<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-K/A
                                 AMENDMENT NO. 1


           [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
               THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2003

                                       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: 001-12391

                                ---------------

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

            DELAWARE                                      13-3593063
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

          6219 DE SOTO AVENUE                                91367
       Woodland Hills, California                          (Zip code)
(Address of principal executive offices)

               Registrant's telephone number including area code:
                                 (818) 316-1000

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:


    TITLE OF EACH CLASS                NAME OF EACH EXCHANGE ON WHICH REGISTERED
    -------------------                -----------------------------------------
        COMMON STOCK                                     NONE


        SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

     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
                                             ---     ---


     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. [ ]


     Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Securities Exchange Act of 1934). Yes    No X
                                                                  ---   ---

     The aggregate market value of the voting and non-voting common stock held
by non-affiliates of the Registrant (based on the closing price for the Common
Stock on the OTC Bulletin Board on such date) on June 30, 2003 was approximately
$3.4 million. As of March 24, 2004, there were 8,769,919 shares of Panavision
Inc. Common Stock outstanding.


                      DOCUMENTS INCORPORATED BY REFERENCE


     Portions of the registrant's 2003 definitive proxy statement, issued in
connection with the annual meeting of stockholders, are incorporated by
reference in Part III of this Form 10-K.

     THIS FORM 10-K IS BEING DISTRIBUTED TO STOCKHOLDERS IN LIEU OF A SEPARATE
ANNUAL REPORT.


<PAGE>

                                EXPLANATORY NOTE

         This Amendment on Form 10-K/A (this "Amendment") constitutes Amendment
No. 1 to the registrant's Annual Report on Form 10-K (the "Form 10-K") for the
fiscal year ended December 31, 2003, filed on March 30, 2004. Due to a clerical
error, the certifications required by Section 302 of the Sarbanes-Oxley Act of
2002 (the "Act") and the disclosure required under Item 9A were included with
the Form 10-K in the improper form. In addition, certain exhibits (including the
certifications required by Section 906 of the Act), while listed as exhibits,
were inadvertently omitted as a result of the clerical error. The Company is
filing this Amendment to replace the certifications required by Section 302 of
the Act, to revise the disclosure under Item 9A, to include the exhibits
previously omitted from the Form 10-K and to correct certain non-substantive
typographical errors. The Amendment is otherwise identical to the Form 10-K.









                                       i
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                                 PANAVISION INC.

                       INDEX TO ANNUAL REPORT ON FORM 10-K

                      FOR THE YEAR ENDED DECEMBER 31, 2003


<TABLE>
<CAPTION>
                                                                                                    PAGE
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<S>          <C>                                                                                  <C>

                                     PART I


Item 1        Business...........................................................................      1

Item 2        Properties.........................................................................     10

Item 3        Legal Proceedings..................................................................     11

Item 4        Submission of Matters to a Vote of Security Holders................................     11


                                     PART II

Item 5        Market for Registrant's Common Equity and Related Stockholder Matters..............     11

Item 6        Selected Financial Data............................................................     12

Item 7        Management's Discussion and Analysis of Financial Condition and
              Results of Operations..............................................................     14

Item 7A       Quantitative and Qualitative Disclosures About Market Risk.........................     28

Item 8        Financial Statements and Supplementary Data........................................     29

Item 9        Changes in and Disagreements With Accountants on Accounting
              and Financial Disclosure...........................................................     29

Item 9A       Control and Procedures.............................................................     29




                                    PART III

Item 10       Directors and Executive Officers of the Registrant.................................      *

Item 11       Executive Compensation.............................................................      *

Item 12       Security Ownership of Certain Beneficial Owners and Management and Related
              Stockholder Matters................................................................      *

Item 13       Certain Relationships and Related Transactions.....................................      *

Item 14       Principal Accounting Fees and Service..............................................      *


                                     PART IV

Item 15       Exhibits, Financial Statement Schedules and Reports on Form 8-K....................     30

</TABLE>

-------------
* Incorporated by reference from the Panavision Inc. 2004 Proxy Statement.



                                       ii

<PAGE>


                                     PART I
ITEM 1.  BUSINESS

BUSINESS OVERVIEW

     Panavision Inc. (the "Company" or "Panavision") is a leading designer,
manufacturer and supplier of high precision camera systems, comprising cameras,
lenses and accessories for the motion picture, television series and television
commercial markets in North America, Europe and the Asia Pacific region.
Panavision camera systems have been widely used in the filming of major motion
pictures over the last 30 years, including the recent box office hits MASTER AND
COMMANDER, SEABISCUIT, THE LAST SAMURAI, MYSTIC RIVER, and COLD MOUNTAIN. The
Company is also a leading supplier of camera equipment to U.S. prime time
episodic or "series" network and cable television productions, such as EVERYBODY
LOVES RAYMOND, CSI, and 24.

     The Company believes that its position as an industry leader results from
its broad range of technologically superior and innovative products, its
long-standing collaborative relationships with filmmakers and studios, its
dedication to customer service, the breadth of its camera and lens equipment
inventory and its unique worldwide distribution network. Panavision is also the
only supplier of cinematography equipment that manufactures a complete camera
system incorporating its own proprietary prime and zoom lenses, the most
critical components of a camera system. The Company is also the only major
manufacturer of cameras and lenses that is located near Hollywood. In contrast,
Panavision's manufacturing competitors are located primarily in Europe and sell
their products to rental companies, which then rent the equipment to the
ultimate user.

     In addition to manufacturing and renting camera systems, the Company also
has rental operations providing lighting, lighting grip, power distribution,
generation and related transportation equipment, cranes and remote camera heads.
These operations include Lee Lighting, the largest lighting rental company in
the United Kingdom, as well as other owned-and-operated facilities in New York;
Orlando, Florida; Dallas, Texas; Toronto, Canada and Australia. Recently, Lee
Lighting supplied the lighting needs of such major films as HARRY POTTER AND THE
SORCERER'S STONE, TOMB RAIDER 2, TROY and ALEXANDER THE GREAT. The Company also
manufactures and sells lighting filters and other color-correction and diffusion
filters through its Lee Filters operation.

     The Company believes that it is well positioned to take advantage of the
emerging markets for the capture of images in digital format and the use of
digital technologies for post-production work. See "--Market Overview--Digital"
for a description of the digital market. The Company offers a complete
state-of-the-art high definition digital camera system comprised of a modified
version of Sony's 24P CINEALTA(TM) high definition digital camera, coupled with
Panavision's series of specially designed PRIMO DIGITAL(R) lenses and other
accessories for use in the motion picture and television industries. The Company
has access to the Sony high definition camera through DHD Ventures, LLC ("DHD"),
a joint venture established in July 2000 with Sony Electronics Inc. The
Sony/Panavision system has been used on a variety of series television programs
and commercials, including JOAN OF ARCADIA, 8 SIMPLE RULES, LIFE WITH BONNIE and
STARGATE ATLANTIS.

       Panavision also believes it is well positioned in the post-production
segment of the digital market with the Company's EFILM operations. In 2002,
Panavision and Deluxe Laboratories Inc. ("Deluxe") formed EFILM, LLC, which
operates as EFILM. Panavision holds an 80% membership interest in EFILM, LLC and
Deluxe holds the remaining 20%, subject to certain agreements which could
increase Deluxe's percentage ownership in certain circumstances. EFILM, a
digital laboratory, provides the post-production services of 1) high-resolution
scanning of film, 2) digital color timing, 3) laser film recording of digital
video and high definition images to film and 4) delivering video masters to
major film studios, independent filmmakers, advertisers, animators, large format
filmmakers and restoration clients. EFILM has worked on such films as TERMINATOR
3: RISE OF THE MACHINES, BRUCE ALMIGHTY, BIG FISH, THE PASSION OF THE CHRIST,
ANGELS IN AMERICA and THE CAT IN THE HAT.

     Panavision was incorporated in Delaware 1990. Predecessors of Panavision
have been engaged in the design and manufacturing of cinematography equipment
since 1954. The Company's principal executive office is located at 6219 De Soto
Avenue, Woodland Hills, California, 91367, and its telephone number is (818)
316-1000.

     Approximately 85.7% of the Company's voting stock is owned by PX Holding
Corporation ("PX Holding"), a wholly owned subsidiary of Mafco Holdings Inc.
("Mafco Holdings").

                                       1
<PAGE>

MARKET OVERVIEW

     The demand for cinematographic equipment is driven by the number and
complexity of feature films, television programs and commercials being produced.
Increases in the number of action films and special effects in feature film and
television productions increase the range and volume of equipment required and
lengthen the rental period. Increases in the number of television networks and
channels and in the networks' demand for original programming also drive the
increased use of camera systems.

     FEATURE FILMS

     Panavision views feature films in two categories: major studio features and
independent features. Major studio features are typically large-budget
productions requiring a greater range and volume of camera and lighting
equipment, thus providing greater revenue potential for the Company. The average
major studio feature film rental is for 10 to 12 weeks. The camera and lighting
rental revenue potential from feature films is dependent on the number and types
of productions filmed in any given year. The Company has been established for
many years as a market leader in the feature film segment and provides equipment
to the majority of major studio feature film productions worldwide.

     EPISODIC TELEVISION

     The episodic or "series" television market in North America is comprised
primarily of dramas, situation comedies and action programs, which are aired in
both prime and non-prime time slots. These programs are broadcast on the major
television networks as well as on cable networks. The average half-hour
situation comedy series generates 22 weeks of billing in a year. The average
one-hour drama series generates 33 weeks of billing in a year. Panavision has
been established for many years as the market leader in the prime time segment,
supplying equipment to the majority of U.S. prime time network series television
productions produced on film. In addition, Panavision has become the leading
supplier of high definition digital camera equipment for use in television
situation comedies, a market that has developed in the last two years. The
Company believes that it will continue to be a strong supplier to this market as
the Company continues to offer customized equipment designed for television
production, which it believes provides both economic and qualitative benefits to
its customers.

     COMMERCIALS

     Although the production of a commercial generally lasts for only one to
seven days, daily rental rates for camera systems are equal to or higher than
feature film rental rates and represent a significant part of the camera
equipment rental market worldwide. Many of the creative professionals involved
in the filming of commercials seek to distinguish their products by using
innovative techniques requiring technologically advanced equipment--the ability
to achieve a unique "look," which the Company believes can, in many cases, be
achieved best by using its products. By pursuing opportunities to expand its
presence in the television commercial market, the Company believes that it can
develop brand loyalty for its products and beneficial long-term relationships
with directors and cinematographers, many of whom begin their careers filming
television commercials.

DIGITAL

     The production of feature films involves three distinct phases: 1) image
capture; 2) post-production; and 3) distribution and exhibition.

     IMAGE CAPTURE. Image capture refers to the recording of images in a camera.
Currently, major theatrical productions are predominantly captured on 35mm film,
although with recent advancements in digital equipment, digital capture may
become more prevalent in the future. Since the camera lens is the most important
factor in image quality, Panavision believes that the superior quality of its
PRIMO DIGITAL(R) lenses coupled with Sony's 24P CINEALTA(TM) high definition
digital camera allows the Company to compete effectively in markets that have
adopted digital capture technology. The Company does not believe that a
substantial portion of feature film or hour-long drama or commercial customers
will utilize digital cameras until additional performance and camera features
are available. The Company is continuing to develop innovative camera and lens
systems to meet evolving needs in the high definition medium.

                                       2
<PAGE>

     POST-PRODUCTION. At the conclusion of production, the captured images are
then processed in a variety of steps including color timing, the insertion of
digital effects, and titling. Much of the post-production phase has
traditionally been a chemical laboratory process, but this is changing over time
with the advent of the digital intermediate. In the digital intermediate
process, film negatives are scanned into digital files using high-resolution
scanning equipment and remain in the digital format throughout the
post-production process. This method may provide a significant improvement in
the quality of theatrical release prints as a result of less film handling, more
precise clean-up routines, real-time pixel-by-pixel color correction, and fewer
intermediate steps and therefore less potential image degradation. Since the
digital intermediate process is typically supervised by the cinematographer of a
feature film, the Company is able to connect its principal customers with a
greater range of services. EFILM's use of the digital intermediate process on
both 35mm negatives and digital media positions the Company to expand its reach
into the feature film value chain and take advantage of the growing
post-production segment of the feature film market.

     DISTRIBUTION/EXHIBITION. The exhibition phase refers to the medium used to
show the completed program to the ultimate viewer. In the example of a
theatrical release, it refers primarily to film projection, although there is a
small but growing market as well for digital projection. Regardless of the speed
of implementation of digital projection or whether digital projection is
implemented on a broad scale at all, the choice of the exhibition medium will
have a limited impact on either the image capture or post-production decisions.
This is because images originally captured on film may be converted for digital
projection as readily as images originally captured digitally may be recorded
back to film for film projection.


GROWTH STRATEGY

     Panavision intends to pursue the following strategies to grow and enhance
its position as the leading designer, manufacturer and supplier of high
precision film camera systems, lighting, and other equipment and services for
the motion picture, television, and commercials industries.

     EXPAND PRODUCTS AND SERVICES FOR OUR CORE FILM BUSINESS. Panavision's film
camera systems business has historically been and continues to be the foundation
of the Company. Although Panavision provides digital cameras to those of
customers who desire them, the vast majority of its customers still prefer to
use film cameras to capture images because of the image quality, including depth
of field, resolution, and dynamic range. In order to meet this continuing demand
for film cameras, the Company continues to work closely with its customers to
develop innovative new products and services for film image capture. Its
location in the mainstream of Hollywood film production and its many programs
aimed at soliciting the views of its customers uniquely position the Company to
respond to changing production requirements.

     DEVELOP NEW PRODUCTS AND APPLICATIONS. Panavision intends to continue
developing and manufacturing innovative cameras, lenses and accessories for
applications beyond its existing core business. Panavision's research and
development group is currently comprised of mechanical, software, electronic and
optical engineers, draftsmen and machinists. Additionally, the research and
development group has a dedicated machine shop that manufactures prototype
equipment. These internal capabilities enable Panavision to develop proprietary
technology in collaboration with filmmakers to address their unique requirements
and position the Company to develop new products.

          o    HD DIGITAL CAMERA SYSTEMS. Panavision offers a complete
               state-of-the-art high definition digital camera system comprised
               of a modified version of Sony's 24P CINEALTA(TM) high definition
               digital camera coupled with Panavision's specially designed PRIMO
               DIGITAL(R) lenses and other accessories. Panavision has designed
               this system to simulate a film system so that traditional film
               crews are comfortable using the medium. The PRIMO DIGITAL(R)
               lenses represent significant technological breakthroughs
               providing extremely high performance, which Panavision believes
               provides the Company with the opportunity to build on the
               Company's leadership position. Panavision will continue to
               develop innovative camera and lens systems to meet evolving needs
               in the high definition digital medium.

          o    HIGH PERFORMANCE LENSES FOR NEW MARKETS. Panavision has developed
               significant expertise in the design, development and manufacture
               of high performance lenses used in the feature film, series
               television and commercial markets. Panavision believes this
               expertise uniquely positions the Company to pursue new
               opportunities in the optical field outside of its existing
               markets. Panavision's strategy is to seek out markets and
               products where high performance optics

                                       3
<PAGE>

               add value and can drive high margins. Present zoom lens
               technology has maximum performance at approximately 100:1
               magnification. Using a breakthrough proprietary design
               technology, Panavision has designed a lens that achieves a 300:1
               continuous zoom ratio. Markets that Panavision has identified for
               the consumption of such technology include the sports broadcast
               market and military and surveillance applications. The Company
               expects these lenses to be available to customers beginning in
               2004. The Company is also exploring opportunities to license the
               proprietary technology behind the 300X lens for other
               applications outside of Panavision's traditional markets.

         IMPROVED OPERATING EFFICIENCY. Panavision believes that profitability
can be enhanced through improvements in operating efficiency. These improvements
include the implementation of a global information system to better manage
equipment rentals and customer service, the implementation of best practices
throughout the Company's rental facilities worldwide, the refinement of
compensation programs to align objectives better with employee remuneration, and
a new product development program aimed at accelerating the cycle between
concept and market delivery. In addition to improved profitability, Panavision
believes these changes will also ultimately lead to more efficient use of
equipment, thereby mitigating capital requirements in the future.

     INCREASE MARKET SHARE OF EXISTING PRODUCTS. Panavision intends to identify
and develop opportunities to increase the market share of its existing products
by increasing the penetration of its products in the Company's current markets
and expanding into new geographic markets. Panavision believes that the Company
can increase its market share through the organic growth of the Company's
business and through strategic acquisitions of complementary businesses as
appropriate opportunities arise.

     CONTINUE TO GROW THE EFILM BUSINESS. Panavision believes that over the next
few years the digital intermediate process will become the preferred
post-production process for finishing feature films, whether they are captured
on film or captured digitally. By utilizing EFILM's leading market position,
Panavision intends to continue to expand its digital post-production work with
the Company's existing and new customers.

     INCREASE CAMERA SYSTEM PACKAGE SIZE. Panavision continues to focus the
Company's development efforts on value-added accessories that increase the
overall size and rental price of a camera package. Since the average cost of
camera rental represents less than 1% of the average major feature film budget,
Panavision believes customers tend to place a higher priority on quality of
service and the availability of a broad range of technologically superior
equipment than on price considerations. In addition, films with more complex and
extensive special effects, such as THE MATRIX series of films, require more
expensive camera packages with more cameras, more lenses and value-added
accessories. As an example of the Company's ability to meet the needs of more
complex films, Panavision has provided the camera system for every JAMES BOND
film ever made.

CAMERA RENTAL OPERATIONS

     Panavision supplies cinematographic equipment, such as cameras, lenses and
accessories, to its customers on a project-by-project basis. Panavision has an
extensive rental inventory of cameras and lenses, as well as associated
accessories (including non-Panavision manufactured equipment). Panavision rents
its equipment through its network of owned-and-operated rental facilities and
independent agents located throughout North America, Europe and the Asia Pacific
region. This network provides the Company with a competitive advantage, as
Panavision is the only rental company that offers clients equipment and service
on a national and worldwide basis.

     CAMERA SYSTEM PRODUCTS

     Panavision is the only provider of camera systems with an integrated design
that provides customers with compatible products available on a worldwide basis.
Each camera package rented for a project is comprised of a number of camera
systems, each of which includes a camera, lenses and accessories. Each camera's
rental price includes a variety of accessories such as eyepieces, viewfinders,
cables and brackets.

         FILM CAMERAS. There are two basic types of motion picture
cameras--Synchronous, or "sync-sound," and Mit Out Sound (MOS). Sync-sound
cameras are used to shoot pictures while recording dialogue. MOS cameras are
used primarily to shoot high-speed footage and special effects and may also be
used as backup cameras in situations where dialogue is not being recorded.
Panavision's camera inventory consists of both sync-

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sound and MOS cameras with various features and at a range of prices. While the
majority of the Company's sync-sound cameras are 35mm cameras, Panavision also
has 16mm cameras, which are used primarily to film episodic television shows,
and 65mm cameras, which are used primarily to film special effects and special
venue presentations.

     Panavision's inventory also includes a number of non-Panavision cameras
that are used to supplement its product line. Due to the Company's ability to
purchase non-Panavision cameras if there is a business need to do so, Panavision
is able to compete with independent renters of cinematography equipment on the
same level and with the same equipment. Panavision's competitors, on the other
hand, do not have the corresponding ability to purchase Panavision equipment, as
Panavision equipment is not available to rental companies other than the
Company's agents.

         FILM LENSES. Panavision develops, designs and manufactures its own
prime (fixed focal length) and zoom lenses, the most critical component
affecting picture quality and an important consideration for the filmmaker. For
many years, Panavision has specialized in anamorphic lenses, which are used for
the wide-screen movie format. While Panavision continues as the world's leading
supplier of these lenses, the Company has also created a line of advanced
spherical lenses for the non-wide screen format, producing the Company's
proprietary PRIMO PRIME(R) and PRIMO ZOOM(R) lenses. The Company believes that
the PRIMO(R) lenses have performance characteristics that exceed the other
lenses available in the marketplace.

         HD DIGITAL CAMERA SYSTEMS. Panavision offers a complete high definition
digital camera system comprised of a modified version of Sony's 24P CINEALTA(TM)
high definition digital camera coupled with its new series of specially designed
PRIMO DIGITAL(R) lenses and other accessories. The PRIMO DIGITAL(R) lenses
represent significant technological breakthroughs, providing extremely high
performance, which Panavision believes will enable the Company the opportunity
to build on its leadership position in the digital segment.

         ACCESSORIES. In order to provide Panavision's customers with a fully
integrated camera system, Panavision frequently introduces new camera
accessories and currently offers an extensive range of products requested by and
developed in conjunction with filmmakers. Certain accessories may reduce overall
production costs by lowering the labor intensiveness of the production process
and thereby decreasing the shooting days. Moreover, an accessory product often
achieves such widespread acceptance among its customers that Panavision
incorporates it into the base camera package, thereby increasing the rental
price of the overall package.

     RESEARCH AND PRODUCT DEVELOPMENT

     Panavision's research and development group is comprised of mechanical,
software, electronic and optical engineers, draftsmen and machinists.
Additionally, the research and development group has a dedicated machine shop
that manufactures prototype equipment. These internal capabilities enable the
Company to develop proprietary technology in collaboration with filmmakers to
address their unique requirements. Panavision has long been a leader in the
research and development of film camera lenses. Since the first Panavision lens
was introduced in 1957, the Company has introduced many innovative spherical and
anamorphic lenses, including the PRIMO(R) series, which won ACADEMY AWARDS(R) in
2002, 1999, 1995, 1994, 1991 and 1990. In 2000, the Company launched a new
series of specially designed PRIMO DIGITAL(R) lenses for use with the Sony 24P
CINEALTA(TM) digital camera. These lenses are among the most sophisticated and
highest performing lenses Panavision has ever produced.

      The research and development group also explores camera and lens
technology for use outside of the Company's traditional markets. Research and
development expense for the years ended 2003, 2002 and 2001 was $5.1 million,
$4.4 million and, $5.0 million, respectively.


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     MANUFACTURING AND ASSEMBLY

     Panavision manufactures cameras, lenses, and accessories designed by the
Company's in-house research and development staff at its 150,000 square foot
corporate headquarters and manufacturing facility located near Hollywood in
Woodland Hills, California. Panavision develops and designs all the critical
components for its camera systems, including the camera movement and lens. An
entire camera system consists of hundreds of parts, each carefully produced,
assembled and tested. The manufacturing process takes up to four months and
primarily involves the fabrication and assembly of camera and lens components by
highly skilled workers, each of whom generally has an area of specialization.
Following the assembly process, each camera system is rigorously tested to
achieve the high standard of performance that customers expect from Panavision.

     While Panavision manufactures most of the components internally, certain
components and subassembly work, including glass grinding, lens element
polishing and die casting, are outsourced to selected suppliers. Panavision has
developed long-standing relationships with the Company's significant suppliers
and believes that they will continue to supply high-quality products in
quantities sufficient to satisfy the Company's requirements. Since certain
components, particularly the lens element, require long lead times, precise
production schedules are critical. Inventory levels are determined based on
input from marketing, operations and the agent network. Panavision maintains a
fairly constant production schedule in order to utilize its resources
efficiently and service its customers' requirements.

     MARKETING AND CUSTOMER SERVICE

     The principal decision-makers in the selection of the camera packages are
cinematographers, directors and producers, who view cameras and related
equipment as critical artistic tools. In addition to cost considerations, the
selection of equipment is driven by its suitability, technological capabilities
and reliability, as well as by the degree to which the manufacturer or renter is
able to rapidly service the technical needs of the filmmaker, both before and
during film production.

     Panavision's skilled sales representatives have established close working
relationships with numerous filmmakers. To cultivate these relationships,
Panavision assigns to each production a sales representative who possesses
skills and experience appropriate to the needs of that production. Based on
discussions with the filmmaker, the sales representative recommends a camera
package tailored to achieve the filmmaker's desired visual effect and meet the
production's budget. In addition, sales representatives provide further advice
and support by visiting film production sites during the production. As a result
of providing high-quality customer service, many of Panavision's representatives
have been working with the same filmmakers throughout their careers and in many
instances the collaborative effort with the filmmaker has prompted the design of
innovative camera systems and accessories.

     After preliminary decisions have been made with respect to the proper
camera package, the camera equipment is delivered to a preparation area in one
of the Company's facilities reserved for that filmmaker. The filmmaker, together
with his or her own and Panavision's representatives, then inspects, tests and
experiments with the equipment at the facility's prep floor, sound stage, film
processing room and screening room.

     DISTRIBUTION

     Camera packages are rented to the motion picture and television industries
through rental offices owned and operated by the Company as well as through its
independent agents. These rental offices serve as a single point of contact for
the cinematographers and often provide services that include maintenance and
technical advice. The Company believes it is the only manufacturer to have the
majority of its revenue generated through owned-and-operated rental houses,
primarily because of the Company's choice not to sell its equipment. Panavision
does not currently intend to begin selling its cinema camera systems. Panavision
owns and operates camera rental and camera and lighting rental facilities
worldwide in North America, Europe and the Asia Pacific region. In addition to
the Company's owned-and-operated facilities, Panavision serves its customers
through a network of international third-party agents who are responsible for
the rental of the Company's equipment in locations that are not serviced by its
owned-and-operated facilities. Agents generally pay approximately 60% of their
rental revenue to Panavision and retain the balance, which is charged as a
commission expense in the Company's statement of operations. All of Panavision's
agents are well trained in the use of Panavision equipment and are supported by
the Company's technical staff.


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     For information as to the Company's operations in different geographical
areas, see Note 11 of the Notes to the Consolidated Financial Statements of the
Company included elsewhere in this Form 10K.

     COMPETITIVE STRENGTHS

     Panavision's leading market position is demonstrated by its premier brand
name recognition and strong market share of the major studio feature films
worldwide and North American episodic television programs. Panavision believes
its leading position results from the following competitive strengths:

     REPUTATION FOR QUALITY AND TECHNOLOGICALLY ADVANCED PRODUCTS. Panavision is
recognized in the motion picture and television industries as the preeminent
brand name for cinematography equipment and the industry leader in the
development of high quality, technologically advanced camera systems, lenses and
accessories. Since its inception in 1954, Panavision has continually introduced
camera systems, lenses and accessories that have become industry standards. The
Company has been awarded three OSCARS(R) and 23 other ACADEMY AWARDS(R) granted
for Scientific and Technical Achievement, including a 2003 award for advancement
in camera systems designed for the film industry, a 2002 award for the PRIMO
MACRO ZOOM(R) lens, a 2001 award for the MILLENNIUM(R) XL camera system, a 2000
award for the MILLENNIUM(R) camera viewfinder and a 1999 award for the
development of the PRIMO(R) lens series. The Company received two EMMY(R)
awards, including one in July of 2000 for the development of the MILLENNIUM(R)
XL camera system and another in 2001 for the development of the PRIMO(R) lens
series. Since 1990, 11 of the 14 OSCARS(R) for Best Cinematography have been
awarded to cinematographers who used the Company's camera systems, including
the cinematographers of MASTER AND COMMANDER, ROAD TO PERDITION, AMERICAN
BEAUTY, and SAVING PRIVATE RYAN.

