UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------
                                    FORM 10-K



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

                  For the fiscal year ended September 30, 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 1-14234
                         ------------------------------
                        AUDIO VISUAL SERVICES CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                                   13-3466655
  (STATE OR OTHER JURISDICTION                      (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)                  IDENTIFICATION NO.)

111 WEST OCEAN BOULEVARD, SUITE 1110, LONG BEACH, CALIFORNIA        90802
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                          (ZIP CODE)


                                 (562) 366-0620
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

  TITLE OF EACH CLASS                      NAME OF EXCHANGE ON WHICH REGISTERED
  -------------------                      ------------------------------------
 Common Stock, par value $0.01 per share         New York Stock Exchange


SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                      None
                                (Title of Class)

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. / /

As of December  15,  2000,  the  aggregate  market value of voting stock held by
non-affiliates of the registrant was $4,297,655.

As of December 12, 2000,  the  registrant  had  25,018,346  shares of its common
stock, par value $0.01 per share (the "Common Stock"), issued and outstanding.
================================================================================
<PAGE>
                                     PART I

Certain  statements  contained  herein  may  be  deemed  to  be  forward-looking
statements as defined in the Safe Harbor  Provisions  of the Private  Securities
Litigation  Reform Act of 1995.  Forward-looking  statements  involve  known and
unknown risks and uncertainties, which may cause the Company's actual results in
future  periods or plans for future  periods to differ  materially  from what is
currently  anticipated.  Those risks include,  among others, general competitive
factors,  the  Company's  ability to continue  operational  improvements  in its
businesses,  the  Company's  ability to comply with the terms of its bank credit
agreement,  the  seasonality  of the Company's  business,  the resolution of the
shareholder  class action currently  pending against the Company and other risks
and  uncertainties  detailed from time to time in the Company's filings with the
Securities and Exchange Commission. Other factors and assumptions not identified
above were also involved in the derivation of these forward-looking  statements,
and the  failure  of such other  assumptions  to be  realized,  as well as other
factors,  may  also  cause  actual  results  to  differ  materially  from  those
projected.  The Company  assumes no obligation  to update these  forward-looking
statements to reflect actual results, changes in assumptions or changes in other
factors affecting such forward-looking statements.

ITEM 1. BUSINESS

AudioVisual Services Corporation is a leading provider of audiovisual  services,
equipment rentals, staging and meeting services and related technical support to
hotels, event production companies,  trade associations,  convention centers and
corporations  in the USA.  In addition to its United  States  operations,  Audio
Visual  Services  Corporation  has  operations  in  Mexico,  Canada,  the United
Kingdom,  Belgium, Brazil and the Caribbean. As used herein, the terms "AVSC" or
the "Company" refer to Audio Visual Services  Corporation and its  subsidiaries,
and the  references  to a fiscal  year are to the  Company's  fiscal  year ended
September 30 in the referenced year.

Business  activities and events that generate a need for  audiovisual  equipment
rentals,  staging  services and other related  services  include sales meetings,
product launches,  trade shows, training and education of employees and dealers,
conferences   and   stockholder   meetings   and  other   executive   management
presentations  that are used to convey  important  information  about a business
and/or  its  products.  Large  corporate  events  tend not to  occur  regularly,
depending,  for example,  on timing of product  rollouts,  changing  competitive
environments,  the  annual  nature of many trade  shows and shifts in  corporate
strategy, which makes it relatively costly to acquire and maintain the equipment
and services to create and execute these events.  Many companies  therefore look
to engage outside firms to assist in the production of these events.

SERVICES

The  Company  has  two  core  operational  business  divisions,   which  provide
audiovisual  equipment  rentals,  staging  services and other related  services:
Presentation Services and Audio Visual Headquarters.

PRESENTATION  SERVICES is a leading provider of in-house audiovisual services in
hotels,  resorts and conference centers throughout the United States, the United
Kingdom, Belgium, Mexico, Canada, Brazil and the Caribbean.  Currently providing
audiovisual services at over 600 properties, Presentation Services offers a full
range of on-site audiovisual equipment and related services to hotel, resort and
conference  center guests and clients,  including the latest in special  effects
technology - from laser and intelligent  lighting systems to indoor pyrotechnics
and  fiber  optic  curtains,  as  well  as  video  conferencing.   In  addition,
Presentation  Services  operates business centers under the trade name EXECUTIVE
EXPRESS in many of the hotel and resort properties in which it maintains on-site
operations.

AUDIO VISUAL HEADQUARTERS,  commonly known in the trade industry as "AVHQ", is a
leading provider of high-end audiovisual equipment rentals with approximately 35
offices  throughout the United States.  Its services include providing  complete
audiovisual  and  technical  support  to  meetings,   conventions,   tradeshows,
corporate  theater,  large  presentations and entertainment  events. The Company
believes  that AVHQ is unique to the  audiovisual  industry in the United States
because of its  ability to serve  clients on a  national  basis.  The  Company's
Rental Services division (which provides drop-off audiovisual  equipment rentals
on an as-needed basis) was recently integrated into AVHQ's operations.

CLIENTS

PRESENTATION  SERVICES  client base primarily  consists of hotels and conference
centers with sufficient  meeting space to accommodate  group meetings and events
with  attendees  numbering  up  to  10,000.  These  events  utilize  audiovisual
equipment  provided  for by an  on-site  inventory  and  staff of  managers  and
technicians.  The Company currently  provides audio visual services,  both on an
exclusive  and  non-exclusive  basis,  at  major  hotel  and  resort  facilities
including,  properties owned, operated and/or franchised by Hyatt, Hilton, Omni,
Sheraton, Westin, Doubletree, Red Lion, Loews,  Inter-Continental,  Crown Plaza,
Holiday Inn as well as major independent  properties.  In addition,  the Company
has entered into national agreements with Omni Hotels,  Hilton Hotels,  Starwood
Hotels and Resorts,  KSL Recreation  Corporation,  Inter-Continental  Hotels and
Meristar H & R Operating  Company L.P.,  pursuant to which such  companies  have
agreed to promote the Company's  audiovisual  outsourcing services to properties
operated, managed and/or franchised under their respective flags.



                                                                               2
<PAGE>


AUDIO VISUAL HEADQUARTERS targets corporate clients with significant audiovisual
equipment needs,  production companies,  trade associations and other businesses
that  require  audiovisual  and  staging  services.   AVHQ  has  numerous  long-
established clients,  including national  associations,  trade organizations and
Fortune 500  corporations,  and has regularly  provided  services to prestigious
entertainment industry productions such as the Academy Awards(R).

Among the ways the Company seeks to  differentiate  itself to clients from other
providers of audiovisual equipment and staging and technical services are by its
customer service, its breadth of technical  expertise,  its demonstrated ability
to  execute  a broad  range of  projects,  large and  small,  across a number of
industries,  its investment in new  technology  and  equipment,  its size in the
United States and its emerging international presence.

SALES AND MARKETING

Historically,  the Company has  acquired  new clients and  marketed its services
primarily  by  cross-selling  to existing  clients,  responding  to requests for
proposals, pursuing client referrals,  identifying prospects through research of
potential clients and actively marketing to potential new customers. The Company
solicits  prospective  accounts  through  personal  contacts  by  members of the
Company's  senior   management  as  well  as  through  the  Company's   managers
responsible for business development.

The Company markets its services by type of service  offered,  customer type and
by  geographic  region.  Personnel  are  assigned  to  those  accounts  that are
identified by management to be strategically  significant.  In addition, each of
the Company's  business units employs a full-time  sales and marketing  staff to
evaluate market  opportunities and identify potential clients.  Personnel in the
Company's  Presentation  Services  unit also  work with the sales and  marketing
personnel  of the  various  hotels in which  the  Company  acts as the  in-house
provider to promote the hotels'  meeting and  conference  capabilities,  thereby
creating additional selling opportunities for the Company.

OPERATIONS

The  Company's  operations  are  divided  into  two  principal  business  units,
generally along service offerings.

PRESENTATION  SERVICES,  the Company's hotel  audiovisual  outsourcing  business
unit, based near Chicago,  Illinois,  services approximately 600 hotels pursuant
to  agreements  under  which  it  acts as the  preferred  in-house  provider  of
audiovisual  equipment  rental  services in such hotels.  To service each of the
hotel properties, the Company employs on-site management,  service and technical
representatives  who work with each individual  hotel's management to assist the
hotel and its guests and customers with their  audiovisual  equipment and office
service  needs and to exploit  opportunities  to  increase  the volume of rental
activity in such hotels. In addition to employees  maintained at each hotel, the
division also employs a full time sales and  marketing  staff that seeks out new
opportunities with individual hotels and hotel chains.

AUDIO VISUAL  HEADQUARTERS,  the Company's staging,  rental and meeting services
business unit, based near Los Angeles, California, provides staging services and
audiovisual equipment rentals to corporate clients,  production companies, trade
associations  and other  businesses  that  require such  services.  AUDIO VISUAL
HEADQUARTERS   maintains   regional  inventory  support  and  sales  offices  in
approximately 35 locations throughout the United States.

Throughout  each of the Company's  business units,  each office  supplements its
staff with independent contractors or part-time employees on an as-needed basis.

The Company's  management  emphasizes  the  coordination  of activities  between
business units.  This coordination of activities allows the Company to serve its
clients at a local level while at the same time providing clients with resources
and expertise of an international organization.

RECENT DEVELOPMENTS

During  the  fiscal  year,  the  Company  engaged  in the  restructuring  of its
businesses,  which  included,  among  other  things,  the sale of certain of its
business units,  changing the name of the Company from Caribiner  International,
Inc. to Audio Visual Services Corporation and relocating the Company's corporate
headquarters  from New York,  New York to Long Beach,  California.  On April 20,
2000,  the  Company  sold  substantially  all of  the  assets  of its  worldwide
communications  group  ("Communications  Division"),  and on May  9,  2000,  the
Company sold its  U.K.-based  Melville  Exhibitions  Services  subsidiary.  As a
result of the  aforementioned  dispositions,  the  Company  ceased  being in the
business of  producing  meetings,  events and  training  programs on a worldwide
basis and providing exhibition services in the United Kingdom. Net proceeds from
each  disposition  were applied  principally  to the  repayment  of  outstanding
amounts  under the  Company's  Term  Facility  (as  hereafter  defined)  and the
reduction  of  the  commitment  under  the  Company's   Revolving  Facility  (as
hereinafter defined).  Specifically,  the Company (i) repaid an aggregate of $38
million under the Term Facility thereby  permanently  reducing  availability and
outstanding amounts thereunder from $199.6

                                                                               3
<PAGE>


million to $161.6  million and (ii) repaid an aggregate of $47.5  million  under
the Revolving Facility thereby permanently reducing the availability  thereunder
from $250  million to $202.5  million.  In addition,  on December 14, 2000,  the
Company changed its fiscal year end from September 30 to December 31.

EMPLOYEES

As of October 31, 2000, the Company employed approximately 2,968 total full-time
employees,  of which 2,533  employees  were  located  domestically  and 435 were
located internationally.

Except for 67 employees of the Company's hotel audiovisual  outsourcing business
unit, whose terms of employment are covered by a collective bargaining agreement
with a union, the Company has no full-time employees whose employment is covered
by collective bargaining or similar agreements with unions; however, the Company
and its  subsidiaries do from time to time  independently  contract with or hire
part-time  union  personnel,  especially  during the  provision  of  services in
connection with a particular  meeting or event,  and,  accordingly,  the Company
and/or its subsidiaries,  is a party to certain agreements with unions governing
the hiring and terms of  employment  of such  personnel.  Over the course of any
given project  period,  the Company  evaluates the  personnel  requirements  and
determines the extent to which it must  supplement  its available  employee base
with the use of freelance  contractors or part-time employees.  Depending on the
timing and  specific  requirements  of the events and the number of  overlapping
events in any given  planning  period,  the use of independent  contractors  and
part-time employees can vary significantly.  The Company considers its relations
with its full-time employees, part-time employees and independent contractors to
be good.

COMPETITION

Although  no firm  data  exists  with  respect  to the  size of the  audiovisual
equipment  rental  and  meeting  services  industry  and the  number and size of
competitors within the industry, management believes, based on its experience in
the industry,  that the industry is relatively fragmented.  The Company believes
that no one  participant  is dominant in the industry  and that its  competitors
consist  primarily of small,  generally  regional  firms which provide a limited
range of  services.  Management  believes  that  the  competitive  factors  most
important in the audiovisual  equipment rental and meeting services industry are
organizational  breadth,  technical  expertise,  demonstrated ability to execute
projects, range of services offered, size, geographical presence and price.

The Company  believes its  principal  strengths  are the depth of its  technical
talent,   its  ability  to  consistently   meet  its  clients'   objectives  and
expectations,  its focus on quality  and  customer  service  and its  ability to
manage   effectively  and  reliably  multiple  complex,   large-scale   projects
contemporaneously.  The Company believes it is at a competitive  disadvantage in
certain regions where it does not have local offices.

SEASONALITY

The Company experiences  quarterly  variations in revenue,  operating income and
net  income as a result  of many  factors,  including  the  timing  of  clients'
meetings and events,  delays in or cancellation of client's  events,  as well as
changes  in the  Company's  revenue  mix among  its  various  services  offered.
Historically,  the  Company's  business  has tended to be slower in the quarters
ended  September  30 and  December 31 mainly due to the summer  holiday  period,
Thanksgiving and Christmas holidays, when clients and hotel guests traditionally
stage fewer meetings and events.

ITEM 2. PROPERTIES

On or about June 1, 2000, the Company's relocated its corporate  headquarters to
leased  offices  occupying  approximately  5,584  square  feet at 111 West Ocean
Boulevard,  Suite 1110,  Long Beach,  California  90802.  The lease for the Long
Beach, California premises expires on April 30, 2002. Prior to the relocation of
its corporate  headquarters to California,  the Company had entered into a lease
for headquarters office space to be located at 498 Seventh Avenue, New York, New
York.  Such lease was assigned to the purchaser in  connection  with the sale of
the Communications Division in April, 2000.

The Company also leases  offices and warehouse  space in cities  throughout  the
United States, as well as in London,  Mexico,  Brazil,  Puerto Rico and the U.S.
Virgin  Islands.  The Company  believes that, to the extent  required,  suitable
additional or alternative  space  necessary for its operations will be available
on an as needed basis.

ITEM 3. LEGAL PROCEEDINGS

On March 25, 1999,  a  shareholder  class action was filed in the United  States
District Court for the Southern  District of New York (the "Southern  District")
against the Company  and certain of its current and former  officers  and one of
its  directors.  On  May 7,  1999,  a  shareholder  class  action  substantially
identical  to the March 25th action was filed in the Southern  District  against
the  Company  and the same  individuals  named in the March  25th  action.  Both
lawsuits allege, among other things, that defendants

                                                                               4

<PAGE>

misrepresented  the  Company's  ability to  integrate  various  companies it was
acquiring and alleges  violations of Sections  10(b) and 20(a) of the Securities
Exchange Act of 1934 and various rules promulgated thereunder. The lawsuits seek
unspecified money damages,  plus costs and expenses,  including  attorneys' fees
and expert fees. In November,  1999, the court issued an order consolidating the
lawsuits into a single action and appointing  lead  plaintiffs and lead counsel.
The  plaintiffs  filed a  consolidated  amended  complaint in January  2000.  In
February,  2000, the Company filed a motion to dismiss the consolidated  amended
complaint.

