
Net deferred tax liabilities				$	(28,201	)			(30,060	)
Balance Sheet Classification:
Non-current deferred tax liability				$	(28,201	)		$	(30,060	)

SFAS 109 provides for the recognition of deferred tax assets if realization of such assets is more likely than not. Based upon the weight of available evidence, which includes the uncertainty regarding the Company's ability to utilize certain net operating losses and tax credits in the future, the Company has provided a partial valuation allowance against its net domestic deferred tax assets.

After the effect of the deconsolidation, as of December 31, 2004, the Company has federal and state net operating loss carryforwards of approximately $82.1 million and $11.4 million, respectively. The net operating loss carryforwards will expire at various dates beginning in 2006 through 2024, if not utilized.

At December 31, 2004, the Company also had federal alternative minimum tax credit carryforwards of approximately $5.6 million, which may be used indefinitely, and research and development credit carryforwards of $0.3 million, which will expire from 2006 through 2021, if not utilized.

At December 31, 2004, the Company also had California alternative minimum tax credit carryforwards and California research and development credit carryforwards totaling approximately $2.0 million, both of which may be carried forward indefinitely.

At December 31, 2004, the Company had U.K. net operating loss carryforwards totaling approximately $35.6 million that may be carried forward indefinitely. A full valuation allowance has been provided against this asset.

8.    Segment Information

The Company has one reportable segment, the rental of camera systems, lighting systems and other equipment, and the sales of related products. These activities are conducted in a number of geographic locations though the Company's owned-and-operated facilities and its network of independent distributors.

F-21

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

The following table presents revenue and other financial information for the reportable segment by geographic region (in thousands):

				December 31, 2004
				United States				Canada				United Kingdom				Rest of Europe				Asia Pacific				Total
Revenue from external customers				$	82,262			$	13,319			$	63,641			$	20,581			$	27,649			$	207,452
Long-lived assets *				$	183,657			$	3,755			$	27,294			$	12,763			$	9,675			$	237,144

				December 31, 2003
				United States				Canada				United Kingdom				Rest of Europe				Asia Pacific				Total
Revenue from external customers				$	77,669			$	16,026			$	58,584			$	16,904			$	21,957			$	191,140
Long-lived assets *				$	182,933			$	4,685			$	20,108			$	5,858			$	9,574			$	223,158

				December 31, 2002
				United States				Canada				United Kingdom				Rest of Europe				Asia Pacific				Total
Revenue from external customers				$	78,206			$	16,032			$	51,196			$	16,228			$	24,617			$	186,279

	* Excluding intangible assets

No one customer accounted for more than 10% of the Company's consolidated net revenues for the years ended December 31, 2004, 2003, and 2002.

9.    Inventories

Inventories consist of the following (in thousands):

				December 31,
				2004				2003
Finished goods				$	2,476			$	2,464
Work-in-process					315				302
Component parts					4,664				2,048
Spare parts and supplies					1,409				1,539
Goods purchased for resale					6,062				5,441
				$	14,926			$	11,794

10.    Property, Plant and Equipment

Property, plant and equipment consist of the following (in thousands):

				December 31,
				2004				2003
Buildings and improvements				$	15,457			$	13,947
Rental assets					359,972				305,812
Machinery and equipment					9,468				7,367
Furniture and fixtures					4,835				5,151
Other					1,739				649
					391,471				332,296
Less: accumulated depreciation and amortization					160,676				122,675
				$	230,795			$	210,251

F-22

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

During 2004 and 2003, the Company recorded approximately $150,000 and $77,000 of capitalized interest costs, respectively.

11.    Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

				December 31,
				2004				2003
Interest payable				$	4,792			$	5,029
Professional fees					1,723				2,792
Taxes other than income taxes					3,599				2,688
Payroll and related costs					8,896				6,186
Rent					3,271				3,134
Insurance					1,058				1,125
Severance, current portion					726				1,717
Other liabilities					4,054				4,026
				$	28,119			$	26,697

12.    Long-Term Debt

Long-term debt, including current maturities, consists of the following (in thousands):

				December 31,
				2004				2003
Amended and Restated Credit Agreement				$	125,694			$	—
12.50% Senior Notes Due 2009					100,597				—
Prior Credit Agreement:
Revolving Facility					—				99,200
Term Facility					—				151,792
9 5/8% Senior Subordinated Discount Notes Due 2006					65,084				65,353
Notes payable to affiliate					9,154				21,401
Other (including capital leases)					8,922				1,928
					309,451				339,674
Less: Current maturities					9,557				5,885
Total Long-Term Debt				$	299,894			$	333,789

As of December 31, 2004, the Company had a line of credit totaling approximately $20.0 million, under which $ 9.2 million was drawn.

