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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K/A
AMENDMENT #1

(Mark One)

|/x/ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|--- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2000

OR

|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number: 0-1461

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LIBERTY LIVEWIRE CORPORATION(Exact name of registrant as specified in its charter)

|Delaware                                       |  | 13-1679856                          
|---------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation) |  | (I.R.S. Employer Identification No.)
|520 Broadway, Santa Monica, CA                 |  | 90401                               
|(Address of principal executive offices)       |  | (Zip Code)                          

Registrant's telephone number, including area code:(310) 434-7000

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

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

| |  | Title of each class                   |  | 
| |  | ------------------------------------- |  | 
| |  | Common Stock, Class A,
$.01 Par Value |  | 

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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 voting stock held by non-affiliates at March 25, 2001 was approximately $30,000,000.

The
number of shares of common stock outstanding at March 25, 2001 was: 5,384,506 Class A Shares and 31,612,716 Class B Shares.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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PART III

The information required by Part III which was to be incorporated in the definitive Proxy Statement to be filed pursuant to Regulation 14A of the
Exchange Act for the Company's 2001 Annual Meeting of Stockholders is being filed herewith due to a change in scheduling with respect to the 2001 Annual Meeting of Stockholders.

Item 10. Directors and Executive Officers of the Registrant.

On March 29, 2001, the executive officers and directors of the Company were as follows:

|Name                        |  | Age |  | Position with Company                                  
|--------------------------- |  | --- |  | -------------------------------------------------------
|William R. Fitzgerald(1)(2) |  | 43  |  | Chairman of the Board and Director                     
|David P. Beddow(1)          |  | 57  |  | Chief Executive Officer and Director                   
|Robert T. Walston           |  | 42  |  | President and Chief Operating Officer and Director     
|Jeffrey J. Marcketta        |  | 46  |  | Executive Vice President and Chief Financial Officer   
|Marcus O. Evans             |  | 51  |  | Executive Vice President, General Counsel and Secretary
|Gavin W. Schutz             |  | 47  |  | Executive Vice President and Chief Technology Officer  
|William E. Niles            |  | 37  |  | Senior Vice President and Assistant Secretary          
|M. David Cottrell           |  | 44  |  | Vice President and Controller                          
|Silas Cross                 |  | 61  |  | Vice President, Treasurer and Assistant Secretary      
|Robert R. Bennett(1)        |  | 42  |  | Director                                               
|Salah M. Hassanein          |  | 79  |  | Director                                               
|Gary S. Howard(2)           |  | 49  |  | Director                                               
|David P. Malm(2)(3)         |  | 36  |  | Director                                               
|Sydney Pollack(2)(3)        |  | 66  |  | Director                                               
|Larry E. Romrell            |  | 61  |  | Director                                               

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1

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William R. Fitzgeraldwas elected a Director and appointed Chairman of the Board in August 2000.  He has served
as Senior Vice President of Liberty Media Corporation since August 2000. Mr. Fitzgerald served as Chief Operating Officer, Operations Administration, of AT&T Broadband Information
Systems, LLC ("AT&T Broadband"), which was formerly known as Tele-Communications, Inc. ("TCI"), from August 1999 to May 2000 and Executive Vice President and Chief Operating Officer of
TCI from March 1999 to August 1999. Mr. Fitzgerald served as Executive Vice President and Chief Operating Officer of TCI Communications, Inc. ("TCIC"), the domestic cable
subsidiary of TCI, from November 1998 to March 1999, served as an Executive Vice President of TCIC from December 1997 to March 1999 and served as a Senior Vice President of
TCIC from March 1996 to December 1997. Mr. Fitzgerald was a Senior Vice President and a Partner in Daniels & Associates, a brokerage and investment banking company, from
1988 to 1996.

David P. Beddowwas appointed Chief Executive Officer of the Company in June 2000. Mr. Beddow most recently served as
Vice President of Technology at Liberty Media Corporation. Mr. Beddow previously served as executive vice president of AT&T Broadband, and was an executive vice president of TCI
Communications, Inc. and president and chief executive officer of TCI's National Digital Television Center from August 1998 through April 2000. Prior to that, Mr. Beddow
held various positions at TCI, TCI Technology Ventures, Primestar, COMSAT and Westinghouse Broadcasting and Cable. Mr. Beddow is a director of Universal Electronics, Inc. On
April 19, 2001, Mr. Beddow resigned as an officer and director of the Company.

Robert T. Walstonwas appointed President & Chief Operating Officer of the Company in June 2000. Mr. Walston was
the founder of Four Media Company and has served as the Chairman and Chief Executive Officer of Four Media Company from 1993 to 2000. Prior to Four Media, Mr. Walston spent ten years as a
banker, investment banker and private equity investor, working on merger and acquisition assignments and debt and equity offerings.

Jeffrey J. Marckettawas appointed Executive Vice President and Chief Financial Officer of the Company in June 2000.
Mr. Marcketta served as Four Media's President and Chief Operating Officer and has had extensive experience with the entertainment industry, having spent over 10 years on a combined
basis with Panavision Inc. in a variety of senior positions, including Executive Vice President and Chief Financial Officer of Panavision Inc.

Marcus O. Evanswas appointed Executive Vice President and General Counsel of the Company in June 2000. Mr. Evans
previously served as Senior Vice President and General Counsel of direct broadcast satellite (DBS) service provider Primestar, Inc./Primestar Partners from 1991 through 1999. Previously,
Mr. Evans held a variety of senior positions with Group W Broadcasting & Cable, Inc. or its affiliates in the cable television, television and radio industries.

Gavin W. Schutzwas appointed Executive Vice President and Chief Technology Officer of the Company in June 2000.
Mr. Schutz had been with Four Media since 1993, prior to which he spent 13 years as Vice President and Director of Engineering of Image Transform, Inc., a company Four Media
acquired in 1993.

William E. Nileswas appointed Senior Vice President and Assistant Secretary of the Company in June 2000. Mr. Niles most
recently served as General Counsel and Vice President of Business Affairs for Four Media Company from February 1998 to April 2000, and was General Counsel and Vice President of Business
Affairs for Visualize (dba POP), a leading provider of post production and visual effects services, from 1997 to February 1998. From 1991 to 1997, Mr. Niles practiced law as a partner at
Stein &
Kahan, A Law Corporation, specializing in corporate, transactional, and real estate law. Before that, he was an associate in the Los Angeles office of Baker & McKenzie. Mr. Niles
received his B.A. from the University of Southern California in 1985 and his law degree from Georgetown Law School in 1988.

2

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M. David Cottrellwas appointed Vice President and Controller of the Company in June 2000. Mr. Cottrell most recently
served as Vice President of Administration of the Company from 1998 to June 2000. Mr. Cottrell previously served as Executive Vice President and Chief Financial Officer for
Todd-AO/Hollywood Digital from 1993 to 1998. Prior to 1993, Mr. Cottrell served as Vice President of Finance for The Post Group, Inc.

Silas Crosswas appointed a Vice President of the Company in 1988. In 1995, he was appointed Treasurer and Assistant Secretary.
Mr. Cross previously served as Assistant Treasurer of United Artists Communications, Inc ("UACI"), and has served the Company in various capacities since 1965. UACI owned approximately 85% of
the Company's common stock until 1986.

Robert R. Bennettwas elected a Director in June 2000. Mr. Bennett has served as President and Chief Executive Officer of
Liberty Media since April 1997 and as a director since September 1994. Mr. Bennett also served as acting Chief Financial Officer of Liberty Digital, Inc. from
June 1997 to July 1997. Mr. Bennett served as Executive Vice President of TCI from April 1997 to March 1999. Mr. Bennett served as Executive Vice President,
Secretary and Treasurer of Liberty Media from June 1995 through March 1997, Chief Financial Officer from May 1996 through March 1997, and in various executive positions
since their inception in 1990. Mr. Bennett is a director of Gemstar-TV Guide International, Inc., Liberty Satellite & Technology, Inc., USANi LLC and Telewest
Communications plc and serves as a director and Chairman of the Board of Liberty Digital, Inc.

Salah M. Hassaneinwas elected a Director in 1962. From 1994 to June 2000, Mr. Hassanein served as President and Chief
Executive Officer of the Company, which was then known as The Todd-AO Corporation. Prior to 1994, he was the Company's Senior Executive Vice President. Mr. Hassanein also served as
President of Warner Bros. International Theatres Co. from 1988 to June 30, 1994. Mr. Hassanein previously served as Executive Vice President and director of UACI and President of United
Artists Eastern Theatres, Inc. Mr. Hassanein is a principal of SMH Entertainment, Inc. and a director of Software Technologies Corporation and Nuesoft Technologies, Inc.

Gary S. Howardwas elected a Director in June 2000. Mr. Howard has served as Executive Vice President, Chief Operating
Officer and director of Liberty Media since July 1998. Mr. Howard has also served as Chairman of the Board of Liberty Satellite & Technology, Inc. since August 2000.
Mr. Howard
served as Chief Executive Officer of Liberty Satellite & Technology, Inc. from December 1996 to April 2000. Mr. Howard also served as Executive Vice President of TCI
from December 1997 to March 1999, as Chief Executive Officer, Chairman of the Board and a director of TV Guide, Inc. (prior to its merger with Gemstar) from June 1997 to
March 1999; and as President and Chief Executive Officer of TCI Ventures Group, LLC from December 1997 to March 1999. Mr. Howard served as President of TCIC from
October 1994 to December 1996; and as Vice President of TCIC from December 1991 through October 1994. Mr. Howard is a director of Liberty Digital, Inc.,
Liberty Satellite & Technology, Inc., Teligent, Inc. and On Command Corporation.

David P. Malmwas elected a Director in 1997. He is currently a partner of Halpern, Denny & Company, a Boston based private
equity investment firm, a director of Tealuxe, Inc., E-Z Serve/Swifty Mart Convenience Stores, Ecce Panis, Inc., H.C. Shaw Company, and Chairman of Brown Broadcasting
Service, Inc. Prior to forming Halpern, Denny & Company in 1991, Mr. Malm was affiliated with Bain Capital, a private equity investment firm, and Bain & Company, a
corporate strategy consulting firm. He also previously worked in the Investment Banking Group at Morgan Stanley & Company.

Sydney Pollackwas elected a director of the Company in 1998. A renowned motion picture director, Mr. Pollack's 17 films have
received 46 Academy Award® nominations, including four for Best Picture. His film "Out of Africa" won seven Oscars including Best Picture and Best Director. In addition to winning the New
York Film Critics' Award for his 1982 film "Tootsie", Mr. Pollack won the Golden Globe for Best Director twice, the National Society of Film Critics Award, and the NATO

3

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Director of the Year Award. Mr. Pollack formed Mirage Enterprises in 1985, which produces motion picture feature films. He is a founding member of The Sundance Institute, The Chairman Emeritus
of The American Cinematheque, and serves on the Board of Directors of the Film Preservation Board and The Motion Picture and Television Fund Foundation.

Larry E. Romrellwas elected a director in June 2000. He has served as a consultant to Liberty Media since March 1999.
Mr. Romrell served as Executive Vice President of TCI from January 1994 to March 1999 and since March 1999 has served as a consultant to AT&T Broadband. Mr. Romrell
also served, from December 1997 to March 1999, as Executive Vice President and Chief Executive Officer of TCI Business Alliance and Technology Co., a subsidiary of TCI prior to the TCI
merger that oversaw and developed TCI's technology activities; from December 1997 to March 1999, as Senior Vice President of TCI Ventures Group, LLC; and, from September 1994 to
October 1997, as President of TCI Technology Ventures, Inc., a subsidiary of TCI prior to the TCI merger that invested in and developed companies engaged in advancing telecommunications
technology. Mr. Romrell served as Senior Vice President of TCIC from 1991 to October 1994. Mr. Romrell is a director of Liberty Media, and General Communication, Inc.

4

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Item 11. Executive Compensation.

Summary Compensation Table.Directors receive no cash compensation for their services as directors. The following table
shows, for the years ended December 31, 2000, August 31, 1999 and 1998, all forms of compensation for the Chief Executive Officer and each of the most highly compensated executive
officers of the company whose total annual salary and bonus exceeded $100,000 for the year ended December 31, 2000.

|                                                                                              |  |                |  |                         |           |             |     | Long-Term
Compensation |  |                      |          
|--------------------------------------------------------------------------------------------- |  | -------------- |  | ----------------------- | --------- | ----------- | --- | ---------------------- |  | -------------------- | ---------
|
|
|
|David P. Beddow
Chief Executive Officer
Liberty Livewire                                      |  | 2000
1999
1998 |  | 302,885

             | (2)       | 

       |     | 

                  |  | 341,910

          | (3)      
|Salah M. Hassanein
President and Chief Executive Officer
The Todd-AO Corporation              |  | 2000
1999
1998 |  | 189,439
221,160
250,000 | (4)(4)(4) | 

241,831 | (4) | 

                  |  | 

                |          
|Robert T. Walston
President and Chief Operating Officer
Liberty Livewire                      |  | 2000
1999
1998 |  | 288,462

             | (2)       | 

       |     | 

                  |  | 1,019

            | (5)      
|Jeffrey J. Marcketta
Executive Vice President and Chief Financial
Officer of Liberty Livewire |  | 2000
1999
1998 |  | 201,923

             | (2)       | 

       |     | 

                  |  | 3,029

            | (5)      
|M. David Cottrell
Vice President and Controller
Liberty Livewire                              |  | 2000
1999
1998 |  | 234,200

             |           | 

       |     | 

                  |  | 11,700

           | (6)      
|Gavin W. Schutz
Executive Vice President and Chief
Technology Officer of Liberty Livewire     |  | 2000
1999
1998 |  | 158,654

             | (2)       | 

       |     | 

                  |  | 

                |          
|Christopher D. Jenkins
President
Todd-AO Studios                                              |  | 2000
1999
1998 |  | 740,327
739,408
963,027 | (7)(7)(7) | 

       |     | 

                  |  | 2,528
6,068
6,068    | (7)(7)(7)
|Richard O'Hare
President
Todd-AO Video Services                                               |  | 2000
1999
1998 |  | 271,131
288,938
204,677 |           | 

       |     | 
10,000
4,050         |  | 16,000
16,000
16,000 | (8)(8)(8)

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5

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OPTION EXERCISES AND VALUE TABLE

The following table shows each exercise of stock options during the fiscal year ended December 31, 2000 by each of the executive officers named in the
Summary Compensation Table, together with respective aggregate values of unexercised options at December 31, 2000.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

|                       |  | Shares
Acquired on
Exercise (#) |  |           |  | Number of
Unexercised Options
at December 31, 2000 |  | Value of Unexercised
In-the-Money Options
at December 31, 2000
|---------------------- |  | ------------------------------- |  | --------- |  | -------------------------------------------------- |  | --------------------------------------------------------------
|
|
|Salah M. Hassanein     |  | 253,000                         |  | 7,803,507 |  |                                                   |  |                                                              
|M. David Cottrell      |  | 9,800                           |  | 144,776   |  |                                                   |  |                                                              
|Christopher D. Jenkins |  | 52,600                          |  | 2,139,505 |  |                                                   |  |                                                              
|Richard O'Hare         |  | 32,650                          |  | 1,162,986 |  |                                                   |  |                                                              

EMPLOYMENT AGREEMENTS

The Company has employment agreements with Messrs. Walston, Marcketta, and O'Hare. Mr. Walston's agreement (expiring December 31, 2003)
provides for an annual salary of $500,000. Mr. Marcketta's agreement (expiring December 31, 2003) provides for an annual salary of $350,000. Mr. O'Hare's agreement (expiring
August 31, 2001) provides for a salary of $260,000 and $280,000 for the twelve months ending August 31, 2000 and 2001, respectively. The Company also had an employment agreement with Mr.
Jenkins which expired without renewal on December 31, 2000.

CONSULTING AGREEMENT

In connection with Liberty Media Corporation's acquisition of a controlling interest in the Company, through the merger of the Company and B-Group
Merger Sub (referred to herein as the "Todd Merger"), Salah M. Hassanein, a director of the Company, SMH Entertainment, Inc. (a corporation under Mr. Hassanein's control), the Company
and Liberty Media are parties to a three-year consulting agreement, under which (i) SMH is entitled to receive $150,000 annually as

6

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compensation for Mr. Hassanein's consulting services to the Company during the term of the agreement, and (ii) Mr. Hassanein became entitled to receive, on and as of the closing
of the Todd Merger, stock options to purchase 150,000 shares of Class A Common Stock at an exercise price of $10.27 per share. As of the date of this report, Mr. Hassanein has not
received such options. Mr. Hassanein and the Company are currently engaged in negotiations regarding possible changes to the terms of such consulting agreement to be mutually agreed.

Item 12. Security Ownership of Certain Beneficial Owners and Management.