Although the Company  believes it has  meritorious  defenses to this action,  in
light of the  inherent  uncertainties  and the  burden  and  expense  of lengthy
litigation,  the Company reached an agreement in principle in late June, 2000 to
settle  the  class  action,  which was  announced  on July 20,  2000.  Under the
agreement,  all  claims  against  the  Company  and  the  individuals  named  as
defendants in the action will be dismissed  without  presumption or admission of
any liability or wrongdoing.  The principal  terms of the agreement call for the
payment  to the  plaintiff  class of the sum of $15.0  million.  The  settlement
amount was paid in its entirety by the Company's insurance carrier. The terms of
the settlement are subject to, among other things,  court approval and execution
of definitive settlement documentation.  In the event this action is not finally
settled, the Company would defend the lawsuit vigorously.

In addition to the litigation  described above, from time to time the Company is
a party to various legal  proceedings  incidental to its business.  Although the
ultimate disposition of these proceedings is not determinable, in the opinion of
the Company,  none of such  proceedings  has had or is likely to have a material
adverse effect on the Company's  results of operations,  financial  condition or
liquidity.

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

None.

ITEM 4A. EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY
<TABLE>
NAME                                AGE              POSITION
----                                ---              --------
<S>                                <C>    <C>
Robert K. Ellis....................  49   Chairman of the Board and Chief Executive Officer
                                            of Audio Visual Services Corporation
Digby J. Davies....................  42   President, Chief Operating Officer, Acting Chief Financial Officer and Director
                                            of Audio Visual Services Corporation
Michael J. O'Brien.................  50   Executive Vice President of Audio Visual Services Corporation
                                            and Chief Executive Officer of Audio Visual Headquarters Division
John C. Voaden.....................  50   Executive Vice President of Audio Visual Services Corporation
                                            and Chief Executive Officer of Presentation Services Division
Kenneth R. Sanders.................  35   Executive Vice President of Audio Visual Services Corporation
                                            and Chief Operating Officer of Presentation Services Division
Errol M. Cook......................  61   Director
Bryan D. Langton...................  64   Director
David E. Libowitz..................  37   Director
C. Anthony Wainwright..............  67   Director
</TABLE>

Robert K. Ellis has been  Chairman of the Board and Chief  Executive  Officer of
the Company  since May,  2000.  Mr. Ellis joined the Company in April,  2000, as
Chief Executive Officer of the Company's audiovisual services businesses.  Prior
to his joining the  Company,  he served as Chief  Executive  Officer of Telecast
Communication  Limited  ("Telecast"),  a U.K.- based group providing  rental and
technical  services to the  corporate  meeting and broadcast  markets,  which he
helped found in May, 1998.  Prior  thereto,  he was Chief  Executive  Officer of
Visual  Action  Holdings Plc  ("VAH"),  which was acquired by AVSC in late 1997,
from 1995 to November, 1997.

Digby J. Davies has been President,  Chief  Operating  Officer and a director of
the Company  since May,  2000. In addition,  he has been Acting Chief  Financial
Officer of the Company since July, 2000. Mr. Davies joined the Company in April,
2000,  as  Chief  Operating  Officer  of  the  Company's   audiovisual   service
businesses.  Prior to his  joining  the  Company,  Mr.  Davies  served  as Chief
Financial Officer of Telecast from May, 1998 to April,  2000. Prior thereto,  he
was Chief Financial Officer of VAH from February, 1997 to November,  1997. Prior
to his joining VAH, Mr. Davies  worked as an  independent  consultant  providing
services in the areas of corporate  restructuring  and  recoveries  from 1990 to
1996.

Michael J. O'Brien has been  Executive  Vice President of the Company since May,
2000, and Chief  Executive  Officer of the Company's  Audio Visual  Headquarters
(staging and meeting services)  division since June, 1998. Mr. O'Brien served as
Chief Executive Officer of the Company's hotel audiovisual  outsourcing division
from January,  1998,  through May, 1998.  Prior to his joining the Company,  Mr.
O'Brien  served  as  Chief  Executive  Officer  of  Audio  Visual   Headquarters
Corporation, a subsidiary of VAH, from 1992 through November, 1997.

John C.  Voaden has been  Executive  Vice  President  of the  Company  and Chief
Executive  Officer of the Company's  Presentation  Services  division since May,
1999.  Prior to his  joining  the  Company,  Mr.  Voaden  served as Senior  Vice
President of Sales and Distribution for Carvel Corporation,  a consumer packaged
goods company from 1995 through 1998. Prior

                                                                               5
<PAGE>

thereto,  Mr. Voaden served as Regional Director for Coca-Cola  Bottling Company
of New York from 1988 through 1995.

Kenneth R. Sanders has been  Executive Vice President of the Company since July,
2000, and Executive Vice President and Chief Operating  Officer of the Company's
Presentation  Services  division  from 1997 to April 1999.  Prior  thereto,  Mr.
Sanders served as Executive Vice  President of the Company's  Hotel  audiovisual
outsourcing  Division  from  1997 to April  1999.  Prior to this  position,  Mr.
Sanders  served  as Vice  President  of Sales  and  Operations  of Audio  Visual
Headquarters Corporation, a subsidiary of VAH, from 1992.

Errol M. Cook has been a director of the  Company  since  June,  1992.  Mr. Cook
presently  serves as a senior advisor to E.M.  Warburg,  Pincus & Co., LLC ("EMW
LLC").  Mr.  Cook served as a Managing  Director  of EMW LLC or its  predecessor
since March, 1991 through his retirement therefrom in December, 1998.

Bryan D.  Langton has been a director  of the Company  since  April,  1996.  Mr.
Langton served as Chairman and Chief Executive  Officer of Holiday Inn Worldwide
and Holiday Inn, Inc. from February, 1990 to December,  1996. Mr. Langton serves
on the board of directors of Fairfield Communities, Inc.

David E.  Libowitz  has been a director of the Company  since  June,  1992.  Mr.
Libowitz is a Managing  Director of EMW LLC and has been associated with EMW LLC
or its  predecessor  since  July,  1991.  Mr.  Libowitz  serves  on the board of
directors  of  Information  Holdings,  Inc. and Four Media  Company,  as well as
certain privately held companies.

C. Anthony  Wainwright has been a director of the Company since March, 1997. Mr.
Wainwright  has served as Vice Chairman of McKinney & Silver,  a privately  held
advertising  agency,  since April,  1997. Mr. Wainwright was Chairman of Harris,
Drury, Cohen, Inc., an advertising  agency,  from 1995 to February,  1997. Prior
thereto Mr.  Wainwright was Chairman of Compton Partners,  Saatchi & Saatchi,  a
national  advertising  agency,  from 1994 to 1995 and was Vice  Chairman of that
company from 1989 to 1994.  Mr.  Wainwright  serves on the board of directors of
Marketing Services Group, Inc., American Woodmark  Corporation,  Del Webb Corp.,
Gibson Greetings, Inc. and Advanced Polymer Systems.

                                                                               6
<PAGE>



                                     PART II

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

(a)        The Common Stock is listed on the New York Stock  Exchange  under the
           symbol "AVC".  The  following  table sets forth on a per share basis,
           for the periods  indicated,  the high and low  closing  prices of the
           Common Stock as reported by the New York Stock  Exchange.  The number
           of  stockholders  of record of Common  Stock on December 12, 2000 was
           149.


                                                   PRICE RANGE
                                                 HIGH         LOW
                                                 ----         ---
FISCAL 1999:
   First Quarter.........................     $10    3/4   $5  7/16
   Second Quarter........................      10   9/16    7   1/8
   Third Quarter.........................       8  15/16    4  9/16
   Fourth Quarter........................       9    3/8    5   1/8

FISCAL 2000:
   First Quarter.........................     $ 9          $3   5/8
   Second Quarter........................       4   5/16    1   1/4
   Third Quarter.........................       1   3/4        7/16
   Fourth Quarter........................           3/4       11/32


The closing price per share of the Common Stock on December 27, 2000 was $0.25.

The Company has not paid any  dividends  with respect to the Common  Stock.  The
Company  presently  intends to retain future  earnings to finance its growth and
development  and  therefore  does  not  anticipate  any  cash  dividends  in the
foreseeable future. Payment of future dividends, if any, will depend upon future
earnings and capital  requirements  of the Company and other factors,  which the
Board  of  Directors  considers  appropriate.  In  addition,  the  terms  of the
Company's  credit  facility  pursuant to which The Chase  Manhattan Bank acts as
administrative  agent  contains  restrictions  on the  Company's  ability to pay
dividends.

Recent Developments

In May, 2000, the New York Stock Exchange,  Inc.  ("NYSE")  notified the Company
that  it was  in  noncompliance  with  the  NYSE's  continued  listing  criteria
requiring (i) total market capitalization of not less than $50 million and total
stockholders  equity  of not  less  than  $50  million  and  (ii)  total  market
capitalization of at least $15 million over a consecutive 30-day trading period.
In addition,  the NYSE notified the Company that its common stock fell below the
continued  listing  standard  requiring  the average  closing price per share of
common  stock to be at least $1.00 over a  consecutive  30-day  trading  period.
Thereafter, the Company submitted a business plan to the NYSE describing how the
Company would return to compliance with the NYSE's continued listing criteria by
the November,  2001,  deadline set by the NYSE. The Company's  business plan was
accepted by the NYSE in September,  2000, subject to the Company meeting certain
interim objectives  outlined in the business plan. Although the Company believes
that to date it has  complied  with  the  interim  objectives  set  forth in the
business   plan  approved  by  the  NYSE,   the  Company   continues  to  be  in
non-compliance  with the NYSE's  continued  listing  criteria.  The Company also
believes,  based upon recent  discussions  between management and the NYSE, that
continued listing on the NYSE and meeting the future interim objectives outlined
in the business plan may not be possible and may not be in the best interests of
the  Company.  The  Company  plans  to  continue  discussions  with  the NYSE to
determine its options  going  forward.  There can be no assurance  that the NYSE
will not take action to suspend the  Company's  common stock from trading on the
NYSE prior to the November, 2001 deadline.


ITEM 6. SELECTED FINANCIAL DATA

                             SELECTED FINANCIAL DATA

The historical  selected financial data presented below as of and for the fiscal
years ended September 30, 1996, 1997, 1998, 1999 and 2000, are derived from, and
are qualified by reference to, the consolidated  financial  statements that have
been  audited by Ernst & Young LLP,  independent  auditors.  The data  presented
below should be read in conjunction  with the Company's  consolidated  financial
statements and related notes thereto and other information included elsewhere in
this Form 10-K.

On April 20,  2000,  the  Company  sold  substantially  all of the assets of its
worldwide Communications Group (the "Communications Group"). On May 9, 2000, the
Company sold its U.K.-based Melville Exhibition Services subsidiary ("MES"). The
Company  recorded an aggregate net loss on disposal of these operations of $40.3
million at March 31, 2000.

During  fiscal 2000,  the  Company's  continuing  operations  consisted of three
reportable segments: Presentation Services, Audio Visual Headquarters and

                                                                               7
<PAGE>

Rental Services. Prior to fiscal 1999, the Company operated these three segments
on a combined basis.  Disaggregated information related to the components within
the audiovisual  services businesses is not practicably  determinable for fiscal
1997 and fiscal  1998.  The Company did not have any  operations  related to the
audiovisual services business in fiscal 1996.

The operating results of the  Communications  Group and MES have been segregated
and reported as discontinued  operations in the financial data presented  below.
The  balance  sheet data  presented  below was  determined  using the  Company's
consolidated  balance  sheets as of September  30th for each of the fiscal years
presented.

<TABLE>
<CAPTION>

                                                                                         YEAR ENDED SEPTEMBER 30,
                                                                                        ------------------------

                                                                           1996      1997       1998     1999       2000
                                                                           ----      ----       ----     ----       ----
<S>                                                                       <C>      <C>       <C>        <C>       <C>
                                                                                          (AMOUNTS IN THOUSANDS,
                                                                                          EXCEPT PER SHARE DATA)
Revenue................................................................   $---    $131,844   $361,157   $386,891  $420,414

Cost of revenue........................................................    ---      86,885    274,531    314,234   349,221
                                                                          ------  --------   --------   --------  --------

Gross profit (a).......................................................    ---      44,959     86,626     72,657    71,193

Operating expenses:
   Selling, general and administrative expenses (b)....................    ---      27,076     69,372     68,401    53,230
   Restructuring charge (c)............................................    ---        ---       4,364      8,880       ---
   Depreciation and amortization.......................................    ---       2,391     11,389     14,359    12,675
                                                                          ------  --------   --------   --------  --------
      Total operating expenses.........................................    ---      29,467     85,125     91,640    65,905
                                                                          ------  --------   --------   --------  --------
Operating (loss) income before corporate reorganization and other costs    ---      15,492      1,501    (18,983)    5,288
Equity in income of affiliated company (d).............................    ---        ---       688         ---        ---
Corporate reorganization and other costs (e)...........................    ---        ---        ---        ---     11,005
Loss on disposal of assets (f).........................................    ---        ---        ---      16,500     3,000
                                                                          ------  --------   --------   --------  --------
Operating income (loss)................................................    ---      15,492      2,189    (35,483)   (8,717)
Interest expense, net..................................................    ---       2,002     24,808     35,218    46,308
                                                                          ------  --------   --------   --------  --------
Income (loss) from continuing operations before taxes..................    ---      13,490    (22,619)   (70,701)  (55,025)
Benefit (provision) for  taxes.........................................    ---      (5,550)     8,942     11,195      (340)
                                                                          ------  --------   --------   --------  --------
Loss from continuing operations........................................    ---       7,940    (13,677)   (59,506)  (55,365)
                                                                          ------  --------   --------   --------  --------
Discontinued operations
    Income (loss) from operations (net of  income taxes)...............    7,989    10,122     14,612      7,213   (16,458)
    Loss on disposal of assets..........................................    ---        ---        ---        ---    (40,313)
                                                                          ------  --------   --------   --------  --------
Income (loss) from discontinued operations.............................    7,989    10,122     14,612      7,213   (56,771)
                                                                          ------  --------   --------   --------  --------
Extraordinary charge on early extinguishment of debt (net of income
  taxes of $403) (g)...................................................    ---        ---         605       ---       ---
                                                                          ------  --------   --------   --------  --------
Net income (loss)......................................................   $7,989   $18,062       $330   $(52,293)$(112,136)
                                                                          ======   ========   =======    ======== ==========
Basic and diluted earnings (loss) per common share:
   Income (loss) from continuing operations ...........................   $ ---      $0.37     $(0.58)    $(2.51)   $(2.32)
   Income (loss) from discontinued operations, net of tax..............     0.55      0.46       0.62       0.30     (2.38)
   Extraordinary charge................................................     ---       ---       (0.03)      ---       ---
                                                                          ------  --------   --------   --------  --------
Net income (loss) per common share.....................................   $ 0.55   $  0.83      $0.01     $(2.21)   $(4.70)
                                                                          =====   ========   =======    ======== ==========
BALANCE SHEET DATA:
Working capital........................................................   $7,488   $36,151    $56,974    $34,457   $11,133
Total assets...........................................................  126,322   313,877    697,949    659,469   414,289
Total debt.............................................................   22,839    61,859    397,240    427,139   344,957
Stockholders' equity...................................................   53,468   171,434    175,775    122,480     7,554
</TABLE>

                      See Notes to Selected Financial Data

                                                                              8
<PAGE>



                        NOTES TO SELECTED FINANCIAL DATA

(a)  Gross  profit for the years ended  September 30,  1999  and  2000  has been
     impacted by aggregate  non-cash  charges of $3.7 million and $4.7  million,
     respectively,  relating to the write-down of audiovisual  rental  equipment
     used in operations.

