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UNITEDSTATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(MarkOne)

|        |                                                                                       |
|--------|---------------------------------------------------------------------------------------|
|   | QUARTERLY REPORT PURSUANT TO SECTION 13 OR15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 |

|        |                                             |
|--------|---------------------------------------------|
|   | Forthe quarterly period ended June 30, 2005 |

OR

|        |                                                                                         |
|--------|-----------------------------------------------------------------------------------------|
|   | TRANSITION REPORT PURSUANT TO SECTION 13 OR15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For thetransition period from_________________to_________________

Commission file number:001-12391

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PANAVISION INC.(Exact name of Registrant as specified in itscharter)

|                                                             |  |                                    |  |  |  |  |
|-------------------------------------------------------------|--|------------------------------------|--|--|--|--|
| Delaware                                                    |  | 13-3593063                         |
| (Stateor other jurisdiction ofincorporation ororganization) |  | (I.R.S. EmployerIdentificationNo.) |
| 6219De Soto AvenueWoodland Hills,California                 |  | 91367                              |
| (Addressof principal executive offices)                     |  | (Zipcode)                          |
|                                                             |

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Registrant'stelephone number including area code: **(818)316-1000**

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**Indicate by check markwhether the registrant (1) has filed all reports required to be filedby Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to suchfiling requirements for the past 90days.    Yes   **    **No**   

**Indicate by checkmark whether the registrant is an acceleratedfiler (as defined in Rule 12b-2 of the Securities Exchange Act of1934).    Yes   **    **No**   

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate thenumber of shares outstanding of each of the Issuer's classes ofcommon stock, as of the latest practicable date.

As of August10, 2005, there were 39,380,729 shares of Panavision Inc. Common Stock,par value $0.01 per share,outstanding.

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PANAVISIONINC.

INDEX TO QUARTERLY REPORT ON FORM 10-QFOR THEQUARTER ENDED JUNE 30, 2005

|             |  |                                                                                      |    |        |    |        |  |  |  |  |
|-------------|--|--------------------------------------------------------------------------------------|----|--------|----|--------|--|--|--|--|
| **PartI.**  |  | **FinancialInformation**                                                             |    |
| Item1.      |  | FinancialStatements                                                                  |    |
|        |  | Condensed ConsolidatedStatements of Operations                                       |    |   | 3  |   |
|        |  | Condensed Consolidated BalanceSheets                                                 |    |   | 4  |   |
|        |  | Condensed ConsolidatedStatements of Cash Flows                                       |    |   | 6  |   |
|        |  | Notesto Condensed Consolidated Financial Statements                                  |    |   | 8  |   |
| Item 2.     |  | Management's Discussion and Analysis ofFinancial Condition and Results of Operations |    |   | 17 |   |
| Item 3.     |  | Quantitative and Qualitative Disclosures AboutMarket Risk                            |    |   | 30 |   |
| Item 4.     |  | Controls andProcedures                                                               |    |   | 30 |   |
| **PartII.** |  | **OtherInformation**                                                                 |    |
| Item 1.     |  | LegalProceedings                                                                     |    |   | 32 |   |
| Item 2.     |  | UnregisteredSales of Equity Securities and Use of Proceeds                           |    |   | 32 |   |
| Item 3.     |  | Defaults Upon SeniorSecurities                                                       |    |   | 32 |   |
| Item 4.     |  | Submission ofMatters to a Vote of Security Holders                                   |    |   | 32 |   |
| Item 5.     |  | Other Information                                                                    |    |   | 32 |   |
| Item 6.     |  | Exhibits                                                                             |    |   | 33 |   |
| SIGNATURES. |  |                                                                                 | 36 |   |
|             |

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PART I —FINANCIAL INFORMATION

Item 1.    Financial Statements

The financial information herein and management's discussionthereof include consolidated data for Panavision Inc.("Registrant" or"Panavision") and its subsidiaries.Registrant and its subsidiaries are sometimes herein referred tocollectively as the "Company".

PANAVISION INC. CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS (Unaudited) (In thousands, except per shareamounts)

|                                                                       |  |                                   |         |                                 |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|-----------------------------------------------------------------------|--|-----------------------------------|---------|---------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                  |  | Forthe Three MonthsEnded June 30, |         | For the SixMonths Ended June30, |
|                                                                  |  | 2005                              |         | 2004                            |  | 2005   |         | 2004    |
| Camerarental                                                          |  | $                                 | 33,154  |                            |  | $      | 26,801  |    |  | $      | 65,024  |    |  | $      | 57,676  |    |
| Lightingrental                                                        |  |                              | 11,584  |                            |  |   | 10,958  |    |  |   | 21,285  |    |  |   | 19,480  |    |
| Salesandother                                                         |  |                              | 11,117  |                            |  |   | 9,191   |    |  |   | 21,648  |    |  |   | 18,812  |    |
| Totalrental revenue andsales                                          |  |                              | 55,855  |                            |  |   | 46,950  |    |  |   | 107,957 |    |  |   | 95,968  |    |
| Costof camerarental                                                   |  |                              | 19,883  |                            |  |   | 15,247  |    |  |   | 38,772  |    |  |   | 30,736  |    |
| Costof lightingrental                                                 |  |                              | 8,724   |                            |  |   | 9,440   |    |  |   | 16,396  |    |  |   | 16,958  |    |
| Costof sales andother                                                 |  |                              | 6,866   |                            |  |   | 5,296   |    |  |   | 12,919  |    |  |   | 10,901  |    |
| Grossmargin                                                           |  |                              | 20,382  |                            |  |   | 16,967  |    |  |   | 39,870  |    |  |   | 37,373  |    |
| Selling,general and administrativeexpenses                            |  |                              | 20,322  |                            |  |   | 17,744  |    |  |   | 40,389  |    |  |   | 35,457  |    |
| Researchand developmentexpenses                                       |  |                              | 1,408   |                            |  |   | 1,330   |    |  |   | 2,922   |    |  |   | 2,761   |    |
| Operatingloss                                                         |  |                              | (1,348  | )                          |  |   | (2,107  | )  |  |   | (3,441  | )  |  |   | (845    | )  |
| Interestincome                                                        |  |                              | 96      |                            |  |   | 117     |    |  |   | 185     |    |  |   | 217     |    |
| Interestexpense                                                       |  |                              | (8,915  | )                          |  |   | (7,894  | )  |  |   | (17,267 | )  |  |   | (15,775 | )  |
| Foreignexchange gain(loss)                                            |  |                              | (700    | )                          |  |   | 248     |    |  |   | (1,096  | )  |  |   | 476     |    |
| Refinancingexpense                                                    |  |                              | — |                            |  |   | — |    |  |   | (154    | )  |  |   | (6,470  | )  |
| Otherincome,net                                                       |  |                              | 197     |                            |  |   | 1,641   |    |  |   | 699     |    |  |   | 1,783   |    |
| Lossfrom continuing operations before incometaxes                     |  |                              | (10,670 | )                          |  |   | (7,995  | )  |  |   | (21,074 | )  |  |   | (20,614 | )  |
| Incometaxprovision                                                    |  |                              | (1,376  | )                          |  |   | (253    | )  |  |   | (1,973  | )  |  |   | (1,665  | )  |
| Netloss from continuingoperations                                     |  |                              | (12,046 | )                          |  |   | (8,248  | )  |  |   | (23,047 | )  |  |   | (22,279 | )  |
| Discontinuedoperations:                                               |  |
| Income from EFILM (net of incometax provision of $26 and $84(2004))   |  |                              | — |                            |  |   | 701     |    |  |   | — |    |  |   | 765     |    |
| Netincome from discontinuedoperations                                 |  |                              | — |                            |  |   | 701     |    |  |   | — |    |  |   | 765     |    |
| Netloss                                                               |  | $                                 | (12,046 | )                          |  | $      | (7,547  | )  |  | $      | (23,047 | )  |  | $      | (21,514 | )  |
| Netloss from continuing operations attributable to commonstockholders |  | $                                 | (12,046 | )                          |  | $      | (13,742 | )  |  | $      | (23,047 | )  |  | $      | (33,023 | )  |
| Netloss from continuing operations per share – basic anddiluted |  | $                                 | (0.31   | )                          |  | $      | (1.57   | )  |  | $      | (0.59   | )  |  | $      | (3.77   | )  |
| Netloss per share – basic and diluted                           |  | $                                 | (0.31   | )                          |  | $      | (1.49   | )  |  | $      | (0.59   | )  |  | $      | (3.68   | )  |
| Sharesused in computation – basic anddiluted                    |  |                              | 39,381  |                            |  |   | 8,770   |    |  |   | 39,381  |    |  |   | 8,770   |    |
|                                                                       |

Seeaccompanying notes.

3

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PANAVISION INC. CONDENSED CONSOLIDATEDBALANCE SHEETS(In thousands, except sharedata)

|                                                                           |  |              |         |                  |  |        |         |        |  |  |
|---------------------------------------------------------------------------|--|--------------|---------|------------------|--|--------|---------|--------|--|--|
|                                                                      |  | June30, 2005 |         | December 31,2004 |
|                                                                      |  | (Unaudited)  |         | (Note1)          |
| **ASSETS**                                                                |  |
| Currentassets:                                                            |  |         |    |             |  |   |    |   |
| Cash and cashequivalents                                                  |  | $            | 7,058   |             |  | $      | 6,593   |   |
| Accountsreceivable (net of allowance of $1,841 in 2005 and $1,618 in2004) |  |         | 29,057  |             |  |   | 28,897  |   |
| Inventories                                                               |  |         | 14,541  |             |  |   | 14,926  |   |
| Prepaidexpenses                                                           |  |         | 3,591   |             |  |   | 3,912   |   |
| Notereceivable                                                            |  |         | 814     |             |  |   | 826     |   |
| Due fromrelated parties                                                   |  |         | 5       |             |  |   | 106     |   |
| Othercurrentassets                                                        |  |         | 1,781   |             |  |   | 2,081   |   |
| Totalcurrentassets                                                        |  |         | 56,847  |             |  |   | 57,341  |   |
| Property, plantand equipment,net                                          |  |         | 223,434 |             |  |   | 230,795 |   |
| Goodwill,net                                                              |  |         | 259,657 |             |  |   | 259,909 |   |
| Patents andtrademarks, net                                                |  |         | 66,147  |             |  |   | 66,266  |   |
| Otherassets                                                               |  |         | 6,209   |             |  |   | 6,349   |   |
| Totalassets                                                               |  | $            | 612,294 |             |  | $      | 620,660 |   |
|                                                                           |

Seeaccompanying notes.

4

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PANAVISION INC. CONDENSED CONSOLIDATEDBALANCE SHEETS(In thousands, except sharedata)

|                                                                                                                                           |  |              |          |                  |  |        |          |         |  |  |
|-------------------------------------------------------------------------------------------------------------------------------------------|--|--------------|----------|------------------|--|--------|----------|---------|--|--|
|                                                                                                                                      |  | June30, 2005 |          | December 31,2004 |
|                                                                                                                                      |  | (Unaudited)  |          | (Note1)          |
| **LIABILITIES ANDSTOCKHOLDERS'EQUITY**                                                                                                    |  |         |     |             |  |   |     |    |
| Currentliabilities:                                                                                                                       |  |         |     |             |  |   |     |    |
| Accountspayable                                                                                                                           |  | $            | 10,108   |             |  | $      | 8,634    |    |
| Accruedliabilities                                                                                                                        |  |         | 31,263   |             |  |   | 28,119   |    |
| Currentmaturities of long-termdebt                                                                                                        |  |         | 82,660   |             |  |   | 9,557    |    |
| Totalcurrentliabilities                                                                                                                   |  |         | 124,031  |             |  |   | 46,310   |    |
| Long-termdebt                                                                                                                             |  |         | 221,082  |             |  |   | 290,740  |    |
| Note payable toaffiliate                                                                                                                  |  |         | 18,154   |             |  |   | 9,154    |    |
| Deferred taxliabilities, net                                                                                                              |  |         | 27,668   |             |  |   | 28,201   |    |
| Otherliabilities                                                                                                                          |  |         | 3,230    |             |  |   | 3,323    |    |
| Commitmentsandcontingencies                                                                                                               |  |         |     |             |  |   |     |    |
| Stockholders'equity:                                                                                                                      |  |         |     |             |  |   |     |    |
| Common stock, $0.01par value; 50,000,000 shares authorized; 39,380,729 shares issuedand outstanding at June 30, 2005 and December 31,2004 |  |         | 394      |             |  |   | 394      |    |
| Additionalpaid-incapital                                                                                                                  |  |         | 374,780  |             |  |   | 374,780  |    |
| Revaluationcapital                                                                                                                        |  |         | 333,199  |             |  |   | 333,199  |    |
| Accumulateddeficit                                                                                                                        |  |         | (494,997 | )           |  |   | (471,950 | )  |
| Accumulatedother comprehensiveincome                                                                                                      |  |         | 4,753    |             |  |   | 6,509    |    |
| Totalstockholders'equity                                                                                                                  |  |         | 218,129  |             |  |   | 242,932  |    |
| Totalliabilities and stockholders'equity                                                                                                  |  | $            | 612,294  |             |  | $      | 620,660  |    |
|                                                                                                                                           |

Seeaccompanying notes.

