<PAGE>



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

                                    FORM 10-K

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 2002

                                       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
       WOODLAND HILLS, CALIFORNIA                          91367
(Address of principal executive offices)                 (Zip code)

               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 NYSE) on June 28, 2002 was approximately $3.9 million. As of
March 27, 2003, there were 8,769,919 shares of Panavision Inc. Common Stock
outstanding.

         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>

                                 PANAVISION INC.

                       INDEX TO ANNUAL REPORT ON FORM 10-K

                      FOR THE YEAR ENDED DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                                                                     PAGE
                                                                                                     ----
<S>           <C>                                                                                     <C>
                                     PART I

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

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

Item 3        Legal Proceedings..................................................................     10

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.........................     25

Item 8        Financial Statements and Supplementary Data........................................     26

Item 9        Changes in and Disagreements With Accountants on Accounting
              and Financial Disclosure...........................................................     26



                                    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       Controls and Procedures............................................................     26



                                     PART IV

Item 15       Exhibits, Financial Statement Schedules and Reports on Form 8-K....................     27
</TABLE>


----------
* Incorporated by reference from the Panavision Inc. 2003 Proxy Statement.

                                       i

<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 and television industries.
Panavision camera systems have been widely used in the filming of major motion
pictures over the last several decades, including the recent box office hits
SPIDERMAN, MY BIG FAT GREEK WEDDING, MEN IN BLACK II, AUSTIN POWERS IN
GOLDMEMBER and HARRY POTTER AND THE CHAMBER OF SECRETS. The Company is also a
leading supplier of camera equipment to U.S. prime time episodic or "series"
television productions shot on film or with high definition equipment, such as
THE WEST WING, E.R., FRASIER, THE SOPRANOS and FRIENDS. Panavision is also a
major provider of camera systems to the television commercial market in North
America, Europe and the Asia Pacific region.

     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.

     Unlike equipment manufactured by its competitors, Panavision camera systems
are not available for sale, but instead are rented exclusively through the
Company's domestic and international owned-and-operated facilities and a network
of independent agents. As the only vertically integrated provider of camera
systems to the film and television industries, Panavision believes it is better
able to meet its customers' needs effectively. Panavision is the only supplier
of cinematographic equipment that has a network of rental offices and
maintenance facilities throughout North America, Europe and the Asia Pacific
region. Renting equipment, rather than purchasing equipment, is more
cost-effective for feature film, television and commercial producers given the
periods of inactivity typically experienced between productions. By renting
camera systems from Panavision, its customers are ensured continual access to
state-of-the-art equipment as well as the availability of the proper equipment
combinations for each specific project.

     In addition to manufacturing and renting camera systems, the Company also
has rental operations providing lighting, lighting grip, cranes, power
distribution, generation and related transportation equipment. These operations
include Lee Lighting, the largest lighting rental company in the United Kingdom,
as well as other owned-and-operated facilities in Toronto, Canada and Australia.
Recently, Lee Lighting supplied the lighting needs of such major films as HARRY
POTTER AND THE CHAMBER OF SECRETS, TOMB RAIDER and GLADIATOR. The Company also
manufactures and sells lighting filters and other color-correction and diffusion
filters through its Lee Filters operation.

     Panavision believes 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. 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 for use in the
motion picture and television industries. Panavision obtains the Sony high
definition camera through DHD Ventures, LLC ("DHD Ventures"), a joint venture
established in July 2000 between Panavision and Sony Electronics Inc. ("Sony").
The Sony/Panavision system has been used on a variety of feature films, series
television programs and commercials, including the feature films STAR WARS
EPISODE II: ATTACK OF THE CLONES and ALI, as well as the television series
ACCORDING TO JIM and M.D.'S, which won a recent award from the American Society
of Cinematographers.




                                       1
<PAGE>


     Panavision also believes it is well positioned in the post-production
segment of the digital market with the Company's EFILM operation. Using
proprietary software that Panavision believes distinguishes EFILM from its
competitors, EFILM provides digital laboratory services, including
high-resolution scanning of film, digital color timing, laser film recording of
digital video and high definition images to film and digital mastering to major
film studios, independent filmmakers, advertisers, animators, large format
filmmakers and restoration clients. The Company's services include Vfx scanning
and recoding, tape-to-film ranging from DV to 24P HD, large format services
ranging from 5 to 15 perforations and true 2K and higher digital mastering of
full length feature films. In 2002, the Company and Deluxe Laboratories, Inc.
("Deluxe") formed EFILM, LLC, which now operates EFILM. The Company holds an 80%
membership interest in EFILM, LLC and Deluxe holds the remaining 20%. EFILM has
worked on such films as XXX, 8 MILE, FRIDA, BLUE CRUSH and SPY KIDS II.

     Panavision was incorporated in Delaware in 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").

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 originated by major studios requiring a greater range and volume of
camera and lighting equipment, thus providing greater revenue potential for the
Company. The average 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. Panavision has been
established for many years as the market leader in this segment, providing
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 series television
program rental is for 22 weeks. Panavision has been established for many years
as the market leader, supplying equipment to the majority of U.S. prime time
network series television productions produced on film or digitally. The Company
believes it will continue to be a strong supplier to this market as it continues
to offer its customized equipment and dedicated service designed for television
production which it believes provides both economic and qualitative benefits to
its customers.

      COMMERCIALS

     Although the production of a commercial generally last for only one to
seven days, daily rental rates for camera systems are equivalent to feature film
rental rates and represent a significant part of the camera equipment rental
market worldwide. Many of the creative people 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
Panavision products. By pursuing opportunities to expand its presence in the
television commercial market, the Company believes that it can develop brand
loyalty to Panavision products and beneficial long-term relationships with
directors and cinematographers, many of whom begin their careers filming
television commercials.




                                       2
<PAGE>


     DIGITAL

      The production of feature films involves three distinct phases: (1) image
capture; (2) post-production; and (3) distribution/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, the Company believes
     that the superior quality of its PRIMO DIGITAL(R) lenses that it couples
     with Sony's 24P CINEALTA(TM) high definition digital camera it currently
     offers to the motion picture and television industries positions the
     Company to compete effectively if digital becomes the capture medium of
     choice.

         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. The post-production phase has
     traditionally been a chemical laboratory process, but this may change over
     time with the advent of the digital intermediate. In the digital
     intermediate process, film negatives are scanned into a computer using high
     resolution scanning equipment and remains in the digital format throughout
     the post-production process. This method provides a significant improvement
     in the quality of theatrical release prints because when the images are
     converted to a digital format the print does not suffer the significant
     degradation that occurs in the traditional film laboratory chemical
     process. EFILM's use of the digital intermediate process on both 35mm
     negatives and digital material and its relationship with Deluxe position
     the Company to take advantage of the growing post-production segment of the
     digital market.

         DISTRIBUTION/EXHIBITION. The exhibition phase refers to the medium used
     to transfer and show the images to the ultimate viewer. In the example of a
     theatrical release, it refers to film or digital projection. Regardless of
     the speed of implementation of digital projection or whether digital
     projection is implemented at all, the choice of the exhibition medium will
     have limited impact on either the capture or post-production decisions.
     This is because digital images in the post-production phase may readily be
     recorded back to a 35mm negative, or any other distribution medium such as
     HD master, DVD, VHS, and television master.

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 camera systems for the motion picture and television industries.

     INCREASE CAMERA SYSTEM PACKAGE SIZE. Panavision continues to focus its
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, require more expensive camera packages with more
cameras, more lenses and value-added accessories.

     DEVELOP NEW PRODUCTS. Panavision intends to continue developing and
manufacturing technologically superior cameras, lenses and accessories.
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
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 CINEALTATM 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
          with using the medium. The PRIMO DIGITAL(R) lenses represent
          significant technological breakthroughs providing extremely high
          performance, which Panavision believes will

                                       3
<PAGE>

          provide it with the opportunity to build on its leadership position.
          Panavision will continue to develop camera and lens systems in
          cooperation with Sony to meet evolving needs in the high definition
          digital medium.

          o BROADCAST LENSES. 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.
          The Company believes this expertise uniquely positions it 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 add value and can drive high margins.
          The first niche market Panavision has identified is high zoom range
          lenses for the sports broadcast market. Present lens technology has
          maximum performance at 100:1 zoom range. Using a breakthrough design
          technology, Panavision has designed a lens that may significantly
          outperform its competitors' products. Panavision expects these lenses
          to be available to customers beginning in 2004.

     IMPROVE OPERATING EFFICIENCY. Panavision believes that profitability can be
enhanced through improvements in operating efficiency. These improvements
include the implementation of a common information system to better manage
equipment rentals and customer service and refinement of compensation programs
to better align objectives with improved profitability, both of which are
currently in process. In addition to improved profitability, Panavision believes
these changes will also ultimately lead to more efficient use of equipment,
hence mitigating capital requirements in the future.

     EFILM. EFILM has been a pioneer in the digital post-production market with
the evolution of the digital intermediate process. A digital intermediate
replaces the portion of post-production that currently uses a film laboratory
chemical process. In the digital intermediate process, the film negative is
scanned into a computer using high-resolution scanning equipment and remains in
a digital format throughout the processes of color timing, insertion of digital
effects, opticals and titles. The digital intermediate process provides a
significant improvement in the quality of theatrical release prints because when
the image is converted to a digital format it does not suffer the significant
degradation that occurs in the traditional film laboratory chemical process. The
digital process also provides the ability to creatively color time and
selectively add color and effects to any frame of film in a manner previously
not possible in film processing. This results in a digital master that can be
used to provide all distribution mediums. For cinematic release, the digital
master is recorded back to 35mm negative. The digital master can also be used to
create a digital cinema release, HD master, DVD, VHS and television master.
Panavision believes that the digital intermediate process will replace film
intermediates over the next few years for images captured on film as well as
images captured digitally.

CAMERA RENTAL OPERATIONS

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

     CAMERA SYSTEM PRODUCTS

     The Company is the only provider of camera systems with an integrated
design that provides customers with compatible products that are available
worldwide. Each camera package rented for a project is comprised of a number of
camera systems, each of which includes a camera, lenses and accessories. A
cinematographer's needs may include, for example, a sync-sound camera, such as
the Platinum PANAFLEX(R) and a high-speed PANASTAR(R) camera. Each camera's
rental package 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. The Company's camera inventory consists of both sync-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, the Company
     also has 16mm cameras, which are used primarily to film episodic television
     shows, and 65mm cameras, which are used


                                       4
<PAGE>

     primarily to film special effects and special venue presentations.

         The Company's inventory also includes a number of non-Panavision
     cameras that are used to supplement the Company's product line. Due to its
     ability to purchase non-Panavision cameras if there is a business need to
     do so, the Company is able to compete with independent renters of
     cinematography equipment on the same level and with the same equipment. Its
     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, the Company specialized in anamorphic lenses, which are
     used for the wide-screen movie format. While the Company remains the
     world's leading supplier of these lenses, it has also designed and
     developed another series of prime and zoom lenses specifically for
     cinematography applications. The Company created a line of advanced
     spherical lenses for the non-wide screen format, producing its proprietary
     PRIMO PRIME(R) and PRIMO ZOOM(R) lenses. The PRIMOTM 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
     CINEALTATM high definition digital camera coupled with Panavision's
     specially designed PRIMO DIGITAL(R) lenses and other accessories. The PRIMO
     DIGITAL(R) lenses represent significant technological breakthroughs
     providing extremely high performance which the Company believes will
     provide it with the opportunity to build on its leadership position for
     many years to come.

         ACCESSORIES. In order to provide its customers with a fully integrated
     camera system, the Company 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 the Company's
     customers that the Company incorporates it into the base camera package,
     thereby increasing the rental price of the overall package.

     RESEARCH AND PRODUCT DEVELOPMENT

     The Company'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. The Company 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 PRIMOTM series, which won Academy Awards in
2002, 1999, 1995, 1994, 1991 and 1990. In 2000, the Company launched its series
of specially designed PRIMO DIGITAL(R) lenses for use with the Sony 24P
CINEALTATM digital camera. These lenses are among the most sophisticated and
highest performing lenses the Company has ever produced.

     Research and development expense for the years ended 2002, 2001 and 2000
was $4.4 million, $5.0 million and $6.2 million, respectively.

     MANUFACTURING AND ASSEMBLY

     The Company manufactures cameras, lenses and accessories designed by the
Company's in-house research and development staff. The Company has approximately
250 non-union employees, including manufacturing and non-manufacturing
personnel, at its 150,000 square foot manufacturing facility in Woodland Hills,
California, located near Hollywood.



                                       5
<PAGE>


     The Company 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 the Company 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. The Company has
developed long-standing relationships with its significant suppliers and
believes that they will continue to supply high-quality products in quantities
sufficient to satisfy its 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. The Company 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 camera packages are
cinematographers, directors and producers, who view their cameras and related
equipment as critical artistic tools. Camera packages typically comprise a very
small percentage of a production budget. Accordingly, other than budget
constraints, 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.

     The Company's skilled sales representatives have established close working
relationships with numerous filmmakers. To cultivate these relationships, the
Company 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 throughout the production. As a
result of providing high-quality customer service, many of the Company'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
studio and screening room.

     DISTRIBUTION

     Camera packages are rented to the motion picture and television industries
through rental offices owned and operated by Panavision as well as by
independent agents. These rental offices serve as a single point of contact for
the cinematographers and often provide services including maintenance and
technical advice. Panavision is the only manufacturer to have a significant
portion of its revenue generated through owned-and-operated rental houses,
primarily because of the Company's choice not to sell its equipment. The Company
does not currently intend to begin selling its 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 its owned-and-operated facilities, the Company serves its
customers through a network of domestic and international third-party agents who
are responsible for the rental of the Company's equipment in locations that are
not serviced by the owned-and-operated facilities. Agents pay approximately 60%
of their rental revenue to the Company and retain the balance, which is charged
as a commission expense in the Company's statement of operations. All of the
Company's agents are well trained in the use of Panavision equipment and are
supported by the Company's technical staff.

                                       6
<PAGE>


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

     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's leading
position results from the following competitive strengths, which it believes
provide substantial barriers to entry into Panavision's business.

         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. Panavision has been awarded three OSCARs(R) and
     23 other Academy Awards 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, a 1999 award for the development of the PRIMOTM lens
     series, and a 1998 award for the Panavision/Frazier Lens System. Panavision
     has also received two EMMY(R) awards, one in 2001 for the development of
     the PRIMOTM lens series and one in 2000 for the development of the
     MILLENNIUM(R) XL camera system. Since 1990, nine cinematographers who have
     won the OSCAR(R) for Best Cinematography, including the cinematographers of
     AMERICAN BEAUTY, SAVING PRIVATE RYAN and TITANIC, used Panavision camera
     systems.

         RANGE AND BREADTH OF CAMERA EQUIPMENT. Panavision believes that it has
     the world's largest inventory of camera systems, with thousands of cameras
     and lenses. It also offers a broad range of choices, including equipment
     that is exclusively available through Panavision 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 its customers with access to the latest
     technological advances. Panavision believes that the range and breadth of
     its camera inventory enable it 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.