The
following table lists stockholders believed by the Company to be the beneficial owners of more than five percent of the outstanding shares of any class of the Company's voting
stock as of February 28, 2001. Voting power in the table is computed based on one vote per share for Class A Common Stock and 10 votes per share for Class B Common Stock. So far
as is known to the Company,
the persons indicated below have sole voting and investment power with respect to the shares indicated as believed to be owned by them, except to the extent such power may be shared by a spouse or as
otherwise stated in the notes to the table.

|Name and address of beneficial owner                                        |  | Title of class                            |  | No.of shares
beneficially owned |     | Percent
of class |   | Combined
voting power |  
|--------------------------------------------------------------------------- |  | ----------------------------------------- |  | ------------------------------- | --- | ---------------- | - | --------------------- | -
|Liberty Media Corporation
9197 S. Peoria Street
Englewood, Colorado         |  | Class A common stock
Class B common stock |  | 
31,612,716                    |     | 
100.00         | % | 98.33                 | %
|Robert A. Naify
172 Golden Gate Ave.
San Francisco, CA 94102                |  | Class A common stock
Class B common stock |  | 876,985
                       | (1) | 16.29
          | % | *                     |  
|Marshall Naify Revocable Trust
172 Golden Gate Ave.
San Francisco, CA 94102 |  | Class A common stock
Class B common stock |  | 771,343
                       | (2) | 14.33
          | % | *                     |  
|Salah M Hassanein
2318 Ocean Front
Del Mar, CA 92014                        |  | Class A common stock
Class B common stock |  | 286,528
                       | (3) | 5.32
           | % | *                     |  
|Paul Dujardin
500 Fifth Avenue, Suite 2020
New York, NY 10110               |  | Class A common stock
Class B common stock |  | 682,687
                       |     | 12.68
          | % | *                     |  

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The
following table sets forth information with respect to the ownership by each director and each of the named executive officers of Livewire and by all directors and executive
officers of Livewire as a group of shares of Livewire common stock. In addition, the table sets forth information with respect to the ownership of such individuals of shares of AT&T common stock,
Liberty Media Group Class A and Class B common stock ("Liberty Media Group Tracking Stock"), AT&T Wireless Group common stock ("Wireless Group Tracking Stock"), Liberty Digital
Series A common stock and Liberty Satellite & Technology Inc ("LSAT") Series A and B common stock, all of which are equity securities of AT&T
Corp., which indirectly owns 100% of Liberty Media, which in turn owns a controlling interest in Livewire.

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The AT&T charter provides that, except as otherwise required by New York law or any special voting rights of AT&T preferred stock, Liberty Media Group Tracking Stock or Wireless Group
Tracking Stock, the holders of AT&T common stock, Liberty Media Group Tracking Stock, Wireless Group Tracking Stock and AT&T preferred stock, if any, entitled to vote with the common shareholders,
vote together as one class.

The
following information is given as of February 28, 2001 and, in case of percentage ownership information, is based on (1) 3,807,460,036 shares of AT&T common stock;
(2) 2,376,765,123 shares of Liberty Media Group Class A tracking stock and 212,045,288 shares of Liberty Media Group Class B tracking stock; (3) 362,750,025 shares of AT&T
Wireless Group tracking stock; (4) 33,206,409 shares of Liberty Digital Series A common stock; (5) 65,471,095 shares of LSAT Series A common stock and 7,732,496 shares of
LSAT Series B common stock; and (6) 5,384,507 shares of Livewire Class A common stock and 31,612,716 shares of Livewire Class B common stock, in each case outstanding on
that date. Voting power in the table is computed based on one vote per share for Livewire Class A Common Stock and 10 votes per share for Livewire Class B Common Stock. Shares of common
stock issuable upon exercise or conversion of options, warrants and convertible securities that were exercisable or convertible on or within 60 days after February 28, 2001, are deemed
to be outstanding and to be beneficially owned by the person holding the options, warrants or convertible securities for the purpose of computing the percentage ownership of the person, but are not
treated as outstanding for the purpose of computing the percentage ownership of any other person. So far as is known to us, the persons indicated below have sole voting and investment power with
respect to the shares indicated as owned by them, except to the extent such power may be shared with a spouse or as otherwise stated in the notes to the table.

|Name                  |  | Title of class              |  | No. of shares
beneficially owned |     | Percent
of class |  | Combined
voting power
|--------------------- |  | --------------------------- |  | -------------------------------- | --- | ---------------- |  | ---------------------
|Directors:            |  |                             |  |                                  |     |                  |  |                      
|William R. Fitzgerald |  | Livewire Class A            |  |                                  |     |                  |  | *                    
|                      |  | Livewire Class B            |  |                                  |     |                  |  |                      
|                      |  | AT&T common stock group     |  | 123,483                          | (1) |                  |  |                      
|                      |  | Liberty Media Group Class A |  | 34,768                           |     | *                |  |                      
|                      |  | Liberty Media Group Class B |  |                                  |     |                  |  |                      
|                      |  | AT&T Wireless Group         |  |                                  |     |                  |  |                      
|                      |  | Liberty Digital Series A    |  |                                  |     |                  |  |                      
|                      |  | LSAT Series A               |  |                                  |     |                  |  |                      
|                      |  | LSAT Series B               |  |                                  |     |                  |  |                      
|David P. Beddow       |  | Livewire Class A            |  |                                  |     |                  |  | *                    
|                      |  | Livewire Class B            |  |                                  |     |                  |  |                      
|                      |  | AT&T common stock group     |  | 4,368                            |     | *                |  |                      
|                      |  | Liberty Media Group Class A |  | 23,028                           |     | *                |  |                      
|                      |  | Liberty Media Group Class B |  |                                  |     |                  |  |                      
|                      |  | AT&T Wireless Group         |  | 10,000                           |     | *                |  |                      
|                      |  | Liberty Digital Series A    |  |                                  |     |                  |  |                      
|                      |  | LSAT Series A               |  | 414,300                          | (2) | *                |  |                      
|                      |  | LSAT Series B               |  |                                  |     |                  |  |                      
|Robert T. Walston     |  | Livewire Class A            |  |                                  |     |                  |  | *                    
|                      |  | Livewire Class B            |  |                                  |     |                  |  |                      
|                      |  | AT&T common stock group     |  |                                  |     |                  |  |                      
|                      |  | Liberty Media Group Class A |  | 645,160                          | (3) | *                |  |                      
|                      |  | Liberty Media Group Class B |  |                                  |     |                  |  |                      
|                      |  | AT&T Wireless Group         |  |                                  |     |                  |  |                      
|                      |  | Liberty Digital Series A    |  |                                  |     |                  |  |                      
|                      |  | LSAT Series A               |  |                                  |     |                  |  |                      
|                      |  | LSAT Series B               |  |                                  |     |                  |  |                      

8

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|Robert R. Bennett |  | Livewire Class A            |  |           |      |      |   | *
|----------------- |  | --------------------------- |  | --------- | ---- | ---- | - | -
|                  |  | Livewire Class B            |  |           |      |      |   |  
|                  |  | AT&T common stock group     |  | 249,000   | (4)  | *    |   |  
|                  |  | Liberty Media Group Class A |  | 3,603,000 | (5)  | *    |   |  
|                  |  | Liberty Media Group Class B |  |           |      |      |   |  
|                  |  | AT&T Wireless Group         |  |           |      |      |   |  
|                  |  | Liberty Digital Series A    |  | 80,000    | (6)  | *    |   |  
|                  |  | LSAT Series A               |  | 5,000     | (7)  | *    |   |  
|                  |  | LSAT Series B               |  |           |      |      |   |  
|Salah M Hassanein |  | Livewire Class A            |  | 286,528   | (8)  | 5.32 | % | *
|                  |  | Livewire Class B            |  |           |      |      |   |  
|                  |  | AT&T common stock group     |  |           |      |      |   |  
|                  |  | Liberty Media Group Class A |  | 870,574   |      | *    |   |  
|                  |  | Liberty Media Group Class B |  |           |      |      |   |  
|                  |  | AT&T Wireless Group         |  |           |      |      |   |  
|                  |  | Liberty Digital Series A    |  |           |      |      |   |  
|                  |  | LSAT Series A               |  |           |      |      |   |  
|                  |  | LSAT Series B               |  |           |      |      |   |  
|Gary S. Howard    |  | Livewire Class A            |  |           |      |      |   | *
|                  |  | Livewire Class B            |  |           |      |      |   |  
|                  |  | AT&T common stock group     |  | 16,000    |      | *    |   |  
|                  |  | Liberty Media Group Class A |  | 1,370,000 | (9)  | *    |   |  
|                  |  | Liberty Media Group Class B |  |           |      |      |   |  
|                  |  | AT&T Wireless Group         |  |           |      |      |   |  
|                  |  | Liberty Digital Series A    |  | 20,000    | (10) | *    |   |  
|                  |  | LSAT Series A               |  | 755,000   | (11) | 1.15 | % |  
|                  |  | LSAT Series B               |  |           |      |      |   |  
|David P. Malm     |  | Livewire Class A            |  | 10,002    |      | *    |   | *
|                  |  | Livewire Class B            |  |           |      |      |   |  
|                  |  | AT&T common stock group     |  |           |      |      |   |  
|                  |  | Liberty Media Group Class A |  | 15,179    |      | *    |   |  
|                  |  | Liberty Media Group Class B |  |           |      |      |   |  
|                  |  | AT&T Wireless Group         |  |           |      |      |   |  
|                  |  | Liberty Digital Series A    |  |           |      |      |   |  
|                  |  | LSAT Series A               |  |           |      |      |   |  
|                  |  | LSAT Series B               |  |           |      |      |   |  
|Sydney Pollack    |  | Livewire Class A            |  | 5,600     |      | *    |   | *
|                  |  | Livewire Class B            |  |           |      |      |   |  
|                  |  | AT&T common stock group     |  |           |      |      |   |  
|                  |  | Liberty Media Group Class A |  | 9,625     |      | *    |   |  
|                  |  | Liberty Media Group Class B |  |           |      |      |   |  
|                  |  | AT&T Wireless Group         |  |           |      |      |   |  
|                  |  | Liberty Digital Series A    |  |           |      |      |   |  
|                  |  | LSAT Series A               |  |           |      |      |   |  
|                  |  | LSAT Series B               |  |           |      |      |   |  

9

---

|Larry E. Romrell          |  | Livewire Class A            |  |           |      |      |   | *
|------------------------- |  | --------------------------- |  | --------- | ---- | ---- | - | -
|                          |  | Livewire Class B            |  |           |      |      |   |  
|                          |  | AT&T common stock group     |  | 511,000   | (12) | *    |   |  
|                          |  | Liberty Media Group Class A |  | 2,778,000 | (12) | *    |   |  
|                          |  | Liberty Media Group Class B |  | 3,000     |      | *    |   |  
|                          |  | AT&T Wireless Group         |  |           |      |      |   |  
|                          |  | Liberty Digital Series A    |  |           |      |      |   |  
|                          |  | LSAT Series A               |  | 741,000   | (13) | 1.13 | % |  
|                          |  | LSAT Series B               |  |           |      |      |   |  
|Other Executive Officers: |  |                             |  |           |      |      |   |  
|Jeffrey J Marcketta       |  | Livewire Class A            |  |           |      |      |   | *
|                          |  | Livewire Class B            |  |           |      |      |   |  
|                          |  | AT&T common stock group     |  |           |      |      |   |  
|                          |  | Liberty Media Group Class A |  | 322,850   | (14) | *    |   |  
|                          |  | Liberty Media Group Class B |  |           |      |      |   |  
|                          |  | AT&T Wireless Group         |  |           |      |      |   |  
|                          |  | Liberty Digital Series A    |  |           |      |      |   |  
|                          |  | LSAT Series A               |  |           |      |      |   |  
|                          |  | LSAT Series B               |  |           |      |      |   |  
|M. David Cottrell         |  | Livewire Class A            |  | 7,132     |      | *    |   | *
|                          |  | Livewire Class B            |  |           |      |      |   |  
|                          |  | AT&T common stock group     |  |           |      |      |   |  
|                          |  | Liberty Media Group Class A |  | 7,155     |      | *    |   |  
|                          |  | Liberty Media Group Class B |  |           |      |      |   |  
|                          |  | AT&T Wireless Group         |  |           |      |      |   |  
|                          |  | Liberty Digital Series A    |  |           |      |      |   |  
|                          |  | LSAT Series A               |  |           |      |      |   |  
|                          |  | LSAT Series B               |  |           |      |      |   |  
|Christopher D. Jenkins    |  | Livewire Class A            |  | 7,540     |      | *    |   | *
|                          |  | Livewire Class B            |  |           |      |      |   |  
|                          |  | AT&T common stock group     |  |           |      |      |   |  
|                          |  | Liberty Media Group Class A |  | 26,300    |      | *    |   |  
|                          |  | Liberty Media Group Class B |  |           |      |      |   |  
|                          |  | AT&T Wireless Group         |  |           |      |      |   |  
|                          |  | Liberty Digital Series A    |  |           |      |      |   |  
|                          |  | LSAT Series A               |  |           |      |      |   |  
|                          |  | LSAT Series B               |  |           |      |      |   |  
|Richard O'Hare            |  | Livewire Class A            |  | 1,860     |      | *    |   | *
|                          |  | Livewire Class B            |  |           |      |      |   |  
|                          |  | AT&T common stock group     |  |           |      |      |   |  
|                          |  | Liberty Media Group Class A |  | 8,325     |      | *    |   |  
|                          |  | Liberty Media Group Class B |  |           |      |      |   |  
|                          |  | AT&T Wireless Group         |  |           |      |      |   |  
|                          |  | Liberty Digital Series A    |  |           |      |      |   |  
|                          |  | LSAT Series A               |  |           |      |      |   |  
|                          |  | LSAT Series B               |  |           |      |      |   |  

10

---

|Silas Cross     |  | Livewire Class A            |  | 3,638  |      | * |  | *
|--------------- |  | --------------------------- |  | ------ | ---- | - |  | -
|                |  | Livewire Class B            |  |        |      |   |  |  
|                |  | AT&T common stock group     |  |        |      |   |  |  
|                |  | Liberty Media Group Class A |  | 5,848  |      | * |  |  
|                |  | Liberty Media Group Class B |  |        |      |   |  |  
|                |  | AT&T Wireless Group         |  |        |      |   |  |  
|                |  | Liberty Digital Series A    |  |        |      |   |  |  
|                |  | LSAT Series A               |  |        |      |   |  |  
|                |  | LSAT Series B               |  |        |      |   |  |  
|Gavin Schutz    |  | Livewire Class A            |  |        |      |   |  | *
|                |  | Livewire Class B            |  |        |      |   |  |  
|                |  | AT&T common stock group     |  |        |      |   |  |  
|                |  | Liberty Media Group Class A |  | 19,356 | (15) | * |  |  
|                |  | Liberty Media Group Class B |  |        |      |   |  |  
|                |  | AT&T Wireless Group         |  |        |      |   |  |  
|                |  | Liberty Digital Series A    |  |        |      |   |  |  
|                |  | LSAT Series A               |  |        |      |   |  |  
|                |  | LSAT Series B               |  |        |      |   |  |  
|William Niles   |  | Livewire Class A            |  |        |      |   |  | *
|                |  | Livewire Class B            |  |        |      |   |  |  
|                |  | AT&T common stock group     |  | 500    |      | * |  |  
|                |  | Liberty Media Group Class A |  | 10,520 | (16) | * |  |  
|                |  | Liberty Media Group Class B |  |        |      |   |  |  
|                |  | AT&T Wireless Group         |  | 200    |      | * |  |  
|                |  | Liberty Digital Series A    |  |        |      |   |  |  
|                |  | LSAT Series A               |  |        |      |   |  |  
|                |  | LSAT Series B               |  |        |      |   |  |  
|Marcus O. Evans |  | Livewire Class A            |  |        |      |   |  | *
|                |  | Livewire Class B            |  |        |      |   |  |  
|                |  | AT&T common stock group     |  | 319    |      | * |  |  
|                |  | Liberty Media Group Class A |  |        |      |   |  |  
|                |  | Liberty Media Group Class B |  |        |      |   |  |  
|                |  | AT&T Wireless Group         |  |        |      |   |  |  
|                |  | Liberty Digital Series A    |  |        |      |   |  |  
|                |  | LSAT Series A               |  | 27     |      | * |  |  
|                |  | LSAT Series B               |  |        |      |   |  |  

11

---

|All directors and     |  | Livewire Class A            |  | 322,300    |  | 5.99 | % | *
|--------------------- |  | --------------------------- |  | ---------- |  | ---- | - | -
|executive officers as |  | Livewire Class B            |  | 0          |  |      |   |  
|a group (17 persons)  |  | AT&T common stock group     |  | 904,670    |  | *    |   |  
|                      |  | Liberty Media Group Class A |  | 9,749,418  |  | *    |   |  
|                      |  | Liberty Media Group Class B |  | 3,000      |  | *    |   |  
|                      |  | AT&T Wireless Group         |  | 10,200     |  | *    |   |  
|                      |  | Liberty Digital Series A    |  | 100,000    |  | *    |   |  
|                      |  | LSAT Series A               |  | 1,915,3270 |  | 2.93 | % |  
|                      |  | LSAT Series B               |  | 0          |  |      |   |  

---

12

---



Item 13.  Certain Relationships and Related Transactions.

LWR, Inc.

In November 2000, Liberty Media Corporation granted William R. Fitzgerald, a director and chairman of the board of directors of the Company, Larry E.
Romrell, a director of the Company, David P. Beddow, then a director and chief executive officer of the Company, and another individual (who is neither a director nor an executive officer of the
Company) an aggregate 4.0725% common stock interest in Liberty LWR, Inc. ("LWR"), a subsidiary of Liberty Media that owns a direct interest in the Company. Upon the formation of LWR on
November 2, 2000, Liberty Media contributed to LWR (a) 31,635,682 shares of Class B common stock of the Company (b) all of Liberty Media's rights and obligations under a
credit agreement between Liberty Media and the Company, and (c) an agreement to fund certain subordinated convertible loans to be made under that credit agreement. Liberty Media received 81,502
shares of LWR preferred stock and 10,000 shares of LWR common stock at the time of such contribution. Liberty Media then transferred a portion of its common stock to the individuals named above.

The
LWR common stock interest granted to these individuals had a value of $407,250 on the date of grant. The percentage interests granted Messrs. Fitzgerald, Romrell and
Beddow, and the values of such interests, are as follows:

Percentage Common Stock
Interest in LWR, Inc.