5

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PANAVISION INC. CONDENSED CONSOLIDATEDSTATEMENTS OF CASH FLOWS(Unaudited) (Inthousands)

|                                                                          |  |                        |         |         |  |        |          |         |  |  |
|--------------------------------------------------------------------------|--|------------------------|---------|---------|--|--------|----------|---------|--|--|
|                                                                     |  | SixMonths EndedJune30, |
|                                                                     |  | 2005                   |         | 2004    |
| **Operatingactivities**                                                  |  |                   |    |    |  |   |     |    |
| Net loss fromcontinuingoperations                                        |  | $                      | (23,047 | )  |  | $      | (22,279  | )  |
| Adjustmentsto derive net cash provided by (used in) operatingactivities: |  |                   |    |    |  |   |     |    |
| Depreciation andamortization                                             |  |                   | 22,236  |    |  |   | 20,228   |    |
| Write-offof deferred financingcosts                                      |  |                   | — |    |  |   | 3,436    |    |
| Gain ondispositions of property andequipment                             |  |                   | (517    | )  |  |   | (1,824   | )  |
| Amortizationof deferred financingcosts                                   |  |                   | 576     |    |  |   | 646      |    |
| Dividendsreceived from equityinvestments                                 |  |                   | — |    |  |   | 1,112    |    |
| Deferredincome taxbenefit                                                |  |                   | — |    |  |   | (1,871   | )  |
| Changesin operating assets andliabilities:                               |  |                   |    |    |  |   |     |    |
| Accountsreceivable                                                       |  |                   | (160    | )  |  |   | 3,129    |    |
| Inventories                                                              |  |                   | 385     |    |  |   | (1,750   | )  |
| Prepaidexpenses and other currentassets                                  |  |                   | 633     |    |  |   | (1,880   | )  |
| Accountspayable                                                          |  |                   | 1,474   |    |  |   | 3,297    |    |
| Accruedliabilities                                                       |  |                   | 3,144   |    |  |   | 988      |    |
| Due fromrelatedparties                                                   |  |                   | 101     |    |  |   | —  |    |
| Due torelatedparties                                                     |  |                   | — |    |  |   | (153     | )  |
| Other,net                                                                |  |                   | 836     |    |  |   | (583     | )  |
| Netcash provided by operatingactivities                                  |  |                   | 5,661   |    |  |   | 2,496    |    |
| **Investingactivities**                                                  |  |                   |    |    |  |   |     |    |
| Capitalexpenditures                                                      |  |                   | (14,651 | )  |  |   | (11,508  | )  |
| Proceedsfrom dispositions of fixedassets                                 |  |                   | 628     |    |  |   | 2,462    |    |
| Netcash used in investingactivities                                      |  |                   | (14,023 | )  |  |   | (9,046   | )  |
| **Financingactivities**                                                  |  |                   |    |    |  |   |     |    |
| Borrowings underAmended and Restated CreditAgreement                     |  |                   | — |    |  |   | 135,600  |    |
| Proceedsfrom issuance of SeniorNotes                                     |  |                   | — |    |  |   | 100,000  |    |
| Borrowingsunder notes payable toaffiliate                                |  |                   | 9,000   |    |  |   | 4,500    |    |
| Proceeds fromlong-termborrowings                                         |  |                   | 5,483   |    |  |   | —  |    |
| Repaymentsof long-termdebt                                               |  |                   | (4,946  | )  |  |   | (254,172 | )  |
| Deferredfinancing costs                                                  |  |                   | (562    | )  |  |   | (938     | )  |
| Capitalcontribution, net of transactioncosts                             |  |                   | — |    |  |   | 22,730   |    |
| Netcash provided by financingactivities                                  |  |                   | 8,975   |    |  |   | 7,720    |    |
| Effect ofexchange rate changes oncash                                    |  |                   | (148    | )  |  |   | 154      |    |
| Netincrease in cash and cashequivalents                                  |  |                   | 465     |    |  |   | 1,324    |    |
| Cash and cashequivalents at beginning ofperiod                           |  |                   | 6,593   |    |  |   | 6,770    |    |
| Cashand cash equivalents at end ofperiod                                 |  | $                      | 7,058   |    |  | $      | 8,094    |    |
|                                                                          |

Seeaccompanying notes.

6

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PANAVISIONINC.CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS(Unaudited)

|                                                     |  |                        |        |        |  |        |        |        |  |  |
|-----------------------------------------------------|--|------------------------|--------|--------|--|--------|--------|--------|--|--|
|                                                |  | SixMonths EndedJune30, |
|                                                |  | 2005                   |        | 2004   |
| **Supplementalcash flow information** (inthousands) |  |                   |   |   |  |   |   |   |
| Interest paid duringtheperiod                       |  | $                      | 15,510 |   |  | $      | 14,882 |   |
| Incometaxes paid during theperiod                   |  | $                      | 597    |   |  | $      | 1,036  |   |
|                                                     |

Supplementalnon-cash activities

During the six months ended June 30, 2005,the Company purchased camera rental equipment totaling approximately$2.7 million using long-term financing. This has been excluded fromboth investing and financing activities.

As described in Note 4of the Notes to Condensed Consolidated Financial Statements, in January2004, the Company issued to PX Holding Corporation ("PXHolding") 1,381,690 shares of new Series E Non-CumulativePerpetual Participating Preferred Stock, par value $0.01 per share, inexchange for 1,381,690 shares of Series A Non-Cumulative PerpetualParticipating Preferred Stock, par value $0.01 per share, whichconstituted all of the then outstanding Series A Preferred Stock.

As described in Note 4 of the Notes to Condensed ConsolidatedFinancial Statements, in January 2004, the Company issued to PX Holding215,274 shares of new Series D Cumulative Pay-in-Kind Preferred Stock,par value $0.01 per share, in exchange for, among other consideration,159,644 shares of Series C Cumulative Pay-in-Kind Preferred Stock, parvalue $0.01, held by PX Holding, which constituted all of the thenoutstanding Series C Preferred Stock. The other consideration includedthe contribution or retirement of various related party notes andMacAndrews & Forbes Holdings Inc.'s one-third interest in thecommon stock of PANY Rental, Inc. Total book value, which approximatedfair value, of such other non-cash consideration was approximately$19.0 million.

During the six months ended June 30, 2004, theCompany entered into capital leasing arrangements for motion picturerental equipment. This transaction increased both net fixed assets andlong-term debt by approximately $2.4 million and has been excluded fromboth investing and financing activities.

In connection with theMay, 2004 sale of lighting equipment, the Company received promissorynotes totaling approximately $1.5 million.

See accompanyingnotes.

7

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PANAVISIONINC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

|          |                     |
|----------|---------------------|
| 1.  | Basis ofPreparation |

The Company is an indirect majority-ownedsubsidiary of MacAndrews & Forbes Holdings Inc.("MacAndrews & Forbes Holdings" or"Parent"), formerly known as Mafco HoldingsInc., a corporation whose sole stockholder is Ronald O. Perelman. TheCompany's principal business operations are conducted through itssubsidiaries.

The accompanying condensed consolidated financialstatements have been prepared in accordance with U.S. generallyaccepted accounting principles for interim financial information andwith the instructions for Form 10-Q and Rule 10-01 of Regulation S-X.Accordingly, they do not include all of the information and footnotesrequired by U.S. generally accepted accounting principles for completefinancial statements. In the opinion of management, all adjustments(consisting of normal recurring adjustments) considered necessary for afair presentation have been included. The results of operations forinterim periods are not necessarily indicative of the results that maybe expected for the fiscal year. The condensed consolidated financialstatements should be read in conjunction with the consolidatedfinancial statements and accompanying notes included in theCompany's Annual Report on Form 10-K for the year ended December31, 2004. All terms used but not defined elsewhere herein have themeaning ascribed to them in the Company's 2004 Annual Report onForm 10-K.

The balance sheet at December 31, 2004 has beenderived from the audited financial statements at that date but does notinclude all the information and footnotes required by U.S. generallyaccepted accounting principles for complete financial statements.

The condensed consolidated financial statements include the accountsof Panavision and its subsidiaries. All significant intercompanyamounts and transactions have been eliminated.

Certain amountsin previously issued financial statements have been reclassified toconform to the 2005 presentation, including, but not limited to, thepresentation of EFILM, LLC ("EFILM") and itsholding company, LPPI, LLC ("LPPI"), asdiscontinued operations for all periods presented. Additionally, thecompany reviewed the components of its reported cost of rentals andsales and determined that certain reclassifications were appropriate tobetter reflect the operating costs related to revenues. Freightcharges, which had previously been reported as selling, general andadministrative ("SG&A") costs, are nowpresented as cost of rentals and sales. Facilities-related costs, suchas rents, utilities and maintenance, which had previously beenallocated using various methodologies to either cost of rental assetsproduced or among cost of sales, and, to a lesser degree, SG&A andresearch and development expenses, are still allocated to cost ofrental assets produced with the remaining unallocated amount allcharged to SG&A. All prior periods have been reclassified toconform to the current classification. The effect of thereclassification was to reduce cost of sales by $1,526,000, $2,096,000and $1,932,000 for the quarters ended March 31, 2005, March 31, 2004and June 30, 2004, respectively. SG&A was increased by $1,597,000,$2,109,000 and $2,035,000 for the same respective periods, with theimmaterial amounts comprising the difference reclassified to other lineitems in the Condensed Consolidated Statements of Operations.

|          |                                  |
|----------|----------------------------------|
| 2.  | Use of Estimates and Assumptions |

Thepreparation of financial statements in conformity with U.S. generallyaccepted accounting principles requires management to make estimatesand assumptions that affect the amounts reported in the financialstatements and accompanying notes, including the collectibility ofreceivables, the realizability of assets such as fixed assets anddeferred taxes, and the valuation of goodwill and trademarks. Actualresults could differ from such estimates.

8

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PANAVISIONINC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

|          |             |
|----------|-------------|
| 3.  | Inventories |

Inventories consist of the following (inthousands):

|                          |  |              |        |                   |  |        |        |        |  |  |
|--------------------------|--|--------------|--------|-------------------|--|--------|--------|--------|--|--|
|                     |  | June30, 2005 |        | December 31, 2004 |
| Finishedgoods            |  | $            | 2,980  |              |  | $      | 2,476  |   |
| Work-in-process          |  |         | 260    |              |  |   | 315    |   |
| Componentparts           |  |         | 4,386  |              |  |   | 4,664  |   |
| Spare parts andsupplies  |  |         | 2,115  |              |  |   | 1,409  |   |
| Goods purchasedforresale |  |         | 4,800  |              |  |   | 6,062  |   |
| Totalinventories         |  | $            | 14,541 |              |  | $      | 14,926 |   |
|                          |

|          |               |
|----------|---------------|
| 4.  | Long-TermDebt |

Long-term debt, including current maturities, consists ofthe following (inthousands):

|                                                  |  |              |         |                   |  |        |         |        |  |  |
|--------------------------------------------------|--|--------------|---------|-------------------|--|--------|---------|--------|--|--|
|                                             |  | June30, 2005 |         | December 31, 2004 |
| Amended andRestated CreditAgreement              |  | $            | 122,084 |              |  | $      | 125,694 |   |
| 12.50%Senior Notes Due2009                       |  |         | 100,940 |              |  |   | 100,597 |   |
| 9 5/8%Senior Subordinated Discount Notes Due2006 |  |         | 64,950  |              |  |   | 65,084  |   |
| Notes payable toMacAndrews & ForbesInc.      |  |         | 18,154  |              |  |   | 9,154   |   |
| Other (includingcapitalized leaseobligations)    |  |         | 15,768  |              |  |   | 8,922   |   |
|                                             |  |         | 321,896 |              |  |   | 309,451 |   |
| Less:Currentmaturities                           |  |         | 82,660  |              |  |   | 9,557   |   |
| TotalLong-TermDebt                               |  | $            | 239,236 |              |  | $      | 299,894 |   |
|                                                  |

TheCompany does not have any off-balance sheet financing arrangements.

9 5/8% Notes

The9 5/8% Senior Subordinated Discount Notes Due2006 ("9 5/8% Notes")were issued at a discount representing a yield to maturity of9 5/8%. There were no periodic or interestpayments through February  1, 2002. Thereafter, they bearinterest at a rate of 9 5/8% per annum, payablesemi-annually on February  1 and August 1 of each year,commencing August 1, 2002. The 9 5/8% Notes aredue February 1, 2006, and are reflected as a component of currentmaturities.

MacAndrews Lines

On August 13,2003, MacAndrews & Forbes Inc., (formerly MacAndrews & ForbesHoldings Inc.) agreed to amend an existing line of credit provided toPanavision to increase the amount available for borrowing from $4.0million to $10.0 million and extend the maturity date to August 31,2006 (as amended, the "MacAndrews Line"). Inconnection with an amendment to Panavision's Prior CreditAgreement (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 rateprovided for in the revolving facility pursuant to the Prior CreditAgreement and a maturity date of April 15, 2004. As described below, inconnection with the January 2004 Refinancing (as defined below), (i)amounts outstanding under the MacAndrews Line were retired in exchangefor shares of new Series D Cumulative Pay-in-Kind Preferred Stock, parvalue $0.01 per share (the "Series D PreferredStock") and (ii) MacAndrews & Forbes Inc. increasedthe amount of the Second MacAndrews Line to $20.0 million and extendedthe maturity date to April 16, 2009. On March 30, 2005, 

9

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PANAVISIONINC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

|          |                                |
|----------|--------------------------------|
| 4.  | Long-TermDebt (Continued) |

the Second MacAndrews Line was amended andrestated to increase the amount to $32.0 million. As of June 30, 2005,Panavision had drawn approximately $18.9 million under the SecondMacAndrews line, including accrued interest of $0.7 million.

Prior Credit Agreement

On June 4, 1998, Panavisionentered into a Credit Agreement with a syndicate of lenders  (assubsequently amended on September 30, 1998, June 30, 1999, March 15,2002, June 14, 2002, September 30, 2002, March 25, 2003 and November12, 2003, the "Prior Credit Agreement").Panavision's obligations under the Prior Credit Agreement weresecured by substantially all of Panavision's assets. The PriorCredit Agreement comprised two facilities, the Term Facility and theRevolving Facility. As described below, the Prior Credit Agreement wasreplaced with the Amended and Restated Credit Agreement pursuant to theJanuary 2004 Refinancing.

January 2004 Refinancing– 12.50% Senior Notes Due 2009 and Amended and RestatedCredit Agreement

On January 16, 2004, Panavision consummated aseries of transactions to refinance its indebtedness under the PriorCredit Agreement (the "January 2004Refinancing"). As part of the January 2004 Refinancing,Panavision sold, in a private placement, $104.2 million of seniorsecured notes (the "Senior Notes") bearinginterest at a rate of 12.50%, payable quarterly, with a maturitydate of January 16, 2009. The Senior Notes were sold at an originalissue discount of approximately 4% for an aggregate purchaseprice of $100.0 million. The Senior Notes are secured by asecond-priority lien on substantially all of the Company'sassets. The indenture pursuant to which the Senior Notes were issued(the "2004 Indenture") requires that, amongother provisions, Panavision achieve certain EBITDA levels and abide bycertain other restrictive covenants, including limitations onindebtedness, liens, disposition of assets, and certain restrictedpayments including dividends to stockholders. Upon certain events ofdefault under the 2004 Indenture, the Senior Notes will bear interestat 2.5% above the rate otherwise applicable.