         LONG-LASTING RELATIONSHIPS WITH FILMMAKERS. As a result of Panavision's
     significant relationships with cinematographers, directors and producers
     and its leading market position, Panavision gains early access to
     productions and often is able to influence the selection of camera systems.
     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
     Panavision 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 Panavision to sustain its strong
     market position. 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 provider of camera systems, lenses, and accessories
     to the motion picture, network television and television commercial
     industries. By renting camera systems from Panavision, its customers are
     ensured continual access to state-of-the-art equipment as well as the
     availability of the proper equipment combinations for each specific
     project. The Company's control over the design, development, manufacturing
     and distribution processes enables it to (i) rapidly incorporate
     technological developments and filmmakers' suggestions into new products,
     (ii) maintain product exclusivity and (iii) 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 sends marketing representatives and technicians to
     film production sets to provide advice or immediate assistance with any
     equipment needs or questions. The Company assigns to


                                       7
<PAGE>


     each production a sales representative who possesses skills and experience
     appropriate to the needs of that production in an attempt to foster a
     strong and lasting working relationship with the customer. In addition, as
     part of its customer service activities, the Company often develops,
     customizes or procures equipment for specific customers or projects.
     Central to Panavision's customer service philosophy is its maintenance and
     repair team, which services all equipment between projects to ensure the
     quality and reliability of its equipment.

         WORLDWIDE DISTRIBUTION NETWORK. Panavision is the only camera and
     lighting operation with an extensive worldwide distribution network,
     including 28 owned-and-operated facilities throughout North America, Europe
     and the Asia Pacific region. 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. The Company also serves its customers through a
     network of 26 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 its 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 management has developed
     relationships over many years with influential individuals in the motion
     picture and television industries, a central aspect of its 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, the Company has one primary
competitor, Arri, Inc. ("Arri"), based in Munich, Germany. Arri manufactures
only cameras and certain accessories, primarily for sale to rental houses and
individuals that are not the end users. Because Panavision manufactures lenses,
cameras, and a full range of accessories, has close relationships with
filmmakers and has in-house design and manufacturing capabilities, the Company
believes that it is better able to develop the innovative camera systems
demanded by its customers.

     As a renter of cinematography equipment, the Company competes with numerous
rental facilities, which must 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, the Company has chosen
to compete on the basis of its large inventory base, technologically advanced
proprietary products, broad product line, extensive sales and marketing force
and commitment to customer service. The Company believes that, as both the
manufacturer and rental house, it is able to respond to many user requests on
shorter notice and more effectively than its rental competitors. In addition to
its existing competitors, the Company may encounter competition from new
competitors, as well as from new types of equipment, such as digital cameras.
Although the Company believes that through its interest with Sony in DHD
Ventures, and through its EFILM operation, it is well positioned to capitalize
on potential growth in the digital market, 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, the Company 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 its owned-and-operated
facilities located in the United Kingdom, 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 picture and television industries. Under
this management there is a sizable field force of gaffers and electricians who
work exclusively with Panavision.



                                       8
<PAGE>


     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 and Edinburgh, Scotland, each of which has its
own rental inventories. From these locations, Lee Lighting is able to service
any production in England, Wales or Scotland. In London, Lee Lighting maintains
three operations, including 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.
This service force is on call 24 hours a day, seven days a week and is
supplemented by freelance labor when required.

     In December 2001, the Company entered into a lease agreement with TFN
Lighting Corp. ("TFN"), a wholly owned subsidiary of Pany Rental, Inc. (dba
Panavision New York), an agent in which the Company holds a one-third interest.
Pursuant to the lease, the Company leased to TFN lighting and related lighting
accessory equipment located in the United States. The lease term commenced on
February 1, 2002 and expires on October 31, 2005. Monthly rental payments are
due to Panavision in amounts specified in the lease agreement. At the end of the
Option Term, as defined in the lease agreement, TFN will have the option to
purchase the equipment covered by the lease.

     COMPETITION

     Panavision's lighting rental operations service both the motion picture and
television 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 Panavision'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 its
operations.

SALES AND OTHER OPERATIONS

     The Company manufactures and sells lighting filters through its Lee Filters
operations in the United Kingdom and the United States. Panavision also owns and
operates EFILM in the United States. In addition, the Company sells various
consumable products such as film stock, light bulbs and gaffer tape, which are
used in all types of production.

     Lee Filters is a manufacturer of light control media for the motion
picture, television and theater 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 production. Lighting filter distribution, on
a worldwide basis, 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. In the United Kingdom, Lee Filters sells on a
direct basis to end users and rental houses as well as to distributors and
dealers.

     EFILM provides digital laboratory services, including high-resolution
scanning of film, digital color timing, laser film recording of digital video
and high definition images to film and digital mastering to major film studios,
independent filmmakers, advertisers, animators, large format filmmakers and
restoration clients. In 2002, the Company and Deluxe formed EFILM, LLC, which
now operates EFILM. The Company holds an 80% membership interest in EFILM, LLC
and Deluxe hold the remaining 20%. EFILM is located in Hollywood, California.

INTELLECTUAL PROPERTY

     The Company relies on a combination of patents, licensing arrangements,
trade names, trademarks, service marks, trade secrets, know-how and proprietary
technology to protect its intellectual property rights. The


                                       9
<PAGE>

Company owns or has been assigned or licensed domestic and foreign patents and
patent applications relating to its cameras, lenses and accessories. The Company
also owns or has been assigned several domestic and foreign trademark or service
mark registrations including PANAVISION(R), PANAFLEX(R), PANAHEAD(R),
PANALITE(R), PANAVID(R), PANASTAR(R), PRIMO ZOOM(R), PRIMO MACRO ZOOM(R),
PRIMO-L(R), PRIMO DIGITAL(R), 3-PERF(R), MILLENNIUM(R) and ULTRAVIEW(R), which,
collectively, are material to its business.

ENVIRONMENTAL MATTERS

     The Company 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 ("Environmental Laws"). The
Company also is subject to laws and regulations relating to worker health and
safety. The Company believes that its operations are in substantial compliance
with all applicable Environmental 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 the Company
will not incur costs in the future relating to environmental matters that would
have a material adverse effect on the Company's business or financial condition.

EMPLOYEES

     As of December 31, 2002, the Company had approximately 1,140 full-time
employees, consisting of 490 employees based in North America, 530 employees
based in Europe and 120 employees based in the Asia Pacific region. The Company
is not a party to any collective bargaining agreement. The Company believes that
its relationships with its employees are good.

RECENT DEVELOPMENTS

     On January 7, 2003, John S. Farrand, then the Company's President and Chief
Executive Officer, ceased his employment with the Company. Separation
arrangements with Mr. Farrand have not yet been finalized. Upon Mr. Farrand's
departure, Ronald O. Perelman, the Chairman of the Board of Directors of the
Company, appointed an Office of the President comprised of Bobby G. Jenkins,
Executive Vice President and Chief Financial Officer, Eric W. Golden, Executive
Vice President and General Counsel, and Will T. Paice, currently President of
U.S. Operations, to manage the daily affairs of the Company. In addition, Scott
L. Seybold, Executive Vice President and former Chief Financial Officer of the
Company, will cease his employment with the Company effective March 31, 2003.

ITEM 2.  PROPERTIES

     The Company's headquarters and principal manufacturing facility are located
at its 150,000 square-foot facility in Woodland Hills, California. The Company
operates domestic rental facilities in Woodland Hills, Hollywood, Dallas,
Orlando and Wilmington. To service its international markets, Panavision
operates rental facilities in Toronto and Vancouver, Canada; Dublin, Ireland;
London (three), 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
London, Bristol and Manchester, England and Glasgow and Edinburgh, Scotland. Lee
Filters has a sales operation in Burbank, California, as well as a manufacturing
and sales facility located in Andover, England. EFILM is located in Hollywood.
All of the Company's facilities are leased.

ITEM 3.  LEGAL PROCEEDINGS

     The Company 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
business or financial condition.

     During 2001, certain shareholders of M&F Worldwide Corp. ("M&F Worldwide")
brought lawsuits against M&F Worldwide and its directors challenging the
purchase by M&F Worldwide from PX Holding Corporation ("PX Holding"), a wholly
owned subsidiary of Mafco Holdings Inc. ("Mafco Holdings"), of all 7,320,225
shares of the Company's Common Stock held by PX Holding (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 shareholders 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


                                       10
<PAGE>

PX Holding, (1) 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.
(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, 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.

     See "Management's Discussion and Analysis of Financial Condition and
Results of Operations", included elsewhere in this Form 10-K, for a detailed
discussion of the M&F Purchase and the M&F Settlement.

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 2002.



                                     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 27, 2003, there were approximately 730 holders of Panavision
Common Stock comprised of approximately 85 record holders and 645 beneficial
holders.

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

         2001
           First Quarter..............................     $    7.06         $    2.88        $    3.75
           Second Quarter.............................          6.02              3.75             5.95
           Third Quarter..............................          5.88              4.85             4.85
           Fourth Quarter.............................          5.00              4.50             4.60
</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 restricts 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 PURCHASE   POST-M&F PURCHASE
                                        YEAR ENDED       PERIOD FROM         PERIOD FROM
                                       DECEMBER 31,      JANUARY 1 TO        APRIL 20 TO            YEAR ENDED DECEMBER 31,
                                         2002 (1)       APRIL 19, 2001    DECEMBER 31, 2001      2000        1999          1998
                                      -------------    ---------------    -----------------   ---------    ---------    ---------
<S>                                     <C>               <C>                 <C>             <C>          <C>          <C>
STATEMENT OF OPERATIONS DATA:
Revenue                                 $ 193,182         $  65,809           $ 125,001       $ 204,628    $ 202,751    $ 192,886
Cost of revenue                           114,040            32,004              72,395         110,295      110,608      105,068
                                        ---------         ---------           ---------       ---------    ---------    ---------
Gross margin                               79,142            33,805              52,606          94,333       92,143       87,818
Selling, general and
  administrative expenses                  55,274            16,987              42,516          57,376       59,428       54,405
Research and development expenses           4,436             1,841               3,136           6,163        6,103        4,539
Charges in connection with the
  Panavision Recapitalization (2)              --                --                  --              --           --       58,726
                                        ---------         ---------           ---------       ---------    ---------    ---------
Operating income (loss)                    19,432            14,977               6,954          30,794       26,612      (29,852)
Net interest expense (2)                  (33,027)          (14,502)            (27,628)        (48,255)     (42,285)     (28,316)
Net other income (expense)                 (1,629)               48                 638          (1,303)       1,435        3,369
                                        ---------         ---------           ---------       ---------    ---------    ---------
Income (loss) before income
  taxes                                   (15,224)              523             (20,036)        (18,764)     (14,238)     (54,799)
Income tax benefit (provision)              4,145            (1,011)              6,511          (4,881)      (1,800)        (322)
                                        ---------         ---------           ---------       ---------    ---------    ---------
Net loss                                $ (11,079)        $    (488)          $ (13,525)      $ (23,645)   $ (16,038)   $ (55,121)
                                        =========         =========           =========       =========    =========    =========
Net loss per share - basic and
  diluted                               $   (1.59)        $   (0.06)          $   (1.54)      $   (2.83)   $   (1.99)   $   (4.35)
                                        =========         =========           =========       =========    =========    =========
Shares used in computation -
  basic and diluted                         8,770             8,770               8,770           8,366        8,056       12,673
EBITDA (3):
Income (loss) before income
  taxes adjusted for:                   $ (15,224)        $     523           $ (20,036)      $ (18,764)   $ (14,238)   $ (54,799)
  Depreciation and amortization            43,529            11,518              36,412          37,926       36,940       33,161
  Net interest expense                     33,027            14,502              27,628          48,255       42,285       28,643
  Foreign exchange (gain) loss               (995)              748                (216)          2,195          782         (439)
  Refinancing expense                       4,523                --                  --              --           --           --
  Charges in connection with
    the Panavision Recapitalization            --                --                  --              --           --       58,726
                                        ---------         ---------           ---------       ---------    ---------    ---------
                                        $  64,860         $  27,291           $  43,788       $  69,612    $  65,769    $  65,292
                                        =========         =========           =========       =========    =========    =========

</TABLE>


<TABLE>
<CAPTION>
                             PRO FORMA(4)     POST-M&F PURCHASE             PRE-M&F PURCHASE
                             ------------  ---------------------   -----------------------------------
                             DECEMBER 31,        DECEMBER 31,                  DECEMBER 31,
                                 2002         2002        2001        2000         1999        1998
                             ------------  ---------   ---------   ---------    ---------    ---------
<S>                           <C>          <C>         <C>         <C>          <C>          <C>
BALANCE SHEET DATA:
Total assets                  $ 642,588    $ 633,167   $ 601,216   $ 284,712    $ 291,558    $ 291,757
Total current liabilities        59,830       58,474      50,198      50,133       41,245       33,078
Long-term debt and Series B
Preferred Stock                 323,648      467,397     448,623     477,425      473,429      463,605
Stockholders' equity/
  (deficiency)                  228,942       72,129      75,325    (250,302)    (213,765)    (231,240)
</TABLE>



                                       12
<PAGE>

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

(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)  In connection with the recapitalization transaction that took place in
     1998, the Company recorded $10.1 million of transaction-related expenses
     and a compensation charge of $48.6 million related to the purchase of
     shares and retirement of options. Additionally, the Company increased
     long-term borrowings outstanding and related interest expense as part of
     the 1998 Panavision Recapitalization transaction.

(3)  The Company evaluates performance based on profit or loss from operations
     before net interest, income taxes, depreciation and amortization
     ("EBITDA"). Management believes that EBITDA serves as an important
     financial analysis tool for measuring financial information such as
     operating performance, liquidity and leverage. However, EBITDA should not
     be considered in isolation as a substitute for net income or cash flow from
     operations prepared in accordance with accounting principles generally
     accepted in the United States or as a measure of profitability or
     liquidity. EBITDA is calculated by adding back all depreciation and
     amortization and net interest expense to income/(loss) before income taxes
     and excluding unrealized foreign exchange gains and losses. In 2002, EBITDA
     excludes refinancing expense of $4.5 million. EBITDA for 1998 has been
     adjusted by adding back the $58.7 million of charges in connection with the
     1998 Panavision Recapitalization to actual EBITDA.

(4)  This column reflects a pro forma presentation of selected balance sheet
     data as if transactions in connection with the March 2003 Amendment had
     occurred as of December 31, 2002. See Note 7 to 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.

     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 rental of cinematographic equipment to major feature film
productions comprises the largest component of revenue generated from camera
rental operations.

     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 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.

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 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.

     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,
2002, the Company had a $6.9 million valuation allowance established against its
deferred tax assets. To the extent the


                                       14
<PAGE>

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 that 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 tradename since both are believed to
have an indefinite life. In lieu of amortization, the Company performed the
required initial impairment and annual review of its goodwill and tradename in
2002 and will perform an annual impairment review thereafter. If the Company
determines at any point in the impairment review process that goodwill or its
tradename has been impaired, the Company would record an impairment charge in
its consolidated statement of operations.

     RECENT ACCOUNTING PRONOUNCEMENTS - In June 2001, the Financial Accounting
Standards Board ("FASB") issued SFAS 142, which is effective for fiscal years
beginning after December 15, 2001. SFAS 142 changes the accounting for goodwill
from an amortization method to an impairment-only approach. In addition, the
standard includes provisions, upon adoption, for the reclassification of certain
existing recognized intangibles as goodwill, reassessment of the useful lives of
existing recognized intangibles, reclassification of certain intangibles out of
previously reported goodwill and the testing for impairment of existing goodwill
and other intangibles. SFAS 142 requires that goodwill be tested annually for
impairment. The Company adopted this pronouncement on January 1, 2002. As a
result of this adoption, goodwill and tradename amortization, which amounted to
approximately $9.2 million in 2001, did not continue beyond December 31, 2001.