(b)  Included in selling,  general and administrative expenses in fiscal 1999 is
     approximately $14.6 million in costs incurred during fiscal 1999 related to
     the Company's former  Atlanta-based  audiovisual  headquarters.  Such costs
     primarily consist of rent on facilities,  certain  administrative costs and
     consulting fees associated  with the completion of the  reorganization.  In
     addition,  the Company recorded an additional charge of $6.2 million, which
     represents  additional  reserves,  and  write-offs  related to the accounts
     receivable of the former Atlanta-based audiovisual operations. The accounts
     receivable  charge relates  primarily to  disruptions  in  collections  and
     changes in certain  billing  procedures  arising  from the  reorganization,
     because  of   personnel   turnover  and  other   adverse   impacts  of  the
     reorganization.

(c)  In  connection  with  the  Company's  efforts  to  integrate  its  acquired
     businesses  and to streamline  its  organizational  structure,  the Company
     recorded an aggregate pre-tax  restructuring  charge of $4.4 million during
     the year ended  September  30, 1998, of which $2.3 million and $2.1 million
     were  recorded in the three months ended March 31, 1998 and  September  30,
     1998,   respectively.   During  fiscal  1999  the  Company   continued  the
     reorganization of its businesses.  As a result, in the fiscal quarter ended
     September 30, 1999 the Company recorded a pre-tax  restructuring  charge of
     $8.9  million   consisting  of  charges   related   primarily  to  employee
     termination and severance costs,  lease termination costs and certain other
     asset write-offs.

(d)  In  November,  1997,  the  Company  acquired a minority  interest in Visual
     Action  Holdings,  plc  ("Visual  Action")  through  open market  purchases
     resulting in the equity in income  reflected  for the year ended  September
     30, 1998. The Company acquired a majority interest and began  consolidating
     the financial results of Visual Action as of December 1, 1997.

(e)  In connection with corporate office and divisional  reorganization plans, a
     charge of $3.9 million was recorded during the three months ended March 31,
     2000. Such charge primarily included severance payments, which were made in
     the third fiscal quarter of 2000.  During the three months ended  September
     30,  2000,  the Company  wrote off  approximately  $0.5 million of computer
     software no longer being used as a result of the corporate  reorganization.
     In July 2000,  the Company  announced  that it had reached an  agreement in
     principle to settle the class action  previously filed against the Company,
     certain  of its  former  officers  and  one of its  former  directors.  The
     settlement  amount  was paid in its  entirety  by the  Company's  insurance
     carrier.  During the year ended  September 30, 2000,  the Company  recorded
     charges  aggregating  $6.6  million for the cost of the  related  insurance
     coverage.

(f)  In connection  with the Company's  disposal of its design and  installation
     business  headquartered  in Atlanta,  a pre-tax  loss of $16.5  million was
     recorded in the three months ended June 30, 1999.  During fiscal 2000,  the
     Company  wrote off an  additional  $3.0  million of assets  related to sold
     businesses.

(g)  In connection  with the  acquisition of Visual Action,  the Company entered
     into a new credit facility in October,  1997. As a result, during the three
     months ended  December 31, 1997, the Company wrote off  approximately  $0.6
     million (net of taxes of $0.4  million) of the remaining  unamortized  debt
     issuance costs related to the Company's  former bank  facilities  that were
     repaid from the proceeds of the new credit facility.

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

Certain  statements  contained  herein  may  be  deemed  to  be  forward-looking
statements as defined in the Safe Harbor  Provisions  of the Private  Securities
Litigation  Reform Act of 1995.  Forward-looking  statements  involve  known and
unknown risks and uncertainties, which may cause the Company's actual results in
future  periods or plans for future  periods to differ  materially  from what is
currently  anticipated.  Those risks include,  among others, general competitive
factors,  the  Company's  ability to continue  operational  improvements  in its
businesses,  the  Company's  ability to comply with the terms of its bank credit
agreement the  seasonality  of the  Company's  business,  the  resolution of the
shareholder class action lawsuit currently pending against the Company and other
risks and uncertainties detailed from time to time in the Company's filings with
the  Securities  and Exchange  Commission.  Other  factors and  assumptions  not
identified  above were also involved in the derivation of these  forward-looking
statements, and the failure of such other assumptions to be realized, as well as
other  factors,  may also cause actual results to differ  materially  from those
projected.  The Company  assumes no obligation  to update these  forward-looking
statements to reflect actual results, changes in assumptions or changes in other
factors affecting such forward-looking statements.


                                                                              9
<PAGE>


RESULTS OF OPERATIONS

Introduction.  During the third  quarter of fiscal 1999 the  Company  determined
that it was  necessary to  reevaluate  its  strategic  plan and to take steps to
reduce its  outstanding  long-term  indebtedness  with the overall  objective of
maximizing shareholder value. In connection therewith, in May, 1999, the Company
retained Salomon Smith Barney as its financial advisor to assist it in reviewing
its existing operations and assessing strategic and financial alternatives. As a
result  of  these  efforts,  during  the  fourth  quarter  of 1999  the  Company
concluded,   among  other  matters,   that  it  should  further  reorganize  its
audiovisual  services operations (the  "Restructuring")  and pursue the possible
sale of one or more of its business operations.

On April 20,  2000,  the  Company  sold  substantially  all of the assets of its
worldwide Communications Group (the "Communications Group"). On May 9, 2000, the
Company sold its U.K.-based Melvile Exhibition Services subsidiary ("MES").  The
Company  recorded an aggregate net loss on disposal of these operations of $40.3
million at March 31, 2000. Operating results of the Communications Group and MES
have been segregated and reported as discontinued operations in the consolidated
results of  operations  for the three years ended  September  30, 2000 (with the
prior year periods restated).

The  following  table sets  forth,  for the  periods  indicated,  the  Company's
consolidated  results  of  continuing  operations,  including  such  data  as  a
percentage of revenue.


<TABLE>
<CAPTION>

                                                             YEAR ENDED SEPTEMBER 30,
                                                             -------------------------
                                                 1998               1999              2000
                                                 ----               ----              -----
                                                                  (DOLLARS IN THOUSANDS)
<S>                                           <C>        <C>      <C>       <C>      <C>        <C>
Revenue....................................... $361,157  100.0%   $386,891   100.0%  $420,414   100.0%
Cost of revenue...............................  274,531   76.0     314,234    81.2    349,221    83.1
                                               --------  -----    --------   -----   --------   ------
Gross profit..................................   86,626   24.0      72,657    18.8     71,193    16.9

Operating expenses:
  Selling, general and administrative expenses   69,372   19.2      68,401    17.7     53,230    12.7
  Restructuring charge........................    4,364    1.2       8,880     2.3         --      --
  Depreciation and amortization...............   11,389    3.2      14,359     3.7     12,675     3.0
                                               --------  -----    --------   -----   --------   ------
    Total operating expenses..................   85,125   23.6      91,640    23.7     65,905    15.7
Operating (loss) income before corporate
 reorganization and other costs...............    1,501    0.4     (18,983)   (4.9)     5,288     1.2
Equity in income of affiliated company........      688    0.2          --      --         --      --
Corporate reorganization and other costs......       --    --           --      --     11,005     2.6
Loss on disposal of assets....................       --    --       16,500     4.3      3,000     0.7
                                               --------  -----    --------   -----   --------   ------
Operating income (loss).......................    2,189    0.6     (35,483)   (9.2)    (8,717)   (2.1)
Interest expense, net.........................   24,808    6.9      35,218     9.1     46,308    11.0
                                               --------  -----    --------   -----   --------   ------
Loss from continuing operations before taxes..  (22,619)  (6.3)    (70,701)  (18.3)   (55,025)  (13.1)
Benefit (provision) for taxes.................    8,942    2.5      11,195     2.9       (340)   (0.1)
                                               --------  -----    --------   -----   --------   ------
Loss from continuing operations...............  (13,677)  (3.8)    (59,506)  (15.4)   (55,365)  (13.2)
Discontinued operations
  Income (loss) from operations
   (net of income taxes)......................  14,612     4.0       7,213     1.9    (16,458)   (3.9)
  Loss on disposal of assets..................      --      --          --      --    (40,313)   (9.6)
                                               --------  -----    --------   -----   --------   ------
Income (loss) from discontinued operations      14,612     4.0       7,213     1.9    (56,771)  (13.5)
                                               --------  -----    --------   -----   --------   ------
Extraordinary charge on early extinguishment
 of debt (net of income taxes of $403)........     605     0.2          --     --          --      --
                                               --------  -----    --------   -----   --------   ------
Net income (loss).............................    $330     --     $(52,293)  (13.5) $(112,136)  (26.7)
                                               ========  =====    =========  =====  =========   ======
</TABLE>

                                                                            10

<PAGE>


FISCAL 2000 COMPARED TO FISCAL 1999

Revenue

Revenue increased $55.8 million, or 15.3%, from $364.6 million in fiscal 1999 to
$420.4 million in fiscal 2000,  excluding  revenue of $22.3 million generated in
fiscal 1999 by the  company's  design and  installation  business,  Presentation
Technologies,  which was  disposed of effective  June 30, 1999.  The increase in
fiscal 2000 revenue is  primarily  attributable  to the growth in the  Company's
Presentation Services segment, which increased its revenues by $52.6 million, or
20.1%,  from $261.6 million in fiscal 1999 to $314.2 million in fiscal 2000. The
increase in sales was due  primarily  to an  increase  in the overall  number of
hotels in which it  provided  outsourcing  services,  as well as an  increase in
revenue generated in properties  serviced under existing  contracts.  The fiscal
2000 revenue of the  Company's  Audio Visual  Headquarters  and Rental  Services
segments was comparable with revenue  generated by such business units in fiscal
1999.

Gross Profit

Total gross profit increased $5.8 million, or 8.9%, from $65.4 million in fiscal
1999 to $71.2  million in fiscal  2000,  excluding  gross profit of $7.3 million
contributed  by  the  disposed   Presentation   Technologies   in  fiscal  1999.
Presentation  Services increased its gross profit in fiscal 2000 by $8.8 million
from $52.9 million in fiscal 1999 to $61.7 million in fiscal 2000 as a result of
higher  sales.  Comparable  gross profit as a percentage of revenue was 16.9% in
both fiscal  1999 and fiscal  2000.  During  fiscal  1999 and fiscal  2000,  the
Company   recorded   non-cash   charges  of  $3.7  million  and  $4.7   million,
respectively,  for the write-down of audiovisual rental equipment.  Gross profit
for both fiscal 1999 and 2000 was  reduced by $16.2  million and $22.8  million,
respectively,  of depreciation  expense related to rental  equipment used in the
audiovisual services business.  Such depreciation expense is included in cost of
revenue.  Excluding  depreciation  expense  included  in cost of revenue and the
charges for the equipment write-down, on a comparable basis, the gross profit as
a percentage of revenue was approximately 22.4% in both fiscal 1999 and 2000.

Selling, general and administrative expenses

Selling,  general and administrative  expenses decreased $5.3 million,  or 9.0%,
from $58.5 million in fiscal 1999 to $53.2 million in fiscal 2000, excluding the
impact of Presentation  Technologies  in fiscal year 1999.  Included in selling,
general and administrative expenses in fiscal 1999 is approximately $8.4 million
in  costs  incurred   during  fiscal  1999  related  to  the  Company's   former
Atlanta-based audiovisual headquarters.  Such costs primarily consist of rent on
facilities, certain administrative costs and consulting fees associated with the
completion of the Restructuring.  In addition,  the Company recorded  additional
charges of $6.2 million and $3.8 million in fiscal 1999 and 2000,  respectively,
which  represent  additional   write-offs  related  primarily  to  the  accounts
receivable  of the former  Atlanta-based  audiovisual  operations.  The accounts
receivable charge in fiscal 1999 related primarily to disruptions in collections
and  changes in  certain  billing  procedures  arising  from the  Restructuring.
Billing and collection  efforts were affected because of personnel  turnover and
other adverse impacts of the Restructuring.  In connection with such activities,
and as part of the Company's  periodic review of purchase  accounting  accruals,
approximately  $2.6 million of aggregate  liabilities  established in connection
with certain  acquisitions  completed in fiscal 1996 and 1997 were identified as
excess and reversed in fiscal 1999.

Restructuring Charge

The Company  effectuated the Restructuring and recorded a pre-tax  restructuring
charge of $8.9 million in the fiscal  quarter  ended  September  30,  1999.  The
charge  included  $0.7  million of  employee  termination  and  severance  costs
associated  with a further  reduction in the workforce,  $3.1 million related to
lease  termination  and  other  facility  shut-down  costs and $5.1  million  of
computer   software   and   equipment   no  longer  used  as  a  result  of  the
reorganization.

The  Restructuring  began in fiscal 1998 when the Company  initiated a review of
its operations,  focusing on the  integration of acquired  businesses as well as
the overall management and  organizational  structure.  Accordingly,  during the
fiscal   quarter  ended  March  31,  1998,   the  Company   recorded  a  pre-tax
restructuring  charge of $2.3 million.  The charge included $1.4 million related
to employee  termination and severance costs  associated with a reduction in the
workforce and $0.9 million related to lease termination and other costs.  During
the fiscal quarter ended September 30, 1998, the Company  recorded an additional
pre-tax restructuring charge of $2.1 million in connection with the continuation
of the reorganization plan begun in March 1998. The charge included $0.8 million
related  to  the  severance  and  termination   costs,  $0.4  million  of  lease
termination  costs and $0.9 million  relating to the write-off of certain assets
and other termination and shut down costs.

The remaining  liability at September  30, 1999 was $1.1  million.  There was no
remaining liability at September 30, 2000.