Value of Interest in LWR, Inc.William R. Fitzgerald

1.25250
%
$
125,250Larry E. Romrell

1.46250
%
$
146,250David P. Beddow

.73125
%
$
73,125


In
addition, LWR awarded Mr. Romrell and Mr. Beddow deferred bonuses in the initial amounts of $3,373,836 and $1,686,921, respectively, such amounts to decrease by an
amount equal to any increase during the relevant period in the value of 21 LWR common shares in the case of Mr. Romrell and 10.5 LWR common shares in the case of Mr. Beddow. The relevant
period is the period beginning on the date of grant (November 2, 2000) and ending on the earlier of (i) the date on which the recipient ceases to be employed by Liberty Media or any of
its affiliates ("Termination Date"), and (ii) November 2, 2005. The adjusted bonus is payable in cash, shares of Liberty Media Group tracking stock, shares of the Company's common stock
or any combination of the foregoing (at the election of LWR) within 100 days following the earlier to occur of the Termination Date or the date on which the recipient ceases to be a "covered
employee" within the meaning of Section 162(m)(3) of the Internal Revenue Code with respect to Liberty Media or any affiliate of Liberty Media.

Liberty
Media, LWR and all of the above individuals also entered into a stockholders' agreement in which the individuals could require Liberty Media to repurchase, after five years,
all or part of their common stock interest in LWR in exchange for Liberty Media common stock at its then fair market value. In addition, Liberty Media has the right to repurchase, in exchange for
shares of Liberty Media common stock, the LWR common stock interests held by such individuals at fair market value at any time. The stock grants to Messrs. Fitzgerald, Beddow and Romrell
described herein were not made as compensation to such individuals in respect of their services to the Company as directors of the Company.

13

---

PART IV

Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K.





14

---



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.

|               |  |    |  | LIBERTY LIVEWIRE CORPORATION                                                                   |  | 
|-------------- |  | -- |  | ---------------------------------------------------------------------------------------------- |  | 
|April 30, 2001 |  | By |  | /s/ M. DAVID COTTRELLM. David Cottrell Vice President, Controller and Chief Accounting Officer |  | 

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.

|April 30, 2001 |  | By |  | /s/ WILLIAM R. FITZGERALDWilliam R. Fitzgerald Chairman of the Board and Director |  | April 30, 2001 |  | By |  | /s/ ROBERT T. WALSTONRobert T. Walston Director, President and Chief Operating Officer
|-------------- |  | -- |  | --------------------------------------------------------------------------------- |  | -------------- |  | -- |  | --------------------------------------------------------------------------------------
|April 30, 2001 |  | By |  | /s/ LARRY E. ROMRELLLarry E. Romrell Director                                     |  | April 30, 2001 |  | By |  | /s/ ROBERT R. BENNETTRobert R. Bennett Director                                       
|April 30, 2001 |  | By |  | /s/ SALAH M. HASSANEINSalah M. Hassanein Director                                 |  | April 30, 2001 |  | By |  | /s/ GARY S. HOWARDGary S. Howard Director                                             
|April 30, 2001 |  | By |  | /s/ DAVID P. MALMDavid P. Malm Director                                           |  | April 30, 2001 |  | By |  | /s/ SYDNEY POLLACKSydney Pollack Director                                             

15

---



EXHIBIT INDEX

|Exhibit
No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                 
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         |  | Restated Certificate of Incorporation of Liberty Livewire Corporation dated as of June 9, 2000 (incorporated by reference to the registrant's Current Report on Form 8-K filed June 13, 2000).                                                                                                                                                                                                                                              
|3.2         |  | Bylaws of Liberty Livewire Corporation dated as of June 9, 2000 (incorporated by reference to the registrant's Current Report on Form 8-K filed June 13, 2000).                                                                                                                                                                                                                                                                             
|4.1         |  | Specimen stock certificate representing shares of the registrant's Class A Common Stock is filed herewith.                                                                                                                                                                                                                                                                                                                                  
|9.1         |  | Voting Agreement, dated as of December 10, 1999, among Liberty Media Corporation and certain stockholders of the registrant (then known as The Todd-AO Corporation) (incorporated by reference to AT&T Corp.'s Registration Statement on Form S-4
filed May 5, 2000, registration no. 333-36458).                                                                                                                                           
|10.32       |  | Agreement and Exhibits for the Purchase and Sale of Assets dated June 18, 1997 among The Todd-AO Corporation, Todd-AO HD, Inc. and Hollywood Digital Limited Partnership, Hollywood Digital Inc., The Palladion Limited Partnership, HDZ Digital Limited
Partnership, Phemus Corporation, Rand Gladden, William Romeo, David Cottrell and Michael Jackson is incorporated by reference from the Registrant's Form 8-K filed on July 7, 1997.
|10.34       |  | Recommended Offer by Astaire and Partners Limited on behalf of Todd-AO Europe Holding Company Limited (a wholly owned subsidiary of The Todd-AO Corporation) for the entire issued and to be issued ordinary share capital of Tele-Cine Cell Group plc. is
incorporated by reference from the Registrant's Form 8-K filed on May 18, 1998.                                                                                                  
|10.37       |  | Merger Agreement among The Todd-AO Corporation, Todd-AO East, Inc., and Sound One Corporation dated as of June 8, 1999 is incorporated by reference from the Registrant's Form 8-K filed on June 21, 1999.                                                                                                                                                                                                                                  
|10.40       |  | Purchase Agreement dated as of September 22, 1999 between 103 Estudio, S.A. and Todd-AO, Espana is incorporated by reference from the Registrant's Form 10-K filed on December 7, 1999.                                                                                                                                                                                                                                                     
|10.39       |  | Agreement and Plan of Merger dated as of December 6, 1999, by and among AT&T Corp., D-Group Merger Corp., Liberty Media Corporation and Four Media Corporation (incorporated by reference to AT&T Corp.'s Registration Statement on Form S-4,
filed February 11, 2000, registration no. 333-30250, Exhibit 2.01).                                                                                                                           
|10.41       |  | Agreement and Plan of Merger dated as of December 10, 1999, by and among AT&T Corp., B-Group Merger Corp., Liberty Media Corporation and the registrant (then known as The Todd-AO Corporation) (incorporated by reference from AT&T Corp.'s
Registration Statement on Form S-4 filed May 5, 2000, registration no. 333-36458).                                                                                                             
|10.42       |  | Amendment No. 1, dated as of March 6, 2000, to the Agreement and Plan of Merger dated as of December 10, 1999, by and among AT&T Corp., B-Group Merger Corp., Liberty Media Corporation and the registrant (then known as The Todd-AO Corporation)
(incorporated by reference to AT&T Corp.'s Registration Statement on Form S-4 filed May 5, 2000, registration no. 333-36458).                                                            

16

---

|10.43 |  | Consulting Agreement dated December 10, 1999, between the registrant (then known as The Todd-AO Corporation), Liberty Media Corporation, Salah M. Hassanein, and SMH Entertainment, Inc. (incorporated by reference to the registrant's Current
Report on Form 8-K filed December 22, 1999).                                                       
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.44 |  | Agreement dated as of February 11, 2000, between Liberty Media Corporation and the registrant (then known as The Todd-AO Corporation) (incorporated by reference to AT&T Corp.'s Registration Statement on Form S-4 filed May 5, 2000,
registration no. 333-36458).                                                                                
|10.45 |  | Contribution Agreement dated as of June 9, 2000, between Liberty Media Corporation and the registrant (re: capital stock of Four Media Corporation) (incorporated by reference to the registrant's Current Report on Form 8-K filed August
 3, 2000).                                                                                              
|10.46 |  | Amendment No. 1, dated July 19, 2000, between Liberty Media Corporation and the registrant to the Contribution Agreement dated as of February 11, 2000 (re: certain assets of SounDelux) (incorporated by reference to Liberty Media
Corporation's Schedule 13D/A filed July 26, 2000, Commission file no. 005-10246).                             
|10.47 |  | Asset Purchase Agreement dated as of July 19, 2000, by and among, the registrant, Liberty SEG Acquisition Sub, LLC, SounDelux Entertainment Group of Delaware, Inc., each of the other Sellers named therein, and each of the shareholders of
SounDelux named therein is filed herewith.                                                           
|10.48 |  | Registration Rights Agreement dated as of July 25, 2000, between the registrant and Paul J. Dujardin (incorporated by reference to Mr. Dujardin's Schedule 13D filed August 4, 2000, Commission file no. 005-10246).                                                                                                                               
|10.49 |  | Agreement and Plan of Merger dated as of July 25, 2000, by and among AT&T Corp., E-Group Merger Corp., Liberty Media Corporation and Video Services Corporation (incorporated by reference to AT&T Corp.'s Registration Statement on Form
 S-4, Amendment No. 1, filed November 17, 2000, registration no. 333-48606, Exhibit 2.01).               
|10.50 |  | Contribution Agreement dated as of December 22, 2000, between Liberty Media Corporation and the registrant (re: capital stock of VSC) (incorporated by reference to the registrant's Current Report on Form 8-K filed January 8, 2001,
Exhibit 2).                                                                                                 
|10.51 |  | First Amended and Restated Credit Agreement dated as of December 22, 2000, between Liberty Media Corporation and the registrant (re: subordinated convertible loans) (incorporated by reference to the registrant's Current Report on Form 8-K
filed January 8, 2001, Exhibit 3).                                                                  
|10.52 |  | Purchase Agreement dated as of October 23, 2000, by and among Viacom, Inc., Westinghouse Electric G.m.b.H., Westinghouse CBS Holding Company, Inc., CBS Broadcasting, Inc., the registrant and GWNS Acquisition Sub, Inc.
(incorporated by reference to the registrant's Current Report on Form 8-K filed February 16, 2001, Exhibit 1).           
|10.53 |  | Amendment Purchase Agreement dated as of October 23, 2000, by and among Viacom, Inc., Westinghouse Electric G.m.b.H., Westinghouse CBS Holding Company, Inc., CBS Broadcasting, Inc., the registrant and GWNS Acquisition Sub,
 Inc. (incorporated by reference to the registrant's Current Report on Form 8-K filed February 16, 2001, Exhibit 2).

17

---

|10.54 |  | Credit Agreement, dated as of December 22, 2000, among Liberty Livewire Corporation, the several banks and other financial institutions from time to time parties to the Agreement, Bank of America, N.A., as issuer of certain letters of credit and
as swingline lender, Banc of America Securities LLC, as lead arranger and book manager, Bank of America, N.A., as administrative agent for the lenders, Salomon Smith Barney Inc., as syndication agent for the lenders and the Bank of New York
Company, Inc. as documentation agent for the lenders. (Incorporated by reference from the registrant's Form 10-K for the year ended December 31, 2000)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.55 |  | Share Purchase Agreement for the issued and outstanding ordinary shares of Visiontext, Limited by and between the shareholders of Visiontext, Limited and Four Media Company (UK) Limited, a wholly owned subsidiary of the Registrant. (Incorporated by
reference from the registrant's Form 10-K for the year ended December 31, 2000)                                                                                                                                                                                                                                                                                                                     
|21.1  |  | The subsidiaries of the Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

(Incorporated
by reference from the registrant's Form 10-K for the year ended December 31, 2000)

18

---



LIBERTY LIVEWIRE CORPORATION    Index to Financial Statements and Financial Statement Schedule

|                                                                                                                                                                                                                                                       |  | Page
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|Independent Auditors' Report                                                                                                                                                                                                                           |  | 20  
|Report of Independent Public Accountants                                                                                                                                                                                                               |  | 21  
|Consolidated Balance Sheets, December 31, 2000 and 1999                                                                                                                                                                                                |  | 22  
|Consolidated Statements of Income for the Seven Months Ended December 31, 2000, the
Five Months Ended May 31, 2000, the Four Months Ended December 31, 1999, and the
Years Ended August 31, 1999 and 1998                                              |  | 23  
|Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) for the
Years Ended August 31, 1998 and 1999, the Four Months Ended December 31, 1999, the
Five Months Ended May 31, 2000 and the Seven Months Ended December 31, 2000 |  | 24  
|Consolidated Statements of Cash Flows for the Seven Months Ended December 31, 2000, the
Five Months Ended May 31, 2000, the Four Months Ended December 31, 1999, and the
Years Ended August 31, 1999 and 1998                                          |  | 26  
|Notes to Consolidated Financial Statements                                                                                                                                                                                                             |  | 32  
|Supplemental Financial Statement Schedule:                                                                                                                                                                                                             |  |     
|Schedule II:
Valuation and Qualifying Accounts for the Seven Months Ended December 31, 2000, the
Five Months Ended May 31, 2000, the Four Months Ended December 31, 1999, and the
Years Ended August 31, 1999 and 1998                                 |  | 51  

Schedules
other than those listed above have been omitted because of the absence of the conditions under which they are required or because the required information, where material,
is shown in the financial statements or the notes thereto.

19

---

Independent Auditors' Report

The Board of Directors and Stockholders
Liberty Livewire Corporation:

We
have audited the accompanying consolidated balance sheets of Liberty Livewire Corporation and subsidiaries as of December 31, 2000 and 1999, and the related consolidated
statements of income, stockholders' equity and comprehensive income, and cash flows for the seven months ended December 31, 2000, the five months ended May 31, 2000, and the four months
ended December 31, 1999. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Liberty Livewire Corporation and
subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for the seven months ended December 31, 2000, the five months ended May 31,
2000, and the four months ended December 31, 1999, in conformity with accounting principles generally accepted in the United States of America.

As
discussed in note 1 to the consolidated financial statements, effective June 9, 2000, Liberty Media Corporation obtained a controlling interest in Liberty Livewire
Corporation in a business combination accounted for as a purchase. As a result of the business combination, the consolidated financial information for the period after the acquisition is presented on
a different cost basis than that for the periods before the acquisition and therefore, is not comparable.

Our
audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information included in Schedule II is
presented for purposes of complying with the Securities and Exchange Commissions' rules and is not a required part of the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a
whole for the seven months ended December 31, 2000, the five months ended May 31, 2000 and the four months ended December 31, 1999.



Los
Angeles, California
March 2, 2001

20

---

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Todd-AO Corporation:

We
have audited the accompanying consolidated balance sheets of The Todd-AO Corporation (a Delaware corporation) and its subsidiaries as of August 31, 1998 and
1999, and the related consolidated statements of income, stockholders' equity and comprehensive income (loss), and cash flows for the years then ended. These consolidated financial statements and the
schedule referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.

We
conducted our audits in accordance with generally accepted auditing standards. 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 financial position of The Todd-AO Corporation and its subsidiaries
as of August 31, 1998 and 1999, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles.

As
explained in Note 1 to the consolidated financial statements, effective September 1, 1998, the Company changed its method of accounting for the cost of
start-up activities in accordance with Statements of Position No. 98-5.

Our
audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the index of financial statements is presented
for purposes of complying with the Securities and Exchange Commissions' rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in
our audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial
statements taken as a whole.



Los
Angeles, California
November 9, 1999

21

---



LIBERTY LIVEWIRE CORPORATION        Consolidated Balance Sheets        (Dollars in thousands)

