<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X]  Annual report pursuant to section 13 or 15(d) of the
     Securities Exchange Act of 1934
     For the fiscal year ended JUNE 30, 1997 or
[ ]  Transition report pursuant to section 13 or 15(d) of the
     Securities Exchange Act of 1934
     For the transition period from __________ to __________
       Commission file number:  0-18613
    
                             TRIMARK HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)


          DELAWARE                               95-4272695
(State or other jurisdiction of               (I.R.S. Employer
incorporation or organization)             Identification Number)
 
     2644 30TH STREET
 SANTA MONICA, CALIFORNIA                          90405
(Address of principal executive offices)         (Zip code)

Registrant's telephone number, including area code:
                                 (310) 314-2000

Securities registered pursuant to Section 12(b) of the Act:
                                    (NONE)

              Name of each exchange on which registered:    (NONE)

          Securities registered pursuant to Section 12(g) of the Act:

                                Title of Class:
                         COMMON STOCK, $.001 PAR VALUE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                       YES   X                 NO  _____
                           -----                        

                                      -1-
<PAGE>
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [ ]

As of September 15, 1997, the aggregate market value of Common Stock held by
non-affiliates of the registrant was approximately $6,499,524.  All officers,
directors and more than ten percent (10%) shareholders of the registrant are
deemed "affiliates" of the registrant solely for the purpose of calculating such
aggregate market value.

The number of shares of Common Stock of the registrant outstanding as of
September 15, 1997 was 4,182,627, excluding shares held by the registrant as
treasury stock.


                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement (the "1997 Proxy
Statement") to be filed pursuant to Regulation 14A not later than 120 days after
the end of the fiscal year (June 30, 1997) are incorporated by reference in Part
III.

                                      -2-
<PAGE>
 
                                 PART I

ITEM 1.  BUSINESS

GENERAL

Trimark Holdings, Inc., a Delaware corporation (the "Company"), through its
wholly-owned subsidiary, Trimark Pictures, Inc., a California corporation
("Trimark"), is a worldwide distributor of entertainment software, primarily
engaged in the distribution of feature films in the domestic home video and
theatrical markets and in the licensing of distribution rights to motion
pictures for international markets.  Trimark Television, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Company, licenses television
rights to feature films, television series, music and children specials, and
documentaries in both the international and domestic markets.

As an independent distribution company, the Company acquires the rights to
motion pictures from a variety of sources, including studios, production
companies and independent producers.  Generally, the Company acquires the rights
to completed motion pictures.  However, in order to secure rights to motion
pictures which might not otherwise be available to the Company and to acquire a
wider array of distribution rights on more favorable terms, the Company also
secures the rights to motion pictures prior to or during production.  The
Company distinguishes itself from the major motion picture studios and certain
other independent video distribution companies by acquiring rights to motion
pictures which may not be cost effective for many of its larger competitors to
distribute.

Distribution rights which the Company may acquire include:  (a) DOMESTIC - home
video, - free television, - pay television (including cable and pay-per-view), -
theatrical and - electronic publishing  (b) INTERNATIONAL - all media.

The Company was formed in August 1984 and began operations as a domestic home
video distributor in early calendar year 1985 by acquiring exclusive home video
distribution rights to motion pictures and other audio-visual entertainment
programs which it packaged, advertised, promoted, sold, had duplicated, and
shipped to home video wholesalers for resale to retailers throughout the
country.  The Company generally sells videocassettes to wholesale distributors
for resale to the approximately 27,500 video rental stores in the United States.

                                      -3-
<PAGE>
 
ITEM 1. (Continued)

In 1987, the Company began distributing and sublicensing motion pictures for
distribution in the international market.  The Company considered this an
opportunity to grow in an area closely related to its video business, while
offering new opportunities to acquire broader distribution rights to motion
pictures in all media.

On May 15, 1990, the Company was re-incorporated in Delaware.  The principal
assets of the Company are the capital stock of Trimark Pictures and Trimark
Television; the material business of the Company is conducted through these
companies.  Unless noted otherwise, all references to the Company in this filing
include its subsidiaries.

On June 29, 1990, the Company effected an initial public offering of 1,300,000
shares of Common Stock and an additional 200,000 shares of Common Stock were
sold by selling stockholders.

On December 31, 1991, the Company acquired Trimark Television (which at the time
was named International Broadcast Systems, Ltd.) a publicly traded company, for
$1.6 million in cash.  Trimark Television specializes in the distribution of
television programming, and licenses television productions to broadcasters
throughout the world.

On June 1, 1992, the Company changed its name from Vidmark, Inc. to Trimark
Holdings, Inc.  On June 24, 1992, Trimark changed its name from Vidmark, Inc. to
Trimark Pictures, Inc.  The name changes reflect the Company's diversification
of its distribution streams.

In March of 1993, the Company formed Trimark Interactive to expand the core
business of film production and video distribution into the emerging market for
interactive entertainment software and multimedia.  In March 1997, the Company
sold substantially all assets (primarily intellectual properties and inventory)
of Trimark Interactive to an unrelated independent entertainment and interactive
music publisher.  The Company is no longer engaged in the market for interactive
entertainment software and multimedia.

                                      -4-
<PAGE>
 
ITEM 1. (Continued)

THE UNITED STATES MOTION PICTURE INDUSTRY

The United States motion picture industry encompasses the production and
theatrical exhibition of feature-length motion pictures and the subsequent
distribution of such pictures in home video, television and other ancillary
markets.  The industry is dominated by the major studios, including Universal
Pictures, Warner Brothers (including Turner Pictures, New Line Cinema and
Castlerock Entertainment), Twentieth Century Fox, Sony Pictures Entertainment
(including Columbia Pictures and Tristar Pictures), Paramount Pictures, The Walt
Disney Company (including Buena Vista, Touchstone and Miramax) and MGM
(including Metro Goldwyn Mayer Pictures, United Artists Pictures, Orion Pictures
and Goldwyn Entertainment Company), which historically have produced and
distributed the majority of theatrical motion pictures released annually in the
United States.  In recent years, however, "independent" motion picture
production companies have played an important role in the production of motion
pictures for the worldwide feature film market.  There are also a large number
of smaller production companies such as the Company and other entities that
produce theatrical motion pictures.

The "majors" generally own their production studios and have national or
worldwide distribution organizations.  Major studios typically release films
with direct production costs ranging from approximately $10 million to $100
million or more, and provide a continual source of motion pictures to the
nation's theatrical exhibitors.  The independents do not own production studios
and, with certain exceptions, have more limited distribution capabilities than
the major studios.  Independents typically produce fewer motion pictures at
substantially lower average production costs than major studios.

Motion Picture Production and Financing.  The production of a motion picture
begins with the screenplay adaptation of a popular novel or other literary work
acquired by the producer or the development of an original screenplay having its
genesis in a story line or scenario conceived of or acquired by the producer.
In the development phase, the producer typically seeks production financing and
tentative commitments from a director, the principal cast members and other
creative personnel.  A proposed production schedule and budget also are prepared
during this phase.

Upon completing the screenplay and arranging financing commitments, pre-
production of the motion picture begins.  In 

                                      -5-
<PAGE>
 
ITEM 1. (Continued)

this phase, the producer engages creative personnel to the extent not previously
committed; finalizes the filming schedule and production budget; obtains
insurance and secures completion guarantees, if necessary or available;
establishes filming locations and secures any necessary studio facilities and
stages; and prepares for the start of principal photography.

Principal photography, the actual filming of the screenplay, may extend from
four to twelve weeks or longer, depending upon such factors as budget, location,
weather and complications inherent in the screenplay.  Following completion of
principal photography, the motion picture is edited, opticals, dialogue, music
and any special effects are added, and voice, effects and music sound tracks and
picture are synchronized during post-production.  This results in the production
of the negative from which the release prints of the motion picture are made.

The cost of a motion picture produced by an independent production company for
limited distribution ranges from approximately $1 million to $12 million as
compared with an average of approximately $40 million for commercial films
produced by major studios for wide release.  Production costs consist of
acquiring or developing the screenplay, film studio rental, cinematography,
post-production costs and the compensation of creative and other production
personnel.  Distribution expenses, which consist primarily of the costs of
advertising and release prints, are not included in direct production costs.

The major studios generally fund production costs from cash flow from their
motion picture and related activities, licensing fees generated from film
library holdings, and, in some cases, from unrelated businesses.  Substantial
overhead costs, consisting largely of salaries and related costs of the
development, production, distribution and marketing staff and physical
facilities maintained by the major studios, also must be funded.

Independent production companies generally avoid incurring substantial overhead
costs by hiring creative and other production personnel and retaining the other
elements required for pre-production, principal photography and post-production
activities on a project-by-project basis.  Unlike the major studios, the
independents also typically finance their production activities from bank loans,
"pre-sales" agreements, equity offerings and joint ventures.  Independents
generally attempt to complete their financing of a motion picture production
prior to 

                                      -6-
<PAGE>
 
ITEM 1. (Continued)

commencement of principal photography, at which point substantial production
costs begin to be incurred and require payment.

"Pre-sales" are often used by independent film companies to finance all or a
portion of the direct production costs of a motion picture.  Pre-sales consist
of license fees paid to the producer by third parties in return for the right to
exhibit the completed motion picture in theaters or to distribute it in home
video, television, international or other ancillary markets.  Producers with
distribution capabilities may retain the right to distribute the completed
motion picture either domestically or in one or more foreign markets.  Producers
may separately license theatrical, home video, television, foreign and all other
distribution rights among several licensees.

Both major studios and independent film companies often acquire motion pictures
for distribution through a customary industry arrangement known as a "negative
pickup," under which the studio or independent film company agrees to acquire
from an independent production company all rights to a film upon completion of
production.  The independent production company normally finances production of
the motion picture pursuant to financing arrangements with banks or other
lenders in which the lender is granted a security interest in the film and the
independent production company's rights under its arrangement with the studio or
independent.  When the studio or independent "picks up" the completed motion
picture, it assumes or pays the production financing indebtedness incurred by
the production company in connection with the film.  In addition, the
independent production company is paid a production fee and generally is granted
a participation in the net profits of the motion picture.

Both major studios and independent film companies generally incur various third-
party participations in connection with the production and distribution of a
motion picture.  These participations are contractual rights of actors,
directors, screenwriters, owners of rights and other creative and financial
contributors entitling them to share in revenues or net profits (as defined in
the respective agreements) from a particular motion picture.  Except for the
most sought-after talent, participations are generally payable after all
distribution and marketing fees and expenses, direct production costs and
financing costs are paid in full.

                                      -7-
<PAGE>
 
ITEM 1. (Continued)

MOTION PICTURE DISTRIBUTION.

Motion picture distribution encompasses the distribution of motion pictures in
theaters and in ancillary markets such as home video, pay-per-view, pay
television, broadcast television, foreign and other markets.  The distributor
typically acquires rights from the producer to distribute a motion picture in
one or more markets.  For its distribution rights, the distributor typically
agrees to advance the producer a certain minimum royalty or guarantee, which is
to be recouped by the distributor out of revenues generated from the
distribution of the motion picture and is generally nonrefundable.  The producer
also is entitled to receive a royalty equal to an agreed-upon percentage of all
revenues received from distribution of the motion picture over and above the
royalty advance.

Theatrical Distribution.  The theatrical distribution of a motion picture
involves the manufacture and transportation of release prints, the promotion of
the picture through advertising and publicity campaigns and the licensing of the
motion picture to theatrical exhibitors.  The size and success of the
promotional advertising campaign can materially affect the revenues realized
from the theatrical release of a motion picture.  The major studios can spend in
excess of $50 million to promote motion pictures, and have average combined
print and advertising costs in excess of $19 million.  The costs incurred in
connection with the distribution of a motion picture can vary significantly,
depending on the number of screens on which the motion picture is to be
exhibited and the competition among distributors for theaters during certain
seasons.  Similarly, the ability to exhibit motion pictures in the most popular
theaters can affect theatrical revenues.

The distributor and theatrical exhibitor generally enter into an arrangement
providing for the exhibitor's payment to the distributor of a percentage of the
box office receipts for the exhibition period, in some cases after deduction of
the theater's overhead, or a flat negotiated weekly amount.  The distributor's
percentage of box office receipts generally ranges from an effective rate of 35%
to over 50%, depending upon the success of the motion picture at the box office.
Distributors carefully monitor the theaters which have licensed the picture for
exhibition to ensure that the exhibitor promptly pays all amounts due the
distributor.  Substantial delays in collection are not unusual.

                                      -8-
<PAGE>
 
ITEM 1. (Continued)

Motion pictures may continue to play in theaters for up to four (4) months or
longer following their initial release.  Concurrently with their release in the
United States, motion pictures generally are released in Canada and may also be
released in one or more other foreign markets. Motion pictures are generally
made available for distribution in markets subsequent to theatrical as follows:

<TABLE>
<CAPTION>
                                   Months After          Approximate 
                                  Initial Release       Release Period
                                  ---------------       -------------- 
<S>                             <C>                     <C>
Domestic home video                  4-6 months                ---
Domestic pay-per-view                6-9 months              3 months
Domestic pay television            10-18 months          12-21 months
Domestic network or basic       
 cable                             30-36 months          18-36 months
Domestic syndication               30-36 months           3-15 years
Foreign home video                  6-12 months                ---
Foreign television                 18-24 months           3-12 years
</TABLE>

Home Video.  The home video distribution business involves the promotion and
sale of videocassettes and videodiscs to local, regional and national video
retailers (e.g., video specialty stores, convenience stores, record stores and
other outlets), which then rent or sell such videocassettes and videodiscs to
consumers primarily for private viewing.

To address the continuing competition in the domestic home video market, the
Company has focused its resources on distributing an increased number of films
theatrically (both mainstream and specialized) and decreasing the releases of
straight-to-video films.  See "Management's Discussion and Analysis of Financial
Condition and Results of Operation."

Major feature films are usually scheduled for release in the home video market
within four to six months after theatrical release to capitalize on the
theatrical advertising and publicity for the film.  Promotion of new releases is
generally undertaken during the nine to twelve weeks before the release date.
Videocassettes of feature films are generally sold to domestic wholesalers at
approximately $50 to $60 per unit and generally are rented by consumers for fees
ranging from $1 to $5 per day.  Wholesalers who meet certain sales and
performance objectives may earn rebates, return credits and cooperative
advertising allowances.  Selected titles, including certain made-for-video
programs, are priced significantly lower to encourage direct purchase by
consumers.  Direct sale to consumers is referred to as the "priced-for-sale" or
"sell-thru" market.