As part ofthe January 2004 Refinancing, Panavision issued to PX Holding 215,274shares of new Series D Preferred Stock in exchange for (a) 159,644shares of Series C Cumulative Pay-in-kind Preferred Stock, par value$0.01 per share (the "Series C PreferredStock"), of Panavision, held by PX Holding (together withapproximately $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 theMacAndrews Line; (d) 33.3 shares of common stock of PANY Rental Inc.("PANY Rental") having a fair market value of$0.7 million (such that, as of January 16, 2004, Panavision owned100% of the outstanding shares of PANY Rental); (e) theretirement of all amounts (consisting of $630,780 in principal and$82,913 in accrued and unpaid interest) owed by PANY Rental to PXHolding pursuant to a certain promissory note held by PX Holding; and(f) the retirement of all amounts (consisting of $7.8 million inprincipal and unpaid interest) owed to MacAndrews & Forbes Holdingsunder a certain promissory note in the principal amount of $6.7million, dated July 1, 2002, issued by Panavision to M & FWorldwide Corp. and subsequently acquired by MacAndrews & ForbesHoldings. Panavision also issued to PX Holding 1,381,690 shares of newSeries E Non-Cumulative Perpetual Participating Preferred Stock, parvalue $0.01 per share, (the "Series E PreferredStock") in exchange for 1,381,690 shares of Series ANon-Cumulative Perpetual Participating Preferred Stock, par value $0.01per share (the "Series A Preferred Stock").As a result of the January 2004 Refinancing transactions, all of theoutstanding shares of Series A and Series C Preferred Stock weretransferred to Panavision. In addition, MacAndrews & Forbes Inc.increased the amount of the Second MacAndrews Line to $20.0 million andextended the maturity date to April 16, 2009.

Panavision usedproceeds from the sale of the Senior Notes and the issuance of Series DPreferred Stock to reduce the indebtedness under the Prior CreditAgreement by $115.4 million, and replaced the 

10

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PANAVISIONINC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

|          |                                |
|----------|--------------------------------|
| 4.  | Long-TermDebt (Continued) |

Prior Credit Agreement with an Amended andRestated Credit Agreement (the "Amended and RestatedCredit Agreement") with the lenders under the Prior CreditAgreement. The Amended and Restated Credit Agreement provides for asingle term loan facility in the principal amount of $135.6 millionrepayable in quarterly installments with a final maturity of January12, 2007, except that the term facility shall be due on December 1,2005 if any of the 9 5/8% Notes remainoutstanding on that date. Panavision is considering variousalternatives with respect to the repayment or refinancing of the9 5/8% Notes. While there can be no assurance,Panavision expects that the 9 5/8% Notes will berefinanced or otherwise repaid by December 1, 2005. PX Holding hascommitted (the "9 5/8% NotesCommitment"), in the event that the9 5/8% Notes are not repaid, retired orrefinanced prior to December 1, 2005, or the applicable provision ofthe Amended Credit Agreement is not amended by such time such thatPanavision's term loans do not become immediately due andpayable, to provide financial support sufficient to allow therepayment, retirement or refinancing of the9 5/8% Notes.

The term facility under theAmended and Restated Credit Agreement bears interest at either the ABRor Eurodollar Rate (as defined in the Amended and Restated CreditAgreement) plus a margin of 5.25% in the case of ABR loans or6.25% in the case of Eurodollar Loans.

The term facilityunder the Amended and Restated Credit Agreement is secured onsubstantially the same basis as indebtedness under the Prior CreditAgreement. In connection with the Amended and Restated Credit AgreementPanavision paid fees to lenders and professional advisors ofapproximately $3.5 million, including an original issue discount fee ofapproximately $2.0 million. Approximately $3.1 million of the fees paidwere expensed in 2004.

Under the Amended and Restated CreditAgreement, Panavision is required to repay $7.2 million in principal in2005. In addition, the Amended and Restated Credit Agreement revisedcertain financial tests and other restrictive covenants set forth inthe Prior Credit Agreement, including required EBITDA (as definedtherein), limitations on indebtedness, and other provisions. As definedin the Amended and Restated Credit Agreement and 2004 Indenture, EBITDAincludes adjustments for certain severance expenses, refinancingexpenses, foreign exchange (gain) loss, other non-cash charges and thepro forma effect of acquisitions and dispositions.

The requiredlevel of EBITDA, as defined, for the last twelve months in the periodended June 30, 2005, was $54.0 million pursuant to the Amended andRestated Credit Agreement and $50.0 million pursuant to the 2004Indenture. The Company met the required level of EBITDA for thetwelve-month period ended June 30, 2005.

Amendments toAmended and Restated Credit Agreement and 2004 Indenture

EFILM Proceeds Amendment

Principally to provide amechanism for the reinvestment of the proceeds of the sale of EFILM, onAugust 11, 2004, Panavision and the other parties to the Amended andRestated Credit Agreement entered into an amendment and waiver to theAmended and Restated Credit Agreement ("First Amendmentand Waiver"). To provide a similar mechanism for thereinvestment of the proceeds of the sale of EFILM under the 2004Indenture, on August 11, 2004, Panavision and Wilmington Trust Company,as Trustee, entered into a supplemental indenture("Supplemental Indenture"). On September 30,2004, upon repayment of $1.3 million to Federal Financial Credit Inc.by PANY Rental with part of the proceeds of the sale of EFILM, PANYRental and its wholly-owned subsidiary TFN Lighting Corp. becameguarantors under the Amended and Restated Credit Agreement and the 2004Indenture in accordance with the terms of those debt instruments.

Preferred Stock Exchange

On November 16, 2004,Panavision issued 30,610,810 shares of common stock, par value $.01 pershare, to PX Holding, in exchange for all Series D Preferred Stock andall Series E Preferred Stock held 

11

----

PANAVISIONINC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

|          |                                |
|----------|--------------------------------|
| 4.  | Long-TermDebt (Continued) |

by PX Holding (the"Exchange"). The Exchange was completedpursuant to a letter agreement, dated November 16, 2004, betweenPanavision and PX Holding (the "LetterAgreement").

In this transaction, Panavisionissued:

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

|              |                                                                                                                     |
|--------------|---------------------------------------------------------------------------------------------------------------------|
| •  | 1,381,690 shares of Common Stock inexchange for the 1,381,690 shares of Series E Preferred Stock held byPX Holding. |

This transaction was unanimously approved by anindependent Special Committee of Panavision's Board of Directors.In the Letter Agreement, PX Holding agreed, among other things, tocertain restrictions on its ability to acquire Panavision'sremaining Common Stock or to transfer the shares it holds. After givingeffect to the transaction, PX Holding held approximately 96.3%of the Common Stock. The transaction followed a May 13, 2004 offer byMacAndrews & Forbes Holdings initially valuing the Common Stock at$7.00 per share.

Following the consummation of the Exchange, noshares of Series D Preferred Stock or Series E Preferred Stock wereoutstanding. Accordingly, effective November 16, 2004, Panavisioneliminated the certificates of designation for the Series D PreferredStock and Series E Preferred Stock.

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

Inaddition, in connection with the Exchange, Panavision entered into aSecond Amendment and Consent, dated as of November 15, 2004, withrespect to Panavision's Amended and Restated CreditAgreement.

WFW Asset Acquisition

In connectionwith the Panavision acquisition of the William F. White InternationalInc. camera inventory in Canada (the "WFWAcquisition"), Panavision entered into a Third Amendment,dated as of December 29, 2004 with respect to Panavision'sAmended and Restated Credit Agreement.  In addition, inconnection with the WFW Acquisition, Panavision entered into a FourthSupplemental Indenture, dated as of December 29, 2004, with respect tothe 2004 Indenture.

March 2005 Amendment

Panavision entered into a Fourth Amendment, dated as of March 30,2005, to the Amended and Restated Credit Agreement and FifthSupplemental Indenture, dated as of March 30, 2005, with respect to the2004 Indenture. This amendment and indenture supplement was enteredinto principally to (a) reduce required EBITDA levels, as provided inthe Amended and Restated Credit Agreement, to $52.0 million, $54.0million, $54.0 million and $58.0 million for the twelve-month periodsended March 31, 2005, June 30, 2005, September 30, 2005 and December31, 2005, respectively; (b) extend the date on which the Term Facilityunder the Amended and Restated Credit Agreement shall be due if the9 5/8% Notes remain outstanding from September1, 2005 to December 1, 2005; (c) increase the limitation on capitalexpenditure, as defined in the Amended and Restated Credit Agreement,from $25.0 million to $37.5 million; and (d) permit the increase of theSecond MacAndrews Line to $32.0 million.

12

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PANAVISIONINC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

|          |                                |
|----------|--------------------------------|
| 4.  | Long-TermDebt (Continued) |

GE Term Loan & SecurityAgreement

On June 14, 2005, Panavision entered into a term loanand security agreement ("GE Term Loan & SecurityAgreement") with General Electric Capital Corporation("GE") pursuant to which GE shall makeavailable to Panavision term loans in aggregate principal amount notexceeding $10 million and maturing September 14, 2006 for the purchaseof digital cameras and equipment. Panavision's obligationspursuant to the GE Term Loan & Security Agreement are guaranteed byMacAndrews & Forbes Holdings and secured by a first prioritysecurity interest in the cameras and related equipment purchased withthe proceeds of the term loans. As of June 30, 2005, there were termloans outstanding representing approximately $6.1 million.

|          |                              |
|----------|------------------------------|
| 5.  | Preferred Stock Transactions |

Asdescribed above in Note 4, on January 16, 2004, as part of the January2004 Refinancing, the Company issued to PX Holding 215,274 shares ofnew Series D Preferred Stock in exchange for, among otherconsideration, 159,644 shares of Series C Preferred Stock. The Series DPreferred Stock was non-voting, had a liquidation preference of $1,000per share plus accrued and unpaid dividends, and entitled the holder tocumulative dividends at a rate of 10% per annum regardless ofwhether declared or earned. Additionally, the Series D Preferred Stockwas subject to redemption in certain circumstances upon a change ofcontrol. The terms of the Series C Preferred Stock were substantivelythe same as the Series D Preferred Stock. The Company also issued to PXHolding 1,381,690 shares of Series E Preferred Stock in exchange for1,381,690 shares of Series A Preferred Stock. The Series E PreferredStock was entitled to one vote per share, voting together with thecommon stock, par value $0.01 per share, of the Company("Common Stock") as a single class, had aliquidation preference of $1.00 per share plus accrued and unpaiddividends, and provided for non-cumulative cash dividends at an annualrate of $0.05 per share if declared by the Company.

The Series APreferred Stock was voting and was entitled to non-cumulative dividendsat a rate of $0.05 per share per annum payable, if declared, quarterlyon each March 31, June 30, September 30 and December 31. In addition,the Series A Preferred Stock had also participated pro rata on ashare-for-share basis with the Common Stock, par value $0.01 per share,of the Company ("Common Stock") with respectto any dividends declared or paid on the Common Stock.

As aresult of the January 2004 Refinancing transactions, all of theoutstanding shares of Series A and Series C Preferred Stock weretransferred to the Company, and a Certificate of Elimination was filedfor each series.

As described in Note 4 of this Quarterly Reporton Form 10-Q and in Notes 12 and 13 of the Company's 2004 AnnualReport on Form 10-K, in November 2004, the Company issued to PX Holding30,610,810 shares of Common Stock, in exchange for all Series D andSeries E Preferred Stock outstanding. A Certificate of Elimination wasfiled for each series. At June 30, 2005, the Company does not have anypreferred stock issued and outstanding.

|          |                     |
|----------|---------------------|
| 6.  | Segment Information |

The Company hasone reportable segment, the rental of camera systems, lighting systemsand other equipment, and the sales of related products. Theseactivities are conducted through the Company's owned-and-operatedfacilities and its network of independent distributors in a number ofgeographic locations principally in the United States and the UnitedKingdom. The relative relationship of activity in individual geographiclocations has not changed significantly during the three-month andsix-month periods ended June 30, 2005 from that disclosed in Note 8 ofthe Company's 2004 Annual Report on Form 10-K. No one customeraccounted for more than 10 percent of the Company's consolidatednet revenues for the three-month and six-month periods ended June 30,2005 and June 30, 2004.

13

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PANAVISIONINC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

|          |                   |
|----------|-------------------|
| 7.  | NetLoss Per Share |

For the three-month and six-month periods endedJune 30, 2005 and 2004, the basic and diluted per share data is basedon the weighted-average number of common shares and dilutive potentialcommon shares outstanding during the period. Potential common shares,consisting of outstanding stock options and warrants, are not includedin the diluted loss per share calculation since they areantidilutive.