     In August 2001, the FASB issued Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which is effective for fiscal
years beginning after December 15, 2001. SFAS 144 supersedes FASB Statement No.
121, "Accounting for the Impairment or Disposal of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," and the accounting and reporting
provisions relating to the disposal of a segment of a business of Accounting
Principles Board Opinion No. 30. The adoption of SFAS 144 has not had a material
effect on the Company's consolidated financial position, results of operations
and cash flows.

     In June 2002, the 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 is effective for exit or disposal activities
that are initiated after December 31, 2002 and is not expected to have a
material impact on the Company's financial statements.

     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



                                       15
<PAGE>


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 statements 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 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 will determine whether it will adopt the
fair value based method of accounting for stock-based employee compensation.

     In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
of Variable Interest Entities" ("FIN 46"). FIN 46 provides guidance on the
identification of entities for which control is achieved through means other
than through voting rights, variable interest entities, and how to determine
when and which business enterprises should consolidate variable interest
entities. This interpretation applies immediately to variable interest entities
created after January 31, 2003. It applies in the first fiscal year or interim
period beginning after June 15, 2003, to variable interest entities in which an
enterprise holds a variable interest that it acquired before February 1, 2003.
The adoption of this interpretation is not expected to have an impact on the
Company's financial statements.

     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.

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. 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:
(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.

                                       16
<PAGE>


     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 shareholders and $600,000 to Las Palmas. M&F Worldwide also agreed to
make an additional payment to the selling shareholders 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").

     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 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"). Since the Company and Las Palmas are
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 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, 2002,
the Company has recorded a liability of approximately $1.2 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. The Series B Preferred Stock is non-voting; it has
a liquidation preference of $49.2 million plus accrued and unpaid dividends; it
entitles the holder to cumulative dividends at a rate of 10% per annum; and it
may be redeemed by the Company at its option at any time for the liquidation
preference plus accrued and unpaid dividends.

     An amendment dated September 30, 2002 to the Existing Credit Agreement
provides that it is an event of default if (i) by February 1, 2003, an affiliate
of the Company fails to make a cash equity contribution to the Company in the
amount of the interest due February 1, 2003 on Existing Notes held by affiliates
of the Company on that date or (ii) by March 28, 2003, the Existing Credit
Agreement is not refinanced or the debt of the Company reduced, in either case
by an amount acceptable to the lenders under the Existing Credit Agreement, or
an affiliate of the Company fails to make a cash equity contribution to the
Company in the amount of the interest which was due on February 1, 2003 on
Existing Notes held by non-affiliates of the Company on that date. On


                                       17
<PAGE>
January 31, 2003, Mafco Holdings made the required 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.

     On February 3, 2003, Mafco Holdings agreed to extend to the Company a
revolving line of credit 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 (the "Mafco Line").

     On March 27, 2003, the Company acquired from Mafco Holdings $90,860,000
principal amount of Existing Notes, which had approximately $1.4 million of
accrued interest and $10,000,000 in cash, and 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 Cumulative Pay-in-Kind Preferred Stock, par value $0.01 per
share, of the Company (the "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. The Series C Preferred Stock is non-voting; it has a liquidation
preference of $1,000 per share plus accrued and unpaid dividends; and it
entitles the holder to cumulative dividends at a rate of 10% per annum. Mafco
Holdings also agreed to extend the Mafco Line until March 31, 2004.

     During 2001, certain shareholders 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 shareholders 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) 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 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). 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.

RESULTS OF OPERATIONS

     The following discussion and analysis includes the Company's consolidated
historical results of operations for 2002 and 2000. 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, 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
commercial slowdown. The decline reflects slightly lower series television
revenue generated outside the U.S. Camera 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. 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.

                                       18
<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. The increase in lighting costs is
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 is 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 $55.3 million, a decrease of $4.2 million, or 7.1%, compared to
the year ended December 31, 2001. The decrease primarily reflects the
elimination of approximately $9.2 million of goodwill and tradename 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 due to lower overall staffing expenses.

     INTEREST, TAXES AND OTHER

     Net interest expense for the year ended December 31, 2002 was $33.0
million, a decrease of $9.1 million, or 21.6%, 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 payable balances held in the U.K.

     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 include 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.

     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 Settlement of December 3, 2002 and through December 31, 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.

                                       19
<PAGE>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

     CAMERA RENTAL OPERATIONS

     Camera rental revenue for the year ended December 31, 2001 was $124.6
million. Revenue decreased $5.4 million, or 4.2%, compared to 2000. Exchange
rate changes adversely affected the year-to-year comparisons by almost $3.3
million reflecting the impact of weaker European and Australian currencies
versus the U.S. Dollar. At constant exchange rates, the decline in camera
revenue largely reflects lower revenue associated with television commercials,
reflecting a weak television commercial market. Most territories worldwide were
adversely affected by the commercial slowdown. The year-to-year decline is in
comparison to a 2000 commercial market that was adversely impacted by a Screen
Actors Guild commercial actors strike from May 2000 through October 2000.

     Camera revenue associated with worldwide feature film production increased
in 2001, despite fewer major studio feature film starts in 2001 as compared to
2000. The decrease in production starts was the result of an unusually low level
of worldwide feature film productions in the second half of 2001, following the
robust feature film environment of the first half of the year. The shift in 2001
production occurred in anticipation of the possibilities of mid-year strikes by
the Writers Guild of America and the Screen Actors Guild. Both of these labor
negotiations were concluded at the end of the second quarter without any labor
disruption. Management believes that the events of September 11, 2001 may have
also exacerbated the decline in the feature film production starts in the second
half of 2001. Revenue growth was also achieved in North American series
television in 2001.

     Cost of camera rental for the year was $58.6 million, a decrease of $2.5
million, or 4.1%, as compared to 2000. The decrease was primarily due to lower
maintenance cost on rental equipment and the favorable impact of translating
expenses of operations denominated in weaker currencies to the U.S. dollar.

LIGHTING RENTAL OPERATIONS

     Lighting rental revenue for the year ended December 31, 2001 was $31.7
million, a decrease of $8.6 million, or 21.3%, compared to 2000. The decrease
was primarily due to considerably lower levels of feature film production in the
U.K. (Lee Lighting). Lighting revenue associated with television commercials
also declined reflecting the weak television commercial market worldwide.
Exchange rate changes adversely impacted the year-to-year comparisons by
approximately $1.8 million.

     Cost of lighting rental for the year was $26.5 million, a decrease of $3.5
million, or 11.7%, from 2000. The change is primarily due to the decreased costs
associated with the lower lighting rentals worldwide.

     SALES AND OTHER

     Sales and other revenue in the year ended December 31, 2001 was $34.4
million, an increase of $0.1 million from the year ended December 31, 2000. The
results reflect $3.5 million of revenue generated from EFILM, which the Company
began operating in the third quarter of 2001, offset by lower lighting filter
and expendable sales worldwide. Exchange rate changes adversely affected the
year-to-year comparisons by approximately $1.9 million.

     OPERATING COSTS

     Selling, general and administrative expenses for the year ended December
31, 2001 were $59.5 million, an increase of $2.1 million, or 3.7%, as compared
to the year ended December 31, 2000. The increase reflects approximately $8.4
million of additional goodwill and other intangible amortization resulting from
the fair value adjustments arising from the M&F Purchase, offset by the impact
of cost reduction measures implemented during the year.

     Research and development expenses for 2001 were $5.0 million, a decrease of
$1.2 million from 2000. The decrease was primarily due to lower costs related to
the development of products for digital application.

                                       20
<PAGE>

     INTEREST, TAXES AND OTHER

     Net interest expense for the year ended December 31, 2001 was $42.1
million, a decrease of $6.2 million, or 12.8%, from 2000. The decrease primarily
reflects lower interest rates as compared to the year ended December 31, 2000.

     Net other income for 2001 was $0.7 million, compared to net other expense
of $ 1.3 million in 2000. The change primarily reflects a decrease in foreign
exchange losses as compared to the prior year.

     The tax benefit was $5.5 million for the year ended December 31, 2001, as
compared to a tax provision of $4.9 million for the year ended December 31,
2000. In connection with the M&F Purchase, the Company recorded a deferred
income tax benefit of approximately $3.8 million resulting from the reversal of
the valuation allowance. The Company also recorded a net income tax benefit of
$6.2 million primarily resulting from the benefit associated with domestic tax
losses. The tax benefit was partially offset by the recording of a $4.6 million
provision relating to profitable foreign operations and foreign taxes withheld
at source and alternative minimum taxes. For the year ended December 31, 2000,
no corresponding tax benefit was recorded for U.S. losses. See Notes 2 and 6 of
the Notes to Consolidated Financial Statements for a discussion of the tax
sharing agreements.

     For the period from April 19, 2001 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 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.

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):

                                                     YEAR ENDED DECEMBER 31,
                                               --------------------------------
                                                 2002        2001        2000
                                               ---------   ---------  ---------
     Net cash provided by (used in):
     Operating activities..................... $ 23,351    $ 43,277   $ 24,752
     Investing activities.....................  (22,292)    (25,007)   (28,978)
     Financing activities.....................    9,382     (21,023)     4,033



                                       21
<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 Laboratories, Inc. 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.

     Cash provided by operating activities, for the year ended December 31,
2000, totaled $24.8 million comprised of the net loss of $23.6 million, adjusted
for depreciation and amortization of $37.9 million and the amortization of the
discount on the Existing Notes of $17.7 million, offset by the net change in
working capital (excluding cash) and other miscellaneous items totaling $7.2
million. Investing activities of $29.0 million included $30.7 million of capital
expenditures, offset by $1.7 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 provided by financing
activities was $4.0 million, reflecting the capital contribution from Sony of
$10.0 million, for which Sony received 714,300 shares of Panavision Common Stock
representing approximately 8% of Panavision's Common Stock 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, such warrants being fully
exercisable at any time through July 25, 2010 (see Note 15 of the Notes to the
Consolidated Financial Statements), and a reduction 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. At December 31, 2002,
exclusive of $90.9 million face value of Existing Notes which were contributed
by Mafco Holdings in connection with the March 2003 Amendment, as well as the
effects of the step-up in basis in connection with the M&F Purchase, 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         $  345,639        $   22,815           $ 322,824      $       -       $          -

Operating leases           40,610             8,185              17,328          6,860              8,237
                       ------------    -------------------    -----------    -----------     ---------------
Total contractual
  cash obligations      $ 386,249        $   31,000             340,152      $   6,860       $      8,237
                       ============    ===================    ===========    ===========     ===============
</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.

     As of December 31, 2002, amounts available to the Company under various
letters of credit totaled approximately $0.6 million, all with expiration dates
of June 2004. In addition, the Company has various lines of credit totaling
approximately $2.9 million at December 31, 2002, under which no amounts were
drawn. The Company's ability to draw on these lines of credit is restricted by
the terms of the Existing Credit Agreement. The Company does not have any
off-balance sheet financing arrangement other than operating leases.

     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 and September 30, 2002, the "Existing Credit
Agreement"). The Existing Credit Agreement is comprised of two facilities, the
Term Facility


                                       22
<PAGE>

and the Revolving Facility. As of December 31, 2002, amounts outstanding under
the Existing Credit Agreement were $174.6 million and $99.2 million for the Term
Facilities and Revolving Facility, respectively. The Term Facility has two
tranches: the Tranche A Term Facility is a 6-year facility in an aggregate
principal amount of $90.0 million and the Tranche B Term Facility is a 7-year
facility in an aggregate principal amount of $150.0 million. The Revolving
Facility is a 6-year facility in an aggregate principal amount of $100.0
million. The Tranche A Term Facility and the Tranche B Term Facility are
repayable in quarterly installments. Borrowings under the Existing Credit
Agreement bear interest at a rate per annum equal to the Alternate Base Rate
("ABR") (as defined in the Existing Credit Agreement) or the Eurodollar Rate (as
defined in the Existing Credit Agreement) plus, in each case, an applicable
margin. The applicable margin at December 31, 2002 on loans under the Revolving
Facility and the Tranche A Term Facility was 4.00% for Eurodollar Loans (as
defined in the Existing Credit Agreement) and 3.00% for ABR Loans (as defined in
the Existing Credit Agreement). The applicable margin at December 31, 2002 on
loans under the Tranche B Term Facility was 4.25% for Eurodollar Loans and 3.25%
for ABR Loans. The Company may select interest periods of one, two, three or six
months for Eurodollar Loans. If at any time the Company is in default in the
payment of any amount of principal due under the Existing Credit Agreement, such
amount will bear interest at 2.00% above the rate otherwise applicable. Overdue
interest, fees and other amounts will bear interest at 2.00% above the rate
applicable to ABR Loans.

     The Company's obligations under the Existing Credit Agreement are secured
by substantially all of the Company's assets. The Existing Credit Agreement
requires that the Company meet certain financial tests and contains 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.

     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
have been 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.

     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 must 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. The
Series B Preferred Stock was non-voting; it had a liquidation preference of
$49.2 million plus accrued and unpaid dividends; it entitled the holder to
cumulative dividends at a rate of 10% per annum; and it could be redeemed by the
Company at its option at any time for the liquidation preference plus accrued
and unpaid dividends.

     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.

     In April 2002, the Company postponed an offering of Secured Notes it had
previously announced and also deferred its plans to replace its Existing Credit
Agreement with a new credit agreement. As a result, the Company expensed all
costs (primarily legal, accounting, advisory and lenders' fees) in connection
with the refinancing. Such costs are reflected in refinancing expense in the
accompanying consolidated statements of operations.

     On June 14, 2002, the Company amended its Existing Credit Agreement to,
among other things, allow the Company to (1) acquire the 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 (see
Notes 2 and 14), and (3) allow Deluxe to purchase 20% of the EFILM, LLC
membership interests for $5.2 million. In addition, certain covenants were
amended.



                                       23
<PAGE>


     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 Amendment"). This provision of the September Amendment expired on
March 28, 2003.

     The September Amendment also provided that it would be an event of default
if (i) by February 1, 2003, an affiliate of the Company failed to make a cash
equity contribution to the Company in the amount of the interest due February 1,
2003 on Existing Notes held by affiliates of the Company on that date or (ii) by
March 28, 2003, the Existing Credit Agreement were not refinanced or the debt of
the Company reduced, in either case by an amount acceptable to the lenders under
the Existing Credit Agreement, or an affiliate of the Company failed to make a
cash equity contribution to the Company in the amount of the interest which was
due on February 1, 2003 on Existing Notes held by non-affiliates of the Company
on that date. On January 31, 2003, Mafco Holdings made the required 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, Mafco Holdings agreed to extend to the Company a
revolving line of credit 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 (the "Mafco Line").

     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 financial covenants for the
four fiscal quarters ended December 31, 2002. Under the March 2003 Amendment,
certain lenders also agreed to defer amortization payments otherwise due in 2003
to March 31, 2004 such that amortization payments required of the Company in
2003 will be reduced by $20 million. The Company agreed to pay, among other
fees, $2.0 million, representing 10% of the amount of deferred amortization, at
closing.

