<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 001-12391
PANAVISION INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 13-3593063
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
6219 DE SOTO AVENUE
WOODLAND HILLS, CALIFORNIA 91367
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (818) 316-1000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<S> <C>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock New York Stock Exchange
</TABLE>
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. / /
The aggregate market value of the voting stock of the Registrant held by
non-affiliates of the Registrant on March 20, 1998 was approximately $104
million.
As of March 20, 1998, there were 18,928,500 shares of Panavision Inc.
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
- --------------------------------------------------------------------------------
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<PAGE>
PART III
Part III of this Annual Report on Form 10-K, as originally filed on March
24, 1998 is hereby amended and restated in its entirety.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Upon the consummation of the transactions contemplated by the
Recapitalization Agreement, PX Holding will have the right to designate all
members of the Company's Board of Directors. If the Recapitalization Agreement
is approved and adopted by the Panavision stockholders and the Merger is
consummated, all of the nominees, if elected, will become the directors of
Panavision immediately after the effective time of the Merger and are expected
to serve from such time until the next succeeding annual meeting of
stockholders. If the Recapitalization Agreement is not approved, the Merger is
not consummated or the nominees are not elected at a Combined Annual and Special
Meeting of Stockholders (the 'Meeting'), an annual meeting of stockholders for
1998 will be scheduled in the near future. Directors of the Company will be
elected by a plurality vote of the outstanding shares of Common Stock present in
person or represented by proxy at the Meeting. Under applicable Delaware law, in
tabulating the votes, abstentions from voting on the election of Directors
(including broker non-votes) will be disregarded and have no effect on the
outcome of the vote.
The Board of Directors has been informed that all persons listed below are
willing to serve as Directors, but if any of them should decline or be unable to
act as a Director, the individuals named in the proxies will vote for the
election of such other person or persons as they, in their discretion, may
choose. The Board of Directors has no reason to believe that any such nominees
will be unable or unwilling to serve.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF EACH OF THE NOMINEES LISTED HEREIN FOR DIRECTOR.
NOMINEES FOR ELECTION AS DIRECTORS
The name, age (as of April 20, 1998), principal occupation for the last
five years, selected biographical information and period of service as a
Director of the Company of each of the nominees for Director are set forth
hereafter.
Ronald O. Perelman (55) has been Chairman of the Board of Directors and
Chief Executive Officer of Mafco and various affiliates since 1980. Mr. Perelman
also is Chairman of the Executive Committees of the Boards of Directors of
Consolidated Cigar Holdings Inc. ('Cigar Holdings'), M&F Worldwide Corp.
('MFW'), The Coleman Company, Inc. ('Coleman'), Revlon, Inc. ('Revlon') and
Revlon Consumer Products Corporation ('Products Corporation') and Chairman of
the Board of Meridian Sports Incorporated ('Meridian'). Mr. Perelman is a
Director of the following corporations which file reports pursuant to the
Exchange Act: California Federal Bank, A Federal Savings Bank ('California
Federal'), CLN Holdings Inc. ('CLN'), Coleman, Coleman Worldwide Corporation
('Coleman Worldwide'), Cigar Holdings, First Nationwide Holdings Inc. ('FN
Holdings'), First Nationwide (Parent) Holdings Inc. ('FN Parent'), MFW,
Meridian, Products Corporation, Revlon and REV Holdings Inc. ('REV Holding').
(On December 27, 1996, Marvel Entertainment Group, Inc. ('Marvel'), Marvel
(Parent) Holdings Inc. ('Marvel Parent') and Marvel Holdings Inc. ('Marvel
Holding'), of which Mr. Perelman was a Director, Marvel III Holdings Inc., of
which Mr. Perelman is a director, and several subsidiaries of Marvel filed
voluntary petitions for reorganization under Chapter 11 of the United States
Bankruptcy Code.)