                                      -9-
<PAGE>
 
ITEM 1. (Continued)

Overall growth in the domestic home video market has slowed as growth in the
number of new outlets and new VCR homes has moderated.  The growth in outlets
designed to specifically serve the rental market has remained essentially flat
for the past several years, while the number of outlets which offer
videocassettes and videodiscs for sale has increased.  The sell-thru market
continues to grow with strong sales in the traditional family entertainment
market and a growing number of hit feature films initially released at prices
generally below $30.  Furthermore, technological developments which regional
telephone companies and others are developing could make competing delivery
systems economically viable and could affect the home video marketplace.

Pay-per-view.  Pay-per-view television allows cable and satellite television
subscribers to purchase individual programs, including recently released motion
pictures and live sporting, music or other events, on a "per use" basis.  The
subscriber fees are typically divided among the program distributor, the pay-
per-view operator and the cable system operator.

Pay Television.  Pay television allows subscribers to view premium channels such
as HBO/Cinemax, Showtime/The Movie Channel and other pay television networks
offered by cable and satellite system operators for a monthly subscription fee.
The pay television networks acquire a substantial portion of their programming
from motion picture distributors.  New markets may develop with the maturation
of newly emerging direct broadcast satellite (DBS) systems and other digital
television systems.

Broadcast and Basic Cable Television.  Broadcast television allows viewers to
receive, without charge, programming broadcast over the air by affiliates of the
major networks (ABC, CBS, NBC and Fox), recently formed networks (UPN and WB
Network), independent television stations and cable and satellite networks and
stations.  In certain areas, viewers may receive the same programming via cable
transmission for which subscribers pay a basic cable television fee.
Broadcasters or cable systems operators pay fees to distributors for the right
to air programming a specified number of times.

Foreign Markets.  In addition to their domestic distribution activities, some
motion picture distributors generate revenues from distribution of motion
pictures in foreign theaters, home video, television and other foreign markets.
There has been a 

                                      -10-
<PAGE>
 
ITEM 1. (Continued)

dramatic increase in recent years in the worldwide demand for filmed
entertainment. This growth is largely due to the privatization of television
stations, introduction of direct broadcast satellite services, and increased
home video and cable penetration.

Other Markets.  Revenues also may be derived from the distribution of motion
pictures to airlines, schools, libraries, hospitals and the military, licensing
of rights to perform musical works and sound recordings embodied in a motion
picture, and licensing rights to manufacture and distribute merchandise,
clothing and similar commercial articles derived from characters or other
elements of a motion picture.

New Technologies.  New means of delivery of entertainment product are constantly
being developed and offered to the consumer.  The impact of emerging
technologies such as digital video discs, direct broadcast satellites and the
internet, on the Company's operations cannot be determined at this time.
However, as a holder of entertainment copyrights, the Company monitors these new
media possibilities.


ACQUISITION OF MOTION PICTURE DISTRIBUTION RIGHTS BY THE COMPANY

General.  Distribution rights to motion pictures can encompass various media
(e.g., theatrical, home video, free or pay television, electronic publishing)
and various markets or territories (e.g., the United States and Canada, Great
Britain, Japan).  The Company prefers to acquire worldwide distribution rights
to a motion picture in all media wherever feasible.

The Company uses a similar decision making process in analyzing the acquisition
of a completed or an uncompleted movie.  The Company collects information
concerning new motion pictures being contemplated or entering the production
cycle.  This information is obtained from trade sources and from personal
relationships and contacts.  The acquisition process focuses on productions
which seem most likely to fit the Company's requirements.  Before the Company
acquires distribution rights for any motion picture, the Company analyzes not
only the picture's projected costs, revenues, and scheduling but also the effect
of these assumptions on overall Company performance.  Management bases its
acquisition decisions on the results of this evaluation process and will not
make offers with risks that, in management's opinion, could materially adversely
affect the Company's profitability.  The 

                                      -11-
<PAGE>
 
ITEM 1. (Continued)

Company's credit facility imposes limitations on the size of minimum guarantees
or production or acquisition costs the Company can incur without the lender's
approval. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations --Liquidity and Capital Resources."

When the Company acquires distribution rights to a motion picture prior to its
production, it makes only limited commitments to advance funds before
completion.  After acquisition of the rights of a motion picture prior to its
production, the Company typically has approval rights over key production
elements and maintains a production supervisory staff to monitor the production
process.  The Company's current policy is to acquire distribution rights for
motion pictures which will not be subject to material restrictions on release
and exhibition.

Domestic Home Video Distribution Rights.  The Company generally acquires
domestic (United States and Canadian) home video rights under exclusive
licenses, for terms ranging from five years to perpetuity, in return for a
minimum guarantee against future royalties based on a percentage of a
videocassette's wholesale net revenues.  The value of a motion picture's
domestic home video rights generally increases as its domestic theatrical print
and advertising budget increases.  Some of the Company's licenses require the
licensor or theatrical distributor to make minimum print and advertising
expenditures.  In other instances, the Company has agreed to release and or pay
print and advertising expenses for a motion picture's theatrical distribution.

Domestic home video sales are promoted through regional direct sales personnel
who contact home video wholesale distributors and large retail video stores.
Substantially all of the Company's home video sales have been made to ten (10)
wholesale video distributors and two (2) retail video stores.

In February 1994, the Company formed a sell-thru unit to maximize the profit
potential of its library and acquire new products for the growing video sell-
thru market.

Domestic Theatrical Distribution Rights.  The Company acquires theatrical
distribution rights and on a selective basis and distributes motion pictures for
exhibition by both major theater chains and numerous independent theaters
throughout the United States.

                                      -12-
<PAGE>
 
ITEM 1. (Continued)

Management of the Company considers the theatrical distribution of film
important as a marketing tool which enhances video and international sales.
Accordingly, the Company seeks to acquire theatrical distribution rights as part
of an acquisition where possible, even if a film ultimately will not be released
theatrically.  The Company released theatrically five films during fiscal 1997.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."  The Company either targets motion pictures for distribution on a
wide release, mainstream basis, which can result in substantial amounts being
expended for the costs of national advertising and the manufacturing of initial
release prints, or targeted, in the case of specialized films, to various
demographic audiences, as opposed to the mainstream public, and such pictures
would be distributed on a more regional, less expensive, basis.  Specialized
motion pictures are characterized by underlying literary and artistic elements
intended to appeal primarily to sophisticated or niche audiences and are
generally substantially less expensive to produce and distribute than films
produced for wide release.  It is not uncommon for heavily advertised films to
suffer theatrical losses but to have increased performance in video and other
ancillary media that may partially or totally offset such losses.  The
management of the Company believes that the theatrical market has significant
upside potential should any particular film perform well.  However, no assurance
can be made as to results with respect to any particular release.

The Company is in various stages of post production, production, development and
pre-production on a number of projects, and intends to release theatrically six
(6) to eight (8) films in fiscal 1998.  See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

Domestic Television Distribution Rights.  The Company acquires television
distribution rights as part of the overall acquisition whenever possible.  In
addition, television distribution rights are acquired specifically for
distribution by Trimark Television.

The Company intends to hire additional personnel to develop and oversee the
production and sales of long-form programming for initial release on network or
major cable.

Television networks, independent television networks, television stations and
cable system operators generally license television series, films and film
packages (consisting of theatrically 

                                      -13-
<PAGE>
 
ITEM 1. (Continued)

released feature films and made-for-television movies) pursuant to agreements
with distributors or syndicators that allow a fixed number of telecasts over a
prescribed period of time for a specified cash license fee or for barter of
advertising time.

Pay/Cable television services usually license pictures for initial exhibition
commencing approximately 10 to 18 months after initial domestic theatrical
release or six months after domestic home video release.  Licensing of such
properties is generally accomplished pursuant to agreements which allow a fixed
number of telecasts over a prescribed period of time for a specified license
fee.

International Distribution Rights.  International distribution rights include
rights in various media (e.g., television, theatrical and home video) and to
various territories (e.g., Germany, Italy, Japan and the United Kingdom).  To
acquire these rights, the Company is usually required to pay a minimum
guarantee.  The minimum guarantee, along with specific recoupable marketing and
other expenses, is recovered from the motion picture's gross revenues before the
producer begins to participate in the net revenues.  The Company maintains a
sales force to manage international sales and to promote its motion pictures at
film markets, including the Cannes Film Festival in France, the American Film
Market (AFM) in Los Angeles and The Milan Film Festival (MIFED) in Italy.


MARKETING AND SELLING

The Company's marketing operations are focused on domestic home video,
international licensing, theatrical distribution and television distribution.
The Company designs its own promotional campaigns for each motion picture;
commissions the art work for advertising, trade show displays and packaging; and
arranges for the printing, production and distribution of all promotional
materials.

Domestic home video sales are promoted through regional direct sales personnel
who contact home video wholesale distributors and large retail video stores.
The Company's largest wholesale video customer is Ingram Entertainment which
represents approximately twelve percent (12%) of net revenues for the fiscal
year ended June 30, 1997.

                                      -14-
<PAGE>
 
ITEM 1. (Continued)

The Company, when appropriate, test markets its motion pictures in the domestic
theatrical market.  If the response is satisfactory, the Company will proceed to
distribute the picture.  The Company handles the sales, marketing and servicing
of its theatrical releases.

International sales operations consist of promoting and sublicensing the
Company's motion pictures to independent territorial distributors for release on
specified media within designated territories.

The Company maintains a sales force to manage international sales and to promote
its motion pictures at foreign film markets.  The Company continues to expand
its worldwide television distribution in order to maximize the unexploited
television rights which it holds.  The Company distributes product directly to
broadcasters in both the international and domestic markets and licenses product
for other companies and producers.


COMPETITION

The motion picture distribution business and other related entertainment
businesses are highly competitive.  The Company's competitors in domestic home
video distribution have included the home video divisions of the major studios,
such as Warner Bros., The Walt Disney Company, Universal, Paramount, Fox and
Sony/Columbia; and independent distributors, including Live Entertainment and
Hallmark Entertainment.  Many of these competitors have greater access to
feature films and significantly greater resources than the Company.

In the international distribution market, the Company competes with a wide range
of companies from small independents exclusively focused upon certain classes of
motion pictures like J & M Entertainment and Mark Damon Productions, to the
major studios which have expanded distribution in international territories,
such as Disney's Buena Vista International.


INTELLECTUAL PROPERTY RIGHTS

Copyright protection is a serious problem in the video cassette distribution
industry because of the ease with which cassettes may be duplicated.  In the
past, certain countries permitted video pirating to such an extent that the
Company did not 

                                      -15-
<PAGE>
 
ITEM 1. (Continued)

consider these markets viable for distribution. Video distributors, including
the Company, have initiated legal actions to enforce copyright protection and
management believes the problem to be less critical at the present time.

In April 1997 the Company changed the trademark used in connection with all of
its domestic home video distribution from "VIDMARK" to "TRIMARK HOME VIDEO."
The Company is currently using the trademark "TRIMARK PICTURES" in connection
with films distributed domestically and licensed internationally and the
trademark "TRIMARK TELEVISION" in connection with licenses to free, pay and
cable television.  The trademarks have been registered or are in the process of
registration with the Commissioner of Patents and Trademarks.  The Company
regards its trademarks as valuable assets and believes that its trademarks are
an important factor in marketing its products.


REGULATION AFFECTING THE COMPANY

Distribution rights to motion pictures are granted legal protection under the
copyright law of the United States and most foreign countries, which provide
substantial civil and criminal sanctions for unauthorized duplication and
exhibition of motion pictures.  The Company endeavors to maintain copyright
protection for all its films under the laws of all applicable jurisdictions.

The Code and Ratings Administration of the Motion Picture Association of
America, an industry trade association, assigns ratings for age group
suitability for theatrical distribution of motion pictures.  The Company submits
most of its films for such ratings.  A substantial number of the Company's films
are rated "R;" under rules enforced by theatrical exhibitors, children under
certain ages may attend the applicable motion picture only if accompanied by an
adult.

In addition, United States television stations and networks as well as foreign
governments impose additional restrictions on the content of motion pictures
which may restrict in whole or in part exhibition on television or in a
particular territory.  There can be no assurance, therefore, that current or
future restrictions on the content of Company films, may not limit or affect the
Company's ability to exhibit certain of such motion pictures in such media or
markets.

                                      -16-
<PAGE>
 
ITEM 1. (Continued)

EMPLOYEES

As of June 30, 1997, the Company had 98 full-time employees, 40 of whom were
engaged in sales and marketing.  None of the Company's employees are covered by
a collective bargaining agreement, although some of the Company's subsidiaries
are subject to guild agreements.  Management believes that its employee
relations are good.


ITEM 2.  PROPERTIES

The Company leases its corporate office space in Santa Monica, California for a
term of seven years expiring on April 30, 1999.  These premises contain
approximately 26,000 square feet of office space.  Management believes that
these facilities will be adequate for the foreseeable future.


ITEM 3.  LEGAL PROCEEDINGS

The Company is subject to claims and suits arising from disputes over
copyrights, clear title and contractual matters arising from its distribution
contracts.  Such proceedings are not considered material to the Company's
business.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.  No matters were submitted to a vote by the Company's security
holders during the fourth quarter of its fiscal year.


ITEM 4A.  EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth the names, ages and all positions with the
Company currently held by each person who may be deemed an executive officer of
the Company.  Executive officers serve at the discretion of the Board of
Directors.  Except as otherwise indicated, each of the executive officers serves
in similar positions for both the Company and Trimark.  Unless otherwise noted,
all references to the Company include Trimark.

                                      -17-
<PAGE>
 
Item 4A. (Continued)

<TABLE>
<CAPTION>
            Name                Age                    Position
            ----                ---                    --------
<S>                             <C>   <C>
Mark Amin                        47   Chairman of the Board and Chief Executive Officer
Johan A. Wassenaar               65   Vice Chairman of the Board and Secretary
Cami Winikoff                    34   Executive Vice President and Chief
                                      Administrative Officer of Trimark
Tim Swain                        46   Executive Vice President of Trimark
Sergio Aguero                    37   Executive Vice President of Trimark
James E. Keegan                  39   Senior Vice President - Finance and Chief
                                      Financial Officer
Don Gold                         41   Senior Vice President of Trimark
</TABLE>

MARK AMIN is a founder of the Company and has served as its Chairman of the
Board since November 1988 and Chief Executive Officer since January 1994.  Mr.
Amin served as a Director, President and Chief Executive Officer of the Company
from its incorporation in 1984 until December 1989.  In 1981, Mr. Amin co-
founded 20/20 Video, a video specialty store in Los Angeles, California, and
served as a director of 20/20 Video from 1981 until 1988.  Mr. Amin sold his
entire stock interest in 20/20 Video in 1987.  Mr. Amin graduated from the
Graduate School of Management at the University of California at Los Angeles
with an MBA in marketing in 1975, and was previously awarded a BA degree in
economics by the University of Kansas.