     In connection with the March 2003 Amendment, Mafco Holdings contributed
$90,860,000 principal amount of 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, par value $0.01 per share, of the Company (the "Series C
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. The Series C 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. Mafco Holdings also agreed to extend the Mafco Line
until March 31, 2004.

     Before March 31, 2004, the Company intends to seek other sources of
financing on terms more favorable to the Company than under the Existing Credit
Agreement, including dates of maturity, amortization schedules and/or interest
rates. However, there can be no assurance that the Company will be able to
secure alternate financing on such favorable terms by March 31, 2004. While the
lenders under the Existing Credit Agreement have accommodated the Company to
date and the Company believes that the lenders will continue to do so, there can
be no assurance that they will continue to do so in March 2004 in the event
alternate financing is not secured.

     Panavision is a holding company whose only material asset is the ownership
interest in its subsidiaries. Panavision's principal business operations are
conducted by its subsidiaries. Although there can be no assurance, the Company
expects that cash flows from operations, borrowings under the Existing Credit
Agreement and the Mafco Line, and cash equity contributions and advances from
affiliates will be sufficient to enable the Company to meet its anticipated cash
requirements through at least December 31, 2003, including operating expenses,
working capital, capital expenditures, further investment in EFILM, LLC and
scheduled debt service requirements. If unable to satisfy such cash
requirements, the Company could be required to adopt one or more alternatives,
such as reducing or delaying capital expenditures, restructuring indebtedness,
or issuing additional shares of capital stock in the Company. There can be no
assurance that any of such actions could be effected, or if so, on terms
favorable to the Company, or that they would enable the Company to continue to
satisfy its cash requirements.




                                       24
<PAGE>


SEASONALITY

     The Company's revenue and net income 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, 2002, 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 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, 2002 and 2001, Panavision's primary net foreign currency
market exposures include the Euro, British pound, French franc, 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, 2002 and 2001, a 10% appreciation in foreign currency
exchange rates from the prevailing market rates would increase the related net
unrealized gain by $2.6 million and $2.6 million, respectively. Conversely, a
10% depreciation in these currencies from the prevailing market rates would
decrease the related net unrealized gain by $2.6 million and $2.6 million, as of
December 31, 2002 and 2001, respectively.

     The Company is exposed to changes in interest rates on its variable rate
debt. A hypothetical 10% increase in the interest rates applicable to 2002 and
2001 would have resulted in an increase to interest expense of approximately
$1.7 million and $2.4 million, respectively. Conversely, a hypothetical 10%
decrease in the interest rates applicable to 2002 and 2001 would have decreased
interest expense by approximately $1.7 million


                                       25
<PAGE>

and $2.4 million, respectively. At December 31, 2002, the Company believes that
the carrying value of its amounts payable under the Existing Credit Agreement
approximate fair value based upon current yields for debt issues of similar
quality and terms.

     The fair value of Panavision's fixed rate long-term debt is sensitive to
changes in interest rates. Based upon a hypothetical 10% increase in the
interest rate, assuming all other conditions affecting market risk remain
constant, the market value of the Company's fixed rate debt would decrease
approximately $1.7 million and $1.9 million at December 31, 2002 and 2001,
respectively. Conversely, a hypothetical 10% decrease in the interest rate,
assuming all other conditions affecting market risk remain constant, would
result in an increase in market value of approximately $1.7 million and $1.9
million over the same period. Management does not foresee nor expect any
significant change in its exposure to interest rate fluctuations or in how such
exposure is managed in the future.

     Panavision manages its fixed and floating rate debt with the objective of
achieving a mix that management believes is appropriate. To manage this mix in a
cost-effective manner, 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, 2002.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     An index to financial statements and required financial statement schedules
is set forth in Item 14(a).

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

     None.


                                    PART III

     The information required by Items 10, 11, 12, 13 and 16 are included in the
Company's 2003 definitive proxy statement under the captions "Directors of the
Company," "Executive Compensation," "Security Ownership of Certain Beneficial
Holders", "Certain Relationships and Related Transactions", and "Independent
Public Accountants".

ITEM 14.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES:

     The Company's Office of the President (the members of which perform the
functions of the Chief Executive Officer) and Chief Financial Officer (who are
its principal executive officers and principal financial officer, respectively)
have, within 90 days prior to the filing date of this Annual Report on Form
10-K, evaluated the effectiveness of the Company's disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934 (as amended, the "Exchange Act")). Based upon such
evaluation, the Company's Office of the President and Chief Financial Officer
have concluded that such disclosure controls and procedures are generally
effective to ensure that information required to be disclosed by the Company in
the reports filed or submitted by it under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Commission's rules and that such information is accumulated and communicated to
the Company's management, including the Office of the President and Chief
Financial Officer, as appropriate, to allow timely decisions regarding
disclosure.

     The Company's Office of the President and Chief Financial Officer have
determined that there were no significant changes in the Company's internal
controls or in other factors that could significantly affect the Company's
internal controls subsequent to the date of their evaluation, nor any
significant deficiencies or material weaknesses in such internal controls
requiring corrective actions. The Company intends to evaluate and assess its
internal controls for financial reporting during 2003.



                                       26
<PAGE>


                                     PART IV

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

(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)        See below

(b)           Reports on Form 8-K

              During the fourth quarter of 2002, the Company did not file any
              Current Reports on Form 8-K.

(c)           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).

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 (the "Indenture").
              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 (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.

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.

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).



                                       27
<PAGE>


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

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.

4.12          First Amendment, dated as of March 27, 2003, to the Line of Credit
              Agreement between Panavision Inc. and MacAndrews & Forbes
              Holdings 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. 1999 Executive Incentive Compensation Plan
              (incorporated herein by reference from the Company's 1999
              Definitive Proxy Statement dated March 31, 1999).

10.3          Letter Agreement, dated as of March 27, 2003, between Mafco
              Holdings Inc., PX Holding Corporation and Panavision Inc.

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 Mafco Holdings 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 Mafco Holdings 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).

<PAGE>

10.11         Mafco-Pneumo Abex Corporation Letter Agreement, dated as of
              December 3, 2002, by and between Mafco Holdings 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).


                                       28
<PAGE>


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

10.12         Employment Agreement, dated October 15, 2002, between Panavision
              Inc. and Bobby G. Jenkins, Executive Vice President and Chief
              Financial Officer.

10.13         Employment Agreement, dated September 1, 2002, between
              Panavision Inc. and Eric W. Golden, Executive Vice President and
              General Counsel.

10.14         Letter Agreement, dated as of January 31, 2003, between Mafco
              Holdings Inc., PX Holding Corporation and Panavision Inc.

10.16         Tax Sharing Agreement, dated as of February 1, 1999, between Mafco
              Holdings 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         Registration Rights Transfer Agreement, dated as of April 19,
              2001, by and between PX Holding Corporation, Panavision Inc. and
              M&F Worldwide Corp. (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, 2001). This agreement
              was later cancelled effective December 3, 2002 as part of the M&F
              Settlement.

10.22         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 identically
              numbered exhibit 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.

10.23         M&F Worldwide Corp. Letter, dated as of April 19, 2001,
              delivered by M&F Worldwide Corp. to Panavision Inc., together
              with Mafco Letter Agreement, dated as of April 19, 2001, by and
              between Mafco Holdings Inc. and M&F Worldwide Corp. (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, 2001). This agreement was later cancelled effective
              December 3, 2002 as part of the M&F Settlement.

10.24         Mafco Letter Agreement, dated as of December 21, 2001, between
              Mafco Holdings Inc. and M&F Worldwide Corp. (incorporated herein
              by reference from Exhibit 11 from the Company's Form SC 13D/A
              filed on December 28, 2001). This agreement was later cancelled
              effective December 3, 2002 as part of the M&F Settlement.

10.25         M&F Worldwide Letter Amendment, dated as of December 21, 2001,
              delivered by M&F Worldwide Corp. to Panavision Inc. (incorporated
              herein by reference from Exhibit 12 from the Company's Form SC
              13D/A filed on December 28, 2001). This agreement was later
              cancelled effective December 3, 2002 as part of the M&F
              Settlement.

10.26         Registration Rights Agreement Amendment Letter, dated as of
              December 21, 2001, between Panavision Inc. and M&F Worldwide Corp.
              (incorporated herein by reference from Exhibit 14 from the
              Company's Form SC 13D/A filed on December 28, 2001). This
              agreement was later cancelled effective December 3, 2002 as part
              of the M&F Settlement.

<PAGE>

10.27         Registration Rights Agreement Amendment Letter, dated as of
              December 21, 2001, between PX Holding Corporation and M&F
              Worldwide Corp. (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, 2001). This agreement
              was later cancelled effective December 3, 2002 as part of the M&F
              Settlement.


                                       29
<PAGE>


EXHIBIT
NUMBER        DESCRIPTION
------        -----------
10.28         Letter Agreement relating to the Mafco Disbursement, dated
              December 21, 2001, between Mafco Holdings, Inc. and M&F Worldwide
              Corp. (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, 2001). This agreement was later
              cancelled effective December 3, 2002 as part of the M&F
              Settlement.

10.29         Letter Agreement, dated June 27, 2002, between Mafco Holdings
              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).

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 Philip E. Beekman

24.3          Power of Attorney executed by Donald G. Drapkin

24.4          Power of Attorney executed by Edward Grebow

24.5          Power of Attorney executed by James R. Maher

24.6          Power of Attorney executed by Martin D. Payson

24.7          Power of Attorney executed by Patrick Whittingham

24.8          Power of Attorney executed by Robert S. Wiesenthal

24.9          Power of Attorney executed by Kenneth Ziffren

99.           MISCELLANEOUS

99.1           Certification of Office of the President pursuant to U.S.C.
               Section 1350 as adopted pursuant to section 906 of the
               Sarbanes-Oxley Act of 2002.

99.2           Certification of Office of the President pursuant to U.S.C.
               Section 1350 as adopted pursuant to section 906 of the
               Sarbanes-Oxley Act of 2002.

99.3           Certification of Office of the President pursuant to U.S.C.
               Section 1350 as adopted pursuant to section 906 of the
               Sarbanes-Oxley Act of 2002.

99.4           Certification of Office of the CFO pursuant to U.S.C. Section
               1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act
               of 2002.

99.5           Press Release dated December 3, 2002 (incorporated herein by
               reference from Exhibit 7 from the Company's Form SC 13D/A filed
               December 9, 2002).


                                       30
<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:    March 28, 2003                   By: /s/ ERIC W. GOLDEN
                                             -------------------------
                                                  Eric W. Golden
                                                  Office of the President

                                          By: /s/ BOBBY G. JENKINS
                                             -------------------------
                                                  Bobby G. Jenkins
                                                  Office of the President

                                          By: /s/ WILL T. PAICE
                                             -------------------------
                                                  Will T. Paice
                                                  Office of the President

                                          By: /s/ BOBBY G. JENKINS
                                             -------------------------
                                                  Bobby G. Jenkins
                                                  Executive Vice President,
                                                  Chief Financial Officer and
                                                  principal accounting officer

<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>
                   *                          Chairman of the Board and Director        March 28, 2003
----------------------------------------
           Ronald O. Perelman

/s/           BOBBY G. JENKINS                Executive Vice President and              March 28, 2003
----------------------------------------      Chief Financial Officer
            Bobby G. Jenkins

                   *                          Director                                  March 26, 2003
----------------------------------------
           Philip E. Beekman

                   *                          Director                                  March 28, 2003
----------------------------------------
           Donald G. Drapkin

                   *                          Director                                  March 28, 2003
----------------------------------------
             Edward Grebow

                   *                          Director                                  March 28, 2003
----------------------------------------
             James R. Maher

                   *                          Director                                  March 28, 2003
----------------------------------------
            Martin D. Payson

                   *                          Director                                  March 28, 2003
----------------------------------------
          Patrick Whittingham

                   *                          Director                                  March 28, 2003
----------------------------------------
          Robert S. Wiesenthal

                   *                          Director                                  March 28, 2003
----------------------------------------
            Kenneth Ziffren
</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
                                                       -------------------------
                                                            Bobby G. Jenkins
                                                            Attorney-in-fact


                                       31
<PAGE>

                                 PANAVISION INC.


                                  CERTIFICATION


I, Bobby G. Jenkins, certify that:

     1.   I have reviewed this Annual Report on Form 10-K of Panavision Inc.;

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and we have:

          a.   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;

          b.   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c.   presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of the registrant's board of directors (or persons
          performing the equivalent function):

          a.   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b.   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this annual report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.

Date: March 28, 2003                           By:      /S/  BOBBY G. JENKINS
      --------------------                         --------------------------
                                               Name:    Bobby G. Jenkins
                                               Title:   Office of the President





                                       32
<PAGE>


                                 PANAVISION INC.


                                  CERTIFICATION


I, Eric W. Golden, certify that:

     1.   I have reviewed this Annual Report on Form 10-K of Panavision Inc.;

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and we have:

          a.   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;

          b.   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c.   presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of the registrant's board of directors (or persons
          performing the equivalent function):

          a.   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b.   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this annual report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.

Date: March 28, 2003                         By:      /S/  ERIC W. GOLDEN
     ----------------------                      ----------------------------
                                             Name:    Eric W. Golden
                                             Title:   Office of the President




                                       33
<PAGE>


                                 PANAVISION INC.


                                  CERTIFICATION


I, Will T. Paice, certify that:

     1.   I have reviewed this Annual Report on Form 10-K of Panavision Inc.;

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and we have:

          a.   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;

          b.   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c.   presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of the registrant's board of directors (or persons
          performing the equivalent function):

          a.   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b.   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this annual report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.

Date: March 28, 2003                    By:      /S/  WILL T. PAICE
     ----------------------                 -------------------------------
                                        Name:    Will T. Paice
                                        Title:   Office of the President






                                       34
<PAGE>


                                 PANAVISION INC.


                                  CERTIFICATION


I, Bobby G. Jenkins, certify that:

     1.   I have reviewed this Annual Report on Form 10-K of Panavision Inc.;

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and we have:

          a.   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;

          b.   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c.   presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

      5.  The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of the registrant's board of directors (or persons
          performing the equivalent function):

          a.   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b.   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

      6.  The registrant's other certifying officers and I have indicated in
          this annual report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.