William C. Scott (63) has been the Chairman and Chief Executive Officer of
the Company since 1988. From 1972 until 1987, Mr. Scott was President and Chief
Operating Officer of Western Pacific Industries Inc., a company listed on the
New York Stock Exchange. Prior to 1972, Mr. Scott was a Group Vice President of
Cordura Corporation (a business information company) for three years, a Vice
President of Booz Allen & Hamilton Inc. (management consulting firm) for five
years and an owner/operator of several small businesses for eight years. Mr.
Scott is also a director of Edison Control Corporation.
John S. Farrand (53) has been the President and Chief Operating Officer of
the Company since 1985 and a director of the Company since October 1996. From
1980 to 1985, Mr. Farrand was employed by Warner Communications Inc. in several
senior executive positions. He was President of their Atari Coin-Operated Games
1
<PAGE>
Division and subsequently was appointed President and Chief Operating Officer of
Atari Holdings, Inc. Prior to 1980, Mr. Farrand spent 14 years with Music Hire
Group Limited, a U.K. company specializing in coin-operated music systems (juke
boxes), and from 1973 to 1980 served as Managing Director. Mr. Farrand is a
member of the Academy of Motion Picture Arts and Sciences, a member of the
Society of Motion Picture and Television Engineers and an associate member of
the American Society of Cinematographers.
Howard Gittis (64) has been Vice Chairman of Mafco and various of its
affiliates since 1985. Mr. Gittis is a Director of the following corporations
which file reports pursuant to the Exchange Act: California Federal, CLN, Cigar
Holdings, FN Holdings, FN Parent, MFW, Products Corporation, Revlon, REV
Holdings, Jones Apparel Group, Inc., Loral Space & Communications Ltd. and
Rutherford-Moran Oil Corporation.
James R. Maher (48) has been President and Chief Executive Officer of Mafco
Consolidated Group, Inc. since 1995. Mr. Maher was Chairman of the Board of
Laboratory Corporation of America Holdings ('Lab Corp.'), a clinical laboratory
company, from 1995 to April 1996 and was President and Chief Executive Officer
of National Health Laboratories Holdings Inc., a clinical laboratory company and
a predecessor to Lab Corp, from 1992 to 1995. Mr. Maher was Vice Chairman of the
First Boston Corporation, an investment bank, from 1990 to 1992 and a Managing
Director of the First Boston Corporation from 1982 to 1990. Mr. Maher is a
Director of First Brands Corporation and MFW, which file reports pursuant to the
Exchange Act.
Joseph P. Page (44) has been Executive Vice President and Chief Financial
Officer of Coleman since 1997 and was Executive Vice President and Chief
Financial Officer of New World Communications Group Inc. from 1994 to 1996.
Prior to that, Mr. Page was a partner in the accounting firm of Price Waterhouse
for more than five years.
Martin D. Payson (62) has been a director of the Company since November
1996. Mr. Payson has been active in investment and philanthropic activities
since December 1992. From January 1990 to December 1992, he was Vice Chairman of
the Board of Directors of Time Warner, Inc., and from 1970 to December 1990, he
was an executive officer of Warner Communications Inc. Mr. Payson is a director
of Bestform Group, Inc., Meridian, Delta Financial Corporation and Unapix
Entertainment, Inc.
Kenneth Ziffren (57) has been a partner with the law firm of Ziffren,
Brittenham, Branka & Fischer since 1979. Mr. Ziffren is a director of City
National Corp.
EXECUTIVE OFFICERS
The executive officers serve at the discretion of the Board of Directors.
The following table sets forth certain information concerning the executive
officers of the Company (as of March , 1998) who are expected to serve in such
capacity until the consummation of the Recapitalization (none of whom has a
family relationship with another executive officer):
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------------- --- ---------------------------------------------------------
<S> <C> <C>
William C. Scott...................... 63 Chairman of the Board and Chief Executive Officer
John S. Farrand....................... 53 President and Chief Operating Officer
Jeffrey J. Marcketta.................. 43 Executive Vice President and Chief Financial Officer
Christopher M.R. Phillips............. 38 Controller and Secretary
</TABLE>
William C. Scott has been the Chairman and Chief Executive Officer of the
Company since 1988. From 1972 until 1987, Mr. Scott was President and Chief
Operating Officer of Western Pacific Industries Inc., a company listed on the
New York Stock Exchange. Prior to 1972, Mr. Scott was a Group Vice President of
Cordura Corporation (a business information company) for three years, a Vice
President of Booz Allen & Hamilton Inc. (management consulting firm) for five
years and an owner/operator of several small businesses for eight years. Mr.