JOHAN A. WASSENAAR is a founder of the Company and has served as a Director from
1984 and as its Vice Chairman since March 1990.  Mr. Wassenaar previously served
as Chairman of the Board from August 1985 until November 1988.  Mr. Wassenaar
has served as Secretary since 1984 and served as Chief Financial Officer from
August 1985 until March 1990.  In 1970, he founded vanAar, Inc. of Santa
Barbara, California, a management consulting firm with expertise in high
technology business strategy, and serves as its President.  Mr. Wassenaar
graduated with a BSc in engineering in 1953 from the University of the
Witwatersrand, Johannesburg, South Africa.

                                      -18-
<PAGE>
 
Item 4A. (Continued)

CAMI WINIKOFF joined Trimark in August 1990, in November 1991 was appointed
Director of Production, in January 1995 was appointed Vice President of
Production, in January 1997 was appointed Senior Vice President and has served
as Executive Vice President, Chief Administrative Officer since September 1997.
Before joining Trimark Ms. Winikoff was an independent producer.

TIM SWAIN joined Trimark in February 1990 as Vice President of Domestic
Theatrical Distribution, in June 1992 was appointed Vice President of Domestic
Distribution, in April 1993 was appointed Senior Vice President of Domestic
Distribution and has served as Executive Vice President since April 1996.  From
1984 to 1990, Mr. Swain was Vice President/General Sales Manager of New World
Pictures, Ltd., a diversified motion picture production and distribution company
located in Los Angeles, California.  Mr. Swain served as Head of Western
Division for Film Ventures of Los Angeles from 1983 to 1984 and served as
Assistant General Sales Manager for The Jerry Gross Organization of Los Angeles
from 1981 to 1983.

SERGIO AGUERO joined Trimark in September 1991 as Vice President of
International Distribution, in September 1992 was appointed Senior Vice
President of International Distribution and has served as Executive Vice
President since April 1996.  From 1989 to 1991, Mr. Aguero was Vice President of
International Sales at Vision International located in Los Angeles, California
and from 1988 to 1989 served as Vice President of International Sales at Epic
Pictures located in Los Angeles, California.  Mr. Aguero graduated in 1982 from
Yale University with a combined BA in Economics and Political Science.

JAMES E. KEEGAN joined the Company in April 1989 as Controller, in March 1990
was appointed Vice President - Finance and Chief Financial Officer and has
served as Senior Vice President - Finance and Chief Financial Officer since
April 1993.  From 1988 until 1989, Mr. Keegan was Controller of ITC Productions,
Inc., a theatrical and television production company based in Los Angeles,
California.  From 1985 until 1988, Mr. Keegan was Controller of RCA/Columbia
Pictures Home Video, a video distribution company in Los Angeles.  From 1984
until 1985, he was responsible for pay television and non-theatrical accounting
at Columbia Pictures in Los Angeles.  Mr. Keegan graduated in 1980 from San
Diego State University with a BS in accounting and is a certified public
accountant (non-active).

                                      -19-
<PAGE>
 
Item 4A. (Continued)

DON GOLD joined Trimark in January 1994 as Vice President of Sell-Thru
Distribution and in July 1996 was appointed Senior Vice President of Sales and
Marketing of Domestic Home Video.  From 1991 to 1993, Mr. Gold was Vice
President of Strand Home Video.  Prior to Strand, Mr. Gold held various sales
positions with Vestron Pictures.  Mr. Gold graduated in 1981 from Cal State
Northridge with a degree in Political Science.

                                      -20-
<PAGE>
 
                                    PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS

The Company's Common Stock began trading on the over-the-counter market on June
29, 1990 following the effectiveness of the Company's Registration Statement on
Form S-1.  Prior to that date, there was no public market for the Common Stock.
The Common Stock is listed and reported on the National Association of
Securities Dealers Automated Quotation National Market ("NASDAQ/NNM") under the
symbol "TMRK."  As of September 15, 1997, there were 4,182,627 shares of Common
Stock outstanding, excluding shares held by the Company as treasury stock, held
by approximately 51 shareholders of record.

The following table sets forth the high and low last sales prices as reported on
NASDAQ/NNM for fiscal 1996 and fiscal 1997.

<TABLE>
<CAPTION>
                            Sales Prices for Common Stock
                            -----------------------------
Quarter Ending                  High             Low
--------------                  ----             ---
<S>                            <C>             <C>
September 30, 1995              8 1/4           6 7/8
December 31, 1995               8 1/8           6 1/4
March 31, 1996                  7 1/4           4 3/4
June 30, 1996                   6 1/2           5 1/4
 
September 30, 1996              5 3/4           4 3/8
December 31, 1996               5 5/8           4 5/8
March 31, 1997                  6 1/4           3 1/2
June 30, 1997                   5 1/8           3 1/4
</TABLE>

The Company has not paid any cash dividends since its organization and has no
present intention to pay cash dividends in the foreseeable future.  The present
policy of the Company is to retain its earnings to provide funds for the
operation and expansion of its business.  See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth the selected financial data for the Company and
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto and with Management's Discussion and Analysis of Financial
Condition and Results of Operations which appear elsewhere in this report.

                                      -21-
<PAGE>
 
ITEM 6. (CONTINUED)

                             TRIMARK HOLDINGS, INC.
                            SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                  June 30,
                            -----------------------------------------------------
                             1997       1996        1995       1994        1993
                            -------   ---------   --------   ---------   --------
                                         (in thousands, except per share data)
Earnings Statement Data:
<S>                         <C>        <C>        <C>         <C>        <C>
Net revenues:
Domestic:
  Home video                $38,823    $34,615    $52,103     $61,994    $37,810
  Theatrical                  5,380        286      1,746       2,652      3,238
  Television                  4,824      5,063      7,861       3,019      3,832
 International:
  All media                  12,791     17,668     21,812      14,660     15,698
 Interactive:
  All Media                   1,347      2,200      1,472          --         --
                         -------------------------------------------------------
   Net revenues              63,165     59,832     84,994      82,325     60,578
Film costs and
 distribution expenses       53,421     57,495     70,721      68,339     44,264
                         -------------------------------------------------------
   Gross profit               9,744      2,337     14,273      13,986     16,314
Operating expenses:
 Selling                      6,857      6,352      5,715       4,153      3,551
 General and
  administrative              4,239      5,447      5,873       5,049      5,137
 Bad debt                       321         31        276         587        995
                         -------------------------------------------------------
                             11,417     11,830     11,864       9,789      9,683
                         -------------------------------------------------------
Operating (loss) 
 earnings                    (1,673)    (9,493)     2,409       4,197      6,631
Other (income) expenses:
 Litigation settlement           --         --         --          --      1,200
 Interest expense             1,934        847      1,230         320         39
 Interest and
  investment income             (84)       (95)       (38)        (73)      (102)
 Minority interest               --        (38)      (422)       (135)       (55)
                         -------------------------------------------------------
(Loss) earnings before
 income taxes                (3,523)   (10,207)     1,639       4,085      5,549
Income taxes                     --     (2,380)       656       1,675      2,275
                         -------------------------------------------------------
Net (loss) earnings
 before cumulative
 effect of change in
 accounting principle        (3,523)    (7,827)       983       2,410      3,274
                         -------------------------------------------------------
Cumulative effect of
 change in accounting
 for income taxes                --         --         --         100         --
                         -------------------------------------------------------
Net (loss) earnings        ($ 3,523)  ($ 7,827)   $   983     $ 2,510    $ 3,274
                         -------------------------------------------------------
</TABLE> 

                                      -22-
<PAGE>
 
ITEM 6. (CONTINUED) 
<TABLE> 
<CAPTION> 
                                                  June 30,
                            -----------------------------------------------------
                             1997       1996        1995       1994        1993
                            -------   ---------   --------   ---------   --------
                                         (in thousands, except per share data) 
<S>                         <C>        <C>        <C>        <C>         <C>  
Net (loss) earnings per common share:
Net (loss) earnings
 before cumulative
 effect of change in
 accounting principle        ($0.84)    ($1.83)   $  0.22     $  0.53    $  0.72 
Cumulative effect of
 change in accounting
 for income taxes                 --        --         --        0.02         --
                          ------------------------------------------------------
Net (loss)earnings
 per common share            ($0.84)    ($1.83)   $  0.22     $  0.55    $  0.72
                          ------------------------------------------------------
 
BALANCE SHEET DATA:

Total assets                $90,223    $48,401    $64,385     $62,281    $48,047
Total liabilities            70,014     24,051     31,775      30,262     18,585
Retained earnings             9,160     12,683     20,510      19,527     17,017
Stockholders' equity         20,209     24,350     32,572      31,909     29,317
</TABLE>

                                      -23-
<PAGE>
 
ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

NET REVENUES:  Net revenues for the year ended June 30, 1997 increased $3.3
------------                                                               
million, or 6%, compared with the prior fiscal year.  The increase was primarily
attributable to increases in revenues generated from domestic theatrical and
home video partially offset by decreases in revenues generated from
international distribution.  Net revenues decreased $25.2 million, or 30%, in
fiscal 1996 compared to fiscal 1995.  The decrease was primarily attributable to
decreases in revenues generated from domestic home video and international
distribution.

To address the continuing competition in the domestic home video market, the
Company has focused its resources on distributing an increased number of films
theatrically (both mainstream and specialized) and decreasing the releases of
straight-to-video films.  The production and distribution of theatrical motion
pictures requires capital commitments which may not be recouped, if at all,
until the picture is released in home video, international and ancillary
markets.

Domestic Home Video:  Net revenues from domestic home video increased $4.2
-------------------                                                       
million, or 12%, for the year ended June 30, 1997 compared with the prior fiscal
year.  In fiscal 1997 the Company released 27 motion pictures for the domestic
home video rental market compared to 34 motion pictures released in fiscal 1996
and 47 motion pictures released in fiscal 1995.  The increase in fiscal 1997
revenues was primarily due to the release on home video of "Meet Wally Sparks"
which had a wide theatrical release and generated $7.6 million domestic home
video revenue compared to fiscal 1996 when no video releases had comparable
theatrical releases.  The decrease in the number of titles released to the
domestic home video rental market in both fiscal 1997 and 1996 was due to
management's strategic decision to release fewer titles, due to the crowded home
video market, and endeavor to increase the number of titles which have prior
theatrical releases.  The Company plans to release approximately thirty two (32)
titles to the domestic home video rental market in fiscal 1998.  The increase in
scheduled fiscal 1998 releases as compared to fiscal 1997 is primarily due to
the availability of additional titles which have had prior theatrical releases.
In addition, sell-thru revenue, a growing component of the domestic home video

                                      -24-
<PAGE>
 
ITEM 7. (CONTINUED)

marketplace, increased to $6.7 million, a 40% increase from fiscal 1996.  The
increase in sell-thru revenue was primarily due to the release of the Director's
cut edition of "Natural Born Killers" and the release of six (6) tapes
containing episodes of the Japanese animation series "Dragon Ball".  Comparable
fiscal 1996 initial sell-thru releases were "Alien Autopsy: Fact of Fiction,"
"Monster in My Pocket" and "Miracles and Visions: Fact or Fiction".  Net
revenues from domestic home video decreased $17.5 million, or 34% for the year
ended June 30, 1996 compared with the prior year.  The decrease in fiscal 1996
revenues was primarily due to the 28% decrease in the number of titles released
and was partially offset by increased sell-thru revenue which increased to $4.8
million, a 55% increase from fiscal 1996.  The decrease in the number of titles
released was due to management's strategic decision to release fewer direct to
video titles, due to the crowded home video market, and endeavor to increase the
number of titles which have prior theatrical releases.

The Company anticipates that the domestic home video market will continue to be
extremely competitive.

Theatrical Distribution:  Net revenues from domestic theatrical distribution
-----------------------                                                     
increased $5.1 million to $5.4 million for the year ended June 30, 1997 compared
with the prior year.  The increase was primarily attributable to the Company's
new focus on theatrical distribution.  In fiscal 1997 the Company released five
motion pictures theatrically, two mainstream - "Meet Wally Sparks" and "Sprung"
and three (3) specialized "Kama Sutra: A Tale of Love," "Ripe" and "Nothing
Personal" compared to fiscal 1996 which had four (4) limited theatrical releases
generating approximately $300,000 in revenue.  The Company anticipates releasing
six (6) to eight (8) titles theatrically in fiscal 1998, including the comedy
"Chairman of the Board" starring Carrot Top and the family adventure "Star Kid"
(formerly titled "Warrior of Waverly Street") produced by Jennie Lew Tugend who
also produced the "Free Willy" movies. Net revenues decreased $1.5 million, or
84%, for the year ended June 30, 1996 compared with the prior year.  The
decrease was primarily attributable to fiscal 1996 having four (4) limited
theatrical releases as compared to fiscal 1995 which included the sale of
domestic theatrical rights to "A Kid in King Arthur's Court."

Television Distribution:  Net revenues from television distribution which
-----------------------                                                  
includes such media as basic cable, pay television, pay-per-view and syndication
decreased $239,000 or 5% 

                                      -25-
<PAGE>
 
ITEM 7. (CONTINUED)

for the year ended June 30, 1997 compared with the prior year. The decrease was
due to a decrease in basic cable sales partially offset by an increase in
syndication revenue. Net revenues decreased $2.8 million or 36% for the year
ended June 30, 1996 compared with the prior year. This decrease was primarily
due to two titles being licensed as "premieres" to premium cable channels in
fiscal 1996 as compared to three (3) titles in fiscal 1995.

International Distribution:  Net revenues from international distribution
--------------------------                                               
decreased $4.9 million or 28% for the year ended June 30, 1997 compared with the
prior year.  The decrease was primarily due to the timing of releases.  In
fiscal 1997, the Company initially licensed four (4) motion pictures for
international distribution compared to seven (7) motion pictures initially
licensed in fiscal 1996 and eight (8) motion pictures in fiscal 1995.  During
fiscal 1998 the Company plans to release approximately seven (7) to nine (9)
motion pictures initially into international distribution.  Net revenues from
international distribution decreased $4.1 million or 19% for the year ended June
30, 1996 compared with the prior year.  The decrease was primarily due to the
release of fewer motion pictures in fiscal 1996 as compared to fiscal 1995 in
the international marketplace.

Trimark Interactive Distribution:  Net revenues from interactive distribution
--------------------------------                                             
decreased $853,000 or 39% for the year ended June 30, 1997 compared with the
prior year.  The decrease was primarily due to the Company's decision to exit
the interactive entertainment software and multimedia business and to sell
substantially all assets (primarily intellectual properties and inventory) of
Trimark Interactive to an unrelated independent entertainment and interactive
music publisher in March 1997.  Interactive revenues for fiscal 1997 primarily
reflect the initial release of the Sony PlayStation version of "The Hive."
Fiscal 1996 interactive revenues primarily reflect the initial release of the
Windows 95 version of "The Hive."  In fiscal 1996 net revenues increased
$728,000 or 49.5% for the year ended June 30, 1996 compared with the prior year.
The increase was due to the release of the Windows 95 version of the game "The
Hive" with no comparable major title release in fiscal 1995.  Revenues in fiscal
1995 were primarily generated from the initial distribution and sublicense of
acquired product including "Warlock," "Tornado," "Air Havoc Controller,"
"Thumbelina" and "White Men Can't Jump."