The 9 5/8% Notes were issued at a discount representing a yield to maturity of 9 5/8%. There were no periodic or interest payments through February 1, 2002. Thereafter, they bear interest at a rate of 9 5/8% per annum, payable semi-annually on February 1 and August 1 of each year, commencing August 1, 2002.

On August 13, 2003, MacAndrews & Forbes Inc., formerly MacAndrews & Forbes Holdings Inc., agreed to amend an existing line of credit provided to the Company to increase the amount available for borrowing from $4.0 million to $10.0 million and extend the maturity date to August 31, 2006 (as amended, the "MacAndrews Line"). In connection with an amendment to the Company's Prior Credit Agreement (as defined below), on November 12, 2003, MacAndrews & Forbes Inc. agreed to provide a second revolving line of credit (the "Second MacAndrews Line") in the amount of $10.0 million at a rate equal to 50 basis points above the rate provided for in the revolving facility pursuant to the Prior Credit

F-23

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

Agreement and a maturity of April 15, 2004. As described below, in connection with the January 2004 Refinancing (as defined below), (i) amounts outstanding under the MacAndrews Line were retired in exchange for shares of new Series D Cumulative Pay-in-Kind Preferred Stock, par value $0.01 per share (the "Series D Preferred Stock") and (ii) MacAndrews & Forbes Inc. increased the amount of the Second MacAndrews Line to $20.0 million and extended the maturity to April 16, 2009. As of December 31, 2004, the Company had availability under the Second MacAndrews line of approximately $10.8 million.

On June 4, 1998, the Company entered into a Credit Agreement with a syndicate of lenders (as subsequently amended on September 30, 1998, June 30, 1999, March 15, 2002, June 14, 2002, September 30, 2002, March 25, 2003 and November 12, 2003, the "Prior Credit Agreement"). The Company's obligations under the Prior Credit Agreement were secured by substantially all of the Company's assets. The Prior Credit Agreement comprised two facilities, the Term Facility and the Revolving Facility. As of December 31, 2003, amounts outstanding under the Prior Credit Agreement were $151.8 million and $99.2 million for the Term Facility and Revolving Facility, respectively. As described below, the Prior Credit Agreement was replaced with the Amended and Restated Credit Agreement pursuant to the January 2004 Refinancing.

On January 16, 2004, the Company consummated a series of transactions to refinance its indebtedness under the Prior Credit Agreement (the "January 2004 Refinancing"). As part of the January 2004 Refinancing, the Company sold, in a private placement, $104.2 million of senior secured notes (the "Senior Notes") bearing interest at a rate of 12.50%, payable quarterly, with a maturity date of January 16, 2009. The Senior Notes were sold at an original issue discount of approximately 4% for an aggregate purchase price of $100.0 million. The Senior Notes are secured by a second-priority lien on substantially all of the Company's assets. The indenture pursuant to which the Senior Notes were issued (the "2004 Indenture") requires that, among other provisions, the Company achieve certain EBITDA levels and abide by certain other restrictive covenants, including limitations on indebtedness, liens, disposition of assets, and certain restricted payments including dividends to stockholders. Upon certain events of default under the 2004 Indenture, the Senior Notes will bear interest at 2.5% above the rate otherwise applicable.

Also as part of the January 2004 Refinancing, the Company issued to PX Holding 215,274 shares of new Series D Preferred Stock in exchange for (a) 159,644 shares of Series C Cumulative Pay-in-kind Preferred Stock, par value $0.01 per share (the "Series C Preferred Stock"), of the Company, held by PX Holding (together with approximately $13.2 million of accumulated dividends thereon); (b) $23.0 million in cash; (c) the retirement of all principal and interest (an aggregate of $10,180,930) owed as of January 16, 2004 under the MacAndrews Line; (d) 33.3 shares of common stock of PANY Rental, Inc., having a fair market value of $0.7 million (such that, as of January 16, 2004, the Company owned 100% of the outstanding shares of PANY Rental); (e) the retirement of all amounts (consisting of $630,780 in principal and $82,913 in accrued and unpaid interest) owed by PANY Rental to PX Holding pursuant to a certain promissory note held by PX Holding; and (f) the retirement of all amounts (consisting of $7.8 million in principal and unpaid interest) owed to MacAndrews & Forbes Holdings under a certain promissory note in the principal amount of $6.7 million, dated July 1, 2002, issued by the Company to M & F Worldwide and subsequently acquired by MacAndrews & Forbes Holdings. The Series D Preferred Stock is non-voting, has a liquidation preference of $1,000 per share plus accrued and unpaid dividends, and entitles the holder to cumulative dividends at a rate of 10% per annum regardless of whether declared or earned. Additionally, the Series D Preferred Stock is subject to redemption in certain circumstances upon a change of control. The Company also issued to PX Holding 1,381,690 shares of new Series E Non-Cumulative Perpetual Participating Preferred Stock, par value $0.01 per share, (the "Series E Preferred Stock") in exchange for 1,381,690 shares of Series A Non-Cumulative Perpetual Participating Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"). The Series E Preferred Stock is entitled to one vote per share, voting together with the Common Stock as a single class, has a liquidation preference of $1.00 per share plus accrued and unpaid dividends, and provides for non-cumulative cash dividends at an annual rate of $0.05 per share if declared by the Company. As a result of the January 2004 Refinancing transactions, all of the outstanding shares of Series A and Series C Preferred Stock were