Scott is also a director of Edison Control Corporation.
John S. Farrand has been the President and Chief Operating Officer of the
Company since 1985. From 1980 to 1985, Mr. Farrand was employed by Warner
Communications Inc. in several senior executive positions. He was President of
their Atari Coin-Operated Games Division and subsequently was appointed
President and Chief Operating Officer of Atari Holdings, Inc. Prior to 1980, Mr.
Farrand spent 14 years with Music Hire Group Limited, a U.K. company
specializing in coin-operated music systems (juke boxes), and from 1973 to 1980
2
<PAGE>
served as Managing Director. Mr. Farrand is a member of the Academy of Motion
Picture Arts and Sciences, a member of the Society of Motion Picture and
Television Engineers and an associate member of the American Society of
Cinematographers.
Jeffrey J. Marcketta has been Executive Vice President and Chief Financial
Officer of the Company since 1993 and Treasurer since 1996. From 1991 to 1993,
Mr. Marcketta served as the President of Panavision Europe Limited, a wholly
owned subsidiary of the Company, and was responsible for the general management
of the Company's European operations. From 1989 until 1991, he was Vice
President of Corporate Development, assisting the Chief Executive Officer in the
restructuring and rationalization of the Company's business operations. Prior to
joining the Company in 1989, he worked for Ernst & Young LLP for almost ten
years, the last three of which were spent in the Mergers and Acquisitions
Consulting Group of the New York office.
Christopher M.R. Phillips has served as Controller of the Company since
1993 and Secretary since 1996. Mr. Phillips was the controller for the domestic
operations of the Company from 1989 to 1993 and the assistant controller for the
domestic operations of the Company from 1986 to 1989.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid to
or accrued by all the executive officers of the Company for each of the last
three completed fiscal years. Compensation accrued during one year and paid in
another is recorded under the year of accrual.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -----------------------------
---------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS(#) COMPENSATION(3)
- ---------------------------------- ---- -------- ---------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
William C. Scott ................. 1997 $800,000 $ 400,000 $ -- -- $ 7,125
Chairman of the Board and 1996 800,000 400,000 -- 576,681 7,125
Chief Executive Officer 1995 600,000 1,172,000 -- -- 6,930
John S. Farrand .................. 1997 $600,000 $ 300,000 $ -- -- $ 7,125
President and Chief Operating 1996 600,000 359,400 54,163(2) 726,812 7,125
Officer 1995 400,000 785,000 -- -- 6,930
Jeffrey J. Marcketta ............. 1997 $240,423 $ 180,317 $ -- -- $ 7,125
Executive Vice President, 1996 228,846 201,335 27,081(2) 224,314 7,125
Chief Financial Officer and 1995 218,769 314,000 -- -- 6,930
Treasurer
Christopher M. R. Phillips ....... 1997 $111,058 $ 51,577 $ -- -- $ 7,125
Controller and Secretary 1996 99,615 24,904 -- 43,076 6,504
1995 88,077 45,000 -- -- 4,842
</TABLE>
- ------------------
(1) Bonuses are paid pursuant to the Company's Executive Incentive Compensation
Plan (the 'Executive Incentive Compensation Plan'), in which the Chairman and
Chief Executive Officer is eligible to participate, as well as any other
employees selected by the Chief Executive Officer. The plan allows participants
to earn bonuses up to a stated percentage of their base salary. The bonuses were
paid in part based on the Company's achievement of operating results, and in
part based on achievement of individual goals established for the participant.