Date: March 28, 2003                      By:      /S/  BOBBY G. JENKINS
     -----------------------                  --------------------------
                                          Name:    Bobby G. Jenkins
                                          Title:   Executive Vice President and
                                                   Chief Financial Officer





                                       35
<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, 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)
and Year Ended December 31, 2000.............................................................................F-3

Consolidated Balance Sheets-December 31, 2002 and 2001.......................................................F-4

Consolidated Statements of Stockholders' Equity/(Deficiency)--Years Ended December 31, 2002, 2001 and 2000...F-5

Consolidated Statements of Cash Flows - 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)
and Year Ended December 31, 2000.............................................................................F-6

Notes to Consolidated Financial Statements...................................................................F-8
</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, 2002 and 2001, and the related consolidated statements of
operations, stockholders' equity/(deficiency), and cash flows for the year ended
December 31, 2002, 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) and for the year ended December 31, 2000. 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, 2002 and 2001, and the consolidated results of its operations and
its cash flows for the year ended December 31, 2002, 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) and for the year ended December 31, 2000,
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 27, 2003




                                      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           PERIOD FROM      PERIOD FROM        YEAR
                                 ENDED           JANUARY 1       APRIL-20-TO        ENDED
                               DECEMBER 31,     TO APRIL 19,     DECEMBER 31,     DECEMBER 31,
                                  2002             2001             2001             2000
                               ------------     ------------     ------------     ------------
<S>                            <C>              <C>              <C>              <C>
Camera rental                  $ 122,223        $  45,660        $  78,978        $ 130,047
Lighting rental                   32,844            9,629           22,118           40,289
Sales and other                   38,115           10,520           23,905           34,292
                               ---------        ---------        ---------        ---------
Total renta revenue and
   sales                         193,182           65,809          125,001          204,628
Cost of camera rental             62,482           18,089           40,506           61,119
Cost of lighting rental           27,524            8,234           18,279           29,962
Cost of sales and other           24,034            5,681           13,610           19,214
                               ---------        ---------        ---------        ---------
Gross margin                      79,142           33,805           52,606           94,333

Selling, general and
   administrative expenses        55,274           16,987           42,516           57,376

Research and development
   expenses                        4,436            1,841            3,136            6,163
                               ---------        ---------        ---------        ---------
Operating income                  19,432           14,977            6,954           30,794
Interest income                      425              269              248              359
Interest expense                 (33,452)         (14,771)         (27,876)         (48,614)
Foreign exchange gain (loss)         995             (748)             216           (2,195)
Refinancing expense               (4,523)            --               --               --
Other, net                         1,899              796              422              892
                               ---------        ---------        ---------        ---------
Income (loss) before income
   taxes                         (15,224)             523          (20,036)         (18,764)

Income tax benefit
   (provision)                     4,145           (1,011)           6,511           (4,881)
                               ---------        ---------        ---------        ---------

Net loss                       $ (11,079)       $    (488)       $ (13,525)       $ (23,645)
                               =========        =========        =========        =========
Net loss attributable to
   common stockholders         $ (13,936)       $    (488)       $ (13,525)       $ (23,645)
                               =========        =========        =========        =========
Net loss per share - basic
   and diluted                 $   (1.59)       $   (0.06)       $   (1.54)       $   (2.83)
                               =========        =========        =========        =========

Shares  used in  computation
   - basic and diluted             8,770            8,770            8,770            8,366

</TABLE>

                             See accompanying notes.




                                      F-3
<PAGE>

                                 Panavision Inc.

                           Consolidated Balance Sheets

                        (In thousands, except share data)
<TABLE>
<CAPTION>

                               ASSETS                                                     DECEMBER 31,
                                                                                      2002         2001
                                                                                  -----------------------
<S>                                                                                <C>          <C>
Current assets:
   Cash and cash equivalents                                                       $  12,647    $   2,048
   Accounts receivable (net of allowance of $1,634 in 2002 and $1,414 in              27,542       22,757
                                                                                                     2001)
   Inventories                                                                        10,417       10,136
   Prepaid expenses                                                                    3,708        2,919
   Due from affiliate                                                                  2,548          978
   Other current assets                                                                1,614          903
                                                                                   ---------    ---------
Total current assets                                                                  58,476       39,741

   Property, plant and equipment, net                                                223,394      233,678
   Goodwill, net                                                                     268,280      248,125
   Patents and trademarks, net                                                        67,574       66,662
   Note due from affiliate                                                               313           --
   Other assets                                                                       15,130       13,010
                                                                                   ---------    ---------
Total assets                                                                       $ 633,167    $ 601,216
                                                                                   =========    =========

                    LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                                                $   6,695    $   7,930
   Accrued liabilities                                                                28,451       16,512
   Due to affiliate                                                                      513        2,076
   Current maturities of long-term debt                                               22,815       23,680
                                                                                   ---------    ---------
Total current liabilities                                                             58,474       50,198

Long-term debt                                                                       408,625      448,623
Note payable to affiliate                                                              7,039           --
Deferred tax liabilities                                                              25,366       24,406
Other liabilities                                                                      8,592        2,664
Due to related parties                                                                 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, 2002 and 2001 (liquidation preference of
     $1 per share plus declared and unpaid dividends)                                     14           14
   Common Stock, $0.01 par value; 50,000,000 shares authorized; 8,769,919
     shares issued and outstanding at December 31, 2002 and 2001                          88           88
   Additional paid-in capital                                                        189,476      187,151
   Revaluation capital                                                               333,199      333,135
   Accumulated deficit                                                              (444,039)    (432,960)
   Accumulated other comprehensive loss                                               (6,609)     (12,103)
                                                                                   ---------    ---------
     Total stockholders' equity                                                       72,129       75,325
                                                                                   ---------    ---------
Total liabilities and stockholders' equity                                         $ 633,167    $ 601,216
                                                                                   =========    =========
</TABLE>

                             See accompanying notes



                                      F-4
<PAGE>


                                 Panavision Inc.

          Consolidated Statements of Stockholders' Equity/(Deficiency)

                                 (In thousands)

<TABLE>
<CAPTION>
                                         Preferred Stock      Common Stock
                                      --------------------------------------
                                         Shares                 Shares
                                         Issued                 Issued                Addiitonal
                                          and                     and                   Paid-in  Revaluation   Accumulated
                                      Outstanding  Amount      Outstanding   Amount     Capital     Capital       Deficit
                                      -------------------------------------------------------------------------------------
<S>                                      <C>       <C>             <C>     <C>         <C>          <C>        <C>
   Balance at January 1, 2000              --      $    --         8,056   $      81   $ 168,032    $    --    $ (395,302)

   Comprehensive loss:
     Net loss                              --           --          --          --          --           --       (23,645)
     Foreign currency translation
      adjustment                           --           --          --          --          --           --          --

   Total comprehensive loss

   Stock option compensation               --           --          --          --           117         --          --
   Net proceeds from the issuance
     of shares                             --           --           714           7       9,738         --          --
                                      -------------------------------------------------------------------------------------
Balance at December 31, 2000               --           --         8,770          88     177,887         --      (418,947)
   Comprehensive loss:
     Net loss (Pre-M&F Purchase)           --           --          --          --          --           --          (488)
     Net loss (Post-M&F Purchase)          --           --          --          --          --           --       (13,525)
     Foreign currency translation
      adjustment                           --           --          --          --          --           --          --

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

   Issuance of Series A
     Non-Cumulative Perpetual
     Participating Preferred
     Stock                                1,382           14        --          --         9,264         --          --

   Revaluation capital                     --           --          --          --          --        333,135        --
                                      -------------------------------------------------------------------------------------
Balance at December 31, 2001              1,382           14       8,770          88     187,151      333,135    (432,960)
   Comprehensive loss:
     Net loss                              --           --          --          --          --           --       (11,079)
     Foreign currency translation
      adjustment                           --           --          --          --          --           --          --

   Total comprehensive loss                --           --          --          --          --           --          --
   Accreted dividend on Redeemable
     Series B Preferred Stock              --           --          --          --        (2,857)        --          --
   Non-cash distribution to M&F
      Worldwide in connection with
      the                                  --           --          --          --        (1,414)        --          --
      purchase of Las Palmas
   Revaluation capital adjustment          --           --          --          --          --             64        --
   Non-cash contribution of
     services by                           --           --          --          --            75         --          --
       Mafco Holdings
   Contribution of net operating
     loss                                  --           --          --          --         6,521         --          --
     carryforwards by M&F Worldwide
                                      -------------------------------------------------------------------------------------
Balance at December 31, 2002              1,382    $      14       8,770   $      88   $ 189,476    $ 333,199   $(444,039)
                                      =====================================================================================

<CAPTION>


                                      Accumulated
                                         Other
                                      Comprehensive   Equity/
                                           Loss    (Deficiency)
                                     --------------------------
<S>                                    <C>          <C>
   Balance at January 1, 2000          $  (4,051)   $(231,240)

   Comprehensive loss:
     Net loss                                --        (23,645)
     Foreign currency translation
      adjustment                           (5,279)      (5,279)
                                                     ---------
   Total comprehensive loss                            (28,924)
                                                     =========
   Stock option compensation                 --            117
   Net proceeds from the issuance
     of shares                               --          9,745
                                     --------------------------
Balance at December 31, 2000               (9,330)    (250,302)
   Comprehensive loss:
     Net loss (Pre-M&F Purchase)             --           (488)
     Net loss (Post-M&F Purchase)            --        (13,525)
     Foreign currency translation
      adjustment                           (2,773)      (2,773)
                                                     ---------
   Total comprehensive loss                  --        (16,786)
                                                     =========
   Issuance of Series A
     Non-Cumulative Perpetual
     Participating Preferred
     Stock                                   --          9,278

   Revaluation capital                       --        333,135
                                     --------------------------
Balance at December 31, 2001              (12,103)      75,325
   Comprehensive loss:
     Net loss                                --        (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                                    --         (1,414)
      purchase of Las Palmas
   Revaluation capital adjustment            --             64
   Non-cash contribution of
     services by                             --             75
       Mafco Holdings
   Contribution of net operating
     loss                                    --          6,521
     carryforwards by M&F Worldwide
                                     --------------------------
Balance at December 31, 2002            $  (6,609)   $  72,129
                                     ==========================


</TABLE>


                             See accompanying notes



                                      F-5
<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          PERIOD FROM     PERIOD FROM         YEAR
                                                    ENDED          JANUARY 1      APRIL 20 TO         ENDED
                                                 DECEMBER 31,     TO APRIL 19,    DECEMBER 31,     DECEMBER 31,
                                                     2002             2001            2001            2000
                                                 ------------    -------------    ------------     ------------
<S>                                               <C>              <C>              <C>              <C>
OPERATING ACTIVITIES
Net loss                                          $(11,079)        $   (488)        $(13,525)        $(23,645)
Adjustments to derive net cash provided by
   operating activities:
     Depreciation and amortization                  43,529           11,518           36,412           37,926
     Gain on sale of property and equipment         (1,696)            (798)            (550)          (1,196)
     Amortization of discount on subordinated        1,480            5,707           13,632           17,659
       notes
     Deferred income tax (benefit) provision        (7,369)            --            (10,070)              45
     Changes in operating assets and
       liabilities:
       Accounts receivable                          (4,785)            (277)           8,631           (1,136)
       Inventories                                    (281)              84              (60)             206
       Prepaid expenses and other current           (1,500)            (411)             327               99
         assets
       Due from affiliate                           (1,570)              70              171             (511)
       Accounts payable                             (1,235)          (1,335)           1,996             (504)
       Accrued liabilities                          11,939           (2,831)          (5,587)           1,426
       Due to affiliate                             (1,563)            --              1,842               16
     Other, net                                     (2,519)             (14)          (1,167)          (5,633)
                                                 ---------         --------         --------         --------
Net cash provided by operating activities           23,351           11,225           32,052           24,752

INVESTING ACTIVITIES
Capital expenditures                               (25,202)         (10,462)         (16,145)         (30,746)
Proceeds from dispositions of fixed assets           2,910              780              820            1,768
                                                 ---------         --------         --------         --------
Net cash used in investing activities              (22,292)          (9,682)         (15,325)         (28,978)

FINANCING ACTIVITIES
Borrowings under notes payable and credit
   agreement                                        32,226            6,700            7,200           30,500
Repayments of notes payable and credit
   agreement                                       (35,816)          (7,331)         (27,592)         (36,212)
Deferred financing costs                            (2,228)            --               --               --
Proceeds from issuance of Series B Preferred        10,000             --               --               --
   Stock
Investment by Deluxe Laboratories in EFILM,          5,200             --               --               --
   LLC
Issuance of shares to Sony (net of transaction
   costs)                                             --               --               --              9,745
                                                 ---------         --------         --------         --------
Net cash (used in) provided by financing             9,382             (631)         (20,392)           4,033
   activities
Effect of exchange rate changes on cash                158             (249)              69             (243)
                                                 ---------         --------         --------         --------
Net increase (decrease) in cash and cash
   equivalents                                      10,599              663           (3,596)            (436)
Cash and cash equivalents at beginning of
   period                                            2,048            4,981            5,644            5,417
                                                 ---------         --------         --------         --------
Cash and cash equivalents at end of period        $ 12,647         $  5,644         $  2,048         $  4,981
                                                 =========         ========         ========         ========
</TABLE>


                             See accompanying notes


                                      F-6
<PAGE>


                                 Panavision Inc.

                      Consolidated Statements of Cash Flows

                        (In thousands, except share data)


<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31, 2001
                                                             ------------------------------
                                                                PRE-M&F         POST-M&F
                                                                PURCHASE        PURCHASE
                                                             --------------  --------------
                                                 YEAR         PERIOD FROM      PERIOD FROM          YEAR
                                                 ENDED          JANUARY 1      APRIL 20 TO          ENDED
                                              DECEMBER 31,     TO APRIL 19,    DECEMBER 31,       DECEMBER 31,
                                                 2002              2001            2001              2000
                                             -------------    -------------    ------------       ------------
<S>                                           <C>              <C>              <C>                 <C>
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid during the period               $  23,299        $   9,184        $  15,716           $ 30,867
Income taxes paid during the period               2,597            1,217            2,911              3,006
</TABLE>


         SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES
         In June 2002, the Company issued 49,199 shares of Series B 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.

         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).


         SUPPLEMENTAL NON-CASH INFORMATION
         The following sets forth the changes in assets and liabilities
         resulting from the 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


       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 95/8% Senior Subordinated Discount
       Notes due 2006 (see Note 2).

       In 2002, goodwill was increased by $14.9 million and deferred tax
       liabilities were increased by $18.2 million relating to differences in
       book and tax basis of assets that were not recorded at the time of the
       M&F Purchase.

       In 2002, M&F Worldwide contributed net operating loss carryforwards
       amounting to $6.5 million (see Note 6).









                             See accompanying notes



                                      F-7
<PAGE>


                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002



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) $80,000,000 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 shareholders 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 shareholders dismissed his lawsuit pursuant to a
settlement.




                                      F-8
<PAGE>


                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

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 95/8% 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 controls 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.

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 2002 presentation.

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 Company's statement of stockholders' equity/(deficiency). 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.

PROPERTY, PLANT AND EQUIPMENT
With the exception of rental assets, which were adjusted in connection with the
M&F Purchase, property,


                                      F-9
<PAGE>


                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

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 $39.0 million, $10.2 million, $25.0 million and
$34.2 million for 2002, the Pre-M&F Purchase period, the Post-M&F Purchase
period and 2000, respectively.

GOODWILL AND INTANGIBLE ASSETS
In June 2001, the Financial Accounting Standards Board 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 and October 1, 2002 and found that the fair values of its
goodwill and its tradename are in excess of carrying value.


                                      F-10
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

A reconciliation of reported net loss to net loss adjusted to reflect the impact
of the discontinuance of the amortization of goodwill and tradename for the
years ended December 31, 2001 and 2000 is as follows (in thousands except per
share data).