     RANGE AND BREADTH OF CAMERA SYSTEMS. Panavision believes that it has the
world's largest inventory of camera systems, including cameras, lenses, and
accessories. Panavision also offers a broad range of choices, including
equipment that is exclusively available through the Company and its agents as
well as equipment manufactured by others. The Company is able to upgrade its
existing inventory to meet continually changing market demands, thereby reducing
obsolescence, achieving better control of inventory and product availability and
providing customers with access to the latest technological advances. Panavision
believes that the range and breadth of its camera systems inventory enables the
Company to provide camera systems to a greater number of film productions
throughout the world than any of its competitors and to serve multiple
large-scale feature film productions simultaneously.

     LONGSTANDING RELATIONSHIPS WITH FILMMAKERS. As a result of Panavision's
significant relationships with cinematographers, directors, producers and studio
executives and its leading market position, Panavision has favorable access to
key decision-makers regarding camera system selection. These relationships
foster a cooperative effort to design and produce unique systems and accessories
that meet filmmakers' creative needs. Additionally, Panavision offers
instruction and training in the handling of its equipment to young directors and
cinematographers while they are still in film school and thereafter, thereby
developing loyalty to Panavision and providing a foundation for the Company to
sustain its strong market position. For several years, Panavision, in
association with the International Cinematographers Guild, has been providing
training in the use of digital cameras. In addition, Panavision is the only
major manufacturer of cameras and lenses in the Hollywood area, enabling the
Company to maintain its close relationships with Hollywood filmmakers and to
respond rapidly to its customers' needs.

     UNIQUE MANUFACTURING AND DISTRIBUTION MODEL. Panavision is the only
vertically integrated worldwide provider of camera systems, lenses and
accessories to the film, series television and television commercial industries.
By renting camera systems from Panavision, customers are ensured continual
access to compatible state-of-the-art equipment as well as the availability of
proper equipment combinations for each specific project. The Company's control
over the design, development, manufacturing and distribution processes enables
it to 1) rapidly incorporate technological developments and filmmakers'
suggestions into new products, 2) maintain product exclusivity and 3) offer
products with greater quality and higher performance at a premium price.

     DEDICATION TO CUSTOMER SERVICE. The Company's customer service, repair and
maintenance personnel are "on call" and available to assist customers 24 hours a
day. In order to provide filmmakers with a high level of support, the Company
regularly sends marketing representatives and technicians to film production
sets to provide advice or immediate assistance with any equipment needs or
questions. In the Hollywood area, the Company operates a "Panavan," a commercial
van fully equipped with service equipment that visits Panavision's customers on
a daily basis. The Company assigns a marketing representative to each production
in an effort to

                                       7
<PAGE>

foster a strong and lasting working relationship with the customer. In addition,
as part of the Company's customer service activities, the Company often
develops, customizes or procures equipment for specific customers or projects.
Central to its customer service philosophy is Panavision's maintenance and
repair team, which services all equipment between projects to ensure the quality
and reliability of its equipment. The Company is currently in the process of
reviewing its service standards and upgrading its entire rental process.

     WORLDWIDE DISTRIBUTION NETWORK. Panavision is the only camera and lighting
operation with an extensive worldwide distribution network, including 29 owned
and operated rental facilities throughout North America, Europe and the Asia
Pacific region. With the increasing globalization of feature film production,
this worldwide Panavision network offers its customers an integrated support
system totally unique in the industry. These facilities offer a large inventory
of rental equipment, on-site technical expertise, knowledgeable market
specialization in feature films, episodic television and commercials, and strong
customer support. Panavision also serves its customers through a network of 24
international third-party agent offices, who are responsible for the rental of
the Company's equipment in locations that are not served by its owned and
operated facilities. Panavision's extensive network for the distribution of its
products instills confidence in the Company's customers that they can receive
the level of quality and customer service they expect from Panavision for their
cinematography equipment needs worldwide.

     EXPERIENCED MANAGEMENT. Panavision's management team provides depth and
continuity of experience. Panavision's senior management has developed
relationships over many years with influential individuals in the motion picture
and television industries, a central aspect of the Company's ability to maintain
its strong market share. Panavision's management team has also been instrumental
in developing new technologies in the industry.

     COMPETITION

     The market for high-precision cinematography equipment is highly
competitive, primarily driven by technology, customer service and price. As a
manufacturer of cinematography equipment, Panavision has one primary competitor,
Arri Inc., based in Munich, Germany. Arri Inc. manufactures only cameras and
certain accessories, primarily for sale to rental houses and individuals that
are not the end users. Arri Inc. has rental facilities in selected markets but
does not have a global rental distribution network. Because Panavision
manufactures lenses, cameras, and a full range of accessories that are
cross-compatible, has close relationships with filmmakers, has global
distribution and has in-house opto-mechanical design and manufacturing
capabilities, Panavision believes that it is better able to develop the
innovative camera systems demanded by its customers.

     As a renter of cinematography equipment, Panavision competes with numerous
rental facilities, which generally purchase their equipment from other
manufacturers and then rent that equipment to their customers. While the overall
rental business is price competitive and subject to discounting, Panavision has
chosen to compete primarily on the basis of the Company's large inventory base,
technologically advanced proprietary products, broad product line, extensive
sales and marketing force and commitment to customer service. Panavision
believes that the Company, as both the manufacturer and rental house, is able to
respond to many user requests on shorter notice and more effectively than the
Company's rental competitors. In addition to the Company's existing competitors,
Panavision may encounter competition from new competitors, as well as from new
types of equipment, such as digital cameras. Although Panavision believes that
the Company is well positioned to capitalize on potential growth in the digital
capture market, including through the Company's interest with Sony in DHD, the
digital capture market is relatively new and the Company cannot predict whether
or how quickly the rental market for digital cameras will grow or what effect
that market will have on the Company's film camera business.

LIGHTING RENTAL OPERATIONS

     In addition to manufacturing and renting camera systems, Panavision rents
lighting, lighting grip, transportation and distribution equipment and mobile
generators used in the production of feature films, television programs and
commercials, outside broadcasts and other events from Panavision's
owned-and-operated facilities located in New York; Orlando, Florida; Dallas,
Texas; the United Kingdom; Toronto, Canada and Australia. Panavision's extensive
inventory of lighting equipment enables various lighting operations to service
projects with large-scale equipment and personnel requirements, such as feature
films, while still maintaining sufficient capacity to service other projects
simultaneously. Panavision's worldwide lighting rental operations employ senior
management who have developed relationships over many years with influential
individuals in the motion


                                       8
<PAGE>

picture and television industries. These operations include Lee Lighting, the
largest lighting rental operation in the United Kingdom. It maintains the
largest rental asset base of lighting equipment, transport, mobile generators
and power distribution equipment in the United Kingdom. Lee Lighting currently
has the largest inventory of lampheads, the core element of lighting equipment
used by filmmakers in all areas of the industry, in the United Kingdom. Lee
Lighting operates lighting rental operations in London, Bristol and Manchester,
England and Glasgow, Scotland, each of which has its own rental inventories.
From these four locations, Lee Lighting is able to service any production in
England, Wales, Ireland, or Scotland. In addition, Lee Lighting maintains a
rental base at Shepperton Studios, the second largest studio complex in the
United Kingdom for the production of feature films. Lee Lighting is the only
lighting company in the United Kingdom that supplies its own electricians in
connection with the rental of its equipment, a sizable field force of gaffers
and electricians who work exclusively with the Company. This service force is on
call 24 hours a day, seven days a week and is supplemented by freelance labor
when required.

     Panavision's lighting facilities in the United States are operated by TFN
Lighting Corp., a wholly owned subsidiary of PANY Rental, Inc. ("PANY Rental")
(dba Panavision New York). Pursuant to a lease agreement entered into in
December 2001, when PANY Rental was an agent of the Company in which Panavision
owned a one third interest, Panavision leased to TFN Lighting Corp. lighting and
related lighting accessory equipment located in the United States. Effective May
30, 2003, PANY Rental became a 66.7% owned subsidiary of Panavision
International. In addition, on May 30, 2003, PX Holding Corporation, the holder
of approximately 85.7% of the Company's voting stock, purchased the remaining
33.3% of PANY Rental shares from Silo Capital Corp for $0.7 million. On January
16, 2004, the Company exchanged the 33.3% interest in PANY Rental held by PX
Holding Corporation for shares of Series C Preferred Stock; as a result, PANY
Rental became a wholly-owned subsidiary of Panavision International, L.P.


     COMPETITION

     Panavision's lighting rental operations service the motion picture,
television and commercials industries, including studio programs, outside
broadcasts, and commercials. These markets require a similar range of lighting
productions and related support equipment; however, feature films and episodic
television programs generally require larger equipment packages than
commercials. The composition of equipment packages is frequently determined by
the producer, director or cinematographer, who may desire a specific type of
image or lighting effect. Although the Company's worldwide inventory of lighting
equipment is extensive, the lighting rental market is price competitive. Because
film and television productions tend to rent lighting equipment from rental
agencies in the territories where the productions are filmed, the rental revenue
generated from Panavision's lighting rental operations depends on the number of
feature films, television programs and commercials being filmed in the areas
near the Company's' operations.

SALES AND OTHER OPERATIONS

     Panavision manufactures and sells lighting filters through the Company's
Lee Filters operations in the United Kingdom and the United States. Panavision
also owns an 80% interest in and operates EFILM in the United States. In
addition, the Company sell various consumable products such as film stock, light
bulbs and gaffer tape, which are used in all types of productions, from several
of Panavision's facilities.

     Lee Filters is a manufacturer of light control media for the motion
picture, television, theater and other industries. The majority of Lee Filters'
business is the sale of filters or gels used by lighting directors to control or
correct lighting conditions during productions. On a worldwide basis, lighting
filter distribution is handled primarily through a network of third-party
dealers who have been selected because of their specific knowledge of the
filters market in their respective countries. However, in the United Kingdom and
United States, Lee Filters sells directly to end users and rental houses as well
as to distributors and dealers.

     EFILM provides the following post-production services: 1) high-resolution
scanning of film, 2) digital color timing, 3) laser film recording of digital
video and high definition images to film and 4) delivery of video masters to
major film studios, independent filmmakers, advertisers, animators, large format
filmmakers and restoration clients. In 2002, Panavision and Deluxe formed EFILM,
LLC, which operates as EFILM. Panavision holds an 80% membership interest in
EFILM, LLC and Deluxe holds the remaining 20%, subject to certain agreements
which could increase Deluxe's percentage ownership in certain circumstances.


                                       9
<PAGE>

INTELLECTUAL PROPERTY

     Panavision relies on a combination of patents, licensing arrangements,
trade names, trademarks, service marks, trade secrets, know-how and proprietary
technology to protect the Company's intellectual property rights. Panavision
owns or has been assigned or licensed domestic and foreign patents and patent
applications relating to its cameras, lenses and accessories. In 2003,
Panavision filed an application for patent on the compound zoom technology used
in the 300X lens, which is currently pending. Panavision also owns or have been
assigned several domestic and foreign trademark or service mark registrations
including PANAVISION(R), PANAFLEX(R), PANAHEAD(R), PANALITE(R), PANASTAR(R),
PRIMO(R), PRIMO ZOOM(R), PRIMO MACRO ZOOM(R), PRIMO-L(R), PRIMO DIGITAL(R),
MILLENNIUM(R) and ULTRAVIEW(R) among others which, collectively, are material to
its business.

ENVIRONMENTAL MATTERS

     Panavision is subject to foreign, federal, state and local environmental
laws and regulations relating to the use, storage, handling, generation,
transportation, emission, discharge, disposal and remediation of hazardous and
non-hazardous substances, materials and wastes. Panavision is also subject to
laws and regulations relating to worker health and safety. Panavision believes
that its operations are in substantial compliance with all applicable
environmental and health and safety laws. Although no material capital or
operating expenditures relating to environmental controls or other environmental
matters are currently anticipated, there can be no assurance that Panavision
will not incur costs in the future relating to environmental matters that would
have a material adverse effect on its business or financial condition.

EMPLOYEES

     As of December 31, 2003, Panavision had approximately 1,274 full-time
employees, consisting of 608 employees based in North America, 544 employees
based in Europe, and 122 employees based in the Asia Pacific region. The
Company's subsidiary, PANY Rental, is a party to collective bargaining
agreements with two local affiliates of the International Brotherhood of
Teamsters, which together cover approximately 23 employees. Panavision believes
that its relationships with its employees is good.

AVAILABILITY OF CERTAIN DOCUMENTS CONCERNING THE COMPANY

     Current versions of the following documents are available on the Company's
website, www.panavision.com, as well as without charge upon request to the
Secretary, Panavision Inc., 6219 De Soto Avenue, Woodland Hills, California
91367:

          o    The Company's Code of Business Conduct, which includes its Code
               of Financial Ethics for Senior Financial Officers.

          o    The charters for all standing committees of the Company's Board
               of Directors, namely its Audit, Compensation and
               Nominating/Governance Committees.

          o    The Company's Corporate Governance Guidelines.

          o    The policy that the Nominating/Governance Committee of the
               Company's Board of Directors adopted concerning criteria for the
               nomination of candidates to the Board of Directors.

Paper copies of this annual report on Form 10-K, the Company's quarterly reports
on Form 10-Q, any current report on Form 8-K and any amendment to any of these
documents are similarly available.

ITEM 2.  PROPERTIES

     Panavision's headquarters and principal manufacturing facility are located
at its 150,000 square-foot facility in Woodland Hills, California. Panavision
operates domestic rental facilities in Woodland Hills, Hollywood, New York City,
Dallas, Orlando and Wilmington. To service its international markets, Panavision
operates rental facilities in Toronto and Vancouver, Canada; Dublin, Ireland;
London (two) and Manchester, England; Paris (three) and Marseilles, France;
Prague, Czech Republic; Warsaw, Poland; Sydney (two), Queensland and Melbourne,
Australia; and Auckland and Wellington, New Zealand. Lee Lighting operates
rental facilities in

                                       10
<PAGE>


ITEM 2.  PROPERTIES (CONTINUED)

London, Bristol and Manchester, England and Glasgow and Edinburgh, Scotland. Lee
Filters has a sales operation in Burbank, California, as well as a manufacturing
facility located in Andover, England. EFILM is located in Hollywood. All of its
facilities are leased.

ITEM 3.  LEGAL PROCEEDINGS

     Panavision is not engaged in any legal proceeding other than ordinary
routine litigation incidental to its business. The Company does not believe that
any such proceedings currently pending will have a material adverse effect on
its business or financial condition.

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

     No matter was submitted to a vote of security holders during the fourth
quarter of 2003.


                                     PART II

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

     Until August 5, 2002, Panavision Common Stock was listed on the New York
Stock Exchange ("NYSE") under the symbol "PVI". After falling below certain
continued listing criteria of the NYSE, the Company's stock ceased trading on
the exchange and now trades over the counter under the symbol "PVIS.OB".

     As of March 24, 2004, there were approximately 662 holders of Panavision
Common Stock comprised of approximately 82 record holders and 580 beneficial
holders.

<TABLE>
<CAPTION>
                                                               STOCK SALES PRICES
                                                   -----------------------------------------------
                                                      High              Low             Closing
                                                   -----------      ------------      ------------
<S>                                              <C>              <C>               <C>

2003
   First Quarter*.............................     $    4.50         $    3.25        $    3.60
   Second Quarter*............................          7.75              3.60             5.50
   Third Quarter*.............................          6.50              4.10             5.45
   Fourth Quarter*............................          6.05              5.15             5.50

2002
   First Quarter..............................     $    4.75         $    3.70        $    3.70
   Second Quarter.............................          3.80              2.80             2.85
   Third Quarter*.............................          3.25              1.25             3.25
   Fourth Quarter*............................          4.70              2.50             4.00
</TABLE>

          *On August 5, 2002, the NYSE ceased listing the Company's Common
          Stock. Since that date, it has traded over the counter under the
          ticker symbol "PVIS.OB". As such, stock information in this table
          beyond that date represents such over-the-counter market quotations
          which reflect inter-dealer prices, without retail mark-up, mark-down
          or commissions and may not necessarily represent actual transactions.
          The trading market for the Company's Common Stock may at times be
          relatively illiquid due to low trading volume.

     The Company has never paid a cash dividend on Panavision Common Stock and
does not anticipate paying any cash dividend on Panavision Common Stock in the
foreseeable future. The current policy of the Company's Board of Directors is to
retain earnings to finance the operations and expansion of the Company's
business. In addition, the Company's Existing Credit Agreement restricted the
Company's ability to pay dividends to its stockholders (see Item 7 "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Note 7 of Notes to the Consolidated Financial Statements of the Company).


                                       11
<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

     The following selected financial data has been derived from the Company's
Consolidated Financial Statements. The information set forth below is not
necessarily indicative of results of future operations, and should be read in
conjunction with Item 7 "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
and related Notes thereto included elsewhere in this Form 10-K (in thousands,
except per share amounts).

<TABLE>
<CAPTION>
                                                                    Year ended December 31, 2001
                                                                 ----------------------------------
                                                                      Pre-M&F         Post-M&F
                                                                      Purchase        Purchase
                                                                 ---------------  -----------------
                                    Year ended      Year ended      Period from      Period from     Year ended     Year ended
                                   December 31,    December 31,     January 1 to     April 20 to    December 31,   December 31,
                                       2003          2002 (1)      April 19, 2001   Dec. 31, 2001       2000           1999
                                  -------------   -------------    --------------  ---------------  ------------  --------------
  STATEMENT OF OPERATIONS DATA:
<S>                                <C>             <C>              <C>             <C>             <C>           <C>
  Camera rental                    $    118,686    $    122,223     $    45,660     $     78,978    $ 130,047     $  130,808
  Lighting rental                        38,757          32,844           9,629           22,118       40,289         36,219
  Sales and other                        50,514          38,115          10,520           23,905       34,292         35,724
                                  -------------   -------------    ------------    -------------    ---------     ----------
  Total revenue                         207,957         193,182          65,809          125,001      204,628        202,751

  Cost of camera rental                  62,620          62,482          18,089           40,506       61,119         63,459
  Cost of lighting rental                34,667          27,524           8,234           18,279       29,962         26,642
  Cost of sales and other                28,865          24,034           5,681           13,610       19,214         20,507
                                  -------------   -------------    ------------    -------------    ---------     ----------
  Total cost of revenue                 126,152         114,040          32,004           72,395      110,295        110,608
                                  -------------   -------------    ------------    -------------    ---------     ----------

  Gross margin                           81,805          79,142          33,805           52,606       94,333         92,143
  Selling, general and
    administrative expenses              71,022          53,715          16,470           41,708       55,638         57,795
  Research and development
    expenses                              5,072           4,436           1,841            3,136        6,163          6,103
                                  -------------   -------------    ------------    -------------    ---------     ----------
  Operating income                        5,711          20,991          15,494            7,762       32,532         28,245
  Net interest expense                  (30,067)        (34,586)        (15,019)         (28,436)     (49,993)       (43,918)
  Refinancing expense                    (1,505)         (4,523)              -                -            -              -
  Net other income (expense)              1,691           2,894              48              638       (1,303)         1,435
                                  -------------   -------------    ------------    -------------    ---------     ----------
  Income (loss) before income
    taxes                               (24,170)        (15,224)            523          (20,036)     (18,764)       (14,238)
  Income tax benefit (provision)          6,414           4,145          (1,011)           6,511       (4,881)        (1,800)
                                  -------------   -------------    ------------    -------------    ---------     ----------
  Net loss                         $    (17,756)   $    (11,079)    $      (488)    $    (13,525)   $ (23,645)    $  (16,038)
                                  =============   =============    ============    =============   ==========     ==========
  Net loss per share - basic and
    diluted                        $      (3.60)   $      (1.59)    $     (0.06)    $      (1.54)   $   (2.83)    $    (1.99)
                                  =============   =============    ============    =============   ==========     ==========
  Shares used in computation -
    basic and diluted                     8,770           8,770           8,770            8,770        8,366          8,056
                                  =============   =============    ============    =============   ==========     ==========
</TABLE>


                                       12
<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA (CONTINUED)

<TABLE>
<CAPTION>

                                   PRO FORMA (2)                      POST-M&F PURCHASE           PRE-M&F PURCHASE
                                  --------------                  --------------------------  ------------------------
                                    DECEMBER 31,    DECEMBER 31,         DECEMBER 31,                DECEMBER 31,
                                       2003            2003           2002           2001        2000          1999
                                  --------------  -------------   ------------   -----------  -----------   ----------
BALANCE SHEET DATA:
<S>                                <C>             <C>            <C>          <C>                          <C>
Total assets                       $    624,284    $    621,922   $ 633,167    $ 601,216     $284,712       $291,558

Total current liabilities                41,877          44,168      58,474       50,198       50,133         41,245

Long-term debt and Redeemable
Series B Preferred Stock                299,840         333,789     467,397      448,623      477,425        473,429

Stockholders' equity/(deficiency)       243,273         204,670      72,129       75,325     (250,302)      (231,765)

</TABLE>


--------------

(1)  The above Statement of Operations data includes the results of EFILM, LLC
     from July 2, 2002. See Note 14 of Notes to the Consolidated Financial
     Statements of the Company included elsewhere in this Form 10-K.

(2)  This column reflects a pro forma presentation of selected balance sheet
     data as if transactions in connection with the January 2004 Refinancing had
     occurred as of December 31, 2003. See Note 7 Long-Term Debt on the
     Consolidated Financial Statements of the Company included elsewhere in this
     Form 10-K.



                                       13
<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     The following should be read in conjunction with the Consolidated Financial
Statements of Panavision and the Notes thereto included elsewhere in this Form
10-K. Except for historical information contained therein, the matters addressed
in this Item 7 constitute "forward-looking statements."

     OVERVIEW

     The Company's revenue is derived from three sources: (i) camera rental
operations, (ii) lighting rental operations, and (iii) sales and other revenue.
Revenue from camera rental operations consists of the rental of camera systems,
lenses and accessories to the motion picture and television industries through a
network of rental offices located throughout North America, Europe and the Asia
Pacific region.

     The Company's lighting rental operations generate revenue through the
rental of lighting, lighting grip, transportation and distribution equipment, as
well as mobile generators, which are all used in the production of feature
films, television programs, commercials and other events. The Company owns and
operates lighting rental facilities in the United States, United Kingdom, Canada
and Australia. Revenue generated by Lee Lighting, the Company's lighting rental
facility located in the United Kingdom, generates the majority of the Company's
lighting rental operations revenue.

     Sales and other revenue is comprised of: (i) the manufacture and sale of
lighting filters through Lee Filters in the United Kingdom and the United
States; (ii) EFILM's operations, which provide high-resolution scanning of film,
digital color timing, laser film recording of digital video and high definition
images to film, and digital mastering services to the motion picture and
television industries, and (iii) sales of various consumable products, such as
film stock, light bulbs and gaffer tape, which are used in all types of
productions.

     The Company considers revenue from international business to be that
revenue which is generated from the rental of its equipment by productions that
are located at production sites outside of the United States.


RESULTS OF OPERATIONS

     The following discussion and analysis includes the Company's consolidated
historical results of operations for 2003 and 2002. With respect to 2001, the
following discussion and analysis includes the combined amounts of the Pre-M&F
Purchase period and the Post-M&F Purchase period as set forth in the selected
financial data table. Such combined amounts do not represent a pro forma
presentation of the results of the Company for 2001.


YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED DECEMBER 31, 2002


     CAMERA RENTAL OPERATIONS

     Camera rental revenue for the year ended December 31, 2003 was $118.7
million. Revenue decreased $3.5 million, or 2.9%, compared to the year ended
December 31, 2002. The decrease principally reflects decreased feature film
revenue, partially offset by increased camera rental revenue from the Company's
international operations due to the positive translation effect of foreign
exchange rate changes. Feature film revenues decreased due to several factors,
principally a lower number of starts in 2003 as compared to 2002 in the film
industry and, to a lesser extent, a lower percentage of industry starts captured
by the Company. Compared to 2002, the estimated increase in 2003 in camera
rental revenue from higher translation of revenues from international operations
was approximately $7 million.

     Cost of camera rental for the year was $62.6 million, as compared to $62.5
million in 2002. 2002 expense included $1.3 million of non-cash charges related
to lens components. Adjusting for that amount, expense increased $1.4 million in
2003. While there was reduction in certain types of camera rental expense due to
lower revenue, this net increase in expense occurred due to higher international
expenses attributable to foreign exchange rate changes, as well as higher
personnel and other costs to enhance customer service consistent with the
Company's strategy. Since camera rental revenues declined, as a percentage of
camera rental revenues the expense increased from 51.1% to 52.8%.

                                       14
<PAGE>

     LIGHTING RENTAL OPERATIONS

     Lighting rental revenue for the year ended December 31, 2003 was $38.8
million, an increase of $5.9 million, or 18.0%, compared to the year ended
December 31, 2002. The primary driver was increased activity at Lee Lighting in
the U.K. of $6.2 million, inclusive of the positive translation effect of
foreign exchange rates. PANY Rental, Inc. ("PANY Rental") also contributed $3.4
million in 2003 as a result of the Company's consolidation of PANY Rental's
results of operations from the date it increased ownership of PANY Rental to
67% in May 2003. These increases were offset by decreased lighting rental
revenue in Australia, principally due to decreased features activity.

     Cost of lighting rental for the year was $34.7 million, an increase of $7.1
million, or 26.0%. The increase was primarily due to increased expense of
approximately $4.7 million related to increased activity at Lee Lighting in the
U.K. This expense increase represents 76% of the revenue increase for Lee
Lighting due to part of the revenue increase pertaining to services in
connection with equipment rental for which the profitability margin was low. The
balance was driven by the consolidation of PANY Rental's lighting business,
partially offset by lower expenses in Australia due to lower volume. Because the
Company believes the decline in Australia's revenues in 2003 was atypical, the
reduction in Australian expenses in 2003 related mostly to variable costs
associated with lower revenues. As a result, the decrease in Australian lighting
revenues had a significant impact on lighting gross margin in 2003 as compared
to 2002. Combined with the lower level of profitability of Lee Lighting's
revenue increase, as discussed above, the result was a reduction of $1.2 million
in gross margin for lighting in 2003 as compared to 2002.

     SALES AND OTHER

     Sales and other for the year ended December 31, 2003 was $50.5 million, an
increase of $12.4 million, or 32.5%, from the year ended December 31, 2002. The
increase was primarily due to continued growth in EFILM revenue $9.9 million.
The balance of the change was primarily due to international operations,
principally attributable to foreign exchange rate changes.

     Cost of sales and other for the year was $28.9 million, an increase of $4.8
million, or 20.1%. The change was primarily due to increased activity at EFILM
of $2.9 million, as well as higher translated expenses associated with the
higher international revenues.

     OPERATING COSTS

     Selling, general and administrative expenses for the year ended December
31, 2003 were $71.0 million, an increase of $17.3 million, or 32.2%, compared to
the year ended December 31, 2002. The increase was primarily due to severance
expense of $4.6 million in connection with the departure of the Company's former
Chief Executive Officer, Chief Financial Officer, and President of US
Operations, $4.1 million related to the expansion of EFILM since the prior year,
and approximately $3.2 million related to increased infrastructure expense,
principally personnel related, to support future growth initiatives. The balance
of the increase related primarily to translation of international expenses into
higher U.S. dollars due to foreign exchange rate changes, consistent with the
increase in revenues from international operations as discussed earlier.