                                      -26-
<PAGE>
 
ITEM 7. (CONTINUED)

GROSS PROFIT:  The Company's gross profit for the year ended June 30, 1997
increased $7.4 million or 317% compared with the prior year.  Gross profit as a
percentage of net revenues increased to 15% as opposed to 4% for fiscal 1997
compared with fiscal 1996.  Gross profit in fiscal 1997 was negatively impacted
by a $3.0 million write down of film costs to estimated net realizable value
associated with the January 1997 theatrical release of "Meet Wally Sparks."
Fiscal 1996 results were negatively impacted by reserves and write downs taken
for the Interactive Division, write downs associated with the video releases of
"Death Machine" and "Kids", the disappointing performances of additional home
video titles released during fiscal 1996 and write downs associated with foreign
distribution.  In fiscal 1996 gross profit decreased $11.9 million or 84%
compared with the prior year.  Gross profit as a percentage of net revenues
decreased to 4% as opposed to 17% for fiscal 1996 compared with fiscal 1995.
The decrease in gross profit and gross profit margins were primarily due to the
reserves and write downs taken in fiscal 1996.


SELLING EXPENSES:  The Company's selling expenses increased $505,000 or 8% for
the year ended June 30, 1997 compared with the prior year and increased
$637,000, or 11% in fiscal 1996 compared with fiscal 1995.  The increase in
fiscal 1997 was primarily due to the increase in theatrical operations partially
offset by the decrease in interactive operations.  During the quarter ended
March 31, 1997, the Company sold substantially all assets of Trimark
Interactive.  The increase in fiscal 1996 over fiscal 1995 was primarily
attributable to the costs associated with increased selling efforts in
television, domestic video and sell-thru.

Selling expenses as a percentage of net revenues for fiscal 1997, fiscal 1996
and fiscal 1995 were 11%, 11% and 7%, respectively.


GENERAL AND ADMINISTRATIVE EXPENSES:  General and administrative expenses
decreased $1.2 million or 22% for the year ended June 30, 1997 compared with the
prior year.  General and administrative expenses decreased $426,000 or 7% for
the year ended June 30, 1996 compared with the prior year.  The decreases were
primarily attributable to savings associated with a Company reorganization and
the related layoffs undertaken in January 1996.

                                      -27-
<PAGE>
 
ITEM 7. (CONTINUED)

BAD DEBT EXPENSE:  Bad debt expense increased $290,000 to $321,000 for the year
ended June 30, 1997 compared with the prior year and decreased $245,000 to
$31,000 for fiscal 1996 compared with fiscal 1995.  Bad debt expenses for the
periods primarily represent reserves taken against domestic video and foreign
sales.  Fiscal 1996 bad debt expense was low primarily due to the collection of
past due international receivables and the settlement of certain past due
domestic video receivables during fiscal 1996.  The increase for fiscal 1997 is
primarily due to a $200,000 increase in past due video receivables.


INTEREST EXPENSE:  Interest expense increased $1.1 million or 128% for the year
ended June 30, 1997 compared with the prior year.  The increase in interest
expense was primarily due to higher levels of borrowing under the Company's
credit facility for the acquisition, distribution, and marketing of theatrical
motion pictures as compared to direct-to-video motion pictures.  Theatrical
releases have a greater length of time from initial investment in film costs to
recoupment in home video and international markets.  Film costs for released and
completed not yet released titles increased $18.4 million to $39.2 million at
June 30, 1997 as compared to $20.8 million at June 30, 1996.  Interest expense
decreased $383,000 for fiscal 1996 compared with fiscal 1995.  The decrease was
due to lower levels of borrowings under the credit facilities for purposes of
funding the costs of acquiring and distributing motion pictures during the
period as compared to fiscal 1995. See "Liquidity and Capital Resources."


INTEREST AND INVESTMENT INCOME:  Interest and investment income decreased
$11,000 for the year ended June 30, 1997 compared with the prior year.  Interest
and investment income increased $57,000 for the year ended June 30, 1996
compared with the prior year.  The decrease in fiscal 1997 and the increase in
fiscal 1996 are primarily due to interest from the federal government related to
refunds on prior year amended tax returns received in fiscal 1996.


NET (LOSS) EARNINGS:  The Company's net loss for fiscal 1997 was $3.5 million.
The fiscal 1997 loss was primarily due to a $3.0 million write down of film
costs to estimated net realizable value associated with the January 1997
theatrical release of "Meet Wally Sparks."  Earnings were also negatively
impacted by higher interest expenses resulting from the Company's release of

                                      -28-
<PAGE>
 
ITEM 7. (CONTINUED)

theatrical motion pictures as compared to release of direct-to-video motion
pictures.  Theatrical releases have a greater length of time from initial
investment in film costs to recoupment in home video and other ancillary
markets, see "Liquidity and Capital Resources."  The Company's net loss for
fiscal 1996 was $7.8 million.  The fiscal 1996 loss was primarily attributable
to losses associated with Trimark Interactive and the performance of the
domestic home video and international markets.


INFLATION:

Generally, costs in connection with the acquisition and distribution of motion
pictures for release have increased in recent years.  Such cost increases may
affect results of operations in the future; however, the Company believes that
the effect of such factors has not been material to date.


LIQUIDITY AND CAPITAL RESOURCES:

In fiscal 1997 the Company experienced negative cash flow from operations due to
investments in film cost and increases in accounts receivable.

In fiscal 1997 the Company made significant investments in film costs.  The
Company invested $67.0 million in new additions to film inventory.  The
additions were primarily incurred to build up the Company's theatrical film
slate.

Two principal factors have increased the length of time from investment in film
costs to recoupment.  The first factor is the terms of the Company's new credit
facility.  Under the Company's new credit facility, described below, the Company
directly pays production costs that generally were previously paid by off
balance sheet production company financing.  This change in financing has
accelerated certain film acquisition payments that were previously made at the
time of film delivery and are now made periodically throughout the production
process.  The production process often takes from six months to a year or more.
Commitments to purchase films from production companies upon delivery are
included in contingent contractual obligations.  The Company's contingent
contractual obligations as of June 30, 1997 was $5.2 million, a decrease of
$30.3 million from June 30, 1996.  The second factor is increased emphasis on
theatrical distribution.  Theatrical films generally require significant

                                      -29-
<PAGE>
 
ITEM 7. (CONTINUED)

marketing expenditures for prints and advertising which are capitalized as film
costs.  Theatrical marketing campaigns begin well in advance of the theatrical
release to generate the maximum level of awareness for the film.  The opening
date must be carefully selected and is often changed to address competition,
screen availability and other factors.  In addition, the decision to release a
film theatrically is often not made until a theatrical test is conducted which
can take several months.  The home video release and other ancillary market
revenues are also not realized for several months to years after the theatrical
release.  All the above factors have contributed to the Company's $42.7 million
increase in debt for the year ended June 30, 1997.

The Company's cash requirements vary with the size and timing of production
advances and minimum guarantee payments along with the timing of its theatrical,
home video, television and international releases.  In fiscal 1997 the principal
sources of funds have been provided by borrowings under the Company's credit
facility.

The Company's principal operating subsidiaries, Trimark Pictures, Inc. and
Trimark Television, Inc., on December 20, 1996 entered into a $75 million
revolving credit facility with a consortium of banks agented and arranged by The
Chase Manhattan Bank which replaced a $25 million revolving credit facility with
Bank of America NT & SA and Westdeustche Landesbank.  The credit facility
expires December 19, 2000.  Under the credit agreement, the Company may borrow
for various corporate purposes provided that the aggregate borrowings do not
exceed the Borrowing Base which is derived from specified percentages of
approved accounts receivable and film library.  The credit agreement is
guaranteed by the Company and certain of its subsidiaries and is secured by
substantially all of the assets of the Company and its significant subsidiaries.
Loans outstanding under the credit facility bear interest at the rate of 1.25%
above Chase Manhattan's prime rate or 2.25% above Chase Manhattan's London
Interbank Market for Eurodollars for the loan term specified.  An unused
commitment fee is payable on the average unused availability under the credit
facility, at the rate of 0.375% per annum.  As of June 30, 1997 there was $57.7
million outstanding under the credit facility.

The Company believes that its present sources of working capital will be
sufficient to maintain its level of operations in accordance with the
anticipated release schedule, as described below.

                                      -30-
<PAGE>
 
ITEM 7. (CONTINUED)

During fiscal 1998, the Company plans to distribute approximately three (3)
films for mainstream domestic theatrical release.  "Eve's Bayou" is scheduled
for a November 1997 release.  "Star Kid" and "Chairman of the Board" are
scheduled for release in the first half of calendar 1998.  In the domestic
specialized theatrical market the Company plans to release approximately three
(3) to five (5) motion pictures in fiscal 1998.  During fiscal 1998 the Company
plans to release approximately thirty-two (32) motion pictures into the domestic
home video rental market and to continue to expand distribution in the sell-thru
market.  Also in fiscal 1998 the Company plans to release approximately seven
(7) to nine (9) motion pictures initially into international distribution.

Technicolor Videocassette, Inc. currently serves as the Company's video cassette
duplicator and fulfillment contractor.  Technicolor Videocassette, Inc. has a
general lien on all of the Company's materials and products in its possession.

As of June 30, 1997, the Company had incurred aggregate net expenditures of $5.5
million (approximately $300,000 expended in fiscal 1997) in Trimark Interactive,
its 90% owned subsidiary.  As previously reported, in March 1997 the Company
sold substantially all assets of Trimark Interactive to an unrelated independent
entertainment and interactive music publisher.  In consideration for the assets
sold the Company received 237,037 shares of non-registered convertible preferred
stock in the acquiring company.  The convertible preferred shares can be
converted into 237,037 shares of common stock of the acquiring company and carry
a mandatory three year redemption value of $800,000 if not converted prior to
three years.  The consideration received was determined by arms length
negotiation and advice from an investment banking firm retained by the Company.
Due to the uncertainty of realizing any value from the convertible preferred
stock the Company is carrying the stock at a zero value.  No gain or loss was
recognized from the sale of the assets.  As a result of this asset sale, the
Company does not expect any significant future expenditures in Trimark
Interactive.

On February 21, 1997, the Company announced a stock repurchase program pursuant
to which it could spend up to $1,500,000, $750,000 per fiscal year, to purchase
shares of its outstanding common stock in the open market.  During fiscal 1997,
the Company spent approximately $707,000 under the repurchase program.

                                      -31-
<PAGE>
 
ITEM 7. (CONTINUED)

As a result of recent merger and acquisition activity in the entertainment
industry, the Company, as a leading independent distributor of specialized
theatrical, television and video product, received certain unsolicited inquires
from interested parties.  Accordingly, on July 21, 1997, the Company announced
that it had retained the investment banking firm, Societe Generale Bannon, to
advise the Company on various strategic alternatives to help enhance shareholder
value.

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

Except for the historical information contained herein, the matters discussed in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995.  Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievement of the Company,
or industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements.  Such factors include, among others, the following:  General
economic and business conditions, which will, among other things, impact demand
for the Company's products; changes in public tastes, industry trends and
demographic changes, which may influence the distribution and exhibition of
films in certain areas; public reaction to and acceptance of the Company's
video, theatrical and television product, which will impact the Company's
revenues; competition, including competition from major motion picture studios,
which may affect the Company's ability to generate revenues; reliance on
management and key personnel; consolidation in the retail video industry;
whether the Company's shift in strategy to release an increased number of films
theatrically and a decreased number of straight to video films is successful;
new methods of distributing motion pictures; and other factors referenced in
this Form 10-K and the Company's other filings with the Securities and Exchange
Commission.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
          RISK

Not applicable.

                                      -32-
<PAGE>
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                       REPORT OF INDEPENDENT ACCOUNTANTS



TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
OF TRIMARK HOLDINGS, INC.

In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a) on page 52 present fairly, in all material respects,
the financial position of Trimark Holdings, Inc. and its subsidiaries at June
30, 1997 and 1996, and the results of their operations and their cash flows for
each of the three years in the period ended June 30, 1997, in conformity with
generally accepted accounting principles.  These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits.  We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.



                              PRICE WATERHOUSE LLP


Century City, California
September 18, 1997

                                      -33-
<PAGE>
 
                             TRIMARK HOLDINGS, INC.