<TABLE>
<CAPTION>
                                                        PRE-M&F           POST-M&F
                                                        PURCHASE          PURCHASE
                                                   ------------------- ----------------
                                                      PERIOD FROM        PERIOD FROM
                                                       JANUARY 1         APRIL 20 TO     YEAR ENDED
                                                      TO APRIL 19,       DECEMBER 31,    DECEMBER 31,
                                                          2001              2001            2000
                                                      ------------       ------------    ------------
<S>                                                     <C>               <C>             <C>
Reported net loss                                       $   (488)         $(13,525)       $(23,645)
Add back: goodwill and tradename amortization                103             9,074             442
                                                        --------          --------        --------
Adjusted net loss                                       $   (385)         $ (4,451)       $(23,203)
                                                        ========          ========        ========
Adjusted loss per share                                 $  (0.04)         $  (0.51)       $  (2.77)
                                                        ========          ========        ========
</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, 2001, goodwill was $248.1
million, net of accumulated amortization of $6.2 million. Goodwill amortization
expense amounted to $0.3 million, $6.2 million and $1.2 million for the Pre-M&F
Purchase period, the Post-M&F Purchase period and 2000, respectively. Goodwill
is principally related to the M&F Purchase (see Note 2).

Patents and trademarks 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, $0.2 million, $3.6 million and $0.3 million for 2002, the
Pre-M&F Purchase period, the Post-M&F Purchase period and 2000, respectively.
Accumulated amortization was $4.0 million and $3.6 million at December 31, 2002
and 2001, respectively.

ACCOUNTING FOR LONG-LIVED ASSETS
The Company assesses on an ongoing basis the recoverability of long-lived
tangible and intangible assets based on estimates of future undiscounted cash
flows compared to net book value. If the future undiscounted cash flow estimates
were less than net book value, net book value would then be reduced to estimated
fair value, which generally approximates discounted cash flows. The Company also
evaluates the amortization periods of assets to determine whether events or
circumstances warrant revised estimates of useful lives. In August 2001, the
Financial Accounting Standards Board 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 and assets 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, 2002, the


                                      F-11
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002


Company's accumulated foreign earnings were approximately $12.0 million. The
Company has provided deferred income taxes, including withholding taxes, on
undistributed Canadian earnings totaling approximately $6.4 million. All other
foreign earnings are permanently reinvested.

FINANCIAL INSTRUMENTS

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

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

REVENUE RECOGNITION

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

ADVERTISING COSTS

For the year ended December 31, 2002, the Pre-M&F Purchase period, Post-M&F
Purchase period, and the year ended December 31, 2000, advertising costs
amounted to $1.6 million, $0.4 million, $1.1 million and $2.3 million,
respectively, and are included in selling, general and administrative expenses
in the accompanying consolidated statements of operations. Advertising costs are
expensed as incurred.

FREIGHT COSTS

For the year ended December 31, 2002, the Pre-M&F Purchase period, the Post-M&F
Purchase period, and the year ended December 31, 2000, freight costs amounted to
$1.8 million, $0.5 million, $1.2 million and $2.3 million, respectively, and are
included in selling, general and administrative expenses in the accompanying
consolidated statements of operations.

COMPREHENSIVE LOSS
For the year ended December 31, 2002, the Pre-M&F Purchase period, the Post-M&F
Purchase period, and the year ended December 31, 2000, comprehensive loss
amounted to $(5,585,000), $(3,537,000), $(13,249,000), and $(28,924,000),
respectively. The difference between net loss and comprehensive loss relates to
the change in the Company's foreign currency translation adjustments.

ACCOUNTING FOR DERIVATIVE INSTRUMENTS
In June 1998, the Financial Accounting Standards Board 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


                                      F-12
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

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 income (loss) or other
comprehensive income (loss), as appropriate. The adoption of SFAS 133 did not
have a material impact on the Company's financial position or results of
operations.


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        JANUARY 1 TO         APRIL 20 TO       YEAR ENDED
                                             DECEMBER 31,         APRIL 19,         DECEMBER 31,      DECEMBER 31,
                                                 2002               2001                2001              2000
                                          ------------------- ------------------  ------------------  -------------
<S>                                             <C>              <C>                 <C>                <C>
Numerator:
     Net loss                                   $(11,079)        $   (488)           $(13,525)          $(23,645)
     Accreted dividends on Redeemable
       Series B Preferred Stock                   (2,857)              --                  --                 --
                                                --------         --------            --------           --------
     Numerator for basic and diluted loss
       per share - net loss attributable
       to Common stockholders                   $(13,936)        $   (488)           $(13,525)          $(23,645)
                                                ========         ========            ========           ========

Denominator:
     Denominator for basic loss per share-         8,770            8,770               8,770              8,366
       weighted average shares
     Effect of dilutive securities -
       stock options and warrants                     --               --                  --                 --
                                                --------         --------            --------           --------
     Denominator for diluted loss per share -
       adjusted weighted average shares            8,770            8,770            $  8,770              8,366
                                                ========         ========            ========           ========
Basic  loss per share                           $  (1.59)        $  (0.06)           $  (1.54)          $  (2.83)
                                                ========         ========            ========           ========
Diluted loss per share                          $  (1.59)        $  (0.06)           $  (1.54)          $  (2.83)
                                                ========         ========            ========           ========
</TABLE>



                                      F-13
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

For the year ended December 31, 2002, the Pre-M&F Purchase period and the
Post-M&F Purchase period, outstanding stock options and warrants to purchase
992,000 and 713,400 shares, respectively, were excluded from the calculation of
diluted loss per share as their effect would have been antidilutive. For the
year ended December 31, 2000, outstanding stock options and warrants to purchase
1,225,333 and 713,400 shares, respectively, 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 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, 2002, 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 will determine whether it will adopt the
fair value based method of accounting for stock-based employee compensation.

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):



                                      F-14
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

<TABLE>
<CAPTION>
                                                         PRE-M&F        POST-M&F
                                                        PURCHASE        PURCHASE
                                                     ----------------------------------
                                                       PERIOD FROM      PERIOD FROM
                                      YEAR ENDED       JANUARY 1 TO     APRIL 20 TO          YEAR ENDED
                                     DECEMBER 31,       APRIL 19,      DECEMBER 31,         DECEMBER 31,
                                         2002              2001             2001                2000
                                   ----------------- ----------------------------------   -----------------
<S>                                   <C>               <C>             <C>                 <C>
Net loss as reported                  $(11,079)         $   (488)       $(13,525)           $(23,645)
Add: stock-based employee
   compensation expense included
   in reported net loss                     --                --              --                 117

Deduct: total stock-based employee
   compensation expense determined
   under fair value method of all
   awards                                  (15)              (59)            (62)               (563)
                                      --------          --------        --------            --------
Pro forma net loss                    $(11,094)         $   (547)       $(13,587)           $(24,091)
                                      ========          ========        ========            ========
Pro forma net loss  attributable to
   common stockholders                $(13,951)         $   (547)       $(13,587)           $(24,091)
                                      ========          ========        ========            ========
Shares used in  computation - basic
   and diluted                           8,770             8,770           8,770               8,366
                                      ========          ========        ========            ========
Loss per share:
   Basic and diluted net loss per
     share - as reported              $  (1.59)         $  (0.06)       $  (1.54)           $  (2.83)
   Basic and diluted net loss per
     share - pro forma                $  (1.59)         $  (0.06)       $  (1.55)           $  (2.88)
</TABLE>


INVESTMENTS

Investments of approximately $5,129,000 and $4,250,000 at December 31, 2002 and
2001, 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 $(83,000), $256,000
and $42,000 in 2002, 2001 and 2000, respectively, is included in other, net in
the accompanying consolidated statements of operations.

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
is effective


                                      F-15
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

for exit or disposal activity that are initiated after December 31, 2002 and is
not expected to 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 January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"). FIN 46 provides guidance on the
identification of entities for which control is achieved through means other
than through voting rights, variable interest entities, and how to determine
when and which business enterprises should consolidate variable interest
entities. This interpretation applies immediately to variable interest entities
created after January 31, 2003. It applies in the first fiscal year or interim
period beginning after June 15, 2003, to variable interest entities in which an
enterprise holds a variable interest that it acquired before February 1, 2003.
The adoption of this interpretation is not expected to have an impact on the
Company's financial statements.

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)
$80,000,000 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


                                      F-16
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

"Registration Rights Agreement"), and that all Purchased Shares became
"Registrable Securities" under such agreement. The Registration Rights Agreement
Transfer Letter was terminated on December 3, 2002, in connection with the M&F
Settlement.

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

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

In 2002, goodwill was increased by $14.9 million and deferred tax liabilities
were increased by $18.2 million relating to differences in book and tax basis of
assets that were not recorded at the time of the M&F Purchase.

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-17
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

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 shareholders 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 shareholders dismissed his lawsuit pursuant to a
settlement. On December 3, 2002, the remaining parties to the litigation
consummated 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) the shares of the Company's Series A Preferred
Stock that M&F Worldwide acquired in December of 2001, (3) the 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). 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):

                                                             DECEMBER 31,
                                                     -------------------------
                                                         2002         2001
                                                     ------------ ------------

    Land                                             $        -   $       41
    Buildings and improvements                           16,686       12,289
    Rental assets                                       254,560      229,254
    Machinery and equipment                              17,716        9,133
    Furniture and fixtures                                3,656        2,377
    Other                                                 2,027        2,244
                                                     ------------ ------------
                                                        294,645      255,338
    Less: accumulated depreciation and amortization      71,251       21,660
                                                     ------------ ------------
                                                     $  223,394   $  233,678
                                                     ============ ============

As a result of the push down of the purchase price relating to the M&F Purchase,
accumulated depreciation and amortization were reset to zero in 2001.
Accordingly, in 2001, approximately $211,000,000 of accumulated depreciation and
amortization was netted against gross property, plant and equipment balances. In
addition, the


                                      F-18
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

fair market value of rental assets was determined to be approximately
$40,783,000 greater than carrying value; accordingly, the gross rental assets
balance was increased by $40,783,000.

During 2002 and 2001, the Company recorded approximately $90,000 and $175,000 of
capitalized interest costs, respectively.

4.  INVENTORIES

Inventories consist of the following (in thousands):

                                                     DECEMBER 31,
                                              -----------------------------
                                                 2002            2001
                                              ------------- ---------------

         Finished goods                       $     2,209     $     2,242
         Work-in-process                              283             162
         Component parts                            1,391           1,583
         Spare parts and supplies                   1,792           2,027
         Goods purchased for resale                 4,742           4,122
                                              ------------- ---------------
                                              $    10,417     $    10,136
                                              ============= ===============

5.  ACCRUED LIABILITIES

Accrued liabilities consist of the following
(in thousands):

                                                      DECEMBER 31,
                                              -------------------------------
                                                  2002             2001
                                              --------------- ---------------
         Interest payable                     $     8,637       $     1,249
         Professional fees                          1,985               794
         Taxes other than income taxes              1,661             1,617
         Payroll and related costs                  5,359             5,238
         Rent                                       3,350             2,935
         Insurance                                  1,256               201
         Accrued other                              6,203             4,478
                                              --------------- ---------------
                                              $    28,451       $    16,512
                                              =============== ===============

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
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.

                                      F-19
<PAGE>
                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002


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 ordering rules set forth in the Internal Revenue Code. Consequently, upon
leaving the M&F Worldwide consolidated group on December 3, 2002, the Company
will take with it approximately $18.6 million of net operating loss
carryforwards that otherwise would have been used prior to December 3, 2002 but
for the ordering


                                      F-20
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

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         JANUARY 1 TO       APRIL 20 TO           YEAR ENDED
                                        DECEMBER 31,          APRIL 19,        DECEMBER 31,          DECEMBER 31,
                                            2002                2001               2001                 2000
                                      ------------------  ----------------  -------------------  -------------------
<S>                                      <C>                 <C>               <C>                   <C>
Current (provision) benefit:
   Federal                               $          -        $        (25)     $        (645)        $          -
   State                                         (205)                  -               (200)                (100)
   Foreign                                     (3,019)               (986)            (2,714)              (4,736)
                                         -------------       -------------     --------------        -------------
Total current provision                        (3,224)             (1,011)            (3,559)              (4,836)
                                         -------------       -------------     --------------        -------------

Deferred (provision) benefit:
   Federal                                      5,916                   -              9,896                    -
   State                                        1,453                   -                174                    -
   Foreign                                          -                   -                  -                  (45)
                                         ------------        ------------      -------------         -------------
Total deferred (provision) benefit              7,369                   -             10,070                  (45)
                                         ------------        ------------      -------------         -------------
                                         $      4,145        $     (1,011)     $       6,511         $     (4,881)
                                         ============        ============      =============         =============
</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          JANUARY 1 TO       APRIL 20 TO           YEAR ENDED
                                        DECEMBER 31,          APRIL 19,         DECEMBER 31,          DECEMBER 31,
                                            2002                 2001               2001                 2000
                                      ------------------  -----------------  -------------------  -------------------
<S>                                      <C>                 <C>                <C>                   <C>
Income (loss) before income taxes:
   Domestic                              $    (16,532)       $        (22)      $     (21,610)        $    (23,034)
   Foreign                                      1,308                 545               1,574                4,270
                                         -------------       -------------      --------------        ------------
                                         $   (15,224)        $        523       $     (20,036)        $    (18,764)
                                         =============       =============      ==============        =============
</TABLE>


                                      F-21
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

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         JANUARY 1 TO       APRIL 20 TO            YEAR ENDED
                                        DECEMBER 31,          APRIL 19,        DECEMBER 31,           DECEMBER 31,
                                            2002                2001               2001                  2000
                                      ------------------  ----------------  -------------------   -----------------
<S>                                      <C>                 <C>               <C>                   <C>
Tax at federal statutory rate            $       5,328       $       (183)     $       7,013         $      6,567
State income tax benefit (provision)             1,248                  -                (26)                 (65)
Decrease/(increase) in valuation
   allowance                                       441                  -              3,762               (6,290)
Expiration of tax credits                       (4,343)                 -                  -                    -
Recognition of Foreign net operating
   loss carryforwards                            6,159                  -                  -                    -
Non-deductible items                               (53)               (19)            (2,753)                (603)
Foreign income taxed at varying rates
   including foreign losses for which
   no benefit was received                      (2,561)              (789)            (2,169)              (4,490)
Other, net                                      (2,074)               (20)               684                    -
                                         ---------------     ---------------   --------------        ------------
                                         $       4,145       $    (1,011)      $       6,511         $     (4,881)
                                         ===============     ===============   ==============        ============
</TABLE>



                                      F-22
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

Significant components of the Company's deferred tax assets and liabilities as
of December 31, 2002 and 2001 are as follows (in thousands):

                                                           DECEMBER 31,
                                                     --------------------
                                                        2002       2001
                                                     --------    --------
Deferred tax assets:
   Debt original issue discount                      $ 22,630    $ 13,644
   Domestic net operating loss carryforwards           21,907      16,392
   Foreign net operating loss carryforwards             6,159          --
   Tax credit carryforwards (primarily alternative
     minimum tax credits)                              10,298      14,725
   Expense accruals                                     3,174       3,681
   State income taxes and other                         2,473       2,807
                                                     --------    --------
Total deferred tax assets                              66,641      51,249
Valuation allowance                                    (6,859)     (7,300)
                                                     --------    --------
Net deferred tax assets                                59,782      43,949

Deferred tax liabilities:
   Fixed assets                                       (52,794)    (34,444)
   Unremitted foreign earnings                         (2,666)     (3,069)
   Intangibles                                        (29,688)    (29,688)
   Other                                                   --      (1,154)
                                                     --------    --------
Total deferred tax liabilities                        (85,148)    (68,355)
                                                     --------    --------
Net deferred tax liabilities                          (25,366)    (24,406)
                                                     ========    ========

Balance Sheet Classifications:
 Non-current deferred tax liability                  $(25,366)   $(24,406)
                                                     --------    --------
                                                     $(25,366)   $(24,406)
                                                     ========    ========

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, 2002, the Company
has federal and state net operating loss carryforwards of approximately $61.0
million and $0.5 million, respectively. The net operating loss carryforwards
will expire at various dates beginning in 2009 through 2019, if not utilized.