     Research and development expenses for the year ended December 31, 2003 were
$5.1 million, an increase of $0.6 million, or 14.3%, from the year ended
December 31, 2002. The change related to the Company's strategy to increase new
product development efforts.

     OPERATING INCOME

     Operating income for 2003 was $5.7 million, a decrease of $15.3 million as
compared to 2002. Consistent with the above discussion, year to year comparisons
of revenue and profitability were significantly impacted by several factors,
principally the translation of international results into higher U.S. dollars.
However, there were two primary factors impacting profitability: the reduction
in camera rental revenues and severance.

     o    Camera rental revenues, excluding the translation effect on
          international results, declined approximately $10.5 million from 2003
          to 2002. Because the Company believes 2003 to be atypical in terms of
          feature revenues, the Company did not make reductions in fixed camera
          rental costs; rather, the


                                       15
<PAGE>

          Company made additional investments to strengthen the business for the
          future. As a result, this decline of approximately $10.5 million in
          revenue significantly impacted profitability in 2003.

     o    Severance expense caused $4.6 million of the decline year to year.

     While other factors explained above, impacted results, these two factors
accounted for approximately $15 million of the reduction from 2002 to 2003.


     INTEREST, TAXES AND OTHER

     Net interest expense for the year ended December 31, 2003 was $30.1
million, a decrease of $4.5 million, or 13.1%, as compared to the year ended
December 31, 2002. The decrease in expense primarily reflects lower debt
compared to the prior year due to the contribution in 2003 of $90.9 million
principal amount of the 9 5/8% Senior Subordinated Discount Notes due 2006
("Existing Notes") owned by Mafco Holdings Inc. ("Mafco Holdings") in exchange
for equity, as well as payments of scheduled amortization.


     Foreign exchange loss for the year ended December 31, 2003 was $0.2 million
as compared to a $1.0 million foreign exchange gain for the year ended December
31, 2002. The decrease was primarily due to a weaker U.S. dollar as compared to
the prior year and primarily reflects the effects of the fluctuating foreign
currencies on the foreign currency denominated intercompany balances held in the
U.S.

     Refinancing expense of $1.5 million for the year ended December 31, 2003
reflects costs incurred in connection with the Company's discontinued offering
of secured notes in the Summer of 2003 and bank refinancing consummated in early
2004. These costs represent primarily professional fees incurred by the Company.

     The tax benefit for the year ended December 31, 2003 was $6.4 million, as
compared to a tax benefit of $4.1 million for the year ended December 31, 2002.
The Company recorded an income tax benefit of $7.8 million resulting from the
benefit associated with domestic tax losses, offset by a $1.4 million provision
relating to profitable foreign operations and foreign taxes withheld at source.
See Note 6 to Consolidated Financial Statements included in the Form 10-K for a
discussion of the Company's Tax Sharing Agreements.

     Under applicable Internal Revenue Service regulations, as a result of the
M&F Settlement (defined below in "Related Party Transactions"), the Company may
not join in filing a consolidated federal income tax return with either Mafco
Holdings or the Company's subsidiaries until May 2006 without consent from the
Internal Revenue Service. Accordingly, from the effective date of the M&F
Settlement of December 3, 2002, the Company will file separate federal income
tax returns for the Company and incorporated subsidiaries. The Company does not
believe that deconsolidation of its federal income tax returns will have a
material adverse effect on the Company's business or financial condition.

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

     CAMERA RENTAL OPERATIONS

     Camera rental revenue for the year ended December 31, 2002 was $122.2
million. Revenue decreased $2.4 million, or 1.9%, compared to the year ended
December 31, 2001. The decline largely reflects lower revenue associated with
television commercials, reflecting a continuation of a weak television
commercial market. Most territories worldwide were adversely impacted by the
television commercial slowdown. The decline also reflects slightly lower series
television revenue generated outside the U.S. Camera rental revenue associated
with worldwide feature film production increased modestly as compared to 2001.

     Cost of camera rental for the year was $62.5 million, an increase of $3.9
million, or 6.7%, as compared to 2001. Cost of camera rental as a percentage of
revenue remained stable compared to the prior year. The 2002 costs include
approximately $3.4 million of additional depreciation resulting from the fair
value adjustments arising from the M&F Purchase and $1.3 million in non-cash
charges related to lens components which will no longer be used in the Company's
rental operation, offset by the impact of cost reductions achieved in 2002.


                                       16
<PAGE>


     LIGHTING RENTAL OPERATIONS

     Lighting rental revenue for the year ended December 31, 2002 was $32.8
million, an increase of $1.1 million, or 3.5%, compared to the year ended
December 31, 2001. The increase reflects stronger feature revenue in the U.K.
and Australia, offset by lower lighting revenue in the U.S. resulting from the
restructuring of the Company's U.S. lighting business in the first quarter of
2002.

     Cost of lighting rental for the year was $27.5 million, an increase of $1.0
million, or 3.8%, as compared to 2001 and as a percentage of revenue, the ratio
remained stable compared to prior year. The increase in lighting costs was
associated with the increase in lighting revenue during the year.

     SALES AND OTHER

     Sales and other for the year ended December 31, 2002 was $38.1 million, an
increase of $3.7 million, or 10.8%, from the year ended December 31, 2001. The
increase primarily reflects the additional revenue generated by EFILM, which the
Company began operating in the third quarter of 2001.

     Cost of sales and other for the year was $24.0 million, an increase of $4.7
million, or 24.4%, as compared to 2001. The increase was primarily due to
additional costs associated with EFILM's operation.

     OPERATING COSTS

     Selling, general and administrative expenses for the year ended December
31, 2002 were $53.7 million, a decrease of $4.5 million, or 7.7%, compared to
the year ended December 31, 2001. The decrease primarily reflects the
elimination of approximately $9.2 million of goodwill and trade name
amortization resulting from the Company's adoption of SFAS 142 on January 1,
2002. The reductions were offset by $3.5 million of additional costs associated
with EFILM's operation, a $0.5 million reserve for vacant property leased in one
of the Company's territories and $0.6 million of compensation charges recorded
in one of the Company's divisions.

     Research and development expenses for the year ended December 31, 2002 were
$4.4 million, a decrease of $0.6 million, or 12.0%, from the year ended December
31, 2001. The decrease was principally due to lower overall staffing expenses.

     OPERATING INCOME

     Operating income declined $2.3 million from 2001 to 2002, reflecting a
decrease in gross margin of $7.3 million, offset by decreased selling, general
and administrative and research and development expenses of $5.0 million.
Adjusting for the additional depreciation resulting from the fair value
adjustment in connection with the M&F Purchase described in Note 1 of the Notes
to Consolidated Financial Statements included elsewhere in this Form 10-K, of
$3.4 million, the non-cash charges of $1.3 million and elimination of goodwill
and trademark amortization of $9.2 million, as discussed above, operating income
declined $6.8 million as compared to the increase in revenues of $2.4 million.
This change was principally caused by the changes in EFILM, including increased
infrastructure expenses for projected growth in 2003 and beyond. Excluding
EFILM's 2001 and 2002 results, the decline in adjusted operating income from
2001 to 2002 would have approximated the decline in revenues.

     INTEREST, TAXES AND OTHER

     Net interest expense for the year ended December 31, 2002 was $34.6
million, a decrease of $8.9 million, or 20.4%, as compared to the year ended
December 31, 2001. The decrease primarily reflects lower interest rates and debt
levels as compared to the year ended December 31, 2001.


     Foreign exchange gain for the year ended December 31, 2002 was $1.0 million
as compared to a $0.5 million foreign exchange loss for the year ended December
31, 2001. This change is primarily due to the effects of the fluctuating British
Pound rate on the U.S. Dollar-denominated intercompany payable balances held in
the U.K.


                                       17
<PAGE>


     Refinancing expense of $4.5 million for the year ended December 31, 2002
reflects costs incurred in connection with the Company's discontinued offering
of secured notes and the bank refinancing. These costs included approximately
$2.2 million of professional fees incurred in connection with the Company's
potential refinancing and lenders' fees of $2.9 million paid in accordance with
the March 15, 2002 amendment to the Existing Credit Agreement. Such charges were
offset by a gain of approximately $0.6 million associated with the $37.7 million
principal amount at maturity of Existing Notes that were cancelled on June 28,
2002.

     The tax benefit for the year ended December 31, 2002 was $4.1 million, as
compared to a tax benefit of $5.5 million for the year ended December 31, 2001.
The change over the prior year is primarily due to the impact of non-deductible
items partially offset by state and local income taxes.


CAPITAL EXPENDITURES

     The Company intends to use cash provided by operating activities and its
revolving lines of credit to make additional capital expenditures primarily to
manufacture camera systems and accessories and purchase other rental equipment.
Based on projected revenues in 2004 and beyond, the Company anticipates
incurring a higher level of capital expenditures in 2004 as compared to 2003.
Consistent with the Company's view of the market and its related strategy, a
higher percentage of such spending will pertain to the Company's core film
business as compared to recent years. In addition, a higher level of spending
for new products for the core film business is projected relative to recent
years.

LIQUIDITY AND CAPITAL RESOURCES

     The following table sets forth certain information from the Company's
Consolidated Statements of Cash Flows for the years indicated (in thousands):

<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
                                                     ------------------------------------------------------
                                                                                             Unaudited
                                                                                              Combined
                                                           2003              2002               2001
                                                    ----------------   ----------------  -------------------
<S>                                                     <C>              <C>                <C>
     Net cash provided by (used in):
     Operating activities                            $     18,205      $     23,351       $     43,277
     Investing activities                                 (22,776)          (22,292)           (25,007)
     Financing activities                                     277             9,382            (21,023)
</TABLE>



     Cash provided by operating activities for the year ended December 31, 2003
totaled $18.2 million comprised of the net loss of $17.8 million adjusted for
depreciation and amortization of $43.4 million offset by the net change in
working capital (excluding cash) and other miscellaneous items totaling $7.4
million. Total investing activities of $22.8 million included $25.2 million of
capital expenditures, offset by $2.4 million in proceeds received from the
disposition of fixed assets. The Company also purchased an additional 1/3
ownership interest in PANY Rental in May 2003 (such that, as of May 2003, the
Company owned a 2/3 interest in PANY Rental) that resulted in the consolidation
of PANY Rental's financial position and results of operations in the Company's
accompanying consolidated financial statements. The purchase price together with
additional payments relating to this transaction approximated $0.6 million and
were offset by a similar amount of cash received upon consolidation. Capital
expenditures were primarily used to manufacture camera rental systems and
accessories. Total net cash provided by financing activities was less than $0.3
million, which was comprised of borrowings of $14.5 million under the MacAndrews
Line and Second MacAndrews Line (as defined below), repayments of $1.5 million
under the MacAndrews Line, notes payable to Deluxe Laboratories, Inc. ("Deluxe")
of $0.6 million, proceeds from the issuance of Series B Preferred Stock of $4.4
million, and proceeds from the issuance of Series C Preferred Stock of $9.7
million, net of transaction costs, offset by repayment of long-term debt of
$23.3 million, and payment of deferred financing costs of $4.1 million.

                                       18
<PAGE>


     Cash provided by operating activities for the year ended December 31, 2002
totaled $23.4 million comprised of the net loss of $11.1 million adjusted for
depreciation and amortization of $43.5 million and the amortization of the
discount on the Existing Notes of $1.5 million, offset by the net change in
working capital (excluding cash) and other miscellaneous items totaling $10.5
million. Total investing activities of $22.3 million included $25.2 million of
capital expenditures, offset by $2.9 million in proceeds received from the
disposition of fixed assets. Capital expenditures were primarily used to
manufacture camera rental systems and accessories, expand EFILM's operation and
purchase lighting equipment. Cash provided by financing activities was $9.4
million, reflecting borrowings of $32.2 million and repayments of $35.8 million
under the Existing Credit Agreement, deferred financing costs of $2.2 million,
the issuance of Series B Preferred Stock for $10.0 million in cash and the $5.2
million invested by Deluxe in EFILM, LLC.

     Cash provided by operating activities for the year ended December 31, 2001
totaled $43.3 million comprised of the net loss of $14.0 million, adjusted for
depreciation and amortization of $47.9 million and the amortization of the
discount on the Existing Notes of $19.3 million, offset by the recording of the
deferred income tax benefit of $10.1 million and the net change in working
capital (excluding cash) and other miscellaneous items totaling $0.2 million.
Investing activities of $25.0 million included $26.6 million of capital
expenditures, offset by $1.6 million in proceeds received from the disposition
of fixed assets. The majority of the capital expenditures were used to
manufacture camera rental systems and accessories. Cash used in financing
activities was $21.0 million, primarily reflecting a decrease in net borrowings
under the Existing Credit Agreement.

     The Company has certain cash obligations and other commercial commitments
which will affect its short and long term liquidity. Giving pro forma effect as
if the January 2004 Refinancing, as described below, had occurred on December
31, 2003, such obligations and commitments were as follows (in thousands):

<TABLE>
<CAPTION>
                                                 PAYMENTS DUE BY PERIOD
CONTRACTUAL                                      ----------------------
OBLIGATIONS               TOTAL        LESS THAN 1 YEAR       1-3 YEARS      4-5 YEARS      AFTER 5 YEARS
-----------               -----        ----------------       ---------      ---------      -------------
<S>                   <C>             <C>                   <C>            <C>             <C>

Long-term debt         $  305,880        $    5,885          $   81,395     $  115,600      $    103,000

Operating leases           38,875            11,153              15,866          7,265             4,591
                       -----------       -------------        -----------    -----------     ------------
Total contractual
  cash obligations      $ 344,755        $   17,038           $  97,261     $  122,865      $    107,591
                       ============      =============        ===========    ===========     ============
</TABLE>

     For information on the Company's long-term debt obligations, see the
discussion herein and in Note 7 of the Notes to the Consolidated Financial
Statements included elsewhere in this Form 10-K. The above table does not
include interest on long-term debt.

     As of December 31, 2003, the Company had lines of credit totaling
approximately $20.0 million, under which $13.0 was drawn. In connection with the
January 2004 Refinancing described below, one $10.0 million line of credit,
which was fully drawn, was converted into Series D Preferred Stock, and the
other $10.0 million line of credit, of which $3.0 million was drawn, was
increased to $20.0 million. The Company does not have any off-balance sheet
financing arrangements, other than operating leases.

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

     On June 4, 1998, the Company entered into a Credit Agreement with a
syndicate of lenders (as subsequently amended on September 30, 1998, June 30,
1999, March 15, 2002, June 14, 2002, September 30, 2002, March 25, 2003 and
November 12, 2003, the "Existing Credit Agreement"). As described below, the
Existing Credit Agreement was later replaced with the Amended and Restated
Credit Agreement pursuant to the January 2004 Refinancing. The Existing Credit
Agreement was comprised of two facilities, the Term Facility and the Revolving
Facility. As of December 31, 2003, amounts outstanding under the Existing Credit
Agreement were $151.8 million and $99.2 million for the Term Facility and
Revolving Facility, respectively. The Term Facility had two tranches: the
Tranche A Term Facility was a 6-year facility in an aggregate principal amount
of $90.0 million and the Tranche B Term Facility was a 7-year facility in an
aggregate principal amount of $150.0 million. The Revolving Facility was a
6-year facility in an aggregate principal amount of $100.0 million.


                                       19
<PAGE>



     The Company's obligations under the Existing Credit Agreement were secured
by substantially all of the Company's assets. The Existing Credit Agreement
required that the Company meet certain financial tests and contained other
restrictive covenants including limitations on indebtedness, leverage ratio
levels, interest coverage ratio levels and restrictions on the ability of the
Company to declare or pay dividends to its stockholders.

     On March 15, 2002, the Company amended its Existing Credit Agreement to,
among other things, revise certain of the financial tests and required ratios
that the Company was required to maintain through December 31, 2002 (the "March
2002 Amendment"). As required by the March 2002 Amendment, on June 28, 2002, the
Company acquired from Mafco Holdings $37.7 million principal amount of Existing
Notes, which had approximately $1.5 million of accrued interest, and $10.0
million cash. In exchange, the Company issued to Mafco Holdings 49,199 shares of
Series B Preferred Stock, which it contributed to the capital of PX Holding.

     On April 1, 2002, the Company entered into an agreement with certain
holders of its Existing Notes that gave the Company the option to acquire from
these holders Existing Notes with a face value of $78.4 million at a price of
$650 per $1,000 of principal amount. On June 28, 2002, Mafco Holdings assumed
this option from the Company and subsequently exercised the option on July 3,
2002.

     On June 14, 2002, the Company amended its Existing Credit Agreement to,
among other things, allow the Company to (1) acquire 100% of the outstanding
shares of Las Palmas from M&F Worldwide in exchange for the Las Palmas Note, (2)
contribute the assets of Las Palmas and certain other assets owned by the
Company to the newly-formed EFILM, LLC in exchange for 80% of its membership
interests, and (3) allow Deluxe to purchase 20% of the EFILM, LLC membership
interests for $5.2 million. In addition, certain covenants were amended.

     Effective September 30, 2002, the Company amended the Existing Credit
Agreement to, among other things, reduce the minimum EBITDA the Company was
required to achieve for the four fiscal quarters ending September 30, 2002 (the
"September 2002 Amendment"). This provision of the September Amendment expired
on March 28, 2003. As required by the September 2002 Amendment, on January 31,
2003, an affiliate of Mafco Holdings made a cash equity contribution to the
Company in the amount of the interest due February 1, 2003 on the Existing Notes
held by affiliates of the Company on that date in exchange for 4,372 shares of
the Company's Series B Preferred Stock.

     On February 3, 2003, MacAndrews & Forbes Holdings Inc. ("MacAndrews &
Forbes") agreed to provide the Company a revolving line of credit in the amount
of $4.0 million, at the same rate as provided for in the revolving facility
pursuant to the Existing Credit Agreement (as amended, the "MacAndrews Line").
As described below, amounts outstanding under the MacAndrews Line were retired
in exchange for shares of Series D Preferred Stock as part of the January 2004
Refinancing.

     On March 27, 2003, the Company amended its Existing Credit Agreement to,
among other things, decrease minimum EBITDA for the four fiscal quarters ended
December 31, 2002, specify the minimum EBITDA, decrease the minimum interest
coverage ratio and increase the maximum leverage ratio required for the four
fiscal quarters ending on each of March 31, 2003, June 30, 2003, September 30,
2003 and December 31, 2003 (the "March 2003 Amendment"). Absent this amendment,
the Company would not have been in compliance with certain financial covenants
under the Existing Credit Agreement for the four fiscal quarters ended December
31, 2002. Under the March 2003 Amendment, certain lenders also agreed to defer
$20.0 million of amortization payments otherwise due in 2003 to March 31, 2004.

     In connection with the March 2003 Amendment, Mafco Holdings contributed
$90.9 million principal amount of Existing Notes (on which there was
approximately $1.4 million of accrued and unpaid interest) and $10.0 million in
cash to the Company in exchange for 102,220 shares of Series C Cumulative
Pay-in-Kind Preferred Stock, par value $0.01 per share, of the Company (the
"Series C Preferred Stock"), which Mafco Holdings contributed to the capital of
PX Holding, and PX Holding contributed to the Company 53,571 shares of Series B
Preferred Stock in exchange for 57,424 shares of Series C Preferred Stock.
MacAndrews & Forbes also agreed to extend the MacAndrews Line until March 31,
2004.


                                       20
<PAGE>


     On August 13, 2003, MacAndrews & Forbes agreed to amend the terms of the
MacAndrews Line to increase the amount available for borrowings thereunder from
$4.0 million to $10.0 million and to extend the maturity date of the MacAndrews
Line to August 31, 2006. As of December 31, 2003, the Company had drawn $10.0
million under the MacAndrews Line.

     In August 2003, the Company postponed an offering of secured notes it had
previously announced due to unfavorable pricing terms resulting from
deteriorating market conditions. Concurrently, the Company also deferred its
plans to replace its Existing Credit Agreement with a new credit agreement.

     Effective November 12, 2003, the Company amended the Existing Credit
Agreement to, among other things, decrease minimum EBITDA required for the four
fiscal quarters ending September 30, 2003 and the four fiscal quarters ending
December 31, 2003 (the "November 2003 Amendment"). In the absence of this
amendment, the Company would not have been in compliance with certain financial
covenants under the Existing Credit Agreement for the four fiscal quarters
ending September 30, 2003 and likely would not have been in compliance with
financial covenants for the four fiscal quarters ending December 31, 2003, due
to, among other factors, costs associated with the abandoned offering of secured
notes and lower than expected feature film and commercial television production.

     In connection with the November 2003 Amendment, on November 12, 2003,
MacAndrews & Forbes agreed to provide an additional revolving line of credit
(the "Second MacAndrews Line") in the amount of $10.0 million at a rate equal to
50 basis points above the rate provided for in the revolving facility pursuant
to the Existing Credit Agreement and a maturity of April 15, 2004.

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

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

     As another part of the January 2004 Refinancing, the Company used proceeds
from the sale of the Senior Notes and the issuance of Series D Preferred Stock
to reduce the indebtedness under the Existing Credit Agreement by $115.4
million, and replaced the Existing Credit Agreement with an Amended and Restated
Credit


                                       21
<PAGE>

Agreement (the "Amended Credit Agreement") with the lenders under the Existing
Credit Agreement. The Amended Credit Agreement provides for a single term loan
facility in the principal amount of $135.6 million repayable in quarterly
installments with a final maturity of January 12, 2007, except that the term
facility shall be due on September 5, 2005 if any of the Existing Notes remain
outstanding on that date. The term facility bears interest at either the ABR or
Eurodollar Rate (as defined in the Amended Credit Agreement) plus a margin of
5.25% in the case of ABR loans or 6.25% in the case of Eurodollar Loans. The
term facility under the Amended Credit Agreement is secured on substantially the
same basis as indebtedness under the Existing Credit Agreement. In connection
with the Amended Credit Agreement, the Company paid fees to lenders and
professional advisors of approximately $3.5 million, including an original issue
discount fee of approximately $2.0 million. Approximately $3.1 million of the
fees paid will be expensed in 2004.

     Under the Amended Credit Agreement, the Company is required to repay $5.0
million in principal in 2004, whereas under the Existing Credit Agreement the
Company would have been required to make principal payments of approximately
$221.1 million in 2004. In addition, the Amended Credit Agreement revised
certain financial tests and other restrictive covenants set forth in the
Existing Credit Agreement, including required EBITDA (as defined), limitations
on indebtedness, and other provisions. As defined in the Amended Credit
Agreement and 2004 Indenture, EBITDA includes adjustments for severance expense,
refinancing expense, foreign exchange (gain) loss, and other non-cash charges.
As compliance with EBITDA levels is a material aspect of the Amended Credit
Agreement and the 2004 Indenture, the calculation of EBITDA pursuant to these
agreements for the year ended 2003 is set forth below, with the calculation for
the year ended 2002 provided for comparative purposes (in millions):


                                             Year ended     Year ended
                                             December 31,   December 31,
                                            -------------  ------------
                                                2003           2002
                                            -------------  -----------

         Net loss                              ($17.8)        ($11.1)
         Net interest expense                    30.1           34.6
         Income tax benefit                      (6.4)          (4.1)
         Depreciation and amortization           43.4           42.0
         Severance expense                        4.6             -
         Refinancing expense                      1.5            4.5
         Foreign exchange (gain) loss             0.6           (0.9)
         Non-cash charges                         -              1.8
                                            -------------  -----------
         EBITDA                                 $56.0          $66.8
                                            =============  ===========

$50 million was the required level of EBITDA, as defined, for the year ended
December 31, 2003 pursuant to the Amended Credit Agreement and 2004 Indenture.

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

Although there can be no assurance, the Company expects that cash flows from
operations, borrowings under the revolving line of credit, and cash equity
contributions and advances from affiliates will be sufficient to enable the
Company to meet its anticipated operating, capital spending and debt service
requirements through at least the next twelve months.

CRITICAL ACCOUNTING POLICIES

     The Company reviews the accounting policies it uses in reporting its
financial results on a regular basis. The preparation of these financial
statements requires the Company to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses and related
disclosure of contingent assets and liabilities. On an ongoing basis, the
Company evaluates its estimates, including those related to accounts receivable,
investments, rental assets, intangible assets, income taxes, contingencies and
litigation. The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances. These estimates form the basis for the Company's judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Results may differ from these estimates if actual outcomes are
different from the estimates on which the

                                       22
<PAGE>

Company based its assumptions. These estimates and judgments are reviewed by
management on an ongoing basis. The Company believes the following critical
accounting policies affect its more significant judgments and estimates used in
the preparation of the Consolidated Financial Statements of Panavision.

     REVENUE RECOGNITION - The Company recognizes revenue over the related
equipment rental period using prices that are negotiated at the time of rental.
Revenue from product sales is recognized upon shipment. The Company does not
have a history of significant product returns or revenue adjustments. Revenue
from digital laboratory services is recognized at the time such services have
been rendered.

     ALLOWANCE FOR DOUBTFUL ACCOUNTS - The Company maintains allowances for
doubtful accounts for estimated losses resulting from the inability of its
customers to make required payments. If the financial condition of the Company's
customers were to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances may be required.

     INCOME TAXES - The Company estimates its actual current tax liabilities
together with temporary differences resulting from differing treatment of items,
such as net operating losses and depreciation, for tax and accounting purposes.
These temporary differences result in deferred tax assets and liabilities. The
Company must then assess the likelihood that its deferred tax assets will be
recovered from future taxable income and to the extent the Company believes that
recovery is not likely, it must establish a valuation allowance. At December 31,
2003, the Company had a $7.3 million valuation allowance established against its
deferred tax assets. To the extent the Company establishes a valuation allowance
or changes this allowance in a period, it must reflect the change to the
allowance within the tax provision in the consolidated statement of operations.
Significant management judgment is required in determining the provision for
income taxes, deferred tax assets and liabilities and any valuation allowance
recorded against its net deferred tax assets.

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

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

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

     o    Significant negative industry or economic trends.

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

     RECENT ACCOUNTING PRONOUNCEMENTS

     In June 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity" (including Certain Costs Incurred in a Restructuring). SFAS
146 requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred. SFAS 146 was effective
for exit or disposal activities that are initiated after December 31, 2002 and
did not have a material impact on the Company's financial statements.

                                       23
<PAGE>


     In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees it has issued. It also
clarifies that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The disclosure requirements were effective for financial
statements of interim or annual periods ending after December 15, 2002. The
recognition and measurement provisions of FIN 45 were applicable on a
prospective basis to guarantees issued or modified after December 31, 2002. The
application of FIN 45 did not materially impact the financial condition, results
of operations, and cash flows of the Company.

     In December 2002, the FASB issued Statement No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure" ("SFAS 148"), which amends
FASB Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123").
SFAS 148 provides alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee compensation.
In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require
more prominent and more frequent disclosures in financial statements about the
effects of stock-based compensation. The Company has complied with the
disclosure requirements of SFAS 148 and elected not to adopt the fair value
based method of accounting for stock-based employee compensation.