F-24

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

transferred to the Company. In addition, MacAndrews & Forbes Inc, increased the amount of the Second MacAndrews Line to $20.0 million and extended the maturity to April 16, 2009.

The Company used proceeds from the sale of the Senior Notes and the issuance of Series D Preferred Stock to reduce the indebtedness under the Prior Credit Agreement by $115.4 million, and replaced the Prior Credit Agreement with an Amended and Restated Credit Agreement (the "Amended Credit Agreement") with the lenders under the Prior Credit Agreement. The Amended Credit Agreement provides for a single term loan facility in the principal amount of $135.6 million repayable in quarterly installments with a final maturity of January 12, 2007, except that the term facility shall be due on September 1, 2005 if any of the 9 5/8% Notes remain outstanding on that date. The Company is considering various alternatives with respect to the repayment or refinancing of the 9 5/8% Notes. While there can be no assurance, the Company expects that the 9 5/8% Notes will be refinanced or otherwise repaid by December 1, 2005. See Note 22 – Subsequent Events.

The term facility bears interest at either the ABR or Eurodollar Rate (as defined in the Amended Credit Agreement) plus a margin of 5.25% in the case of ABR loans or 6.25% in the case of Eurodollar Loans. The term facility under the Amended Credit Agreement is secured on substantially the same basis as indebtedness under the Prior Credit Agreement. In connection with the Amended Credit Agreement, the Company paid fees to lenders and professional advisors of approximately $3.5 million, including an original issue discount fee of approximately $2.0 million. Approximately $3.1 million of the fees paid were expensed in 2004.

As a result of the January 2004 Refinancing, in accordance with Statement of Financial Accounting Standards No. 6, "Classification of Short-Term Obligations Expected to be Refinanced" ("SFAS 6"), the Company reclassified $246.0 million of the refinanced debt to long-term debt as of December 31, 2003.

Under the Amended Credit Agreement, the Company is required to repay $7.2 million in principal in 2005. In addition, the Amended Credit Agreement revised certain financial tests and other restrictive covenants set forth in the Prior Credit Agreement, including required EBITDA (as defined), limitations on indebtedness, and other provisions. As defined in the Amended Credit Agreement and 2004 Indenture, EBITDA includes adjustments for certain severance expenses, refinancing expenses, foreign exchange (gain) loss, and other non-cash charges.

Amendments to Amended Credit Agreement and 2004 Indenture

EFILM

Principally to provide a mechanism for the reinvestment of the proceeds of the EFILM Sale, as described below, on August 11, 2004, the Company and the other parties to the Amended Credit Agreement entered into an amendment and waiver to the Amended Credit Agreement ("First Amendment and Waiver"). To provide a similar mechanism for the reinvestment of the proceeds of the EFILM Sale under the 2004 Indenture, on August 11, 2004, the Company and Wilmington Trust Company, as Trustee, entered into a supplemental indenture ("Supplemental Indenture"). On September 30, 2004, in accordance with the terms of the Amended Credit Agreement and the 2004 Indenture, upon repayment of $1.3 million to Federal Financial Credit Inc., PANY Rental and TFN Lighting Corp. (each subsidiaries of the Company) became guarantors under those debt instruments.

DHD

On September 16, 2004, the Company purchased from Sony Electronics, Inc. ("Sony"), a 49% interest in DHD Ventures, LLC ("DHD"), making DHD a wholly-owned subsidiary of the Company. Following this acquisition, DHD was converted to a limited partnership, DHD Ventures, LP, the limited partner of which is the Company and the general partner is DHD Holdings, Inc. DHD Ventures, LP and DHD Holdings, Inc. both became guarantors under the Amended Credit Agreement and the 2004 Indenture on September 30, 2004.

F-25

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

Preferred Stock Exchange

On November 16, 2004, Panavision issued 30,610,810 shares of common stock, par value $.01 per share to PX Holding Corporation, in exchange for all Series D Preferred Stock and all Series E Preferred Stock held by PX Holding (the "Exchange"). In connection with the Exchange, Panavision entered into a Second Amendment and Consent, dated as of November 15, 2004, with respect to Panavision's Amended Credit Agreement.