The following table sets forth the computation forbasic and diluted earnings per share (in thousands, except per shareinformation):

|                                                                                    |  |                            |         |                          |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|------------------------------------------------------------------------------------|--|----------------------------|---------|--------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                               |  | ThreeMonths Ended June 30, |         | Six Months Ended June30, |
|                                                                               |  | 2005                       |         | 2004                     |  | 2005   |         | 2004    |
| Numerator:                                                                         |  |                       |    |                     |  |   |    |    |  |   |    |    |  |   |    |    |
| Netloss from continuingoperations                                                  |  | $                          | (12,046 | )                   |  | $      | (8,248  | )  |  | $      | (23,047 | )  |  | $      | (22,279 | )  |
| SeriesC Preferred Stock accumulateddividend                                        |  |                       | — |                     |  |   | — |    |  |   | — |    |  |   | (765    | )  |
| SeriesD Preferred Stock accumulated dividend                                       |  |                       | — |                     |  |   | (5,494  | )  |  |   | — |    |  |   | (9,979  | )  |
| Numeratorsfor basic and diluted loss per share attributable to commonstockholders: |  |
| Net loss from continuingoperations                                                 |  |                       | (12,046 | )                   |  |   | (13,742 | )  |  |   | (23,047 | )  |  |   | (33,023 | )  |
| Netincome from discontinuedoperations                                              |  |                       | — |                     |  |   | 701     |    |  |   | — |    |  |   | 765     |    |
| Netloss                                                                            |  | $                          | (12,046 | )                   |  | $      | (13,041 | )  |  | $      | (23,047 | )  |  | $      | (32,258 | )  |
|                                                                                    |

|                                                                                        |  |                            |         |                          |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|----------------------------------------------------------------------------------------|--|----------------------------|---------|--------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                   |  | ThreeMonths Ended June 30, |         | Six Months Ended June30, |
|                                                                                   |  | 2005                       |         | 2004                     |  | 2005   |         | 2004    |
| Denominator:                                                                           |  |                       |    |                     |  |   |    |    |  |   |    |    |  |   |    |    |
| Denominatorfor basic income (loss) per share –weighted averageshares             |  |                       | 39,381  |                     |  |   | 8,770   |    |  |   | 39,381  |    |  |   | 8,770   |    |
| Effectof dilutive securities – stock options andwarrants                         |  |                       | — |                     |  |   | — |    |  |   | — |    |  |   | — |    |
| Denominatorfor diluted income (loss) per share – adjusted weighted averageshares |  |                       | 39,381  |                     |  |   | 8,770   |    |  |   | 39,381  |    |  |   | 8,770   |    |
| Income(loss) per share – basic anddiluted:                                       |  |                       |    |                     |  |   |    |    |  |   |    |    |  |   |    |    |
| Continuingoperations                                                                   |  | $                          | (0.31   | )                   |  | $      | (1.57   | )  |  | $      | (0.59   | )  |  | $      | (3.77   | )  |
| Discontinuedoperations                                                                 |  |                       | — |                     |  |   | 0.08    |    |  |   | — |    |  |   | 0.09    |    |
| Income(loss) per share – basic anddiluted                                        |  | $                          | (0.31   | )                   |  | $      | (1.49   | )  |  | $      | (0.59   | )  |  | $      | (3.68   | )  |
|                                                                                        |

14

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PANAVISIONINC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

|          |                   |
|----------|-------------------|
| 8.  | ComprehensiveLoss |

Components of accumulated other comprehensive loss are asfollows (inthousands):

|                                       |  |                            |         |                          |  |        |        |         |  |        |         |         |  |        |         |         |  |  |
|---------------------------------------|--|----------------------------|---------|--------------------------|--|--------|--------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                  |  | ThreeMonths Ended June 30, |         | Six Months Ended June30, |
|                                  |  | 2005                       |         | 2004                     |  | 2005   |        | 2004    |
| Netloss                               |  | $                          | (12,046 | )                   |  | $      | (7,547 | )  |  | $      | (23,047 | )  |  | $      | (21,514 | )  |
| Foreigncurrency translationadjustment |  |                       | (718    | )                   |  |   | (2,076 | )  |  |   | (1,756  | )  |  |   | (2,441  | )  |
| Totalcomprehensiveloss                |  | $                          | (12,764 | )                   |  | $      | (9,623 | )  |  | $      | (24,803 | )  |  | $      | (23,955 | )  |
|                                       |

|          |                     |
|----------|---------------------|
| 9.  | Stock-BasedBenefits |

The Company follows the provisions of Statement ofFinancial Accounting Standards ("SFAS") No.123, "Accounting for Stock-BasedCompensation" ("SFAS 123"),which permits the Company to continue to follow the intrinsic valuemethod set forth in Accounting Principles Board Opinion No. 25,"Accounting for Stock Issued to Employees"("APB 25"), but disclose the pro formaeffects on net income (loss) had the fair value of the options beenexpensed.

In December 2002, SFAS No. 148,"Accounting for Stock-Based Compensation-Transition andDisclosure" ("SFAS 148") wasissued. SFAS 148 amends SFAS 123. SFAS 148 provides alternative methodsof transition for a voluntary change to the fair value based method ofaccounting for stock-based employee compensation. In addition, SFAS 148amends the disclosure requirements of SFAS 123 to require moreprominent and more frequent disclosures in financial statements aboutthe effects of stock based compensation. The Company has complied withthe disclosure requirements of SFAS 148.

In December 2004,SFAS  No.  123R, "Share-BasedPayment" was issued which sets accounting requirements forshare-based compensation to employees and requires companies torecognize in the income statement the grant-date fair value of stockoptions and other equity-based compensation. The Company will berequired to adopt SFAS  No.  123R as of January 1, 2006 anddoes not expect the adoption to have a material impact.

Had theCompany applied the fair value recognition provision of FASB No. 123 tostock-based employee compensation, there would have been no effect onreported net loss or net loss per share for the three-month andsix-month periods ended June 30, 2005 and 2004.

|           |                   |
|-----------|-------------------|
| 10.  | Other Income, Net |

The components ofOther income, net for the three-month and six month-periods ended June30, 2005 and 2004 are as follows (inthousands):

|                                           |  |                            |         |                          |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|-------------------------------------------|--|----------------------------|---------|--------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                      |  | ThreeMonths Ended June 30, |         | Six Months Ended June30, |
|                                      |  | 2005                       |         | 2004                     |  | 2005   |         | 2004    |
| Netgain on sales of property andequipment |  | $                          | 54      |                     |  | $      | 1,683   |    |  | $      | 517     |    |  | $      | 1,824   |    |
| Lossof equityaffiliates                   |  |                       | — |                     |  |   | (80     | )  |  |   | — |    |  |   | (102    | )  |
| Feesfrom relatedparty                     |  |                       | 105     |                     |  |   | — |    |  |   | 210     |    |  |   | — |    |
| Other                                     |  |                       | 38      |                     |  |   | 38      |    |  |   | (28     | )  |  |   | 61      |    |
| Totalother income,net                     |  | $                          | 197     |                     |  | $      | 1,641   |    |  | $      | 699     |    |  | $      | 1,783   |    |
|                                           |

15

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PANAVISIONINC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

|           |                        |
|-----------|------------------------|
| 11.  | DiscontinuedOperations |

In August 2004, the Company disposed of its80% interest in EFILM. Accordingly, both EFILM and its holdingcompany LPPI are presented as discontinued operations in the condensedconsolidated financial statements and the accompanying notes.

Revenue and income before income taxes from discontinued operationsfor the three-month and six-month periods ended June 30, 2005 and 2004were as follows (inthousands):

|                          |  |                            |         |                          |  |      |       |        |  |   |         |        |  |   |        |        |  |  |
|--------------------------|--|----------------------------|---------|--------------------------|--|------|-------|--------|--|---|---------|--------|--|---|--------|--------|--|--|
|                     |  | ThreeMonths Ended June 30, |         | Six Months Ended June30, |
|                     |  | 2005                       |         | 2004                     |  | 2005 |       | 2004   |
| Revenue                  |  | $                          | — |                     |  | $    | 6,980 |   |  | $ | — |   |  | $ | 12,852 |   |
| Incomebefore incometaxes |  | $                          | — |                     |  | $    | 727   |   |  | $ | — |   |  | $ | 849    |   |
|                          |

|           |                           |
|-----------|---------------------------|
| 12.  | RelatedParty Transactions |

On April 8, 2005, Panavision Europe Limited("PVE"), a subsidiary of the Company, enteredinto an operating lease arrangement with a related party, PX (UK)Limited ("PX (UK)"), a subsidiary of PXHolding, whereby PVE will lease from PX (UK) certain camera andlighting equipment (the "PX (UK) Equipment").The Company believes the rental payments called for in the lease are onarms-length terms. For the three-month and six-month periods ended June30, 2005, PVE incurred rental charges of $205,000 relating to the PX(UK) Equipment, of which $65,000 remained outstanding at June 30, 2005.In addition, PX (UK) has agreed to reimburse PVE for approximately$110,000 of costs incurred by PVE in relation to the preparation of thePX (UK) Equipment for rental to PVE's customers.

Asdiscussed in Note 4, Long-Term Debt, the Company's obligationspursuant to the GE Term Loan & Security Agreement are guaranteed byMacAndrews & Forbes Holdings.

16

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PANAVISIONINC.

Item 2.    Management'sDiscussion and Analysis of Financial Condition and Results ofOperations

Overview

In the following discussion,unless the context requires otherwise, the terms"Panavision," "we,""our," "ours," and"us" refer to Panavision Inc. and itssubsidiaries.

Our revenue is derived from three sources: (i)camera rental operations, (ii) lighting rental operations, and (iii)sales and other revenue. Revenue from camera rental operations consistsof the rental of camera systems, lenses and accessories to the motionpicture and television industries through a network ofowned-and-operated ("O&O") rental officeslocated throughout North America, Europe and the Asia Pacific region,and through a network of independent distributors responsible for therental of our equipment in locations not served by ourO&O's.

Our lighting rental operations generate revenuethrough the rental of lighting, lighting grip, transportation andelectrical distribution equipment, as well as mobile generators, whichare all used in the production of feature films, television programs,commercials and other events. We own and operate lighting rentalfacilities in the United States, United Kingdom, Australia and NewZealand. Revenue generated by Lee Lighting, our lighting rentalbusiness located in the United Kingdom, comprises the majority of ourlighting rental operations revenue.

Sales and other revenue iscomprised of: (i) the manufacture and sale of lighting filters throughLee Filters in the United Kingdom and the United States; and (ii) salesof equipment, accessories and various consumable products, such as filmstock, light bulbs and gaffer tape, which are used in all types ofproductions.

We consider revenue from international business tobe that revenue which is generated from the rental of our equipment byproductions that are located at production sites outside of the UnitedStates. We record the majority of our international business in thelocal currency ("LC") of the officeinitiating the transaction. When LC-denominated activity is convertedinto U.S. dollars ("USD") for presentation inthe Condensed Consolidated Financial Statements, the change in thevalue of LCs relative to the USD will have an impact on both thebalance sheet and the revenues and costs analyzed below. While bothrental revenues and costs of rental revenues in any given country willtypically be affected in the same manner, a change in gross margin canbe amplified or mitigated by the effect of foreign exchange ratechanges.

Recent acquisition and divestiture activity hasaffected the quarter-to-quarter and period-to-period comparisons. InMay 2004, we sold our lighting assets in Canada, thereby exiting thelighting business in that country. In August 2004, we purchasedTechnovision France ("Technovision"), a filmequipment rental company in Paris. Results of Technovision operationshave been consolidated effective August 14, 2004. On September 16,2004, we purchased the outstanding 49% interest in DHD Ventures,LLC ("DHD"), making DHD our wholly-ownedsubsidiary, at which point we began consolidating DHD's resultsof operations. Prior to this purchase DHD was reported using the equitymethod of accounting. Additionally, in December, 2004, we purchased allthe film, high definition and video camera equipment of William F.White International Inc. ("WFW") in Canada.Accordingly, the three-month and six-month periods ended June 30, 2005include revenues and costs from Technovision, DHD and the WFW assetsbut no revenue or costs from the Canadian lighting rental operation,while the three-month and six-month periods ended June 30, 2004included revenue and costs from the Canadian lighting rental operationbut no revenues or costs from Technovision, or the WFW assets, and $0.4million and $0.8 million, respectively, of commission revenue fromDHD.

The company reviewed the components of its reported cost ofrentals and sales and determined that certain reclassifications wereappropriate to better reflect the operating costs related to revenues.Freight charges, which had previously been reported as selling, generaland administrative ("SG&A") costs, arenow presented as cost of rentals and sales. Facilities-related costs,such as rents, utilities and maintenance, which had previously beenallocated using various methodologies to either cost of rental

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assets produced or among cost of sales, and,to a lesser degree, SG&A and research and development expenses, arestill allocated to cost of rental assets produced with the remainingunallocated amount all charged to SG&A. All prior periods have beenreclassified to conform to the current classification. The effect ofthe reclassification was to reduce cost of sales by $1,526,000,$2,096,000 and $1,932,000 for the quarters ended March 31, 2005, March31, 2004 and June 30, 2004, respectively. SG&A was increased by$1,597,000, $2,109,000 and $2,035,000 for the same respective periods,with the immaterial amounts comprising the difference reclassified toother line items in the Condensed Consolidated Statements ofOperations.

This section should be read in conjunction with theConsolidated Financial Statements and accompanying Notes included inour Annual Report on Form 10-K for the year ended December 31, 2004 andthe Critical Accounting Policies as disclosed under Item 7 in ourAnnual Report on Form 10-K for the year ended December 31, 2004.

Results of Operations

The following discussion and analysisincludes the Company's consolidated results of operations for thesecond fiscal quarter of 2005 as compared to the same quarter of2004.

Quarter Ended June 30, 2005 Compared to QuarterEnded June 30, 2004

The USD weakened, comparing the quarterended June 30, 2005 with the quarter ended June 30, 2004, against mostmajor foreign currencies in countries where we do business. Thefollowing table presents the average exchange rates we used during therespective quarters of 2005 and 2004 in translating LC-denominatedactivity (USD: 1LC).

|                       |  |                     |        |                   |  |                   |        |         |  |                |        |         |  |        |        |         |  |        |        |         |  |  |
|-----------------------|--|---------------------|--------|-------------------|--|-------------------|--------|---------|--|----------------|--------|---------|--|--------|--------|---------|--|--------|--------|---------|--|--|
| QuarterEnded June 30, |  | U. K. PoundSterling |        | Australian Dollar |  | New ZealandDollar |        | Euro    |  | CanadianDollar |
| 2005                  |  |                | 1.8579 |              |  |              | 0.7702 |    |  |           | 0.7165 |    |  |   | 1.2649 |    |  |   | 0.8031 |    |
| 2004                  |  |                | 1.8097 |              |  |              | 0.7204 |    |  |           | 0.6341 |    |  |   | 1.2126 |    |  |   | 0.7398 |    |
| Increasevs.USD        |  |                | 2.7    | %            |  |              | 6.9    | %  |  |           | 13.0   | %  |  |   | 4.3    | %  |  |   | 8.6    | %  |
|                       |

Thesecurrency rate changes have had a significant impact on the amounts ofrental revenues, costs of revenues, and operating costs translated fromLC into USD. Management believes it provides insight into operationalperformance to review the results of operations after taking intoaccount the effects of exchange rate changes on LC amounts translatedinto USD and, accordingly, we have included that information in thefollowing discussion.