     In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity"
("SFAS No. 150"). SFAS 150 established standards for how an issuer classifies
and measures certain financial instruments with characteristics of both
liabilities and equity. SFAS 150 requires that certain financial instruments be
classified as liabilities that were previously considered equity. The adoption
of this standard on July 1, 2003, as required, had no impact on the Company's
consolidated financial statements.

     In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 requires an investor with
a majority of the variable interests (primary beneficiary) in a variable
interest entity ("VIE") to consolidate the entity and also requires majority and
significant variable interest investors to provide certain disclosures. A VIE is
an entity in which the voting equity investors do not have a controlling
financial interest, or the equity investment at risk is insufficient to finance
the entity's activities without receiving additional subordinated financial
support from other parties. For arrangements entered into with VIEs created
prior to January 31, 2003, the provisions of FIN 46 were originally effective as
of the beginning of the three months ended September 30, 2003, however, the FASB
subsequently delayed the effective date of this provision until the first
interim or annual period ending after December 15, 2003 for entities that have
interests in structures that are commonly referred to as special-purpose
entities and for periods ending after March 15, 2004 for all other types of
variable interest entities. The provisions of FIN 46 were effective immediately
for all arrangements entered into with new VIEs created after January 31, 2003.

     The Company is currently performing a review of its relationships with its
network of agents, its investment in DHD Ventures, LLC ("DHD") and Panavision
Imaging, LLC, a subsidiary of PX Holding Corporation, to determine whether the
agents, DHD, or Panavision Imaging, LLC qualify as VIEs and then whether the
Company is the primary beneficiary of any of the entities. The Company is also
reviewing its accounting for EFILM LLC in light of FIN 46. The review has not
identified any VIE that would require consolidation for the year ended December
31, 2003. The Company expects to complete the review prior to the issuance of
its unaudited interim financial statements as of March 31, 2004. Provided that
the Company is not the primary beneficiary, the Company is not exposed to losses
related to any of the agent entities. Should the Company be determined to be the
primary beneficiary of DHD, the maximum exposure to losses is generally limited
to the carrying amount of the investment in the entity.

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

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

                                       24
<PAGE>


RELATED PARTY TRANSACTIONS

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

     M&F Worldwide accounted for the M&F Purchase as a purchase, and purchase
accounting adjustments were pushed down to the Panavision financial statements
for the period subsequent to April 19, 2001 (designated "Post-M&F Purchase").
The Panavision financial statements for the periods ended prior to April 19,
2001 were prepared using Panavision's historical basis of accounting and are
designated as "Pre-M&F Purchase." Accordingly, the results of the Company for
the Pre-M&F Purchase period and the Post-M&F Purchase period are not comparable.

     The push down of the M&F Purchase price allocation had the following
effects on the Panavision financial statements as of the date of acquisition to
the extent of the 83.5% change in ownership: (i) accumulated depreciation and
amortization of approximately $211.0 million was reset to zero by netting it
against gross property, plant and equipment balances; (ii) the gross rental
assets balance, after the effect of the netting of accumulated depreciation and
amortization described in (i), was increased by approximately $40.8 million;
(iii) goodwill was increased by approximately $260.0 million; (iv) trademarks
were increased by approximately $68.6 million; (v) other assets were reduced by
approximately $2.8 million; (vi) deferred tax assets and liabilities were
increased by approximately $15.5 million and $45.1 million, respectively; (vii)
accumulated amortization of goodwill and other intangibles was reset to zero,
and (viii) long-term debt was increased by $3.8 million.

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

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

       In July 2001, M&F Worldwide purchased all of the issued and outstanding
shares of Las Palmas Productions Inc. ("Las Palmas"), which conducted business
under the name "EFILM". EFILM is a laboratory providing digital post-production
services to the motion picture and television industries. As a result of this
purchase, Las Palmas became a wholly owned subsidiary of M&F Worldwide. The
consideration paid by M&F Worldwide at closing consisted of $5.4 million to the
selling stockholders and $0.6 million to Las Palmas. M&F Worldwide also agreed
to make an additional payment to the selling stockholders equal to the greater
of (a) 90% of the average annual EBITDA (as defined below) of the EFILM business
over a two-year Incentive Period (as defined in the EFILM Agreements) or (b)
$1.5 million, such payment to occur no earlier than 2004 and no later than 2007
(the "Earnout Payment").

     In conjunction with the Las Palmas purchase, the Company entered into a
series of transactions with Las Palmas to provide it substantially all of the
benefits of, and obligate it with respect to, EFILM. From July 2, 2001 through
July 1, 2002, the Company operated EFILM pursuant to various lease and
secondment agreements. Specifically, Las Palmas (i) subleased the real estate
used in the business to the Company, (ii) leased the property

                                       25
<PAGE>

and equipment used in the business to the Company on a month-to-month basis,
(iii) seconded all of the Las Palmas employees to Panavision, and (iv) granted a
worldwide, nonexclusive license to certain technology and intellectual property
to be used solely in connection with servicing customers of Panavision until
July 2, 2008, subject to renewal (collectively, the "EFILM Agreements").
Following the entry into these various agreements, the Company directly
purchased equipment that is used in the business of EFILM.

     In addition to monthly payments, the EFILM Agreements required that
Panavision pay Las Palmas a one-time cash payment equal to the Earnout Payment.
On July 2, 2001, the Company began expensing the $1.5 million minimum amount of
this one-time cash payment over the 7-year initial term of the EFILM Agreements,
as additional lease expense. For 2002 and 2001, expenses relating to the EFILM
Agreements of approximately $564,000 and $573,000, respectively, were included
in cost of sales and other and $24,000 and $29,000, respectively, were included
in selling, general and administrative expenses in the consolidated statements
of operations.

     On July 2, 2002, the Company acquired the shares of Las Palmas from M&F
Worldwide in exchange for a note in the amount of $6.7 million bearing interest
at 10% per annum, payable on September 30, 2005 or upon refinancing of the
Existing Credit Agreement (the "Las Palmas Note"). Since the Company and Las
Palmas were under common control, the transaction was accounted for at
historical cost in a manner similar to that of a pooling of interests. The prior
periods were not restated to give effect to Las Palmas since the impact was not
material. Immediately following the acquisition, the Company contributed the
assets of Las Palmas and certain other assets owned by the Company to the newly
formed EFILM, LLC in exchange for 80% of its membership interests. At the same
time, Deluxe purchased 20% of the EFILM, LLC membership interests for $5.2
million. The Company maintains a controlling interest in, and therefore
consolidates the results, of EFILM, LLC. The accompanying consolidated
statements of operations include the results of EFILM, LLC from July 2, 2002.
Minority interest, representing Deluxe's equity in ownership of EFILM, LLC, is
included in other liabilities in the accompanying consolidated balance sheets.

     EFILM, LLC assumed the obligation to make the Earnout Payment. However,
Panavision and Deluxe agreed to reimburse EFILM, LLC by making capital
contributions equal to the amount of the Earnout Payment. At December 31, 2003,
on a consolidated basis, the Company had a liability of approximately $1.3
million based upon the current value of the Earnout Payment.

     On June 28, 2002, the Company acquired from Mafco Holdings $37.7 million
principal amount of Existing Notes, which had approximately $1.5 million of
accrued interest, and $10.0 million cash. In exchange, the Company issued to
Mafco Holdings 49,199 shares of Series B Preferred Stock, which it contributed
to the capital of PX Holding.

     On January 31, 2003, Mafco Holdings made a cash equity contribution to the
Company in the amount of the interest due February 1, 2003 on the Existing Notes
held by affiliates of the Company on that date in exchange for 4,372 shares of
Series B Preferred Stock as required by the September 30, 2002 Amendment to the
Existing Credit Agreement.

     On February 3, 2003, Mafco Holdings agreed to extend to the Company a
revolving line of credit (the "MacAndrews Line ") in the amount of $4.0 million,
maturing March 28, 2003, at the same rate as provided for in the Revolving
Facility pursuant to the Existing Credit Agreement.

     On March 27, 2003, the Company acquired (i) from Mafco Holdings
approximately $90.9 million principal amount of Existing Notes, which had
approximately $1.4 million of accrued interest and $10.0 million in cash and
(ii) from PX Holding 53,571 shares of Series B Preferred Stock, which had
approximately $3.9 million of accrued and unpaid dividends. In exchange, the
Company issued to Mafco Holdings 102,220 shares of Series C Preferred Stock,
which it contributed to the capital of PX Holding, and to PX Holding 57,424
shares of Series C Preferred Stock. MacAndrews & Forbes also agreed to extend
the MacAndrews Line until March 31, 2004.

     On August 13, 2003, MacAndrews & Forbes agreed to amend the terms of the
MacAndrews Line to increase the amount available for borrowings thereunder from
$4.0 million to $10.0 million and to extend the maturity date of the MacAndrews
Line to August 31, 2006.

     In connection with the November 2003 Amendment to the existing Credit
Agreement, on November 12, 2003, MacAndrews & Forbes agreed to extend the Second
MacAndrews Line in the amount of $10.0 million at a


                                       26
<PAGE>

rate equal to 50 basis points above the rate provided for in the revolving
facility pursuant to the Existing Credit Agreement and a maturity of April 15,
2004. As of December 31, 2003, the Company had drawn $10.0 million under the
MacAndrews Line and $3.0 million under the Second MacAndrews Line.

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

     On December 16, 2003, Panavision Imaging, LLC, a subsidiary of PX Holding,
purchased the assets of Silicon Video, Inc., a designer of CMOS imaging sensors
located in Homer, New York, and formed Panavision SVI, LLC to act as marketing
affiliate with respect to certain products designed by Panavision Imaging, LLC.
The Company manages the operations of Panavision Imaging, LLC and Panavision
SVI, LLC in exchange for certain research and development services and most
favored customer status with respect to certain products of Panavision Imaging,
LLC. In addition, the Company purchases certain sensors from Panavision Imaging,
LLC on a basis that is at least as favorable as could be obtained at
arms-length. Panavision Imaging, LLC and its marketing affiliate Panavision SVI,
LLC utilize the Panavision tradename pursuant to a license from the Company.


SEASONALITY

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


IMPACT OF INFLATION

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


FORWARD-LOOKING STATEMENTS

     This annual report on Form 10-K for the year ended December 31, 2003, as
well as certain of the Company's other public documents and statements and oral
statements, contain forward-looking statements that reflect management's current
assumptions and estimates of future performance and economic conditions. Such
statements are made in reliance upon safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The Company cautions investors that
forward-looking statements are subject to risks and uncertainties that may cause
actual results and future trends to differ materially from those projected,
stated, or implied by the forward-looking statements. In addition, estimates of
cost savings included in this Form 10-K are based on various assumptions that
are subject to inherent uncertainty and actual cost savings could vary from
these


                                       27
<PAGE>

estimates. Further, the Company encourages investors to read the summary of its
critical accounting policies included elsewhere herein.

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


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

     As of December 31, 2003 and 2002, Panavision's primary net foreign currency
market exposures include the Euro, British pound, Canadian dollar, Australian
dollar and the New Zealand dollar. At the present time, the Company does not
generally hedge against foreign currency fluctuation. Management does not
foresee nor expect any significant changes in foreign currency exposure in the
near future.

     As of December 31, 2003 and 2002, a 10% appreciation in foreign currency
exchange rates from the prevailing market rates would increase the related net
unrealized gain on intercompany balances by $2.6 million. Conversely, a 10%
depreciation in these currencies from the prevailing market rates would decrease
the related net unrealized loss on intercompany balances by $2.6 million, as of
each of December 31, 2003 and 2002.

     The Company is exposed to changes in interest rates on its variable rate
debt. A hypothetical 10% increase in the interest rates applicable to 2003 and
2002 would have resulted in an increase to interest expense of approximately
$1.6 million and $1.7 million, respectively. Conversely, a hypothetical 10%
decrease in the interest rates applicable to 2003 and 2002 would have decreased
interest expense by approximately $1.6 million and $1.7 million, respectively.
As of December 31, 2003, the Company believes that the carrying value of its
amounts payable under the Existing Credit Agreement approximate fair value.

     The fair value of the Company's fixed rate long-term debt is sensitive to
changes in interest rates. Based upon a hypothetical 10% increase in the
interest rate, assuming all other conditions affecting market risk remain
constant, the market value of the Company's fixed rate debt would decrease
approximately $0.8 million and $1.7 million at December 31, 2003 and 2002,
respectively. Conversely, a hypothetical 10% decrease in the interest rate,
assuming all other conditions affecting market risk remain constant, would
result in an increase in market value of approximately $0.8 million and $1.7
million over the same period. Management does not foresee nor expect any
significant change in its exposure to interest rate fluctuations or in how such
exposure is managed in the future.

     The Company manages its fixed and floating rate debt with the objective of
achieving a mix that management believes is appropriate. To manage this mix in a
cost-effective manner, the Company, from time to time, has entered into interest
rate swap agreements, in which it agrees to exchange various combinations of
fixed and/or variable interest rates based upon agreed upon notional amounts.
Panavision had no interest rate swap agreements in effect at December 31, 2003.


     The Company believes the carrying value of its debt securities approximates
fair value.


                                       28
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURES

     None.

ITEM 9A.  CONTROLS AND PROCEDURES


         (a) Disclosure Controls and Procedures. The Company's management, with
the participation of the Company's Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the Company's disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (as amended, the "Exchange Act")) as of the end of the
period covered by this report. Based upon such evaluation, the Company's Chief
Executive Officer and Chief Financial Officer have concluded that, as of the end
of such period, such disclosure controls and procedures are effective.

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


                                    PART III

     The Company will provide the information otherwise set forth in Part III,
Items 10 through 14, of Form 10-K in its definitive proxy statement for its 2004
annual meeting of stockholders, which is to be filed pursuant to Regulation 14A
not later than April 30, 2004.



                                       29
<PAGE>

                                     PART IV


ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

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


(a)(3)        Exhibits


3.            CERTIFICATE OF INCORPORATION AND BY-LAWS

3.1           Restated Certificate of Incorporation of the Company (incorporated herein by
              reference from the identically numbered exhibit from the Company's Quarterly
              Report on Form 10-Q for the quarter ended March 31, 1999).

3.2           Restated By-Laws of the Company (incorporated herein by reference from the
              identically numbered exhibit from the Company's Quarterly Report on Form 10-Q
              for the quarter ended March 31, 1999).

3.3           Certificate of Designations, Powers, Preferences and Rights of Series A
              Non-Cumulative Perpetual Participating Preferred Stock of Panavision Inc.
              (incorporated herein by reference from Exhibit 13 from the Company's Form SC
              13D/A filed on December 28, 2001).


3.4           Certificate of Designations, Powers, Preferences and Rights of Series B
              Cumulative Pay-in-Kind Preferred Stock of Panavision Inc. (incorporated herein
              by reference from the identically numbered exhibit from the Company's Quarterly
              Report on Form 10-Q for the quarter ended June 30, 2002).

3.5           Certificate of Designations, Powers, Preferences and Rights of Series C
              Cumulative Pay-in-Kind Preferred Stock of Panavision Inc. (incorporated herein
              by reference from the identically numbered exhibit from the Company's Quarterly
              Report on Form 10-Q for the quarter ended March 31, 2003).


3.6           Certificate of Designations, Powers, Preferences and Rights of Series D
              Cumulative Pay-in-Kind Preferred Stock of Panavision Inc.**

3.7           Certificate of Designations, Powers, Preferences and Rights of Series E Non-
              Cumulative Perpetual Participating Preferred Stock of Panavision Inc.**


4.            INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES.

4.1           Indenture, dated as of February 11, 1998, between PX Escrow and The Bank of New
              York, as Trustee, relating to the Company's 95/8% Senior Subordinated Discount
              Notes Due 2006 (incorporated herein by reference from the identically numbered
              exhibit from the Company's Registration Statement on Form S-1, Registration No.
              333-59363 filed with the Securities and Exchange Commission on October 8, 1998).

4.2           First Supplemental Indenture dated June 4, 1998, among PX Escrow, the Company
              and the Trustee, amending the Indenture identified at Exhibit 4.1 (incorporated
              herein by reference from the identically numbered exhibit from the Company's
              Registration Statement on Form S-1, Registration No. 333-59363 filed with the
              Securities and Exchange Commission on October 8, 1998).

4.3           Credit Agreement, dated June 4, 1998, among Panavision Inc., the several lenders
              named therein, Chase Securities Inc., as Advisor and Arranger, and The Chase
              Manhattan Bank, as Administrative Agent (incorporated herein by reference from
              the identically numbered exhibit from the Company's Current Report on Form 8-K
              dated June 4, 1998 and filed with the Securities and Exchange Commission on June 19,
              1998).

4.4           Line of Credit Agreement dated February 3, 2003 between Panavision Inc. and
              MacAndrews & Forbes Holdings Inc. (incorporated herein by reference from the
              identically numbered exhibit from the Company's Annual Report on Form 10-K for
              the year ended December 31, 2002).

4.5           Registration Rights Agreement, dated as of June 5, 1998, between Panavision Inc.
              and PX Holding Corporation (incorporated herein by reference from the
              identically numbered exhibit from the Company's Annual Report on Form 10-K for
              the year ended December 31, 1998). This document was transferred to M&F
              Worldwide Corp. on April 19, 2001. See Exhibit 10.21 below.
</TABLE>

                                       30
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER        DESCRIPTION
------        -----------
<S>          <C>
4.6           First Amendment, dated as of September 30, 1998, to the Credit Agreement among
              Panavision Inc., the several lenders named therein, Chase Securities Inc., as
              Advisor and Arranger, and The Chase Manhattan Bank, as Administrative Agent
              (incorporated herein by reference from the identically numbered exhibit from the
              Company's Annual Report on Form 10-K for the year ended December 31, 1998).

4.7           Second Amendment, dated as of June 30, 1999, to the Credit Agreement among
              Panavision Inc., the several lenders named therein, Chase Securities Inc., as
              Advisor and Arranger, and The Chase Manhattan Bank, as Administrative Agent
              (incorporated herein by reference from the identically numbered exhibit from the
              Company's Annual Report on Form 10-K for the year ended December 31, 1999).

4.8           Third Amendment, dated as of March 15, 2002, to the Credit Agreement among
              Panavision Inc., the several lenders named therein, J.P. Morgan Securities Inc.
              (formerly known as Chase Securities Inc.), as Advisor and Arranger, Credit
              Suisse First Boston, as Documentation Agent, and J.P. Morgan Chase Bank
              (formerly known as The Chase Manhattan Bank), as Administrative Agent
              (incorporated herein by reference from the identically numbered exhibit from the
              Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002).

4.9           Fourth Amendment, dated as of June 14, 2002, to the Credit Agreement among
              Panavision Inc., the several lenders named therein, J.P. Morgan Securities
              (formerly known as Chase Securities Inc.), as Advisor and Arranger, Credit
              Suisse First Boston, as Documentation Agent, and J.P. Morgan Chase Bank
              (formerly known as The Chase Manhattan Bank), as Administrative Agent
              (incorporated herein by reference from the identically numbered exhibit from the
              Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).

4.10          Fifth Amendment, dated as of September 30, 2002, to the Credit Agreement among
              Panavision Inc., the several lenders named therein, J.P. Morgan Securities
              (formerly known as Chase Securities Inc.), as Advisor and Arranger, Credit
              Suisse First Boston, as Documentation Agent, and J.P. Morgan Chase Bank
              (formerly known as The Chase Manhattan Bank), as Administrative Agent
              (incorporated herein by reference from the identically numbered exhibit from the
              Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
              2002).

4.11          Sixth Amendment, dated as of March 27, 2003, to the Credit Agreement among
              Panavision Inc., the several lenders named therein, Credit Suisse First Boston,
              as Documentation Agent, and J.P. Morgan Chase Bank, as Administrative Agent
              (incorporated herein by reference from the identically numbered exhibit from the
              Company's Annual Report on Form 10-K for the year ended December 31, 2002).

4.12          First Amendment, dated as of March 27, 2003, to the Line of Credit Agreement
              between Panavision Inc. and MacAndrews & Forbes Holdings Inc. (incorporated
              herein by reference from the identically numbered exhibit from the Company's
              Annual Report on Form 10-K for the year ended December 31, 2002).

4.13          Amended and Restated Line of Credit Agreement, dated as of August 13, 2003,
              between Panavision Inc. and MacAndrews and Forbes Holdings Inc. (incorporated
              herein by reference from the identically numbered exhibit from the Company's
              Quarterly Report on Form 10-Q for the quarter ended September 30, 2003).

4.14          Senior Subordinated Line of Credit Agreement, dated as of November 12, 2003,
              between Panavision Inc. and MacAndrews and Forbes Holdings Inc. (incorporated
              herein by reference from the identically numbered exhibit from the Company's
              Quarterly Report on Form 10-Q for the quarter ended September 30, 2003).

4.15          Seventh Amendment, dated as of November 12, 2003, to the Credit Agreement among
              Panavision Inc., the several lenders named therein, Credit Suisse First Boston,
              as Documentation Agent, and JP Morgan Chase, as Administrative Agent
              (incorporated herein by reference from the identically numbered exhibit from the
              Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
              2003).


4.16          Line of Credit Agreement dated January 16, 2004, between Panavision Inc. and
              MacAndrews & Forbes Holdings Inc.**

4.17          Indenture, dated as of January 16, 2004, between Panavision Inc. and Wilmington
              Trust Company, as Trustee, relating to the Company's 12.50% Senior Secured Notes
              due 2009.**

</TABLE>

                                       31
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER        DESCRIPTION
------        -----------
<S>           <C>

4.18          Form of 12.50% Senior Secured Note due 2009 (incorporated herein by reference
              from Exhibit 4.17 to the Company's Annual Report on Form 10-K for the year
              ended December 31, 2003 and filed with the Securities and Exchange Commission
              on March 30, 2004).

4.19          Amended and Restated Credit Agreement, dated as of May 28, 1998, as amended and
              restated as of January 16, 2004, among Panavision Inc., the several lenders
              named therein, and JP Morgan Chase Bank, as Administrative Agent.**

4.20          Letter Agreement dated as of January 16, 2004, Mafco Holdings Inc., MacAndrews &
              Forbes Holdings Inc., PX Holding Corporation and Panavision Inc.**


10.           MATERIAL CONTRACTS.

10.1          Panavision Inc. 1999 Stock Option Plan (incorporated herein by reference from
              Annex A of the Company's 1999 Definitive Proxy Statement dated March 31, 1999).

10.2          Panavision Inc. 2003 Executive Incentive Compensation Plan (incorporated herein
              by reference from the identically numbered exhibit from the Company's Quarterly
              Report on Form 10-Q for the quarter ended March 31, 2003).

10.3          Letter Agreement, dated as of March 27, 2003, between MacAndrews & Forbes Inc.,
              PX Holding Corporation and Panavision Inc. (incorporated herein by reference
              from the identically numbered exhibit from the Company's Annual Report on Form
              10-K for the year ended December 31, 2002).

10.4          Lease, dated June 13, 1995, between the Company and Trizec Warner Inc.
              (incorporated herein by reference from the identically numbered exhibit to the
              Company's Registration Statement on Form S-1, Registration No. 333-12235).

10.5          Stipulation of Settlement Agreement, dated July 26, 2002, regarding the M&F
              Worldwide Corp. Shareholder litigation (incorporated herein by reference from
              Exhibit 16 from the Company's Form SC 13D/A filed on July 29, 2002).

10.6          Common Stock Letter Agreement, dated as of December 3, 2002, by and between PX
              Holding Corporation and M&F Worldwide Corp. (incorporated herein by reference
              from Exhibit 1 from the Company's form SC 13D/A filed on December 9, 2002).

10.7          Preferred Stock Letter Agreement, dated as of December 3, 2002, by and between
              PX Holding Corporation and M&F Worldwide Corp. (incorporated herein by reference
              from Exhibit 2 from the Company's form SC 13D/A filed on December 9, 2002).

10.8          Registration Rights Agreement, dated as of December 3, 2002, by and between PX
              Holding Corporation and Panavision Inc. (incorporated herein by reference from
              Exhibit 3 from the Company's form SC 13D/A filed on December 9, 2002).

10.9          Registration Rights Termination Letter Agreement, dated as of December 3, 2002,
              by and between MacAndrews & Forbes Inc. and Panavision Inc. (incorporated herein
              by reference from Exhibit 4 from the Company's form SC 13D/A filed on December
              9, 2002).

10.10         Mafco-M&F Worldwide Note Letter Agreement, dated as of December 3, 2002, by and
              between MacAndrews & Forbes Inc. and M&F Worldwide Corp. (incorporated herein by
              reference from Exhibit 5 from the Company's Form SC 13D/A filed on December 9,
              2002).

10.11         Mafco-Pneumo Abex Corporation Letter Agreement, dated as of December 3, 2002, by
              and between MacAndrews & Forbes Inc., M&F Worldwide Corp and Pneumo Abex
              Corporation (incorporated herein by reference from Exhibit 6 from the Company's
              form SC 13D/A filed on December 9, 2002).

10.12         Amended & Restated Employment Agreement, dated May 9, 2003, between Panavision
              Inc. and Bobby G. Jenkins, Executive Vice President and Chief Financial Officer
              (incorporated herein by reference from the Company's Quarterly Report on Form
              10-Q for the quarter ended March 31, 2003).

10.13         Amended & Restated Employment Agreement, dated May 9, 2003, between Panavision
              Inc. and Eric W. Golden, Executive Vice President and General Counsel
              (incorporated herein by reference from the Company's Quarterly Report on Form
              10-Q for the quarter ended March 31, 2003).

10.14         Letter Agreement, dated as of January 31, 2003, between MacAndrews & Forbes
              Inc., PX Holding Corporation and Panavision Inc. (incorporated herein by
              reference from the identically numbered exhibit from the Company's Annual Report
              on Form 10-K for the year ended December 31, 2002).
</TABLE>

                                       32
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER        DESCRIPTION
------        -----------
<S>           <C>
10.15         Loan Out Service Agreement, dated April 10, 2003, and made effective March 26,
              2003, between Panavision Inc., and Ziffren, Brittenham, Branca, Fischer,
              Gilbert-Lurie & Stiffelman LLP (incorporated herein by reference from the
              identically numbered exhibit from the Company's Quarterly Report on Form 10-Q
              for the quarter ended March 31, 2003).

10.16         Tax Sharing Agreement, dated as of February 1, 1999, between MacAndrews & Forbes
              Inc. and Panavision Inc. (incorporated herein by reference from the identically
              numbered exhibit from the Company's Annual Report on Form 10-K for the year
              ended December 31, 1998). This agreement covers the period February 1, 1999
              through April 18, 2001.

10.17         Stock and Warrant Purchase Agreement dated July 26, 2000 by and between Sony
              Electronics Inc. and Panavision Inc. (incorporated herein by reference from the
              identically numbered exhibit from the Company's Quarterly Report on Form 10-Q
              for the quarter ended June 30, 2000).

10.18         Warrant No. W-1, dated July 26, 2000, Warrant for Purchase of Shares of Common
              Stock from Panavision Inc. by Sony Electronics Inc. (incorporated herein by
              reference from the identically numbered exhibit from the Company's Quarterly
              Report on Form 10-Q for the quarter ended June 30, 2000).