WFW

In connection with the Panavision acquisition of the camera inventory of William F. White International Inc., (the "WFW Acquisition"), Panavision entered into a Third Amendment, dated as of December 29, 2004 with respect to Panavision's Amended Credit Agreement. In addition, in connection with the WFW Acquisition, Panavision entered into a Fourth Supplemental Indenture, dated as of December 29, 2004, with respect to the 2004 Indenture.

See Note 22 – Subsequent Events, regarding amendments to the Amended Credit Agreement, 2004 Indenture and Second MacAndrews Line that took place subsequent to December 31, 2004.

F-26

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

The following sets forth the aggregate principal maturities of the Company's debt, including capital leases, during the twelve-month periods ending December (in thousands):

2005				$	9,557
2006					83,331
2007					113,312
2008					1,708
2009 and thereafter					104,821
				$	312,729

The amounts presented for 2005 do not reflect the impact of the term facility under the Amended Credit Agreement becoming due in December 2005 if any of the 9 5/8% Notes remain outstanding on that date. See Note 22 – Subsequent Events.

13.    Preferred Stock

As more fully described in Note 2, the Company issued 1,381,690 shares of Series A Preferred Stock in December 2001. The Series A Preferred Stock was entitled to non-cumulative dividends at a rate of $0.05 per share per annum payable, if declared, quarterly on each March 31, June 30, September 30 and December 31. In addition, the Series A Preferred Stock had also participated pro rata on a share-for-share basis with the common stock, par value $0.01 per share, of the Company ("Common Stock") with respect to any dividends declared or paid on the Common Stock. The Company's Prior Credit Agreement restricted the payment of dividends.

As discussed in Note 12, the Company issued 49,199 shares of Series B Preferred Stock to MacAndrews & Forbes Holdings on June 28, 2002. The Series B Preferred Stock was non-voting, had a liquidation preference of $49.2 million plus accrued and unpaid dividends, and entitled its holders to cumulative dividends at a rate of 10% per annum. The terms of the Series B Preferred Stock indicated that such stock may be redeemed by the Company, at its option, at any time at a price of $1,000 per share, plus accrued and unpaid dividends. Since MacAndrews & Forbes Holdings maintained the majority shareholder vote of the Company, the Series B Preferred Stock was deemed to be redeemable at the option of MacAndrews & Forbes Holdings, and was therefore classified outside of permanent equity in the accompanying consolidated balance sheets.

The issuance of the Series B Preferred Stock was recorded at its redemption value, net of $0.3 million of transaction costs. Because the Series B Preferred Stock was redeemable at the option of MacAndrews & Forbes Holdings, the Company was required to carry the Series B Preferred Stock at its redemption value. The Company recorded an accreted dividend of $1.3 million and $2.9 million during the years ended December 31, 2003 and 2002 in accordance with the terms of the Series B Preferred Stock.

In connection with the March 2003 Amendment, all the Series B Preferred Stock was contributed back to the Company and 102,220 shares of Series C Preferred Stock were issued. The Series C Preferred Stock, par value $0.01 per share, was non-voting; had a liquidation preference of $1,000 per share plus accrued and unpaid dividends; and entitled the holder to cumulative dividends at a rate of 10% per annum regardless of whether declared or earned. Additionally, the Series C Preferred Stock was subject to redemption in certain circumstances upon a change of control.

As described in Note 12, the Company issued to PX Holding 215,274 shares of new Series D Cumulative Pay-In-Kind Preferred Stock on January 16, 2004. The Series D Preferred Stock was non-voting, had a liquidation preference of $1,000 per share plus accrued and unpaid dividends, and entitled the holder to cumulative dividends at a rate of 10% per annum regardless of whether declared or earned. Additionally, the Series D Preferred Stock was subject to redemption in certain circumstances upon a change of control. The Company also issued to PX Holding 1,381,690 shares of new Series E Non-Cumulative Perpetual Participating Preferred Stock (the "Series E Preferred Stock") in exchange for

F-27

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

1,381,690 shares of Series A Preferred Stock. The Series E Preferred Stock was entitled to one vote per share, voting together with the Common Stock as a single class, had a liquidation preference of $1.00 per share plus accrued and unpaid dividends, and provided for non-cumulative cash dividends at an annual rate of $0.05 per share if declared by the Company. As a result of the January 2004 Refinancing transactions, all of the outstanding shares of Series A and Series C Preferred Stock were transferred to the Company and a Certificate of Elimination was filed for each series.