Loss on disposal of assets

Effective June 30, 1999, the Company disposed of its  Presentation  Technologies
business  headquartered in Atlanta. A pre-tax loss of $16.5 million was incurred
and recorded on June 30, 1999 upon the disposition of the related assets. During
fiscal 2000,  the Company wrote off an additional  $3.0 million  related to sold
businesses.
                                                                             11

<PAGE>

Depreciation and amortization

Depreciation  and  amortization  expense  for fiscal  2000 was $12.7  million as
compared  with $14.4  million in fiscal  1999.  The  decrease of $1.7 million is
primarily a result of the fixed asset write-offs recorded in fiscal 1999 related
to the Company's former  Atlanta-based  audiovisual  headquarters.  Amortization
expense for fiscal 1999 and fiscal 2000 was comparable.

Corporate Reorganization and Other Costs.

During  fiscal 2000,  the Company  recorded  aggregate  charges of $11.0 million
related to its corporate and certain division reorganization plans. Such charges
included,  among other  things,  $3.9  million  primarily  related to  severance
payments made in the third fiscal quarter of 2000. In addition, during the three
months  ended  September  30, 2000,  the Company  wrote off  approximately  $0.5
million of computer  software no longer being used as a result of the  corporate
reorganization. Also, in July 2000, the Company announced that it had reached an
agreement in principle to settle the  securities  class action filed against the
Company in March, 1999,  certain of its  former  officers  and one of its former
directors.  Under  the  agreement,  all  claims  against  the  Company  and  the
individuals  named  as  defendants  in the  action  will  be  dismissed  without
presumption or admission of any liability or wrongdoing.  The principal terms of
the agreement  call for the payment to the  plaintiff  class of the sum of $15.0
million.  The  settlement  amount  was  paid in its  entirety  by the  Company's
insurance  carrier.  During the year  ended  September  30,  2000,  the  Company
recorded charges  aggregating $6.6 million for the cost of the related insurance
coverage. The remaining liability at September 30, 2000 was $5.1 million.

Interest expense, net.

Interest  expense,  net increased by $11.1 million due to higher borrowing costs
primarily resulting from an amendment to the Company's credit facility completed
in March 2000.

Provision for income taxes

The  provision  for taxes in fiscal  2000  results  from the  Company's  foreign
operations.  The  decrease  in the  effective  tax rate is  attributable  to the
establishment of a valuation  allowance for the deferred tax assets arising from
the fiscal 2000 and prior net operating losses.

Net (loss) income.

Overall,  the Company's net loss was $112.1 million in fiscal 2000 compared to a
net loss of $52.3 million in fiscal 1999.  The Company  realized a net loss from
continuing  operations of $55.4 million in fiscal 2000 compared to a net loss of
$59.5  million  in  fiscal  1999.  The loss per  common  share  from  continuing
operations  was  $2.32 as  compared  with a loss per  common  share of $2.51 for
fiscal  1999.  The  Company's  discontinued  operations  generated  a loss  from
operations of $16.5 million in fiscal 2000 compared with income from  operations
of $7.2 million in fiscal 1999.  The Company  recognized a loss of $40.3 million
upon disposition of its  Communications and MES divisions in April and May, 2000
respectively.

FISCAL 1999 COMPARED TO FISCAL 1998

Revenue.

Revenue increased $25.7 million,  or 7.1%, from $361.2 million in fiscal 1998 to
$386.9  million in fiscal 1999,  primarily due to growth in the Company's  hotel
audiovisual services segment, increased local market penetration from the rental
services  segment  and  consistent  solid  results  from the staging and meeting
services segment.

Gross Profit

Total gross profit  decreased  $14.0  million,  or 16.2%,  from $86.6 million in
fiscal 1998 to $72.7  million in fiscal 1999.  Gross  profit as a percentage  of
revenue was 24.0% and 18.8% in fiscal 1998 and fiscal  1999,  respectively.  The
decrease in the gross margin on revenue  resulted  primarily  from the impact of
acquired  rental  businesses,  which had  historically  operated  at lower gross
margins and investments made to strengthen the  infrastructure  of the Company's
audiovisual  services businesses to enable them to handle future revenue growth.
Gross  profit on rental  revenue in both  fiscal  1998 and 1999 was  impacted by
$16.2 million of depreciation  expense  related to rental  equipment used in the
audiovisual services  businesses.  Such depreciation expense is included in cost
of revenue.  In addition,  the gross profit in fiscal 1999 was impacted by fixed
asset  write-offs of $3.7  million.  Gross profit as a percentage of revenue was
19.7%, excluding the effect of the fixed asset write-offs.

Selling, General and Administrative Expenses

Total selling,  general and  administrative  expenses were  comparable in fiscal
1998 and fiscal 1999. Included in selling,  general and administrative  expenses
in fiscal 1999 is  approximately  $8.4 million in costs  incurred  during fiscal
1999 related to the Company's former  Atlanta-based  audio visual  headquarters.
Such costs primarily consist of rent on facilities, certain administrative costs
and consulting  fees  associated  with the completion of the  Restructuring.  In
addition,  the Company  recorded an  additional  charge of $6.2

                                                                            12
<PAGE>


million,  which represents  additional  reserves,  and write-offs related to the
accounts  receivable of the former  Atlanta-based  audio visual operations.  The
accounts  receivable  charge related primarily to disruptions in collections and
changes in certain billing procedures  arising from the  Restructuring.  Billing
and  collection  efforts were affected  because of personnel  turnover and other
adverse impacts of the Restructuring. In connection with such activities, and as
part  of  the  Company's  periodic  review  of  purchase  accounting   accruals,
approximately  $2.6 million of aggregate  liabilities  established in connection
with certain  acquisitions  completed in fiscal 1996 and 1997 were identified as
excess and reversed.  Excluding the impact of the accounts  receivable charge of
$6.2  million,  the reversal of the $2.6 million of excess  purchase  accounting
accruals and the above-described  costs of $8.4 million,  selling,  general and
administrative  expenses, as a percentage of revenue, was approximately 14.6% in
fiscal 1999 as compared with 19.2% in fiscal 1998.

Restructuring Charge

In  fiscal  1998,  the  Company  initiated  a review  of all of its  operations,
primarily  focusing on the  integration of the audiovisual  services  businesses
that it had acquired, as well as the Company's overall management organizational
structure.  In connection with this review, the Company adopted a reorganization
plan to  streamline  its  organizational  structure  and  evaluate  its  overall
operational efficiency.

Accordingly,  during the three months ended March 31, 1998, the Company recorded
a pre-tax restructuring charge of $2.3 million. The charge included $1.4 million
related to employee  termination and severance costs associated with a reduction
in the workforce and $0.9 million related to lease termination and other related
costs. During the three months ended September 30, 1998, the Company recorded an
additional pre-tax  restructuring  charge of $2.1 million in connection with the
continuation of the reorganization plan begun in March 1998. The charge included
$0.8 million related to severance and termination  costs,  $0.4 million of lease
termination  costs, $0.9 million relating to the write-off of certain assets and
other termination and shut down costs.

Depreciation and Amortization

Depreciation  and  amortization  increased to $14.4  million in fiscal 1999,  an
increase  of $3.0  million  from the $11.4  million  incurred  in  fiscal  1998.
Property and equipment  acquired  through  acquisitions  and  increased  capital
expenditures for computer and other technology  equipment  resulted in increased
depreciation  of $2.1  million.  Amortization  expense  increased  $0.9  million
resulting primarily from goodwill arising from acquisitions.

Equity in Income of Visual Action

In November,  1997,  the Company  acquired a minority  interest in Visual Action
through open market  purchases  resulting in the equity in income  reflected for
the year ended September 30, 1998. The Company acquired a majority  interest and
began  consolidating  the  financial  results of Visual Action as of December 1,
1997.

Interest Expense, Net

Net interest  expense  increased by $10.4  million from $24.8  million in fiscal
1998 to $35.2  million  in  fiscal  1999 due to  higher  borrowings  to  finance
acquisitions,  operational expansion, capital expenditures and increased working
capital requirements.

Provision for income taxes

The effective tax rate for the years ended September 30, 1999 and 1998 was 15.8%
and 39.5%, respectively.  The decrease in the effective tax rate is attributable
to the  establishment  of a  valuation  allowance  for the  deferred  tax assets
arising from the fiscal 1999 net operating losses.

Extraordinary Charge on Early Extinguishment of Debt.

In connection with the acquisition of Visual Action,  the Company entered into a
new  credit  facility  in  October,  1997.  As a result,  during  the year ended
September  30, 1998 the Company  wrote-off  approximately  $0.6  million (net of
taxes of $0.4 million) of the remaining  unamortized debt issuance costs related
to its former bank  facilities  that were  repaid from the  proceeds of such new
credit facility.

Net Income (Loss).

Overall,  the  Company  realized  a net loss of $52.3  million  in  fiscal  1999
compared to net income of $0.3 million in fiscal 1998. The Company  recognized a
net loss from continuing  operations of $59.5 million in fiscal 1999 compared to
a net loss of $13.7  million  if fiscal  1998.  The loss per  common  share from
continuing  operations  was $2.51 for  fiscal  1999  compared  to a net loss per
common share from continuing operations of $0.58 in fiscal 1998.

                                                                            13
<PAGE>







LIQUIDITY AND CAPITAL RESOURCES

The following discussion of liquidity and capital resources is for the Company's
continuing and  discontinued  operations.  Cash flow impacts of the discontinued
operations  have not been  segregated  in the  consolidated  statements  of Cash
Flows.  The following  table sets forth certain  information  from the Company's
Consolidated Statements of Cash Flows for periods indicated:

                                              YEAR ENDED SEPTEMBER 30,
                                              ------------------------

                                         1998             1999         2000
                                         ----             ----         ----

Net cash provided by (used in):
   Operating activities...............  $22,990         $14,839        $ 6,738
   Investing activities............... (302,973)        (55,276)        74,596
   Financing activities...............  285,499          27,257        (81,677)

In  fiscal  1998,  the  Company  generated  $23.0  million  from  its  operating
activities.  Net income  adjusted  for  depreciation  and  amortization  and the
extraordinary and restructuring  charges provided $42.9 million.  The net change
in working capital used $19.9 million,  with an increase in deferred income, and
a decrease in accrued  expenses and other  liabilities and prepaid  expenses and
other  current  assets,  which were more than  offset by an increase in accounts
receivable  and other  assets  and a  decrease  in taxes  payable  and  accounts
payable.  Investing  activities  used $303.0 million due to  acquisition-related
expenditures  and fixed asset  purchases,  primarily  audiovisual  and  computer
equipment,  as  well  as  information  technology  enhancements.  Aggregate  net
proceeds of $48.9 million related to the disposition of the Company's U.K.-based
broadcast  video and  audiovisual  staging  divisions  offset  the  expenditures
described above.  Financing  activities provided $285.5 million, of which $759.1
million was provided by drawings under the Company's bank facilities,  offset by
repayments of $470.5  million.  In addition,  the Company  received $0.7 million
from the exercise of employee stock options.

In  fiscal  1999,  the  Company  generated  $14.8  million  from  its  operating
activities.   Net  income  adjusted  for  depreciation  and  amortization,   the
restructuring  charges,  the loss on  disposal  of assets,  and the fixed  asset
write-offs  provided $21.9 million.  The net change in working capital used $7.0
million,  with a decrease in  accounts  receivable,  deferred  charges and taxes
receivable,  which were more than offset by an increase in prepaid  expenses and
other current  assets and  decreases in deferred  income,  accounts  payable and
accrued expenses and other liabilities.  Investing activities used $55.3 million
due to  acquisition-related  expenditures and fixed asset  purchases,  primarily
audiovisual  and  computer   equipment,   as  well  as  information   technology
enhancements.  Financing  activities  provided  $27.3  million,  of which $174.6
million was provided by drawings under the Company's bank facilities,  offset by
repayments of $144.5  million and $2.8 million was used to pay financing fees in
connection with amendments to the Company's credit agreement.

In  fiscal  2000,  the  Company   generated  $6.7  million  from  its  operating
activities.  The net change in working capital  provided $30.7 million in fiscal
2000, with decreases in accounts  receivable,  prepaid expenses and other assets
and taxes  receivable.  Increases  in  deferred  income,  accrued  expenses  and
accounts  payable  also  provided  cash  flow  for the  fiscal  year.  Investing
activities  provided $74.6  million,  with $111.7 million of cash generated from
the  dispositions  of the  Company's  Communications  Group  and MES  divisions.
Approximately  $36.8  million was used for the  purchase of  audiovisual  rental
equipment and the  continued  investment in  information  technology.  Financing
activities  used a net of $81.7 million.  Approximately  $96.6 million was drawn
under the Company's  Credit  Facility  during fiscal 2000 and $177.3 million was
used to repay outstanding amounts thereunder.

On October  28,  1997,  the Company  entered  into a new loan  agreement  with a
syndicate  of banks  pursuant  to which  the  Company  increased  its  aggregate
available bank financing from $100 million to $550 million, consisting of a $300
million six year  revolving  line of credit  (the  "Revolving  Facility")  to be
utilized in  connection  with future  acquisitions  and for working  capital and
general  corporate  purposes  and a $250  million  six year term loan (the "Term
Facility"  and together with the Revolving  Facility,  the "Credit  Agreement"),
which was fully  utilized in connection  with the  acquisition of Visual Action.
Amounts  outstanding under the Company's former credit facility were repaid with
the proceeds from the Credit Agreement.  The Company recognized an extraordinary
loss of $0.6 million, net of taxes of $0.4 million in the quarter ended December
31, 1997  resulting  from the  write-off of the  unamortized  debt issuance fees
relating to the Company's former credit facility.  Approximately $4.8 million in
debt issuance fees were incurred in connection with the Credit  Agreement.  Such
fees are being amortized over the term of the Credit Agreement.

At June 30, 1999, the Company did not achieve certain of the financial covenants
specified in the Credit Agreement. In connection with the amendments made to the
Credit  Agreement in July 1999 (the "July 1999  Amendment"),  the lenders waived
through  March 30,  2000,  all  defaults  that have arisen or may arise from the
failure  to  satisfy  the  specified  financial  covenants  for June  30,  1999,
September 30, 1999 and December 31, 1999. As part of such amendment, the Company
agreed,  among other things, to revised

                                                                            14
<PAGE>


covenants  regarding  minimum  consolidated  earnings  before  interest,  taxes,
depreciation and amortization ("EBITDA") as defined in the Credit Agreement, for
the twelve month periods ending June 30, September 30 and December 31, 1999, and
to restrictions on the amount of permitted capital expenditures (as described in
the Credit  Agreement)  for the three  month  periods  ending  September  30 and
December 31, 1999.