10.19         Panavision Inc. Stockholders Agreement dated July 26, 2000 by and among
              Panavision Inc. and Sony Electronics Inc. (incorporated herein by reference from
              the identically numbered exhibit from the Company's Quarterly Report on Form
              10-Q for the quarter ended June 30, 2000).

10.20         Registration Rights Agreement dated July 26, 2000 by and between Panavision Inc.
              and Sony Electronics Inc. (incorporated herein by reference from the identically
              numbered exhibit from the Company's Quarterly Report on Form 10-Q for the
              quarter ended June 30, 2000).

10.21         Tax Sharing Agreement, dated as of April 19, 2001, by and amount Panavision
              Inc., certain of its subsidiaries and M&F Worldwide Corp (incorporated herein by
              reference from the Company's Quarterly Report on Form 10-Q for the quarter ended
              March 31, 2001). This agreement covers the period April 19, 2001 through
              December 2, 2002.

10.22         Letter Agreement, dated June 27, 2002, between MacAndrews & Forbes Inc. and
              Panavision Inc. (incorporated herein by reference from the identically numbered
              exhibit from the Company's Quarterly Report on Form 10-Q for the quarter ended
              June 30, 2002).

10.23         Employment Agreement, dated April 1, 2003, between Panavision Inc. and Robert L.
              Beitcher, President and (as of September 7, 2003), Chief Executive Officer
              (incorporated herein by reference from the identically numbered exhibit from the
              Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003).

21.           SUBSIDIARIES.


21.1          Subsidiaries of the Company.*


23.           CONSENTS


23.1          Consent of Ernst & Young LLP.*


24.           POWERS OF ATTORNEY.


24.1          Power of Attorney executed by Ronald O. Perelman.*

24.2          Power of Attorney executed by Robert L. Beitcher.*

24.3          Power of Attorney executed by Howard Gittis.*

24.4          Power of Attorney executed by Edward Grebow.*

24.5          Power of Attorney executed by Ed Gregory Hookstratten.*

24.6          Power of Attorney executed by James R. Maher.*

24.7          Power of Attorney executed by Martin D. Payson.*

24.8          Power of Attorney executed by John A. Scarcella.*

24.9          Power of Attorney executed by Robert S. Wiesenthal.*

24.10         Power of Attorney executed by Kenneth Ziffren.*

</TABLE>

                                       33
<PAGE>


<TABLE>
<CAPTION>
EXHIBIT
NUMBER        DESCRIPTION
------        -----------
<S>           <C>
31.           SECTION 302 CERTIFICATIONS.

31.1          Certification of Robert L. Beitcher, Chief Executive Officer, dated April 22, 2004.*

31.2          Certification of Bobby G. Jenkins, Chief Financial Officer, dated April 22, 2004.*

32.           SECTION 906 CERTIFICATIONS.

32.1          Certification of Robert L. Beitcher, Chief Executive Officer, dated April 22,
              2004, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
              the Sarbanes-Oxley Act of 2002. (furnished herewith)

32.2          Certification of Bobby G. Jenkins, Chief Financial Officer, dated April 22,
              2004, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
              the Sarbanes-Oxley Act of 2002. (furnished herewith)

----------

*    Filed herewith.

**   Previously filed as the identically numbered exhibit to the Company's
     Annual Report on Form 10-K for the year ended December 31, 2003 and filed
     with the Securities and Exchange Commission on March 30, 2004.



(b)           REPORTS ON FORM 8-K.


              On October 8, 2003, the Company filed a Current Report on Form 8-K dated October
              8, 2003. The Form 8-K reported at Item 5 that the Company issued a press
              release announcing Robert L. Beitcher as Chief Executive Officer of the Company.

              On January 20, 2004, the Company filed a Current Report on Form 8-K dated
              January 20, 2004. The Form 8-K reported at Item 5 that the Company issued a
              press release announcing completion of the Company's refinancing activities.
</TABLE>

                                       34
<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.


                                      PANAVISION INC.



Date: April 22, 2004



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



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




                                       35
<PAGE>


     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>



                   *                          Co-Chairman of the Board                  April 22, 2004
----------------------------------------      and Director
           Ronald O. Perelman


                   *                          Co-Chairman and Director                  April 22, 2004
----------------------------------------
            Kenneth Ziffren


                   *                          Vice Chairman and Director                April 22, 2004
----------------------------------------
            Howard Gittis


         /s/ ROBERT L. BEITCHER               President and Chief Executive             April 22, 2004
----------------------------------------      Officer and Director
           Robert L. Beitcher


          /s/ BOBBY G. JENKINS                Executive Vice President,                 April 22, 2004
----------------------------------------      Chief Financial Officer and
            Bobby G. Jenkins                  Principal Accounting Officer


                   *                          Director                                  April 22, 2004
----------------------------------------
            Edward Grebow


                   *                          Director                                  April 22, 2004
----------------------------------------
         Ed Gregory Hookstratten


                   *                          Director                                  April 22, 2004
----------------------------------------
            James R. Maher


                   *                          Director                                  April 22, 2004
----------------------------------------
            Martin D. Payson


                   *                          Director                                  April 22, 2004
----------------------------------------
            John A. Scarcella


                   *                          Director                                  April 22, 2004
----------------------------------------
          Robert S. Wiesenthal


</TABLE>



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

                                           By:    /S/ BOBBY G. JENKINS
                                               -------------------------------
                                           Name:  Bobby G. Jenkins
                                           Title: Executive Vice President,
                                                  Chief Financial Officer and
                                                  Principal Accounting Officer



                                       36

<PAGE>


                          INDEX TO FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                 ----
<S>                                                                                               <C>
Report of Independent Auditors....................................................................F-2

Consolidated Statements of Operations - Year ended December 31, 2003, Year ended
December 31, 2002, period from January 1, 2001 to April 19, 2001 (Pre-M&F
Purchase) and period from April 20, 2001 to December 31, 2001 (Post-M&F
Purchase).........................................................................................F-3

Consolidated Balance Sheets - Year Ended December 31, 2003 and 2002...............................F-4

Consolidated Statements of Stockholders' Equity and Comprehensive Loss - Years Ended
December 31, 2003, 2002 and 2001..................................................................F-6

Consolidated Statements of Cash Flows - Year ended December 31, 2003 and Year ended
December 31, 2002, period from January 1, 2001 to April 19, 2001 (Pre-M&F Purchase) and
period from April 20, 2001 to December 31, 2001 (Post-M&F Purchase)...............................F-7

Notes to Consolidated Financial Statements........................................................F-9

</TABLE>

Financial Statement Schedules:

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


                                       F-1
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS


The Board of Directors and Stockholders
Panavision Inc.

We have audited the accompanying consolidated balance sheets of Panavision Inc.
as of December 31, 2003 and 2002, and the related consolidated statements of
operations, stockholders' equity and comprehensive loss, and cash flows for the
years ended December 31, 2003 and 2002, and the period from January 1, 2001 to
April 19, 2001 (Pre-M&F Purchase) and the period from April 20, 2001 to December
31, 2001 (Post-M&F Purchase). These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Panavision Inc. at
December 31, 2003 and 2002, and the consolidated results of its operations and
its cash flows for the years ended December 31, 2003 and 2002, and the period
from January 1, 2001 to April 19, 2001 (Pre-M&F Purchase) and the period from
April 20, 2001 to December 31, 2001 (Post-M&F Purchase), in conformity with
accounting principles generally accepted in the United States.

As more fully described in Note 1, the Company changed its method of accounting
for goodwill and indefinite-lived intangible assets as of January 1, 2002.

                                              ERNST & YOUNG LLP

Los Angeles, California
March 16, 2004


                                      F-2
<PAGE>


                                 PANAVISION INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31, 2001
                                                                              -----------------------------------
                                                                                 PRE-M&F              POST-M&F
                                                                                 PURCHASE             PURCHASE
                                                                              --------------     ----------------
                                                YEAR              YEAR          PERIOD FROM          PERIOD FROM
                                                ENDED             ENDED          JANUARY 1           APRIL 20 TO
                                              DECEMBER 31,      DECEMBER 31,    TO APRIL 19,         DECEMBER 31,
                                                2003              2002             2001                  2001
                                         ---------------    -----------------  --------------     ---------------
<S>                                        <C>                 <C>              <C>                 <C>
Camera rental                              $    118,686        $    122,223     $    45,660          $  78,978
Lighting rental                                  38,757              32,844           9,629             22,118
Sales and other                                  50,514              38,115          10,520             23,905
                                           ------------      --------------     -----------          ---------

Total rental revenue and sales                  207,957             193,182          65,809            125,001

Cost of camera rental                            62,620              62,482          18,089             40,506
Cost of lighting rental                          34,667              27,524           8,234             18,279
Cost of sales and other                          28,865              24,034           5,681             13,610
                                           ------------      --------------     -----------          ---------

Gross margin                                     81,805              79,142          33,805             52,606


Selling, general and                             71,022              53,715          16,470             41,708
   administrative expenses

Research and development expenses                 5,072               4,436           1,841              3,136
                                           ------------      --------------     -----------          ---------
Operating income                                  5,711              20,991          15,494              7,762

Interest income                                     194                 425             269                248
Interest expense                                (30,261)            (35,011)        (15,288)           (28,684)
Foreign exchange gain (loss)                       (238)                995            (748)               216
Refinancing expense                              (1,505)             (4,523)              -                  -
Other income, net                                 1,929               1,899             796                422
                                           ------------      --------------     -----------          ---------

Income (loss) before income taxes               (24,170)            (15,224)            523            (20,036)
Income tax benefit (provision)                    6,414               4,145          (1,011)             6,511
                                           ------------      --------------     -----------          ---------

Net loss                                   $    (17,756)       $    (11,079)    $      (488)        $  (13,525)
                                           ============      ==============     ===========          =========
Net loss attributable to common
   stockholders                            $    (31,541)       $    (13,936)    $      (488)        $  (13,525)
                                           ============      ==============     ===========          =========

Net loss per share - basic and diluted     $      (3.60)       $      (1.59)    $     (0.06)        $    (1.54)
                                           ============      ==============     ===========          =========

Shares used in computation - basic
   and diluted                                    8,770               8,770           8,770              8,770
                                           ============      ==============     ===========          =========
</TABLE>


                             See accompanying notes.

                                       F-3
<PAGE>

                                 PANAVISION INC.

                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                               ASSETS                                                      DECEMBER 31,
                                                                                        2003            2002
                                                                                  ----------------------------------
Current assets:
<S>                                                                                 <C>              <C>
   Cash and cash equivalents                                                         $   9,079      $    12,647
   Accounts receivable (net of allowance of $2,586 in 2003 and $1,634 in                29,255           27,542
   Inventories                                                                          11,931           10,417
   Prepaid expenses                                                                      4,330            3,708
   Due from related parties                                                                628            2,548
   Other current assets                                                                  1,248            1,614
                                                                                     ---------         --------
Total current assets                                                                    56,471           58,476

  Property, plant and equipment, net                                                   220,704          226,577
  Goodwill, net                                                                        264,548          268,280
  Patents and trademarks, net                                                           67,258           67,574
  Note due from related parties                                                              -              313
  Other assets                                                                          12,941           11,947
                                                                                     ---------         --------
TOTAL ASSETS                                                                         $ 621,922      $   633,167
                                                                                     =========         ========
</TABLE>

                                       F-4
<PAGE>


                                 PANAVISION INC.

                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

<TABLE>
<CAPTION>

                LIABILITIES AND STOCKHOLDERS' EQUITY                                        DECEMBER 31,
                                                                                        2003             2002
                                                                                  -----------------------------------
<S>                                                                                  <C>                     <C>
Current liabilities:
   Accounts payable                                                              $     6,685      $       6,695
   Accrued liabilities                                                                28,955             28,451
   Due to related parties                                                              2,643                513
   Current maturities of long-term debt                                                5,885             22,815
                                                                                  ------------      ---------------
Total current liabilities                                                             44,168             58,474

Long-term debt                                                                       312,388            408,625
Notes payable to affiliate                                                            21,401              7,039
Deferred tax liabilities, net                                                         30,060             25,366
Other liabilities                                                                      7,909              8,592
Due to related parties                                                                 1,326              1,209


Commitments and contingencies

Redeemable  Series B Cumulative  Pay-in-Kind  Preferred  Stock,  $0.01
   par value; 100,000 shares authorized;  49,199 shares issued and
   outstanding at December 31, 2002,  (liquidation preference of $1,000
   per share plus accrued and unpaid dividends)                                            -             51,733

Stockholders' equity:

   Series A Non-Cumulative Perpetual Participating Preferred Stock, $0.01 par
     value; 2,000,000 shares authorized; 1,381,690 shares issued and outstanding
     at December 31, 2003 and 2002 (liquidation preference of $1 per share,
     or $1,382, plus declared and unpaid dividends)                                       14                 14
   Series C Cumulative Pay-in Kind Preferred Stock, $0.01 par value; 200,000
     shares authorized; 159,644 shares issued and outstanding at December 31,
     2003 (liquidation preference of $1,000 per share, or $159,644, plus
     accrued and unpaid dividends)                                                         2                  -
   Common Stock, $0.01 par value; 50,000,000 shares authorized; 8,769,919 shares
     issued and outstanding at December 31, 2003 and 2002                                 88                 88

   Additional paid-in capital                                                        329,127            189,476
   Revaluation capital                                                               333,199            333,199
   Accumulated deficit                                                              (461,795)          (444,039)
   Accumulated other comprehensive income (loss)                                       4,035             (6,609)
                                                                                  ------------      ---------------
     Total stockholders' equity                                                      204,670             72,129
                                                                                  ------------      ---------------
Total liabilities and stockholders' equity                                       $   621,922        $   633,167
                                                                                  ============      ===============
</TABLE>

                             See accompanying notes

                                      F-5

<PAGE>


                                 PANAVISION INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             AND COMPREHENSIVE LOSS
                       (In thousands, except share amount)


<TABLE>
<CAPTION>

                                                   Preferred Stock                    Common Stock
                                    --------------------------------------------  ---------------------

                                        Shares                 Shares                Shares
                                        Issued    Series       Issued     Series     Issued                Additional
                                         and       "A"          and        "C"        and                    Paid-in     Revaluation
                                     Outstanding  Amount    Outstanding   Amount  Outstanding    Amount      Capital       Capital
                                    --------------------------------------------------------- --------------------------------------
<S>                                     <C>      <C>            <C>      <C>     <C>            <C>         <C>            <C>
   Balance at January 1, 2001              --   $      --           0    $    --       8,770    $      88   $ 177,887           --
   Comprehensive loss:
     Net loss (Pre-M&F Purchase)           --          --          --         --           0           --          --           --
     Net loss (Post-M&F Purchase)          --          --          --         --           0           --          --           --
      Foreign currency translation
      adjustment                           --          --          --                      0           --          --           --

   Total comprehensive loss                --          --          --         --           0           --          --           --

   Issuance of Series A
     Non-Cumulative Perpetual
     Preferred Stock                    1,382          14          --         --           0           --       9,264           --
   Revaluation capital                     --          --          --         --           0           --          --      $ 333,135
                                    ------------------------------------------------------------------------------------------------
    Balance at December 31, 2001        1,382          14           0         --       8,770           88      187,151       333,135
   Comprehensive loss:
     Net loss                              --          --          --         --           0           --          --           --
     Foreign currency translation
     adjustment                            --          --          --         --           0           --          --           --

   Total comprehensive loss                --          --          --         --           0           --          --           --

   Accreted dividend on Redeemable
     Series B Preferred Stock              --          --          --         --           0           --      (2,857)          --
   Non-cash distribution to M&F
      Worldwide in connection
      with the purchase of Las
      Palmas                               --          --          --         --           0           --      (1,414)          --
   Revaluation capital adjustment          --          --          --         --           0           --          --           64
   Contribution of net operating
      loss carryforwards by
      M&F Worldwide                        --          --          --         --           0           --       6,521           --
   Other                                   --          --          --         --           0           --          75           --
                                    ------------------------------------------------------------------------------------------------
Balance at December 31, 2002            1,382          14           0         --       8,770           88     189,476      333,199
   Comprehensive loss:
     Net loss                              --          --          --         --           0           --          --           --
     Foreign currency translation
     adjustment                            --          --          --         --           0           --          --           --

   Total comprehensive loss                --          --          --         --           0           --          --           --
   Accreted dividend on Redeemable
     Series B Preferred Stock              --          --          --         --           0           --      (1,319)          --
   Issuance of Series C
      Non-Cumulative Perpetual
      Preferred Stock                      --          --         160          2           0           --     142,470           --
   Adjustment to 2002
     contribution of net
     operating loss carryforwards
     by M&F Worldwide                      --          --          --         --           0           --      (1,650)          --
   Other                                   --          --          --         --           0           --         150           --
                                    ------------------------------------------------------------------------------------------------
   Balance at December 31, 2003         1,382   $      14         160    $     2       8,770    $      88   $ 329,127    $ 333,199
                                    ================================================================================================


<CAPTION>



                                                     Accumulated    Stockholders'
                                                        Other           Equity/
                                                    Comprehensive   Comprehensive
                                     Accumulated        Income          Income
                                       Deficit          (Loss)          (Loss)
                                    ---------------------------------------------
<S>                                  <C>              <C>          <C>
   Balance at January 1, 2001        $  (418,947)     $ (9,330)     $(250,302)
   Comprehensive loss:
     Net loss (Pre-M&F Purchase)            (488)           --           (488)
     Net loss (Post-M&F Purchase)        (13,525)           --        (13,525)
      Foreign currency
      translation adjustment                  --        (2,773)        (2,773)
                                                                    ---------
   Total comprehensive loss                   --            --        (16,786)
                                                                    =========
   Issuance of Series A
     Non-Cumulative Perpetual
     Preferred Stock                          --            --          9,278
   Revaluation capital                        --            --        333,135
                                    ---------------------------------------------
Balance at December 31, 2001            (432,960)      (12,103)        75,325
   Comprehensive loss:
     Net loss                            (11,079)           --        (11,079)
     Foreign currency translation
     adjustment                               --         5,494          5,494
                                                                    ---------
   Total comprehensive loss                   --            --         (5,585)
                                                                    =========
   Accreted dividend on Redeemable
     Series B Preferred Stock                 --            --         (2,857)
   Non-cash distribution to M&F
      Worldwide in connection
      with the purchase of Las
      Palmas                                  --            --         (1,414)
   Revaluation capital adjustment             --            --             64
   Contribution of net operating
      loss carryforwards by
      M&F Worldwide                           --            --          6,521
   Other                                      --            --             75
                                    ---------------------------------------------
Balance at December 31, 2002            (444,039)       (6,609)        72,129
   Comprehensive loss:
     Net loss                            (17,756)           --        (17,756)
     Foreign currency translation
     adjustment                               --        10,644         10,644
                                                                    ---------
   Total comprehensive loss                   --            --         (7,112)
   Accreted dividend on Redeemable                                  =========
     Series B Preferred Stock                 --            --         (1,319)
   Issuance of Series C
      Non-Cumulative Perpetual
      Preferred Stock                         --            --        142,472
   Adjustment to 2002
     contribution of net
     operating loss carryforwards
     by M&F Worldwide                         --            --         (1,650)
   Other                                      --            --            150
                                    ---------------------------------------------
Balance at December 31, 2003          $ (461,795)     $  4,035     $  204,670
                                    =============================================
</TABLE>

                                      F-6

<PAGE>


                                 PANAVISION INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                                          YEAR ENDED DECEMBER 31, 2001
                                                                                         --------------------------------
                                                                                            PRE-M&F          POST-M&F
                                                                                            PURCHASE         PURCHASE
                                                                                         --------------   ---------------
                                                          YEAR               YEAR          PERIOD FROM     PERIOD FROM
                                                          ENDED              ENDED          JANUARY 1       APRIL 20 TO
                                                       DECEMBER 31,       DECEMBER 31,     TO APRIL 19,    DECEMBER 31,
                                                           2003               2002              2001            2001
                                                      --------------     -------------   --------------   ---------------
<S>                                                      <C>               <C>               <C>               <C>
OPERATING ACTIVITIES
Net loss                                                 $(17,756)         $(11,079)         $   (488)         $(13,525)
Adjustments to derive net cash provided by
  operating activities:
     Depreciation and amortization                         43,399            41,970            11,001            35,604
     Gain on sale of property and equipment                (1,507)           (1,696)             (798)             (550)
     Amortization of deferred financing costs               4,831             1,559               517               808
     Amortization of discount on subordinated notes            --             1,480             5,707            13,632
     Deferred income tax benefit                          (10,755)           (7,369)               --           (10,070)
     Changes in operating assets and liabilities:
       Accounts receivable                                   (636)           (4,785)             (277)            8,631
       Inventories                                           (906)             (281)               84               (60)
       Prepaid expenses and other current assets           (1,734)           (1,500)             (411)              327
       Due from affiliate                                    (523)           (1,570)               70               171
       Accounts payable                                      (447)           (1,235)           (1,335)            1,996
       Accrued liabilities                                  1,762            11,939            (2,831)           (5,587)
       Due to affiliate                                     1,550            (1,563)               --             1,842
       Other, net                                             927            (2,519)              (14)           (1,167)
                                                      --------------     -------------   --------------   ---------------
Net cash provided by operating activities                  18,205            23,351            11,225            32,052

INVESTING ACTIVITIES
Capital expenditures                                      (25,162)          (25,202)          (10,462)          (16,145)
Acquisition of PANY Rental, net cash acquired                   9                --                --                --
Proceeds from dispositions of fixed assets                  2,377             2,910               780               820
                                                      --------------     -------------   --------------   ---------------
Net cash used in investing activities                     (22,776)          (22,292)           (9,682)          (15,325)

FINANCING ACTIVITIES
Borrowings under credit agreement                              --            32,226             6,700             7,200
Borrowings under notes payable to affiliates               14,500                --                --                --
Repayment under notes payable to affiliates                (1,500)               --                --                --
Notes payable to Deluxe Laboratories, Inc                     580                --                --                --
Repayments of long-term debt                              (23,313)          (35,816)           (7,331)          (27,592)
Deferred financing costs                                   (4,087)           (2,228)               --                --
Proceeds from issuance of Series B Preferred Stock          4,372            10,000                --                --
Investment by Deluxe Laboratories in EFILM, LLC                --             5,200                --                --
Net proceeds from issuance of Series C Preferred
  Stock                                                     9,725                --                --                --
                                                      --------------     -------------   --------------   ---------------
Net cash (used in) provided by financing
  activities                                                  277             9,382              (631)          (20,392)
Effect of exchange rate changes on cash                       726               158              (249)               69
                                                      --------------     -------------   --------------   ---------------
Net increase (decrease) in cash and cash
  equivalents                                              (3,568)           10,599               663            (3,596)
Cash and cash equivalents at beginning of period           12,647             2,048             4,981             5,644
                                                      --------------     -------------   --------------   ---------------
Cash and cash equivalents at end of period               $  9,079          $ 12,647          $  5,644          $  2,048
                                                      ==============     =============   ==============   ===============
</TABLE>

                             See accompanying notes

                                      F-7

<PAGE>


                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                             YEAR ENDED DECEMBER 31, 2001
                                                                             PRE-M&F          POST-M&F
                                                                          --------------   ---------------
                                                                             PURCHASE          PURCHASE
                                           YEAR              YEAR          PERIOD FROM       PERIOD FROM
                                          ENDED              ENDED          JANUARY 1        APRIL 20 TO
                                       DECEMBER 31,       DECEMBER 31,      TO APRIL 19,    DECEMBER 31,
                                           2003              2002              2001             2001
                                      ---------------- -----------------  ---------------- ---------------
<S>                                   <C>               <C>               <C>              <C>
SUPPLEMENTAL CASH FLOW
   INFORMATION
Interest paid during the period       $       26,921    $    23,299       $       9,184    $      15,716
Income taxes paid during the
   period                                      2,360          2,597               1,217            2,911
</TABLE>


       SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES

       In December 2001, the Company issued 1,381,690 shares of Series A
       Non-Cumulative Perpetual Participating Preferred Stock in exchange for
       $24.5 million principal amount of 9 5/8% Senior Subordinated Discount
       Notes due 2006 (see Note 2 to the Notes to the Consolidated Financial
       Statements). As described in Note 7 of the Notes to Consolidated
       Financial Statements, pursuant to the January 2004 Refinancing, the
       Company issued to PX Holding 1,381,690 shares of new Series E Preferred
       Stock in exchange for 1,381,690 Shares of Series A Preferred Stock, which
       constituted all of the outstanding Series A Preferred Stock.

       In June 2002, the Company issued 49,199 shares of Series B Cumulative Pay
       in Kind Preferred Stock in exchange for $10,000 in cash and $37,726
       principal amount at maturity of Existing Notes plus unpaid accrued
       interest of $1,473. For the year ended December 31, 2002, an accreted
       dividend of $2,857 was recorded on the Series B Preferred Stock. For the
       year ended December 31, 2003, the Company recorded an accreted dividend
       of $1,319 on the Series B Preferred Stock.

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

       Pursuant to the January 2004 Refinancing described in Note 7 to
       Consolidated Financial Statements, the Company issued PX Holding 215,274
       shares of new Series D cumulative Pay-In-Kind Preferred Stock in exchange
       for, among other consideration, 159,644 shares of Series C Preferred
       Stock held by PX Holding Corporation, which constituted all of the
       outstanding Series C Preferred Stock.

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

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


       In 2002, M&F Worldwide contributed net operating loss carryforwards
       amounting to $6.5 million (See Note 6 to the Notes to the Consolidated
       Financial Statements). Such amounts were reduced by $1.6 million in 2003.


       SUPPLEMENTAL NON-CASH INFORMATION

       The following sets forth the changes in assets and liabilities resulting
       INCREASE from the (DECREASE) purchase price allocation in connection with
       the M&F Purchase in 2001 (see Note 2):

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

                             See accompanying notes



                                      F-8
<PAGE>


                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Panavision Inc. ("Panavision" or the "Company") is a leading designer,
manufacturer and supplier of high-precision camera systems, comprising cameras,
lenses and accessories, for the motion picture and television industries. The
Company rents its products through its owned-and-operated facilities in North
America, Europe, and the Asia Pacific region, as well as through a worldwide
agent network. In addition to manufacturing and renting camera systems, the
Company also rents lighting, lighting grip, power distribution, generation and
related transportation equipment and sells lighting filters and other color
correction and diffusion filters. Panavision also owns and operates EFILM, a
digital laboratory (see Note 14).

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

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

M&F Worldwide accounted for the M&F Purchase as a purchase, and purchase
accounting adjustments were pushed down to the Panavision financial statements
for the period subsequent to April 19, 2001 (designated "Post-M&F Purchase").
The Panavision financial statements for the periods ended prior to April 19,
2001 were prepared using Panavision's historical basis of accounting and are
designated as "Pre-M&F Purchase." Accordingly, the results of the Company for
the Pre-M&F Purchase period and the Post-M&F Purchase period are not comparable.