|                                                                                                                          |                                                                                                                                                      | Livewire
December 31,
2000 |           | Todd-AO
December 31,
1999 |  
|------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | --------- | ------------------------- | -
|Assets                                                                                                                    |                                                                                                                                                     
|Current assets:                                                                                                           |                                                                                                                                                      |                            |           |                           |  
|Cash and cash equivalents                                                                                                 |                                                                                                                                                      | $                          | 19,466    |                           | $
|Marketable securities                                                                                                     |                                                                                                                                                      |                            | 5,414     |                           |  
|Trade receivables (net of allowance for doubtful accounts of $5,567 at December 31, 2000 and $1,388 at December 31, 1999) |                                                                                                                                                      |                            | 106,158   |                           |  
|Income tax receivable                                                                                                     |                                                                                                                                                      |                            |          |                           |  
|Inventories (first-in first-out basis)                                                                                    |                                                                                                                                                      |                            | 4,932     |                           |  
|Deferred income taxes, net                                                                                                |                                                                                                                                                      |                            | 4,742     |                           |  
|Prepaid deposits and other                                                                                                |                                                                                                                                                      |                            | 16,430    |                           |  
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  
|Total current assets                                                                                                      |                                                                                                                                                      |                            | 157,142   |                           |  
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  
|Non current assets:                                                                                                       |                                                                                                                                                      |                            |           |                           |  
|Land                                                                                                                      |                                                                                                                                                      |                            | 46,145    |                           |  
|Buildings and improvements                                                                                                |                                                                                                                                                      |                            | 71,903    |                           |  
|Equipment                                                                                                                 |                                                                                                                                                      |                            | 283,752   |                           |  
|Construction in progress                                                                                                  |                                                                                                                                                      |                            | 220       |                           |  
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  
|Property, plant and equipmentat cost:                                                                                    |                                                                                                                                                      |                            | 402,020   |                           |  
|Accumulated depreciation and amortization                                                                                 |                                                                                                                                                      |                            | (35,076   | )                         |  
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  
|Property, plant and equipmentnet                                                                                         |                                                                                                                                                      |                            | 366,944   |                           |  
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  
|Investments and other non current receivables                                                                             |                                                                                                                                                      |                            | 2,445     |                           |  
|Due from parentnet                                                                                                       |                                                                                                                                                      |                            | 7,245     |                           |  
|Goodwill (net of accumulated amortization of $16,411 at December 31, 2000 and $3,354 at December 31, 1999)                |                                                                                                                                                      |                            | 582,171   |                           |  
|Identifiable intangible assets (net of accumulated amortization of $4,945 at December 31, 2000)                           |                                                                                                                                                      |                            | 49,025    |                           |  
|Other assets (net of accumulated amortization of $555 at December 31, 2000)                                               |                                                                                                                                                      |                            | 10,873    |                           |  
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  
|Total assets                                                                                                              |                                                                                                                                                      | $                          | 1,175,845 |                           | $
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  
|Liabilities and Stockholders' Equity                                                                                      |                                                                                                                                                     
|Current liabilities:                                                                                                      |                                                                                                                                                      |                            |           |                           |  
|Accounts payable                                                                                                          |                                                                                                                                                      | $                          | 65,679    |                           | $
|Accrued liabilities:                                                                                                      |                                                                                                                                                      |                            |           |                           |  
|                                                                                                                          | Payroll and related taxes                                                                                                                            |                            |           | 10,948                    |  
|                                                                                                                          | Interest                                                                                                                                             |                            |           | 1,120                     |  
|                                                                                                                          | SARs compensation payable                                                                                                                            |                            |           | 979                       |  
|                                                                                                                          | Other                                                                                                                                                |                            |           | 31,155                    |  
|Current maturities of long-term debt and capital lease obligations                                                        |                                                                                                                                                      |                            | 8,545     |                           |  
|Income taxes payable                                                                                                      |                                                                                                                                                      |                            | 998       |                           |  
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  
|Total current liabilities                                                                                                 |                                                                                                                                                      |                            | 119,424   |                           |  
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  
|Long-term debt and capital lease obligations                                                                              |                                                                                                                                                      |                            | 492,573   |                           |  
|Other liabilities                                                                                                         |                                                                                                                                                      |                            | 3,764     |                           |  
|Deferred income taxes, net                                                                                                |                                                                                                                                                      |                            | 6,957     |                           |  
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  
|Total liabilities                                                                                                         |                                                                                                                                                      |                            | 622,718   |                           |  
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  
|Commitments and contingencies                                                                                             |                                                                                                                                                      |                            |           |                           |  
|Stockholders' equity:                                                                                                     |                                                                                                                                                      |                            |           |                           |  
|Common stock:                                                                                                             |                                                                                                                                                      |                            |           |                           |  
|                                                                                                                          | Class A; authorized 300,000,000 shares of $0.01 par value; issued 5,384,506 at December 31, 2000 and 8,951,404 at December 31, 1999                  |                            |           | 54                        |  
|                                                                                                                          | Class B; authorized 100,000,000 shares of $0.01 par value; issued and outstanding 31,612,716 at December 31, 2000 and 1,747,178 at December 31, 1999 |                            |           | 316                       |  
|Additional paid-in capital                                                                                                |                                                                                                                                                      |                            | 570,185   |                           |  
|Unearned stock compensation                                                                                               |                                                                                                                                                      |                            | (273      | )                         |  
|Treasury stock (shares at cost: 2,400 at December 31, 2000 and 6,000 at December 31, 1999)                                |                                                                                                                                                      |                            | (19       | )                         |  
|Retained earnings                                                                                                         |                                                                                                                                                      |                            | (9,793    | )                         |  
|Deferred tax asset to be utilized by parent                                                                               |                                                                                                                                                      |                            | (409      | )                         |  
|Accumulated other comprehensive income (loss)                                                                             |                                                                                                                                                      |                            | (6,934    | )                         |  
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  
|Total stockholders' equity                                                                                                |                                                                                                                                                      |                            | 553,127   |                           |  
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  
|Total                                                                                                                     |                                                                                                                                                      | $                          | 1,175,845 |                           | $
|                                                                                                                          |                                                                                                                                                      |                            |           |                           |  

See notes to consolidated financial statements

22

---



LIBERTY LIVEWIRE CORPORATION  Consolidated Statements of Income  (Dollars in thousands, except per share amounts)

|                                                                                   |                                                              | Livewire |            | Todd-AO |  
|---------------------------------------------------------------------------------- | ------------------------------------------------------------ | -------- | ---------- | ------- | -
|
|
|Revenues                                                                           |                                                              | $        | 253,099    |         | $
|                                                                                   |                                                              |          |            |         |  
|Costs and expenses:                                                                |                                                              |          |            |         |  
|Operating costs and other expenses                                                 |                                                              |          | 218,985    |         |  
|SARs compensation expense (income)                                                 |                                                              |          | (29,577    | )       |  
|Depreciation and amortization                                                      |                                                              |          | 51,545     |         |  
|Interest                                                                           |                                                              |          | 19,132     |         |  
|Restructuring and other charges:                                                   |                                                              |          |            |         |  
|                                                                                   | Equipment                                                    |          |            |        |  
|                                                                                   | Lease costs                                                  |          |            |        |  
|                                                                                   | Loss on equipment lease commitments                          |          |            |        |  
|Other (income) expensenet                                                         |                                                              |          | (872       | )       |  
|                                                                                   |                                                              |          |            |         |  
|Total costs and expenses                                                           |                                                              |          | 259,213    |         |  
|                                                                                   |                                                              |          |            |         |  
|Income (loss) before provision for income taxes and change in accounting principle |                                                              |          | (6,114     | )       |  
|Provision for income taxes                                                         |                                                              |          | 3,679      |         |  
|                                                                                   |                                                              |          |            |         |  
|Income (loss) before change in accounting principle                                |                                                              |          | (9,793     | )       |  
|Change in accounting principle, net of income taxes of $150                        |                                                              |          |           |         |  
|                                                                                   |                                                              |          |            |         |  
|Net income (loss)                                                                  |                                                              | $        | (9,793     | )       | $
|                                                                                   |                                                              |          |            |         |  
|Net income (loss) available to common stockholders                                 |                                                              | $        | (9,793     | )       | $
|Effect of dilutive securities: 5% convertible debentures                           |                                                              |          |           |         |  
|                                                                                   |                                                              |          |            |         |  
|Net income (loss) available to common stockholders plus assumed conversions        |                                                              | $        | (9,793     | )       | $
|                                                                                   |                                                              |          |            |         |  
|Weighted average shares outstandingbasic                                          |                                                              |          | 34,463,373 |         |  
|Effect of dilutive securities:                                                     |                                                              |          |            |         |  
|                                                                                   | Stock options                                                |          |            |        |  
|                                                                                   | 5% convertible debentures                                    |          |            |        |  
|                                                                                   |                                                              |          |            |         |  
|Weighted average shares outstandingdiluted                                        |                                                              |          | 34,463,373 |         |  
|                                                                                   |                                                              |          |            |         |  
|Net income (loss) per common share:                                                |                                                              |          |            |         |  
|                                                                                   | Income(loss) before change in accounting principle-basic     |          | $          | (0.28   | )
|                                                                                   | Change in accounting principle                               |          |            |        |  
|                                                                                   |                                                              |          |            |         |  
|                                                                                   | Net income (loss)basic                                      |          | $          | (0.28   | )
|                                                                                   |                                                              |          |            |         |  
|                                                                                   | Income (loss) before change in accounting principle- diluted |          | $          | (0.28   | )
|                                                                                   | Change in accounting principle                               |          |            |        |  
|                                                                                   |                                                              |          |            |         |  
|                                                                                   | Net income (loss)diluted                                    |          | $          | (0.28   | )
|                                                                                   |                                                              |          |            |         |  

See notes to consolidated financial statements

23

---

LIBERTY LIVEWIRE CORPORATION
Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss)
For the Years Ended August 31, 1998 and 1999, the Four Months Ended December 31, 1999,
the Five Months Ended May 31, 2000 and the Seven Months Ended December 31, 2000
(Dollars in thousands)

|                                           |                            | Common Stock |   |   |    |   |           |   |   |    |   |   |        |   |  
|------------------------------------------ | -------------------------- | ------------ | - | - | -- | - | --------- | - | - | -- | - | - | ------ | - | -
|
|
|
|Balance at August 31, 1997                 |                            | 8,290,494    |   | $ | 83 |   | 1,747,178 |   | $ | 17 |   | $ | 39,996 |   | $
|                                           |                            |              |   |   |    |   |           |   |   |    |   |   |        |   |  
|Exercise of stock options                  |                            | 98,206       |   |   | 1  |   |          |   |   |   |   |   | 341    |   |  
|Tax benefit from exercise of stock options |                            |             |   |   |   |   |          |   |   |   |   |   | 200    |   |  
|Purchase of treasury shares                |                            |             |   |   |   |   |          |   |   |   |   |   |       |   |  
|Treasury shares transfer to 401(k)         |                            |             |   |   |   |   |          |   |   |   |   |   |       |   |  
|Shares issued for stock award              |                            | 50,000       |   |   |   |   |          |   |   |   |   |   | 268    |   |  
|Unrealized gain on investment securities   |                            |             |   |   |   |   |          |   |   |   |   |   |       |   |  
|Gain on foreign currency translation       |                            |             |   |   |   |   |          |   |   |   |   |   |       |   |  
|Cash dividends:                            |                            |              |   |   |    |   |           |   |   |    |   |   |        |   |  
|                                           | Class A ($.06) per share   |              |  |   |    |  |           |  |   |    |  |   |        |  |  
|                                           | Class B ($.054) per share  |              |  |   |    |  |           |  |   |    |  |   |        |  |  
|Net income                                 |                            |             |   |   |   |   |          |   |   |   |   |   |       |   |  
|                                           |                            |              |   |   |    |   |           |   |   |    |   |   |        |   |  
|Balance at August 31, 1998                 |                            | 8,438,700    |   |   | 84 |   | 1,747,178 |   |   | 17 |   |   | 40,805 |   |  
|                                           |                            |              |   |   |    |   |           |   |   |    |   |   |        |   |  
|Exercise of stock options                  |                            | 274,080      |   |   | 3  |   |          |   |   |   |   |   | 1,095  |   |  
|Tax benefit from exercise of stock options |                            |             |   |   |   |   |          |   |   |   |   |   | 123    |   |  
|Purchase of treasury shares                |                            |             |   |   |   |   |          |   |   |   |   |   |       |   |  
|Treasury shares cancelled                  |                            | (723,447     | ) |   | (7 | ) |          |   |   |   |   |   | (5,316 | ) |  
|Treasury shares transfer to 401(k)         |                            |             |   |   |   |   |          |   |   |   |   |   |       |   |  
|Shares issued as compensation              |                            | 135,000      |   |   | 2  |   |          |   |   |   |   |   | 1,180  |   |  
|Unrealized (loss) on investment securities |                            |             |   |   |   |   |          |   |   |   |   |   |       |   |  
|(Loss) on foreign currency translation     |                            |             |   |   |   |   |          |   |   |   |   |   |       |   |  
|Cash dividends:                            |                            |              |   |   |    |   |           |   |   |    |   |   |        |   |  
|                                           | Class A ($.045) per share  |              |  |   |    |  |           |  |   |    |  |   |        |  |  
|                                           | Class B ($.0405) per share |              |  |   |    |  |           |  |   |    |  |   |        |  |  
|Net income                                 |                            |             |   |   |   |   |          |   |   |   |   |   |       |   |  
|                                           |                            |              |   |   |    |   |           |   |   |    |   |   |        |   |  
|Balance at August 31, 1999                 |                            | 8,124,333    |   | $ | 82 |   | 1,747,178 |   | $ | 17 |   | $ | 37,887 |   | $
|                                           |                            |              |   |   |    |   |           |   |   |    |   |   |        |   |  

See notes to consolidated financial statements

24

---



LIBERTY LIVEWIRE CORPORATION  Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss)  For the Years Ended August 31, 1998 and 1999, the Four Months Ended December 31, 1999,
the Five Months Ended May 31, 2000 and the Seven Months Ended December 31, 2000  (Dollars in thousands)

|                                           |  | Common Stock |   |   |     |   |            |  |   |     |  |   |         |   |  
|------------------------------------------ |  | ------------ | - | - | --- | - | ---------- |  | - | --- |  | - | ------- | - | -
|
|
|
|Balance at August 31, 1999                 |  | 8,124,333    |   | $ | 82  |   | 1,747,178  |  | $ | 17  |  | $ | 37,887  |   | $
|                                           |  |              |   |   |     |   |            |  |   |     |  |   |         |   |  
|Exercise of stock options                  |  | 183,735      |   |   | 2   |   |           |  |   |    |  |   | 1,610   |   |  
|Conversion of subordinated notes           |  | 643,336      |   |   | 7   |   |           |  |   |    |  |   | 7,592   |   |  
|Unrealized gain on investment securities   |  |             |   |   |    |   |           |  |   |    |  |   |        |   |  
|Gain on foreign currency translation       |  |             |   |   |    |   |           |  |   |    |  |   |        |   |  
|Net income                                 |  |             |   |   |    |   |           |  |   |    |  |   |        |   |  
|                                           |  |              |   |   |     |   |            |  |   |     |  |   |         |   |  
|Balance at December 31, 1999               |  | 8,951,404    |   |   | 91  |   | 1,747,178  |  |   | 17  |  |   | 47,089  |   |  
|                                           |  |              |   |   |     |   |            |  |   |     |  |   |         |   |  
|Exercise of stock options                  |  | 151,318      |   |   |    |   |           |  |   |    |  |   | 776     |   |  
|Unrealized gain on investment securities   |  |             |   |   |    |   |           |  |   |    |  |   |        |   |  
|(Loss) on foreign currency translation     |  |             |   |   |    |   |           |  |   |    |  |   |        |   |  
|Net (loss)                                 |  |             |   |   |    |   |           |  |   |    |  |   |        |   |  
|                                           |  |              |   |   |     |   |            |  |   |     |  |   |         |   |  
|Balance at May 31, 2000                    |  | 9,102,722    |   |   | 91  |   | 1,747,178  |  |   | 17  |  |   | 47,865  |   |  
|                                           |  |              |   |   |     |   |            |  |   |     |  |   |         |   |  
|Conversion of equity in Todd-AO merger     |  | (4,772,729   | ) |   | (48 | ) | 4,772,729  |  |   | 48  |  |   | 91,474  |   |  
|Unearned stock compensation                |  |             |   |   |    |   |           |  |   |    |  |   | (2,458  | ) |  
|Exercise of stock options                  |  | 348,959      |   |   | 4   |   | 296,039    |  |   | 3   |  |   | 1,413   |   |  
|Unrealized (loss) on investment securities |  |             |   |   |    |   |           |  |   |    |  |   |        |   |  
|(Loss)on foreign currency translation      |  |             |   |   |    |   |           |  |   |    |  |   |        |   |  
|Stock issued for Acquisitions              |  | 705,554      |   |   | 7   |   | 24,796,770 |  |   | 248 |  |   | 413,973 |   |  
|SAR adjustments                            |  |             |   |   |    |   |           |  |   |    |  |   |        |   |  
|Contribution to Capital                    |  |             |   |   |    |   |           |  |   |    |  |   | 17,918  |   |  
|Net Loss                                   |  |             |   |   |    |   |           |  |   |    |  |   |        |   |  
|                                           |  |              |   |   |     |   |            |  |   |     |  |   |         |   |  
|Balance at December 31, 2000               |  | 5,384,506    |   | $ | 54  |   | 31,612,716 |  | $ | 316 |  | $ | 570,185 |   | $
|                                           |  |              |   |   |     |   |            |  |   |     |  |   |         |   |  

See notes to consolidated financial statements.

25

---



LIBERTY LIVEWIRE CORPORATION

Consolidated Statements of Cash Flows  (Dollars in thousands)

|                                                    |                                                                                   | Livewire                                                     |                                          | Todd-AO |       
|--------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------ | ---------------------------------------- | ------- | ------
|
|
|Cash flows from operating activities:               |                                                                                   |                                                              |                                          |         |       
|                                                    | Net income (loss)                                                                 |                                                              | $                                        | (9,793  | )     
|                                                    | Adjustments to reconcile net income to net cash provided by operating activities: |                                                              |                                          |         |       
|                                                    |                                                                                   | Depreciation and amortization                                |                                          |         | 51,545
|                                                    |                                                                                   | Restructuring and other charges                              |                                          |         |      
|                                                    |                                                                                   | Deferred income taxes                                        |                                          |         | 12,995
|                                                    |                                                                                   | Tax benefit from exercise of stock options                   |                                          |         |      
|                                                    |                                                                                   | Amortization of unearned compensation                        |                                          |         | 127   
|                                                    |                                                                                   | Foreign currency exchange (gain) loss                        |                                          |         |      
|                                                    |                                                                                   | Amortization of deferred gain on sale/leaseback transaction  |                                          |         |      
|                                                    |                                                                                   | (Gain) loss on sale of marketable securities and investments |                                          |         |      
|                                                    |                                                                                   | Loss (gain) on disposition of fixed assets                   |                                          |         |      
|                                                    |                                                                                   | Shares issued for stock award                                |                                          |         |      
|                                                    |                                                                                   | Changes in assets and liabilities (net of acquisitions):     |                                          |         |       
|                                                    |                                                                                   |                                                              | Trade receivables, net                   |         |       
|                                                    |                                                                                   |                                                              | Inventories and other current assets     |         |       
|                                                    |                                                                                   |                                                              | Accounts payable and accrued liabilities |         |       
|                                                    |                                                                                   |                                                              | SARs compensation payable                |         |       
|                                                    |                                                                                   |                                                              | Accrued equipment lease                  |         |       
|                                                    |                                                                                   |                                                              | Income taxes payable, net                |         |       
|                                                    |                                                                                   |                                                              | Other liabilities                        |         |       
|                                                    |                                                                                   |                                                              | Deferred income                          |         |       
|                                                    |                                                                                   |                                                              |                                          |         |       
|Net cash provided by (used in) operating activities |                                                                                   |                                                              | 18,995                                   |         |       
|                                                    |                                                                                   |                                                              |                                          |         |       
|Cash flows from investing activities:               |                                                                                   |                                                              |                                          |         |       
|                                                    | Purchase of marketable securities and investments                                 |                                                              |                                          | (5,093  | )     
|                                                    | Proceeds from sale of marketable securities and investments                       |                                                              |                                          |        |       
|                                                    | Proceeds from disposition of fixed assets                                         |                                                              |                                          |        |       
|                                                    | Capital expenditures, net                                                         |                                                              |                                          | (76,700 | )     
|                                                    | Purchase of 50% interest103 Estudio, S.L.                                        |                                                              |                                          |        |       
|                                                    | Cash paid for Sound One                                                           |                                                              |                                          |        |       
|                                                    | Cash paid for Tele-Cine Cell Group plc                                            |                                                              |                                          |        |       
|                                                    | Net cash acquired in 4MC contribution                                             |                                                              |                                          | 14,066  |       
|                                                    | Cash paid for Triumph                                                             |                                                              |                                          | (8,488  | )     
|                                                    | Cash paid for Soho                                                                |                                                              |                                          | (26,969 | )     
|                                                    | Cash paid for Visiontext                                                          |                                                              |                                          | (2,912  | )     
|                                                    | Net cash acquired in VSC acquisition                                              |                                                              |                                          | 696     |       
|                                                    | Other assets                                                                      |                                                              |                                          |        |       
|                                                    |                                                                                   |                                                              |                                          |         |       
|Net cash flows used in investing activities         |                                                                                   | $                                                            | (105,400                                 | )       | $     
|                                                    |                                                                                   |                                                              |                                          |         |       

See notes to consolidated financial statements.