Camera RentalOperations

|                |  |                       |        |                    |  |        |        |         |  |        |        |        |  |        |        |         |  |  |
|----------------|--|-----------------------|--------|--------------------|--|--------|--------|---------|--|--------|--------|--------|--|--------|--------|---------|--|--|
| (inthousands)  |  | Quarter Ended June30, |        | Increase(Decrease) |
| 2005           |  | 2004                  |        |               |  | %      |        |
| Rentalrevenue  |  | $                     | 33,154 |               |  | $      | 26,801 |    |  | $      | 6,353  |   |  |   | 23.7   | %  |
| Costof rentals |  |                  | 19,883 |               |  |   | 15,247 |    |  |   | 4,636  |   |  |   | 30.4   | %  |
| Grossmargin    |  | $                     | 13,271 |               |  | $      | 11,554 |    |  | $      | 1,717  |   |  |   | 14.9   | %  |
| Cost%          |  |                  | 60.0   | %             |  |   | 56.9   | %  |  |   |   |   |  |   |   |    |
|                |

Themain factors underlying the increase in camera rental revenue wereadditional revenue from the acquisitions of DHD, the WFW assets andTechnovision, increased revenue from the television and commercialsectors and the positive translation effect of foreign exchange ratechanges. The weakening of the USD, primarily against Canadian andEuropean currencies, increased camera rental revenue by approximately$1.4 million, and we estimate the impact of the DHD acquisition oncamera revenues was approximately $0.7 million. As the WFW andTechnovision assets have been integrated into our respective regionaloperations, the impact of their utilization cannot be quantified but webelieve it has been accretive to revenue.

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After taking into account the effects ofcurrency translation and the DHD acquisition, camera rental revenueincreased approximately $4.2 million. Camera rental revenue fromfeature films, television, commercials and other camera rentalsincreased by approximately $1.3 million, $1.2 million, $1.0 million and$0.7 million, respectively. On a regional basis, feature filmsincreases in Canada and Asia Pacific were partially offset by declinesin the U.S. and Europe. The improvement in Canada was due to an overallincrease in the level of production activity, while the improvement inthe Asia Pacific region was due to an increase in the number of majorfeature films, including one feature marking the first utilization ofour GENESISTM digital camera system on a large-scale featureproduction. Television revenues increased in part as a result anincrease in original programming for cable networks and a recentincrease in the number of scripted television productions relative tothe reality programming that had become increasingly popular over thelast few years. Reality shows tend to be lower-budget productions that,as a general rule, are less likely to use our cameras and lenses. Therecent trend away from reality programming has contributed to theincrease in television revenues. The increase in revenue fromcommercials was due primarily to the addition of the WFW assets inCanada.

Cost of camera rentals increased $0.7 million due to thetranslation effect of foreign exchange rate changes. After taking intoaccount the effect of currency translation, cost of camera rentalsincreased $3.9 million. Approximately $2.0 million of the increaserelated to increased depreciation charges arising from the recentacquisitions of DHD, the WFW assets and Technovision. The primarycomponents of the remaining $1.9 million increase were higher costs forsubrentals (the cost of our having to rent additional equipment notcurrently available in our inventory), third-party commissions, andpayroll-related costs. The increases in subrentals and third-partycommissions were related to increased revenues, while the increase inpayroll-related costs in part was due to the acquisitions of the WFWassets and Technovision.

After taking into account the positiveeffect of currency changes of $0.7 million, camera rental gross marginincreased approximately $1.0 million. The increase was related to thedeployment of the WFW assets, and the increased revenues from featurefilms, television and commercials during the second quarter of 2005compared with the second quarter of 2004.

Lighting RentalOperations

|                |  |                       |        |                    |  |        |        |         |  |        |        |         |  |        |        |          |  |  |
|----------------|--|-----------------------|--------|--------------------|--|--------|--------|---------|--|--------|--------|---------|--|--------|--------|----------|--|--|
| (inthousands)  |  | Quarter Ended June30, |        | Increase(Decrease) |
| 2005           |  | 2004                  |        |               |  | %      |        |
| Rentalrevenue  |  | $                     | 11,584 |               |  | $      | 10,958 |    |  | $      | 626    |    |  |   | 5.7    | %   |
| Costof rentals |  |                  | 8,724  |               |  |   | 9,440  |    |  |   | (716   | )  |  |   | (7.6   | )%  |
| Grossmargin    |  | $                     | 2,860  |               |  | $      | 1,518  |    |  | $      | 1,342  |    |  |   | 88.4   | %   |
| Cost%          |  |                  | 75.3   | %             |  |   | 86.1   | %  |  |   |   |    |  |   |   |     |
|                |

Aftertaking into account a $0.3 million increase from the positive effectsof foreign currency rate changes, lighting rental revenue increased$0.3 million. Revenues from the Asia Pacific region improved $1.8million due to an increase in major feature films, but this was offsetby a decline in revenue from Lee Lighting in the United Kingdom andlighting operations in the United States. The U.K. and U.S. declineswere primarily in feature films, while television was unchanged in theU.S. and increased slightly in the U.K.

The effect of foreigncurrency rate changes increased the cost of lighting rentals by $0.4million, but was more than offset by cost declines of approximately$1.1 million, of which $0.8 million took place at Lee Lighting,primarily driven by decreases in salaries and subrentals related todecreases in revenue.

The improvement in gross margin was due tohigher margin major feature films in the Asia Pacific region inaddition to improved profitability at Lee Lighting.

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Sales andOther

|                |  |                       |        |                    |  |        |       |         |  |        |        |        |  |        |        |         |  |  |
|----------------|--|-----------------------|--------|--------------------|--|--------|-------|---------|--|--------|--------|--------|--|--------|--------|---------|--|--|
| (inthousands)  |  | Quarter Ended June30, |        | Increase(Decrease) |
| 2005           |  | 2004                  |        |               |  | %      |       |
| Sales          |  | $                     | 11,117 |               |  | $      | 9,191 |    |  | $      | 1,926  |   |  |   | 21.0   | %  |
| Costof rentals |  |                  | 6,866  |               |  |   | 5,296 |    |  |   | 1,570  |   |  |   | 29.6   | %  |
| Grossmargin    |  | $                     | 4,251  |               |  | $      | 3,895 |    |  | $      | 356    |   |  |   | 9.1    | %  |
| Cost%          |  |                  | 61.8   | %             |  |   | 57.6  | %  |  |   |   |   |  |   |   |    |
|                |

Aftertaking into account a $0.2 million increase from the positive effectsof foreign currency rate changes, sales and other revenue increased$1.7 million. Revenues from Lee Filters, with operations in both theUnited .Kingdom and United States, increased $1.5 million with smallerchanges at other locations. The improvement at Lee Filters was dueprimarily to several large-volume sales of special effects glasses.

Cost of sales and other increased $0.3 million from the positiveeffects of foreign currency rate changes, $0.6 million at Lee Filters,and $0.4 million in Asia Pacific, with the balance of the increase dueto smaller changes in other regions. The increase in costs as apercentage of sales is due to volume discounts inherent in thelarge-volume sales at Lee Filters.

OperatingCosts

|                                   |  |                       |        |                    |  |        |        |        |  |        |       |        |  |        |      |         |  |  |
|-----------------------------------|--|-----------------------|--------|--------------------|--|--------|--------|--------|--|--------|-------|--------|--|--------|------|---------|--|--|
| (inthousands)                     |  | Quarter Ended June30, |        | Increase(Decrease) |
| 2005                              |  | 2004                  |        |               |  | %      |        |
| Selling,general andadministrative |  | $                     | 20,322 |               |  | $      | 17,744 |   |  | $      | 2,578 |   |  |   | 14.5 | %  |
| Researchanddevelopment            |  |                  | 1,408  |               |  |   | 1,330  |   |  |   | 78    |   |  |   | 5.9  | %  |
|                                   |

SG&Aexpenses increased $0.6 million as the result of foreign exchange ratechanges. After taking this item into account, SG&A expensesincreased $1.9 million compared to the corresponding quarter of 2004.The primary component related to severance costs of approximately $0.9million in connection with the departure of several senior executivesas part of the Company's effort to reduce operating expenses. Thebalance of the increase related to higher professional and consultingfees associated with regulatory compliance requirements and accountingsystems enhancements and additional SG&A expenses associated withthe operations of Technovision and the WFW assets.

Interest,Taxes andOther

|                             |  |                       |        |                        |  |        |        |         |  |        |        |         |  |        |        |          |  |  |
|-----------------------------|--|-----------------------|--------|------------------------|--|--------|--------|---------|--|--------|--------|---------|--|--------|--------|----------|--|--|
| (inthousands)               |  | Quarter Ended June30, |        | Favorable(Unfavorable) |
| 2005                        |  | 2004                  |        | Change                 |  | %      |        |
| Interestexpense             |  | $                     | (8,915 | )                 |  | $      | (7,894 | )  |  | $      | (1,021 | )  |  |   | (12.9  | )%  |
| Interestincome              |  |                  | 96     |                   |  |   | 117    |    |  |   | (21    | )  |  |   | (17.9  | )%  |
| Foreignexchange gain (loss) |  |                  | (700   | )                 |  |   | 248    |    |  |   | (948   | )  |  |   | (382.3 | )%  |
| Otherincome, net            |  |                  | 197    |                   |  |   | 1,641  |    |  |   | (1,444 | )  |  |   | (88.0  | )%  |
| Incometaxprovision          |  |                  | (1,376 | )                 |  |   | (253   | )  |  |   | (1,123 | )  |  |   | (443.9 | )%  |
|                             |

Theincrease in interest expense primarily reflected higher effectiveinterest rates during the 2005 second quarter, in addition to slightlyhigher average debt balances compared to the corresponding quarter of2004. The higher average debt balances resulted from an increase inborrowings, primarily capital leases and borrowings from affiliates,offset by scheduled principal payments of outstanding debt.

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Foreign exchange activity resulted in aloss for the quarter ended June 30, 2005 as compared with a foreignexchange gain for the quarter ended June 30, 2004. The increase wasprimarily due to the effects of the fluctuating foreign currencies onthe foreign currency-denominated intercompany balances held in theUnited States.

Other income, net decreased due to a $1.5 milliongain on the sale of lighting rental equipment that was recorded in May2004.

The income tax provision for the quarter endedJune 30, 2005 comprises income taxes on profitable foreign operationsand foreign taxes withheld in the relevant jurisdictions. The Companydid not recognize any net benefit from tax losses as uncertainty as tofuture utilization resulted in an increase to the allowance againstdeferred tax assets in the same amount as additional deferred taxassets generated. For the quarter ended June 30, 2004 the Companyrecorded a $2.7 million tax benefit associated with domestic taxlosses. In assessing the recoverability of the related increase todeferred tax assets, the Company increased its valuation allowance by$2.0 million, resulting in a net domestic tax benefit of $0.7 million.This was offset by a $1.0 million provision relating to profitableforeign operations, based on application of the Company'seffective tax rate on full-year income, and foreign taxes withheld inthe relevant jurisdictions. See Note 7 to Consolidated FinancialStatements included in the Company's Annual Report on Form 10-Kfor a discussion of the Company's Tax Sharing Agreements.

Under applicable Internal Revenue Service regulations, as a resultof the December 3, 2002 settlement of certain shareholder litigationrelated to the 2001 purchase of shares of the Company's CommonStock from PX Holding by M & F Worldwide Corp. (the "M& F Settlement"), the Company may not join in filing aconsolidated federal income tax return with either MacAndrews &Forbes Holdings or the Company's subsidiaries until May 2006without consent from the Internal Revenue Service. Accordingly, sincethe December 3, 2002 effective date of the M & F Settlement, theCompany files separate federal income tax returns for the Company andincorporated subsidiaries. The Company does not believe thatdeconsolidation of its federal income tax returns has had or will havea material adverse effect on the Company's business or financialcondition.

Six Months Ended June 30, 2005 Compared toSix Months Ended June 30, 2004

The USD weakened, comparing thesix months ended June 30, 2005 with the six months ended June 30, 2004,against most major foreign currencies in countries where we dobusiness. The following table presents the average exchange rates weused during the respective periods of 2005 and 2004 in translatingLC-denominated activity (USD: 1LC).

|                          |  |                     |        |                   |  |                   |        |         |  |                |        |         |  |        |        |         |  |        |        |         |  |  |
|--------------------------|--|---------------------|--------|-------------------|--|-------------------|--------|---------|--|----------------|--------|---------|--|--------|--------|---------|--|--------|--------|---------|--|--|
| SixMonths Ended June 30, |  | U. K.Pound Sterling |        | Australian Dollar |  | NewZealand Dollar |        | Euro    |  | CanadianDollar |
| 2005                     |  |                | 1.8799 |              |  |              | 0.7741 |    |  |           | 0.7158 |    |  |   | 1.2918 |    |  |   | 0.8076 |    |
| 2004                     |  |                | 1.8203 |              |  |              | 0.7415 |    |  |           | 0.6531 |    |  |   | 1.2277 |    |  |   | 0.7478 |    |
| Increasevs.USD           |  |                | 3.3    | %            |  |              | 4.4    | %  |  |           | 9.6    | %  |  |   | 5.2    | %  |  |   | 8.0    | %  |
|                          |

Thesecurrency rate changes have had a significant impact on rental revenues,costs of revenues, and operating costs translated from LC into USD.Management believes it provides insight into operational performance toreview the results of operations after taking into account the effectsof exchange rate changes on LC amounts translated into USD and,accordingly, we have included that information in the followingdiscussion.

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Camera RentalOperations

|                |  |                          |        |                    |  |        |        |         |  |        |        |         |  |        |        |          |  |  |
|----------------|--|--------------------------|--------|--------------------|--|--------|--------|---------|--|--------|--------|---------|--|--------|--------|----------|--|--|
| (inthousands)  |  | Six Months EndedJune 30, |        | Increase(Decrease) |
| 2005           |  | 2004                     |        |               |  | %      |        |
| Rentalrevenue  |  | $                        | 65,024 |               |  | $      | 57,676 |    |  | $      | 7,348  |    |  |   | 12.7   | %   |
| Costof rentals |  |                     | 38,772 |               |  |   | 30,736 |    |  |   | 8,036  |    |  |   | 26.1   | %   |
| Grossmargin    |  | $                        | 26,252 |               |  | $      | 26,940 |    |  | $      | (688   | )  |  |   | (2.6   | %)  |
| Cost%          |  |                     | 59.6   | %             |  |   | 53.3   | %  |  |   |   |    |  |   |   |     |
|                |

Themain factors underlying the increase in camera rental revenue wereadditional revenue from the acquisitions of DHD, the WFW assets andTechnovision, increased revenue from television and commercials and thepositive translation effect of foreign exchange rate changes. Theweakening of the USD, primarily against Canadian and Europeancurrencies, increased camera rental revenue by approximately $2.2million, and we estimate the impact of the DHD acquisition on camerarevenues was an increase of approximately $1.5 million. As the WFW andTechnovision assets have been integrated into our respective regionaloperations, the impact of their utilization cannot be quantified but webelieve it has been accretive to revenue.