Mr. Farrand's and Mr. Marcketta's 1996 bonus also reflects the issuance of
shares of Panavision Common Stock (the '1996 Recapitalization Stock') at the
time of the Company's 1996 Recapitalization, which shares at such time had a
fair market value of $59,400 and $29,700, respectively.
(2) Consists of tax reimbursement payments relating to the 1996 Recapitalization
Stock.
(3) Consists of matching contributions by the Company under its 401(k) plan.
3
<PAGE>
OPTION GRANT TABLE
No stock options were granted to any named executive officers during the
last fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth the number of shares as to which options
were exercised by Messrs. Scott, Farrand, Marcketta and Phillips during 1997,
the value realized upon such exercise, and the number and value of options held
by such persons as of December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END(#) AT FY-END($)(1)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William C. Scott............... 210,000 $ 5,216,925 101,408 265,273 $ 2,617,594 $ 6,847,359
John S. Farrand................ 420,000 $10,533,850 0 306,812 0 7,919,585
Jeffrey J. Marcketta........... 105,000 $ 2,608,463 16,130 103,184 416,356 2,663,437
Christopher M.R. Phillips...... 0 0 15,101 27,975 389,795 722,105
</TABLE>
- ------------------
(1) Based on a closing price of $25.8125 per share of Panavision Common Stock on
December 31, 1997.
MANAGEMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
William C. Scott. Pursuant to an employment agreement with the Company,
William C. Scott serves as Chairman of the Board of Directors and Chief
Executive Officer of the Company at an annual salary of $800,000, subject to
annual increases as determined by the Company. The employment agreement provides
that Mr. Scott shall be granted bonuses pursuant to the Executive Incentive
Compensation Plan and Non-Statutory Options pursuant to the terms of the Stock
Option Plan. The employment agreement expires on June 11, 1999. The Company may
terminate the employment agreement for cause. In the event of Mr. Scott's
voluntary termination (except during the six-month period commencing six months
after a change of control) or termination for cause by the Company, the Company
shall pay Mr. Scott only an amount equal to his annual base salary and all
previously unreimbursed expenses. Upon a voluntary termination by Mr. Scott
during such six-month period commencing six months after a change of control, or
upon termination of Mr. Scott's employment by the Company without good cause or
by Mr. Scott for good reason, Mr. Scott is entitled to the greater of (x)
$1,600,000 or (y) twice his annual base salary, and all accrued but previously
unpaid salary, bonuses and unreimbursed expenses through the date of
termination. Mr. Scott intends to terminate such contract prior to the Merger
and, accordingly, upon such termination will not be entitled to any payments
thereunder. Upon a termination of Mr. Scott by death or disability, the Company
shall make a lump sum payment equal to the greater of $800,000 or Mr. Scott's
base salary currently then in effect, as well as all accrued but previously
unpaid salary, bonuses and unreimbursed, expenses through the date of
termination.
The employment agreement contains a covenant prohibiting the improper
disclosure and use of the Company's confidential information. In addition, the
employment agreement contains a covenant prohibiting Mr. Scott from directly or
indirectly competing with the Company. This covenant expires two years following
Mr. Scott's voluntary termination.
John S. Farrand. The Company has entered into an employment agreement with
Mr. Farrand pursuant to which he is entitled to receive, upon termination of his
employment by the Company (other than for cause or upon his death or
disability), severance payments equal to the greater of (i) $600,000 or (ii) his
annual base salary in effect at the time.
Jeffrey J. Marcketta. The Company has entered into an employment agreement
with Mr. Marcketta pursuant to which he is entitled to receive, upon termination
of his employment by the Company (other than for cause or upon his death or
disability), severance payments equal to the greater of (i) $237,500 or (ii) his
annual base salary in effect at the time.
Messrs. Farrand and Marcketta intend to waive their rights to receive
severance payments upon termination of employment as described above prior to
the effective time of the Merger.