                          CONSOLIDATED BALANCE SHEETS
                    ----------------------------------------
                   (Dollars in Thousands, Except Share Data)
<TABLE>
<CAPTION>
 
                                                               June 30,    June 30,
                   Assets                                        1997        1996
                   ------                                     ---------   ---------
<S>                                                            <C>         <C>
 
Cash and cash equivalents                                       $ 3,665     $   344
Accounts receivable, less allowances of
 $4,010 and $4,269, respectively                                 23,124      12,457
Film costs, net (Note 3)                                         57,293      29,853
Deferred marketing costs (Note 2)                                 1,696       1,524
Inventories, net (Note 2)                                           650         624
Property and equipment at cost, less accumulated
 depreciation of $2,049 and $1,749, respectively (Note 2)           808         604
Due from officers (Note 13)                                         662          --
Other assets (Note 6)                                             2,325       2,995
                                                                -------     -------
                                                                $90,223     $48,401
                                                                =======     =======
          Liabilities and Stockholders' Equity
          ------------------------------------
Debt (Note 5)                                                   $57,700     $15,000
Accounts payable and accrued expenses (Note 4)                    7,575       2,191
Minimum guarantees and royalties payable                          3,391       4,639
Deferred income                                                   1,283       2,144
Income taxes payable (Note 6)                                        65          77
                                                                -------     -------
    Total liabilities                                            70,014      24,051
                                                                -------     -------
Commitments and contingencies (Note 9)                               --          --
                                                                -------     -------
Stockholders' equity (Note 7):
  Common stock, $.001 par value.  Authorized
   20,000,000 shares; 5,099,081 shares issued
   at June 30, 1997 and 5,064,581 shares
   issued at June 30, 1996                                            5           5
  Additional paid in capital                                     15,474      15,385
  Preferred stock, $.01 par value.  Authorized
   2,000,000 shares; no shares issued and
   outstanding                                                       --          --
  Retained earnings                                               9,160      12,683
  Less treasury shares, at cost - 952,200 shares
   and 789,850 shares (Note 8)                                   (4,430)     (3,723)
                                                                -------     -------
    Stockholders' equity                                         20,209      24,350
                                                                -------     -------
                                                                $90,223     $48,401
                                                                =======     =======
</TABLE>


          See accompanying notes to consolidated financial statements

                                      -34-
<PAGE>
 
                             TRIMARK HOLDINGS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
             ------------------------------------------------------
            (Amounts in Thousands, Except (Loss) Earnings Per Share)
<TABLE>
<CAPTION>
 
                                                             Year Ended June 30,
                                                      ---------------------------------
                                                        1997        1996        1995
                                                      ---------   ---------   ---------
<S>                                                   <C>         <C>         <C>
 
Net revenues (Note 2)                                  $63,165     $59,832     $84,994
 
Film costs and distribution expenses (Note 2)           53,421      57,495      70,721
                                                       -------     -------     -------
  Gross profit                                           9,744       2,337      14,273
                                                       -------     -------     -------
Operating expenses:
 Selling                                                 6,857       6,352       5,715
 General and administrative                              4,239       5,447       5,873
 Bad debt                                                  321          31         276
                                                       -------     -------     -------
                                                        11,417      11,830      11,864
                                                       -------     -------     -------
   Operating (loss) earnings                            (1,673)     (9,493)      2,409
 
Other (income) expenses:
 Interest expense                                        1,934         847       1,230
 Interest and investment income                            (84)        (95)        (38)
 Minority interest                                          --         (38)       (422)
                                                       -------     -------     -------
                                                         1,850         714         770
                                                       -------     -------     -------
  (Loss) earnings before income taxes                   (3,523)    (10,207)      1,639
 
Income taxes (Note 6)                                       --      (2,380)        656
                                                       -------     -------     -------
   Net (loss) earnings                                 $(3,523)    $(7,827)    $   983
                                                       =======     =======     =======
 
   Net (loss) earnings per common share (Note 2)        $(0.84)     $(1.83)      $0.22
                                                       =======     =======     =======
   Average common and common equivalent shares
    outstanding used in computation                      4,217       4,284       4,493
                                                       =======     =======     =======
</TABLE>

          See accompanying notes to consolidated financial statements

                                      -35-
<PAGE>
 
                             TRIMARK HOLDINGS, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
               -------------------------------------------------
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                              Common Stock
                                           ------------------   Additional                            Total
                                                                  paid in    Retained   Treasury   stockholders'
                                             Shares    Amount     capital    earnings     stock      equity
                                           ---------   ------   ----------   --------   --------   -------------
<S>                                        <C>         <C>      <C>          <C>        <C>        <C>
Balance, June 30, 1994                     4,323,148   $    5   $   15,178   $ 19,527   $ (2,801)  $      31,909

Purchase of treasury stock (Note 8)          (66,000)                                       (493)           (493)

Exercise of stock options                     64,833                   173                                   173

Net earnings                                                                      983                        983
                                           ---------   ------   ----------   --------   --------   -------------
Balance, June 30, 1995                     4,321,981        5       15,351     20,510     (3,294)         32,572
                                           ---------   ------   ----------   --------   --------   -------------

Purchase of treasury stock
  (Note 8)                                   (55,750)                                       (429)           (429)

Exercise of stock options                      8,500                    34                                    34

Net loss                                                                       (7,827)                    (7,827)
                                           ---------   ------   ----------   --------   --------   -------------
Balance, June 30, 1996                     4,274,731        5       15,385     12,683     (3,723)         24,350
                                           ---------   ------   ----------   --------   --------   -------------

Purchase of treasury stock
  (Note 8)                                  (162,350)                                       (707)           (707)
Exercise of stock options                     34,500                    89                                    89

Net loss                                                                       (3,523)                    (3,523)
                                           ---------   ------   ----------   --------   --------   -------------
Balance, June 30, 1997                     4,146,881   $    5   $   15,474   $  9,160   $ (4,430)  $      20,209
                                           =========   ======   ==========   ========   ========   =============
</TABLE>
          See accompanying notes to consolidated financial statements

                                      -36-
<PAGE>
 
                             TRIMARK HOLDINGS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                   -----------------------------------------
                             (Dollars in Thousands)
<TABLE>
<CAPTION>
 
 
                                                                  Year Ended June 30,
                                                           ---------------------------------
                                                             1997        1996        1995
                                                           ---------   ---------   ---------
<S>                                                        <C>         <C>         <C>
 
Operating activities:
 Net (loss) earnings                                       $ (3,523)   $ (7,827)   $    983
 Adjustments to reconcile net loss (earnings) to
  net cash used by operating activities:
   Film amortization                                         39,514      36,561      47,858
   Depreciation and other amortization                          300         275         292
   Provision for returns                                         72        (501)       (264)
   Provision for bad debt                                      (331)       (149)        164
   Provision for inventory obsolescence                        (494)        202           3
   Minority interest in net (loss) earnings                      --         (38)       (422)
   Change in operating assets and liabilities:
    (Increase) decrease in accounts receivable              (10,408)      9,622          --
    Additions to film costs                                 (66,954)    (32,022)    (50,487)
    (Increase) decrease in deferred marketing costs            (172)      1,068         524
    Decrease (increase) in inventories                          468        (284)       (218)
    Increase in notes receivable from officers                 (662)         --          --
    Decrease (increase) in other assets                         670        (159)       (313)
    Increase (decrease) in accounts payable and
      accrued expenses                                        5,384      (1,180)     (1,700)
    Decrease in minimum guarantees and
      royalties payable                                      (1,248)     (3,648)     (3,753)
    (Decrease) increase in income taxes payable                 (12)     (1,042)      1,119
    (Decrease) increase in deferred income                     (861)        146         847
                                                           --------    --------    --------
     Net cash (used) provided by operating activities       (38,257)      1,024      (5,367)
                                                           --------    --------    --------
Investing activities:
 Acquisition of property and equipment                         (504)        (20)       (440)
                                                           --------    --------    --------
     Net cash used by investing activities                     (504)        (20)       (440)
                                                           --------    --------    --------
Financing activities:
 Net increase (decrease) in debt                             42,700      (2,000)      5,000
 Exercise of stock options                                       89          34         173
 Capital contribution by minority shareholder                    --          --         350
 Purchase of treasury stock                                    (707)       (429)       (493)
                                                           --------    --------    --------
     Net cash provided (used) by financing activities        42,082      (2,395)      5,030
                                                           --------    --------    --------
 
 Increase (decrease) in cash and cash equivalents             3,321      (1,391)       (777)
 
Cash and cash equivalents at beginning of period                344       1,735       2,512
                                                           --------    --------    --------
Cash and cash equivalents at end of period                 $  3,665    $    344    $  1,735
                                                           ========    ========    ========
</TABLE>

          See accompanying notes to consolidated financial statements

                                      -37-
<PAGE>
 
                             TRIMARK HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - THE COMPANY:
---------------------

Trimark Holdings, Inc., a Delaware corporation (the "Company"), is a broad-based
entertainment company which distributes and licenses motion pictures in the
international and domestic arena through its wholly owned subsidiaries Trimark
Pictures, Inc. and Trimark Television, Inc..  The significant business
activities of the Company constitute one business segment, filmed entertainment.
The Company is primarily engaged in the distribution of feature films for the
domestic home video market, domestic theatrical and television markets, and in
the licensing of distribution rights to motion pictures for foreign markets.  As
an independent distribution company, the Company acquires distribution rights
from a wide variety of studios, production companies and independent producers.

In March of 1993, the Company formed Trimark Interactive to expand the core
business of film production and video distribution into the emerging market for
interactive entertainment software and multimedia.  The results of operations of
Trimark Interactive have been included in the Company's consolidated financial
statements since April 1, 1993.  Trimark Holdings, Inc. increased its ownership
of Trimark Interactive from 80% to 90% in fiscal 1995.  In March 1997, the
Company sold substantially all assets (primarily intellectual properties and
inventory) of Trimark Interactive to an unrelated independent entertainment and
interactive music publisher.  In consideration for the assets sold the Company
received 237,037 shares of non-registered convertible preferred stock in the
acquiring company.  The convertible preferred shares can be converted into
237,037 shares of common stock of the acquiring company and carry a mandatory
three year redemption value of $800,000 if not converted prior to three years.
The consideration received was determined by arms length negotiation and advice
from an investment banking firm retained by the Company.  Due to the uncertainty
of realizing any value from the convertible preferred stock the Company is
carrying the stock at a zero value.  No gain or loss was recognized from the
sale of the assets.  The Company is no longer engaged in the market for
interactive entertainment software and multimedia.

                                      -38-
<PAGE>
 
NOTE 1 - (CONTINUED)
-------------------

On June 1, 1992, the Company changed its name from Vidmark, Inc. to Trimark
Holdings, Inc.  Certificates that previously represented shares of Vidmark
common stock now represent an equal number of shares of Trimark Holdings, Inc.
common stock.

Purple Tree Productions, Inc., Cheap Date, Inc., Loving Gun Productions, Inc.
and Writers on the Wave are wholly-owned subsidiaries of the Company, which were
formed for the sole purpose of producing motion pictures.  Trimark Music, a
wholly-owned subsidiary of the Company, was formed for the purpose of exploiting
revenues from music rights owned by the Company.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
----------------------------------------------------

Principles of Consolidation
---------------------------

The consolidated financial statements include the accounts of the Company and
its majority-owned subsidiaries.  The minority interest separately disclosed
herein reflects the non-Company owned shareholder interest in Trimark
Interactive.  All significant intercompany balances and transactions have been
eliminated.

Unclassified Consolidated Balance Sheet
---------------------------------------

In accordance with the provisions of Statement of Financial Accounting Standards
No. 53 ("SFAS 53"), the Company has elected to present an unclassified
consolidated balance sheet.

Accounting Estimates
--------------------

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period.
Actual results could differ from these estimates

Net Revenues and Film Costs
---------------------------

Home video revenues are recognized, net of allowances for estimated returns, as
products are shipped to customers.  Revenues from licenses of films to foreign
territories are 

                                      -39-
<PAGE>
 
NOTE 2 - (Continued)
--------------------

recognized when the films are made available to sub-distributors and other terms
of the license agreements are satisfied.

Film costs include the direct costs of acquiring and in some instances producing
motion pictures and are capitalized as incurred.  Exploitation costs which
benefit future periods are also capitalized.  Capitalized costs, which include
interest, are charged to expense, in the proportion that current revenues for
each film bear to that film's estimated ultimate total revenues.  Film costs are
stated at the lower of net unamortized cost or net realizable value.


Cash
----

Cash includes cash equivalents.  The Company considers all highly  liquid
investments purchased with a maturity of three months or less to be cash
equivalents.

Inventories
-----------

Inventories, net of an allowance for excess quantities and obsolescence, are
stated at the lower of cost or market using a first-in/first-out (FIFO) method
of accounting.

Property and Equipment
----------------------

Depreciation of property and equipment is computed using the straight-line
method, based on estimated useful lives of three to seven years.

Net (Loss) Earnings Per Common Share
------------------------------------

Net (loss) earnings per common share is based upon the weighted average number
of common and common equivalent shares outstanding during each period.  Common
equivalent shares represent the number of shares which would be issued assuming
the exercise of dilutive common stock options, reduced by the number of shares
which could be purchased with proceeds from the exercise of such options.

                                      -40-
<PAGE>
 
NOTE 3 - FILM COSTS:
--------------------

Film costs primarily represent the acquisition of film rights from producers for
a guaranteed minimum payment, with the producer retaining a participation in the
profits of the property.  The producer's share of the profits is retained by the
Company until it equals the amount of the guarantee, after which the excess is
paid to the producer.  In these instances, the Company records as participation
expense an amount equal to the producer's share of the profits.  The guaranteed
minimum payments are capitalized and amortized using the individual-film-
forecast-computation method in accordance with SFAS 53.  Based on the Company's
estimate of future revenues as of June 30, 1997, approximately 95% of
unamortized released film costs will be amortized during the next three years.

Film costs, net of amortization, consist of the following:

<TABLE>
<CAPTION>
 
                                      June 30,
                                 ------------------
                                  1997       1996
                                 -------    -------
<S>                              <C>        <C>
                                   (in thousands)
Released                          32,159    $17,766
Completed not released             7,045      3,065
In process and development        18,089      9,022
                                 -------    -------
                                 $57,293    $29,853
                                 -------    -------
</TABLE>

NOTE 4 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
-----------------------------------------------
<TABLE>
<CAPTION>
 
                                June 30,
                             ---------------
                              1997     1996
                             ------   ------
<S>                          <C>      <C>
                             (in thousands)
Accrued marketing costs      $5,159   $  549
Accounts payable              2,178    1,388
Accrued other expenses          238      254
                             ------   ------
                             $7,575   $2,191
                             ------   ------
</TABLE>

                                      -41-
<PAGE>
 
NOTE 5 - DEBT:
--------------

The Company's principal operating subsidiaries, Trimark Pictures, Inc. and
Trimark Television, Inc., have a $75 million revolving credit facility with a
consortium of banks agented and arranged by The Chase Manhattan Bank expiring on
December 20, 2000.  Under the credit agreement, the Company may borrow for
various corporate purposes provided that the aggregate borrowings do not exceed
the Borrowing Base which is derived from specified percentages of approved
accounts receivable and film library.  The credit agreement is guaranteed by the
Company and secured by substantially all of the assets of the Company and its
significant subsidiaries.  Loans outstanding under the credit facility bear
interest at the rate of 1.25% above Chase Manhattan's prime rate (8.5% at June
30, 1997) or 2.25% above Chase Manhattan's London interbank rate for the loan
term specified.  An unused commitment fee is payable on the average unused
availability under the credit facility, at the rate of 0.375% per annum.  As of
June 30, 1997 there was $57.7 million outstanding under the bank facility.

In connection with the credit facility, the Company has capitalized debt
issuance costs as other assets which are being amortized on a straight line
basis over the term of the agreement.