As discussed in Note 2, on November 16, 2004, Panavision issued 30,610,810 shares of common stock, par value $.01 per share to PX Holding Corporation, in exchange for all Series D Preferred Stock and all Series E Preferred Stock held by PX Holding (the "Exchange"). The Exchange was completed pursuant to a letter agreement, dated November 16, 2004, between Panavision and PX Holding (the "Letter Agreement").

In the transaction, Panavision issued:

•	29,229,120 shares of Common Stock in exchange for all 215,274 shares of Series D Preferred Stock held by PX Holding at an exchange ratio of 125 shares of Common Stock for each $1,000 of outstanding liquidation preference or accrued and unpaid dividends, valuing the Common Stock at $8.00 per share; and

•	1,381,690 shares of Common Stock in exchange for all 1,381,690 shares of Series E Preferred Stock held by PX Holding.

The transaction was unanimously approved by an independent Special Committee of Panavision's Board of Directors. In the Letter Agreement, PX Holding agreed, among other things, to certain restrictions on its ability to acquire Panavision's remaining Common Stock or to transfer the shares it holds. After giving effect to the transaction, PX Holding holds approximately 96.3% of the Common Stock. The transaction follows a May 13, 2004 offer by MacAndrews & Forbes Holdings initially valuing the Common Stock at $7.00 per share. As a result of the Exchange, all of the outstanding shares of Series D and Series E Preferred Stock were transferred to the Company and a Certificate of Elimination was filed for each series.

14.    Stock Based Benefits

During 1999, the Board of Directors adopted a stock option plan (the "Plan") which is open to participation by directors, officers, consultants, and other key employees of the Company or of its subsidiaries and certain other key persons. The Plan provides for the issuance of incentive and nonqualified stock options under the Internal Revenue Code. An aggregate of 1,500,000 shares of Panavision Common Stock are reserved for issuance under the Plan. The options are granted for a term of ten years. If an incentive stock option is granted to an individual owning more than 10% of the total combined voting power of all stock, the exercise price of the option may not be less than 110% of the fair market value of the underlying shares on the date of grant and the term of the option may not exceed five years. The Plan also provides that the aggregate fair market value (determined as of the time the option is granted) of Panavision Common Stock with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year shall not exceed $100,000.

F-28

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

Option information with respect to the Company's stock option plan is as follows:

								Exercise Price
				Shares				Range				Weighted Avg. Price
Options outstanding at December 31, 2001					992,000			$10.00-$7.50				$	9.73
Options expired					—			—					—
Options outstanding at December 31, 2002					992,000			$10.00-$7.50				$	9.67
Options expired					(350,000	)		$10.00-$7.50					—
Options outstanding at December 31, 2003					642,000			$10.00				$	10.00
Options expired					(28,000	)		$10.00				$	10.00
Options outstanding at December 31, 2004					614,000			$10.00				$	10.00

The weighted-average remaining contractual life of options outstanding at December 31, 2003 is 4.8 years.

Information regarding stock options exercisable is as follows:

				December 31,
				2004				2003				2002
Options Exercisable:
Number					614,000				642,000				992,000
Weighted average exercise prices				$10.00				$10.00				$9.67

There were no options granted under the Plan during 2004, 2003, or 2002.

For purposes of the pro forma expense discussed in Note 1, the weighted average fair value of the options was amortized over the vesting period. Applying SFAS 123 in the pro forma disclosures may not be representative of the effects on pro forma net loss for future years as options vest over several years and additional awards may be made each year

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options. The Company's stock options have characteristics significantly different from those of traded options such as vesting restrictions and non-transferability of options. In addition, the assumptions used in option valuation models are subjective, particularly the expected stock price volatility for the underlying stock. Because changes in these subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing model does not provide a reliable single measure of the fair value of its employee stock options.

F-29

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

The following table illustrates the effect on net loss and loss per share if the Company had applied the fair value recognition provision of FASB No. 123, "Accounting for Stock-Based Compensation," to stock-based employee compensation (in thousands, except per share data):

				Year ended December 31, 2004				Year ended December 31, 2003				Year ended December 31, 2002
Net loss as reported				$	(10,155	)		$	(17,756	)		$	(11,079	)
Add: stock-based employee compensation expense included in reported net loss					—				—				—
Deduct: total stock-based employee compensation expense determined under fair value method of all awards					—				—				(15	)
Pro forma net loss				$	(10,155	)		$	(17,756	)		$	(11,094	)
Pro forma net loss attributable to common stockholders				$	(29,479	)		$	(31,541	)		$	(13,951	)
Shares used in computation – basic and diluted					12,617				8,770				8,770
Loss per share:
Basic and diluted net loss per share – as reported				$	(2.34	)		$	(3.60	)		$	(1.59	)
Basic and diluted net loss per share – pro forma				$	(2.34	)		$	(3.60	)		$	(1.59	)

15.    Employee Benefit Plans

The Company sponsors a defined contribution 401(k) plan covering a majority of its domestic employees. Eligible employees may contribute from 1% to 16% of their base compensation. The Company makes matching contributions equal to 75% of employee before-tax contributions from 1% to 6%. For the years ended December 31, 2004, 2003 and 2002. The Company recorded expense of $0.9 million, $0.8 million, and $0.7 million respectively, related to the 401(k) plan.