26

---

LIBERTY LIVEWIRE CORPORATION

Consolidated Statements of Cash Flows  (Dollars in thousands)  (Continued)

|                                                           |                                               | Livewire |        | Todd-AO  |  
|---------------------------------------------------------- | --------------------------------------------- | -------- | ------ | -------- | -
|
|
|Cash flows from financing activities:                      |                                               |          |        |          |  
|                                                           | Borrowings of long-term debt                  |          | $      | 476,926  |  
|                                                           | Payments on long-term debt and capital leases |          |        | (385,485 | )
|                                                           | Borrowings from parent, net                   |          |        | (7,246   | )
|                                                           | Proceeds from sale/leaseback transaction      |          |        |         |  
|                                                           | Cash payments for SARs exercised              |          |        | (269     | )
|                                                           | Proceeds from exercise of stock options       |          |        | 5,366    |  
|                                                           | Proceeds from issuance of common stock        |          |        | 7,053    |  
|                                                           | Capital contribution                          |          |        | 292      |  
|                                                           | Treasury stock purchases                      |          |        |         |  
|                                                           | Dividends paid                                |          |        |         |  
|                                                           |                                               |          |        |          |  
|Net cash flows provided by (used in) financing activities: |                                               |          | 96,637 |          |  
|                                                           | Effect of exchange rate changes on cash       |          |        | (203     | )
|                                                           |                                               |          |        |          |  
|Net increase (decrease) in cash and cash equivalents       |                                               |          | 10,029 |          |  
|Cash and cash equivalents at beginning of year             |                                               |          | 9,437  |          |  
|                                                           |                                               |          |        |          |  
|Cash and cash equivalents at end of year                   |                                               | $        | 19,466 |          | $
|                                                           |                                               |          |        |          |  
|Supplemental disclosure of cash flow information:          |                                               |          |        |          |  
|Cash paid during the year for:                             |                                               |          |        |          |  
|                                                           | Interest                                      |          | $      | 18,583   |  
|                                                           |                                               |          |        |          |  
|                                                           | Income taxes                                  |          | $      | 2,406    |  
|                                                           |                                               |          |        |          |  

27

---

Supplemental Disclosures of Non Cash Investing and Financing Activities:
Livewire
2000:

In June 2000 the Company acquired all of the outstanding shares of Four Media Company from Liberty Media. In connection with the acquisition the Company
issued 16,614,952 shares of Class B Common Stock to Liberty Media.

Assets acquired:Cash

$
14,066Property, plant and equipment-net


195,680Trade and other receivablesnet


46,723Deferred income taxes


40,533Inventory


1,821Prepaid deposits and other


4,121Other assetsnet


7,685Identifiable intangible assets


19,820Goodwillnet


270,744Liabilities assumed:Accounts payable and accrued liabilitiesnet


(73,194
)Long-Term debt and capital lease obligations


(231,922
)Deferred income taxes


(19,029
)Accumulated Foreign exchange loss


2,614Common stock issued to Liberty Media


(279,662
)Cash paid in acquisition

$
0


See notes to consolidated financial statements.

28

---



LIBERTY LIVEWIRE CORPORATION    Consolidated Statements of Cash Flows  (Dollars in thousands)  (Continued)

In July 2000, the Company acquired the post-production content and sound editorial assets and certain of the liabilities of SounDelux
Entertainment Group of Delaware, Inc. from Liberty Media. In connection with this acquisition the Company issued 8,181,818 shares of Class B Common Stock to Liberty Media.

Assets acquired:Property, plant and equipment

$
6,872Trade and other receivablesnet


4,154Inventory


1,588Goodwill


70,093Identifiable intangible assets


10,730Other assets


298Liabilities assumed:Accounts payable and accrued expenses


(3,735
)Common stock issued to Liberty Media


(90,000
)Cash paid in acquisition

$
0


In
July 2000 the Company acquired substantially all of the outstanding shares of Triumph Communications Group. In connection with the acquisition the Company
paid cash and issued 705,554 shares of Class A Common Stock.

Assets acquired:Property, plant and equipmentnet

$
2,539Trade and other receivablesnet


218Inventory


230Prepaid deposits and other


439Deferred income taxes


40Identifiable intangible assets


3,190Goodwill


53,543Liabilities assumed:Accounts payable and accrued liabilitiesnet


(6,809
)Long-term debt and capital lease obligations


(332
)Common stock issued to Triumph


(44,570
)Cash paid in acquisition, net of cash received

$
8,488


In
August 2000 the Company acquired substantially all of the outstanding shares of Soho Group Limited. In connection with the acquisition the Company paid cash
as follows:

Assets acquired:Property, plant and equipmentnet

$
16,316Trade and other receivablesnet


4,470Prepaid deposits and other


223Goodwill


9,391Liabilities assumed:Accounts payable and accrued expenses


(2,583
)Long-term debt and capital lease obligations


(848
)Cash paid in acquisition, net of cash received

$
26,969


See
notes to consolidated financial statements.

29

---

In October 2000 the Company acquired all of the outstanding shares of Visiontext Limited. In connection with the acquisition the Company paid cash as follows:

Assets acquired:Property, plant and equipmentnet

$
656Trade and other receivablesnet


620Other assets


15Goodwill


4,314Liabilities assumed:Accounts payable and accrued liabilities  net


(757
)Notes issued to sellers


(1,936
)Cash paid in acquisition, net of cash received

$
2,912


On
December 22, 2000, the Company acquired all of the outstanding shares of Video Services Corporation from Liberty Media in connection with the acquisition
Liberty Media contributed capital to the Company and the Company paid cash as follows:

Assets acquired:Property, plant and equipmentnet

$
35,208Trade and other receivablesnet


21,389Inventory


662Prepaid deposits and other


4,372Deferred income taxes


6,911Other assetsnet


826Identifiable intangible assets


6,090Goodwillnet


79,693Liabilities assumed:Accounts payable and accrued liabilitiesnet


(27,456
)Current maturities of long-term debt


(2,435
)Long-term debt and capital lease obligations


(4,648
)Other Liabilities


(1,645
)Contribution to capital by Liberty Media


(17,626
)Debt issued in acquisition, net of cash received

$
101,342


On
June 9, 2000 approximately 60% of the Company's outstanding common stock was acquired by Liberty Media Corporation. In connection with this acquisition the
Company made the following purchase accounting adjustments:

Property, plant and equipmentnet

$
(11,002
)Marketable securities


(54
)Trade and other receivablesnet


98Goodwill


75,417Identifiable intangible assets


14,140Other assetsnet


(23
)Accounts payable and accrued expenses


(1,568
)Deferred income tax payable


(12,119
)Additional paid in capital


(91,474
)Unearned compensation


2,858Treasury stock


(28
)Unearned gain/loss on marketable securities


4,448Foreign exchange adjustment


(899
)Retained earnings


20,206Net

$
0


See
notes to consolidated financial statements.

30

---

LIBERTY LIVEWIRE CORPORATION    Consolidated Statements of Cash Flows  (Dollars in thousands)  (Continued)

Todd-AO

1999:

In June 1999 the Company acquired substantially all of the outstanding shares of Sound One Corporation. In connection with the acquisition the Company
paid cash as follows:

Assets acquired:Property, plant and equipmentnet

$
4,069Trade and other receivablesnet


1,304Inventory


108Deferred income taxes


1,000Other assets


1,811Goodwill


7,137Liabilities assumed:Accounts payable and accrued liabilitiesnet


270Long-term debt and capital lease obligations


(833
)Deferred income taxes


(569
)Common stock issued as compensation


(1,182
)Non-compete agreements payable to sellers


(800
)Cash paid in acquisition

$
12,315


1998:

On May 8, 1998 the Company acquired substantially all of the outstanding shares of Tele-Cine Cell Group plc. In connection with the
acquisition the Company paid cash as follows:

Assets acquired:Property and equipment

$
8,378Trade and other receivablesnet


7,755Investments


119Inventory


200Goodwill


10,699Liabilities assumed:Accounts payable and accrued liabilitiesnet


(2,888
)Bank loan


(2,638
)Equipment leases


(438
)Provision for liabilities and charges


(3,239
)Long-term debt issued to sellers


(2,207
)Cash paid in acquisition

$
15,741


See
notes to consolidated financial statements.

31

---



LIBERTY LIVEWIRE CORPORATION    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Dollars in thousands except per share and option data)

1.  CHANGE IN CONTROL AND BASIS OF PRESENTATION

Change in ControlOn June 9, 2000 The Todd-AO Corporation
("Todd-AO") stockholders approved the acquisition by Liberty Media Corporation ("Liberty Media") of a controlling interest in Todd-AO and related merger proposals
(collectively, the "Todd Merger"), voted in favor of certain post-merger business combinations as set forth in an Agreement between Todd-AO and Liberty Media, dated as of
February 11, 2000, and approved the change of Todd-AO's name to Liberty Livewire Corporation ("Livewire" or the "Company"). In the Todd Merger, each issued and outstanding share of
Todd-AO Common Stock was converted into the right to receive 0.4 of a share of Class A Livewire Common Stock and 0.5 of a share of AT&T Corp. ("AT&T") Class A Liberty Media
Group tracking stock. Liberty Media's aggregate ownership interest in the Company as of December 31, 2000 consists of Class B Common Stock of Livewire representing approximately 85.5% of
the Company's outstanding equity, which consists of Livewire's Class A and Class B Common Stock. All of Livewire's outstanding Class B Common Stock is currently held by Liberty
Media. This ownership gives Liberty Media 98.3% voting control of the Company.

The
consideration paid by Liberty Media in the Todd Merger, consisting of 5,501,256 shares of Liberty Media Group Class A (LMGA) stock valued at $101.5 million and
conversion of vested options valued at $7.5 million, was allocated based on the preliminary fair values of the assets and liabilities acquired with the excess consideration of
$75.4 million recorded as goodwill and $14.1 million as identifiable intangible assets.

Liberty
Media is an indirect wholly owned subsidiary of AT&T. It's former parent, Tele-Communications, Inc ("TCI"), was acquired by AT&T by merger in March 1999.
Liberty Media and its subsidiaries constitute substantially all of the businesses and assets of Liberty Media Group. Liberty Media Group Class A ("LMGA") and Class B ("LMGB") Common
Stock are tracking stocks of AT&T that are intended to reflect the economic performance of the Liberty Media Group.

Basis of PresentationDue to the level of ownership of the Company obtained by Liberty Media as a result of the merger as
discussed above and the contribution of Four Media Company ("4MC") as discussed in note 2, Liberty Media has applied "push down" accounting and transferred to the Company the preliminary fair
value adjustments relating to the assets of Todd-AO at June 9, 2000. The assets and liabilities of 4MC have been recorded at Liberty Media's historical value including preliminary
fair value adjustments resulting from the acquisition of 4MC by Liberty Media.

On
August 10, 2000, the Board of Directors of Livewire approved the change of the Company's fiscal year end from August 31 to December 31. A transition report on
Form 10-Q covering the transition period from September 1, 1999 through December 31, 1999 was filed with the Securities and Exchange Commission on September 22,
2000.

The
consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in
consolidation.

The
consolidated balance sheet as of December 31, 1999 and the financial statements for the five months ended May 31, 2000, the four months ended December 31,
1999 and the years ended August 31, 1999 and 1998 represent the consolidated financial condition and results of operations of Todd-AO before the acquisition by Liberty Media. The
consolidated financial statements for the seven months ended December 31, 2000 represent the consolidated financial condition and results of

32

---

operations of the Company after giving effect to the Liberty Media merger. For financial statement purposes, the acquisition by Liberty Media is deemed to have occurred on June 1, 2000.

2.  SIGNIFICANT ACCOUNTING POLICIES

Cash and cash equivalentsThe Company considers investments with original purchased maturities of
three months or less to be cash equivalents.

Marketable securities and investmentsMarketable securities consist primarily of corporate preferred stocks and bonds.
Management has classified all investment securities as available-for-sale. As a result, securities are reported at fair value with net unrealized holding gains and losses
excluded from earnings
and reported in stockholders' equity. Fair value is based upon quoted market prices using the specific identification method. Investments include stock and other investments which management intends
to hold for more than one year.

Property and equipmentProperty and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation and amortization are computed at straight-line rates based upon the estimated useful lives of the various classes of assets. The principal rates are as follows: buildings,
3-5% per annum; equipment, 10-20% per annum; leaseholds, leasehold improvements, and lease acquisition costs over the term of the lease.

GoodwillGoodwill represents the excess purchase price paid over the value of net assets acquired, and is being amortized
on a straight-line basis over useful lives of 20 years.

IntangiblesIntangible assets consist of the following:

(In thousands)

December 31,
2000Assembled workforce

$
29,580Employment agreements


10,850Covenants not to compete


10,930Tradenames


2,61053,970Accumulated amortization


(4,945
)Intangible assets, net

$
49,025


Intangible
assets of the Company are amortized on a straight-line basis over their estimated useful lives as follows:

Assembled workforce

5 yearsEmployment agreements

5 yearsCovenants not to compete

3 to 5 yearsTradenames

20 years


Long-LivedAssetsManagement continuously monitors and evaluates the realizability of its
long-lived assets, to determine whether their carrying values have been impaired. In evaluating the value and future benefits of long-term assets, their carrying value is
compared to management's best estimate of undiscounted future cash flows over the remaining amortization period. Management also considers events or changes in circumstances, which indicate that an
asset may not be recoverable. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the estimated
fair value of the assets.

As
a result of the Company's recent investment in advanced digital technologies and the acceleration in demand by the marketplace for these advanced technologies, certain older
composite

33

---

digital and analogue-based technologies have experienced a significant reduction in demand. In fiscal year 1998 the Company recorded an impairment loss based on an appraisal of this older equipment in
the amount of $2,414. In addition, a lease impairment cost of $353 was also recognized in 1998 due to the loss of a beneficial option in the renegotiation of a building lease.

Income taxesThe Company accounts for income taxes under Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109"). SFAS 109 is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, SFAS 109 generally considers all expected future
events other than proposed changes in the tax law or rates.

Foreign currency translationThe Company's foreign subsidiary's functional currency is its local currency. Assets and
liabilities of foreign operations are translated into U.S. dollars using current exchange rates,
and revenues and expenses are translated into U.S. dollars using average exchange rates. The effects of the foreign currency translation adjustments are deferred and are included in stockholders'
equity as a component of comprehensive income (loss).

Net income per common shareThe Company adopted Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings Per Share" ("EPS"), during the year ending August 31, 1998. Under SFAS No. 128, "Basic" EPS is computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period. "Diluted" EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or
converted into common stock. When dilutive, stock options are included as share equivalents in computing diluted earnings per share using the treasury stock method.

During
a loss period the assumed exercise of in-the-money stock options has an antidilutive effect. As a result of the loss for the five months ended
May 31, 2000 and the loss for the seven months ended December 31, 2000, stock options representing 719,739 and 332,920 shares of potential common stock, respectively, were excluded from
the calculation. Additionally, out-of-the money options to purchase approximately 543,000 and 365,000 shares of common stock were outstanding during fiscal years ended
August 31, 1998 and 1999, respectively. They were excluded from the computation of diluted income per share as they would have been antidilutive. For the year ended August 31, 1999,
debentures convertible into 643,341 shares of common stock were excluded from the computation of diluted income per share as they were antidilutive.

Fair value of financial instrumentsThe carrying amounts of cash and cash equivalents, accounts receivable and accounts
payable approximate fair value because of the short-term maturity of these instruments. Notes payable are carried at amounts approximating fair values based on current rates offered to the
Company for debt with similar collateral and maturities.

The
Company has only limited involvement with derivative financial instruments and does not use them for trading purposes. They are used to manage well-defined interest
rate risks.

Effective
December 28, 2000 the Company entered into a one-year interest rate swap agreement with Bank of America, N.A. for a notional amount of $365 million
to hedge the impact of fluctuations in interest rates on its floating rate credit facility. Under the agreement, the Company is obligated to pay 6.03% in exchange for receiving three-month LIBOR on
the notional amount. Settlements are quarterly and the contract expires December 28, 2001.

The
Company intends for this instrument to partially hedge the exposure to variability in future cash flows by exchanging variable rate debt for fixed rate debt, which under SFAS
No. 133 "Accounting for Derivative Instruments and Hedging Activities" qualifies for consideration as a cash flow hedge. Hedge effectiveness must be measured by comparing changes in the
intrinsic value of the derivative instrument to the changes in the expected future cash flows on the debt in order to apply hedge

34

---

accounting under SFAS No. 133. To maintain effectiveness, the cumulative change between the hedged item and the derivative instrument must be within 80 to 125% using the cumulative dollar
offset method. The Company will evaluate the hedge effectiveness on an ongoing basis.