At September 30, 1999, the Company was not in compliance  with the covenants set
forth in the July 1999  Amendment.  In December  1999,  the  Company  obtained a
further  amendment (the "December 1999 Amendment") to the Credit Agreement that,
among other  things,  extended the waivers under the July 1999  Amendment  until
October 1, 2000,  and waived through  October 1, 2000 all defaults  arising from
the failure at September 30, 1999 to satisfy the financial  covenants  specified
in the July 1999 Amendment. As part of the December 1999 Amendment,  the Company
agreed to a  minimum  consolidated  adjusted  EBITDA  covenant  that is based on
post-September   30,  1999  consolidated   EBITDA  (as  defined  in  the  Credit
Agreement),  and to restrictions on the amount of capital  expenditures that may
be made by the Company during the fiscal year ending September 30, 2000.

In addition to the waivers and revised financial  covenants described above, the
December 1999 Amendment provided for the deferral through October 1, 2000 of the
principal  payments  due under the Term  Facility on December 31, 1999 and March
31, 2000.  The December  1999  Amendment  also included a consent by the lenders
that  would  have  allowed  the  Company  to  pursue  the  possible  sale of its
audiovisual  businesses,  provided that certain timing requirements were met and
minimum net proceeds exceeded a specified  amount.

In March,  2000, the Company  entered into a further  amendment (the "March 2000
Amendment") to the Credit Agreement,  that, among other things,  (i) amended the
maturity  date of the Term  Facility to eliminate  the  requirement  to make any
installment  payments thereon such that all amounts  outstanding  under the Term
Facility  are due and  payable  on October 1, 2001,  (ii)  reduced  the  amounts
available to the Company under the Credit Agreement for letters of credit, (iii)
eliminated altogether those financial covenants that the July 1999 Amendment and
December 1999  Amendments  previously had waived through  October 1, 2000,  (iv)
amended the covenant relating to minimum consolidated EBITDA for the three month
period ended  December 31, 1999,  the six month period ended March 31, 2000, the
nine month period ended June 30, 2000, the twelve month periods ending September
30 and December 31, 2000,  and any period of four  consecutive  fiscal  quarters
ending on or after  March  31,  2001,  (v)  amended  the  covenant  relating  to
restrictions on the amount of permitted  capital  expenditures  (as described in
the Credit Agreement) such that the Company may not permit capital  expenditures
to exceed $25 million in any two  consecutive  fiscal quarters or $40 million in
any four consecutive  fiscal quarters  commencing with fiscal quarter  beginning
January 1, 2000 and (vi)  requires  the  Company to provide  certain  additional
reports to the  lenders.  In  addition,  pursuant to the terms of the March 2000
Amendment,  the  lenders  withdrew  the  consent  granted to the  Company in the
December 1999 amendment to pursue the possible sale of the Company's audiovisual
businesses.

In addition to the amendments and revised financial  covenants  described above,
the March 2000  Amendment  also  included a consent by the  lenders to allow the
Company  to proceed  with the sale of its  worldwide  Communications  Group (the
"Communications Sale") and to pursue the sale of MES ( the "MES Sale"), provided
that, in each case,  certain timing  requirements were met, minimum net proceeds
exceeded a specific amount and 75% of the net proceeds of each such  disposition
would be applied to the prepayment of the Term Facility and the reduction of the
commitment   under  the  Revolving   Facility.   The  Company   consummated  the
Communications  Sale on April 20, 2000, and  consummated  the MES Sale on May 9,
2000, and in connection therewith (i) repaid an aggregate of $38.0 million under
the Term Facility  thereby  permanently  reducing  availability  and outstanding
amounts  thereunder  from  $199.6  million to $161.6  million and (ii) repaid an
aggregate of $47.5  million under the Revolving  Facility,  which  resulted in a
permanent reduction of the availability thereunder from $250.0 million to $202.5
million.

Pursuant to the terms of the March 2000  Amendment,  the Company  also agreed to
retain not later than June 1, 2001, an investment  banking firm for the purposes
of evaluating strategic and debt reduction alternatives.

Fees of approximately $1.2 million,  $1.4 million and $1.0 million were incurred
in  connection  with the  amendments  made to the Credit  Agreement in December,
1998, July, 1999, and December 1999,  respectively.  Such fees will be amortized
over the remaining term of the Credit Agreement.

No fees were paid to the  Company's  lenders in  connection  with the March 2000
Amendment;  however, pursuant to a deferred amendment fee letter entered into in
connection with the March 2000 Amendment,  the Company will be required to pay a
fee equal to the  greater of (A) not less than $2.5  million nor more than $12.5
million or (B) not less than 2.5% nor more than  12.5% of the net  equity  value
(as  defined in the  deferred  amendment  fee  letter) of the  Company  upon the
occurrence of the earlier of (i) the maturity  date of the  Revolving  Facility,
(ii) an event of default (as defined in the Credit  Agreement),  (iii) a sale of
all or substantially all of the Company's  assets,  (iv) a sale of substantially
all of the capital  stock of the  Company,  or (v) the  repayment of all amounts
outstanding  under the Credit  Agreement  (such  events  being  referred to as a
"Triggering  Event").  The actual  amount of such fee will be  determined on the
date that a Triggering Event shall occur.

Interest on outstanding amounts under the Credit Agreement is payable monthly in
arrears  and at the  option of the  Company  accrues at either (i) LIBOR plus an
applicable  margin or (ii) an alternate base rate based upon the greatest of (a)
the agent bank's prime rate, (b) the three-month secondary certificate

                                                                            15
<PAGE>

of deposit  rate and (c) the federal  funds  rate.  The  applicable  margins are
subject to change based on the  occurrence  of certain  events.  Pursuant to the
terms of the March 2000  Amendment,  outstanding  amounts under each of the Term
Facility and Revolving Facility also accrue additional interest at a rate of 1 %
per annum payable in arrears upon the termination of the Credit  Agreement.  The
weighted  average  interest  rate on  outstanding  debt at September 30, 2000 is
9.64%.

The  Credit  Agreement  is  secured  by  substantially  all of the assets of the
Company and its material subsidiaries, and the Company and its subsidiaries have
pledged the stock of their  respective  subsidiaries  for the ratable benefit of
its lending banks. In addition to the financial  covenants  described above, the
Credit Agreement contains certain other covenants and restrictions customary for
credit  facilities  of  a  similar  nature,   including,   without   limitation,
restrictions on the ability of the Company to pay dividends.

The  Company  believes  it will  be able to  satisfy  the  financial  and  other
covenants  included  in the  Credit  Agreement,  as  amended.  As stated  above,
pursuant to the terms of the Credit  Agreement,  the entire principal on each of
the Term Facility and the Revolving Facility is payable on October 1, 2001. With
the foregoing in mind, the Company  recognizes that it will be necessary to take
actions to reduce its indebtedness or restructure the terms of such indebtedness
under the Credit Agreement by assessing various refinancing options or obtaining
a further amendment to the Company's existing Credit Agreement.  There can be no
assurance that the Company will be able to take such actions.  In the event that
the Company is unable to refinance the  indebtedness  under the Credit Agreement
or restructure  the terms  thereof,  then upon the maturity of the Term Facility
and the Revolving Facility, the lenders would be entitled to exercise all or any
of their rights or  remedies.  Any such  exercise of rights and  remedies  would
likely have a material adverse effect on the Company.

As  of  December  15,  2000,  the  Company  had  approximately   $356.5  million
outstanding under the Credit Agreement,  of which $194.8 million was outstanding
under the Revolving  Facility.  Cash on hand as of such date was $11.3  million.
The Company  believes that cash flow from operations and available  credit under
the Revolving  Facility will be sufficient to meet  operating  needs through the
end of fiscal 2001.

The Company has received a commitment letter from Chase Securities, Inc. and The
Chase  Manhattan  Bank to structure,  arrange and  syndicate a senior  revolving
credit facility in an aggregate amount of up to $16 million, which would provide
working  capital to the Company in addition to the liquidity  provided under the
Company's  existing  Credit  Agreement.  Consummation of the financing under the
proposed additional credit facility is conditioned upon, among other things, the
consent of the requisite  number of lenders under the Company's  existing Credit
Agreement, the execution of definitive financing documentation, the amendment of
the terms of the  Company's  existing  Credit  Agreement  and  other  conditions
customary for  transactions  of this type.  There can be no assurance  that such
conditions will be met and that such additional financing will be consummated.

Capital  expenditures were $46.5 million in fiscal 1998, $45.4 million in fiscal
1999,  and $36.8  million in fiscal  2000.  During each of the three years ended
September  30,  2000,  the  purchase of  audiovisual  rental  equipment  and the
continued  investment in information  technology  comprised the major portion of
capital expenditures.

QUARTERLY RESULTS

The  following  table sets forth the unaudited  quarterly  results of operations
related to the Company's  continuing  businesses for each of the quarters in the
two years ended  September  30, 1999 and 2000.  In  management's  opinion,  this
unaudited quarterly information includes all adjustments which are necessary for
a fair presentation of the information for the quarters presented.

The  operating  results in any quarter  are not  necessarily  indicative  of the
results, which may be expected for any other future period.
<TABLE>
<CAPTION>

                                             FISCAL 1999(A) (B)(C) (D)                    FISCAL 2000 (B) (C) (D)
                                             -------------------------                    -----------------------

                                1ST         2ND         3RD         4TH         1ST         2ND         3RD         4TH
                              QUARTER     QUARTER     QUARTER     QUARTER     QUARTER     QUARTER     QUARTER     QUARTER
                              -------     -------     -------     -------     -------     -------     -------     -------
<S>                          <C>          <C>         <C>        <C>         <C>         <C>          <C>        <C>

                                                                     (IN THOUSANDS)
Revenue....................    $95,651    $104,252    $107,111     $79,877     $98,767    $111,207    $117,054     $93,386
Gross profit...............     18,249      23,405      24,116       6,887      16,748     21,072       25,033       8,340
Operating income (loss)....     (2,277)      4,317     (11,083)    (26,440)      2,785     (3,715)       8,954     (16,741)
Net income (loss)..........     (5,983)     (2,639)    (14,451)    (36,493)     (7,818)   (14,457)      (3,387)    (29,703)
Loss per share.............      (0.25)      (0.11)      (0.61)      (1.54)      (0.34)     (0.61)       (0.14)      (1.23)
</TABLE>
NOTES TO QUARTERLY RESULTS

(A)  Operating  losses for the three and twelve months ended  September 30, 1999
     include  approximately  $11.4 million and $18.3 million,  respectively,  of
     costs relating to the Company's former  Atlanta-based  headquarters for its
     audiovisual services businesses.

(B)  Results  of  operations  for the year  ended  September  30,  1999  include
     operating losses of $2.9 million from the Company's design

                                                                            16
<PAGE>

     and installation  business,  which  was  disposed  effective June 30, 1999.
     A  pre-tax  loss  of  $16.5  million  in  respect  of  uch disposition  was
     recorded at June 30, 1999. In addition, during the quarter ended  March 31,
     2000, the Company wrote-off an additional $3.0  million of  assets  related
     to disposed businesses.

(C)  The operating loss for the fourth quarter of fiscal 1999 includes corporate
     reorganization  and  other  costs  of  $8.9  million  related  to  employee
     termination and severance costs,  lease termination costs and certain other
     asset  write-offs.  Operating  losses for the second and fourth quarters of
     fiscal  2000  include  corporate  reorganization  and  other  costs of $3.6
     million and $7.4 million, respectively,  related to the Company's corporate
     office reorganization and class action settlement.

(D)  The operating  loss for the fourth quarter of fiscal 1999 includes a charge
     of $3.7 million  relating to the write-off of audiovisual  rental equipment
     used in operations.  Charges of $2.5 million and $2.2 million were recorded
     in the second and fourth  quarters of fiscal  2000 for similar  fixed asset
     write-offs.

BILLINGS AND COLLECTIONS

The Customers are normally  billed on a per-rental  basis upon completion of the
staging service or rental. The Company provides audiovisual equipment rentals to
customers based on published price lists.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business,  the Company's foreign  operations are exposed
to fluctuations in currency  values.  However,  management does not consider the
impact of currency  fluctuations to represent a significant  risk as its foreign
operations are a minimal component to its consolidated operations. The Company's
interest  expense is sensitive to changes in the general level of U.S.  interest
rates.  In this regard,  changes in the U.S. rates affect the interest paid on a
portion  of its debt.  The  Company  does not enter  into  derivative  financial
instruments in the normal course of business,  nor are such instruments used for
speculative purposes.


<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         REPORT OF INDEPENDENT AUDITORS

To the Stockholders and Board of Directors of Audio Visual Services Corporation

We have audited the  accompanying  consolidated  balance  sheets of Audio Visual
Services  Corporation (the "Company") as of September 30, 1999 and 2000, and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for each of the three years in the period ended September 30, 2000.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial  position of the Company at
September 30, 1999 and 2000 and the  consolidated  results of its operations and
its cash flows for each of the three  years in the period  ended  September  30,
2000, in conformity with accounting  principles generally accepted in the United
States.

                                                        /s/ ERNST & YOUNG LLP

Long Beach, California
December 8, 2000


                                                                            17
<PAGE>



                        AUDIO VISUAL SERVICES CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                             (AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>

                                                                                                         SEPTEMBER 30,
                                                                                                         -------------
                                                                                                       1999          2000
                                                                                                       ----          ----
<S>                                                                                                  <C>          <C>
                                              ASSETS
Current Assets:
   Cash and cash equivalents......................................................................   $  1,675     $  1,272
   Trade accounts receivable, net of allowance for doubtful accounts of $4,693 in 1999 and
      $4,310 in 2000..............................................................................    100,446       47,585
   Deferred charges...............................................................................      8,301         ---
   Prepaid expenses and other current assets......................................................     20,173       14,782
                                                                                                     --------      --------
      Total Current Assets........................................................................    130,595       63,639
   Property and equipment, net....................................................................    100,438       68,103
   Goodwill, net..................................................................................    409,204      272,009
   Taxes receivable...............................................................................      4,548         --
   Other assets...................................................................................     14,684       10,538
                                                                                                     --------     --------
Total Assets......................................................................................   $659,469     $414,289
                                                                                                     ========     ========
                              LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Current portion of long-term debt..............................................................     $1,299     $   --
   Trade accounts payable.........................................................................     22,527       13,249
   Accrued expenses and other current liabilities.................................................     40,436       38,427
   Accrued production costs.......................................................................     20,259         --
   Deferred income................................................................................     11,617         --
   Taxes payable..................................................................................        --           830
                                                                                                     --------     --------
      Total Current Liabilities...................................................................     96,138       52,506

   Long-term debt.................................................................................    425,840      344,957
   Deferred income................................................................................      4,975          --
   Deferred tax liability.........................................................................      7,892        7,350
   Other liabilities..............................................................................      2,144        1,922
                                                                                                        -----        -----
Total Liabilities.................................................................................    536,989      406,735
Stockholders' Equity:
   Preferred stock, $.01 par value:
      2,000 shares authorized, none issued and outstanding at 1999 and 2000.......................        --          --
   Common stock, $.01 par value:
      40,000 voting shares authorized, 23,697 and 24,568 shares issued and outstanding
       at 1999 and 2000, respectively.............................................................        236          246
   Additional paid-in capital.....................................................................    167,677      168,170
   Accumulated other comprehensive loss...........................................................     (4,785)      (7,828)
   Deferred compensation..........................................................................        --          (250)
   Accumulated deficit............................................................................    (40,648)    (152,784)
                                                                                                     --------     ---------
      Total Stockholders' Equity..................................................................    122,480        7,554
                                                                                                      -------     ---------
Total Liabilities and Stockholders' Equity........................................................   $659,469     $414,289
                                                                                                     ========     ========
</TABLE>
See accompanying notes to the consolidated financial statements.