In addition, the Company sponsors defined contribution retirement plans in Europe and Australia that cover certain foreign employees. Participating employees contribute from 4% to 15% of their base compensation. The Company contributes 10.5% to 13% of base compensation for participating employees depending upon their level of contribution. For the years ended December 31, 2004, 2003, and December 31, 2002, the Company recorded expense of $1.8 million, $1.5 million, and $1.0 million, respectively, representing the Company's contributions.

Certain of the Company's senior executives have employment agreements containing equity participation provisions. Amounts, if any, to be paid under the equity participation provisions, are based on contractually defined formulas. As of December 31, 2004, approximately $636,000 has been accrued in connection with these equity participation provisions.

16.    Change in Estimated Asset Retirement Obligations

Upon the initial adoption of SFAS No. 143, "Accounting for Asset Retirement Obligations", the Company estimated its liability for asset retirement obligations to be zero. After completing a recent facilities rationalization review, the Company revised its estimate for leasehold restoration costs upward to approximately $2.4 million. The impact of the revision on net income from continuing operations for the year ended December 31, 2004, was approximately $175,000, or $0.01 per common share, basic and diluted.

F-30

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

Changes in estimated asset retirement obligations for the year ended December 31, 2004 are as follows (in thousands):

Balance January 1, 2004				$	—
Revision of estimate *					2,394
Accretion expense					80
Balance, December 31, 2004				$	2,474

* Includes effects of foreign currency rate changes on balances denominated in currencies other than the U.S. dollar

17.    Commitments and Contingencies

The Company leases real estate, equipment, and vehicles under non-cancelable operating and capitalized leases. Future minimum payments under non-cancelable leases with initial or remaining terms of one year or more are presented below (in thousands):

				Operating				Capital
2005				$	9,755			$	2,571
2006					6,847				2,443
2007					5,191				2,320
2008					4,164				1,930
2009					3,194				503
Thereafter					6,239				273
Minimum lease payments				$	35,390				10,040
Less: imputed interest at rates ranging from 3.5% to 8.75%									1,310
Present value of minimum lease payments included in long-term debt								$	8,730

During the years ended December 31, 2004, 2003 and 2002, rental expense under operating leases was $9.8 million, $10.3 million, and $8.1 million, respectively.

As of December 31, 2004, the Company had a commitment of approximately $7 million to purchase digital cameras over a period of approximately eighteen months.

As of December 31, 2004, the Company had a line of credit totaling approximately $20.0 million, under which $9.2 million was drawn. In addition, the Company had various lines of credit totaling approximately $3.6 million at December 31, 2003, under which no amounts were drawn. The Company does not have any off-balance sheet financing arrangements.

The Company and its subsidiaries are defendants in actions for matters arising out of normal business operations. The Company, based in part on the advice of legal counsel, does not believe that any such proceedings currently pending will have a materially adverse effect on its consolidated financial position, results of operations, or cash flows.

18.    Related Party Transactions

Certain related party transactions between Panavision and MacAndrews & Forbes Holdings and between Panavision and PX Holding are disclosed in Note 1, Summary of Significant Accounting Policies — Description of Business, Note 2, Transactions with M&F Worldwide Corp., Note 7, Income Taxes, Note 12, Long-Term Debt, and Note 13, Preferred Stock.

Beginning in December 2002, the Company began participating in MacAndrews & Forbes Holdings' directors and officers insurance program, which covers the Company as well as MacAndrews & Forbes

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

Holdings and its other affiliates. The limits of coverage are applicable to aggregate losses to any or all of the participating companies and their respective directors and officers. The Company reimburses MacAndrews & Forbes Holdings for its allocable portion of the premiums for such coverage, which the Company believes are at least as favorable as the premiums the Company could secure were it to secure stand-alone coverage. The Company participates on a similar basis in other insurance programs with MacAndrews & Forbes Holdings and its affiliates which management believes are at least as favorable as arms-length terms.