After taking intoaccount the effects of currency translation and the DHD acquisitiondescribed above, camera rental revenue increased approximately $3.6million. Rental revenue increased from television and commercials byapproximately $1.9 million and $0.8 million, respectively. Televisionrevenues increased in part as a result of an increase in originalprogramming for cable networks and a recent increase in the number ofscripted television productions relative to the reality programmingthat had become increasingly popular over the last few years. Realityshows tend to be lower-budget productions that, as a general rule, areless likely to use our cameras and lenses. The increase in camerarental revenue from commercials was due primarily to the addition ofthe WFW assets in Canada. Revenue from feature films was essentiallyunchanged as declines in major feature films were nearly offset byincreases in independent films. Other camera revenue increased $1.1million, of which half related to an increase in agent revenues.

Cost of camera rentals increased $0.8 million due to the translationeffect of foreign exchange rate changes, $3.2 million due to higherdepreciation charges, and $4.0 million due to other operating costincreases. The higher depreciation charges were primarily related tothe acquisitions of DHD, the WFW assets and Technovision. The primarycomponents of the other operating cost change were increases inpayroll-related costs, equipment subrentals and third-party commissionsof approximately $1.1 million each. The commissions are directlyrelated to revenue increases while payroll and subrental costs arerelated to both increased rental activity and the recent acquisitionsof the WFW assets and Technovision. Additionally, severance costs of$0.4 million, reflecting personnel reductions to reduce fixed operatingcosts, increased operating costs during the period.

After takinginto account the positive effects of currency changes of $1.4 million,camera rental gross margin declined approximately $1.9 million. Themajority of the decline took place in the U.S. as the cost increases,primarily the non-cash depreciation charges, outpaced revenuegains.

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Lighting Rental Operations

|                |  |                          |        |                    |  |        |        |         |  |        |        |         |  |        |        |          |  |  |
|----------------|--|--------------------------|--------|--------------------|--|--------|--------|---------|--|--------|--------|---------|--|--------|--------|----------|--|--|
| (inthousands)  |  | Six Months EndedJune 30, |        | Increase(Decrease) |
| 2005           |  | 2004                     |        |               |  | %      |        |
| Rentalrevenue  |  | $                        | 21,285 |               |  | $      | 19,480 |    |  | $      | 1,805  |    |  |   | 9.3    | %   |
| Costof rentals |  |                     | 16,396 |               |  |   | 16,958 |    |  |   | (562   | )  |  |   | (3.3   | )%  |
| Grossmargin    |  | $                        | 4,889  |               |  | $      | 2,522  |    |  | $      | 2,367  |    |  |   | 93.9   | %   |
| Cost%          |  |                     | 77.0   | %             |  |   | 87.1   | %  |  |   |   |    |  |   |   |     |
|                |

Aftertaking into account a $0.7 million increase from the positive effectsof foreign currency rate changes, lighting rental revenue increased$1.1 million. Lighting revenue from the Asia Pacific region improved$2.4 million due to an increase in major feature films, while in theUnited States lighting revenue declined approximately $0.9 million.Also, 2004 results included approximately $0.4 million of lightingrevenues from Canada prior to the May, 2004 sale of all our lightingassets in that country.

Cost of lighting rentals decreased $1.1million compared with the corresponding 2004 period after taking intoaccount a $0.5 million increase from the effect of foreign currencyrate changes. Cost increases totaling $0.8 million in the Asia Pacificregion were more than offset by $0.8 million of cost declines in theU.S., a $0.7 million decline at Lee Lighting in the United Kingdom, andthe absence of lighting costs from Canada of $0.4 million. Theimprovement in gross margin was due to higher margin major featurefilms in the Asia Pacific region in addition to improved profitabilityat Lee Lighting.

Sales andOther

|                |  |                          |        |                    |  |        |        |         |  |        |        |        |  |        |        |         |  |  |
|----------------|--|--------------------------|--------|--------------------|--|--------|--------|---------|--|--------|--------|--------|--|--------|--------|---------|--|--|
| (inthousands)  |  | Six Months EndedJune 30, |        | Increase(Decrease) |
| 2005           |  | 2004                     |        |               |  | %      |        |
| Sales          |  | $                        | 21,648 |               |  | $      | 18,812 |    |  | $      | 2,836  |   |  |   | 15.1   | %  |
| Costof rentals |  |                     | 12,919 |               |  |   | 10,901 |    |  |   | 2,018  |   |  |   | 18.5   | %  |
| Grossmargin    |  | $                        | 8,729  |               |  | $      | 7,911  |    |  | $      | 818    |   |  |   | 10.3   | %  |
| Cost%          |  |                     | 59.7   | %             |  |   | 57.9   | %  |  |   |   |   |  |   |   |    |
|                |

Aftertaking into account a $0.6 million increase from the positive effectsof foreign currency rate changes, sales and other revenue increased$2.2 million. Revenues from Lee Filters, with operations in both theUnited Kingdom and United States, increased $1.8 million. Revenues fromthe Asia Pacific region increased $0.8 million but were offset bydeclines in the United States and the United Kingdom. The improvementat Lee Filters was due primarily to several large-volume sales ofspecial effects glasses.

Cost of sales and other increased $0.6million from the positive effects of foreign currency rate changes,$0.7 million related to the increase in Lee Filters revenues, and $0.7million in Asia Pacific and Europe. The increase in costs as apercentage of sales is due to volume discounts inherent in large-volumesales.

OperatingCosts

|                                   |  |                          |        |                    |  |        |        |        |  |        |       |        |  |        |      |         |  |  |
|-----------------------------------|--|--------------------------|--------|--------------------|--|--------|--------|--------|--|--------|-------|--------|--|--------|------|---------|--|--|
| (inthousands)                     |  | Six Months EndedJune 30, |        | Increase(Decrease) |
| 2005                              |  | 2004                     |        |               |  | %      |        |
| Selling,general andadministrative |  | $                        | 40,389 |               |  | $      | 35,457 |   |  | $      | 4,932 |   |  |   | 13.9 | %  |
| Researchanddevelopment            |  |                     | 2,922  |               |  |   | 2,761  |   |  |   | 161   |   |  |   | 5.8  | %  |
|                                   |

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SG&A expenses increased $1.0 millionas the result of foreign exchange rate changes. After taking this iteminto account, SG&A expenses increased $3.9 million compared to thecorresponding period of 2004. The majority of the increase related toseverance costs of approximately $2.8 million in connection with thedeparture of several senior executives, including some departures thatwere part of the Company's effort to reduce operating costs. Thebalance of the increase related to higher professional and consultingfees associated with regulatory compliance requirements and accountingsystems enhancements and additional SG&A expenses associated withthe operations of Technovision and the WFW assets.

Interest,Taxes andOther

|                             |  |                         |         |                        |  |        |         |         |  |        |        |         |  |        |        |          |  |  |
|-----------------------------|--|-------------------------|---------|------------------------|--|--------|---------|---------|--|--------|--------|---------|--|--------|--------|----------|--|--|
| (inthousands)               |  | Six Months EndedJune30, |         | Favorable(Unfavorable) |
| 2005                        |  | 2004                    |         | Change                 |  | %      |         |
| Interestexpense             |  | $                       | (17,267 | )                 |  | $      | (15,775 | )  |  | $      | (1,492 | )  |  |   | (9.5   | )%  |
| Interestincome              |  |                    | 185     |                   |  |   | 217     |    |  |   | (32    | )  |  |   | (14.7  | )%  |
| Foreignexchange gain (loss) |  |                    | (1,096  | )                 |  |   | 476     |    |  |   | (1,572 | )  |  |   | (330.3 | )%  |
| Refinancingexpense          |  |                    | (154    | )                 |  |   | (6,470  | )  |  |   | 6,316  |    |  |   | 97.6   | %   |
| Other income, net           |  |                    | 699     |                   |  |   | 1,763   |    |  |   | (1,064 | )  |  |   | (60.4  | )%  |
| Incometaxprovision          |  |                    | (1,973  | )                 |  |   | (1,665  | )  |  |   | (308   | )  |  |   | (18.5  | )%  |
|                             |

Theincrease in interest expense primarily reflected higher effectiveinterest rates during the first six months of 2005, partially offset byslightly lower average debt balances compared to the correspondingperiod of 2004. The lower average debt balances resulted from theJanuary 2004 Refinancing (discussed below in "Long-TermDebt"), and scheduled principal payments of outstandingdebt.

Foreign exchange activity resulted in a loss for the sixmonths ended June 30, 2005 as compared with a foreign exchange gain forthe six months ended June 30, 2004. This was primarily due to theeffects of the weakening of the USD against foreign currencies onintercompany balances held in the United States that are denominated inthose foreign currencies.

Other income, net decreased due to a$1.5 million gain on the sale of lighting rental equipment that wasrecorded in May 2004.

Refinancing expense of $6.5million for the six months ended June 30, 2004 reflects costs incurredin connection with the Company's January 2004 Refinancing andcosts previously incurred in connection with the Company's PriorCredit Agreement (discussed below in "Long-TermDebt"). These costs represent primarily lender andprofessional fees incurred by the Company.

The income taxprovision for the six months ended June 30, 2005 comprises income taxeson profitable foreign operations and foreign taxes withheld in therelevant jurisdictions. The Company did not recognize any net benefitfrom tax losses as uncertainty as to future utilization resulted in anincrease to the allowance against deferred tax assets in the sameamount as additional deferred tax assets generated. For the six monthsended June 30, 2004 the Company recorded a $4.2 million tax benefitassociated with domestic tax losses. In assessing the recoverability ofthe related increase to deferred tax assets, the Company increased itsvaluation allowance by $3.3 million, resulting in a net domestic taxbenefit of $0.9 million. This was offset by a $2.4 million provisionrelating to profitable foreign operations, based on application of theCompany's effective tax rate on full-year income, and foreigntaxes withheld in the relevant jurisdictions. See Note 7 toConsolidated Financial Statements included in the Company'sAnnual Report on Form 10-K for a discussion of the Company's TaxSharing Agreements.

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Liquidity and Capital Resources

The following table sets forth certain information from theCompany's condensed consolidated statements of cash flows for theperiods indicated (inthousands):

|                               |  |                         |         |         |  |        |        |         |  |  |
|-------------------------------|--|-------------------------|---------|---------|--|--------|--------|---------|--|--|
|                          |  | SixMonths Ended June30, |
|                          |  | 2005                    |         | 2004    |
| Netcash provided by (usedin): |  |                    |    |    |  |   |   |    |
| Operatingactivities           |  | $                       | 5,661   |    |  | $      | 2,496  |    |
| Investingactivities           |  |                    | (14,023 | )  |  |   | (9,046 | )  |
| Financingactivities           |  |                    | 8,975   |    |  |   | 7,720  |    |
|                               |

Cashprovided by operating activities for the six months ended June 30,2005, totaled $5.7 million comprised of the net loss from continuingoperations of $23.0 million, adjusted for depreciation and amortizationof $22.2 million, and the net change in working capital (excludingcash) and other miscellaneous items of $6.5 million. The improvement ascompared with the same period of 2004 was due primarily to the positiveimpact of working capital changes.

Cash used in investingactivities during the six months ended June 30, 2005 of $14.0 millionconsisted of capital expenditures net of proceeds from assetdispositions. The higher level of capital expenditures was dueprimarily to expenditures related to the GENESISTM digitalcamera systems and related accessories. Cash provided by financingactivities was $9.0 million, consisting of borrowings under the SecondMacAndrews Line (as defined below in "Long-TermDebt") of $9.0 million and borrowing from third parties of$5.5 million reduced by scheduled repayments under the Amended andRestated Credit Agreement (as defined below in "Long-TermDebt") and under capital leases totaling $4.9 million anddeferred financing costs of $0.6 million.

Cash provided byoperating activities for the six months ended June 30, 2004, totaled$2.5 million comprised of the net loss of $22.3 million, adjusted fordepreciation and amortization of $20.2 million, and the net change inworking capital (excluding cash) and other miscellaneous items of $4.6million. Total investing activities of $9.0 million consisted ofcapital expenditures net of proceeds of dispositions. The majority ofthe capital expenditures were used to manufacture camera rental systemsand accessories. Cash provided by financing activities was $7.7million, which comprised borrowings of $135.6 million under the Amendedand Restated Credit Agreement (defined below in "Long-TermDebt"), the issuance of $100.0 million of Senior Notes(net of discount), a capital contribution from MacAndrews & ForbesHoldings of $22.7 million, net of transaction costs, and borrowingunder the Second MacAndrews Line of $4.5 million, partially offset byrepayments of $251.0 million under the Prior Credit Agreement,repayments of other long-term debt of $2.9 million and deferredfinancing costs of $0.9 million.

As of June 30, 2005, theCompany had a line of credit provided by MacAndrews & Forbes (theSecond MacAndrews Line) totaling $32.0 million, under whichapproximately $18.9 million, including accrued interest, was drawn. TheCompany drew an additional $4.5 million under the line of credit duringJuly 2005, reflecting the seasonal second-quarter slowdown intelevision production and debt service requirements in early August2005.

Although there can be no assurance, Panavision expectsthat cash flows from operations, borrowings under the revolving line ofcredit, and cash equity contributions and advances from affiliates willbe sufficient to enable Panavision to meet its anticipated operating,capital spending and debt service requirements through at least thenext twelve months.

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Long-Term Debt

9 5/8% Notes

The9 5/8% Notes were issued at a discountrepresenting 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 of9 5/8% per annum, payable semi-annually onFebruary 1 and August 1 of each year, commencing August 1, 2002.