                                                                            18
<PAGE>



                        AUDIO VISUAL SERVICES CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>

                                                                                            YEAR ENDED SEPTEMBER 30,
                                                                                            ------------------------

                                                                                         1998         1999         2000
                                                                                         ----         ----         ----
<S>                                                                                     <C>         <C>           <C>
                                                                                             (AMOUNTS IN THOUSANDS,
                                                                                             EXCEPT PER SHARE DATA)
Revenue.............................................................................    $361,157     $386,891    $420,414

Cost of revenue.....................................................................     274,531      314,234     349,221
                                                                                         -------      -------     -------

Gross profit........................................................................      86,626       72,657      71,193

Operating expenses:
   Selling, general and administrative expenses (note 5)............................      69,372       68,401      53,230
   Restructuring charge (note 4)....................................................       4,364        8,880          --
   Depreciation and amortization....................................................      11,389       14,359      12,675
                                                                                         -------      -------      -------
      Total operating expenses......................................................      85,125       91,640      65,905

Operating (loss) income before corporate reorganization and other costs.............       1,501      (18,983)      5,288

Equity in income of affiliated company (note 6).....................................         688          --           --
Corporate reorganization and other costs (note 7)...................................         --           --       11,005
Loss on disposal of assets (note 6).................................................         --        16,500       3,000
                                                                                         -------      -------     -------
Operating income (loss).............................................................       2,189      (35,483)     (8,717)

Interest expense, net...............................................................       24,808      35,218      46,308
                                                                                         -------      -------     -------

Loss from continuing operations before taxes........................................     (22,619)     (70,701)    (55,025)
Benefit (provision) for  taxes......................................................       8,942       11,195        (340)
                                                                                         -------      -------      -------

Loss from continuing operations ....................................................     (13,677)     (59,506)     (55,365)
Discontinued operations (note 3)
    Income (loss) from operations (less income taxes)...............................      14,612        7,213      (16,458)
    Loss on disposal of assets......................................................         --           --       (40,313)
                                                                                         -------      -------      -------
Income (loss) from discontinued operations..........................................      14,612        7,213      (56,771)
                                                                                         -------      -------      -------
Extraordinary charge on early extinguishment of debt (net of income taxes of
   $403) (note 7)...................................................................         605          --           --
                                                                                         -------      -------      --------
Net income (loss)...................................................................       $330      $(52,293)   $(112,136)
                                                                                         =======      ========   ==========
Basic and diluted earnings (loss) per common share:
   Income (loss) from continuing operations ........................................      $(0.58)      $(2.51)      $(2.32)
   Income (loss) from discontinued operations, net of tax...........................        0.62         0.30        (2.38)
   Extraordinary charge.............................................................       (0.03)         --            --
                                                                                         -------      -------       -------
Net income (loss) per common share..................................................       $0.01       $(2.21)      $(4.70)
                                                                                         =======      ========      =======
</TABLE>
See accompanying notes to the consolidated financial statements.

                                                                             19
<PAGE>



                        AUDIO VISUAL SERVICES CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


                                                                                               YEAR ENDED SEPTEMBER 30,
                                                                                               ------------------------

                                                                                         1998              1999           2000
                                                                                         ----              ----           ----

                                                                                                (AMOUNTS IN THOUSANDS)
<S>                                                                                     <C>           <C>             <C>
Cash flows from operating activities:
   Net income (loss).............................................................        $330          $(52,293)      $(112,136)
   Adjustments to reconcile net income (loss) to net cash provided by
      operating activities:
      Restructuring charge, net of cash payments.................................       4,125             9,669             --
      Loss on disposal of assets.................................................         --             16,500          40,313
      Fixed asset write-offs.....................................................         --              4,439           5,190
      Extraordinary charge on early extinguishment of debt, net of tax...........         605                --             --
      Depreciation and amortization..............................................      37,801            43,563          42,660
   Change in assets and liabilities, net of amounts acquired:
      (Increase) decrease in accounts receivable.................................     (11,158)           18,206           8,276
      (Increase) decrease in deferred charges....................................      (1,880)            2,235          (7,167)
      (Increase) decrease in prepaid expenses and other current assets...........       1,280            (9,030)          4,112
      (Increase) decrease in taxes receivable....................................     (11,935)              185           4,981
      (Increase) decrease in other assets........................................      (3,866)           (1,503)          2,757
      Increase (decrease) in accounts payable....................................      (3,851)             (290)          3,910
      Increase (decrease) in deferred income.....................................       6,428            (9,582)         12,733
      Increase (decrease) in accrued expenses and other liabilities..............       5,111            (7,260)          1,109
                                                                                      -------           --------        --------
      Net cash provided by operating activities..................................      22,990            14,839           6,738
                                                                                      -------           --------        --------
Cash flows from investing activities:
      Purchase of property and equipment.........................................     (46,454)          (45,410)        (36,815)
      Proceeds from disposition of businesses, net of transaction costs..........      48,892               --          111,694
      Acquisition of intangibles and businesses, net of cash acquired............    (305,411)           (9,866)           (283)
                                                                                     ---------          --------       ---------
      Net cash provided by (used in) investing activities........................    (302,973)          (55,276)         74,596
                                                                                     ---------          --------       --------
Cash flows from financing activities:
   Proceeds from exercise of stock options.......................................         667               --           --
   Proceeds from long-term debt..................................................     759,122           174,550          96,625
   Repayments of long-term debt..................................................    (470,478)         (144,457)       (177,311)
   Payment of debt issuance fees.................................................      (3,812)           (2,836)           (991)
                                                                                    ---------          ---------        --------
      Net cash provided by (used in) financing activities........................     285,499            27,257         (81,677)
                                                                                    ---------          ---------        --------
Translation effect on cash and cash equivalents..................................        (652)             (262)            (60)
                                                                                    ---------          ---------        --------
Net increase (decrease) in cash and cash equivalents.............................       4,864           (13,442)           (403)
Cash and cash equivalents beginning of year......................................      10,253            15,117           1,675
                                                                                    ---------          ---------        --------
Cash and cash equivalents end of year............................................     $15,117            $1,675        $  1,272
                                                                                     ========          =========        ========
</TABLE>
See accompanying notes to the consolidated financial statements.


                                                                             20
<PAGE>



                        AUDIO VISUAL SERVICES CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  FOR THE THREE YEARS ENDED SEPTEMBER 30, 2000
                             (AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>

                                                                                           ACCUMULATED
                                                COMMON STOCK      ADDITIONAL  RETAINED        OTHER                     TOTAL
                                                ------------      ----------
                                                                   PAID-IN    EARNINGS    COMPREHENSIVE    DEFERRED  STOCKHOLDERS'
                                               SHARES   AMOUNT     CAPITAL    (DEFICIT)   INCOME (LOSS)  COMPENSATION   EQUITY
                                               ------   ------     -------    --------    -------------  ------------ ------------
<S>                                           <C>       <C>        <C>         <C>       <C>            <C>           <C>


Balance at September 30, 1997..............   23,417    $ 234       $159,874   $11,315       $   11          $--        $171,434
Net income.................................       --       --             --       330           --           --             330
Foreign currency translation adjustment....       --       --             --        --       (3,725)          --          (3,725)
                                                                                                                        ---------
Comprehensive (loss).......................                                                                               (3,395)
Issuance of common stock upon acquisitions
  completed during fiscal 1998.............      239        2          7,042        --           --           --           7,044
Issuance of common stock upon exercise of
  stock options............................       33        *            692        --           --           --             692
                                              ------    -----       --------   ------       -------          ----        --------
Balance at September 30, 1998..............   23,689      236        167,608   $11,645       (3,714)          --         175,775
Net loss...................................       --       --             --   (52,293)          --           --         (52,293)
Foreign currency translation adjustment....       --       --             --        --       (1,071)                      (1,071)
                                                                                                                         --------
Comprehensive (loss).......................                                                                              (53,364)
Issuance of common stock...................        8        *             69        --           --           --              69
                                              ------    -----       --------   ------       -------          ----        --------
Balance at September 30, 1999..............   23,697      236        167,677   (40,648)      (4,785)          --         122,480
Net loss...................................       --       --             --  (112,136)          --           --        (112,136)
Foreign currency translation adjustment....       --       --             --        --       (3,043)          --          (3,043)
                                                                                                                         --------
Comprehensive loss.........................                                                                             (115,179)
Issuance of restricted common stock........      666        7            243        --           --         (250)             --
Issuance of common stock...................      205        3            250        --           --           --             253
                                              ------    -----       --------   -------      -------          ----        --------
Balance at September 30, 2000..............   24,568     $246       $168,170 $(152,784)     $(7,828)        (250)         $7,554
                                              ======    =====       =======  =========      =======       =======        ========
</TABLE>
* Less than $1 thousand
See accompanying notes to the consolidated financial statements.

                                                                             21
<PAGE>


                        AUDIO VISUAL SERVICES CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY

Audio Visual Services  Corporation  (formerly known as Caribiner  International,
Inc.) (the "Company") is a provider of audiovisual  equipment  rentals,  staging
services and other  related  services.  As used herein,  the term the  "Company"
refers  to Audio  Visual  Services  Corporation  and its  subsidiaries,  and the
references to a fiscal year are to the Company's  fiscal year ended September 30
in the referenced year.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

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

Certain  reclassifications  have been made to the fiscal  1998 and  fiscal  1999
consolidated financial statements to conform to the current year presentation.

Revenue Recognition

Revenue is recognized over the period in which  audiovisual  equipment is rented
to  customers.  Revenue for staging  services is  recognized as the services are
provided.

Cost of Revenue

Cost of revenue is comprised  principally  of direct  labor costs,  commissions,
depreciation of equipment  rented to clients and customers in the conduct of the
business, and equipment rentals.

Cash and Cash Equivalents

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

Property and Equipment

Property and  equipment  are stated at cost.  Depreciation  is calculated on the
straight-line method over the estimated useful lives of the assets, ranging from
three to five years.  Leasehold  improvements are amortized on the straight-line
method over the shorter of the lease term or the estimated useful life.

Goodwill

Goodwill  represents the excess of the cost over the fair value of net assets of
purchased  businesses  and is  amortized on a  straight-line  basis over periods
ranging  from 15 years to 40 years.  Accumulated  amortization  of goodwill  was
$33.4 million and $27.7 million at September 30, 1999 and 2000, respectively.

The Company reviews the recoverability of intangible and other long-lived assets
whenever  events or changes in  circumstances  indicate that the carrying amount
may not be recoverable as determined based upon the estimated  undiscounted cash
flow  of the  entity  acquired.  In  the  event  goodwill  is  determined  to be
unrecoverable,  a loss is  recognized  for the  difference  between the carrying
amount and the estimated fair value of the asset.

Deferred Financing Fees

Deferred financing fees are amortized on a straight-line  basis over the term of
the related debt. The amortization of deferred  financing fees is reflected as a
component of interest  expense.  Deferred  financing fees  amortized  during the
years ending  September 30, 1998, 1999 and 2000 were $0.9 million,  $1.2 million
and $2.8 million, respectively.

Foreign Currency Translation

The  financial  statements  of foreign  subsidiaries  are  translated  into U.S.
dollars at current rates as of the balance sheet date, except for revenue, costs
and expenses which are translated at average current rates during each reporting
period.  The  gains or losses  resulting  from  translation  are  included  as a
component of  accumulated  other  comprehensive  income (loss) in  stockholders'
equity.  The gains and losses resulting from foreign  currency  transactions are
included in the Company's  current results of operations.  Transaction  gains or
losses  in  the  years  ended  September  30,  1998,  1999  and  2000  were  not
significant.
                                                                             22

<PAGE>


                        AUDIO VISUAL SERVICES CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Risks and Uncertainties

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from those estimates.

Stock Based Compensation

The Company  grants to certain  employees'  stock  options for a fixed number of
shares with an exercise  price equal to the fair value of the shares at the date
of grant.  The Company  accounts for stock option grants in accordance  with APB
Opinion  25,  "Accounting  for Stock  Issued to  Employees,"  and,  accordingly,
recognizes no compensation expense for such grants.

New Accounting Pronouncements

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities",  as amended,  which establishes  accounting
and  reporting  standards  for  derivative  instruments,   including  derivative
instruments  embedded in other contracts,  and for hedging activities.  SFAS No.
133 is required to be adopted in fiscal  years  beginning  after June 15,  2000.
This  statement is not  expected to affect the Company as the Company  currently
does  not  engage  or  plan to  engage  in  derivative  instruments  or  hedging
activities.

In December 1999,  the SEC issued Staff  Accounting  Bulletin No. 101,  "Revenue
Recognition in Financial  Statements" (SAB No. 101") which summarizes certain of
the SEC staff's views in applying  generally accepted  accounting  principles to
revenue  recognition  in financial  statements.  The Company will be required to
adopt the accounting provisions of SAB No. 101, no later than the fourth quarter
of 2000. The Company is currently evaluating the impact of adopting SAB No. 101,
but the Company  does not believe  that the  implementation  of SAB No. 101 will
have a significant effect on its results of operations.


3. DISCONTINUED OPERATIONS

On April 20,  2000,  the  Company  sold  substantially  all of the assets of its
worldwide Communications Group (the "Communications Group"). On May 9, 2000, the
Company sold its U.K.-based Melvile Exhibition Services subsidiary ("MES").  The
Company  recorded an  aggregate  loss on disposal of these  operations  of $40.3
million at March 31, 2000. Operating results of the Communications Group and MES
have been segregated and reported as discontinued operations in the Consolidated
Statement of Operations  for the three years ended  September 30, 2000 (with the
prior year periods restated).  Cash flow impacts of the discontinued  operations
have not been segregated in the Consolidated Statement of Cash Flows. Components
of the income (loss) from discontinued  operations reflected in the Consolidated
Statements  of  Operations  for the three  years  ended  September  30, 2000 are
presented in the following table (amounts in thousands).