At December 31, 2002, the Company also had federal alternative minimum tax
credit carryforwards of approximately $5.4 million, which may be used
indefinitely, foreign tax credit carryforwards of approximately


                                      F-23
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

$0.7, which will expire in 2003 if not utilized, and research and development
credit carryforwards of $0.4, which will expire from 2005 through 2020, if not
utilized.

At December 31, 2002, the Company also had California alternative minimum tax
credit carryforwards and California research and development credit
carryforwards totaling approximately $1.0 million, both of which may be carried
forward indefinitely.

At December 31, 2002, the Company had U.K. net operating loss carryforwards
totaling approximately $6.1 million that may be carried forward indefinitely.

Utilization of the net operating loss and tax credit carryforwards are subject
to an annual limitation due to the ownership change limitations provided by the
Internal Revenue Code and similar state provisions. The annual limitation may
result in the expiration of a portion of the net operating loss and tax credit
carryforwards before utilization.

7.   LONG-TERM DEBT

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

                                                               DECEMBER 31,
                                                        -----------------------
                                                            2002        2001
                                                        ----------   ----------
        Existing Credit Agreement:
            Revolving Facility                          $   99,200   $   79,000
            Term Facility                                  174,608      198,287
        95/8% Senior Subordinated Discount Notes
            Due 2006                                       157,632      195,016

                                                        ----------   ----------
   Total long-term debt, including current maturities   $  431,440   $  472,303
                                                        ==========   ==========

The Company's Existing Credit Agreement is comprised of two facilities, the Term
Facility and the Revolving Facility. The Term Facility has two tranches: the
Tranche A Term Facility is a 6-year facility in an aggregate principal amount
equal to $90.0 million and the Tranche B Term Facility is a 7-year facility in
an aggregate principal amount of $150.0 million. The Revolving Facility is a
6-year facility in an aggregate principal amount of $100.0 million. The Tranche
A Term Facility and the Tranche B Term Facility are repayable in quarterly
installments. Borrowings under the Existing Credit Agreement bear interest at a
rate per annum equal to the Alternate Base Rate ("ABR") (as defined in the
Existing Credit Agreement) or the Eurodollar Rate (as defined in the Existing
Credit Agreement) plus, in each case, an applicable margin. The applicable
margin at December 31, 2002 on loans under the Revolving Facility and the
Tranche A Term Facility was 4.00% for Eurodollar Loans (as defined in the
Existing Credit Agreement) (5.84% at December 31, 2002) and 3.00% for ABR Loans
(as defined in the Existing Credit Agreement). The applicable margin at December
31, 2002 on loans under the Tranche B Term Facility was 4.25% for Eurodollar
Loans (5.65% to 6.09% at December 31, 2002) and 3.25% for ABR Loans. The Company
may select interest periods of one, two, three or six months for Eurodollar
Loans. If at any time the Company is in default in the payment of any amount of
principal due under the Existing Credit


                                      F-24
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

Agreement, such amount will bear interest at 2.00% above the rate otherwise
applicable. Overdue interest, fees and other amounts will bear interest at 2.00%
above the rate applicable to ABR Loans.

The Company's obligations under the Existing Credit Agreement are secured by
substantially all of the Company's assets. The Existing Credit Agreement
requires that the Company meet certain financial tests and other restrictive
covenants including limitations on indebtedness, leverage ratio levels, interest
coverage ratio levels and restricts the Company from declaring or paying
dividends to its stockholders.

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.

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 must 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 Redeemable
Series B Cumulative Pay-in-Kind Preferred Stock ("Series B Preferred Stock"),
which it contributed to the capital of PX Holding. The Series B Preferred Stock
was non-voting; it had a liquidation preference of $49.2 million plus accrued
and unpaid dividends (total of approximately $51.7 million at December 31,
2002); it entitled the holder to cumulative dividends at a rate of 10% per
annum; and it could be redeemed by the Company at its option at any time for the
liquidation preference plus accrued and unpaid dividends.

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.

In April 2002, the Company postponed an offering of Secured Notes it had
previously announced and also deferred its plans to replace its Existing Credit
Agreement with a new credit agreement. As a result, the Company expensed all
costs (primarily legal, accounting, advisory and lenders' fees) in connection
with the refinancing. Such costs are reflected in refinancing expense in the
accompanying consolidated statements of operations.

On June 14, 2002, the Company amended its Existing Credit Agreement to, among
other things, allow the Company to (1) acquire the shares of Las Palmas from M&F
Worldwide in exchange for the Las Palmas Note (see Note 14), (2) contribute the
assets of Las Palmas and certain other assets owned by the Company to the



                                      F-25
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

newly-formed EFILM, LLC in exchange for 80% of its membership interests (see
Notes 2 and 14), and (3) allow Deluxe Laboratories, Inc. 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
Amendment"). This provision of the September Amendment will expire on March 28,
2003.

The September Amendment also provided that it would be an event of default if
(i) by February 1, 2003, an affiliate of the Company failed to make a cash
equity contribution to the Company in the amount of the interest due February 1,
2003 on Existing Notes held by affiliates of the Company on that date or (ii) by
March 28, 2003, the Existing Credit Agreement were not refinanced or the debt of
the Company reduced, in either case by an amount acceptable to the lenders under
the Existing Credit Agreement, or an affiliate of the Company failed to make a
cash equity contribution to the Company in the amount of the interest which was
due on February 1, 2003 on Existing Notes held by non-affiliates of the Company
on that date. On January 31, 2003, Mafco Holdings made the required 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, Mafco Holdings agreed to extend to the Company a revolving
line of credit 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 (the "Mafco Line").

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 financial covenants for the
four fiscal quarters ended December 31, 2002. Under the March 2003 Amendment,
certain lenders also agreed to defer amortization payments otherwise due in 2003
to March 31, 2004 such that amortization payments required of the Company in
2003 will be reduced by $20 million. The Company agreed to pay, among other
fees, $2.0 million, representing 10% of the amount of deferred amortization, at
closing.

In connection with the March 2003 Amendment, Mafco Holdings contributed
$90,860,000 principal amount of 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, par value $0.01 per share, of the Company (the "Series C
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. The Series C Preferred
Stock is non-voting; has a liquidation preference of $1,000 per share plus
accrued and unpaid dividends; and entitles the holder to


                                      F-26
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

cumulative dividends at a rate of 10% per annum. Mafco Holdings also agreed to
extend the Mafco Line until March 31, 2004.

The Existing Notes were issued at a discount representing a yield to maturity of
95/8%. There were no periodic interest payments through February 1, 2002.
Thereafter, they bear interest at a rate of 95/8% per annum, payable
semi-annually on February 1 and August 1 of each year, which commenced August 1,
2002.

As discussed in Note 2, in December 2001, M&F Worldwide delivered Existing Notes
with an aggregate principal amount of $24.5 million to the Company in exchange
for 1,381,690 shares of Series A Preferred Stock. The remaining outstanding
Existing Notes, at December 31, 2001, had a principal amount at maturity of
$193.4 million.

The following sets forth the aggregate principal maturities of the Company's
debt during the twelve-month periods ending December 31 (in thousands):


                2003                      $    22,815
                2004                          221,095
                2005                           36,938
                2006                           64,791
                2007                                -

The aggregate principal amount for 2006 excluded $90.9 million face value of
Existing Notes, which were contributed by Mafco Holdings in connection with the
March 2003 Amendment as well as the effects of the step-up in basis in
connection with the M&F Purchase.

Before March 31, 2004, in order to provide the Company with additional financial
and operating flexibility and to improve its overall capital structure, the
Company intends to seek other sources of financing on terms more favorable to
the Company than under the Existing Credit Agreement, including dates of
maturity, amortization schedules and/or interest rates. However, there can be no
assurance that the Company will be able to secure alternate financing on such
favorable terms by March 31, 2004. While the lenders under the Existing Credit
Agreement have accommodated the Company to date and the Company believes that
the lenders will continue to do so, there can be no assurance that they will
continue to do so in March 2004 in the event alternate financing is not secured.

8.  PREFERRED STOCK

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 is
non-voting, has a liquidation preference of $49.2 million plus accrued and
unpaid dividends, and entitles its holders to cumulative dividends at a rate of
10% per annum. The terms of the Series B Preferred Stock indicate that such
stock may be redeemed by the Company, at its option, at


                                      F-27
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

any time at a price of $1,000 per share, plus accrued and unpaid dividends.
Since Mafco Holdings maintains the majority shareholder vote of the Company, the
Series B Preferred Stock was deemed to be redeemable at the option of Mafco
Holdings, and is 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 (which management believes approximates fair value), net of $323,000 of
transaction costs. Because the Series B Preferred Stock was redeemable at the
option of Mafco Holdings, the Company is required to carry the Series B
Preferred Stock at its redemption value. The Company recorded an accreted
dividend of $2,857,000 during the year ended December 31, 2002 in accordance
with the terms of the Series B 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 is 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 will also participate 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 restricts the payment of
dividends.

All Series B Preferred Stock was exchanged for Series C Preferred Stock in
connection with the March 2003 Amendment, as discussed in Note 7.

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-28
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

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, 1999          1,162,000           $ 10.00                $10.00
      Options expired                                   (66,667)            10.00                 10.00
      Grants                                            130,000              7.50                  7.50
                                                      ----------       --------------          ----------
    Options Outstanding at December 31, 2000          1,225,333        $10.00 - $7.50            $ 9.73
      Options expired                                  (233,333)            10.00                 10.00
                                                      ----------       --------------          ----------
    Options Outstanding at December 31, 2001            992,000        $10.00 - $7.50            $ 9.67
      Options granted/expired                                 -               -                       -
                                                      ----------       --------------          ----------
    OPTIONS OUTSTANDING AT DECEMBER 31, 2002            992,000        $10.00 - $7.50            $ 9.67
</TABLE>

The weighted-average remaining contractual life of options outstanding at
December 31, 2002 is 6.77 years.

Information regarding stock options exercisable is as follows:


<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                    ------------------------------------------------------
                                                         2002               2001               2000
                                                    ----------------   ----------------  -----------------
<S>                                                      <C>                <C>              <C>
         Options Exercisable:
              Number                                     992,000            948,667          1,138,667
              Weighted average exercise price              $9.67              $9.77             $9.90
</TABLE>

There were no options granted under the Plan during 2002 or in the Pre-M&F
Purchase period or in the Post-M&F Purchase period.

For purposes of the pro forma expense, the weighted average fair value of the
options is amortized over the vesting period. For 2000, the weighted average
fair value of options whose exercise price is less than the market price of the
stock on the date of grant is $4.97. For 2000, the weighted average fair value
of options granted whose exercise price is more than the market price of the
stock on the grant date is $3.39. The fair values are as of the respective grant
dates and were estimated using the following assumptions and the Black-Scholes
option valuation model:

<TABLE>
<CAPTION>
                                                                2002         2001         2000
                                                               -----        -----        ------
<S>                                                             <C>          <C>         <C>
                 Risk-free interest rate                        N/A          N/A         6.53%
                 Expected life                                  N/A          N/A        5 years
                 Expected volatility                            N/A          N/A          0.44
                 Expected dividend yield                        N/A          N/A         0.00%
</TABLE>

Applying SFAS 123 in the pro forma disclosures may not be representative of the
effects on pro forma net income (loss) for future years as options vest over
several years and additional awards may be made each year.


                                      F-29
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

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, 2002, the Pre-M&F Purchase period, the Post-M&F Purchase period, and the
year ended December 31, 2000, the Company recorded expense of $721,000,
$238,000, $579,000, and $893,000, 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,
2002, the Pre-M&F Purchase period, the Post-M&F Purchase period, and the year
ended December 31, 2000, the Company recorded expense of $965,000, $323,000,
$785,000, and $1,158,000, respectively, representing the Company's
contributions.

11.  SEGMENT INFORMATION

The Company has one reportable segment, the rental of camera systems, lighting
systems and other equipment, and the sale of related products. These activities
are conducted in a number of geographic locations through the Company's
owned-and-operated facilities and its network of independent agents. These
geographic operations are organized in three regions: North America, Europe and
Asia Pacific. North America consists of camera rental facilities in Woodland
Hills, Hollywood, Dallas, Orlando, Wilmington and Toronto and Vancouver, Canada.
In addition to camera rental, Toronto also provides lighting, lighting grip and
power distribution and generation equipment. The Company also has a Lee Filters
sales operation located in Burbank, California. Europe consists of camera rental
facilities in Dublin, Ireland, London (three) and Manchester, England; Glasgow
and Edinburgh, Scotland; Marseilles and Paris, France; Prague, Czech Republic;
and Warsaw, Poland. In addition, Europe also includes the Lee Lighting and Lee
Filters operations in the United Kingdom and a lighting consumables sales
facility in Paris, France. Asia Pacific consists of camera rental facilities in
Sydney, Queensland and Melbourne, Australia, and Auckland and Wellington, New
Zealand. The rental facilities in Australia also provide lighting, lighting grip
and power distribution and generation equipment.

The Company evaluates performance based on profit or loss from operations before
net interest, income taxes, depreciation and amortization ("EBITDA"). Management
believes that EBITDA serves as an important


                                      F-30
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

financial analysis tool for measuring financial information such as operating
performance, liquidity and leverage. However, EBITDA should not be considered in
isolation as a substitute for net income or cash flow from operations prepared
in accordance with accounting principles generally accepted in the United States
or as a measure of profitability or liquidity.