NOTE 6 - INCOME TAXES:
----------------------

Consolidated (loss) earnings before income taxes consists of the following:
<TABLE>
<CAPTION>
 
                                                             Year ended
                                                              June 30,
                                                   1997         1996        1995
                                                 -------      -------     -------- 
                                                            (in thousands) 
<S>                                             <C>         <C>           <C>
Domestic                                         ($5,372)    ($11,872)     ($1,690)
Foreign                                            1,849        1,665        3,329
                                                 -------      -------     -------- 
                                                 ($3,523)    ($10,207)    $  1,639
                                                 -------      -------     -------- 
 </TABLE> 
 
 

                                      -42-
<PAGE>
 
NOTE 6 - (CONTINUED)
-------------------
 
The provision for income taxes is summarized as follows:
<TABLE> 
<CAPTION> 
                                                        Year ended
                                                         June 30,
                                               1997        1996            1995
                                              -----      -------         -------          
                                                          (in thousands)
<S>                                          <C>         <C>             <C> 
Current
  Federal                                     $  --      ($4,657)        $ 1,679         
  State                                          16         (453)            510         
  Foreign                                       433          539             835         
                                              -----      -------         -------          
                                                449       (4,572)          3,024         
                                              -----      -------         -------         
Deferred                                                                                 
  Federal                                      (684)       1,972          (1,973)        
  State                                         235          219            (395)        
                                              -----      -------         -------         
                                               (449)       2,191          (2,368)        
                                              -----      -------         -------         
                                              $  --      ($2,380)        $   656         
                                              -----      -------         -------         
</TABLE> 
 
The components of the deferred tax assets and liabilities are summarized as
follows:
<TABLE> 
<CAPTION> 
 
                                             Year ended June 30,
                                            --------------------
                                              1997         1996
                                            -------      ------- 
                                             (in thousands)
<S>                                        <C>         <C>                    
Deferred Tax Assets:
  Net operating loss carryforward           $ 7,232      $ 3,478
  Foreign tax credit carryforward             2,095        2,095
  Reserves and allowances                       816          915
  Bad debts                                     768          413
  Deferred income                               418          846
  State income taxes                             39           --
  Other                                         145          178
                                            -------      ------- 
                                             11,513        7,925
 
Deferred Tax Liabilities:
  Film cost amortization                     (5,519)      (3,937)
  State taxes                                    --          (75)
                                            -------      ------- 
Net deferred tax asset before
  valuation allowance                         5,994        3,913
Valuation allowance                          (6,045)      (3,990)
                                            -------      ------- 
    Net deferred tax (liability)
      asset                                  ($  51)      ($  77)
                                            -------      -------
 </TABLE>

                                      -43-
<PAGE>
 
NOTE 6 - (CONTINUED)
-------------------

A reconciliation of the federal statutory tax rate to the Company's effective
tax rate is as follows:

<TABLE>
<CAPTION>
                                Year ended June 30,
                              -----------------------
                               1997     1996     1995
                              ------   ------   -----
<S>                           <C>      <C>      <C>
Federal income tax rate       (34.0%)  (34.0%)  34.0%
State taxes, net of
 federal income tax benefit     4.7%    (1.5%)   4.6%
Foreign taxes, net of
 federal income tax benefit     8.1%       --     --
Meals and entertainment
 disallowance                   1.2%     0.5%    2.5%
Utilization of loss
 carryforward                    --        --   (4.5%)
Valuation Allowance            19.5%    11.8%     --
Other                           0.5%    (0.2%)   4.4%
                              -----    ------   -----
                                0.0%   (23.4%)  41.0%
                              -----    ------   ----- 
</TABLE>

The increase of approximately $2.1 million in the valuation allowance reserve is
primarily attributable to the establishment of reserves against the current year
net operating loss ("NOL").  For federal income tax purposes, NOLs may be
carried forward fifteen (15) years, or until such time as they are fully
utilized.  For California purposes, NOLs may be carried forward for  five (5)
years, or until such time as they are fully utilized.  The valuation allowance
was established as a result of the uncertainty of the utilization of the current
year NOLs.

Additionally, a valuation allowance was established in prior years of
approximately $1.4 million against foreign tax credit carryforwards.  These
credits have a five year expiration period and are scheduled to expire in the
years ending June 30, 1998 to June 30, 2000.

As a result of the acquisition of Trimark Television (formerly IBS) by the
Company, approximately $5.5 million in federal income tax NOLs were acquired.
The NOLs expire in the years 2004-2006.  The Internal Revenue Code of 1986, as
amended, imposes substantial limitations on the use of NOL carryforwards
acquired in an acquisition.  Accordingly, a valuation allowance has been
established in prior years and the related balance at June 30, 1997 is
approximately $2.6 million.

                                      -44-
<PAGE>
 
NOTE 6 - (CONTINUED)
-------------------

As of June 30, 1997, the deferred tax liability balance of $51,000 and current
income taxes payable of $13,500 are included in income taxes payable.  At June
30, 1996, a deferred tax liability balance of $77,000 was included in income
taxes payable and an income taxes receivable balance of $2.1 million was
included in other assets.


NOTE 7 - STOCK OPTIONS:
-----------------------

Under the Company's stock option plans, employees and directors may be granted
nonqualified stock options ("options").  Generally, options are exercisable
contingent upon the grantee's continued employment with the Company and
generally have been granted with an exercise price equal to the fair market
value of the underlying Common Stock on the date of grant.  Each option is
granted subject to various terms and conditions established on the date of
grant, including vesting periods and expiration dates.  The options typically
become exercisable at the rate of 33.3% annually, beginning one year after the
date of grant.  Options generally expire 10 years after the date of grant.  As
of June 30, 1997 and 1996, a total of 979,369 options had been approved for
issue under employee option plans and other arrangements.  As of June 30, 1997
and 1996, a total of 40,000 options had been approved for issue under the
director option plan.  Stock option data follows:

<TABLE>
<CAPTION>
                                                                                       
                                           
                                    1997                   1996                     1995                         
                             ------------------      -------------------      ------------------
                                       Weighted                 Weighted                Weighted                    
                                        Average                 Average                  Average
                                       Exercise                 Exercise                Exercise                  
                              Shares    Price         Shares     Price         Shares     Price
                             -------   --------      --------   --------      -------   --------
<S>                          <C>       <C>           <C>        <C>           <C>       <C>
Outstanding at July 1        715,476   $   5.30       552,910    $  6.33      528,244   $   5.48                 
    Granted                   83,500   $   5.73       360,100    $  5.32      154,000   $   8.05                 
    Exercised                (34,500)  $   2.59        (8,500)   $  4.01      (64,833)  $   2.67                 
    Purchased                     --         --            --         --      (50,000)  $   6.00                 
    Terminated               (72,667)  $   8.05      (189,034)   $  8.87      (14,501)  $   6.27                 
                             -------                 --------                 -------
Outstanding at June 30       691,809   $   5.20       715,476    $  5.30      552,910   $   6.33                 
                             =======                 ========                 =======
Exercisable at June 30       438,559   $   5.11       445,965    $  5.01      340,442   $   5.28                 
                             =======                 ========                 =======
Available for grant at                                                         
   June 30                   199,161                  209,994                 187,393
                             =======                 ========                 =======
</TABLE>

                                      -45-
<PAGE>
 
NOTE 7 - (CONTINUED)
-------------------


The following table summarizes information concerning outstanding and
exercisable stock options at June 30, 1997:

<TABLE>
<CAPTION>
                                  Options Outstanding              Options Exercisable
                         ----------------------------------      ---------------------                 
                                      Weighted            
                                       Average        
                                      Remaining    Weighted                   Weighted 
  Range of                           Contractual    Average                    Average                                
  Exercise                Number       Life in     Exercise        Number     Exercise
   Prices                of Shares      Years        Price       of Shares      Price
--------------           ---------   -----------   --------     ----------    --------
<S>                      <C>         <C>           <C>          <C>           <C>    
$2.40 - $6.00              584,476          6.80   $   4.84        367,766    $   4.73
$6.25 - $11.50             107,333          8.05   $   7.19         70,793    $   7.11
                         ---------   -----------   --------     ----------    --------
$2.40 - $11.50             691,809          6.99   $   5.20        438,559    $   5.11
                         =========   ===========   ========     ==========    ========
</TABLE>

The Company has adopted SFAS No. 123, "Accounting of Stock-Based Compensation,"
which establishes a fair value based method of accounting for compensation cost
related to stock option plans and other forms of stock-based compensation plans,
by providing the pro forma disclosures as if the fair value based method had
been applied for the current period and prior comparable period.  In accordance
with SFAS No. 123, the Company applies the intrinsic value based method of
accounting defined under Accounting Principles Board Opinion No. 25 and
accordingly, does not recognize compensation expense for its plans.

Had compensation cost for the plans been determined based on the fair value at
the grant dates for awards under those plans consistent with the method of FASB
Statement 123, the Company's pretax and after tax income would decrease by
$440,000 or $0.10 per share and $136,000 or $0.03 per share in fiscal 1997 and
fiscal 1996, respectively.  These pro forma amounts may not be representative of
future disclosures since the estimated fair value of stock options is amortized
to expense over the vesting period, and additional options may be granted in
future years.

The weighted average fair value of each option as of the grant date was $3.41
and $4.15 for fiscal 1997 and fiscal 1996, respectively.  The fair value of each
option grant is estimated on the date of grant using the Black-Scholes option-
pricing model with the following weighted average assumptions:

<TABLE>
<CAPTION>
                                   fiscal 1997    fiscal 1996
                                   -----------    -----------
<S>                                <C>            <C> 
Expected dividend yield (a)                 --             --
Expected stock price volatility          81.42%         81.42%
Risk-free interest rate                   6.40%          6.36%
Expected life of options (years)          5.94           5.94
</TABLE>

                                      -46-
<PAGE>
 
NOTE 7 - (CONTINUED)
-------------------

(a) During fiscal 1997 and 1996, the Company did not declare any cash dividends
    on its common stock.  The Company does not have any present intention to
    declare a dividend on its common stock in the foreseeable future.


NOTE 8 - TREASURY STOCK:
------------------------

On February 21, 1997, the Company announced a stock repurchase program pursuant
to which it could spend up to $1,500,000, $750,000 per fiscal year, to purchase
shares of its outstanding common stock in the open market.  During fiscal 1997,
the Company spent approximately $707,000 to purchase 162,350 shares under the
repurchase program.

On December 6, 1994, the Company announced a stock repurchase program pursuant
to which it could buy up to $1,250,000 of its outstanding common stock in the
open market.  During fiscal 1996, the Company spent approximately $429,094 to
purchase 55,750 shares under the repurchase program.

At June 30, 1997, the Company held 952,200 shares of treasury stock.

NOTE 9 - COMMITMENTS AND CONTINGENCIES:
---------------------------------------

The Company has entered into certain agreements which provide for guaranteed
royalty advances and promotional and advertising payments totaling $5.2 million.
If the provisions of these agreements are not met by the licensors, the Company
may withdraw from the arrangements. These commitments extend to January 1998.

As of June 30, 1997, the Company had an operating lease for its corporate office
space for a remaining term of three years.  Rent expense was $368,000 for the
year ended June 30, 1997 and $363,000 and $382,000 for the years ended June 30,
1996 and 1995, respectively.

                                      -47-
<PAGE>
 
NOTE 9 - (CONTINUED)
-------------------

The future minimum rental commitments as of June 30, 1997 are as follows (in
thousands):
<TABLE>
<CAPTION>
 
                                Year Ended
                                  June 30,
                               -------------
                                  <S>                         <C>
                                    1997                    $  388
                                    1998                       323
                                    1999                        --
                                    2000                        --
                                 Thereafter                     --
                                                            ------
                                                            $  711
</TABLE>                                                    ------

NOTE 10 - MAJOR CUSTOMERS:
--------------------------

For the years ended June 30, 1997, 1996 and 1995, Ingram, the Company's major
customer, accounted for 12%, 12% and 14% of net revenues, respectively.  For the
year ending June 30, 1996 East Texas accounted for 10% of net revenues and was
not more than 10% of net revenues in fiscal 1997 or fiscal 1995.  With regard to
foreign distribution net revenues, there are no individual geographic areas that
account for more than 10% of total net revenues.

In carrying out its film distribution activities, the Company grants credit to
customers, primarily all of whom are in the film distribution segment of the
entertainment industry.  This customer base is sufficiently diversified by
number of customers, channels of distribution (theatrical exhibition, video
distribution, pay television, cable television and other) and geographic
location to prevent any undue risk related to concentration of credit.

NOTE 11 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
------------------------------------------------------------
<TABLE>
<CAPTION>
 
Cash paid during the year for:
 
                                      Year ended June 30,
                                   ---------------------------
                                      1997     1996     1995
                                   --------  -------  --------
                                         (in thousands)
<S>                                 <C>      <C>      <C> 
Interest                            $2,593   $1,186   $1,442
Income Taxes                           433    1,322    1,494
</TABLE>

                                      -48-
<PAGE>
 
NOTE 11 - (Continued)
--------------------- 

Interest costs capitalized as film costs in fiscal 1997, fiscal 1996 and fiscal
1995 were $935,000, $396,000 and $208,000, respectively.

NOTE 12 - NEW ACCOUNTING PRONOUNCEMENTS:
----------------------------------------

There are no new accounting pronouncements that are expected to have a material
impact on the Company's financial position or results of operations

NOTE 13 - RELATED PARTY TRANSACTIONS:
-------------------------------------

Notes Receivable From Officers
------------------------------

Notes receivable from officers are secured by Trimark Holdings stock equal to at
least 200% of the outstanding loan amount.  The loans bear interest at the
Company's weighted average cost of capital and interest is due quarterly.  The
loans are due on June 30, 2000.

                                      -49-
<PAGE>
 
                                                                     SCHEDULE II



                             TRIMARK HOLDINGS, INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                             (Dollars in Thousands)
<TABLE>
<CAPTION>
 
 
                                Balance     Additions     Additions                        Balance
                              at Beginning  Charged to    Charged to                       at End
Description                     of Period    Expense     Net Revenues      Deductions     of Period
-----------                     ---------   ----------   -------------   --------------   ---------
<S>                               <C>           <C>            <C>           <C>            <C>
Provision for returns and
 bad debts (1):
  Year Ended June 30, 1995         $5,019         $276          $(264)         $112 (2)      $4,919
  Year Ended June 30, 1996          4,919           30           (501)          179 (2)       4,269
  Year Ended June 30, 1997          4,269          321             72           652 (2)       4,010
 
Provision for inventory
 obsolescence:
  Year Ended June 30, 1995            615            3             --            --             618
  Year Ended June 30, 1996            618          202             --            --             820
  Year Ended June 30, 1997            820           --             --           494             326
---------------------------
</TABLE>

(1) Returns are reflected in net revenues and bad debt expense is recorded
    separately in the statement of operations.

(2) Doubtful receivables written-off, net of recoveries.

                                      -50-
<PAGE>
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.


                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning directors and executive officers is incorporated herein
by reference from the sections entitled "Election of Directors" and "Section
16(a) Beneficial Ownership Reporting Compliance" in the Registrant's 1997 Proxy
Statement.


ITEM 11.  EXECUTIVE COMPENSATION

Information concerning executive compensation is incorporated herein by
reference from the sections entitled "Executive Compensation and Related
Matters," "Compensation Committee Interlocks and Insider Participation,"
"Compensation Committee and Stock Option and Stock Appreciation Rights Plan
Committee Report on Executive Compensation" and "Stock Performance" in the
Registrant's 1997 Proxy Statement.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information concerning security ownership of certain beneficial owners and
management is incorporated herein by reference from the section entitled
"Security Ownership of Certain Beneficial Owners and Management" in the
Registrant's 1997 Proxy Statement.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED MATTERS

Information concerning certain relationships and related transactions is
incorporated herein by reference from the section entitled "Executive
Compensation and Related Matters" in the Registrant's 1997 Proxy Statement.