4
<PAGE>
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
No officer or employee of the Company, other than Messrs. Scott and
Farrand, who serve on the Board of Directors of the Company, participated in the
deliberations of the Board of Directors of the Company concerning executive
compensation.
The Stock Option Committee and the Compensation Committee were formed on
May 8, 1996, upon the consummation of the 1996 Recapitalization. Set forth below
is a description of the policies and practices that the Compensation Committee
will implement with respect to future compensation determinations.
Compensation Philosophy. The Company's compensation program is designed to
attract, reward and retain highly qualified executives and to encourage the
achievement of business objectives and superior corporate performance. The
program ensures the Board of Directors and stockholders that (1) the achievement
of the overall goals and objectives of the Company can be supported by adopting
an appropriate executive compensation policy and implementing it through an
effective total compensation program and (2) the total compensation program and
practices of the Company are designed with full consideration of all accounting,
tax, securities law and other regulatory requirements and are of the highest
quality.
The Company's executive compensation program consists of two key elements:
(1) an annual compensation component composed of base salary and bonus, and (2)
a long-term compensation component composed of equity-based awards pursuant to
the Stock Option Plan.
Annual Compensation. Base salaries will be determined by evaluating the
responsibilities associated with the position being evaluated and the
individual's overall level of experience. In addition, the compensation of the
Chief Executive Officer determined by the Compensation Committee is subject to
the terms of Mr. Scott's existing employment agreement. Annual salary
adjustments will be determined by giving consideration to the Company's
performance and the individual's contribution to that performance.
Bonuses are paid pursuant to the Company's Executive Incentive Compensation
Plan, in which the Chairman and Chief Executive Officer is eligible to
participate, as well as any other employees selected by the Chief Executive
Officer. The plan allows participants to earn bonuses up to a stated percentage
of their base salary. The bonuses are paid in part based on the Company's
achievement of operating results, and in part based on achievement of individual
goals established for the participant.
With the exception of Mr. Phillips, all of the Company's named executive
officers are currently under employment contracts. See 'Management Contracts and
Change In Control Agreements.' The annual compensation for Messrs. Farrand,
Marcketta and Phillips and the bonus portion of Mr. Scott's annual compensation
will be based upon the considerations noted above. Mr. Scott's base salary is
determined pursuant to his employment agreement.
Long-term Compensation. In order to align stockholder and executive
officer interests, the long-term component of the Company's executive
compensation program utilizes equity-based awards whose value is directly
related to the value of the Panavision Common Stock. These equity-based awards
will be granted by the Stock Option Committee pursuant to the Stock Option Plan.
Individuals to whom equity-based awards are to be granted and the amount of
Panavision Common Stock related to equity-based awards will be determined solely
at the discretion of the Stock Option Committee. Because individual equity-based
award levels will be based on a subjective evaluation of each individual's
overall past and expected future contribution, no specific formula is used to
determine such awards for any executive.
Tax Deductibility of Executive Compensation. Section 162(m) of the Code
limits the tax deductibility of compensation in excess of $1 million paid to
certain members of senior management, unless the payments are made under a
performance-based plan as defined in Section 162(m). The Company's general
policy is to structure its compensation programs to preserve the tax
deductibility of compensation paid to its executive officers and other members
of management. All compensation paid pursuant to the Stock Option Plan is
intended to be exempt from the application of Section 162(m). Although Messrs.
Scott's and Farrand's total annual salary and bonus in 1997 exceeded $1 million,
such amounts were exempt from the application of Section 162(m) because of
certain grandfather provisions and therefore are fully deductible by the
Company. While the Company currently intends to pursue a strategy of maximizing
deductibility of senior management
5
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compensation, it also believes it is important to maintain the flexibility to
take actions it considers to be in the best interests of the Company and its
stockholders, which may be based on considerations in addition to Section
162(m).
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
- ----------------------- -----------------------
<S> <C>
William C. Scott Martin D. Payson
Sidney Lapidus Willis G. Ryckman
Joanne R. Wenig
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last completed fiscal year, Messrs. Scott and Lapidus and Ms.