Concentration of credit risk and significant customersThe Company's accounts receivable are related primarily to the
entertainment industry and are unsecured.

On
a consolidated basis, the Company's ten largest customers account for approximately 25% of revenues for the seven months ended December 31, 2000. No single customer
accounted for more than 4% of revenues. The Walt Disney Company and its affiliated companies and MGM accounted for approximately 21% and 12%, respectively, of the total revenue for the Content
Management segment of the Company for the seven months ended December 31, 2000. DirecTV, MTV, and TVN accounted for approximately 22%, 19%, and 18%, respectively, of the total revenue for the
Content Distribution segment of the Company for the same period. No single customer accounted for more than 10% of the total revenue in any other segment of the Company.

Prior
to the acquisition of Todd-AO, the Walt Disney Company and its affiliated companies was the only customer to account for more than 10% of revenues. They accounted
for approximately 16% and 15% of revenues for the years ended August 31, 1999 and 1998, respectively.

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

Stock-Based CompensationIn fiscal 1998, the Company adopted the disclosure only provision of SFAS No. 123,
"Accounting for Stock-Based Compensation". The Company continues to account for its stock compensation arrangements using the intrinsic value method in accordance with Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees" including related interpretations.

Change in Accounting PrincipleThe Company adopted the Statements of Position (SOP) No. 98-5 "Reporting
on the Costs of Start-Up Activities" during fiscal year 1999. The effect of the adoption was to record an expense, net of tax, of $293 in fiscal year 1999.

Comprehensive IncomeIn fiscal year 1999, the Company adopted Statement of SFAS No. 130, "Reporting Comprehensive
Income." This statement establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements.

ReclassificationsCertain reclassifications have been made to the prior years' consolidated financial statements to conform
with the current year's presentation.

Recent Issued Accounting PronouncementsIn June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities". In July 1999 the FASB issued SFAS No. 137, "Deferral of the Effective Date of FASB Statement No. 133" which deferred the effective
date of SFAS No. 133 to no later than January 1, 2001 for the Company's financial statements. SFAS No. 133 requires companies to record derivatives on the balance sheet at fair
value. Changes in the fair values of those derivatives would be reported in the earnings or other comprehensive income depending on the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in achieving offsetting changes in fair value of assets or liabilities or cash flows from
forecasted transactions. In June 2000, the FASB issued SFAS No. 138, "Accounting For Certain Derivative Instruments and Certain Hedging Activities", an amendment of SFAS No. 133.
The Company does not believe the adoption of SFAS No. 133 will have any effect on the Company's financial position or results of operations.

35

---

3.  ACQUISITIONS

On May 8, 1998, Todd Europe, a wholly owned United Kingdom subsidiary of the Company, purchased substantially all of the outstanding shares of
Tele-Cine Cell Group plc. ("TeleCine"), a U.K. corporation. The purchase price of the shares was $17,948 (£11,011); $15,741 was paid in cash and $2,207 was represented by
unsecured notes bearing interest at a fixed rate of interest of 4.5% payable annually in arrears. The purchase price includes $495 paid by Todd Europe for costs incurred in connection with
the acquisition. TeleCine is a London based facility that specializes in video post-production and special effects providing services to the film and television industries.

TeleCine
recorded against acquisition reserves equipment abandonment charges of $1,229, severance and related payments of $205 and other charges of $561 from the date of acquisition
to August 31, 1998 and severance and related payments of $249, lease payments for unused equipment of $481 and other charges of $217 for the year ended August 31, 1999. During the fiscal
year ended August 31, 1999, $851 of acquisition reserves no longer required was credited to goodwill.

In
June 1999, all the issued and outstanding shares of Sound One Corporation ("Sound One"), a New York corporation, were acquired by the Company through a Merger Agreement
signed June 8, 1999. Todd-AO East, Inc., an indirect wholly owned subsidiary of the Company was merged into Sound One extinguishing all of the issued and outstanding shares
of common stock of Sound One in exchange for a cash consideration of $11.50 per share. In consideration of the purchase, the Company paid $11,962 in cash for the common stock and an additional $353 in
cash for costs incurred in connection with the acquisition. In addition, $800 is represented by non-compete agreements. Sound One is the leading post production sound facility in New York
servicing the entertainment industry.

On
April 7, 2000, Liberty Media acquired 4MC for $123.3 million in cash plus 3,182,300 shares of LMGA stock valued at $137.7 million, converted 4MC vested options
into stock appreciation rights valued at $52.9 million, and issued a warrant valued at $7.8 million. The total consideration was allocated based on the preliminary fair values of the
assets and liabilities acquired with the excess consideration of $270.7 million recorded as goodwill and $19.8 million as identifiable intangible assets. On May 31, 2000, 4MC
acquired six entities from the Virgin Media Group Limited ("Virgin") for $39.5 million in cash. The consideration was allocated based on the preliminary fair values of the assets and
liabilities acquired with the excess consideration of $21.1 million recorded as goodwill.

On
June 9, 2000 Liberty Media contributed all of the issued and outstanding shares of 4MC to the Company in exchange for 16,614,952 shares of the Livewire's Class B
Common Stock, valued at $279.7 million pursuant to a Contribution Agreement between Liberty Media and the Company. The assets and liabilities of 4MC (including Virgin) were recorded based on
Liberty Media's historical values, which includes the effect of Liberty Media's acquisitions of 4MC and Virgin. 4MC provides technical and creative services to producers and distributors of television
programming, television commercials, feature films and other entertainment content, as well as to owners of film and television libraries. 4MC's California facilities are located in Los Angeles,
Culver City, Burbank and Santa Monica. It has international facilities in Mexico City, London and Singapore.

In
July 2000 a wholly owned subsidiary of Liberty Media ("Liberty Sub"), acquired the post-production content and sound editorial businesses of SounDelux
Entertainment Group of Delaware, Inc.
("SounDelux") for $90.0 million in cash. Immediately following the closing of this asset purchase, Liberty Media contributed 100% of its ownership interests in Liberty Sub to the Company in
exchange for 8,181,818 shares of Livewire's Class B Common Stock pursuant to a previously negotiated contribution agreement between Liberty Media and Livewire. The contribution was allocated
based on the preliminary fair values of the assets and liabilities acquired with the excess consideration of $70.1 million recorded as goodwill and $10.7 million as identifiable
intangible assets. SounDelux provides services to the motion picture sound design and sound editing industry and has an audio post-production business encompassing a range of sound and
music services for feature films, television,

36

---

cable, advertising and new media. Services provided include sound supervision, design and editorial, music supervision, editorial and temporary scores and mixing, re-recording, scoring,
ADR and Foley. SounDelux's content, technology development and distribution segment commercializes and markets its proprietary entertainment content and technologies that include audio books, sound
effects and SounDelux Microphones. SounDelux is located in Los Angeles and San Francisco, California.

In
July 2000 the Company acquired Triumph Communications Group ("Triumph") for $5.7 million in cash and 705,554 shares of Livewire Class A common stock, which had
an aggregate market value at the time of issuance of $44.6 million. The consideration was allocated based on the preliminary fair values of the assets and liabilities acquired with the excess
consideration of $53.5 million recorded as goodwill and $3.2 million as identifiable intangible assets. Triumph, located in New York City, designs, engineers and implements video
transmission services for a range of clients including cable networks, broadcasters, news, sports, infomercials, and corporate organizations. Services provided include fiber optic, satellite,
compression system, encoding and encryption, and IRD sales and authorization.

In
August 2000 a wholly owned subsidiary of Livewire, acquired all of the outstanding shares of Soho Group Limited ("Soho") for £17.2 million
($27.2 million), which includes real property in the Soho area of London. The consideration was allocated based on the preliminary fair values of the assets and liabilities acquired with excess
consideration of $9.4 million recorded as goodwill. Soho is one of the oldest post-production companies in the U.K., providing services primarily to the commercial advertising
industry. Services include commercial editing, film laboratory and negative cutting services using a proprietary computerized technology.

In
October 2000 a wholly owned subsidiary of Livewire, acquired all of the outstanding shares of Visiontext Limited ("Visiontext") for £3.7 million
($5.4 million). The consideration was allocated based on the preliminary fair values of the assets and liabilities acquired with excess consideration of $4.3 million recorded as
goodwill. Visiontext is located in London, U.K. and provides sub-titling services to the DVD industry.

In
July 2000, Liberty Media entered into an "Agreement and Plan of Merger" with VSC. Under the Agreement, Liberty Media acquired VSC for $83 million in cash plus
1,441,212 LMGA stock shares and 119,666 LMGA stock options valued at $35.2 million. The total consideration was allocated based on the preliminary fair values of the assets and liabilities
acquired with the excess consideration of $79.7 million recorded as goodwill and $6.1 million as identifiable intangible assets.

On
December 22, 2000, when the VSC acquisition closed, Liberty Media contributed the equity of VSC to Livewire, in exchange for debt on the Liberty Media subordinated line of
credit in the amount of $92.5 million and an additional $8.1 million from Livewire's institutional lender to pay down debt of VSC. Liberty Media contributed capital to Livewire in the
amount of $17.6 million for the balance of the total consideration. VSC provides engineering, production and distribution services for the video and broadcast industries, nationally and
internationally. It has locations in New York, New Jersey, Florida and California.

The
acquisitions have been accounted for under the purchase method of accounting. For all of the above acquisitions, with the exception of Sound One, the allocation of the purchase
price has been recorded based on preliminary estimates. The Company is currently in the process of obtaining additional information, including appraisals in order to finalize the purchase price
allocations. The following unaudited pro forma consolidated financial information for the years ended December 31, 2000 and 1999 is presented as if the acquisitions had occurred on
January 1, 1999. Pro forma adjustments are primarily for amortization of goodwill and other identifiable intangibles, depreciation adjustments, interest expense on borrowings in connection with
the acquisitions, and income taxes. No pro forma adjustments have been included for the pre-acquisition time periods for potential

37

---

fluctuations in the liability recorded for the stock appreciation rights granted in the 4MC acquisition, including effects for market fluctuations or estimates of rights exercised.

2000

1999Revenues

$
574,368

$
561,002Net income (loss)

$
(39,284
)
$
(33,846
)Net income (loss) per common shareBasic

$
(1.14
)
$
(0.94
)Net income (loss) per common shareDiluted

$
(1.14
)
$
(0.94
)


4.  LONG-TERM DEBT

Long-term debt outstanding as of December 31, 2000 and 1999 was as follows:

2000

1999Revolving credit facility

$
193,500

$
57,074Term loans


183,500


Liberty Media convertible notes


92,682


Real property mortgage notes


16,535


5,050Capital lease obligations


13,775


6,040Other


1,126


1,732Total


501,118


69,896Less: current maturities


(8,545
)

(4,030
)Total long-term debt

$
492,573

$
65,866


Aggregate
loan maturities subsequent to December 31, 2000 are as follows:

Fiscal years ending

Totals2001

$
8,5452002


13,4432003


23,8302004


23,2282005


32,587Thereafter


399,486Total

$
501,119


Under
a new long-term credit agreement dated December 22, 2000 with several banks and other financial institutions, including Bank of America, Livewire may borrow
up to $415 million in term and revolving loans. Livewire may add new lenders to the agreement (with the consent of the current lenders) increasing the available borrowings up to an additional
$135 million for a total commitment of $550 million. In the discussion that follows, the $135 million that is subject to additional lenders and consent of current lenders, is
referred to as the "additional commitment". Term loan B has a current commitment of $58.5 million with an additional commitment of $41.5 million available. Term loan B matures on
June 30, 2007. Principal payments begin on June 30, 2001 and are due semi-annually from that date. Each principal installment is 0.5% of the original principal amount with
the remaining 94% due on the maturity date. Term loan A has a current commitment of $125 million with an additional commitment of $25 million available. Term loan B must be fully
extended to its current commitment before the term loan A funds are received. Term loan A matures on December 22, 2006. Principal payments begin on September 30, 2002 and are due
semi-annually. Principal installments range from

38

---

2.5% of the original principal amount in the first year of installments to 21.25% at the maturity date. The revolving credit loans (the "Revolver") have a current commitment of $231.5 million
with an additional commitment of $68.5 million available. The Revolver loans are available from December 28, 2000 through December 21, 2006. The termination date for the Revolver
loans is December 22, 2006. Interest for all the loans is paid quarterly in arrears and is based on the "Alternate Base Rate" or the "Eurodollar Rate", whichever is applicable to the loan, plus
margins based on the leverage ratio as defined in the agreement for term A and the Revolver loans and defined margins for term B loans. The Alternate Base Rate is a daily fluctuating rate per annum
equal to the higher of the Federal Funds Rate plus 0.5% and the Prime Rate. The Eurodollar Rate is the rate per annum equal to the average
British Bankers Association Interest Settlement Rate for deposits in the relevant currency or an alternate base, as defined in the agreement, if that rate is unavailable. The Revolver is also subject
to a commitment fee of 0.375% to 0.5% per annum subject to the leverage ratio and based on the unused portion of the current commitment. The loans are collateralized by substantially all of the
operating assets of the Company. Material restrictions include: the Interest Coverage Ratio may not be less than 2.5:1 through December 31, 2003 (increasing thereafter); the Fixed Charge
Coverage Ratio may not be less than 1:1 through December 31, 2003 (increasing thereafter); Other Indebtedness may not exceed $75 million; the Leverage Ratio is not to exceed 4.25:1
through June 30, 2002 (decreasing thereafter); Consolidated Operating Cash Flow may not be less than $32 million. The agreement permits debt under the First Amended and Restated Credit
Agreement with Liberty Media of up to $310 million (See note 11).

In
June 2000, the Company, through its indirectly wholly owned subsidiary, TeleCine, Ltd., financed the purchase of a freehold property at 48 Charlotte Street, London,
U.K. with a 10-year mortgage note in the amount of $3.9 million bearing interest at 8.02% per annum. The loan is secured by the property.

In
April 1999, the Company, through its indirectly wholly owned subsidiary, TeleCine, Ltd., financed the purchase of the freehold property at 50/54 Charlotte Street,
London, U.K. with a 10-year term mortgage loan in the amount of $5.2 million. The loan is secured by the property. Equal payments of $105,000 (principal and interest) are due
quarterly based on a 25-year amortization period with the balance of the note due after 10 years. Interest is fixed at 6.7251%. The note contains a minimum net worth requirement of
at least $9 million plus 50% of earnings subsequent to fiscal year 1998.

The
Company exercised its option to purchase for $5,699 equipment leased under a sale/leaseback transaction that matured in December 1999. The purchase was funded by borrowings
under the credit facilities and is payable as a capital lease obligation over two years maturing in December 2002 with interest based on LIBOR.

Livewire
and its subsidiaries have entered into various capital leases related to the purchase of equipment. The capital lease obligations are due at various times through 2004 and
bear interest at rates of 7.74% to 19.4%.

Other
long-term debt consists of notes and obligations acquired in connection with other acquisitions and bearing interest between 9.4% and the prime rate plus
1/4%.

39

---

5.  INCOME TAXES

The Company's effective income tax rate differs from the federal statutory income tax rate due to the following:

|                                                |  | Seven
months
ended
December
31, 2000 |    | Five
months
ended
May 31,
2000 |   | Four
months
ended
December
31, 1999 |    | Year
ended
August
31,
1999 |   | Year
ended
August
31,
1998 |  
|----------------------------------------------- |  | ------------------------------------ | -- | ------------------------------ | - | ----------------------------------- | -- | -------------------------- | - | -------------------------- | -
|Federal statutory income tax rate               |  | 35.0                                 | %  | 35.0                           | % | 35.0                                | %  | 35.0                       | % | 35.0                       | %
|Adjust to actual Company rate                   |  | 0                                    |    | (1.0                           | ) | (1.0                                | )  | (1.0                       | ) | (1.0                       | )
|                                                |  |                                      |    |                                |   |                                     |    |                            |   |                            |  
|Adjusted federal statutory income tax rate      |  | 35.0                                 |    | 34.0                           |   | 34.0                                |    | 34.0                       |   | 34.0                       |  
|State and foreign taxes, net of federal benefit |  | (8.5                                 | )  | (10.2                          | ) | (48.6                               | )  | 0.0                        |   | (6.8                       | )
|Non-deductible goodwill amortization            |  | (86.2                                | )  | (1.8                           | ) | 0                                   |    | 0                          |   | 0                          |  
|Other, net                                      |  | (0.5                                 | )  | (4.0                           | ) | (1.1                                | )  | 1.7                        |   | (0.7                       | )
|                                                |  |                                      |    |                                |   |                                     |    |                            |   |                            |  
|Total                                           |  | (60.2                                | )% | 18.0                           | % | (15.7                               | )% | 35.7                       | % | 26.5                       | %
|                                                |  |                                      |    |                                |   |                                     |    |                            |   |                            |  

Deferred
income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to
affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for
the period plus or minus the change during the period in deferred tax assets and liabilities.