MacAndrews Lines

On August 13, 2003, MacAndrews &Forbes Inc., (formerly MacAndrews & Forbes Holdings Inc.) agreed toamend an existing line of credit provided to Panavision to increase theamount available for borrowing from $4.0 million to $10.0 million andextend the maturity date to August 31, 2006 (as amended, the"MacAndrews Line"). In connection with anamendment to Panavision's Prior Credit Agreement (as definedbelow), on November 12, 2003, MacAndrews & Forbes Inc. agreed toprovide a second revolving line of credit (the "SecondMacAndrews Line") in the amount of $10.0 million at a rateequal to 50 basis points above the rate provided for in the revolvingfacility pursuant to the Prior Credit Agreement and a maturity date ofApril 15, 2004. As described below, in connection with the January 2004Refinancing (as defined below), (i) amounts outstanding under theMacAndrews Line were retired in exchange for shares of new Series DCumulative 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 SecondMacAndrews Line to $20.0 million and extended the maturity date toApril 16, 2009. On March 30, 2005, the Second MacAndrews Line wasamended and restated to increase the amount to $32.0 million. As ofJuly 31, 2005, Panavision had drawn approximately $23.6 million,including accrued interest, under the Second MacAndrews line, leavingavailability of approximately $8.4 million.

Prior CreditAgreement

On June 4, 1998, Panavision entered into a CreditAgreement with a syndicate of lenders (as subsequently amended onSeptember 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"). Panavision'sobligations under the Prior Credit Agreement were secured bysubstantially all of Panavision's assets. The Prior CreditAgreement comprised two facilities, the Term Facility and the RevolvingFacility. As described below, the Prior Credit Agreement was replacedwith the Amended and Restated Credit Agreement pursuant to the January2004 Refinancing.

January 2004 Refinancing -12.50% Senior Notes Due 2009 and Amended and Restated CreditAgreement

On January 16, 2004, Panavision consummated a seriesof transactions to refinance its indebtedness under the Prior CreditAgreement (the "January 2004 Refinancing").As part of the January 2004 Refinancing, Panavision sold, in a privateplacement, $104.2 million of senior secured notes (the"Senior Notes") bearing interest at a rate of12.50%, payable quarterly, with a maturity date of January 16,2009. The Senior Notes were sold at an original issue discount ofapproximately 4% for an aggregate purchase price of $100.0million. The Senior Notes are secured by a second-priority lien onsubstantially all of the Company's assets. The indenture pursuantto which the Senior Notes were issued (the "2004Indenture") requires that, among other provisions,Panavision achieve certain EBITDA levels and abide by certain otherrestrictive covenants, including limitations on indebtedness, liens,disposition of assets, and certain restricted payments includingdividends to stockholders. Upon certain events of default under the2004 Indenture, the Senior Notes will bear interest at 2.5%above the rate otherwise applicable.

As part of the January 2004Refinancing, Panavision issued to PX Holding 215,274 shares of newSeries D Preferred Stock in exchange for (a) 159,644 shares of Series CCumulative Pay-in-kind Preferred Stock, par value $0.01 per share (the"Series C Preferred Stock"), of Panavision,held by PX 

26

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Holding (together with approximately $13.2million 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. ("PANYRental") having a fair market value of $0.7 million (suchthat, as of January 16, 2004, Panavision owned 100% of theoutstanding shares of PANY Rental); (e) the retirement of all amounts(consisting of $630,780 in principal and $82,913 in accrued and unpaidinterest) owed by PANY Rental to PX Holding pursuant to a certainpromissory note held by PX Holding; and (f) the retirement of allamounts (consisting of $7.8 million in principal and unpaid interest)owed to MacAndrews & Forbes Holdings under a certain promissorynote in the principal amount of $6.7 million, dated July 1, 2002,issued by Panavision to M & F Worldwide Corp. and subsequentlyacquired by MacAndrews & Forbes Holdings. Panavision also issued toPX Holding 1,381,690 shares of new Series E Non-Cumulative PerpetualParticipating Preferred Stock, par value $0.01 per share, (the"Series E Preferred Stock") in exchange for1,381,690 shares of Series A Non-Cumulative Perpetual ParticipatingPreferred Stock, par value $0.01 per share (the "Series APreferred Stock"). As a result of the January 2004Refinancing transactions, all of the outstanding shares of Series A andSeries C Preferred Stock were transferred to Panavision. In addition,MacAndrews & Forbes Inc. increased the amount of the SecondMacAndrews Line to $20.0 million and extended the maturity date toApril 16, 2009.

Panavision used proceeds from the sale of theSenior Notes and the issuance of Series D Preferred Stock to reduce theindebtedness under the Prior Credit Agreement by $115.4 million, andreplaced the Prior Credit Agreement with an Amended and Restated CreditAgreement (the "Amended and Restated CreditAgreement") with the lenders under the Prior CreditAgreement. The Amended and Restated Credit Agreement provides for asingle term loan facility in the principal amount of $135.6 millionrepayable in quarterly installments with a final maturity of January12, 2007, except that the term facility shall be due on December 1,2005 if any of the 9 5/8% Notes remainoutstanding on that date. Panavision is considering variousalternatives with respect to the repayment or refinancing of the9 5/8% Notes. While there can be 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% NotesCommitment"), in the event that the9 5/8% Notes are not repaid, retired orrefinanced prior to December 1, 2005, or the applicable provision ofthe Amended Credit Agreement is not amended by such time such thatPanavision's term loans do not become immediately due andpayable, to provide financial support sufficient to allow therepayment, retirement or refinancing of the9 5/8% Notes.

The term facility under theAmended and Restated Credit Agreement bears interest at either the ABRor Eurodollar Rate (as defined in the Amended and Restated CreditAgreement) plus a margin of 5.25% in the case of ABR loans or6.25% in the case of Eurodollar Loans.

The term facilityunder the Amended and Restated Credit Agreement is secured onsubstantially the same basis as indebtedness under the Prior CreditAgreement. In connection with the Amended and Restated Credit AgreementPanavision paid fees to lenders and professional advisors ofapproximately $3.5 million, including an original issue discount fee ofapproximately $2.0 million. Approximately $3.1 million of the fees paidwere expensed in 2004.

Under the Amended and Restated CreditAgreement, Panavision is required to repay $7.2 million in principal in2005. In addition, the Amended and Restated Credit Agreement revisedcertain financial tests and other restrictive covenants set forth inthe Prior Credit Agreement, including required EBITDA (as definedtherein), limitations on indebtedness, and other provisions. As definedin the Amended and Restated Credit Agreement and 2004 Indenture, EBITDAincludes adjustments for certain severance expenses, refinancingexpenses, foreign exchange (gain) loss, other non-cash charges and thepro forma effect of acquisitions and dispositions.

The requiredlevel of EBITDA, as defined, for the last twelve months in the periodended June  30, 2005, was $54.0 million pursuant to the Amendedand Restated Credit Agreement and $50.0 

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PANAVISIONINC.

million pursuant to the 2004 Indenture. TheCompany met the required level of EBITDA for the twelve-month periodended June 30, 2005.

Amendments to Amended and RestatedCredit Agreement and 2004 Indenture

EFILM ProceedsAmendment

Principally to provide a mechanism for thereinvestment of the proceeds of the sale of EFILM, on August 11, 2004,Panavision and the other parties to the Amended and Restated CreditAgreement entered into an amendment and waiver to the Amended andRestated Credit Agreement ("First Amendment andWaiver"). To provide a similar mechanism for thereinvestment of the proceeds of the sale of EFILM under the 2004Indenture, on August 11, 2004, Panavision and Wilmington Trust Company,as Trustee, entered into a supplemental indenture("Supplemental Indenture"). On September 30,2004, upon repayment of $1.3 million to Federal Financial Credit Inc.by PANY Rental with part of the proceeds of the sale of EFILM, PANYRental and its wholly-owned subsidiary TFN Lighting Corp. becameguarantors under the Amended and Restated Credit Agreement and the 2004Indenture in accordance with the terms of those debt instruments.

Preferred Stock Exchange

On November 16, 2004,Panavision issued 30,610,810 shares of common stock, par value $.01 pershare, to PX Holding, in exchange for all Series D Preferred Stock andall Series E Preferred Stock held by PX Holding (the"Exchange"). The Exchange was completedpursuant to a letter agreement, dated November 16, 2004, betweenPanavision and PX Holding (the "LetterAgreement").

In this transaction, Panavisionissued:

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

|              |                                                                                                                     |
|--------------|---------------------------------------------------------------------------------------------------------------------|
| •  | 1,381,690 shares of Common Stockin exchange for the 1,381,690 shares of Series E Preferred Stock heldby PX Holding. |

This transaction was unanimously approved by anindependent Special Committee of Panavision's Board of Directors.In the Letter Agreement, PX Holding agreed, among other things, tocertain restrictions on its ability to acquire Panavision'sremaining Common Stock or to transfer the shares it holds. After givingeffect to the transaction, PX Holding held approximately 96.3%of the Common Stock. The transaction followed a May 13, 2004 offer byMacAndrews & Forbes Holdings initially valuing the Common Stock at$7.00 per share.

Following the consummation of the Exchange, noshares of Series D Preferred Stock or Series E Preferred Stock wereoutstanding. Accordingly, effective November 16, 2004, Panavisioneliminated the certificates of designation for the Series D PreferredStock and Series E Preferred Stock.

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

Inaddition, in connection with the Exchange, Panavision entered into aSecond Amendment and Consent, dated as of November 15, 2004, withrespect to Panavision's Amended and Restated CreditAgreement.

WFW Asset Acquisition

In connectionwith the Panavision acquisition of the William F. White InternationalInc. camera inventory in Canada (the "WFWAcquisition"), Panavision entered into a Third Amendment,dated as 

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PANAVISIONINC.

of December 29, 2004 with respect toPanavision's Amended and Restated Credit Agreement.  Inaddition, in connection with the WFW Acquisition, Panavision enteredinto a Fourth Supplemental Indenture, dated as of December 29, 2004,with respect to the 2004 Indenture.

March 2005Amendment

Panavision entered into a Fourth Amendment, datedas of March 30, 2005, to the Amended and Restated Credit Agreement andFifth Supplemental Indenture, dated as of March 30, 2005, with respectto the 2004 Indenture. This amendment and indenture supplement wasentered into principally to (a) reduce required EBITDA levels, asprovided in the Amended and Restated Credit Agreement, to $52.0million, $54.0 million, $54.0 million and $58.0 million for thetwelve-month periods ended March 31, 2005, June 30, 2005, September 30,2005 and December 31, 2005, respectively; (b) extend the date on whichthe Term Facility under the Amended and Restated Credit Agreement shallbe due if the 9 5/8% Notes remain outstandingfrom September 1, 2005 to December 1, 2005; (c) increase the limitationon capital expenditure, as defined in the Amended and Restated CreditAgreement, from $25.0 million to $37.5 million; and (d) permit theincrease of the Second MacAndrews Line to $32.0 million.

GE Term Loan & Security Agreement

On June 14,2005, Panavision entered into a term loan and security agreement("GE Term Loan & Security Agreement")with General Electric Capital Corporation("GE") pursuant to which GE shall makeavailable to Panavision term loans in aggregate principal amount notexceeding $10 million and maturing September 14, 2006 for the purchaseof digital cameras and equipment. Panavision's obligationspursuant to the GE Term Loan & Security Agreement are guaranteed byMacAndrews & Forbes Holdings and secured by a first prioritysecurity interest in the cameras and related equipment purchased withthe proceeds of the term loans. As of June 30, 2005, there were termloans outstanding representing approximately $6.1 million.

Capital Expenditures, Liquidity Requirements and Other

The Company intends to use cash provided by operating activities andits revolving lines of credit to make additional capital expendituresprimarily to manufacture camera systems and accessories and purchaseother rental equipment. Based on projected revenues in 2005 and beyond,the Company anticipates incurring a higher level of capitalexpenditures in 2005 as compared to 2004.

Panavision is aholding company whose principal material asset is the ownershipinterest in its subsidiaries. The Company's principal businessoperations are conducted by its subsidiaries. Accordingly, theCompany's source of cash to pay its obligations is expected to bedistributions with respect to its ownership interests in itssubsidiaries. There can be no assurance that its subsidiaries willgenerate sufficient cash flow to pay dividends or distribute funds tothe Company or that applicable state law and contractual restrictions,including negative covenants contained in the debt instruments of suchsubsidiaries, will permit such dividends or distributions.

Off-Balance Sheet Arrangements

The Company does not haveany off-balance sheet financing arrangements.

Seasonality

The Company's revenue and net income are subject to seasonalfluctuations. In North America, the majority of episodic televisionprograms cease filming in the second quarter for several months, andtypically resume production in August. Feature film production activitytypically reaches its peak in the third and fourth quarters.

SFAS No. 142, "Goodwill and Other IntangibleAssets"

We performed an annual impairment testrelating to our goodwill and trade name, most recently as of December31, 2004, and found that the fair values of our goodwill and our tradename were in 

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excess of carrying value. In the absence ofindicators that an earlier assessment would be required, we willperform the annual impairment test of goodwill and trade name duringthe fourth quarter of fiscal 2005.

Forward-LookingStatements

This quarterly report on Form 10-Q for the quarterended June 30, 2005, as well as certain of Panavision's otherpublic documents and electronic and oral disclosures, containsforward-looking statements that reflect management's currentassumptions and estimates of future performance and economicconditions. Such statements are made in reliance upon the safe harborprovisions of the Private Securities Litigation Reform Act of 1995.Panavision cautions investors that forward-looking statements aresubject to risks and uncertainties that may cause actual results andfuture trends to differ materially from those projected, stated, orimplied by the forward-looking statements and investors are cautionednot to place undue reliance on any forward-looking statements. Further,Panavision encourages investors to read the summary of its criticalaccounting policies included in its Annual Report on Form 10-K for theyear ended December 31, 2004 under the heading"Management's Discussion and Analysis of FinancialCondition and Results of Operations – Critical AccountingPolicies," as such discussion may be modified orsupplemented by subsequent reports that we file with the Securities andExchange Commission.

In addition to factors described inPanavision's Securities and Exchange Commission filings andelsewhere, the following factors could cause Panavision's actualresults to differ materially from those expressed in anyforward-looking statements made by Panavision: (a) a significantreduction in the number of feature film, commercial or seriestelevision productions; (b) competitive pressures arising from changesin technology, changing customer requirements, price competition,evolving industry standards or improvements in, and the expansion of,product offerings of Panavision's competitors; (c)unfavorable foreign currency fluctuations; (d) lower-than-expected cashflows from operations; (e)  difficulties or delays in developingand introducing new products or the failure of Panavision'scustomers to accept new product offerings; (f) difficulties or delaysin implementing improvements in operating efficiencies; (g) theinability to secure capital contributions or loans from affiliates,refinance its indebtedness or to sell its equity securities; or (h)significant increases in interest rates.