Wenig served as members of the Compensation Committee. Mr. Scott is Chief
Executive Officer of the Company.
COMPARATIVE STOCK PERFORMANCE GRAPH
The graph below compares the total cumulative return of the Panavision
Common Stock from November 21, 1996 (the date trading of the Panavision Common
Stock commenced) through December 31, 1997, to the Standard & Poor's 500 Index
and the Russell 2000 Index. The graph assumes that dividends were reinvested and
is based on an investment of $100 on November 20, 1996.
[GRAPH]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
--------------------------------
11/20/96 12/31/96 12/31/97
-------- -------- --------
<S> <C> <C> <C>
Panavision Inc................................................................... $100 $ 122.06 $ 151.84
Standard & Poor's 500 Index...................................................... 100 99.57 130.23
Russell 2000..................................................................... 100 104.34 125.75
</TABLE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 20, 1998, certain information
regarding the beneficial ownership of Panavision Common Stock by (i) each of the
Company's executive officers, (ii) each Director of the Company, (iii) each
nominee for election as a Director of the Company, (iv) each person who is known
to the Company to own beneficially more than 5% of the Common Stock and (v) all
officers and Directors of the Company as a group. Such information is based, in
part, upon information provided by certain stockholders of the Company. In the
case of persons other than the officers and Directors of the Company, such
information is
6
<PAGE>
based solely on a review of Schedules 13D and 13G filed with the Commission. As
of March 20, 1998 there were 47 holders of record of Panavision Common Stock.
<TABLE>
<CAPTION>
PRIOR TO MERGER POST-MERGER(1)
---------------------------------- ----------------------------------
PERCENTAGE PERCENTAGE
NUMBER OF OF SHARES NUMBER OF OF SHARES
SHARES BENEFICIALLY BENEFICIALLY SHARES BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(2)(3) OWNED(2)(4) OWNED(2) OWNED(2)
- ------------------------------------------------ ------------------- ----------- ------------------- -----------
<S> <C> <C> <C> <C>
Ronald O. Perelman(5) 12,717,000 67.2% 5,784,199 71.8%
35 East 62nd Street
New York, New York 10021......................
Warburg, Pincus Capital Company, L.P.(6) 12,717,000 67.2 1,526,040 18.9
466 Lexington Avenue
New York, New York 10017......................
William C. Scott 1,262,508 6.7 139,332 1.7
Panavision Inc.
885 Third Avenue--Suite 3020
New York, New York 10022......................
John S. Farrand................................. 702,600 3.7 84,312 1.0
Jeffrey J. Marcketta............................ 268,430 1.4 30,276 *
Christopher M.R. Phillips....................... 15,601 * 60 *
Sidney Lapidus(7)............................... 12,717,000 67.2 1,526,040 18.9
Martin D. Payson................................ 11,200 * -- --
Willis G. Ryckman............................... 1,200 -- -- --
Joanne R. Wenig................................. -- -- -- --
Howard Gittis................................... -- -- -- --
James R. Maher.................................. -- -- -- --
Joseph P. Page.................................. -- -- -- --
Kenneth Ziffren................................. -- -- -- --
All directors and executive officers as a group 14,978,539 79.1 7,564,219 93.9
(8 persons)...................................
</TABLE>
The foregoing persons have sole voting and investment power, unless
otherwise indicated below.
- ------------------
* Less than 1%.
(1) Assumes 88% of the shares of Panavision Common Stock are exchanged for cash.
(2) Except as otherwise indicated, the persons in this table have sole voting
and investment power with respect to all shares of Panavision Common Stock
shown as beneficially owned by them, subject to community property laws
where applicable and subject to the information contained in the footnotes
to this table. Mr. Scott has shared investment power with respect to 6,000
shares of Panavision Common Stock.