                                                1998       1999        2000
                                              ---------  ---------   --------
Revenue                                        $348,197   $352,232   $138,946
Cost of Revenue                                 237,681    244,119     94,943
Selling, general and administrative expenses     74,035     80,746     53,378
Restructuring charge                              2,590      1,889         --
Depreciation and amortization                    10,197     12,988      6,671
                                              ---------  ---------    --------
Operating income (loss)                          23,694     12,490    (16,046)
Interest income (expense), net                      484        268        (82)
                                              ---------  ---------   ---------
Income (loss) from operations before tax         24,178     12,758    (16,128)
Tax provision                                    (9,566)    (5,545)      (330)
                                              ---------  ---------    --------
Income (loss) from discontinued operations      $14,612   $  7,213   $(16,458)
                                              =========  =========   =========


                                                                             23
<PAGE>


                        AUDIO VISUAL SERVICES CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)


4. RESTRUCTURING CHARGE

During  the third  quarter of fiscal  1999 the  Company  determined  that it was
necessary  to  reevaluate  its  strategic  plan and to take  steps to reduce its
outstanding  long-term  indebtedness  with the overall  objective of  maximizing
shareholder value. In connection  therewith,  in May, 1999, the Company retained
Salomon  Smith Barney as its  financial  advisor to assist it in  reviewing  its
existing  operations and assessing  strategic and financial  alternatives.  As a
result  of  these  efforts,  during  the  fourth  quarter  of 1999  the  Company
concluded,   among  other  matters,   that  it  should  further  reorganize  its
audiovisual  services operations (the  "Restructuring")  and pursue the possible
sale of one or more of its business operations.

As a result,  in the fiscal  quarter  ended  September  30,  1999,  the  Company
recorded a pre-tax  restructuring  charge of $8.9 million.  The charge  included
$0.7 million of employee  termination  and  severance  costs  associated  with a
further  reduction in the workforce,  $3.1 million related to lease  termination
and other  facility  shut-down  costs and $5.1 million of computer  software and
equipment no longer usable as a result of the reorganization.

The  restructuring  began in fiscal 1998 when the Company  initiated a review of
its  operations,  focusing on the  integration  of its businesses as well as the
overall  management  and  organizational   structure,   which  resulted  in  the
initiation of the  Restructuring.  Accordingly,  during the fiscal quarter ended
March 31,  1998,  the Company  recorded a pre-tax  restructuring  charge of $2.3
million.  The charge included $1.4 million  related to employee  termination and
severance  costs  associated  with a reduction in the workforce and $0.9 million
related to lease  termination  and other costs.  During the fiscal quarter ended
September 30, 1998,  the Company  recorded an additional  pre-tax  restructuring
charge of $2.1 million in connection with the continuation of the reorganization
plan  begun in March  1998.  The charge  included  $0.8  million  related to the
severance and termination  costs, $0.4 million of lease termination  costs, $0.9
million  relating to the write-off of certain assets and other  termination  and
shut down costs to be incurred during the Restructuring.

The remaining  liability at September  30, 1999 was $1.1  million.  There was no
remaining liability at September 30, 2000.

5. OTHER COSTS ASSOCIATED WITH REALIGNMENT OF BUSINESS

During  fiscal 1999,  the Company  recorded  additional  charges of $9.9 million
related to the  Restructuring  described in Note 4 but which did not satisfy the
accounting  criteria for inclusion in the  restructuring  charge.  These charges
included  $6.2  million of  additional  reserves and  write-offs  related to the
accounts  receivable of the former  Atlanta-based  audiovisual  operations.  The
accounts  receivable  charge related primarily to disruptions in certain billing
procedures,  which the  Company  believes,  arose from the  Restructuring.  Such
accounts  receivable  related  charge  is  included  in  selling,   general  and
administrative   expenses  for  the  year  ended   September  30,  1999  in  the
accompanying financial statements.

In addition,  during fiscal 1999, the Company recorded a non-cash charge of $3.7
million for  audiovisual  rental  equipment  losses.  The charge was  identified
during the  Company's  reorganization  of its  audiovisual  businesses  from its
former  Atlanta-based  audiovisual  headquarters to the respective business unit
facilities. In accordance with generally accepted accounting principles, as such
charge does not satisfy the criterion for inclusion in the restructuring charge,
it has been included in cost of rental revenue.

6. BUSINESS ACQUISITIONS/DISPOSITIONS

During the two years ended  September 30, 1999,  the Company  completed  various
acquisitions   and   dispositions  in  each  of  the  audiovisual  and  business
communications  services  industries.  The following  describes the  significant
transactions completed during the two years ended September 30, 1999 relating to
the Company's continuing audiovisual services operations.

Fiscal 1998 Acquisitions/Dispositions

Effective  December 1, 1997, the Company acquired the outstanding  capital stock
of Visual Action Holdings, plc ("Visual Action") for an aggregate purchase price
of $253.0  million  (excluding  transaction  costs).  In  addition,  the Company
assumed  approximately  $44.3  million  in  outstanding  indebtedness  of Visual
Action. Visual Action provides corporate meeting services, including audiovisual
and exhibition  services,  in the United States and United Kingdom. The goodwill
resulting  from the  acquisition  of Visual  Action is being  amortized  over 40
years. The cost of the acquisition,  including  transaction  costs, was financed
through the Company's loan agreement entered into in October, 1997 (see Note 9).
Prior to December  1997,  the Company had acquired a minority  interest  through
open market  purchases  resulting in the equity in income reflected for the year
ended September 30, 1998.

                                                                             24
<PAGE>


                        AUDIO VISUAL SERVICES CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. BUSINESS ACQUISITIONS/DISPOSITIONS (Continued)

In May,  1998,  the Company  completed the  disposition  of the broadcast  video
services  business of Visual  Action for  approximately  $27.6  million in cash,
excluding  transaction  costs  of $2.0  million.  In  July,  1998,  the  Company
completed the disposition of the U.K.-based  audiovisual  staging  operations of
Visual Action for approximately  $26.7 million in cash. The Company retained the
hotel audiovisual outsourcing services portion of this business,  integrating it
with  Visual  Action's  existing  U.K.  operations.  The  Company  used the cash
proceeds  from the sales of the  businesses to repay  outstanding  bank debt. No
gain or loss was recognized on such disposition transactions.

Fiscal 1999 Dispositions

During  fiscal 1999, in connection  with the  Company's  consolidation  of hotel
audiovisual outsourcing operations, and as part of the Company's periodic review
of the purchase accounting  accruals,  approximately $2.6 million of liabilities
established in connection with certain of the  acquisitions  completed in fiscal
1996 and 1997 were identified as excess and reversed.

Effective  June 30, 1999,  the Company  disposed of its design and  installation
business, Presentation Technologies, headquartered in Atlanta. A pre-tax loss of
$16.5 million was incurred upon the  disposition of the related  assets.  During
the three months ended March 31, 2000, the Company wrote off an additional  $3.0
million of assets related to sold businesses.

The Company  accounted  for its  acquisitions  in  accordance  with the purchase
method and,  accordingly,  operations of the acquired businesses are included in
the  accompanying  consolidated  statements of operations from their  respective
dates of acquisition.


The  following  unaudited  consolidated  pro forma  results of operations of the
Company for the year ended  September 30, 1999 give effect to the disposition of
Presentation  Technologies,  as if such  transaction  had occurred on October 1,
1998.

                                                        YEAR ENDED
                                                       SEPTEMBER 30,
                                                      --------------
                                                          1999
                                                          ----
                                         (IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenue..................................              $364,572
Income before taxes......................               (51,205)
Net income...............................               (46,444)
Pro forma basic and diluted
 earnings per common share...............                 (1.96)

The above calculation of pro forma basic and diluted net income per common share
assumes that approximately 23,695,126 shares were outstanding during 1999.

The unaudited pro forma consolidated  results of operations do not purport to be
indicative of the actual results of operations  that would have occurred had the
acquisitions  described  above been made at the  beginning  of fiscal 1999 or of
results, which may occur in the future.

7. CORPORATE REORGANIZATION AND OTHER COSTS

During  fiscal 2000,  the Company  recorded  aggregate  charges of $11.0 million
related to its corporate  office and certain  divisional  reorganization  plans.
Such charges  included,  among other things,  $3.9 million  primarily related to
severance  payments which were made in the third fiscal quarter of 2000.  During
the three months ended  September 30, 2000, the Company wrote off  approximately
$0.5  million  of  computer  software  no longer  being  used as a result of the
corporate reorganization.

In July  2000,  the  Company  announced  that it had  reached  an  agreement  in
principle  to settle the class  action  previously  filed  against the  Company,
certain  of its  former  officers  and one of its  former  directors.  Under the
agreement,  all  claims  against  the  Company  and  the  individuals  named  as
defendants in the action will be dismissed  without  presumption or admission of
any liability or wrongdoing.  The principal  terms of the agreement call for the
payment  to the  plaintiff  class of the sum of $15.0  million.  The  settlement
amount was paid in its entirety by the Company's  insurance carrier.  During the
year ended September 30, 2000, the Company  recorded  charges  aggregating  $6.6
million  for the cost of the  related  insurance  coverage  (See Note  14).  The
remaining liability at September 30, 2000 was $5.1 million.


                                                                             25
<PAGE>

                        AUDIO VISUAL SERVICES CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)



8. PROPERTY AND EQUIPMENT

At September 30, 1999 and 2000 property and equipment consisted of:

                                                         AT SEPTEMBER 30,
                                                        ----------------
                                                      1999         2000
                                                      ----         ----
                                                       (IN THOUSANDS)
Audiovisual rental and production equipment......... $97,274    $125,314
Furniture and fixtures.............................    9,363       4,279
Information systems.................................  24,718      12,018
Leasehold improvements.............................   12,293         911
Other...............................................  10,349       2,909
                                                     -------    --------
                                                     153,997     145,431
Less--accumulated depreciation and amortization....   53,559      77,328
                                                     -------    --------
                                                    $100,438     $68,103
                                                    ========     =======

The related  depreciation and amortization expense for the years ended September
30, 1999 and 2000 was $20.5 million and $31.8 million, respectively.

9. DEBT

At September 30, 1999 and 2000, long-term debt consisted of:

                                                        AT SEPTEMBER 30,
                                                        ----------------
                                                      1999         2000
                                                      ----         ----
                                                        (IN THOUSANDS)
Credit Agreement............................       $425,280      $344,950
Notes payable...............................          1,415           --
Other.......................................            444             7
                                                   --------      --------
                                                    427,139       344,957
Less--current portion of long-term debt......         1,299           --
                                                   ---------     --------
                                                   $425,840      $344,957
                                                   =========     ========

At September 30, 2000, the carrying amount of the above commitments approximated
fair value.

On October 28, 1997, the Company  entered into a loan agreement with a syndicate
of banks  pursuant to which the Company  increased its aggregate  available bank
financing  from $100 million to $550  million,  consisting of a $300 million six
year  revolving  line of credit  (the  "Revolving  Facility")  to be utilized in
connection  with  future  acquisitions  and  for  working  capital  and  general
corporate  purposes and a $250 million six year term loan ( the "Term  Facility"
and together with the Revolving Facility, the "Credit Agreement") to be utilized
in  connection  with the  acquisition  of Visual  Action.  (See Note 6, Business
Acquisitions/Dispositions). The Company recognized an extraordinary loss of $0.6
million in the quarter ended  December 31, 1997  resulting from the write-off of
the  unamortized  debt  issuance  fees  relating  to the  Company's  former bank
facilities.  Approximately  $4.8 million in debt  issuance fees were incurred in
connection  with the Credit  Agreement.  Such fees are being  amortized over the
term of the Credit Agreement.

At June 30, 1999, the Company did not achieve certain of the financial covenants
specified in the Credit Agreement. In connection with the amendments made to the
Credit  Agreement in July 1999 (the "July 1999  Amendment"),  the lenders waived
through  March 30,  2000 all  defaults  that have  arisen or may arise  from the
failure to satisfy the specified financial covenants for June 30, 1999,

                                                                             26

<PAGE>

                        AUDIO VISUAL SERVICES CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. DEBT (Continued)

September 30, 1999 and December 31, 1999. As part of such amendment, the Company
agreed,  among other things, to revised covenants regarding minimum consolidated
earnings before interest,  taxes,  depreciation and amortization ("EBITDA"),  as
defined in the Credit  Agreement  for the twelve month  periods  ending June 30,
September  30 and  December  31,  1999,  and to  restrictions  on the  amount of
permitted  capital  expenditures (as defined in the Credit  Agreement),  for the
three month periods ending September 30 and December 31, 1999.

At September 30, 1999, the Company was not in compliance  with the covenants set
forth in the July 1999  Amendment.  In December,  1999,  the Company  obtained a
further  amendment (the "December 1999 Amendment") to the Credit Agreement that,
among other  things,  extended  the  waivers  under the July 1999  Amendment  to
October 1, 2000,  and waived through  October 1, 2000 all defaults  arising from
the failure at September 30, 1999 to satisfy the financial  covenants  specified
in the July 1999 Amendment. As part of the December 1999 Amendment,  the Company
agreed to a  minimum  consolidated  adjusted  EBITDA  covenant  that is based on
post-September   30,  1999  consolidated   EBITDA  (as  defined  in  the  Credit
Agreement),  and to restrictions on the amount of capital  expenditures that may
be made by the Company during the fiscal year ending September 30, 2000.

In addition to the waivers and revised financial  covenants described above, the
December 1999 Amendment provided for the deferral through October 1, 2000 of the
principal  payments  due under the Term  Facility on December 31, 1999 and March
31, 2000.  The December  1999  Amendment  also included a consent by the lenders
that  would  have  allowed  the  Company  to  pursue  the  possible  sale of its
audiovisual  businesses,  provided that certain timing requirements were met and
minimum net proceeds exceeded a specified  amount.

In March,  2000, the Company  entered into a further  amendment (the "March 2000
Amendment") to the Credit Agreement,  that, among other things,  (i) amended the
maturity  date of the Term  Facility to eliminate  the  requirement  to make any
installment  payments thereon such that all amounts  outstanding  under the Term
Facility  are due and  payable  on October 1, 2001,  (ii)  reduced  the  amounts
available to the Company under the Credit Agreement for letters of credit, (iii)
eliminated altogether those financial covenants that the July 1999 Amendment and
December 1999  Amendments  previously had waived through  October 1, 2000,  (iv)
amended the covenant relating to minimum consolidated EBITDA for the three month
period ended  December 31, 1999,  the six month period ended March 31, 2000, the
nine month period ended June 30, 2000, the twelve month periods ending September
30 and December 31, 2000,  and any period of four  consecutive  fiscal  quarters
ending on or after  March  31,  2001,  (v)  amended  the  covenant  relating  to
restrictions on the amount of permitted  capital  expenditures  (as described in
the Credit Agreement) such that the Company may not permit capital  expenditures
to exceed $25 million in any two  consecutive  fiscal quarters or $40 million in
any four consecutive  fiscal quarters  commencing with fiscal quarter  beginning
January 1, 2000 and (vi)  requires  the  Company to provide  certain  additional
reports to the  lenders.  In  addition,  pursuant to the terms of the March 2000
Amendment,  the  lenders  withdrew  the  consent  granted to the  Company in the
December 1999 amendment to pursue the possible sale of the Company's audiovisual
businesses.