Components
of the income tax provision are as follows:

|                  |          | Seven Months
Ended
December 31,
2000 |         | Five Months
Ended May 31, 2000 |   | Four Months
Ended
December 31,
1999 |      | Year Ended
August 31,
1999 |      | Year Ended
August 31,
1998 |  
|----------------- | -------- | ------------------------------------ | ------- | ------------------------------ | - | ----------------------------------- | ---- | -------------------------- | ---- | -------------------------- | -
|Currentdomestic  |          | $                                    | (11,487 | )                              | $ | 0                                   |      | $                          | (411 | )                          | $
|Deferreddomestic |          |                                      | (282    | )                              |   | (633                                | )    |                            | 122  |                            |  
|                  |          |                                      |         |                                |   |                                     |      |                            |      |                            |  
|                  | Domestic |                                      |         | (11,769                        | ) |                                     | (633 | )                          |      | (289                       | )
|Currentforeign   |          |                                      | 2,295   |                                |   | 646                                 |      |                            | 433  |                            |  
|Deferredforeign  |          |                                      | 13,153  |                                |   | (454                                | )    |                            | 0    |                            |  
|                  |          |                                      |         |                                |   |                                     |      |                            |      |                            |  
|                  | Foreign  |                                      |         | 15,448                         |   |                                     | 192  |                            |      | 433                        |  
|                  |          |                                      |         |                                |   |                                     |      |                            |      |                            |  
|Total             |          | $                                    | 3,679   |                                | $ | (441                                | )    | $                          | 144  |                            | $
|                  |          |                                      |         |                                |   |                                     |      |                            |      |                            |  

40

---

Deferred
income tax assets and liabilities consist of the following:

|                                     |                                   | December 31,
2000 |         | December 31,
1999 |  
|------------------------------------ | --------------------------------- | ----------------- | ------- | ----------------- | -
|Current assets:                      |                                   |                   |         |                   |  
|                                     | Accounts receivable reserves      |                   | $       | 2,648             |  
|                                     | Accrued liabilities               |                   |         | 5,240             |  
|                                     | Lease obligations                 |                   |         | 0                 |  
|                                     | Other                             |                   |         | 303               |  
|                                     |                                   |                   |         |                   |  
|Total current assets                 |                                   | $                 | 8,191   |                   | $
|                                     |                                   |                   |         |                   |  
|Long-term assets:                    |                                   |                   |         |                   |  
|                                     | Deferred compensation             |                   | $       | 1,206             |  
|                                     | Net operating loss carryovers     |                   |         | 17,937            |  
|                                     | FASB 115 marketable securities    |                   |         | 1,455             |  
|                                     | State income tax credit carryover |                   |         | 2,268             |  
|                                     | Other                             |                   |         | 4,991             |  
|                                     |                                   |                   |         |                   |  
|Total long-term assets               |                                   |                   | 27,857  |                   |  
|Valuation allowance                  |                                   |                   | (2,726  | )                 |  
|                                     |                                   |                   |         |                   |  
|Total deferred tax assets, net       |                                   |                   | 33,322  |                   |  
|                                     |                                   |                   |         |                   |  
|Current liabilities:                 |                                   |                   |         |                   |  
|                                     | Prepaids                          |                   |         | (895              | )
|                                     | Other                             |                   |         | (2,555            | )
|                                     |                                   |                   |         |                   |  
|Total current liability              |                                   |                   | (3,450  | )                 |  
|Long-term liability:                 |                                   |                   |         |                   |  
|                                     | Depreciation                      |                   |         | (8,603            | )
|                                     | Identifiable intangibles          |                   |         | (21,121           | )
|                                     | Other                             |                   |         | (2,364            | )
|                                     |                                   |                   |         |                   |  
|Total long-term liability            |                                   |                   | (32,088 | )                 |  
|                                     |                                   |                   |         |                   |  
|Total deferred tax liabilities       |                                   |                   | (35,538 | )                 |  
|                                     |                                   |                   |         |                   |  
|Net long-term deferred tax liability |                                   | $                 | (2,216  | )                 | $
|                                     |                                   |                   |         |                   |  

At
December 31, 2000, the Company has $43.3 million and $61.1 million in net operating loss carryforwards for federal and state tax purposes, respectively. These
net operating losses begin to expire in the year 2019 for federal purposes and 2004 for state purposes. In addition, the Company has $.6 million and $2.5 million of income tax credits
for federal and state purposes with no expiration date.

On
the date of acquisition, the Company's net operating loss carryforwards are subject to the change in control provisions of Internal Revenue Code Section 382. The limitations
on the net operating loss carryforwards do not have a significant impact on the availability and utilization of the losses.

6.  STOCKHOLDERS' EQUITY

On June 9, 2000, in connection with the Todd Merger, the Company amended and restated in its entirety its Certificate of Incorporation. Under the prior
Certificate of Incorporation, the Company was authorized to issue 37,000,000 shares of capital stock, consisting of 30,000,000 shares of Class A
Common Stock ("Old Class A Stock"), 6,000,000 shares of Class B Common Stock ("Old Class B Stock") and 1,000,000 shares of preferred stock. Under the Restated Certificate of
Incorporation, the

41

---

total number of shares of capital stock authorized to be issued was increased to 405,000,000. 400,000,000 of the authorized shares are designated common stock ("Common Stock") and 5,000,000 are
designated preferred stock ("Preferred Stock"). Of the total amount of authorized Common Stock, 300,000,000 shares have been designated as Class A Common Stock and 100,000,000 shares have been
designated as Class B Common Stock. All the shares of Common Stock and Preferred Stock will have a par value of $.01 per share. Class A Common Stock shareholders are entitled to one vote
per share and Class B Common Stock shareholders are entitled to ten votes per share. In all other respects, the Class A and B Common Stock are substantially identical and have equal
rights and privileges.

On
June 9, 2000, pursuant to the Restated Certificate of Incorporation, each outstanding share of Old Class A Stock and Old Class B Stock was converted into or
reconstituted as four-tenths (0.40) of a share of Class A Common Stock and six-tenths (0.60) of a share of Class B Common Stock.

7.  STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

Stock Options

The Company had five stock option plans: The 1986, 1994, 1995, and 1997 Stock Option Plans and the 1998 Stock Incentive Plan. No stock options or shares were
issued from the 1998 Plan. These plans provided for the granting of either non-qualified or incentive stock options at not less than 85% and 100% of the market value of the stock on the
date of the grant, respectively. Options generally became exercisable in installments commencing as of the beginning of a fiscal year near the date of grant.

On
December 10, 1998, the Company granted to all option holders a one-time re-pricing adjustment with respect to all options outstanding with exercise
prices in excess of the $8.00 per share market value determined as of that date. Option holders electing to reduce the exercise price of their share options agreed to reduce the number of their
affected option shares outstanding by the same ratio as the price reduction.

Pursuant
to the Todd Merger on June 9, 2000, each outstanding Todd-AO stock option under all plans became fully vested and was converted into a rollover option to
purchase 0.5 of a LMGA share and 0.4 of a Livewire Class A share. All of such converted options automatically expired six months from the acquisition date of June 9, 2000.

A
Stock Option Fulfillment Agreement ("Agreement") was executed between Liberty Media and Livewire as of June 10, 2000 to create a mechanism for Livewire to fulfill its
obligations under the rollover options as they pertain to shares of LMGA.

Pursuant
to the Agreement, Livewire purchased LMGA stock on the open market to fulfill the .5 LMGA share portion of the options exercised. To fund such purchases, Liberty Media
contributed cash to Livewire equal to (i) the number of LMGA shares delivered pursuant to the rollover option electionstimes(ii) the
average of the high and low price per LMGA shares during the day the rollover option was exercised (iii)lessa pro rata share of proceeds
received from the option holder. In consideration for such capital contributions, Livewire issued shares of Livewire's Class B Common Stock in an amount equal to (i) the number of LMGA
shares deliverable upon exercise,times(ii) 1.2.

During
the seven months ended December 31, 2000, 830,871 Todd-AO converted options were exercised for 332,348 shares of Livewire Class A shares. For the
funding of the LMGA shares to the option holders, 296,038 shares of Livewire Class B shares have been issued to Liberty Media valued at $5.1 million as consideration for payments made to
Livewire for the purchase of LMGA stock on the open market. A gain of $836,000 has been included in the statement of income based on the decrease in LMGA stock price between the date of option
exercises and the date the LMGA shares were purchased by Livewire on the open market.

42

---

The following table presents the number and weighted average exercise price of the Todd-AO Stock Options and the Livewire and Liberty Media options that were issued in
exchange for the Todd-AO options:

|                                 |            | Todd-AO
Stock Options |          | Livewire
Class A
Stock Options |          | LMGA
Stock Options |          | Weighted-Average
Exercise Price
|-------------------------------- | ---------- | --------------------- | -------- | ------------------------------ | -------- | ------------------ | -------- | -------------------------------
|At August 31, 1997               |            | 1,665,591             |          | 0                              |          | 0                  |          | $                              
|                                 | Awarded    |                       | 96,000   |                                | 0        |                    | 0        |                                
|                                 | Exercised  |                       | (96,206  | )                              | 0        |                    | 0        |                                
|                                 | Forfeited  |                       | (31,984  | )                              | 0        |                    | 0        |                                
|                                 |            |                       |          |                                |          |                    |          |                                
|At August 31, 1998               |            | 1,633,401             |          | 0                              |          | 0                  |          | $                              
|                                 | Awarded    |                       | 70,500   |                                | 0        |                    | 0        |                                
|                                 | Exercised  |                       | (274,080 | )                              | 0        |                    | 0        |                                
|                                 | Forfeited  |                       | (53,696  | )                              | 0        |                    | 0        |                                
|Forfeited due to repricing       |            | (176,775              | )        | 0                              |          | 0                  |          |                                
|                                 |            |                       |          |                                |          |                    |          |                                
|At August 31, 1999               |            | 1,199,350             |          | 0                              |          | 0                  |          | $                              
|                                 | Awarded    |                       | 17,000   |                                | 0        |                    | 0        |                                
|                                 | Exercised  |                       | (183,735 | )                              | 0        |                    | 0        |                                
|                                 | Forfeited  |                       | (3,970   | )                              | 0        |                    | 0        |                                
|                                 |            |                       |          |                                |          |                    |          |                                
|At December 31, 1999             |            | 1,028,645             |          | 0                              |          | 0                  |          | $                              
|                                 | Awarded    |                       | 15,000   |                                | 0        |                    | 0        |                                
|                                 | Exercised  |                       | (152,318 | )                              | 0        |                    | 0        |                                
|                                 | Forfeited  |                       | (41,936  | )                              | 0        |                    | 0        |                                
|                                 |            |                       |          |                                |          |                    |          |                                
|At June 9, 2000                  |            | 849,391               |          | 0                              |          | 0                  |          | $                              
|                                 | Conversion |                       | (849,391 | )                              | 339,756  |                    | 424,696  |                                
|                                 | Exercised  |                       | 0        |                                | (332,348 | )                  | (415,436 | )                              
|                                 | Forfeited  |                       | 0        |                                | (7,408   | )                  | (9,260   | )                              
|                                 |            |                       |          |                                |          |                    |          |                                
|At December 31, 2000             |            | 0                     |          | 0                              |          | 0                  |          | $                              
|                                 |            |                       |          |                                |          |                    |          |                                
|Exercisable at December 31, 2000 |            | 0                     |          | 0                              |          | 0                  |          |                                
|                                 |            |                       |          |                                |          |                    |          |                                

FASB 123 Accounting for Stock Based CompensationStock Options

The Company has adopted the disclosure-only provisions of SFAS 123. The estimated fair value of options granted during the five months ended
May 31, 2000, four months ended December 31, 1999, the year ended August 31, 1999, and the year ended August 31, 1998 pursuant to SFAS 123 was approximately $52,000,
$77,000, $490,000, and $343,000, respectively. There were no options granted during the seven months ended December 31, 2000. The fair value of each option grant was estimated using the
Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield of 0.40%-0.75%, volatility of 25%, a risk free interest rate of 5.65% for May 31,
2000, 5.12% for the four months ended December 31, 1999, 4.95% for August 31, 1999, and 5.05% for August 31, 1998 and expected option lives of 5 to 9 years. Had the Company
accounted for its stock based compensation pursuant to the fair value based accounting method in SFAS No. 123, the

43

---

Company's net income (loss) and net income (loss) per share would have changed to the pro forma amounts indicated below:

|                            |                     | Livewire |   | Todd-AO
|--------------------------- | ------------------- | -------- | - | -------
|
|Net income (loss)           |                     |          |   |        
|                            | As reported         |          | $ | (9,793 
|                            |                     |          |   |        
|                            | Pro forma           |          | $ | (9,793 
|                            |                     |          |   |        
|Net income (loss) per share |                     |          |   |        
|                            | As reported basic   |          | $ | (.28   
|                            |                     |          |   |        
|                            | Pro forma basic     |          | $ | (.28   
|                            |                     |          |   |        
|                            | As reported diluted |          | $ | (.28   
|                            |                     |          |   |        
|                            | Pro forma diluted   |          | $ | (.28   
|                            |                     |          |   |        

Stock Appreciation Rights

Pursuant to the acquisition of 4MC by Liberty Media each outstanding 4MC stock option was converted into a stock appreciation right ("SARs") at a ratio 0.32258
shares of LMGA stock for each 1.0 share of 4MC stock. Upon the election to exercise, holders of vested SARs have the option of receiving any net cash appreciation of LMGA stock over the exercise price
in cash or shares of LMGA stock.

The
following table presents the number and weighted average exercise price of SARs to purchase LMGA stock for the seven months ended December 31, 2000.

LMGA SARs

Weighted-Average
Exercise PriceConverted SARs at June 9, 2000

3,856,112

$
12.50Exercised

591,839


11.59At December 31, 2000

3,264,273


12.66Exercisable at December 31, 2000

2,584,009

$
12.56


Exercise
prices for SARs outstanding at December 31, 2000 ranged from $.53 to $15.50 and the weighted average remaining contractual life was 7.6 years.

Summarized
information about the outstanding SARs at December 31, 2000 is as follows:

|Range of
Exercise Prices |                | Number of
Outstanding at
December 31, 2000 |           | Weighted-Average
Remaining
Contractual Life |           | Weighted-Average
Exercise Price |   | Number
Exercisable at
December 31, 2000 |  | Weighted-Average
Exercise Price
|------------------------ | -------------- | ------------------------------------------ | --------- | ------------------------------------------- | --------- | ------------------------------- | - | --------------------------------------- |  | -------------------------------
|$                        | .53            |                                            | 5,998     |                                             | 5.8 years |                                 | $ | .53                                     |  | 5,998                          
|$                        | 10.08 to 12.98 |                                            | 2,760,118 |                                             | 7.8 years |                                 | $ | 12.32                                   |  | 2,301,527                      
|$                        | 13.37 to 15.50 |                                            | 498,157   |                                             | 7.3 years |                                 | $ | 14.73                                   |  | 276,484                        
|                         |                |                                            |           |                                             |           |                                 |   |                                         |  |                                
|$                        | .53 to 15.50   |                                            | 3,264,273 |                                             | 7.6 years |                                 | $ | 12.66                                   |  | 2,584,009                      

44

---

The accrued expense for SARs recorded by Liberty Media at the acquisition of 4MC was $52.9 million. The accrued expense at June 9, 2000 assumed under the Contribution
Agreement between Liberty Media and the Company was $30.8 million. The accrued expense at December 31, 2000 is $979,000. The consolidated statement of income for the seven months ended
December 31, 2000 reflects a credit adjustment of $29.6 million due to the decline in the stock price underlying the SARs. Upon delivery of an exercise notice to the Company by a
participant in the option plan, the Company forwards such notice to Liberty Media. Liberty Media processes the exercise notice. If the participant has elected a cash settlement for the options,
Liberty Media will remit funds equivalent to the difference between the LMGA share price established by a ten day trailing average as of the day prior to the exercise and the exercise price for the
participant's options multiplied by the number of shares exercised. If the participant elects to receive LMGA shares directly, the participant will remit to the Company a payment equivalent to the
exercise price for the participant's options multiplied by the number of shares exercised. Liberty Media will issue shares directly to the participant equivalent to the number of shares exercised.

Unearned Stock Compensation

Pursuant to the Todd-AO Merger, the Company entered into a consulting agreement with an executive of Todd-AO. The consulting agreement
provides for the grant of 150,000 options of LMGA stock that vest 50,000 per year over three years beginning June 9, 2000. The fair value of the stock options recorded as unearned stock
compensation on the date of the Todd AO Merger was $2,858,000. The Company recorded $127,000 of stock compensation expense for the seven months ended December 31, 2000 based on the fluctuation
in the stock price underlying the options and the unearned stock compensation balance was adjusted to $273,000 as of December 31, 2000.

8.  COMMITMENTS

Operating LeasesRent expense for noncancellable operating leases for real property and equipment
was $13,950, $8,242 and $6,524 for the years ended December 31, 2000, August 31, 1999 and 1998, respectively.

Minimum
rentals for operating leases for years ending after December 31, 2000 are as follows: 2001, $23,281; 2002, $21,520; 2003, $18,055; 2004, $16,158; 2005, $15,569; and
$52,503, thereafter. Some of the leases have options to extend terms and are subject to escalation clauses.

Capital LeasesMinimum rentals for capital leases for years ending after December 31, 2000 are as follows: 2001,
$7,385; 2002, $5,966; 2003, $2,265; 2004, $18. Included in the minimum rentals for capital leases is interest in the amount of $1,859.

Employment AgreementsAt December 31, 2000, the Company is committed to compensation under long-term
employment agreements with certain of its officers and key employees as follows: 2001, $2,574; 2002, $2,082; 2003, $1,857; 2004 $350; and 2005, $350.

9.  CONTINGENCIES

The Company is involved in litigation and similar claims incidental to the conduct of its business. In management's opinion, none of the pending actions is
likely to have a material adverse impact on the Company's financial position or results of operations.