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

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



                                      F-9
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

On December 3, 2002, the remaining parties to the litigation consummated a
Stipulation of Settlement (the "M&F Settlement") whereby Mafco Holdings acquired
(1) through PX Holding, the shares of the Company's Common Stock that M&F
Worldwide had purchased in April 2001, (2) the shares of the Company's Series A
Non-Cumulative Perpetual Participating Preferred Stock, par value $0.01 per
share (the "Series A Preferred Stock") that M&F Worldwide acquired in December
of 2001, (3) the 9 5/8% Senior Subordinated Discount Notes due 2006 (the
"Existing Notes") that a subsidiary of M&F Worldwide acquired in November of
2001, and (4) the note in the amount of $6.7 million (the "Las Palmas Note")
that the Company issued to M&F Worldwide on its acquisition of the shares of Las
Palmas Productions, Inc. ("Las Palmas") (see Note 14). In addition, all
agreements to which M&F Worldwide entered into in connection with the M&F
Purchase and the December 2001 issuance of the Series A Preferred Stock were
terminated.


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

On May 30, 2003, the Company purchased an additional 1/3 interest in PANY Rental
Inc. ("PANY Rental") for a combined purchase price of approximately $0.6 million
including transaction costs. This purchase increased the Company's ownership
interest from a 1/3 interest to a 2/3 interest. As a result of this increased
ownership interest, the Company consolidated the financial position and results
of operation of PANY Rental in the accompanying consolidated financial
statements, the effects of which were immaterial.

PANY Rental holds an exclusive license to rent the Company's camera systems in
the New York market and a license to use the Panavision trademark in connection
with the rental of camera systems and related equipment to customers.

In addition, on May 30, 2003, PX Holding Corporation, the holder of
approximately 83.5% of the Company's voting stock, purchased the remaining 1/3
interest in PANY Rental for a purchase price of $0.7 million and purchased a
promissory note payable by PANY Rental with a principal amount plus accrued
interest of approximately $0.7 million.


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

Certain amounts in previously issued financial statements have been reclassified
to conform to the 2003 presentation.



                                      F-10
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


TRANSLATION OF FOREIGN CURRENCIES

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

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

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

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

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

Depreciation is provided principally over the following useful lives:


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


Depreciation expense amounted to $40.9 million, $39.0 million, $10.2 million and
$25.0 million for 2003, 2002, the Pre-M&F Purchase period and the Post-M&F
Purchase Period, respectively.




                                      F-11
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


GOODWILL AND INTANGIBLE ASSETS
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141"),
and Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"), effective for fiscal years beginning after
December 15, 2001. Under the rules, goodwill and intangible assets deemed to
have indefinite lives are no longer amortized, but are subject to annual
impairment tests in accordance with the Statements. Other intangible assets
continue to be amortized over their estimated useful lives.

The Company adopted SFAS 141 and SFAS 142 as of January 1, 2002. Amortization of
goodwill was discontinued as of January 1, 2002. In addition, the Company's
tradename was determined to have an indefinite useful life and, therefore,
amortization of this asset was discontinued as of January 1, 2002.


The Company performed an impairment test relating to its goodwill and tradename
as of January 1, 2002, December 31, 2002 and December 31, 2003, and found that
the fair values of its goodwill and its tradename are in excess of carrying
value.


A reconciliation of reported net loss to net loss adjusted to reflect the impact
of the discontinuance of amortization of goodwill and tradename for the Pre-and
Post-M&F Purchase Periods is as follows (in thousands, except per share data):


<TABLE>
<CAPTION>
                                                         PRE-M&F PURCHASE   POST M&F PURCHASE
                                                       -----------------------------------------
                                                           PERIOD FROM         PERIOD FROM
                                                           JANUARY 1 TO        APRIL 20 TO
                                                            APRIL 19,          DECEMBER 31,
                                                               2001                2001
                                                       -----------------------------------------
<S>                                                       <C>                  <C>
     Reported net loss                                    $      (488)         $    (13,525)
     Add back: Goodwill and tradename amortization                103                 9,074
                                                          -----------          ------------
     Adjusted net loss                                    $      (385)         $     (4,451)
                                                          ============         =============
     Adjusted loss per share                              $     (0.04)         $      (0.51)
                                                          ============         =============
</TABLE>


Goodwill recognized in business combinations accounted for as purchases was
amortized through December 31, 2001, on a straight-line basis over periods
ranging from 4 to 30 years. As of December 31, 2003 and 2002, goodwill was
$264.6 and $268.3 million, net of accumulated amortization of $9.1 million for
both years, respectively. Goodwill amortization expense amounted to $0.3 million
and $6.2 million for the Pre-M&F Purchase period and the Post-M&F Purchase
period, respectively. Goodwill is principally related to the M&F Purchase (see
Note 2).


Patents are being amortized on a straight-line basis over their estimated useful
lives ranging from 5 to 12 years. Amortization expense amounted to $0.4 million,
$0.4 million, $0.2 million and $3.6 million for 2003, 2002, 2001 Pre-M&F
Purchase period, and the Post-M&F Purchase period, respectively. Accumulated
amortization was $4.4 million and $4.0 million at December 31, 2003 and 2002,
respectively.




                                      F-12
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


ACCOUNTING FOR LONG-LIVED ASSETS

The Company assesses on an ongoing basis the recoverability of long-lived
tangible and intangible assets based on estimates of future undiscounted cash
flows compared to net book value. If the future undiscounted cash flow estimates
were less than net book value, net book value would then be reduced to estimated
fair value, which generally approximates discounted cash flows. The Company also
evaluates the amortization periods of assets to determine whether events or
circumstances warrant revised estimates of useful lives. In August 2001, the
FASB issued Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 supercedes
Statement of Financial Accounting Standards No. 121, but retains the fundamental
provisions relating to recognition and measurement of impairment of long-lived
assets. The adoption of SFAS 144 did not have a material effect on the Company's
consolidated financial position, results of operations, or cash flows.

INCOME TAXES

Income taxes are accounted for using the liability method in accordance with
Statement of Financial Accounting Standard No. 109, "Accounting for Income
Taxes" ("SFAS 109") (see Note 6). Under this method, deferred tax assets and
liabilities are recognized for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of assets and
liabilities. As of December 31, 2003, the Company has provided deferred income
taxes, including withholding taxes, on undistributed earnings from Canada
totaling approximately $5.6 million. Additionally, the Company has provided
deferred withholding taxes on future distributions from New Zealand. All other
foreign earnings are permanently reinvested.

FINANCIAL INSTRUMENTS

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

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

REVENUE RECOGNITION

Rental revenue is recognized over the related equipment rental period. Sales
revenue is recognized upon shipment. Returns and allowances, which have not been
significant, are provided for in the period of sale. Revenue from digital
laboratory services is recognized at the time such services have been rendered.

ADVERTISING COSTS

For the years ended December 31, 2003 and 2002, the Pre-M&F Purchase Period, and
Post-M&F Purchase Period, advertising costs amounted to $1.9 million, $1.6
million, $0.4 million and $1.1 million, respectively, and




                                      F-13
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


are included in selling, general and administrative expenses in the accompanying
consolidated statements of operations. Advertising costs are expensed as
incurred.

FREIGHT COSTS


For the years ended December 31, 2003 and 2002, the Pre-M&F Purchase Period, and
Post-M&F Purchase Period, freight costs amounted to $1.5 million, $1.8 million,
$0.5 million, and $1.2 million, respectively, and are included in selling,
general and administrative expenses in the accompanying consolidated statements
of operations.


COMPREHENSIVE LOSS

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

<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31, 2001
                                                                         -----------------------------------------------
                                                                             PRE-M&F PURCHASE      POST-M&F PURCHASE
                                                                         ----------------------   ----------------------
                                                                              PERIOD FROM            PERIOD FROM
                                          YEAR ENDED        YEAR ENDED        JANUARY 1 TO           APRIL 20 TO
                                         DECEMBER 31,      DECEMBER 31,        APRIL 19,             DECEMBER 31,
                                             2003              2002               2001                   2001
                                        ----------------  -------------- ----------------------   ----------------------
<S>                                        <C>               <C>            <C>                       <C>
Net loss                                   $  (17,756)       $(11,079)      $        (488)            $ (13,525)

Foreign currency translation adjustment        10,644           5,494              (3,049)                  276
                                        ----------------  --------------    ---------------           ----------
Total comprehensive loss                   $   (7,112)       $ (5,585)      $      (3,537)            $ (13,249)
                                        ===============   ==============    ===============           ==========
</TABLE>


ACCOUNTING FOR DERIVATIVE INSTRUMENTS
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"). SFAS 133, as amended by SFAS 137, is effective for fiscal years beginning
after June 15, 2000. SFAS 133 requires the Company to recognize all derivatives
as either assets or liabilities and measure those instruments at fair value. It
further provides criteria for derivative instruments to be designated as fair
value, cash flow and foreign currency hedges and establishes respective
accounting standards for reporting changes in the fair value of the derivative
instruments.

The Company adopted SFAS 133 on January 1, 2001, and is required to adjust
hedging instruments to fair value in its balance sheet and recognize the
offsetting gains or losses as adjustments to net loss or other comprehensive
loss, as appropriate. The adoption of SFAS 133 did not have a material impact on
the Company's financial position or results of operations.



                                      F-14
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


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

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

<TABLE>
<CAPTION>
                                                                                     YEAR ENDED DECEMBER 31, 2001
                                                                                -------------------------------------
                                                                                  PRE-M&F PURCHASE POST-M&F PURCHASE
                                                                                -------------------------------------
                                                                                  PERIOD FROM         PERIOD FROM
                                             YEAR ENDED        YEAR ENDED         JANUARY 1 TO        APRIL 20 TO
                                             DECEMBER 31,     DECEMBER 31,         APRIL 19,          DECEMBER 31,
                                                 2003             2002                2001                2001
                                          ------------------------------------  ----------------    -----------------
<S>                                          <C>              <C>                   <C>               <C>
Numerator:
     Net loss                                $     (17,756)   $   (11,079)          $    (488)        $   (13,525)
     Accreted dividends on Redeemable
       Series B Preferred Stock                     (1,319)        (2,857)
     Series C Preferred Stock dividends
       in arrears                                  (12,466)             -                   -                   -
                                             --------------   ------------          ----------       -------------
     Numerator for basic and diluted loss
       per share - net loss attributable to
       Common stockholders                   $     (31,541)   $   (13,936)          $    (488)        $   (13,525)
                                             ==============   ============          ==========       =============

Denominator:
     Denominator for basic loss per share-
       weighted average shares                       8,770          8,770               8,770               8,770
     Effect of dilutive securities -
       stock options and warrants                        -              -                   -                   -
                                             --------------   ------------          ----------       -------------
     Denominator for diluted loss per
       share - adjusted weighted average
       shares                                        8,770          8,770               8,770               8,770
                                             ==============   ============          ==========       =============
Basic loss per share                         $       (3.60)   $     (1.59)          $   (0.06)        $     (1.54)
                                             ==============   ============          ==========       =============
Diluted loss per share                       $       (3.60)   $     (1.59)          $   (0.06)        $     (1.54)
                                             ==============   ============          ==========       =============
</TABLE>



                                      F-15
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Outstanding stock options and warrants to purchase 642,000 and 714,300 shares of
common stock, respectively, at December 31, 2003 were excluded from the
calculation of diluted loss per share as their effect would have been
antidilutive. Outstanding stock options and warrants to purchase 992,000 and
714,300 shares of common stock, respectively, at December 31, 2002, and for each
of the Pre-M&F Purchase Period and the Post-M&F Purchase Period, were excluded
from the calculation of diluted loss per share as their effect would have been
antidilutive.

STOCK-BASED BENEFITS

The Company follows the provisions of FASB Statement No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"). The provisions of SFAS 123 allow
companies to either expense the estimated fair value of stock options ,
determined using the Black-Scholes option pricing model, or to continue to
follow the intrinsic value method set forth in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), but
disclose the pro forma effects on net income (loss) had the fair value of the
options been expensed. Through the year ended December 31, 2003, the Company has
elected to continue to apply APB 25 in accounting for its stock option grants.

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

In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure" ("SFAS 148"), which amends SFAS 123.
SFAS 148 provides alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee compensation.
In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require
more prominent and more frequent disclosures in financial statements about the
effects of stock-based compensation. The Company has complied with the
disclosure requirements of SFAS 148 and has elected not to adopt the fair value
based method of accounting for stock-based employee compensation.




                                      F-16
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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


<TABLE>
<CAPTION>
                                                                     PRE-M&F PURCHASE POST-M&F PURCHASE
                                                                     -----------------------------------
                                                                        PERIOD FROM      PERIOD FROM
                                      YEAR ENDED      YEAR ENDED       JANUARY 1 TO      APRIL 20 TO
                                     DECEMBER 31,    DECEMBER 31,        APRIL 19,      DECEMBER 31,
                                         2003            2002              2001              2001
                                   --------------------------------- -----------------------------------
<S>                                   <C>             <C>               <C>               <C>
Net loss as reported                  $    (17,756)   $    (11,079)     $      (488)      $    (13,525)

Add: stock-based employee
   compensation expense included
   in reported net loss                          -               -                -                   -

Deduct: total stock-based employee
   compensation expense determined
   under fair value method of all
   awards                                        -             (15)             (59)               (62)
                                      -------------   -------------     -------------     -------------
Pro forma net loss                    $    (17,756)   $    (11,094)     $      (547)      $    (13,587)
                                      =============   =============     =============     =============
Pro forma net loss  attributable to
   common stockholders                $    (31,541)   $    (13,951)     $      (547)      $    (13,587)
                                      =============   =============     =============     =============
Shares used in  computation - basic
   and diluted                               8,770           8,770            8,770              8,770
                                      =============   =============     =============     =============
Loss per share:
   Basic and diluted net loss per
     share - as reported              $      (3.60)   $      (1.59)     $     (0.06)      $      (1.54)
   Basic and diluted net loss per
     share - pro forma                $      (3.60)   $      (1.59)     $     (0.06)      $      (1.55)

</TABLE>

INVESTMENTS

Investments of approximately $5.0 million and $5.1 million at December 31, 2003
and 2002, respectively, accounted for under the equity method, are included in
other assets in the accompanying consolidated balance sheets. The Company's
share of earnings (losses) of its equity investees of approximately $137,000,
($83,000) and $256,000 in 2003, 2002 and 2001, respectively, is included in
other, net in the accompanying consolidated statements of operations.






                                      F-17
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

NEW ACCOUNTING PRONOUNCEMENTS

In June 2002, the FASB issued Statement of Financial Accounting Standard No 146,
"Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146").
SFAS 146 addresses financial accounting and reporting for costs associated with
exit or disposal activities and nullifies Emerging Issues Task Force (EITF)
Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity" (including Certain Costs Incurred in a
Restructuring). SFAS 146 requires that a liability for a cost associated with an
exit or disposal activity be recognized when the liability is incurred. SFAS 146
was effective for exit or disposal activity that are initiated after December
31, 2002 and did not have a material impact on the Company's financial
statements.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirement for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" ("FIN 45"). FIN 45 elaborates on the disclosures to be
made by a guarantor in its interim and annual financial statements about its
obligations under certain guarantees it has issued. It also clarifies that a
guarantor is required to recognize, at the inception of a guarantee, a liability
for the fair value of the obligation undertaken in issuing the guarantee. The
disclosure requirements are effective for financial statement of interim or
annual periods ending after December 15, 2002. The recognition and measurement
provisions of FIN 45 are applicable on a prospective basis to guarantees issued
or modified after December 31, 2002. The application of FIN 45 is not expected
to materially impact the financial condition, results of operations, and cash
flows of the Company.


In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity" ("SFAS No.
150"). SFAS 150 established standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. SFAS 150 requires that certain financial instruments be classified as
liabilities that were previously considered equity. The adoption of this
standard on July 1, 2003, as required, had no impact on the Company's
consolidated financial statements.


In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 requires an investor with
a majority of the variable interests (primary beneficiary) in a variable
interest entity ("VIE") to consolidate the entity and also requires majority and
significant variable interest investors to provide certain disclosures. A VIE is
an entity in which the voting equity investors do not have a controlling
financial interest, or the equity investment at risk is insufficient to finance
the entity's activities without receiving additional subordinated financial
support from other parties. For arrangements entered into with VIEs created
prior to January 31, 2003, the provisions of FIN 46 were originally effective as
of the beginning of the three months ended September 30, 2003, however, the FASB
subsequently delayed the effective date of this provision until the first
interim or annual period ending after December 15, 2003 for entities that have
interests in structures that are commonly referred to as special-purpose
entities and for periods ending after March 15, 2004 for all other types of
variable interest entities. The provisions of FIN 46 were effective immediately
for all arrangements entered into with new VIEs created after January 31, 2003.



                                      F-18
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company is currently performing a review of its relationships with its
network of agents, its investment in DHD Ventures, LLC ("DHD") and Panavision
Imaging, LLC, a subsidiary of PX Holding Corporation to determine whether the
agents, DHD, or Panavision Imaging, LLC qualify as VIEs and then whether the
Company is the primary beneficiary of any of the entities. The Company is also
reviewing its accounting for EFILM LLC in light of FIN 46. The review has not
identified any VIE that would require consolidation as of the year ended
December 31, 2003. The Company expects to complete the review prior to the
issuance of its unaudited financial statements as of March 31, 2004. Provided
that the Company is not the primary beneficiary, the Company is not exposed to
losses related to any of the agent entities. Should the Company be determined to
be the primary beneficiary of DHD, the maximum exposure to losses is generally
limited to the carrying amount of the investment in the entity.

USE OF ESTIMATES AND ASSUMPTIONS

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

2.  TRANSACTIONS WITH M&F WORLDWIDE CORP.

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

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



                                      F-19
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


2.  TRANSACTIONS WITH M&F WORLDWIDE CORP. (CONTINUED)

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

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

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

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

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



                                      F-20
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


2.  TRANSACTIONS WITH M&F WORLDWIDE CORP. (CONTINUED)

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

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

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

3.  PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                               -------------------------------
                                                                    2003            2002
                                                               --------------- ---------------
<S>                                                              <C>             <C>
         Buildings and improvements                              $    17,193     $    16,686
         Rental assets                                               305,812         257,743
         Machinery and equipment                                      21,128          17,716
         Furniture and fixtures                                        5,677           3,656
         Other                                                         2,872           2,027
                                                               --------------- ---------------
                                                                     352,682         297,828
         Less: accumulated depreciation and amortization             131,978          71,251
                                                               --------------- ---------------
                                                                  $  220,704      $  226,577
                                                               =============== ===============
</TABLE>

As a result of the push down of the purchase price relating to the M&F Purchase,
accumulated depreciation and amortization relating to the 83.5% of assets that
were sold in the M&F transaction was reset to zero in 2001. Accordingly, in
2001, approximately $211.0 million of accumulated depreciation and amortization
was netted against gross property, plant and equipment balances. In addition,
the fair market value of rental assets was

                                      F-21
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003

3.  PROPERTY, PLANT AND EQUIPMENT (CONTINUED)


determined to be approximately $40.8 million greater than carrying value;
accordingly, the gross rental assets balance was increased by $40.8 million.

       During 2003 and 2002, the Company recorded approximately $77,000 and
$90,000 of capitalized interest costs, respectively.

4.  INVENTORIES

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                  DECEMBER 31,
                                                                         -------------------------------
                                                                              2003            2002
                                                                         --------------- ---------------
<S>                                                                        <C>             <C>
         Finished goods                                                    $     2,601     $     2,209
         Work-in-process                                                           302             283
         Component parts                                                         2,048           1,391
         Spare parts and supplies                                                1,539           1,792
         Goods purchased for resale                                              5,441           4,742
                                                                         --------------- ---------------
                                                                           $    11,931     $    10,417
                                                                         =============== ===============
</TABLE>

5.  ACCRUED LIABILITIES

Accrued liabilities consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,
                                                                         ---------------------------------
                                                                               2003             2002
                                                                         ----------------- ---------------
<S>                                                                        <C>               <C>
         Interest payable                                                  $     5,029       $     8,637
         Professional fees                                                       3,092             1,985
         Taxes other than income taxes                                           1,738             1,661
         Payroll and related costs                                               7,137             5,359
         Rent                                                                    3,163             3,350
         Insurance                                                                 400             1,256
         Severance, current portion                                              1,717                 -
         Other liabilities                                                       6,679             6,203
                                                                         ----------------- ---------------
                                                                           $    28,955       $    28,451
                                                                         ================= ===============
</TABLE>


6.  INCOME TAXES

Under applicable Internal Revenue Service regulations, the Company may not join
in filing a consolidated federal income tax return with either Mafco Holdings or
the Company's subsidiaries until May 2006 without consent from the Internal
Revenue Service. Accordingly, for the period from the effective date of the M&F


                                      F-22
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003

6.  INCOME TAXES (CONTINUED)


Settlement of December 3, 2002 and through December 31, 2002, the Company will
file separate federal income tax returns for the Company and each of its
incorporated subsidiaries.

For the period from April 19, 2001 through December 31, 2001 and for the period
from January 1, 2002 through December 3, 2002, the closing date of the M&F
Settlement, the Company, for federal income tax purposes, has been included in
the affiliated group of which M&F Worldwide is the common parent, and the
Company's federal taxable income is included in such group's consolidated tax
return filed by M&F Worldwide. The Company was also included in certain state
and local tax returns of M&F Worldwide or its subsidiaries. As of April 19,
2001, the Company and M&F Worldwide entered into a tax sharing agreement (the
"M&F Worldwide Tax Sharing Agreement"), pursuant to which M&F Worldwide agreed
to indemnify the Company against federal, state or local income tax liabilities
of the consolidated or combined group of which M&F Worldwide (or a subsidiary of
M&F Worldwide other than the Company or its subsidiaries) is the common parent
for taxable periods beginning after April 19, 2001 during which the Company or a
subsidiary of the Company was a member of such group. Pursuant to the M&F
Worldwide Tax Sharing Agreement, for all taxable periods beginning on or after
April 19, 2001 and ending December 3, 2002, the Company was obligated to pay to
M&F Worldwide amounts equal to the taxes that the Company would otherwise have
to pay if it were to file separate federal, state or local income tax returns
(including any amounts determined to be due as a result of a redetermination
arising from an audit or otherwise of the consolidated or combined tax liability
relating to any such period which is attributable to the Company), except that
the Company was not entitled to carry back any losses to taxable periods ending
prior to April 19, 2001. No payments were required under the M&F Worldwide Tax
Sharing Agreement as the Company had sufficient net operating loss carryforwards
to offset its taxable income. The M&F Worldwide Tax Sharing Agreement will
continue in effect after December 3, 2002 only as to matters such as audit
adjustments and indemnities.

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

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

Although the Company had taxable income on a consolidated basis for the tax
years ending December 3, 2002 and December 31, 2001, current operating losses
and net operating loss carryforwards of M&F Worldwide were used to offset this
income before the Company's net operating loss carryforwards were utilized due
to the


                                      F-23
<PAGE>


                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


6.  INCOME TAXES (CONTINUED)

ordering rules set forth in the Internal Revenue Code. Consequently, upon
leaving the M&F Worldwide consolidated group on December 3, 2002, the Company
took approximately $60.1 million of net operating loss carryforwards, of which
$15.1 million relates to net operating loss carryforwards that otherwise would
have been used prior to December 3, 2002 but for the ordering rules. The Company
has accounted for these additional net operating loss carryovers as a
contribution to capital by M&F Worldwide.


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

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

<TABLE>
<CAPTION>
                                                                            PRE-M&F PURCHASE POST-M&F PURCHASE
                                                                           -------------------------------------
                                                                              PERIOD FROM       PERIOD FROM
                                         YEAR ENDED        YEAR ENDED         JANUARY 1 TO      APRIL 20 TO
                                        DECEMBER 31,      DECEMBER 31,         APRIL 19,        DECEMBER 31,
                                            2003              2002                2001              2001
                                      ------------------------------------ -------------------------------------
<S>                                      <C>              <C>                 <C>                <C>
Current (provision) benefit:
   Federal                               $          -     $          -        $        (25)      $        (645)
   State                                            -             (205)                  -                (200)
   Foreign                                     (1,447)          (3,019)               (986)             (2,714)
                                         -------------    -------------       -------------      --------------
Total current provision                        (1,447)          (3,224)             (1,011)             (3,559)
                                         -------------    -------------       -------------      --------------

Deferred (provision) benefit:
   Federal                                      7,490            5,916                   -               9,896
   State                                          371            1,453                   -                 174
   Foreign                                          -                -                   -                   -
                                         ------------     ------------        ------------       -------------
Total deferred (provision) benefit              7,861            7,369                   -              10,070
                                         ------------     ------------        ------------       -------------
                                         $     6,414      $      4,145        $     (1,011)      $       6,511
                                         ============     ============        ============       =============
</TABLE>

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

<TABLE>
<CAPTION>
                                                                            PRE-M&F PURCHASE  POST-M&F PURCHASE
                                                                           --------------------------------------
                                                                               PERIOD FROM       PERIOD FROM
                                         YEAR ENDED        YEAR ENDED         JANUARY 1 TO       APRIL 20 TO
                                        DECEMBER 31,      DECEMBER 31,          APRIL 19,        DECEMBER 31,
                                            2003              2002                2001               2001
                                      ------------------------------------ --------------------------------------
<S>                                      <C>              <C>                 <C>                 <C>
Income (loss) before income taxes:
   Domestic                              $    (21,423)    $    (16,532)       $        (22)       $     (21,610)
   Foreign                                     (2,747)           1,308                 545                1,574
                                         -------------    -------------       -------------       -------------
                                         $   (24,170)     $    (15,224)       $        523        $    (20,036)
                                         =============    =============       =============       =============
</TABLE>



                                      F-24
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


6.  INCOME TAXES (CONTINUED)

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


<TABLE>
<CAPTION>
                                                                            PRE-M&F PURCHASE  POST-M&F PURCHASE
                                                                           --------------------------------------
                                                                              PERIOD FROM        PERIOD FROM
                                         YEAR ENDED        YEAR ENDED         JANUARY 1 TO       APRIL 20 TO
                                        DECEMBER 31,      DECEMBER 31,         APRIL 19,        DECEMBER 31,
                                            2003              2002                2001               2001
                                      ------------------------------------ --------------------------------------
<S>                                      <C>              <C>                 <C>                <C>
Tax at federal statutory rate            $       8,460    $       5,328       $       (183)      $       7,013
State income tax benefit (provision)               371            1,248                  -                 (26)
Decrease/(increase) in valuation
  allowance                                       (474)             441                  -               3,762
Change in tax credits                              449           (4,343)                 -                   -
Recognition of foreign net loss
  carryforwards                                      -            6,159                  -                   -
Non-deductible items                               (77)             (53)               (19)             (2,753)
Foreign income taxed at varying rates
  including foreign losses for which
  no benefit was received                       (3,038)          (2,561)              (789)             (2,169)
Other, net                                         723           (2,074)               (20)                684
                                         ---------------  ---------------     ---------------    -------------
                                         $       6,414    $       4,145       $     (1,011)      $       6,511
                                         ===============  ===============     ===============    =============
</TABLE>



                                      F-25
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


6.  INCOME TAXES (CONTINUED)

Significant components of the Company's deferred tax assets and liabilities as
of December 31, 2003 and 2002 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                  DECEMBER 31,
                                                                         --------------------------------
                                                                              2003             2002
                                                                         ---------------  ---------------
<S>                                                                        <C>              <C>
      Deferred tax assets:
         Debt original issue discount                                      $       403      $    22,630
         Domestic net operating loss carryforwards                              26,054           21,907
         Foreign net operating loss carryforwards                                6,573            6,159
         Tax credit carryforwards (primarily alternative
           minimum tax credits                                                  10,973           10,298
         Expense accruals                                                        1,440            3,174
         State income taxes and other                                            3,845            2,473
                                                                         ---------------  ---------------
      Total deferred tax assets                                                 49,288           66,641
      Valuation allowance                                                       (7,333)          (6,859)
                                                                         ---------------  ---------------
      Net deferred tax assets                                                   41,955           59,782

      Deferred tax liabilities:
         Fixed assets                                                          (41,083)         (52,794)
         Unremitted foreign earnings                                            (2,731)          (2,666)
         Intangibles                                                           (28,201)         (29,688)
                                                                         ---------------  ---------------
      Total deferred tax liabilities                                           (72,015)         (85,148)
                                                                         ---------------  ---------------
      Net deferred tax liabilities                                             (30,060)         (25,366)
                                                                         ===============  ===============

      Balance Sheet Classifications:
       Non-current deferred tax liability                                  $   (30,060)      $  (25,366)
                                                                         ---------------  ---------------
                                                                           $   (30,060)      $  (25,366)
                                                                         ===============  ===============
</TABLE>

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

After the effect of the deconsolidation, as of December 31, 2003, the Company
has federal and state net operating loss carryforwards of approximately $73.2
million and $7.5 million, respectively. The net operating loss carryforwards
will expire at various dates beginning in 2006 through 2023, if not utilized.