(3) Amounts shown for each stockholder include all shares of Panavision Common
Stock subject to stock options for 101,408, 0, 16,130, 15,101, 1,200 and
1,200 shares of Panavision Common Stock granted to Messrs. Scott, Farrand,
Marcketta, Phillips, Payson and Ryckman exercisable within 60 days. Not
included are 265,273, 306,812, 103,184, 27,975, 4,800, 4,800 and 6,000
shares of Panavision Common Stock subject to options granted to Messrs.
Scott, Farrand, Marcketta Phillips, Payson and Ryckman and Ms. Wenig
respectively, that would not be exercisable within 60 days, but for the
consummation of the Merger.
(4) Based upon 18,928,500 shares of Panavision Common Stock outstanding as of
December 31, 1997. Shares not outstanding but deemed beneficially owned by
virtue of the right of a person or group to acquire them within 60 days are
treated as outstanding only for purposes of determining the number of and
percent owned by such person or group.
(Footnotes continued on next page)
7
<PAGE>
(Footnotes continued from previous page)
(5) All of the shares indicated as owned by Mr. Perelman are beneficially owned,
pursuant to the Stockholders Agreement, by Mafco Holdings, a wholly owned
subsidiary of Mr. Perelman, and accordingly, Mr. Perelman may be deemed to
have beneficial ownership of such shares.
(6) The sole general partner of Warburg (together with its wholly owned
subsidiaries, 'Warburg, Pincus') is Warburg, Pincus & Co., a New York
general partnership ('WP'). E.M. Warburg, Pincus & Co., LLC, a New York
limited liability company ('EMW LLC'), manages Warburg. The members of EMW
LLC are substantially the same as the partners of WP. Lionel I. Pincus is
the managing partner of WP and the managing member of EMW LLC and may be
deemed to control both WP and EMW LLC. WP, as the sole general partner of
Warburg, has a 20% interest in the profits of Warburg. Mr. Lapidus, a
director of the Company, is a Managing Director and a member of EMW LLC and
a general partner of WP. As such, Mr. Lapidus may be deemed to have an
indirect pecuniary interest (within the meaning of the Exchange Act) in an
indeterminate portion of the shares beneficially owned by Warburg and WP.
See Note 7 below.
(7) All of the shares indicated as owned by Mr. Lapidus are owned by Warburg,
Pincus and are included because of his affiliation with Warburg, Pincus. Mr.
Lapidus disclaims 'beneficial ownership' of these shares within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934. The address of Mr.
Lapidus is c/o Warburg, Pincus Capital Company, L.P., 466 Lexington Avenue,
New York, NY 10017.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May 1996, the Company effected a recapitalization, pursuant to which it
acquired all of the equity interests in PILP it did not previously own and
retired all of PILP's outstanding debt securities for a total of $126.1 million
in cash (the '1996 Recapitalization'). As part of the 1996 Recapitalization:
(i) Warburg, Pincus and Messrs. Scott, Farrand and Marcketta
contributed $11,608,000, $580,400, $165,829 and $82,914, respectively, to
the Company for subordinated demand notes which had an interest rate of
6.83% per annum and ranked pari passu with each other. The notes to Messrs.
Scott, Farrand and Marcketta were issued on May 8, 1996. The notes to
Warburg, Pincus were issued on May 8, July 16, and July 31, 1996. Mr.
Lapidus is a Managing Director of Warburg, Pincus which holds 67.2% of the
shares of Panavision Common Stock;
(ii) Mr. Scott exchanged his interests in PILP for 989,100 shares of
Panavision Common Stock;
(iii) Messrs. Farrand and Marcketta were issued 282,600 and 141,300
shares of Panavision Common Stock, respectively; and
(iv) the Company, Warburg, Pincus and Messrs. Scott, Farrand and
Marcketta entered into an Amended and Restated Stockholders Agreement dated
June 12, 1996 (the 'PILP Stockholder Agreement'), pursuant to which the
parties have agreed to cause the Board of Directors to include (i) three
persons designated by Warburg, Pincus, (ii) William C. Scott or, if he is
not an employee of the Company or is otherwise unavailable, one person
designated by the holders of a majority of the shares of Panavision Common
Stock held by management who are then employed by the Company and (iii)
John S. Farrand or, if he is not an employee of the Company or is otherwise
unavailable, one person designated by the holders of a majority of the
shares of Panavision Common Stock held by management who are then employed
by the Company. The PILP Stockholders Agreement imposes certain
restrictions on the transfer of shares of Panavision Common Stock by the
management stockholders prior to the second anniversary of the initial
public offering. The PILP Stockholders Agreement also provides such
stockholders with certain registration rights. The PILP Stockholders
Agreement terminates on the date when Warburg, Pincus and its affiliates
beneficially own less than 5% of the outstanding shares of Panavision
Common Stock.