The Company and PX Holding are parties to a Registration Rights Agreement dated as of December 3, 2002 (the "Registration Rights Agreement") pursuant to which PX Holding and certain of its transferees (the "Holders") have the right to require the Company to register under the Securities Act of 1933 (a "Demand Registration") all or part of the Common Stock and certain other shares of capital stock (collectively, "Registrable Shares") owned by the Holders. The Company may postpone giving effect to a Demand Registration for up to a period of 30 days if the Company believes such registration might have a material adverse effect on any plan or proposal by the Company with respect to any financing, acquisition, recapitalization, reorganization or other material transaction, or the Company is in possession of material non-public information that, if publicly disclosed, could result in a material disruption of a major corporate development or transaction then pending or in progress or in other material adverse consequences to the Company. In addition, the Holders will have the right to participate in registrations by the Company of its equity securities (an "Incidental Registration") subject, however, to certain rights in favor of the Company to reduce, or eliminate entirely, the number of Registrable Shares the Holders may have registered in an Incidental Registration. The Company will pay all out-of-pocket expenses incurred in connection with a Demand Registration or an Incidental Registration, except for underwriting discounts, commissions and related expenses attributable to the Registrable Shares sold by such Holders.

On July 1, 2003, Panavision International, L.P., the Company's principal operating subsidiary, entered into a Security Officer Service Agreement (the "Security Agreement") with an operating subsidiary of Allied Security Holdings LLC, ("Allied Security") an affiliate of MacAndrews & Forbes Holdings. Pursuant to the Security Agreement, Allied Security provides the Company with security officer services on terms which management believes are competitive with industry rates for similarly situated security firms and as favorable as terms that could have been obtained from an unrelated party in an arms-length transaction. During 2004, amounts paid to Allied Security by the Company pursuant to the Security Agreement were $145,000. Since July 16, 2003, the Security Agreement has been continuing on a month-to-month basis.

In December 2003, Panavision Imaging, LLC, a subsidiary of PX Holding, purchased the assets of Silicon Video, Inc., a designer of CMOS imaging sensors located in Homer, New York, and formed Panavision SVI, LLC to act as marketing affiliate with respect to certain products designed by Panavision Imaging, LLC. The Company manages the operations of Panavision Imaging, LLC and Panavision SVI, LLC (together "Panavision SVI") in exchange for certain research and development services, management fees and most favored customer status with respect to certain products of Panavision Imaging, LLC. In addition, the Company purchases certain sensors from Panavision Imaging, LLC on a basis that is at least as favorable as could be obtained in an arms-length transaction. Panavision Imaging, LLC and its marketing affiliate Panavision SVI, LLC utilize the Panavision tradename pursuant to a license from the Company. The management and royalty fees charged by the Company to Panavision SVI for 2004 were $420,000, of which $105,000 was payable at December 31, 2004.

On September 16, 2004, the Company entered into an agreement with Sony, a holder of the Company's Common Stock. Pursuant to the agreement, the Company acquired from Sony the remaining 49% interest in DHD, not then held by the Company, making DHD a wholly owned subsidiary of the Company for consideration of $4.4 million.

On December 29, 2004, in connection with the Company's acquisition of the camera inventory of William F. White International Inc. in Canada, LPPI, LLC ("LPPI"), a wholly-owned subsidiary of the

F-32

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

Company, entered into a Sale and Purchase Agreement with PX Holding pursuant to which LPPI sold and PX Holding purchased a promissory note (the "Deluxe Note"), dated August 6, 2004, issued by Deluxe Laboratories, Inc. ("Deluxe") in favor of LPPI. The Deluxe Note was issued in connection with the sale of the Company's interest in EFILM, LLC to Deluxe on August 6, 2004. The Deluxe Note is in the principal amount of $5,000,000 and bears interest at a rate of 7% per annum. As consideration for the Deluxe Note, PX Holding paid $5,000,000 to LPPI and agreed to pay to LPPI any accrued and unpaid interest on the Deluxe Note through and including December 29, 2004 upon receipt of such payment from Deluxe when the Deluxe Note matures on August 6, 2005.

19.    Recent Acquisitions

On September 16, 2004, the Company purchased from Sony a 49% interest in DHD for a cash purchase price of $4.4 million, making DHD a wholly-owned subsidiary of the Company. As a result, the Company has consolidated the financial position and results of operations of DHD in the accompanying consolidated financial statements from the date of purchase. The effects of the consolidation were immaterial for the period. There was no goodwill resulting from the purchase price allocation.

On August 13, 2004, the Company purchased, through one of its wholly-owned subsidiaries, 100% of the share capital of Technovision France for a cash purchase price of approximately $3.4 million. Technovision is a film equipment rental company located in Paris, France. The effects of the purchase were immaterial for the period. Goodwill of approximately $300,000 was recognized as result of the allocation of purchase price to the fair value of assets acquired and liabilities assumed.