                                      F-26
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


6.  INCOME TAXES (CONTINUED)

At December 31, 2003, the Company also had federal alternative minimum tax
credit carryforwards of approximately $5.6 million, which may be used
indefinitely, and research and development credit carryforwards of $0.8 million,
which will expire from 2006 through 2021, if not utilized.

At December 31, 2003, the Company also had California alternative minimum tax
credit carryforwards and California research and development credit
carryforwards totaling approximately $2.1 million, both of which may be carried
forward indefinitely.


At December 31, 2003, the Company had U.K. net operating loss carryforwards
totaling approximately $27.7 million that may be carried forward indefinitely. A
full valuation allowance has been provided against this asset.



7.  LONG-TERM DEBT

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

<TABLE>
<CAPTION>

                                                                             DECEMBER 31,
                                                            -----------------------------------------------
                                                                    2003                     2002
                                                            ---------------------   -----------------------
<S>                                                              <C>                     <C>
          Existing Credit Agreement:
              Revolving Facility                                 $   99,200              $   99,200
              Term Facility                                         151,792                 174,608
          9-5/8% Senior Subordinated Discount Notes Due 2006         65,353                 157,632
          Notes payable to affiliate                                 21,402                   7,039
          Other                                                       1,927                       -
                                                                 -------------           ----------

                                                                    339,674                 438,479
          Less: Current maturities                                    5,885                  22,815
                                                                 -------------           ----------
          Total Long Term Debt                                   $  333,789              $  415,664
                                                                 =============           ==========
</TABLE>

As of December 31, 2003, the Company had lines of credit totaling approximately
$20.0 million, under which $13.0 million was drawn. In connection with the
January 2004 Refinancing described below, one $10.0 million line of credit,
which was fully drawn, was converted into Series D Preferred Stock, and the
other $10.0 million line of credit, of which $3.0 million was drawn, was
increased to $20.0 million.

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



                                      F-27
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


7.   LONG-TERM DEBT (CONTINUED)


On June 4, 1998, the Company entered into a Credit Agreement with a syndicate of
lenders (as subsequently amended on September 30, 1998, June 30, 1999, March 15,
2002, June 14, 2002, September 30, 2002, March 25, 2003 and November 12, 2003,
the "Existing Credit Agreement"). As described below, the Existing Credit
Agreement was later replaced with the Amended and Restated Credit Agreement
pursuant to the January 2004 Refinancing. The Existing Credit Agreement was
comprised of two facilities, the Term Facility and the Revolving Facility. As of
December 31, 2003, amounts outstanding under the Existing Credit Agreement were
$151.8 million and $99.2 million for the Term Facility and Revolving Facility,
respectively. The Term Facility had two tranches: the Tranche A Term Facility
was a 6-year facility in an aggregate principal amount of $90.0 million and the
Tranche B Term Facility was a 7-year facility in an aggregate principal amount
of $150.0 million. The Revolving Facility was a 6-year facility in an aggregate
principal amount of $100.0 million.

The Company's obligations under the Existing Credit Agreement were secured by
substantially all of the Company's assets. The Existing Credit Agreement
required that the Company meet certain financial tests and contained other
restrictive covenants including limitations on indebtedness, leverage ratio
levels, interest coverage ratio levels and restrictions on the ability of the
Company to declare or pay dividends to its stockholders.

On March 15, 2002, the Company amended its Existing Credit Agreement to, among
other things, revise certain of the financial tests and required ratios that the
Company was required to maintain through December 31, 2002 (the "March 2002
Amendment"). As required by the March 2002 Amendment, on June 28, 2002, the
Company acquired from Mafco Holdings $37.7 million principal amount of Existing
Notes, which had approximately $1.5 million of accrued interest, and $10.0
million cash. In exchange, the Company issued to Mafco Holdings 49,199 shares of
Series B Preferred Stock, which it contributed to the capital of PX Holding.

On April 1, 2002, the Company entered into an agreement with certain holders of
its Existing Notes that gave the Company the option to acquire from these
holders Existing Notes with a face value of $78.4 million at a price of $650 per
$1,000 of principal amount. On June 28, 2002, Mafco Holdings assumed this option
from the Company and subsequently exercised the option on July 3, 2002.

On June 14, 2002, the Company amended its Existing Credit Agreement to, among
other things, allow the Company to (1) acquire 100% of the outstanding shares of
Las Palmas from M&F Worldwide in exchange for the Las Palmas Note, (2)
contribute the assets of Las Palmas and certain other assets owned by the
Company to the newly-formed EFILM, LLC in exchange for 80% of its membership
interests, and (3) allow Deluxe to purchase 20% of the EFILM, LLC membership
interests for $5.2 million. In addition, certain covenants were amended.

Effective September 30, 2002, the Company amended the Existing Credit Agreement
to, among other things, reduce the minimum EBITDA the Company was required to
achieve for the four fiscal quarters ending September 30, 2002 (the "September
2002 Amendment"). This provision of the September Amendment expired on March 28,
2003. As required by the September 2002 Amendment, on January 31, 2003, an
affiliate of Mafco Holdings made a cash equity contribution to the Company in
the amount of the interest due February 1, 2003 on




                                      F-28
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


7. LONG-TERM DEBT (CONTINUED)

the Existing Notes held by affiliates of the Company on that date in exchange
for 4,372 shares of the Company's Series B Preferred Stock.

On February 3, 2003, MacAndrews & Forbes Holdings Inc. ("MacAndrews & Forbes")
agreed to provide the Company a revolving line of credit in the amount of $4.0
million, at the same rate as provided for in the revolving facility pursuant to
the Existing Credit Agreement (as amended, the "MacAndrews Line"). As described
below, amounts outstanding under the MacAndrews Line were retired in exchange
for shares of Series D Preferred Stock as part of the January 2004 Refinancing.

On March 27, 2003, the Company amended its Existing Credit Agreement to, among
other things, decrease minimum EBITDA for the four fiscal quarters ended
December 31, 2002, specify the minimum EBITDA, decrease the minimum interest
coverage ratio and increase the maximum leverage ratio required for the four
fiscal quarters ending on each of March 31, 2003, June 30, 2003, September 30,
2003 and December 31, 2003 (the "March 2003 Amendment"). Absent this amendment,
the Company would not have been in compliance with certain financial covenants
under the Existing Credit Agreement for the four fiscal quarters ended December
31, 2002. Under the March 2003 Amendment, certain lenders also agreed to defer
$20.0 million of amortization payments otherwise due in 2003 to March 31, 2004.

In connection with the March 2003 Amendment, Mafco Holdings contributed $90.9
million principal amount of Existing Notes (on which there was approximately
$1.4 million of accrued and unpaid interest) and $10.0 million in cash to the
Company in exchange for 102,220 shares of Series C Cumulative Pay-in-Kind
Preferred Stock, par value $0.01 per share, of the Company (the "Series C
Preferred Stock"), which Mafco Holdings contributed to the capital of PX
Holding, and PX Holding contributed to the Company 53,571 shares of Series B
Preferred Stock in exchange for 57,424 shares of Series C Preferred Stock.
MacAndrews & Forbes also agreed to extend the MacAndrews Line until March 31,
2004.

On August 13, 2003, MacAndrews & Forbes agreed to amend the terms of the
MacAndrews Line to increase the amount available for borrowings thereunder from
$4.0 million to $10.0 million and to extend the maturity date of the MacAndrews
Line to August 31, 2006. As of December 31, 2003, the Company had drawn $10.0
million under the MacAndrews Line.

In August 2003, the Company postponed an offering of secured notes it had
previously announced due to unfavorable pricing terms resulting from
deteriorating market conditions. Concurrently, the Company also deferred its
plans to replace its Existing Credit Agreement with a new credit agreement.

Effective November 12, 2003, the Company amended the Existing Credit Agreement
to, among other things, decrease minimum EBITDA required for the four fiscal
quarters ending September 30, 2003 and the four fiscal quarters ending December
31, 2003 (the "November 2003 Amendment"). In the absence of this amendment, the
Company would not have been in compliance with certain financial covenants under
the Existing Credit Agreement for the four fiscal quarters ending September 30,
2003 and likely would not have been in compliance with financial covenants for
the four fiscal quarters ending December 31, 2003, due to, among other factors,



                                      F-29
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


7.  LONG-TERM DEBT (CONTINUED)

costs associated with the abandoned offering of secured notes and lower than
expected feature film and commercial television production.

In connection with the November 2003 Amendment, on November 12, 2003, MacAndrews
& Forbes agreed to provide an additional revolving line of credit (the "Second
MacAndrews Line") in the amount of $10.0 million at a rate equal to 50 basis
points above the rate provided for in the revolving facility pursuant to the
Existing Credit Agreement and a maturity of April 15, 2004.

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

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



                                      F-30
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


7.   LONG-TERM DEBT (CONTINUED)

As another part of the January 2004 Refinancing, the Company used proceeds from
the sale of the Senior Notes and the issuance of Series D Preferred Stock to
reduce the indebtedness under the Existing Credit Agreement by $115.4 million,
and replaced the Existing Credit Agreement with an Amended and Restated Credit
Agreement (the "Amended Credit Agreement") with the lenders under the Existing
Credit Agreement. The Amended Credit Agreement provides for a single term loan
facility in the principal amount of $135.6 million repayable in quarterly
installments with a final maturity of January 12, 2007, except that the term
facility shall be due on September 5, 2005 if any of the Existing Notes remain
outstanding on that date. The term facility bears interest at either the ABR or
Eurodollar Rate (as defined in the Amended Credit Agreement) plus a margin of
5.25% in the case of ABR loans or 6.25% in the case of Eurodollar Loans. The
term facility under the Amended Credit Agreement is secured on substantially the
same basis as indebtedness under the Existing Credit Agreement. In connection
with the Amended Credit Agreement, the Company paid fees to lenders and
professional advisors of approximately $3.5 million, including an original issue
discount fee of approximately $2.0 million. Approximately $3.1 million of the
fees paid will be expensed in 2004.

Under the Amended Credit Agreement, the Company is required to repay $5.0
million in principal in 2004, whereas under the Existing Credit Agreement the
Company would have been required to make principal payments of approximately
$221.1 million in 2004. In addition, the Amended Credit Agreement revised
certain financial tests and other restrictive covenants set forth in the
Existing Credit Agreement, including required EBITDA, as defined, limitations on
indebtedness, and other provisions.

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




                                      F-31
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


7.   LONG-TERM DEBT (CONTINUED)


The following sets forth the aggregate principal maturities of the Company's
debt during the twelve-month periods ending December 31 giving pro forma effect
as if the January 2004 Financing transaction had occurred on December 31, 2003
(in thousands):

                    2004                       $    5,885
                    2005                            8,369
                    2006                           73,026
                    2007                          115,600
                    2008 and thereafter           103,000
                                               ----------
                                               $  305,880
                                               ==========

Debt as of December 31, 2003 was $339.7 million. The difference of $33.8 million
is due to the extinguishment of debt resulting from the January 2004
Refinancing. The amounts presented for 2005 do not reflect the impact of the
term facility under the Amended Credit Agreement becoming due in September 2005
if any of the Existing Notes remain outstanding on that date.

8.  PREFERRED STOCK

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

As discussed in Note 7, on June 28, 2002, the Company issued 49,199 shares of
Series B Preferred Stock to Mafco Holdings. The Series B Preferred Stock was
non-voting, had a liquidation preference of $49.2 million plus accrued and
unpaid dividends, and entitled its holders to cumulative dividends at a rate of
10% per annum. The terms of the Series B Preferred Stock indicated that such
stock may be redeemed by the Company, at its option, at any time at a price of
$1,000 per share, plus accrued and unpaid dividends. Since Mafco Holdings
maintained the majority shareholder vote of the Company, the Series B Preferred
Stock was deemed to be redeemable at the option of Mafco Holdings, and was
therefore classified outside of permanent equity in the accompanying
consolidated balance sheets.

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

In connection with the March 2003 Amendment, all the Series B Preferred Stock
was contributed back to the Company and 102,220 shares of Series C Preferred
Stock were issued. The Series C Preferred Stock, par value




                                      F-32
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


8.  PREFERRED STOCK (CONTINUED)

$0.01 per share, was non-voting; had a liquidation preference of $1,000 per
share plus accrued and unpaid dividends; and entitled the holder to cumulative
dividends at a rate of 10% per annum regardless of whether declared or earned.
Additionally, the Series C Preferred Stock was subjected to redemption in
certain circumstances upon a change of control.


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

9.  STOCK OPTION PLAN

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



                                      F-33
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


9.  STOCK OPTION PLAN (CONTINUED)


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

<TABLE>
<CAPTION>
                                                                                 EXERCISE PRICE
                                                                      -----------------------------------
                                                                                                WEIGHTED
                                                       SHARES              RANGE               AVG. PRICE
                                                    -----------       ---------------          ----------
<S>                                                   <C>               <C>                      <C>
    Options Outstanding at December 31, 2000          1,225,333         $10.00-$7.50             $10.00
      Options expired                                  (233,333)            10.00                 10.00
                                                    -----------       ---------------          ----------
    Options Outstanding at December 31, 2001            992,000        $10.00- $7.50             $ 9.73
      Options expired                                         -              -                      -
                                                    -----------       ---------------          ----------
    Options Outstanding at December 31, 2002            992,000         $10.00-$7.50             $ 9.67
      Options granted/expired                         (350,000)         $10.00-$7.50                -
                                                    -----------       ---------------          ----------
    OPTIONS OUTSTANDING AT DECEMBER 31, 2003            642,000            $10.00                $10.00
</TABLE>

The weighted-average remaining contractual life of options outstanding at
December 31, 2003 is 5.80 years.

Information regarding stock options exercisable is as follows:

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                    ------------------------------------------------------
                                                         2003               2002               2001
                                                    ----------------   ----------------  -----------------
<S>                                                      <C>                <C>                <C>
         Options Exercisable:
              Number                                      642,000            992,000            948,667
              Weighted average exercise price           $   10.00           $   9.67           $   9.77
</TABLE>

There were no options granted under the Plan during 2003, 2002, or 2001.



                                      F-34
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


9.  STOCK OPTION PLAN (CONTINUED)

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


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

10.  EMPLOYEE BENEFIT PLANS

The Company sponsors a defined contribution 401(k) plan covering a majority of
its domestic employees. Eligible employees may contribute from 1% to 16% of
their base compensation. The Company makes matching contributions equal to 75%
of employee before-tax contributions from 1% to 6%. For the year ended December
31, 2003 and 2002, the Pre-M&F Purchase Period, and the Post-M&F Purchase
Period, the Company recorded expense of $0.8 million, $0.7 million, $0.2
million, and $0.6 million, respectively, related to the 401(k) plan.

In addition, the Company sponsors defined contribution retirement plans in
Europe and Australia that cover certain foreign employees. Participating
employees contribute from 4% to 15% of their base compensation. The Company
contributes 10.5% to 13% of base compensation for participating employees
depending upon their level of contribution. For the year ended December 31,
2003, December 31, 2002, the Pre-M&F Purchase Period, and the Post-M&F Purchase
Period, the Company recorded expense of $1.5 million, $1.0 million, $0.3
million, and $0.8 million, respectively, representing the Company's
contributions.

Certain of the Company's senior executives have employment agreements containing
equity participation provisions. Amounts, if any, to be paid under the equity
participation provisions, are based on contractually defined formulas. As of
December 31, 2003, no amounts have been paid or were due in connection with
these equity participation provisions.

11.  SEGMENT INFORMATION

The Company has one reportable segment, the rental of camera systems, lighting
systems and other equipment, and the sales of related products. These activities
are conducted in a number of geographic locations though the Company's
owned-and-operated facilities and its network of independent agents. The
geographic operations are organized in three regions: North America, Europe, and
Asia Pacific.



                                      F-35
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


11.  SEGMENT INFORMATION (CONTINUED)

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


<TABLE>
<CAPTION>
                                                              DECEMBER 31, 2003
                                   ------------------------------------------------------------------------
                                                  RENTAL AND SALES
                                   ------------------------------------------------
                                     NORTH                     ASIA
                                    AMERICA      EUROPE      PACIFIC     SUBTOTAL      OTHER        TOTAL
                                   ----------- ------------ ----------- ----------- ------------ ------------
<S>                                  <C>       <C>          <C>         <C>         <C>          <C>
Revenue from
  external customers                 $ 93,491  $   75,586   $   21,957  $  191,034  $   16,923   $  207,957

Long-lived assets                     513,201      29,680       12,086     554,967      10,484      565,451



                                                              DECEMBER 31, 2002
                                   ------------------------------------------------------------------------
                                                  RENTAL AND SALES
                                   ------------------------------------------------
                                     NORTH                     ASIA
                                    AMERICA      EUROPE      PACIFIC     SUBTOTAL      OTHER        TOTAL
                                   ----------- ------------ ----------- ----------- ------------ ------------
Revenue from
  external customers                 $ 96,781  $   67,513   $   24,617  $  188,911  $    4,271   $  193,182

Long-lived assets                     521,765      30,021       11,624     563,410      11,281      574,691



                                                               DECEMBER 31, 2001
                                   --------------------------------------------------------------------------
                                                   RENTAL AND SALES
                                   -------------------------------------------------
                                     NORTH                    ASIA
                                    AMERICA      EUROPE      PACIFIC     SUBTOTAL      OTHER        TOTAL
                                   ----------- ----------- ------------ ------------ ---------- --------------
Revenue from
  external customers                 $101,746     $66,881     $22,183     $190,810          -   $  190,810

Long-lived assets                     516,626      32,770      12,079      561,475          -      561,475
</TABLE>


No customer accounted for more than 10% of the Company's consolidated net
revenues in fiscal 2003, 2002, and 2001.



                                      F-36
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


12.  COMMITMENTS AND CONTINGENCIES

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


                    2004                       $ 11,153
                    2005                          9,770
                    2006                          6,096
                    2007                          4,328
                    2008                          2,937
                    Thereafter                    4,591
                                             --------------
                                               $ 38,875
                                             ==============

During the years ended December 31, 2003 and 2002, the Pre-M&F Purchase Period,
and the Post M&F Purchase Period, rental expense under operating leases was
$10.3 million, $8.1 million, $2.4 million and $5.7 million, respectively.


As of December 31, 2003, the Company had a commitment to purchase approximately
$1.1 million of glass from a vendor.


As of December 31, 2003, the Company had lines of credit totaling approximately
$20.0 million, under which $13.0 million was drawn. In connection with the
January 2004 Refinancing described below, one $10.0 million line of credit,
which was fully drawn, was converted into Series D Preferred Stock, and the
other $10.0 million line of credit, of which $3.0 million was drawn, was
increased to $20.0 million. In addition, the Company had various lines of credit
totaling approximately $3.6 million at December 31, 2003, under which no amounts
were drawn. The Company does not have any off-balance sheet financing
arrangements other than operating leases.

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




                                      F-37
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


13.  RELATED PARTY TRANSACTIONS


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

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

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

 In July 2001, M&F Worldwide purchased all of the issued and outstanding shares
of Las Palmas Productions Inc. ("Las Palmas"), which conducted business under
the name "EFILM". EFILM is a laboratory providing digital post-production
services to the motion picture and television industries. As a result of this
purchase, Las




                                      F-38
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


13.  RELATED PARTY TRANSACTIONS (CONTINUED)

Palmas became a wholly owned subsidiary of M&F Worldwide. The consideration paid
by M&F Worldwide at closing consisted of $5.4 million to the selling
stockholders and $0.6 million to Las Palmas. M&F Worldwide also agreed to make
an additional payment to the selling stockholders equal to the greater of (a)
90% of the average annual EBITDA (as defined below) of the EFILM business over a
two-year Incentive Period (as defined in the EFILM Agreements) or (b) $1.5
million, such payment to occur no earlier than 2004 and no later than 2007 (the
"Earnout Payment").

In conjunction with the Las Palmas purchase, the Company entered into a series
of transactions with Las Palmas to provide it substantially all of the benefits
of, and obligate it with respect to, EFILM. From July 2, 2001 through July 1,
2002, the Company operated EFILM pursuant to various lease and secondment
agreements. Specifically, Las Palmas (i) subleased the real estate used in the
business to the Company, (ii) leased the property and equipment used in the
business to the Company on a month-to-month basis, (iii) seconded all of the Las
Palmas employees to Panavision, and (iv) granted a worldwide, nonexclusive
license to certain technology and intellectual property to be used solely in
connection with servicing customers of Panavision until July 2, 2008, subject to
renewal (collectively, the "EFILM Agreements"). Following the entry into these
various agreements, the Company directly purchased equipment that is used in the
business of EFILM.

In addition to monthly payments, the EFILM Agreements required that Panavision
pay Las Palmas a one-time cash payment equal to the Earnout Payment. On July 2,
2001, the Company began expensing the $1.5 million minimum amount of this
one-time cash payment over the 7-year initial term of the EFILM Agreements, as
additional lease expense. For 2002 and 2001, expenses relating to the EFILM
Agreements of approximately $564,000 and $573,000, respectively, were included
in cost of sales and other and $24,000 and $29,000, respectively, were included
in selling, general and administrative expenses in the consolidated statements
of operations.

On July 2, 2002, the Company acquired the shares of Las Palmas from M&F
Worldwide in exchange for a note in the amount of $6.7 million bearing interest
at 10% per annum, payable on September 30, 2005 or upon refinancing of the
Existing Credit Agreement (the "Las Palmas Note"). Since the Company and Las
Palmas were under common control, the transaction was accounted for at
historical cost in a manner similar to that of a pooling of interests. The prior
periods were not restated to give effect to Las Palmas since the impact was not
material. Immediately following the acquisition, the Company contributed the
assets of Las Palmas and certain other assets owned by the Company to the newly
formed EFILM, LLC in exchange for 80% of its membership interests. At the same
time, Deluxe Laboratories, Inc. ("Deluxe") purchased 20% of the EFILM, LLC
membership interests for $5.2 million. The Company maintains a controlling
interest in, and therefore consolidates the results of EFILM, LLC. The
accompanying consolidated statements of operations include the results of EFILM,
LLC from July 2, 2002. Minority interest, representing Deluxe's equity in
ownership of EFILM, LLC, is included in other liabilities in the accompanying
consolidated balance sheets.

EFILM, LLC assumed the obligation to make the Earnout Payment. However,
Panavision and Deluxe agreed to reimburse EFILM, LLC by making capital
contributions equal to the amount of the Earnout Payment. At



                                      F-39
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


13.  RELATED PARTY TRANSACTIONS (CONTINUED)

December 31, 2003, on a consolidated basis, the Company had a liability of
approximately $1.3 million based upon the current value of the Earnout Payment.

On June 28, 2002, the Company acquired from Mafco Holdings $37.7 million
principal amount of Existing Notes, which had approximately $1.5 million of
accrued interest, and $10.0 million cash. In exchange, the Company issued to
Mafco Holdings 49,199 shares of Series B Preferred Stock, which it contributed
to the capital of PX Holding.

On January 31, 2003, Mafco Holdings made a cash equity contribution to the
Company in the amount of the interest due February 1, 2003 on the Existing Notes
held by affiliates of the Company on that date in exchange for 4,372 shares of
Series B Preferred Stock as required by the September 30, 2002 Amendment to the
Existing Credit Agreement.

On February 3, 2003, Mafco Holdings agreed to extend to the Company a revolving
line of credit (the "MacAndrews Line ") in the amount of $4.0 million, maturing
March 28, 2003, at the same rate as provided for in the Revolving Facility
pursuant to the Existing Credit Agreement.

On March 27, 2003, the Company acquired (i) from Mafco Holdings approximately
$90.9 million principal amount of Existing Notes, which had approximately $1.4
million of accrued interest and $10.0 million in cash and (ii) from PX Holding
53,571 shares of Series B Preferred Stock, which had approximately $3.9 million
of accrued and unpaid dividends. In exchange, the Company issued to Mafco
Holdings 102,220 shares of Series C Preferred Stock, which it contributed to the
capital of PX Holding, and to PX Holding 57,424 shares of Series C Preferred
Stock. MacAndrews & Forbes also agreed to extend the MacAndrews Line until March
31, 2004.

On August 13, 2003, MacAndrews & Forbes agreed to amend the terms of the
MacAndrews Line to increase the amount available for borrowings thereunder from
$4.0 million to $10.0 million and to extend the maturity date of the MacAndrews
Line to August 31, 2006.

In connection with the November 2003 Amendment to the existing Credit Agreement,
on November 12, 2003, MacAndrews & Forbes agreed to extend the Second MacAndrews
Line in the amount of $10.0 million at a rate equal to 50 basis points above the
rate provided for in the revolving facility pursuant to the Existing Credit
Agreement and a maturity of April 15, 2004. As of December 31, 2003, the Company
had drawn $10.0 million under the MacAndrews Line and $3.0 million under the
Second MacAndrews Line.