Effective July 1, 1996, Warburg, Pincus acquired substantially all of the
assets of Lee Lighting Limited for approximately $8.0 million and contributed
those assets to the Company. The purchase price equaled the book value of the
acquired assets.
8
<PAGE>
Mr. Farrand, an executive officer of the Company, is the obligor in respect
of a promissory demand note issued to the Company in January 1987. The principal
amount of and accrued interest on this note were $540,000 and $38,681,
respectively, as of December 31, 1997. The note accrues interest at a rate of
7.04% per annum, and, as of December 31, 1997, no payments of principal had been
made. This note was originally issued in connection with Mr. Farrand's purchase
of a residence and is secured by a portion of Mr. Farrand's Panavision Common
Stock and options in Panavision.
In December 1997, in order to facilitate the payment of taxes related to
the exercise of options issued pursuant to the Panavision Stock Option Plan, the
Company made advances to certain officers and key employees in the form of
notes. Notes were issued by Messrs. Scott, Farrand and Marcketta in the amount
of $2,152,503, $3,698,800 and $924,700, respectively. The balance of the notes
were issued to other key employees. The notes mature on the earlier of December
24, 2000 or the date of consummation of the Proposed Recapitalization. The
Company expects that the notes will be repaid during 1998 even if the Proposed
Recapitalization is not completed. Interest on the notes is compounded
semiannually at the applicable federal rate in effect on the date the notes were
issued. These amounts are reflected on the Company's consolidated balance sheet
as notes receivable from officers and key employees as of December 31, 1997.
Certain executive management services have been provided by the Company to
Lee International, Inc. ('LII'), an indirect, wholly owned subsidiary of
Warburg, Pincus. The amount received by the Company from LII was $996,000,
$854,000, $687,000 and $510,000 for the years ended December 31, 1993, 1994,
1995 and 1996, respectively. The amounts received have been offset against
selling, general and administrative expenses in the Company's consolidated
statement of income. The agreement with LII expired on September 30, 1996.
9
<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.
<TABLE>
<S> <C>
Date: April 29, 1998 By: /s/WILLIAM C. SCOTT
--------------------
William C. Scott
Chairman of the Board
and Chief Executive Officer
</TABLE>
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
- ------------------------------------------ ------------------------------------------- -------------------
<C> <S> <C>
/s/ JOHN S. FARRAND President, Chief Operating Officer and April 29, 1998
- ------------------------------------------ Director
John S. Farrand
/s/ JEFFREY J. MARCKETTA Executive Vice President and Chief April 29, 1998
- ------------------------------------------ Financial Officer
Jeffrey J. Marcketta
/s/ CHRISTOPHER M.R. PHILLIPS Controller April 29, 1998
- ------------------------------------------
Christopher M.R. Phillips
/s/ SIDNEY LAPIDUS Director April 29, 1998
- ------------------------------------------
Sidney Lapidus
/s/ MARTIN D. PAYSON Director April 29, 1998
- ------------------------------------------
Martin D. Payson
/s/ WILLIS G. RYCKMAN Director April 29, 1998
- ------------------------------------------
Willis G. Ryckman
/s/ JOANNE R. WENIG Director April 29, 1998
- ------------------------------------------
Joanne R. Wenig
</TABLE>
10