Forward-lookingstatements speak only as of the date they are made, and except for ourongoing obligations under the U.S. federal securities laws, weundertake no obligation to publicly update any forward-lookingstatements whether as a result of new information, future events orotherwise.

Item 3.    Quantitative and QualitativeDisclosures About Market Risk

We have exposure to market riskboth as a result of changing interest rates and movements in foreigncurrency exchange rates. We manage our exposure to these market risksthrough our regular operating and financing activities. Item 7A of theCompany's Annual Report on Form 10-K for the year ended December31, 2004 presents quantitative and qualitative disclosures about marketrisk as of December 31, 2004. As of June 30, 2005, there have been nomaterial changes in our market risk since December 31, 2004.

Item 4.    Controls and Procedures

(a) DisclosureControls and Procedures. Our management, with the participation of ourChief Executive Officer and Chief Financial Officer, has evaluated theeffectiveness of our disclosure controls and procedures (as such termis defined in Rules 13a-15(e) and 15d-15(e) under the SecuritiesExchange Act of 1934, as amended (the "ExchangeAct"), as of the end of the fiscal period covered by thisQuarterly Report on Form 10-Q. Based upon such evaluation, our ChiefExecutive Officer and Chief Financial Officer have concluded that, asof the end of such period, such disclosure controls and procedures areeffective in accurately recording, processing, summarizing andreporting, on a timely basis, information required to be disclosed byus in the reports we file or submit under the Exchange 

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Act, and are effective in ensuring thatinformation required to be disclosed by us in the reports that we fileor submit under the Exchange Act is accumulated and communicated to ourmanagement, including our Chief Executive Officer and Chief FinancialOfficer, as appropriate to allow timely decisions regarding requireddisclosure.

(b) Changes in Internal Control Over FinancialReporting. There have not been any changes in our internal control overfinancial reporting (as such term is defined in Rules 13a-15(f) and15d-15(f) under the Exchange Act) during the fiscal period to whichthis Quarterly Report on Form 10-Q relates that have materiallyaffected, or are reasonably likely to materially affect, our internalcontrol over financial reporting.

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PART II — OTHERINFORMATION

|               |                   |
|---------------|-------------------|
| Item 1.  | Legal Proceedings |

|        |                                                                                                                                                                                                                                                                                          |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Panavision is not engaged in any legal proceedingother than ordinary routine litigation incidental to its business.Currently, Panavision is not involved in any legal proceeding that itexpects to have a material effect on its financial condition, resultsof operations, or business. |

|              |                                                            |
|--------------|------------------------------------------------------------|
| Item2.  | Unregistered Sales of Equity Securities and Use ofProceeds |

|        |      |
|--------|------|
|   | None |

|              |                                 |
|--------------|---------------------------------|
| Item3.  | Defaults Upon Senior Securities |

|        |      |
|--------|------|
|   | None |

|               |                                                    |
|---------------|----------------------------------------------------|
| Item 4.  | Submissionof Matters to a Vote of Security Holders |

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | TheCompany's 2005 Annual Meeting of Stockholders was held on May 17,2005. The only matter voted upon at such meeting was the re-election ofRonald O. Perelman, Robert L. Beitcher, Howard Gittis, Edward Grebow,Ed Gregory Hookstratten, James R. Maher, Martin D. Payson, John A.Scarcella, Robert S. Wiesenthal, and Kenneth Ziffren as directors,consisting of all the directors standing for re-election, and all ofwhom were re-elected. |

|        |                                                                                                                                                                                                                                                                                                                        |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The Company'svoting stock comprises 39,380,729 shares of Common Stock, par value$0.01 per share, each of which is entitled to one vote. There werepresent at the meeting, either in person or by proxy, 39,193,499shares. The following is a tabulation of the votes cast in connectionwith the Election of Directors: |

|                       |  |        |            |                    |  |           |        |                 |  |        |         |        |  |        |         |        |  |  |
|-----------------------|--|--------|------------|--------------------|--|-----------|--------|-----------------|--|--------|---------|--------|--|--------|---------|--------|--|--|
| Nomineesfor Director  |  | For    |            | Against orWithheld |  | Abstained |        | BrokerNon-Votes |
| Ronald O.Perelman     |  |   | 39,184,272 |               |  |      | 9,227  |            |  |   | — |   |  |   | — |   |
| RobertL.Beitcher      |  |   | 39,184,102 |               |  |      | 9,397  |            |  |   | — |   |  |   | — |   |
| HowardGittis          |  |   | 39,170,791 |               |  |      | 22,708 |            |  |   | — |   |  |   | — |   |
| EdwardGrebow          |  |   | 39,191,581 |               |  |      | 1,918  |            |  |   | — |   |  |   | — |   |
| EdGregoryHookstratten |  |   | 39,191,581 |               |  |      | 1,918  |            |  |   | — |   |  |   | — |   |
| JamesR.Maher          |  |   | 39,191,581 |               |  |      | 1,918  |            |  |   | — |   |  |   | — |   |
| MartinD.Payson        |  |   | 39,178,096 |               |  |      | 15,403 |            |  |   | — |   |  |   | — |   |
| JohnA.Scarcella       |  |   | 39,185,917 |               |  |      | 17,582 |            |  |   | — |   |  |   | — |   |
| RobertS.Wiesenthal    |  |   | 39,191,581 |               |  |      | 1,918  |            |  |   | — |   |  |   | — |   |
| KennethZiffren        |  |   | 39,184,402 |               |  |      | 9,097  |            |  |   | — |   |  |   | — |   |
|                       |

|              |                   |
|--------------|-------------------|
| Item5.  | Other Information |

|        |                                             |
|--------|---------------------------------------------|
|   | Noadditional information need be presented. |

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|               |          |
|---------------|----------|
| Item 6.  | Exhibits |

|               |  |                                                                                                                                                                                                                                                                                                                                                                                     |  |  |  |  |
|---------------|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                         |
| 3             |  | Certificateof Incorporation and By-Laws.                                                                                                                                                                                                                                                                                                                                            |
| 3.1           |  | RestatedCertificate of Incorporation of the Company (incorporated herein byreference to Exhibit 3.1 to Panavision's Quarterly Report on Form10-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'sQuarterly Report on Form 10-Q for the quarter ended March 31, 1999).**                                                                                                                                                                                                               |
| 4             |  | Instruments Definingthe Rights of Security Holders, IncludingIndentures                                                                                                                                                                                                                                                                                                             |
| 4.1           |  | Indenture, dated as ofFebruary 11, 1998, between PX Escrow and The Bank of New York, asTrustee, relating to the Company's 9 5/8%Senior Subordinated Discount Notes Due 2006 (incorporated herein byreference to Exhibit 4.1 to Panavision's Registration Statementon Form S-1, Registration No. 333-59363 filed with the Securities andExchange Commission on July 17, 1998).**     |
| 4.2           |  | First Supplemental Indenture datedJune 4, 1998, among PX Escrow, Panavision and the Trustee, amending theIndenture identified at Exhibit 4.1 (incorporated herein by referenceto Exhibit 4.2 to Panavision's Registration Statement on FormS-1, Registration No. 333-59363 filed with the Securities and ExchangeCommission on July 17, 1998). **                                   |
| 4.3           |  | SecondAmended and Restated Senior Subordinated Line of Credit Agreement datedJanuary 16, 2004, amended and restated as of March 30, 2005, betweenPanavision Inc. and MacAndrews & Forbes Inc. (formerly MacAndrews& Forbes Holdings Inc.) (incorporated herein by reference toExhibit 4.4 to Panavision's Annual Report on Form 10-K for theyear ended December 31,2004).** |
| 4.4           |  | Indenture, dated as of January16, 2004, among Panavision Inc., the subsidiary guarantors partythereto and Wilmington Trust Company, as Trustee and CollateralTrustee, relating to Panavision's 12.50% Senior SecuredNotes due 2009 (incorporated herein by reference to Exhibit 4.17Panavision's Annual Report on Form 10-K for the year endedDecember 31, 2003). **                |
| 4.5           |  | Form of12.50% Senior Secured Note due 2009 (incorporated herein byreference from to Exhibit 4.17 to Panavision's Annual Report onForm 10-K for the year ended December 31, 2003).**                                                                                                                                                                                                 |
| 4.6           |  | Amended and Restated CreditAgreement, dated as of May 28, 1998, as amended and restated as ofJanuary 6, 2004, among Panavision Inc., the several lenders namedtherein and JP Morgan Chase Bank, as Administrative Agent (incorporatedherein by reference to Exhibit 4.19 to Panavision's Annual Reporton Form 10-K for the year ended December 31, 2003).**                         |
|               |

33

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|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  |  |
|---------------|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.7           |  | First Amendment andWaiver, dated as of August 11, 2004, with respect to the Amended andRestated Credit Agreement, dated as of May 28, 1998, as amended andrestated as of January 16, 2004, among Panavision Inc., the severalbanks and other financial institutions or entities from time to timeparties thereto and JP Morgan Chase Bank, as Administrative Agent.(incorporated herein by reference from Exhibit 4.21 fromPanavision's Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2004).** |
| 4.8           |  | FirstSupplemental Indenture and Waiver, dated as of August 11, 2004, withrespect to Indenture, dated as of January 16, 2004, between PanavisionInc. the subsidiary guarantors party thereto and Wilmington TrustCompany, as Trustee and Collateral Trustee, relating toPanavision's 12.50% Senior Secured Notes due 2009(incorporated herein by reference from Exhibit 4.22 fromPanavision's Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2004). **                                           |
| 4.9           |  | Second Amendmentand Consent, dated as of November 15, 2004, with respect to the Amendedand Restated Credit Agreement, dated as of May 28, 1998, as amended andrestated as of January 16, 2004, among Panavision Inc., the severalbanks and other financial institutions or entities from time to timeparties thereto and JP Morgan Chase Bank, as administrative agent(incorporated herein by reference from Exhibit 10.2 toPanavision's Current Report on Form 8-K filed on November 17,2004). **                |
| 4.10          |  | Third Amendment, dated as ofDecember 29, 2004, with respect to the Amended and Restated CreditAgreement, dated as of May 28, 1998, as amended and restated as ofJanuary 16, 2004, among Panavision Inc., the several banks and otherfinancial institutions or entities from time to time parties theretoand JP Morgan Chase Bank, as administrative agent (incorporated hereinby reference from Exhibit 10.1 to Panavision's Current Report onForm 8-K filed on January 4, 2005).**                               |
| 4.11          |  | Fourth Supplemental Indenture, datedas of December 29, 2004, with respect to the Indenture, dated as ofJanuary 16, 2004, among Panavision Inc. the subsidiary guarantors partythereto and Wilmington Trust Company, as Trustee and CollateralTrustee, related to Panavision's 12.50% Senior SecuredNotes due 2009 (incorporated herein by reference from Exhibit 10.2 toPanavision's Current Report on Form 8-K filed on January 4,2005). **                                                                      |
| 4.12          |  | Fourth Amendment, dated as ofMarch 30, 2005, with respect to the Amended and Restated CreditAgreement, dated as of May 28, 1998, as amended and restated as ofJanuary 16, 2004, among Panavision Inc., the several banks and otherfinancial institutions or entities from time to time parties theretoand JP Morgan Chase Bank, as administrative agent (incorporated hereinby reference to Exhibit 4.13 to Panavision's Annual Report onForm 10-K for the year ended December 31, 2004).**                       |
| 4.13          |  | Fifth Supplemental Indenture, datedas of March 30, 2005, with respect to the Indenture, dated as ofJanuary 16, 2004, among Panavision Inc., the subsidiary guarantorsparty thereto and Wilmington Trust Company, as Trustee and CollateralTrustee, related to Panavision's 12.50% Senior SecuredNotes due 2009 (incorporated herein by reference to Exhibit 4.14 toPanavision's Annual Report on Form 10-K for the year endedDecember 31, 2004). **                                                               |
|               |

34

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|               |  |                                                                                                                                                                                                                                                                 |  |  |  |  |
|---------------|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                                     |
| 10            |  | MaterialContracts                                                                                                                                                                                                                                               |
| 10.1          |  | 2005 Performance Objectivesand 2004 Bonus Award (incorporated herein by reference to Item 1.01 ofPanavision's Current Report on Form 10-K filed April 15, 2005).**                                                                                              |
| 31            |  | Section 302Certifications                                                                                                                                                                                                                                       |
| 31.1          |  | Certification of RobertL. Beitcher, Chief Executive Officer, dated August 12, 2005.*                                                                                                                                                                            |
| 31.2          |  | Certification of Bobby G. Jenkins,Chief Financial Officer, dated August 12, 2005. *                                                                                                                                                                             |
| 32            |  | Section 906Certifications                                                                                                                                                                                                                                       |
| 32.1          |  | Certifications of RobertL. Beitcher, Chief Executive Officer, and Bobby G. Jenkins, ChiefFinancial Officer, dated August 12, 2005, pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002 (furnished herewith). |
|               |

|   |                |
|---|----------------|
| * | Filedherewith. |

|    |                  |
|----|------------------|
| ** | Previouslyfiled. |

35

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PANAVISIONINC.

SIGNATURES

Pursuant to the requirements ofthe Securities Exchange Act of 1934, the Registrant has duly causedthis report to be signed on its behalf by the undersigned thereuntoduly authorized.

|                                                                                                                                              |  |                |  |                                                                                                                                                                                                                                                                 |  |  |  |  |  |  |
|----------------------------------------------------------------------------------------------------------------------------------------------|--|----------------|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|--|--|
|                                                                                                                                         |  | PANAVISIONINC. |
| Date: August 12,2005                     |  | By:            |  | /s/ROBERT L. BEITCHER                     Robert L.BeitcherPresident andChief ExecutiveOfficer                                                              |
|                                                                                                                                         |  | By:            |  | /s/ BOBBY G.JENKINS                             Bobby G.JenkinsExecutive Vice President and, Chief FinancialOfficer |
|                                                                                                                                              |

36

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