                                      -51-
<PAGE>
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  Financial Statements included in Part II of this report:
<TABLE>
<CAPTION>
 
                                                          Page
                                                        --------
<S>                                                       <C>
Report of Independent Accountants                           33
Consolidated Balance Sheets at June 30, 1997 and 1996       34
For the years ended June 30, 1997, 1996 and 1995:
  Consolidated Statements of Operations                     35
  Consolidated Statements of                                36
   Stockholders' Equity
  Consolidated Statements of Cash Flows                     37
  Notes to Consolidated Financial Statements             38-49
Financial Statement Schedules:
  II. Valuation and Qualifying Accounts                     50
</TABLE>

All other schedules have been omitted either as inapplicable or not required
under the instructions contained in Regulation S-X or because the information is
included in the financial statements or the notes thereto.

(b)  Reports on Form 8-K:

None.

(c)  Exhibits:

    (i) Except as noted, all Exhibits, numbered as they were numbered for filing
        as Exhibits to the Company's Form S-1 Registration Statement, No. 33-
        35053, effective June 26, 1990, are incorporated herein by this
        reference to such Registration Statements.  All filings were made at the
        Commissions office in Washington D.C..  The registrant's SEC file number
        is 0-18613:
<TABLE>
<CAPTION>
 
 Exhibit
 Number                                         Description
-------                        ----------------------------------------------------
<S>                             <C>
 2.1                            Asset Purchase Agreement between the Registrant,
                                Trimark Interactive, and Graphix Zone, Inc.
                                dated February 26, 1997.  15
 
 3.1                            Certificate of Incorporation of the Registrant,
                                as amended to date.  4
</TABLE> 
 

                                      -52-
<PAGE>
 
ITEM 14. (CONTINUED)
<TABLE>
<CAPTION>
 
 Exhibit
 Number                                         Description
-------                        ----------------------------------------------------
<S>                             <C>
 3.2                            By-laws of the Registrant, as amended.  8
 
 4.2                            Form of Common Stock Certificate.  4
 
10.2                            Stock Purchase and Option Agreement, dated as of
                                September 1, 1987, as amended, by and between
                                Vidmark, Inc., a California corporation and Said
                                (Sam) Pirnazar.  +
 
10.4                            Stock Purchase and Option Agreement, dated as of
                                September 1, 1989, by and between Vidmark, Inc.,
                                a California corporation and Said (Sam)
                                Pirnazar.  +
 
10.9                            Employment Agreement, dated as of January 1,
                                1990, by and between Vidmark, Inc., a California
                                corporation and Barry Barnholtz.  +
 
10.12                           Consulting Agreement, dated as of January 1,
                                1990, by and between Vidmark, Inc., a California
                                corporation and Johan A. Wassenaar.  +
 
10.13                           1990 Stock Option and Stock Appreciation Rights
                                Plan of the Registrant, as amended.  13+
 
10.15                           Amendment to Stock Option Agreements, dated as
                                of May 17, 1990, by and among the Registrant,
                                Vidmark, Inc., a California corporation and Said
                                (Sam) Pirnazar.  +
 
10.22                           Standard Office Lease - Gross, dated as of March
                                9, 1992, and amendments thereto, by and between
                                Vidmark, Inc., a California corporation and 2644
                                SM Partners, a California limited partnership.  4
 
10.25                           Non-Qualified Stock Option Agreement dated
                                December 5, 1991, by and between the Registrant
                                and Gordon Stulberg.  4+
 
10.29                           Non-Qualified Stock Option Agreement dated
                                December 2, 1992, by and between the Registrant
                                and Gordon Stulberg.  5+
</TABLE> 

                                      -53-
<PAGE>
 
ITEM 14. (CONTINUED)

<TABLE>
<CAPTION>
 
 Exhibit
 Number                                         Description
-------                        ----------------------------------------------------
<S>                             <C>
 
10.32                           Directors' Stock Option Plan of the Registrant.
                                13+
 
10.35                           Technicolor Videocassette, Inc. Fulfillment
                                Agreement with Trimark Pictures, Inc. dated as
                                of March 1, 1994, by and between Trimark
                                Pictures, Inc., a California corporation and
                                Technicolor Videocassette, Inc.  7
 
10.36                           Credit Agreement dated November 24, 1993, by and
                                between the Registrant's principal operating
                                subsidiaries, Trimark Pictures, Inc. and Trimark
                                Television, Inc., and Bank of America NT & SA
                                and Westdeustche Landesbank.  8
 
10.38                           Employment Agreement, dated February 11, 1994,
                                by and between Trimark Pictures, Inc., a
                                California corporation and Timothy Swain.  8+
 
10.39                           Employment Agreement, dated February 22, 1994,
                                by and between Trimark Pictures, Inc., a
                                California corporation and Sergio Aguero.  8+
 
10.41                           Non-Qualified Stock Option Agreement dated March
                                31, 1994, by and between the Registrant and
                                Timothy Swain.  8+
 
10.42                           Non-Qualified Stock Option Agreement dated March
                                31, 1994, by and between the Registrant and
                                Sergio Aguero.  8+
 
10.43                           Non-Qualified Stock Option Certificate dated
                                January 14, 1994, by and between the Registrant
                                and Gordon Stulberg.  8+
 
10.45                           Non-Qualified Stock Option Certificate dated
                                January 14, 1995, by and between the Registrant
                                and Gordon Stulberg.  10+
 
10.46                           Non-Qualified Stock Option Certificate dated
                                January 14, 1995, by and between the Registrant
                                and Matthew Saver.  10+
</TABLE> 

                                      -54-
<PAGE>
 
ITEM 14. (CONTINUED)
 
<TABLE>
<CAPTION>
 
 Exhibit
 Number                                         Description
-------                        ----------------------------------------------------
<S>                             <C>
10.47                           Non-Qualified Stock Option Certificate dated
                                January 14, 1995, by and between the Registrant
                                and Tofigh Shirazi.  10+
 
10.48                           Non-Qualified Stock Option Agreement dated
                                October 11, 1994, by and between the Registrant
                                and Barry Barnholtz.  10+
 
10.50                           Letter amendment to Stock Option Agreements
                                dated August 10, 1995 by and between the
                                Registrant and Said (Sam) Pirnazar.  10+
 
10.51                           Amendment No. 1 to credit agreement and waiver
                                of default.  10
 
10.52                           Amendment No. 2 to credit agreement and waiver
                                of default, dated September 27, 1995.  11
 
10.53                           Non-Qualified Stock Option Agreement, dated
                                January 30, 1996 by and between the Registrant
                                and Mark Amin.  11+
 
10.54                           Amendment to Non-Qualified Stock Option
                                Agreement, dated January 30, 1996 by and between
                                the Registrant and Timothy Swain.  11+
 
10.55                           Amendment to Non-Qualified Stock Option
                                Agreement, dated January 30, 1996 by and between
                                the Registrant and Barry Barnholtz.  11+
 
10.56                           Amendment to stock option agreement dated March
                                31, 1994, by and between the Registrant and
                                Sergio Aguero.  12+
 
10.57                           Non-Qualified Stock Option Agreement dated
                                August 10, 1995, by and between the Registrant
                                and Sergio Aguero.  12+
 
10.58                           Non-Qualified Stock Option Certificate dated
                                January 14, 1996. by and between the Registrant
                                and Matthew Saver.  12+
</TABLE> 
 

                                      -55-
<PAGE>
 
ITEM 14. (CONTINUED)

<TABLE>
<CAPTION>  
 Exhibit
 Number                                         Description
-------                        ----------------------------------------------------
<S>                             <C>
10.59                           Non-Qualified Stock Option Certificate dated
                                January 14, 1996. by and between the Registrant
                                and Tofigh Shirazi.  12+
 
10.60                           Non-Qualified Stock Option Certificate dated
                                January 14, 1996. by and between the Registrant
                                and Gordon Stulberg.  12+
 
10.61                           Employment Agreement dated July 1, 1996 between
                                the Registrant and Timothy Swain.  12+
 
10.62                           Non-Qualified Stock Option Agreement dated July
                                2, 1996, by and between the Registrant and
                                Timothy Swain.  13+
 
10.63                           Employment Agreement, dated August 30, 1995, by
                                and between Trimark Pictures, Inc., a California
                                corporation and Sergio Aguero, as amended to
                                date.  14+
 
10.64                           Amendment No. 3 to credit agreement, dated
                                October 31, 1996.  14
 
10.65                           Credit, Security, Guaranty and Pledge Agreement,
                                dated December 20, 1996, by and between the
                                Registrant's principal operating subsidiaries,
                                Trimark Pictures, Inc. and Trimark Television,
                                Inc., and The Chase Manhattan Bank, as
                                Administrative Agent and Fronting Bank.  14
 
10.66                           Pledge Agreement, dated February 28, 1997, by
                                and between Trimark Pictures Inc. and Johan
                                Wassenaar and Anne Wassenaar.  16+
 
10.67                           Secured Promissory Note, dated February 28,
                                1997, executed in favor of Trimark Pictures Inc.
                                by Johan Wassenaar.  16+
</TABLE> 
 

                                      -56-
<PAGE>
 
ITEM 14. (CONTINUED)

<TABLE>
<CAPTION>
 
 Exhibit
 Number                                         Description
-------                        ----------------------------------------------------
<S>                             <C>
10.68                           Letter waiver and amendment to Credit, Security,
                                Guaranty and Pledge Agreement, dated February
                                20, 1997, by and between the Registrant's
                                principal operating subsidiaries, Trimark
                                Pictures, Inc. and Trimark Television, Inc., and
                                The Chase Manhattan Bank, as Administrative
                                Agent and Fronting Bank.  16
 
10.69                           Non-Qualified Stock Option Certificate dated
                                January 14, 1997, by and between the Registrant
                                and Matthew Saver.  16+
 
10.70                           Non-Qualified Stock Option Certificate dated
                                January 14, 1997, by and between the Registrant
                                and Tofigh Shirazi.  16+
 
10.71                           Non-Qualified Stock Option Certificate dated
                                January 14, 1997, by and between the Registrant
                                and Gordon Stulberg.  16+
 
10.72                           Pledge Agreement, dated May 1, 1997, by and
                                between Trimark Pictures Inc. and Mark Amin and
                                Susan Amin.  1+
 
10.73                           Secured Promissory Note, dated May 1, 1997, by
                                and between Trimark Pictures Inc. and Mark Amin.
                                1+
 
10.74                           Employment Agreement, dated February 21, 1995,
                                by and between Trimark Pictures, Inc., a
                                California corporation and Don Gold.  1+
 
10.75                           Addendum dated October 23, 1996 to Employment
                                Agreement, dated February 21, 1995, by and
                                between Trimark Pictures, Inc., a California
                                corporation and Don Gold.  1+
 
10.76                           Letter amendment to Stock Purchase and Option
                                Agreement, dated July 25, 1997, by and between
                                the Registrant and Sam Pirnazar.  1+
</TABLE> 
 

                                      -57-
<PAGE>
 
ITEM 14. (CONTINUED)

<TABLE>
<CAPTION>
 
 Exhibit
 Number                                         Description
-------                        ----------------------------------------------------
<S>                             <C>

10.77                           Letter waiver and amendment to Credit, Security,
                                Guaranty and Pledge Agreement, dated June 9,
                                1997, by and between the Registrant and The
                                Chase Manhattan Bank, as Administrative Agent
                                and Fronting Bank.  1
 
10.78                           Employment Agreement, dated July 31, 1995, by
                                and between the Registrant and James Keegan.  1+
 
10.79                           Amendment no. 1 to the Credit, Security,
                                Guaranty and Pledge Agreement, dated June 30,
                                1997, by and between the Registrant's principal
                                operating subsidiaries, Trimark Pictures, Inc.
                                and Trimark Television, Inc., and The Chase
                                Manhattan Bank, as Administrative Agent and
                                Fronting Bank.  1
 
21.1                            Subsidiaries of Registrant.  12
 
23.1                            Consent of Price Waterhouse LLP.  1
 
27                              Financial Data Schedule.  1
</TABLE> 
 
------------------------------------------------------------------------------
<TABLE> 
<S>                             <C> 
 
1                               Filed herewith.
2                               Incorporated by reference to the identical
                                exhibit number in Registrant's Annual Report on
                                Form 10-K for the fiscal year ended June 30,
                                1991.
3                               Intentionally omitted.
4                               Incorporated by reference to the identical
                                exhibit number in Registrant's Annual Report on
                                Form 10-K for the fiscal year ended June 30,
                                1992.
5                               Incorporated by reference to the identical
                                exhibit number in Registrant's Annual Report on
                                Form 10-K for the fiscal year ended June 30,
                                1993.
6                               Incorporated by reference to the identical
                                exhibit number in Registrant's Quarterly Report
                                on Form 10-Q for the quarter ended December 31,
                                1993.
7                               Incorporated by reference to the identical
                                exhibit number in Registrant's Quarterly Report
                                on Form 10-Q for the quarter ended March 31,
                                1994.

</TABLE> 

                                      -58-
<PAGE>
 
ITEM 14. (CONTINUED)
<TABLE> 
<S>                             <C> 
8                               Incorporated by reference to the identical
                                exhibit number in Registrant's Annual Report on
                                Form 10-K for the fiscal year ended June 30,
                                1994.
9                               Incorporated by reference to the identical
                                exhibit number in Registrant's Quarterly Report
                                on Form 10-Q for the quarter ended September 30,
                                1994.
10                              Incorporated by reference to the identical
                                exhibit number in Registrant's Annual Report on
                                Form 10-K for the fiscal year ended June 30, 1995
11                              Incorporated by reference to the identical
                                exhibit number in Registrant's Quarterly Report
                                on Form 10-Q for the quarter ended March 31,
                                1996.
12                              Incorporated by reference to the identical
                                exhibit number in Registrant's Annual Report on
                                Form 10-K for the fiscal year ended June 30, 1996
13                              Incorporated by reference to the identical
                                exhibit number in Registrant's Quarterly Report
                                on Form 10-Q for the quarter ended September 30,
                                1996.
14                              Incorporated by reference to the identical
                                exhibit number in Registrant's Quarterly Report
                                on Form 10-Q for the quarter ended December 31,
                                1996.
15                              Incorporated by reference to the identical
                                exhibit number in Registrant's Current Report on
                                Form 8-K Dated February 21, 1997.
16                              Incorporated by reference to the identical
                                exhibit number in Registrant's Quarterly Report
                                on Form 10-Q for the quarter ended March 31,
                                1997.
+                               This is a management contract or compensatory
                                plan or arrangement.
</TABLE>

                                      -59-
<PAGE>
 
                                   SIGNATURES

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

                                          TRIMARK HOLDINGS, INC.