On January 16, 2004, as part of the January 2004 Refinancing, the Company issued
to PX Holding 215,274 shares of new Series D Cumulative Pay-In-Kind Preferred
Stock in exchange for (a) 159,644 shares of Series C Preferred Stock held by PX
Holding (together with approximately $13.2 million of dividends in arrears
thereon); (b) $23.0 million in cash; (c) the retirement of all principal and
interest owed as of January 16, 2004 under the MacAndrews Line; (d) 33.3 shares
of common stock of PANY Rental, having a fair market value of $0.7 million (such
that, as of January 16, 2004, the Company owned 100% of the outstanding shares
of PANY Rental); (e) the retirement of all amounts (consisting of $630,780 in
principal and $82,913 in accrued and unpaid interest) owed



                                      F-40
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


13.  RELATED PARTY TRANSACTIONS (CONTINUED)

by PANY Rental to PX Holding pursuant to a certain promissory note held by PX
Holding; and (f) the retirement of all amounts (consisting of $7.8 million in
principal and unpaid interest) owed to Mafco Holdings under the Las Palmas Note.
The Series D Preferred Stock is non-voting, has a liquidation preference of
$1,000 per share plus accrued and unpaid dividends, and entitles the holder to
cumulative dividends at a rate of 10% per annum regardless of whether declared
or earned. Additionally, the Series D Preferred Stock is subject to redemption
in certain circumstances upon a change of control. The Company also issued to PX
Holding 1,381,690 shares of new Series E Non-Cumulative Perpetual Participating
Preferred Stock (the "Series E Preferred Stock") in exchange for 1,381,690
shares of Series A Preferred Stock. The Series E Preferred Stock is entitled to
one vote per share, voting together with the Common Stock as a single class, has
a liquidation preference of $1.00 per share plus accrued and unpaid dividends,
and provides for non-cumulative cash dividends at an annual rate of $0.05 per
share if declared by the Company. As a result of the January 2004 Refinancing
transactions, all of the outstanding shares of Series A and Series C Preferred
Stock were transferred to the Company. In addition, MacAndrews & Forbes
increased the amount of the Second MacAndrews Line to $20.0 million and extended
the maturity to April 16, 2009.

On December 16, 2003, Panavision Imaging, LLC, a subsidiary of PX Holding,
purchased the assets of Silicon Video, Inc., a designer of CMOS imaging sensors
located in Homer, New York, and formed Panavision SVI, LLC to act as marketing
affiliate with respect to certain products designed by Panavision Imaging, LLC.
The Company manages the operations of Panavision Imaging, LLC and Panavision
SVI, LLC in exchange for certain research and development services and most
favored customer status with respect to certain products of Panavision Imaging,
LLC. In addition, the Company purchases certain sensors from Panavision Imaging,
LLC on a basis that is at least as favorable as could be obtained at
arms-length. Panavision Imaging, LLC and its marketing affiliate Panavision SVI,
LLC utilize the Panavision tradename pursuant to a license from the Company.

Mafco Holdings contributes the services of one of its employees in support of
the Company's operations. Accordingly, the Company recorded $150,000 and $75,000
of compensation expense and increases to Additional Paid in Capital for the
years ended December 31, 2003 and 2002 for such services.

14.  EFILM

In July 2001, M&F Worldwide purchased all of the issued and outstanding shares
of Las Palmas, which conducted business under the name "EFILM". EFILM is a
laboratory providing digital post-production services to the motion picture and
television industries. As a result of this purchase, Las Palmas became a wholly
owned subsidiary of M&F Worldwide. The consideration paid by M&F Worldwide at
closing consisted of $5.4 million to the selling stockholders and $0.6 million
to Las Palmas. M&F Worldwide also agreed to make an additional payment to the
selling stockholders equal to the greater of (a) 90% of the average annual
EBITDA (as defined in the EFILM Agreements) of the EFILM business over a
two-year Incentive Period (as defined in the EFILM Agreements) or (b) $1.5
million, such payment to occur no earlier than 2004 and no later than 2007 (the
"Earnout Payment").




                                      F-41
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


14.  EFILM (CONTINUED)

In conjunction with the Las Palmas purchase, the Company entered into a series
of transactions with Las Palmas to provide it substantially all of the benefits
of, and obligate it with respect to, EFILM. From July 2, 2001 through July 1,
2002, the Company operated EFILM pursuant to various lease and secondment
agreements. Specifically, Las Palmas (i) subleased the real estate used in the
business to the Company, (ii) leased the property and equipment used in the
business to the Company on a month-to-month basis, (iii) seconded all of the Las
Palmas employees to Panavision, and (iv) granted a worldwide, nonexclusive
license to certain technology and intellectual property to be used solely in
connection with servicing customers of Panavision until July 2, 2008, subject to
renewal (collectively, the "EFILM Agreements"). Following the entry into the
EFILM Agreements, the Company directly purchased equipment that is used in the
business of EFILM.

In addition to monthly payments, the EFILM Agreements required that Panavision
pay Las Palmas a one-time cash payment equal to the Earnout Payment. For 2002
and 2001, expenses relating to the EFILM Agreements of approximately $564,000
and $573,000, respectively, were included in cost of sales and other and $24,000
and $29,000, respectively, were included in selling, general and administrative
expenses in the accompanying consolidated statements of operations.

On July 2, 2002, the Company acquired the shares of Las Palmas from M&F
Worldwide in exchange for a note in the amount of $6.7 million plus interest at
10% per annum, payable on September 30, 2005 or upon refinancing of the Existing
Credit Agreement (the "Las Palmas Note"). As of December 31, 2003, the carrying
value of this note was $7.0 million and classified as Note Payable to Affiliate
in the accompanying consolidated balance sheets. The Las Palmas note was
contributed to the Company in connection with the January 2004 Refinancing in
exchange for Series D Preferred Stock. Since the Company and Las Palmas were
under common control, the acquisition on Las Palmas was accounted for at
historical cost in a manner similar to that of a pooling of interests. The prior
periods were not restated as a result of the acquisition of Las Palmas since the
impact was not material. Immediately following the acquisition, the Company
contributed the assets of Las Palmas and certain other assets owned by the
Company to the newly formed EFILM, LLC in exchange for 80% of its membership
interests. At the same time, Deluxe Laboratories, Inc. ("Deluxe") purchased 20%
of the EFILM, LLC membership interests for $5.2 million. The Company maintains a
controlling interest in, and therefore consolidates the results of, EFILM, LLC.
The accompanying consolidated statements of operations include the results of
EFILM, LLC from July 2, 2002. The minority interest, representing Deluxe's
equity ownership of EFILM, LLC, is included in other liabilities in the
accompanying consolidated balance sheets.

15.  DHD VENTURES

In July 2000, the Company announced the establishment of a strategic
relationship with Sony Electronics Inc. ("Sony") to form DHD Ventures, LLC ("DHD
Ventures"). The Company owns 51% of DHD Ventures but does not exercise control.
As a result, the Company's investment in DHD Ventures is accounted for under the
equity method. As outlined in the operating agreement, DHD Ventures and
Panavision couple Sony's 24P CINEALTA(TM) high definition digital camera with
Panavision's advanced PRIMO DIGITAL(R)(TM) lenses to form a digital camera
system for use in the motion picture and television industry. These camera
systems are available



                                      F-42
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


15.  DHD VENTURES (CONTINUED)

for rent exclusively through Panavision's domestic and international
owned-and-operated facilities and worldwide agent network.

Pursuant to the operating agreement, if the Company undergoes a change of
control involving one of Sony's competitors, the Company may be required to
purchase Sony's 49% interest in the venture. In addition, Sony purchased, for
aggregate consideration of $10.0 million, 714,300 shares of Panavision Common
Stock, representing approximately 8% of Panavision's Common Stock outstanding,
and a warrant to acquire an additional 714,300 shares of Panavision Common Stock
at an exercise price of $17.50 per share, subject to adjustment. The warrants
are fully exercisable at any time through July 25, 2010.

Panavision and Sony also entered into a registration rights agreement which
grants to Sony demand registration rights under the Securities Act of 1933, as
amended, subject to certain limitations and conditions, for the shares of
Panavision Common Stock that Sony has purchased and for any Common Stock it
acquires upon exercise of its warrant.

16.  VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

The following is a summary of the valuation and qualifying accounts and reserves
for the year ended December 31, 2003, 2002, and the Pre-M&F Purchase Period, the
Post-M&F Purchase period (in thousands):

<TABLE>
<CAPTION>

                                              BEGINNING       AMOUNTS    BALANCES       ENDING
                                               BALANCE       RESERVED   WRITTEN OFF     BALANCE
                                              ---------     ---------  -------------  -----------
<S>                                             <C>           <C>         <C>           <C>
Allowance for Doubtful Accounts
-------------------------------

December 31, 2003                               $ 1,634       $ 1,924     $  972        $ 2,586

December 31, 2002                               $ 1,414       $   576     $  356        $ 1,634


Pre-M&F Purchase Period                         $ 1,907       $    52     $  196        $ 1,763

Post-M&F Purchase Period                        $ 1,763       $   132     $  481        $ 1,414
</TABLE>


Amounts reserved for the year ended December 31, 2003 increased by $1.4 million
compared to amounts reserved for the year ended December 31, 2002, principally
due to the deterioration of certain international accounts.



                                      F-43
<PAGE>

                                 PANAVISION INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


17.  QUARTERLY OPERATING DATA (UNAUDITED)

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

<TABLE>
<CAPTION>
                                                                       QUARTER
                                            --------------------------------------------------------------
                                                FIRST          SECOND           THIRD          FOURTH
                                            --------------- --------------  --------------  --------------
<S>                                           <C>             <C>             <C>             <C>
YEAR ENDED DECEMBER 31, 2003
Total revenue                                 $  46,299       $  48,434       $  54,946       $  58,278
Gross margin                                     18,381          17,043          21,826          24,555
Net loss                                         (7,354)         (3,682)         (2,376)         (4,344)
Net loss attributable to common
  shareholders                                   (8,845)         (7,683)         (6,471)         (8,542)
Loss per share - Basic and Diluted            $   (1.01)      $   (0.87)      $   (0.74)      $   (0.98)
                                            =============     ===========     ==========      ==========

YEAR ENDED DECEMBER 31, 2002
Total revenue                                 $  45,581       $  43,318       $  52,462       $  51,821
Gross margin                                     19,125          15,363          24,031          20,623
Net income (loss)                                (3,304)         (6,389)            700          (2,086)
Net loss attributable to common
  shareholders                                   (3,304)         (6,689)           (595)         (3,348)
Loss per share - Basic and Diluted            $   (0.38)      $   (0.76)      $   (0.07)      $   (0.38)
                                            =============     ===========     ===========     ==========
</TABLE>



                                      F-44
<PAGE>



                                 EXHIBIT INDEX


3.            CERTIFICATE OF INCORPORATION AND BY-LAWS

3.1           Restated Certificate of Incorporation of the Company (incorporated
              herein by reference from the identically numbered exhibit from the
              Company's Quarterly Report on Form 10-Q for the quarter ended
              March 31, 1999).

3.2           Restated By-Laws of the Company (incorporated herein by reference
              from the identically numbered exhibit from the Company's Quarterly
              Report on Form 10-Q for the quarter ended March 31, 1999).

3.3           Certificate of Designations, Powers, Preferences and Rights of
              Series A Non-Cumulative Perpetual Participating Preferred Stock of
              Panavision Inc. (incorporated herein by reference from Exhibit 13
              from the Company's Form SC 13D/A filed on December 28, 2001).

3.4           Certificate of Designations, Powers, Preferences and Rights of
              Series B Cumulative Pay-in-Kind Preferred Stock of Panavision Inc.
              (incorporated herein by reference from the identically numbered
              exhibit from the Company's Quarterly Report on Form 10-Q for the
              quarter ended June 30, 2002).

3.5           Certificate of Designations, Powers, Preferences and Rights of
              Series C Cumulative Pay-in-Kind Preferred Stock of Panavision Inc.
              (incorporated herein by reference from the identically numbered
              exhibit from the Company's Quarterly Report on Form 10-Q for the
              quarter ended March 31, 2003).


3.6           Certificate of Designations, Powers, Preferences and Rights of
              Series D Cumulative Pay-in-Kind Preferred Stock of Panavision
              Inc.**

3.7           Certificate of Designations, Powers, Preferences and Rights of
              Series E Non-Cumulative Perpetual Participating Preferred Stock of
              Panavision Inc.**


4.            INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
              INDENTURES.

4.1           Indenture, dated as of February 11, 1998, between PX Escrow and
              The Bank of New York, as Trustee, relating to the Company's 95/8%
              Senior Subordinated Discount Notes Due 2006 (incorporated herein
              by reference from the identically numbered exhibit from the
              Company's Registration Statement on Form S-1, Registration No.
              333-59363 filed with the Securities and Exchange Commission on
              October 8, 1998).

4.2           First Supplemental Indenture dated June 4, 1998, among PX Escrow,
              the Company and the Trustee, amending the Indenture identified at
              Exhibit 4.1 (incorporated herein by reference from the identically
              numbered exhibit from the Company's Registration Statement on Form
              S-1, Registration No. 333-59363 filed with the Securities and
              Exchange Commission on October 8, 1998).

4.3           Credit Agreement, dated June 4, 1998, among Panavision Inc., the
              several lenders named therein, Chase Securities Inc., as Advisor
              and Arranger, and The Chase Manhattan Bank, as Administrative
              Agent (incorporated herein by reference from the identically
              numbered exhibit from the Company's Current Report on Form 8-K
              dated June 4, 1998 and filed with the Securities and Exchange
              Commission on June 19, 1998).

4.4           Line of Credit Agreement dated February 3, 2003 between Panavision
              Inc. and MacAndrews & Forbes Holdings Inc. (incorporated herein
              by reference from the identically numbered exhibit from the
              Company's Annual Report on Form 10-K for the year ended December
              31, 2002).

4.5           Registration Rights Agreement, dated as of June 5, 1998, between
              Panavision Inc. and PX Holding Corporation (incorporated herein
              by reference from the identically numbered exhibit from the
              Company's Annual Report on Form 10-K for the year ended December
              31, 1998). This document was transferred to M&F Worldwide Corp.
              on April 19, 2001. See Exhibit 10.21 below.



<PAGE>



EXHIBIT
NUMBER        DESCRIPTION
------        -----------
4.6           First Amendment, dated as of September 30, 1998, to the Credit
              Agreement among Panavision Inc., the several lenders named
              therein, Chase Securities Inc., as Advisor and Arranger, and The
              Chase Manhattan Bank, as Administrative Agent (incorporated herein
              by reference from the identically numbered exhibit from the
              Company's Annual Report on Form 10-K for the year ended December
              31, 1998).

4.7           Second Amendment, dated as of June 30, 1999, to the Credit
              Agreement among Panavision Inc., the several lenders named
              therein, Chase Securities Inc., as Advisor and Arranger, and The
              Chase Manhattan Bank, as Administrative Agent (incorporated herein
              by reference from the identically numbered exhibit from the
              Company's Annual Report on Form 10-K for the year ended December
              31, 1999).

4.8           Third Amendment, dated as of March 15, 2002, to the Credit
              Agreement among Panavision Inc., the several lenders named
              therein, J.P. Morgan Securities Inc. (formerly known as Chase
              Securities Inc.), as Advisor and Arranger, Credit Suisse First
              Boston, as Documentation Agent, and J.P. Morgan Chase Bank
              (formerly known as The Chase Manhattan Bank), as Administrative
              Agent (incorporated herein by reference from the identically
              numbered exhibit from the Company's Quarterly Report on Form 10-Q
              for the quarter ended March 31, 2002).

4.9           Fourth Amendment, dated as of June 14, 2002, to the Credit
              Agreement among Panavision Inc., the several lenders named
              therein, J.P. Morgan Securities (formerly known as Chase
              Securities Inc.), as Advisor and Arranger, Credit Suisse First
              Boston, as Documentation Agent, and J.P. Morgan Chase Bank
              (formerly known as The Chase Manhattan Bank), as Administrative
              Agent (incorporated herein by reference from the identically
              numbered exhibit from the Company's Quarterly Report on Form 10-Q
              for the quarter ended June 30, 2002).

4.10          Fifth Amendment, dated as of September 30, 2002, to the Credit
              Agreement among Panavision Inc., the several lenders named
              therein, J.P. Morgan Securities (formerly known as Chase
              Securities Inc.), as Advisor and Arranger, Credit Suisse First
              Boston, as Documentation Agent, and J.P. Morgan Chase Bank
              (formerly known as The Chase Manhattan Bank), as Administrative
              Agent (incorporated herein by reference from the identically
              numbered exhibit from the Company's Quarterly Report on Form 10-Q
              for the quarter ended September 30, 2002).

4.11          Sixth Amendment, dated as of March 27, 2003, to the Credit
              Agreement among Panavision Inc., the several lenders named
              therein, Credit Suisse First Boston, as Documentation Agent, and
              J.P. Morgan Chase Bank, as Administrative Agent (incorporated
              herein by reference from the identically numbered exhibit from the
              Company's Annual Report on Form 10-K for the year ended December
              31, 2002).

4.12          First Amendment, dated as of March 27, 2003, to the Line of Credit
              Agreement between Panavision Inc. and MacAndrews & Forbes
              Holdings Inc. (incorporated herein by reference from the
              identically numbered exhibit from the Company's Annual Report
              on Form 10-K for the year ended December 31, 2002).

4.13          Amended and Restated Line of Credit Agreement, dated as of August
              13, 2003, between Panavision Inc. and MacAndrews and Forbes
              Holdings Inc. (incorporated herein by reference from the
              identically numbered exhibit from the Company's Quarterly Report
              on Form 10-Q for the quarter ended September 30, 2003).

4.14          Senior Subordinated Line of Credit Agreement, dated as of November
              12, 2003, between Panavision Inc. and MacAndrews and Forbes
              Holdings Inc. (incorporated herein by reference from the
              identically numbered exhibit from the Company's Quarterly Report
              on Form 10-Q for the quarter ended September 30, 2003).

4.15          Seventh Amendment, dated as of November 12, 2003, to the Credit
              Agreement among Panavision Inc., the several lenders named
              therein, Credit Suisse First Boston, as Documentation Agent, and
              JP Morgan Chase, as Administrative Agent (incorporated herein by
              reference from the identically numbered exhibit from the Company's
              Quarterly Report on Form 10-Q for the quarter ended September 30,
              2003).


4.16          Line of Credit Agreement dated January 16, 2004, between
              Panavision Inc. and MacAndrews & Forbes Holdings Inc.**

4.17          Indenture, dated as of January 16, 2004, between Panavision Inc.
              and Wilmington Trust Company, as Trustee, relating to the
              Company's 12.50% Senior Secured Notes due 2009.**



<PAGE>


EXHIBIT
NUMBER        DESCRIPTION
------        -----------


4.18          Form of 12.50% Senior Secured Note due 2009 (incorporated herein
              by reference from Exhibit 4.17 to the Company's Annual Report on
              Form 10-K for the year ended December 31, 2003 and filed with the
              Securities and Exchange Commission on March 30, 2004).

4.19          Amended and Restated Credit Agreement, dated as of May 28, 1998,
              as amended and restated as of January 16, 2004, among Panavision
              Inc., the several lenders named therein, and JP Morgan Chase Bank,
              as Administrative Agent.**

4.20          Letter Agreement dated as of January 16, 2004, Mafco Holdings
              Inc., MacAndrews & Forbes Holdings Inc., PX Holding Corporation
              and Panavision Inc.**


10.           MATERIAL CONTRACTS.

10.1          Panavision Inc. 1999 Stock Option Plan (incorporated herein by
              reference from Annex A of the Company's 1999 Definitive Proxy
              Statement dated March 31, 1999).

10.2          Panavision Inc. 2003 Executive Incentive Compensation Plan
              (incorporated herein by reference from the identically numbered
              exhibit from the Company's Quarterly Report on Form 10-Q for the
              quarter ended March 31, 2003).

10.3          Letter Agreement, dated as of March 27, 2003, between MacAndrews
              & Forbes Inc., PX Holding Corporation and Panavision Inc.
              (incorporated herein by reference from the identically numbered
              exhibit from the Company's Annual Report on Form 10-K for the
              year ended December 31, 2002).

10.4          Lease, dated June 13, 1995, between the Company and Trizec Warner
              Inc. (incorporated herein by eference from the identically
              numbered exhibit to the Company's Registration Statement on Form
              S-1, Registration No. 333-12235).

10.5          Stipulation of Settlement Agreement, dated July 26, 2002,
              regarding the M&F Worldwide Corp. Shareholder litigation
              (incorporated herein by reference from Exhibit 16 from the
              Company's Form SC 13D/A filed on July 29, 2002).

10.6          Common Stock Letter Agreement, dated as of December 3, 2002, by
              and between PX Holding Corporation and M&F Worldwide Corp.
              (incorporated herein by reference from Exhibit 1 from the
              Company's form SC 13D/A filed on December 9, 2002).

10.7          Preferred Stock Letter Agreement, dated as of December 3, 2002, by
              and between PX Holding Corporation and M&F Worldwide Corp.
              (incorporated herein by reference from Exhibit 2 from the
              Company's form SC 13D/A filed on December 9, 2002).

10.8          Registration Rights Agreement, dated as of December 3, 2002, by
              and between PX Holding Corporation and Panavision Inc.
              (incorporated herein by reference from Exhibit 3 from the
              Company's form SC 13D/A filed on December 9, 2002).

10.9          Registration Rights Termination Letter Agreement, dated as of
              December 3, 2002, by and between MacAndrews & Forbes Inc. and
              Panavision Inc. (incorporated herein by reference from Exhibit 4
              from the Company's form SC 13D/A filed on December 9, 2002).

10.10         Mafco-M&F Worldwide Note Letter Agreement, dated as of December 3,
              2002, by and between MacAndrews & Forbes Inc. and M&F Worldwide
              Corp. (incorporated herein by reference from Exhibit 5 from the
              Company's Form SC 13D/A filed on December 9, 2002).

10.11         Mafco-Pneumo Abex Corporation Letter Agreement, dated as of
              December 3, 2002, by and between MacAndrews & Forbes Inc., M&F
              Worldwide Corp and Pneumo Abex Corporation (incorporated herein by
              reference from Exhibit 6 from the Company's form SC 13D/A filed on
              December 9, 2002).

10.12         Amended & Restated Employment Agreement, dated May 9, 2003,
              between Panavision Inc. and Bobby G. Jenkins, Executive Vice
              President and Chief Financial Officer (incorporated herein by
              reference from the Company's Quarterly Report on Form 10-Q for the
              quarter ended March 31, 2003).

10.13         Amended & Restated Employment Agreement, dated May 9, 2003,
              between Panavision Inc. and Eric W. Golden, Executive Vice
              President and General Counsel (incorporated herein by reference
              from the Company's Quarterly Report on Form 10-Q for the quarter
              ended March 31, 2003).

10.14         Letter Agreement, dated as of January 31, 2003, between MacAndrews
              & Forbes Inc., PX Holding Corporation and Panavision Inc.
              (incorporated herein by reference from the identically numbered
              exhibit from the Company's Annual Report on Form 10-K for the year
              ended December 31, 2002).



<PAGE>



EXHIBIT
NUMBER        DESCRIPTION
------        -----------
10.15         Loan Out Service Agreement, dated April 10, 2003, and made
              effective March 26, 2003, between Panavision Inc., and Ziffren,
              Brittenham, Branca, Fischer, Gilbert-Lurie & Stiffelman LLP
              (incorporated herein by reference from the identically numbered
              exhibit from the Company's Quarterly Report on Form 10-Q for the
              quarter ended March 31, 2003).

10.16         Tax Sharing Agreement, dated as of February 1, 1999, between
              MacAndrews & Forbes Inc. and Panavision Inc. (incorporated herein
              by reference from the identically numbered exhibit from the
              Company's Annual Report on Form 10-K for the year ended December
              31, 1998). This agreement covers the period February 1, 1999
              through April 18, 2001.

10.17         Stock and Warrant Purchase Agreement dated July 26, 2000 by and
              between Sony Electronics Inc. and Panavision Inc. (incorporated
              herein by reference from the identically numbered exhibit from
              the Company's Quarterly Report on Form 10-Q for the quarter ended
              June 30, 2000).

10.18         Warrant No. W-1, dated July 26, 2000, Warrant for Purchase of
              Shares of Common Stock from Panavision Inc. by Sony Electronics
              Inc. (incorporated herein by reference from the identically
              numbered exhibit from the Company's Quarterly Report on Form 10-Q
              for the quarter ended June 30, 2000).

10.19         Panavision Inc. Stockholders Agreement dated July 26, 2000 by and
              among Panavision Inc. and Sony Electronics Inc. (incorporated
              herein by reference from the identically numbered exhibit from
              the Company's Quarterly Report on Form 10-Q for the quarter ended
              June 30, 2000).

10.20         Registration Rights Agreement dated July 26, 2000 by and between
              Panavision Inc. and Sony Electronics Inc. (incorporated herein by
              reference from the identically numbered exhibit from the
              Company's Quarterly Report on Form 10-Q for the quarter ended
              June 30, 2000).

10.21         Tax Sharing Agreement, dated as of April 19, 2001, by and amount
              Panavision Inc., certain of its subsidiaries and M&F Worldwide
              Corp (incorporated herein by reference from the Company's
              Quarterly Report on Form 10-Q for the quarter ended March 31,
              2001). This agreement covers the period April 19, 2001 through
              December 2, 2002.

10.22         Letter Agreement, dated June 27, 2002, between MacAndrews &
              Forbes Inc. and Panavision Inc. (incorporated herein by reference
              from the identically numbered exhibit from the Company's
              Quarterly Report on Form 10-Q for the quarter ended June 30,
              2002).

10.23         Employment Agreement, dated April 1, 2003, between Panavision Inc.
              and Robert L. Beitcher, President and (as of September 7, 2003),
              Chief Executive Officer (incorporated herein by reference from the
              identically numbered exhibit from the Company's Quarterly Report
              on Form 10-Q for the quarter ended March 31, 2003).

21.           SUBSIDIARIES.


21.1          Subsidiaries of the Company.*


23.           CONSENTS


23.1          Consent of Ernst & Young LLP.*


24.           POWERS OF ATTORNEY.


24.1          Power of Attorney executed by Ronald O. Perelman.*

24.2          Power of Attorney executed by Robert L. Beitcher.*

24.3          Power of Attorney executed by Howard Gittis.*

24.4          Power of Attorney executed by Edward Grebow.*

24.5          Power of Attorney executed by Ed Gregory Hookstratten.*

24.6          Power of Attorney executed by James R. Maher.*

24.7          Power of Attorney executed by Martin D. Payson.*

24.8          Power of Attorney executed by John A. Scarcella.*

24.9          Power of Attorney executed by Robert S. Wiesenthal.*

24.10         Power of Attorney executed by Kenneth Ziffren.*




<PAGE>




31            SECTION 302 CERTIFICATIONS.


31.1          Certification of Robert L. Beitcher, Chief Executive Officer,
              dated April 22, 2004.*

31.2          Certification of Bobby G. Jenkins, Chief Financial Officer, dated
              April 22, 2004.*


32.           SECTION 906 CERTIFICATIONS.


32.1          Certification of Robert L. Beitcher, Chief Executive Officer,
              dated April 22, 2004, pursuant to 18 U.S.C. Section 1350, as
              adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
              2002. (furnished herewith)

32.2          Certification of Bobby G. Jenkins, Chief Financial Officer, dated
              April 22, 2004, pursuant to 18 U.S.C. Section 1350, as adopted
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
              (furnished herewith)

----------

*    Filed herewith.

**   Previously filed as the identically numbered exhibit to the Company's
     Annual Report on Form 10-K for the year ended December 31, 2003 and filed
     with the Securities and Exchange Commission on March 30, 2004.