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

<TABLE>
<CAPTION>
                                                              DECEMBER 31, 2002
                                   -------------------------------------------------------------------------
                                                   RENTAL AND SALES
                                   ------------------------------------------------
                                     NORTH                     ASIA
                                    AMERICA      EUROPE      PACIFIC     SUBTOTAL      OTHER        TOTAL
                                   ----------- ------------ ----------- ----------- ------------ -----------
<S>                                <C>         <C>          <C>         <C>         <C>          <C>
Revenue from
  external customers               $   96,781  $   67,513   $   24,617  $  188,911  $    4,271   $  193,182
Intersegment revenue                   14,707       4,333            -      19,040           -       19,040
Operating income (loss)                28,320      (5,545)       3,622      26,397      (6,965)      19,432
Depreciation and amortization          30,930       8,088        3,035      42,053       1,476       43,529
Capital expenditures                   16,494       2,543        1,916      20,953       4,249       25,202
Long-lived assets                     459,702      81,772       11,624     553,098      21,593      574,691
Total assets                          515,223      55,253       17,805     588,281      44,886      633,167
</TABLE>


<TABLE>
<CAPTION>
                                                                        DECEMBER 31, 2001
                                   ---------------------------------------------------------------------------------------
                                                   RENTAL AND SALES
                                   ------------------------------------------------
                                                                                                               UNAUDITED
                                                                                                                  PRO
                                     NORTH                     ASIA                                              FORMA
                                    AMERICA      EUROPE       PACIFIC    SUBTOTAL      OTHER        TOTAL         (1)
                                   ----------- ------------ ----------- ----------- ------------ ------------ ------------
<S>                                  <C>          <C>          <C>        <C>       <C>            <C>        <C>
Revenue from
  external customers                 $101,746     $66,881      $22,183    $190,810  $        -     $190,810   $  190,810
Intersegment revenue                   13,282       4,417            -      17,699           -       17,699       17,699
Operating income (loss)                26,033      (3,566)       3,469      25,936      (4,005)      21,931       17,042
Depreciation and amortization          36,597       8,389        2,944      47,930           -       47,930       53,000
Capital expenditures                   20,911       3,284        2,412      26,607           -       26,607       26,607
Long-lived assets                     463,014      79,590       12,079     554,683       6,792      561,475      561,475
Total assets                          523,400      52,535       16,869     592,804       8,412      601,216      601,216
</TABLE>


<TABLE>
<CAPTION>
                                                                        DECEMBER 31, 2000
                                   ---------------------------------------------------------------------------------------
                                                   RENTAL AND SALES
                                   ------------------------------------------------
                                                                                                               UNAUDITED
                                                                                                                  PRO
                                     NORTH                     ASIA                                              FORMA
                                    AMERICA      EUROPE       PACIFIC    SUBTOTAL      OTHER        TOTAL         (1)
                                   ----------- ------------ ----------- ----------- ------------ ------------ ------------
<S>                                  <C>          <C>          <C>        <C>       <C>          <C>          <C>
Revenue from
  external customers                 $103,988     $78,523      $22,117    $204,628  $        -   $  204,628   $  204,628
Intersegment revenue                   13,611       4,696            -      18,307           -       18,307       18,307
Operating income (loss)                32,763        (582)       2,165      34,346      (3,552)      30,794       16,752
Depreciation and amortization          24,165       8,890        3,132      36,187       1,739       37,926       52,562
Capital expenditures                   22,377       5,825        2,544      30,746           -       30,746       30,746
Long-lived assets                     172,499      39,186       13,862     225,547       7,956      233,503      576,362
Total assets                          189,542      68,706       19,430     277,678       7,034      284,712      624,753
</TABLE>

(1)  Reflects the impact of the M&F Purchase assuming that the transaction had
     occurred at the beginning of each respective period. The pro forma impact
     on depreciation and amortization relates to the step-up in basis of assets
     in North America.

                                      F-31
<PAGE>


                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

The accounting policies of the geographic regions are the same as those
described in Note 1.

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):


                  2003                       $  8,185
                  2004                          6,533
                  2005                          5,985
                  2006                          4,810
                  2007                          3,614
                  Thereafter                   11,483
                                           --------------
                                             $ 40,610
                                           ==============

During the year ended December 31, 2002, the Pre-M&F Purchase period, the
Post-M&F Purchase period and the year ended December 31, 2000, rental expense
under operating leases was $8,066,000, $2,361,000, $5,733,000, and $8,053,000,
respectively.

As of December 31, 2002, amounts available to the Company under various letters
of credit totaled approximately $0.6 million, all with expiration dates of June
2004. In addition, the Company has various lines of credit totaling
approximately $2.9 million at December 31, 2002, under which no amounts were
drawn. The Company's ability to draw on these lines of credit is restricted by
the terms of the Existing Credit Agreement. The Company does not have any
off-balance sheet financing arrangement 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.

13.  RELATED PARTY TRANSACTIONS

At December 31, 2002 and 2001, the Company recorded amounts payable to DHD
Ventures, LLC of approximately $244,000 and $233,000, respectively, relating to
equipment rentals facilitated by Panavision on behalf of DHD Ventures (see Note
15). Such amount is included in due to affiliate in the accompanying
consolidated balance sheets. Due to related party of $1,209,000 is due to the
former shareholders of Las Palmas Productions, Inc. relating to amounts owed by
the Company under the EFILM Agreements (see Note 14). Included in other assets
for 2002 and 2001 is a note receivable in 2004 from Pany Rental, Inc. (dba
Panavision


                                      F-32
<PAGE>


                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

New York)("Pany Rental"), an agent in which the Company holds a one-third
interest. The balance of this note is approximately $315,000 at December 31,
2002 and $325,000 at December 31, 2001.

In December 2001, the Company entered into a lease agreement with TFN Lighting
Corp. ("TFN"), a wholly owned subsidiary of Pany Rental, whereby the Company
leased to TFN certain of its lighting and related lighting equipment located in
the United States. The lease term commenced on February 1, 2002 and expires on
October 31, 2005. Monthly rental payments are due in specified amounts as
outlined in the lease agreement. At the end of the Option Term, as defined in
the lease, TFN will have the option to purchase the lighting and related
equipment covered by the lease. In connection with this lease agreement, the
Company recorded rental income of approximately $611,000 as of December 31,
2002, which has been included in lighting rental revenue.

Due from affiliate of $2.5 million and $1.0 million as of December 31, 2002 and
2001, respectively, relate to amounts due from Pany Rental. A significant
portion of the December 31, 2002 balance is overdue based on the terms of the
agreement between the Company and Pany Rental. Consistent with the Company's
evaluation of its other investments in Pany Rental, the Company believes that no
reserve is necessary for this asset given the prospects for Pany Rental's
operations and that the classification as a current asset is appropriate.

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 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. The Series B Preferred Stock is non-voting; it has
a liquidation preference of $49.2 million plus accrued and unpaid dividends; it
entitles the holder to cumulative dividends at a rate of 10% per annum; and it
may be redeemed by the Company at its option at any time for the liquidation
preference plus accrued and unpaid dividends.

An amendment dated September 30, 2002 to the Existing Credit Agreement provides
that it is an event of default if (i) by February 1, 2003, an affiliate of the
Company fails to make a cash equity contribution to the Company in the amount of
the interest due February 1, 2003 on Existing Notes held by affiliates of the
Company on that date or (ii) by March 28, 2003, the Existing Credit Agreement is
not refinanced or the debt of the Company reduced, in either case by an amount
acceptable to the lenders under the Existing Credit Agreement, or an affiliate
of the Company fails to make a cash equity contribution to the Company in the
amount of the interest which was due on February 1, 2003 on Existing Notes held
by non-affiliates of the Company on that date. On January 31, 2003, Mafco
Holdings made the required 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.

On March 27, 2003, the Company acquired from Mafco Holdings $90,860,000
principal amount of Existing Notes, which had approximately $1.4 million of
accrued interest and $10,000,000 in cash, and from PX Holding 53,571


                                      F-33
<PAGE>


                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

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 Cumulative Pay-in-Kind Preferred Stock, par value
$0.01 per share, of the Company (the "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. The Series C Preferred Stock is non-voting; it has a
liquidation preference of $1,000 per share plus accrued and unpaid dividends;
and it entitles the holder to cumulative dividends at a rate of 10% per annum.

On February 3, 2003, Mafco Holdings agreed to extend to the Company a revolving
line of credit in the amount of $4.0 million, maturing March 28, 2003 at the
same rate as provided for the Revolving Facility pursuant to the Existing Credit
Agreement (the "Mafco Line"). As a result of the March 2003 Amendment, Mafco
Holdings agreed to extend the Mafco Line until March 31, 2004.

Beginning in December 2002, the Company began participating in Mafco Holdings'
directors and officers insurance program, which covers the Company as well as
Mafco Holdings and its other affiliates. The limits of coverage are available on
aggregate losses to any or all of the participating companies and their
respective directors and officers. The Company reimburses Mafco Holdings for its
allocable portion of the premiums for such coverage, which the Company believes
is at least as favorable as the premiums the Company could secure were it to
secure stand-alone coverage. The Company participates in other insurance
programs with Mafco Holdings and its affiliates which management believes are at
terms at least as favorable as would be obtained at arms-length terms.

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 shareholders and $600,000 to
Las Palmas. M&F Worldwide also agreed to make an additional payment to the
selling shareholders 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").

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.

                                      F-34
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

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, 2002, the carrying
value of this note was $7.0 million and classified as Note Payable to Affiliate
in the accompanying consolidated balance sheets. Since the Company and Las
Palmas are 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 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. purchased 20% of the EFILM, LLC membership
interests for $5.2 million. The Company maintains a controlling interest 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 Laboratories, Inc.'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, 2002,
the Company has recorded a liability of approximately $1.2 million based upon
the current value of the Earnout Payment.

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 CINEALTATM high definition digital camera with
Panavision's advanced PRIMO DIGITAL(R) lenses to form a state-of-the-art digital
camera system for use in the motion picture and television industry. These
camera systems are available 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,


                                      F-35
<PAGE>


                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002

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, 2002, the Pre-M&F Purchase period, the Post-M&F
Purchase period, and the year ended December 31, 2000 (in thousands):


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

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

December 31, 2000                             $ 2,368       $ 440        $ 901          $ 1,907

</TABLE>


                                      F-36
<PAGE>

                                 Panavision Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 2002


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, 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)
                                            =============== ==============  ==============  ==============

YEAR ENDED DECEMBER 31, 2001
Total revenue                                 $  53,812       $  55,217       $  37,961       $  43,820
Gross margin                                     27,149          28,618          13,244          17,400
Net income (loss)                                (1,352)            982          (8,222)         (5,421)
Net income (loss) attributable to common
     shareholders                                (1,352)            982          (8,222)         (5,421)
Income (loss) per share - Basic and Diluted   $   (0.15)      $    0.11       $   (0.94)      $   (0.62)
                                            =============== ==============  ==============  ==============
</TABLE>

18.  RECENT DEVELOPMENTS

On January 7, 2003, John S. Farrand, then the Company's President and Chief
Executive Officer, ceased his employment with the Company. Separation
arrangements with Mr. Farrand have not yet been finalized. Upon Mr. Farrand's
departure, Ronald O. Perelman, the Chairman of the Board of Directors of the
Company, appointed an Office of the President comprised of Bobby G. Jenkins,
Executive Vice President and Chief Financial Officer, Eric W. Golden, Executive
Vice President and General Counsel, and Will T. Paice, currently President of
U.S. Operations, to manage the daily affairs of the Company.

In addition, Scott L. Seybold, Executive Vice President and former Chief
Financial Officer, will cease his employment with the Company effective March
31, 2003.

19.  OTHER MATTERS

On August 5, 2002, the New York Stock Exchange ceased listing the Company's
Common Stock, which now trades over the counter under the ticker symbol PVIS.OB.




                                      F-37
<PAGE>






                                  EXHIBIT INDEX


EXHIBIT
NUMBER        DESCRIPTION
------        -----------
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).

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 (the "Indenture").
              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 (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.

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.

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).


<PAGE>


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

4.12          First Amendment, dated as of March 27, 2003, to the Line of Credit
              Agreement between Panavision Inc. and MacAndrews & Forbes
              Holdings 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. 1999 Executive Incentive Compensation Plan
              (incorporated herein by reference from the Company's 1999
              Definitive Proxy Statement dated March 31, 1999).

10.3          Letter Agreement, dated as of March 27, 2003, between Mafco
              Holdings Inc., PX Holding Corporation and Panavision Inc.

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 Mafco Holdings Inc. and
              Panavision Inc. (incorporated herein by reference from Exhibit 4
              from the Company's form SC 13D/A filed on December 9, 2002).

<PAGE>

10.10         Mafco-M&F Worldwide Note Letter Agreement, dated as of December 3,
              2002, by and between Mafco Holdings 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 Mafco Holdings 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         Employment Agreement, dated October 15, 2002, between Panavision
              Inc. and Bobby G. Jenkins, Executive Vice President and Chief
              Financial Officer.

10.13         Employment Agreement, dated September 1, 2002, between
              Panavision Inc. and Eric W. Golden, Executive Vice President and
              General Counsel.

10.14         Letter Agreement, dated as of January 31, 2003, between Mafco
              Holdings Inc., PX Holding Corporation and Panavision Inc.

10.16         Tax Sharing Agreement, dated as of February 1, 1999, between
              Mafco Holdings 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         Registration Rights Transfer Agreement, dated as of April 19,
              2001, by and between PX Holding Corporation, Panavision Inc. and
              M&F Worldwide Corp. (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, 2001). This agreement
              was later cancelled effective December 3, 2002 as part of the M&F
              Settlement.

10.22         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 identically
              numbered exhibit 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.

10.23         M&F Worldwide Corp. Letter, dated as of April 19, 2001,
              delivered by M&F Worldwide Corp. to Panavision Inc., together
              with Mafco Letter Agreement, dated as of April 19, 2001, by and
              between Mafco Holdings Inc. and M&F Worldwide Corp. (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, 2001). This agreement was later cancelled effective
              December 3, 2002 as part of the M&F Settlement.

10.24         Mafco Letter Agreement, dated as of December 21, 2001, between
              Mafco Holdings Inc. and M&F Worldwide Corp. (incorporated herein
              by reference from Exhibit 11 from the Company's Form SC 13D/A
              filed on December 28, 2001). This agreement was later cancelled
              effective December 3, 2002 as part of the M&F Settlement.

10.25         M&F Worldwide Letter Amendment, dated as of December 21, 2001,
              delivered by M&F Worldwide Corp. to Panavision Inc. (incorporated
              herein by reference from Exhibit 12 from the Company's Form SC
              13D/A filed on December 28, 2001). This agreement was later
              cancelled effective December 3, 2002 as part of the M&F
              Settlement.

<PAGE>

10.26         Registration Rights Agreement Amendment Letter, dated as of
              December 21, 2001, between Panavision Inc. and M&F Worldwide Corp.
              (incorporated herein by reference from Exhibit 14 from the
              Company's Form SC 13D/A filed on December 28, 2001). This
              agreement was later cancelled effective December 3, 2002 as part
              of the M&F Settlement.

10.27         Registration Rights Agreement Amendment Letter, dated as of
              December 21, 2001, between PX Holding Corporation and M&F
              Worldwide Corp. (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, 2001). This agreement
              was later cancelled effective December 3, 2002 as part of the M&F
              Settlement.

10.28         Letter Agreement relating to the Mafco Disbursement, dated
              December 21, 2001, between Mafco Holdings, Inc. and M&F Worldwide
              Corp. (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, 2001). This agreement was later
              cancelled effective December 3, 2002 as part of the M&F
              Settlement.

10.29         Letter Agreement, dated June 27, 2002, between Mafco Holdings
              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).

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 Philip E. Beekman

24.3          Power of Attorney executed by Donald G. Drapkin

24.4          Power of Attorney executed by Edward Grebow

24.5          Power of Attorney executed by James R. Maher

24.6          Power of Attorney executed by Martin D. Payson

24.7          Power of Attorney executed by Patrick Whittingham

24.8          Power of Attorney executed by Robert S. Wiesenthal

24.9          Power of Attorney executed by Kenneth Ziffren

99.           MISCELLANEOUS

99.1           Certification of Office of the President pursuant to U.S.C.
               Section 1350 as adopted pursuant to section 906 of the
               Sarbanes-Oxley Act of 2002.

99.2           Certification of Office of the President pursuant to U.S.C.
               Section 1350 as adopted pursuant to section 906 of the
               Sarbanes-Oxley Act of 2002.

99.3           Certification of Office of the President pursuant to U.S.C.
               Section 1350 as adopted pursuant to section 906 of the
               Sarbanes-Oxley Act of 2002.

99.4           Certification of Office of the CFO pursuant to U.S.C. Section
               1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act
               of 2002.

99.5           Press Release dated December 3, 2002 (incorporated herein by
               reference from Exhibit 7 from the Company's Form SC 13D/A filed
               December 9, 2002).