                                    By:   /s/ Mohammed Mark Amin
                                          ----------------------
                                          Mohammed Mark Amin
                                          Chairman of the Board

Date: September 26, 1997
      ------------------

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

<TABLE>
<CAPTION>
Signature                           Title                   Date  
-------------------------   ----------------------------  -------- 
<S>                         <C>                           <C>      
                                                                   
/s/ Mohammed Mark Amin      Chairman of the Board         09/26/97 
-------------------------   and Chief Executive Officer   -------- 
Mohammed Mark Amin          [Principal Executive Officer]         
                                                                  
/s/ Johan A. Wassenaar      Vice Chairman of the          09/26/97 
-------------------------   Board and Secretary           -------- 
Johan A. Wassenaar                                                
                                                                  
/s/ Gordon Stulberg         Director                      09/26/97 
-------------------------                                 -------- 
Gordon Stulberg                                                   
                                                                  
/s/ Tofigh Shirazi          Director                      09/26/97 
-------------------------                                 -------- 
Tofigh Shirazi                                                    
                                                                  
/s/ Matthew Saver           Director                      09/26/97 
-------------------------                                 -------- 
Matthew Saver                                                     
                                                                  
/s/ James E. Keegan         Chief Financial and           09/26/97 
-------------------------   Accounting Officer,           -------- 
James E. Keegan             and Senior Vice President      
                            - Finance [Principal             
                            Financial and        
                            Accounting Officer]  
</TABLE>                              
                              

                                      -60-
<PAGE>
 
                               INDEX TO EXHIBIT
<TABLE>
<CAPTION>
 
Exhibit                                             Method
Number         Description                        of Filing
-------      -------------------------------      ---------
<S>          <C>                             
 2.1         Asset Purchase Agreement between the Registrant, 
             Trimark Interactive, and Graphix Zone, Inc. dated 
             February 26, 1997.  15
             
 3.1         Certificate of Incorporation of the Registrant, as 
             amended to date.  4
             
 3.2         By-laws of the Registrant, as amended.  8
             
 4.2         Form of Common Stock Certificate.  4
             
10.2         Stock Purchase and Option Agreement, dated as of
             September 1, 1987, as amended, by and between 
             Vidmark, Inc., a California corporation and Said             
             (Sam) Pirnazar.  3+
             
10.4         Stock Purchase and Option Agreement, dated as of
             September 1, 1989, by and between Vidmark, Inc., a
             California corporation and Said (Sam) Pirnazar.  3+
             
10.9         Employment Agreement, dated as of January 1, 1990, by 
             and between Vidmark, Inc., a California corporation 
             and Barry Barnholtz.  3+
             
10.12        Consulting Agreement, dated as of January 1, 1990, by and
             between Vidmark, Inc., a California corporation 
             and Johan A. Wassenaar.  3+
             
10.13        1990 Stock Option and Stock Appreciation Rights Plan 
             of the Registrant, as amended.  13+
             
10.15        Amendment to Stock Option Agreements, dated as of May 
             17, 1990, by and among the Registrant, Vidmark, Inc., 
             a California corporation and Said (Sam) Pirnazar.  3+
             
10.22        Standard Office Lease - Gross, dated as of March 9, 
             1992, and amendments thereto, by and between Vidmark, 
             Inc., a California corporation and 2644 SM Partners, 
             a California limited partnership.  4
</TABLE> 

                                      -61-
<PAGE>
 
Index to Exhibits (Continued)

<TABLE>
<CAPTION>
 
Exhibit                                             Method
Number         Description                        of Filing
-------      -------------------------------      ---------
<S>          <C>                              
10.25        Non-Qualified Stock Option Agreement dated December
             5, 1991, by and between the Registrant and Gordon 
             Stulberg.  4+
             
10.29        Non-Qualified Stock Option Agreement dated December 
             2, 1992, by and between the Registrant and Gordon 
             Stulberg. 5+
             
10.32        Directors' Stock Option Plan of the Registrant.  13+
             
10.35        Technicolor Videocassette, Inc. Fulfillment Agreement 
             with Trimark Pictures, Inc. dated as of March 1, 
             1994, by and between Trimark Pictures, Inc., a
             California corporation and Technicolor Videocassette, 
             Inc.  7
             
10.36        Credit Agreement dated November 24, 1993, by and 
             between the Registrant's principal operating 
             subsidiaries, Trimark Pictures, Inc. and Trimark
             Television, Inc., and Bank of America NT & SA and
             Westdeustche Landesbank.  8
             
10.38        Employment Agreement, dated February 11, 1994, by and
             between Trimark Pictures, Inc., a California 
             corporation and Timothy Swain.  8+             
             
10.39        Employment Agreement, dated February 22, 1994, by and
             between Trimark Pictures, Inc., a California 
             corporation and Sergio Aguero.  8+
             
10.41        Non-Qualified Stock Option Agreement dated March 31, 
             1994, by and between the Registrant and Timothy 
             Swain.  8+
             
10.42        Non-Qualified Stock Option Agreement dated March 31, 
             1994, by and between the Registrant and Sergio 
             Aguero.  8+
             
10.43        Non-Qualified Stock Option Certificate dated January 
             14, 1994, by and between the Registrant and Gordon 
             Stulberg.   8+
</TABLE> 

                                      -62-
<PAGE>
 
Index to Exhibits (Continued)

<TABLE>
<CAPTION>
 
Exhibit                                              Method
Number          Description                        of Filing
-------      --------------------------------      ---------
<S>           <C>                              
10.45         Non-Qualified Stock Option Certificate dated January 
              14, 1995, by and between the Registrant and Gordon 
              Stulberg.   10+
             
10.46         Non-Qualified Stock Option Certificate dated January 
              14, 1995, by and between the Registrant and Matthew 
              Saver.   10+
             
10.47         Non-Qualified Stock Option Certificate dated January 
              14, 1995, by and between the Registrant and Tofigh 
              Shirazi.   10+
             
10.48         Non-Qualified Stock Option Agreement dated October 
              11, 1994, by and between the Registrant and Barry 
              Barnholtz.   10+
             
10.50         Letter amendment to stock options agreements dated 
              August 10, 1995 by and between the Registrant and Said 
              (Sam) Pirnazar.  10+
              
10.51         Amendment No. 1 to credit agreement and waiver of
              default.  10
             
10.52         Amendment No. 2 to credit agreement and waiver of
              default, dated September 27, 1995.  11
             
10.53         Non-Qualified Stock Option Agreement, dated January 
              30, 1996 by and between the Registrant and Mark Amin.  
              11+
             
10.54         Amendment to Non-Qualified Stock Option Agreement,
              dated January 30, 1996 by and between the Registrant 
              and Timothy Swain.  11+
             
10.55         Amendment to Non-Qualified Stock Option Agreement, 
              dated January 30, 1996 by and between the Registrant 
              and Barry Barnholtz.  11+
             
10.56         Amendment to stock option agreement dated March 31, 
              1994, by and between the Registrant and Sergio 
              Aguero.  12+

</TABLE> 
                                      -63-
<PAGE>
 
Index to Exhibits (Continued)

<TABLE>
<CAPTION>
 
Exhibit                                              Method
Number          Description                        of Filing
-------      --------------------------------      ---------
<S>           <C>                             
10.57         Non-Qualified Stock Option Agreement dated August 10,
              1995, by and between the Registrant and Sergio 
              Aguero.  12+
             
10.58         Non-Qualified Stock Option Certificate dated January 
              14, 1996. by and between the Registrant and Matthew 
              Saver.   12+
             
10.59         Non-Qualified Stock Option Certificate dated January 
              14, 1996. by and between the Registrant and Tofigh 
              Shirazi.   12+
             
10.60         Non-Qualified Stock Option Certificate dated January 
              14, 1996. by and between the Registrant and Gordon 
              Stulberg.   12+
             
10.61         Employment Agreement dated July 1, 1996 between the 
              Registrant and Timothy Swain.  12+
             
10.62         Non-Qualified Stock Option Agreement dated July 2, 
              1996, by and between the Registrant and Timothy 
              Swain.  13+
             
10.63         Employment Agreement, dated August 30, 1995, by and 
              between Trimark Pictures, Inc., a California 
              corporation and Sergio Aguero, as amended to date.  
              14+
             
10.64         Amendment No. 3 to credit agreement, dated October 
              31, 1996.  14
             
10.65         Credit, Security, Guaranty and Pledge Agreement, 
              dated December 20, 1996, by and between the 
              Registrant's principal operating subsidiaries, 
              Trimark Pictures, Inc. and Trimark Television, Inc., 
              and The Chase Manhattan Bank, as Administrative Agent
              and Fronting Bank.  14
             
10.66         Pledge Agreement, dated February 28, 1997, by and
              between Trimark Pictures Inc. and Johan Wassenaar and 
              Anne Wassenaar.  16+
</TABLE> 

                                      -64-
<PAGE>
 
Index to Exhibits (Continued)

<TABLE>
<CAPTION>
 
Exhibit                                             Method
Number         Description                        of Filing
-------      -------------------------------      ---------
<S>          <C>                             
10.67        Secured Promissory Note, dated February 28, 1997, 
             executed in favor of Trimark Pictures Inc. by Johan 
             Wassenaar.  16+
             
10.68        Letter waiver and amendment to Credit, Security, 
             Guaranty and Pledge Agreement, dated February 20, 
             1997, by and between the Registrant's principal 
             operating subsidiaries, Trimark Pictures, Inc. and 
             Trimark Television, Inc., and The Chase Manhattan
             Bank, as Administrative Agent and Fronting Bank.  16
             
10.69        Non-Qualified Stock Option Certificate dated January 
             14, 1997, by and between the Registrant and Matthew 
             Saver.  16+
             
10.70        Non-Qualified Stock Option Certificate dated January 
             14, 1997, by and between the Registrant and Tofigh 
             Shirazi. 16+
             
10.71        Non-Qualified Stock Option Certificate dated January 
             14, 1997, by and between the Registrant and Gordon 
             Stulberg.  16+
             
10.72        Pledge Agreement, dated May 1, 1997,           filed herewith
             by and between Trimark Pictures Inc.           electronically
             and Mark Amin and Susan Amin.  1+
             
10.73        Secured Promissory Note, dated May 1,          filed herewith
             1997, by and between Trimark Pictures          electronically
             Inc. and Mark Amin. 1+
             
10.74        Employment Agreement, dated February           filed herewith
             21, 1995, by and between Trimark               electronically
             Pictures, Inc., a California
             corporation and Don Gold.  1+
             
10.75        Addendum dated October 23, 1996 to             filed herewith
             Employment Agreement, dated February           electronically
             21, 1995, by and between Trimark
             Pictures, Inc., a California
             corporation and Don Gold.  1+
</TABLE> 

                                      -65-
<PAGE>
 
Index to Exhibits (Continued)
<TABLE>
<CAPTION>
 
Exhibit                                                  Method
Number          Description                             of Filing
-------      --------------------------------           ---------
<S>           <C>                             
10.76         Letter amendment to Stock Purchase and  filed herewith
              Option Agreement, dated July 25, 1997,  electronically
              by and between the Registrant and Sam 
              Pirnazar. 1+
             
10.77         Letter waiver and amendment to Credit,  filed herewith
              Security, Guaranty and Pledge           electronically
              Agreement, dated June 9, 1997, by and
              between the Registrant and The Chase
              Manhattan Bank, as Administrative
              Agent and Fronting Bank.  1
             
10.78         Employment Agreement, dated July 31,    filed herewith
              1995, by and between the Registrant     electronically
              and James Keegan.  1+
             
10.79         Amendment no. 1 to the Credit,          filed herewith
              Security, Guaranty and Pledge           electronically
              Agreement, dated June 30, 1997, by and
              between the Registrant's principal
              operating subsidiaries, Trimark
              Pictures, Inc. and Trimark Television,
              Inc., and The Chase Manhattan Bank, as
              Administrative Agent and Fronting 
              Bank.  1

21.1          Subsidiaries of Registrant.  12
             
23.1          Consent of Price Waterhouse LLP.  1     filed herewith
                                                      electronically
             
27            Financial Data Schedule.  1             filed herewith
                                                      electronically
-------------------------------------
1             Filed herewith.
2             Incorporated by reference to the identical exhibit 
              number in Registrant's Annual Report on Form 10-K 
              for the fiscal year ended June 30, 1991.
3             Incorporated by reference to the identical exhibit number in
              Registrant's Form S-1 Registration Statement, No. 33-35053,
              effective June 26, 1990.
4             Incorporated by reference to the identical exhibit 
              number in Registrant's Annual Report on Form 10-K 
</TABLE> 

                                      -66-
<PAGE>
 
Index to Exhibits (Continued)
<TABLE> 
<S>          <C> 
             for the fiscal year ended June 30, 1992.
5            Incorporated by reference to the identical exhibit 
             number in Registrant's Annual Report on Form 10-K 
             for the fiscal year ended June 30, 1993.
6            Incorporated by reference to the identical exhibit 
             number in Registrant's Quarterly Report on Form 
             10-Q for the quarter ended December 31, 1993.
7            Incorporated by reference to the identical exhibit 
             number in Registrant's Quarterly Report on Form 
             10-Q for the quarter ended March 31, 1994.
8            Incorporated by reference to the identical exhibit 
             number in Registrant's Annual Report on Form 10-K 
             for the fiscal year ended June 30, 1994.
9            Incorporated by reference to the identical exhibit 
             number in Registrant's Quarterly Report on Form 
             10-Q for the quarter ended September 30, 1994.
10           Incorporated by reference to the identical exhibit 
             number in Registrant's Annual Report on Form 10-K 
             for the fiscal year ended June 30, 1995
11           Incorporated by reference to the identical exhibit 
             number in Registrant's Quarterly Report on Form 
             10-Q for the quarter ended March 31, 1996.
12           Incorporated by reference to the identical exhibit 
             number in Registrant's Annual Report on Form 10-K 
             for the fiscal year ended June 30, 1996
13           Incorporated by reference to the identical exhibit 
             number in Registrant's Quarterly Report on Form 
             10-Q for the quarter ended September 30, 1996.
14           Incorporated by reference tothe identical exhibit 
             number in Registrant's Quarterly Report on Form 
             10-Q for the quarter ended December 31, 1996.
15           Incorporated by reference to the identical exhibit 
             number in Registrant's Current Report on Form 8-K 
             Dated February 21, 1997.
16           Incorporated by reference to the identical exhibit 
             number in Registrant's Quarterly Report on Form 
             10-Q for the quarter ended March 31, 1997.
+            This is a management contract or compensatory plan
             or arrangement.
 
</TABLE>

                                      -67-