10. BUSINESS SEGMENT INFORMATION

Since the change in control of the Company pursuant to the Todd Merger in June 2000, the Company's business units have been aggregated into four
reportable operating segments: Content Preparation, Content Management, Content Distribution and Europe. The Audio Services, Entertainment Television and Commercial Television Divisions, which make up
the Content Preparation segment, provide the technical and creative services necessary to conform original film or video

45

---

principal photography into a final product suitable for the public. These are the more traditional post-production services such as creating music and sound effects, as well as visual
effects. State-of-the-art facilities and equipment are used to digitally create or manipulate sounds and images in high-resolution formats for
integration into feature films, television shows and television commercials. The Content Management segment primarily consists of the Library Services Division, which provides the formatting,
archiving, storage and maintenance of master copies of original film and videotape. In addition, this segment restores damaged content, transfers and converts film to video (and vice versa), provides
audio layback and standards conversion, and professional duplication. The segment facilitates the worldwide distribution of content in formats ranging from HDTV to streaming media. The Content
Distribution segment consists of the Broadcast Services Division which provides the facilities and services necessary to assemble and distribute programming content for cable and broadcast networks
via freight, fiber, satellite and the Internet to viewers in North America, Europe and Asia. These services principally
include production, on-air promotion, language translation, assembly, origination and distribution, fiber transport, uplink and satellite transponder services and video equipment rentals.
The Company maintains a separate segment and management structure for its European/United Kingdom ("UK") activities because of the size and scope of these operations. The various operations are
grouped according to function and client base, and are tightly linked to the Company's other major operating segments. The Other column includes corporate related items and income and expenses not
allocated to reportable segments. The Company's reportable operating segments have been determined in accordance with the Company's internal management structure, which is organized based on operating
activities. The Company evaluates performance based upon several factors, including segment income (loss) before income taxes, interest, depreciation and amortization of intangibles.

Periods
prior to June 2000 have been restated to conform to the current reportable operating segments.

46

---

Summarized financial information concerning the Company's reportable segments is shown in following tables:

|Livewire                              |                                                                            | Content
Preparation |   | Content
Management |  | Content
Distribution |        | Europe |   | Other   |  | Total
|------------------------------------- | -------------------------------------------------------------------------- | ------------------- | - | ------------------ |  | -------------------- | ------ | ------ | - | ------- |  | -----
|
|Seven Months Ended December 31, 2000: |                                                                            |                     |   |                    |  |                      |        |        |   |         |  |      
|                                      | Revenues                                                                   |                     | $ | 140,666            |  | $                    | 33,326 |        | $ | 19,775  |  | $    
|                                      | Income before income taxes, interest, depreciation and amortization        |                     |   | 30,084             |  |                      | 10,795 |        |   | 1,268   |  |      
|                                      | Capital expenditures                                                       |                     |   | 48,230             |  |                      | 983    |        |   | 8,583   |  |      
|                                      | Depreciation and amortization expense                                      |                     |   | 26,033             |  |                      | 4,579  |        |   | 4,690   |  |      
|                                      |                                                                            |                     |   |                    |  |                      |        |        |   |         |  |      
|Todd-AO                               |                                                                            |                     |   |                    |  |                      |        |        |   |         |  |      
|Five Months Ended May 31, 2000:       |                                                                            |                     |   |                    |  |                      |        |        |   |         |  |      
|                                      | Revenues                                                                   |                     | $ | 32,595             |  | $                    | 6,270  |        | $ |        |  | $    
|                                      | Income (loss) before income taxes, interest, depreciation and amortization |                     |   | 3,247              |  |                      | 1,389  |        |   |        |  |      
|                                      | Capital expenditures                                                       |                     |   | 2,262              |  |                      | 161    |        |   |        |  |      
|                                      | Depreciation and amortization Expense                                      |                     |   | 4,133              |  |                      | 557    |        |   |        |  |      
|Four Months Ended December 31, 1999:  |                                                                            |                     |   |                    |  |                      |        |        |   |         |  |      
|                                      | Revenues                                                                   |                     | $ | 25,422             |  | $                    | 5,034  |        | $ |        |  | $    
|                                      | Income before income taxes, interest, depreciation and amortization        |                     |   | 2,427              |  |                      | 1,466  |        |   |        |  |      
|                                      | Capital expenditures                                                       |                     |   | 2,105              |  |                      | 156    |        |   |        |  |      
|                                      | Depreciation and amortization expense                                      |                     |   | 2,553              |  |                      | 437    |        |   |        |  |      
|Year Ended August 31, 1999:           |                                                                            |                     |   |                    |  |                      |        |        |   |         |  |      
|                                      | Revenues                                                                   |                     | $ | 65,582             |  | $                    | 13,748 |        | $ |        |  | $    
|                                      | Income before income taxes, interest, depreciation and amortization        |                     |   | 6,696              |  |                      | 3,536  |        |   |        |  |      
|                                      | Capital expenditures                                                       |                     |   | 10,085             |  |                      | 4,131  |        |   |        |  |      
|                                      | Depreciation and amortization expense                                      |                     |   | 6,356              |  |                      | 1,252  |        |   |        |  |      
|Year Ended August 31, 1998:           |                                                                            |                     |   |                    |  |                      |        |        |   |         |  |      
|                                      | Revenues                                                                   |                     | $ | 69,428             |  | $                    | 9,715  |        | $ |        |  | $    
|                                      | Income before income taxes, interest, depreciation and amortization        |                     |   | 7,918              |  |                      | 2,279  |        |   |        |  |      
|                                      | Capital expenditures                                                       |                     |   | 17,539             |  |                      | 1,865  |        |   |        |  |      
|                                      | Depreciation and amortization expense                                      |                     |   | 6,067              |  |                      | 1,088  |        |   |        |  |      
|Livewire                              |                                                                            |                     |   |                    |  |                      |        |        |   |         |  |      
|December 31, 2000                     |                                                                            |                     |   |                    |  |                      |        |        |   |         |  |      
|                                      | Identifiable assets                                                        |                     | $ | 301,372            |  | $                    | 6,715  |        | $ | 97,820  |  | $    
|                                      | Intangible assetsnet                                                      |                     |   | 190,413            |  |                      |       |        |   | 141,130 |  |      
|                                      |                                                                            |                     |   |                    |  |                      |        |        |   |         |  |      
|Todd-AO                               |                                                                            |                     |   |                    |  |                      |        |        |   |         |  |      
|December 31, 1999                     |                                                                            |                     |   |                    |  |                      |        |        |   |         |  |      
|                                      | Identifiable assets                                                        |                     | $ | 78,694             |  | $                    | 9,143  |        | $ |        |  | $    
|                                      | Intangible assetsnet                                                      |                     |   | 22,934             |  |                      |       |        |   |        |  |      

47

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The following table reconciles segment income before income taxes, interest, depreciation and amortization to the Company's consolidated net
income:

|                                                                    |  | Livewire |         | Todd-AO |  
|------------------------------------------------------------------- |  | -------- | ------- | ------- | -
|
|
|Income before income taxes, interest, depreciation and amortization |  | $        | 64,563  |         | $
|Depreciation and amortization                                       |  |          | (51,545 | )       |  
|Interest expense                                                    |  |          | (19,132 | )       |  
|Provision for income taxes                                          |  |          | (3,679  | )       |  
|                                                                    |  |          |         |         |  
|Income (loss) before change in accounting principle                 |  |          | (9,793  | )       |  
|Change in accounting principle                                      |  |          |        |         |  
|                                                                    |  |          |         |         |  
|Net income (loss)                                                   |  | $        | (9,793  | )       | $
|                                                                    |  |          |         |         |  

Information
as to the Company's operations in different geographic areas is as follows:

|                                                         |  | Livewire |           | Todd-AO
|-------------------------------------------------------- |  | -------- | --------- | -------
|
|Revenues:                                                |  |          |           |        
|United States                                            |  | $        | 185,520   |        
|United Kingdom                                           |  |          | 59,332    |        
|Mexico                                                   |  |          | 2,649     |        
|Asia                                                     |  |          | 5,598     |        
|                                                         |  |          |           |        
|Total                                                    |  | $        | 253,099   |        
|                                                         |  |          |           |        
|Net income (loss) before change in accounting principle: |  |          |           |        
|United States                                            |  | $        | (14,383   | )      
|United Kingdom                                           |  |          | 3,720     |        
|Mexico                                                   |  |          | 442       |        
|Asia                                                     |  |          | 428       |        
|                                                         |  |          |           |        
|Total                                                    |  | $        | (9,793    | )      
|                                                         |  |          |           |        
|Assets:                                                  |  |          |           |        
|United States                                            |  | $        | 1,001,816 |        
|United Kingdom                                           |  |          | 152,892   |        
|Mexico                                                   |  |          | 5,232     |        
|Asia                                                     |  |          | 15,905    |        
|                                                         |  |          |           |        
|Total                                                    |  | $        | 1,175,845 |        
|                                                         |  |          |           |        

11. RELATED PARTY TRANSACTIONS

In connection with the Todd Merger, Livewire and Liberty Media entered into the Liberty Subordinated Credit Agreement, which was amended and restated on
December 22, 2000. The

48

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agreement provides for aggregate credit commitments of at least $145 million and up to $213.6 million, subject to additional commitments under the Senior Credit Agreement with its
institutional lenders and to the completion of proposed transactions as defined in the agreement. Funds are available at Livewire's option in whole or in part at any time during the 4-year
period June 9, 2000 to June 9, 2004. The notes issued under the Liberty Agreement will be unsecured senior subordinated obligations, ranking junior to Livewire's Senior Credit Agreement
with its institutional lenders. The convertible notes will bear interest at 10% per annum, payable quarterly in arrears either in cash, shares of Livewire's Class B common stock or a
combination thereof, subject to certain limits. To the extent interest is paid in shares of Class B common stock, such shares will be valued at 95% of the trailing ten day average closing price
of the Class A common stock of Livewire on the interest payment date. The notes are convertible at the option of Liberty Media into shares of Livewire's Class B Common Stock at a
conversion price of $10.00 per share.

The
Company filed its own consolidated federal income tax return up to May 31, 2000. Commencing June 1, 2000, the Company is included in the consolidated tax return of
AT&T and is party to a Tax Liability Allocation and Indemnification Agreement entered into with its parent, Liberty Media (the "Tax Sharing Agreement"). The Tax Sharing Agreement is now at the final
stage of documentation but remains subject to approval by the Company's Board of Directors.

The
income tax provision for the Company is calculated based on a hypothetical tax liability determined as if the Company filed a separate tax return.

Under
the Tax Sharing Agreement, the Company will record a current intercompany tax benefit from Liberty Media in periods when it generates taxable losses and such losses are utilized
by Liberty Media to reduce its income tax liability. In periods when the Company generates taxable income, the Company will record current intercompany tax expense. Liberty Media will pay cash to the
Company if the Company becomes disaffiliated for any reason from the combined group that files the joint return and when one of the following occurs: a tax refund is received by Liberty Media that is
determined to relate to amounts paid by Livewire, or the Company has a tax liability under a separate return and had a net cumulative benefit for net operating losses or credits that were utilized by
the Liberty Media Group to the extent of the separate return liability and which would not have expired at the time of the filing of the separate return. Additionally, if the Liberty Media Group does
not own 20% of the voting power (loss of control) of Livewire, Liberty Media will pay Livewire an amount equal to the cumulative net tax benefit utilized by the Liberty Media Group that would not have
expired at the time of loss of control.

12. SUBSEQUENT EVENTS

On February 1, 2001, Livewire acquired substantially all the assets of the business unit known as "Group W Network Services" ("GWNS") from
Viacom, Inc. and certain affiliates of Viacom, for $116.5 million in cash and assumed debt, subject to a post-closing working capital adjustment. Livewire financed the
acquisition of Group W Network Services primarily with a loan under the Liberty Subordinated Credit Agreement and borrowings from Livewire's institutional lenders.

GWNS,
with operations in Stamford, Connecticut, Minneapolis, Minnesota and Singapore, is a leading technical service provider in the broadcast industry, providing a wide array of
program channel origination, studio production, post production, graphics and satellite transmission services to both domestic and international broadcasters. A recent addition to its product line is
a package of Internet-based services that can be provided terrestrially through the Internet and/or via satellite, including streaming video, store and forward, and
video-to-desktop multicasting.

On
January 5, 2001, Livewire entered into an Ownership Interest Purchase Agreement with Livewire, ANS Acquisition Sub, Inc. ("ANS"), a direct wholly owned subsidiary of
Livewire, and Ascent Entertainment Group, Inc. ("AEG"). Liberty Media is the sole stockholder of AEG. Pursuant to the purchase agreement, Ascent Network Services, a division of AEG, contributed
all of its assets to

49

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Livewire Network Services, LLC ("LNS"), a direct wholly owned subsidiary of AEG, ANS purchased a 1% ownership interest in LNS from AEG in exchange for $300,000 in cash, and ANS and AEG entered into
the Operating Agreement of LNS (the "Operating Agreement").

Under
the Operating Agreement, ANS is appointed as manager of LNS. The Operating Agreement also contains a put-call provision, pursuant to which ANS may elect to purchase
from AEG, or AEG may elect to sell to ANS, at certain times during the 2001 calendar year, the remaining 99% of the ownership interests of LNS owned by AEG. The purchase price under the
put-call will be payable in cash and will total $29.7 million plus an additional return on that amount accrued at the annual rate of 10% from the date of the purchase agreement to
the date of acquisition of the 99% interest.

The
existing collective bargaining agreement governing contracts and agreements with members of the Writers Guild of America is due to expire on April 30, 2001. Additionally,
the existing collective bargaining agreement governing contracts and agreements with members of the Screen Actors Guild is set to expire on June 30, 2001. In the event that either or both of
these collective bargaining agreements is allowed to expire and a strike or strikes occur, dependent upon the length of any such strike(s), such strike(s) could have a materially adverse effect on the
operations, cash flows and financial position of the Company during 2001.

13. QUARTERLY FINANCIAL DATA (unaudited)

|Todd-AO
Fiscal Year 8/31/99 |  | Total
Revenues |         | Gross
Profit |   | Net Income
(Loss) |  | Basic
Earnings
(Loss)
Per
Common
Share
Outstanding |        | Diluted
Earnings
(Loss)
Per
Common
Share
Outstanding |  
|--------------------------- |  | -------------- | ------- | ------------ | - | ----------------- |  | -------------------------------------------------- | ------ | ---------------------------------------------------- | -
|First Quarter               |  | $              | 33,947  |              | $ | 4,784             |  | $                                                  | 2,468  |                                                      | $
|Second Quarter              |  |                | 28,388  |              |   | 1,167             |  |                                                    | 897    |                                                      |  
|Third Quarter               |  |                | 28,093  |              |   | 784               |  |                                                    | 62     |                                                      |  
|Fourth Quarter              |  |                | 28,089  |              |   | 569               |  |                                                    | (2,114 | )                                                    |  
|                            |  |                |         |              |   |                   |  |                                                    |        |                                                      |  
|TOTAL                       |  | $              | 118,517 |              | $ | 7,304             |  | $                                                  | 1,313  |                                                      | $
|                            |  |                |         |              |   |                   |  |                                                    |        |                                                      |  
|Transitional Period         |  |                |         |              |   |                   |  |                                                    |        |                                                      |  
|4 months ended 12/31/99     |  | $              | 43,261  |              | $ | 2,098             |  | $                                                  | 449    |                                                      | $
|                            |  |                |         |              |   |                   |  |                                                    |        |                                                      |  

|2000                   |  | Total
Revenues |         | Gross
Profit |   | Net Income
(Loss) |   | Basic
Earnings
(Loss)
Per
Common
Share
Outstanding |         | Diluted
Earnings
(Loss)
Per
Common
Share
Outstanding |  
|---------------------- |  | -------------- | ------- | ------------ | - | ----------------- | - | -------------------------------------------------- | ------- | ---------------------------------------------------- | -
|5 months ended 5/31/00 |  | $              | 53,243  |              | $ | 595               |   | $                                                  | (1,675  | )                                                    | $
|Liberty Livewire       |  |                |         |              |   |                   |   |                                                    |         |                                                      |  
|4 months ended 9/30/00 |  |                | 127,307 |              |   | (1,361            | ) |                                                    | (8,778  | )                                                    |  
|Fourth Quarter         |  |                | 125,792 |              |   | 13,507            |   |                                                    | (1,015  | )                                                    |  
|                       |  |                |         |              |   |                   |   |                                                    |         |                                                      |  
|TOTAL                  |  | $              | 306,342 |              | $ | 12,741            |   | $                                                  | (11,468 | )                                                    | $
|                       |  |                |         |              |   |                   |   |                                                    |         |                                                      |  

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50

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SCHEDULE II

LIBERTY LIVEWIRE CORPORATION  VALUATION AND QUALIFYING ACCOUNTS  (Dollars in thousands)

|Column
A                         |  | Column
B |       | Column
C |   | Column
D |   | Column
E |       | Column
F
|-------------------------------- |  | -------- | ----- | -------- | - | -------- | - | -------- | ----- | --------
|
|Allowance for doubtful accounts: |  |          |       |          |   |          |   |          |       |         
|Year ended August 31, 1998       |  | $        | 562   |          | $ | (28      | ) | $        | 1,220 | (a)     
|                                 |  |          |       |          |   |          |   |          |       |         
|Year ended August 31, 1999       |  | $        | 1,768 |          | $ | (650     | ) | $        | 94    | (b)     
|                                 |  |          |       |          |   |          |   |          |       |         
|4 months ended 12/31/99          |  | $        | 1,215 |          | $ | 96       |   |          |       |         
|                                 |  |          |       |          |   |          |   |          |       |         
|5 months ended 5/31/00           |  | $        | 1,388 |          | $ | (149     | ) |          |       |         
|                                 |  |          |       |          |   |          |   |          |       |         
|7 months ended 12/31/00          |  | $        | 1,239 |          | $ | 493      |   | $        | 3,835 | (c)     
|                                 |  |          |       |          |   |          |   |          |       |         

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