20.    Valuation and Qualifying Accounts and Reserves

The following is a summary of the valuation and qualifying accounts and reserves for the years ended December 31, 2004, 2003, and 2002 (in thousands):

				Beginning Balance				Amounts Reserved				Balances Written Off				Ending Balance
Allowance for Doubtful Accounts
December 31, 2004				$	2,586			$	962			$	1,930			$	1,618
December 31, 2003				$	1,634			$	1,924			$	972			$	2,586
December 31, 2002				$	1,414			$	576			$	356			$	1,634

F-33

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

21.    Quarterly Operating Data (unaudited)

The following is a summary of unaudited quarterly results of operations (in thousands, except per share data):

				Quarter
				First				Second				Third				Fourth
Year ended December 31, 2004
Total revenue (1)				$	49,050			$	46,979			$	54,018			$	57,405
Gross margin (2)					18,911				15,733				21,259				21,267
Net loss from continuing operations					(14,031	)			(8,248	)			4,870				(3,791	)
Net loss from continuing operations attributable to common shareholders					(19,281	)			(13,742	)			(761	)			(6,740	)
Net income (loss)					(13,967	)			(7,547	)			15,254				(3,895	)
Net income (loss) attributable to common shareholders					(19,217	)			(13,041	)			9,623				(6,844	)
Loss from continuing operations per share *				$	(2.20	)		$	(1.57	)		$	(0.09	)		$	(0.28	)
Income (loss) per share *				$	(2.19	)		$	(1.49	)		$	1.10			$	(0.28	)
Year ended December 31, 2003
Total revenue (1)				$	43,988			$	44,125			$	50,221			$	52,806
Gross margin (2)					17,891				15,208				19,761				21,725
Net loss from continuing operations					(6,571	)			(3,417	)			(2,141	)			(4,394	)
Net loss from continuing operations attributable to common shareholders					(8,062	)			(7,418	)			(6,236	)			(8,592	)
Net income (loss)					(7,354	)			(3,682	)			(2,376	)			(4,344	)
Net loss attributable to common shareholders					(8,845	)			(7,683	)			(6,471	)			(8,542	)
Loss from continuing operations per share *				$	(0.92	)		$	(0.85	)		$	(0.71	)		$	(0.98	)
Loss per share *				$	(1.01	)		$	(0.87	)		$	(0.74	)		$	(0.98	)

(1)	Presentation of EFILM and LPPI as discontinued operations reduced previously reported revenue by $5,872 and $6,980 for the first and second quarter of 2004, respectively, and $2,311, $4,309, $4,725 and $5,472 for the first through fourth quarters of 2003, respectively.

(2)	Presentation of EFILM and LPPI as discontinued operations reduced previously reported gross margin by $2,892 and $3,701for the first and second quarter of 2004, respectively, and $490, $1,835, $2,065 and $2,830 for the first through fourth quarters of 2003, respectively.

*	Basic and diluted

22.    Subsequent Events

On March 30, 2005, the Company received a commitment from PX Holding (the "9 5/8% Notes Commitment"), that in the event that the 9 5/8% Notes are not repaid, retired or refinanced prior to December 1, 2005, or the applicable provision of the Amended Credit Agreement is not amended by such time that Panavision's term loans do not become immediately due and payable, PX Holding will provide financial support sufficient to allow the repayment, retirement or refinancing of the 9 5/8% Notes.

F-34

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Panavision Inc.
Notes to Consolidated Financial Statements (Continued)

In addition, Panavision entered into a Fourth Amendment, dated as of March 30, 2005, to the Amended Credit Agreement and a Fifth Supplemental Indenture, dated as of March 30, 2005, with respect to the 2004 Indenture. This amendment and indenture supplement was entered into principally to (a) provide a mechanism for the potential acquisition of the camera, lighting and grip assets of a company in the United Kingdom ("the UK Acquisition"); (b) reduce required EBITDA levels, as provided in the Amended Credit Agreement, to $52.0 million, $54.0 million, $54.0 million and $58.0 million for the twelve-month periods ended March 31, 2005, June 30, 2005, September 30, 2005 and December 31, 2005, respectively; (c) extend the date on which the term facility under the Amended Credit Agreement shall be due if the 9 5/8% Notes remain oustanding from September 1, 2005 to December 1, 2005; (d) increase the limitation on capital expenditure, as defined in the Amended Credit Agreement, from $25.0 million to $37.5 million; and (e) increase the Second MacAndrews Line to $32.0 million, plus an amount for the potential UK Acquisition, if necessary.

On March 30, 2005, the Second MacAndrews Line was amended and restated to increase the amount to $32.0 million, plus an amount for the potential UK Acquisition, if necessary.

F-35

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