In addition to the amendments and revised financial  covenants  described above,
the March 2000  Amendment  also  included a consent by the  lenders to allow the
Company  to proceed  with the sale of its  worldwide  Communications  Group (the
"Communications Sale") and to pursue the sale of MES ( the "MES Sale"), provided
that, in each case,  certain timing  requirements were met, minimum net proceeds
exceeded a specific amount and 75% of the net proceeds of each such  disposition
would be applied to the prepayment of the Term Facility and the reduction of the
commitment   under  the  Revolving   Facility.   The  Company   consummated  the
Communications  Sale on April 20, 2000, and  consummated  the MES Sale on May 9,
2000, and in connection therewith (i) repaid an aggregate of $38.0 million under
the Term Facility  thereby  permanently  reducing  availability  and outstanding
amounts  thereunder  from  $199.6  million to $161.6  million and (ii) repaid an
aggregate of $47.5  million under the Revolving  Facility,  which  resulted in a
permanent reduction of the availability thereunder from $250.0 million to $202.5
million.

Pursuant to the terms of the March 2000  Amendment,  the Company  also agreed to
retain not later than June 1, 2001, an investment  banking firm for the purposes
of evaluating strategic and debt reduction alternatives.

Fees of approximately $1.2 million,  $1.4 million and $1.0 million were incurred
in  connection  with the  amendments  made to the Credit  Agreement in December,
1998, July, 1999, and December 1999,  respectively.  Such fees will be amortized
over the remaining term of the Credit Agreement.

No fees were paid to the  Company's  lenders in  connection  with the March 2000
Amendment;  however, pursuant to a deferred amendment fee letter entered into in
connection with the March 2000 Amendment,  the Company will be required to pay a
fee equal to the  greater of (A) not less than $2.5  million nor more than $12.5
million or (B) not less than 2.5% nor more than  12.5% of the net  equity  value
(as  defined in the  deferred  amendment  fee  letter) of the  Company  upon the
occurrence of the earlier of (i) the maturity  date of the  Revolving  Facility,
(ii) an event of default (as defined in the Credit  Agreement),  (iii) a sale of
all or substantially all of the Company's  assets,  (iv) a sale of substantially
all of the capital  stock of the  Company,  or (v) the  repayment of all amounts
outstanding  under the Credit  Agreement  (such  events  being  referred to as a
"Triggering Event"). The actual amount of such fee will be


                                                                             27
<PAGE>

                        AUDIO VISUAL SERVICES CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. DEBT (Continued)

determined on the date that a Triggering Event shall occur.

The maturity  date of each of the Term  Facility and the  Revolving  Facility is
October,  2001.  Interest on outstanding  amounts under the Credit  Agreement is
payable  monthly in arrears and at the option of the  Company  accrues at either
(i) LIBOR plus an  applicable  margin or (ii) an alternate  base rate based upon
the greatest of (a) the agent bank's prime rate, (b) the  three-month  secondary
certificate  of deposit  rate and (c) the  federal  funds rate.  The  applicable
margins  are  subject  to change  based on the  occurrence  of  certain  events.
Pursuant to the terms of the March 2000  Amendment,  outstanding  amounts  under
each of the Term Facility and Revolving Facility also accrue additional interest
at a rate of 1 % per annum payable in arrears upon the termination of the Credit
Agreement.  The weighted  average interest rate on outstanding debt at September
30, 2000 is 9.64%.


The  Credit  Agreement  is  secured  by  substantially  all of the assets of the
Company and its material subsidiaries, and the Company and its subsidiaries have
pledged the stock of their  respective  subsidiaries  for the ratable benefit of
its lending banks. In addition to the financial  covenants  described above, the
Credit Agreement contains certain other covenants and restrictions customary for
credit  facilities  of  a  similar  nature,   including,   without   limitation,
restrictions on the ability of the Company to pay dividends.

The  Company  believes  it will  be able to  satisfy  the  financial  and  other
covenants  included  in the  Credit  Agreement,  as  amended.  As stated  above,
pursuant to the terms of the Credit Agreement,  the entire principal on the Term
Facility  and the  Revolving  Facility  is payable on October 1, 2001.  With the
foregoing  in mind,  the Company  recognizes  that it will be  necessary to take
actions to reduce its indebtedness or restructure the terms of such indebtedness
under the Credit Agreement by assessing various refinancing options or obtaining
a further amendment to the Company's existing Credit Agreement.  There can be no
assurance that the Company will be able to take such actions.  In the event that
the Company is unable to refinance the  indebtedness  under the Credit Agreement
or restructure  the terms  thereof,  then upon the maturity of the Term Facility
and the Revolving Facility, the lenders would be entitled to exercise all or any
of their rights or  remedies.  Any such  exercise of rights and  remedies  would
likely have a material adverse effect on the Company.

As  of  December  15,  2000,  the  Company  had  approximately   $356.5  million
outstanding under the Credit Agreement,  of which $194.8 million was outstanding
under the Revolving Facility. Cash on hand at such date was $11.3 million.

Fees of approximately $1.2 million,  $1.4 million and $1.0 million were incurred
in  connection  with the  amendments  made to the Credit  Agreement in December,
1998, July, 1999, and December 1999,  respectively.  Such fees will be amortized
over the remaining term of the Credit Agreement.

The Company has received a commitment letter from Chase Securities, Inc. and The
Chase  Manhattan  Bank to structure,  arrange and  syndicate a senior  revolving
credit facility in an aggregate amount of up to $16 million, which would provide
working  capital to the Company in addition to the liquidity  provided under the
Company's  existing  Credit  Agreement.  Consummation of the financing under the
proposed additional credit facility is conditioned upon, among other things, the
consent of the requisite  number of lenders under the Company's  existing Credit
Agreement, the execution of definitive financing documentation, the amendment of
the terms of the  Company's  existing  Credit  Agreement  and  other  conditions
customary for  transactions  of this type.  There can be no assurance  that such
conditions will be met and that such additional financing will be consummated.

10. CAPITAL STOCK

Effective as of January 1, 1996,  the Board of Directors  adopted a  stock-based
incentive  plan, the Caribiner  International,  Inc. 1996 Stock Option Plan (the
"1996 Option Plan").  On February 27, 1998 and March 16, 1999, the  stockholders
of the Company approved certain amendments to the 1996 Option Plan.  Further, on
June 28, 2000,  the  stockholders  approved an Amended and  Restated  1996 Stock
Option Plan (the "Amended and Restated Option Plan"), which, among other things,
amended  the 1996 Stock  Option  Plan to permit the  Company to issue  shares of
restricted  common  stock,  as well as options to  purchase  common  stock.  The
Amended  and  Restated  Option Plan is not  subject to the  requirements  of the
Employee  Retirement  Income  Security Act of 1974 as amended or qualified under
Section  401(a) of the Internal  Revenue Code of 1986,  as amended (the "Code").
The  Amended  and  Restated   Option  Plan  is  designed  to:  to  optimize  the
profitability and growth of the Company through  incentives which are consistent
with  the  Company's  goals  and  which  link  the  personal  interest  of  plan
participants to the interests of the stockholders;  to provide plan participants
with an incentive for excellence

                                                                             28
<PAGE>


                        AUDIO VISUAL SERVICES CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. CAPITAL STOCK(Continued)


in individual  performance;  to promote  teamwork  among plan  participants;  to
provide  flexibility  to the Company in its ability to  motivate,  attract,  and
retain the services of plan  participants who make significant  contributions to
the Company's  success;  and, to allow Plan Participants to share in the success
of the Company.  The Amended and Restated Option Plan provides that an aggregate
of 3,500,000  shares of the Company's  common stock shall be available for grant
(either in the form of stock options or shares of restricted stock),  subject to
authorization  by the  Compensation  Committee  of the Board of  Directors.  The
option price per share under the Amended and  Restated  Option Plan is generally
the  market  price of the common  stock on the grant  date.  Generally,  options
granted  under the Amended and Restated  Option Plan vest over a period of three
years from the grant date.

As of September  30, 2000,  stock  options to purchase an aggregate of 1,960,700
shares of Common Stock were  outstanding,  of which options to purchase  120,111
shares of Common  Stock  were  vested  and an  aggregate  of  666,000  shares of
Restricted Common Stock were outstanding.

The Company applies the provisions of APB No. 25, Accounting for Stock Issued to
Employees,   in  accounting  for  its  stock-based   awards.   Accordingly,   no
compensation cost has been recognized for its stock option plans.

The fair value of each option grant was estimated on the date of grant using the
Black-Scholes  option-pricing  model with the following  assumptions:  risk-free
interest  rate of 4% in 1998 and 6% in 1999 and 2000; a dividend  yield of 0% in
1998,  1999 and 2000;  volatility of 67.4% in 1998,  77.4% in 1999 and 156.1% in
2000, respectively, and an expected life of 5 years in 1998, 1999 and 2000.

Had the  Company  elected to apply the  provisions  of  Statement  of  Financial
Accounting  Standards (SFAS No. 123),  Accounting for Stock Based  Compensation,
net  income  would  have  been  reduced  by  $823,000,  or $0.03  per  share and
$1,372,000,  or $0.06 per share,  for fiscal years 1998 and 1999,  respectively,
and  increased  by  $2,009,000,  or $0.08 per share for the  fiscal  year  ended
September 30, 2000.

A summary of the status of the Company's  option plans at September 30, 2000 and
activity during the years ended September 30, 1998, 1999 and 2000 is as follows:



<TABLE>
<CAPTION>


                                                      1998                     1999                   2000
                                                      ----                     ----                   ----
                                                WEIGHTED AVERAGE          WEIGHTED AVERAGE           WEIGHTED AVERAGE
                                                ----------------          ----------------           ----------------
                                            SHARES    EXERCISE PRICE   SHARES  EXERCISE PRICE    SHARES       EXERCISE PRICE
                                            ------    --------------   ------  --------------    ------       --------------
                                                                      (IN THOUSANDS OF SHARES)
<S>                                          <C>          <C>          <C>         <C>          <C>               <C>
Outstanding at beginning of year.........      737        $23.22        1,048      $21.75        1,989            $9.23
Options granted..........................      561         20.25        2,024        8.68        1,644             0.51
Options exercised........................      (30)        23.38         --           --           --                --
Options forfeited/expired................     (220)        23.10       (1,083)      16.06       (1,672)            9.48
                                             -----         -----       -------       -----       ------            -----
Options outstanding at end of year.......    1,048         21.75        1,989        9.23        1,961             1.80
                                             -----         -----        -----        -----       ------            -----
Exercisable at end of year...............      275         20.69           67       16.52          120             9.39
                                             -----         -----        -----        -----       ------            -----
Weighted average fair value of options
  granted during the year................                  12.00                     5.80                          0.50
                                                           -----                     -----                         -----
</TABLE>
A summary of information about stock options outstanding and options exercisable
at September 30, 2000 is as follows (In thousands of shares):

<TABLE>
<CAPTION>
                                                          OPTIONS OUTSTANDING                       OPTIONS EXERCISABLE
                                                         --------------------                       -------------------
                                                       WEIGHTED AVERAGE     WEIGHTED AVERAGE               WEIGHTED AVERAGE
RANGE OF EXERCISE PRICES                     SHARES    REMAINING TERM       EXERCISE PRICE       SHARES    EXERCISE PRICE
------------------------                     ------    --------------       --------------       ------    --------------
<S>                                         <C>          <C>                <C>               <C>          <C>
$0.36 to $0.47............................   1,626         9.80                 $0.43             --            --
$6.66 to $7.63............................     309         7.56                  7.39            102           7.39
$20.63 to $21.94..........................      26         7.51                $20.73             18         $20.77
$0.36 to $21.94...........................   1,961         9.41                 $1.80            120          $9.39
</TABLE>

                                                                             29
<PAGE>

                        AUDIO VISUAL SERVICES CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

11. EMPLOYEE BENEFIT PLANS

The Company maintains several defined  contribution plans covering all qualified
employees.  Effective January 1, 1997, the Company began matching $0.25 for each
dollar contributed by an employee, up to a maximum of 3% of such employee's base
compensation  (subject to applicable  limits under the Internal  Revenue Code of
1986,  as amended). In  addition,  the  Company  continues  to maintain  several
existing  defined  contribution  plans that it inherited in connection  with its
acquisition of Visual Action in December,  1997.  Under such plans,  the Company
contributes  varying  amounts  ranging  from  $0.25  to $0.50  for  each  dollar
contributed  by an employee  to such plan up to a maximum of 4% of base  salary.
Company matching  contributions  during the years ended September 30, 1998, 1999
and 2000 totaled $0.4 million, $0.7 million and $0.7 million, respectively.


12. INCOME TAXES

Deferred  income  taxes  reflect  the net tax  effect of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the carrying  amounts used for income tax purposes  which  resulted
from the  acquisition of certain  business  operations,  the difference  between
financial  reporting recovery periods and tax reporting recovery periods and the
write-down of certain assets for financial reporting purposes.

Significant  components of the Company's  deferred tax assets and liabilities as
of September 30, 1999 and September 30, 2000 are as follows:

<TABLE>
<CAPTION>
                                                                   1999          2000
                                                                   ----          ----
                                                                     (IN THOUSANDS)
<S>                                                              <C>           <C>
DEFERRED TAX ASSETS:
NOL and tax credit carryforwards............................     $23,900       $43,176
Accrued interest............................................         247           --
Allowance for doubtful accounts.............................         691         1,082
Restructuring and other reserves............................       1,791         6,297
                                                                 -------       -------
Total deferred tax assets...................................      26,629        50,555
Valuation allowance.........................................     (14,640)      (39,875)
                                                                 -------       -------
Net deferred tax assets.....................................      11,989        10,680

DEFERRED TAX LIABILITIES:

Tax over book depreciation and amortization.................       8,003         7,769
Adjustments for differences in basis of acquired assets.....       8,000         6,913
Amortization of intangibles.................................       3,653         3,193
Other.......................................................         225           155
                                                                 -------       -------
Total deferred tax liabilities..............................      19,881        18,030
                                                                 -------        ------
Net deferred tax liability/(asset)..........................      $7,892        $7,350
                                                                 =======        ======
</TABLE>

At September 30, 2000, the Company had net operating loss ("NOL")  carryforwards
for federal income tax purposes of approximately  $100.5 million, of which, $1.6
million  expire in the years 2001 through 2007 and $98.9  million  expire in the
years 2019 and 2020. The Company also has tax loss  carryforwards  for state and
local tax  purposes.  A valuation  allowance has been recorded to the extent the
Company  believes  the  benefit  from  the tax  loss  carryforwards  will not be
realized.  In addition,  approximately $1.6 million of the NOL carryforwards may
be  subject  to  limitations  under the change in  ownership  provisions  of the
Internal  Revenue  Code and may also be limited  for state and local  income tax
purposes.  The Company has not recorded any future benefit  related to the usage
of these NOL carryforwards.


                                                                             30
<PAGE>



                        AUDIO VISUAL SERVICES CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. INCOME TAXES (Continued)

Significant  components  of the  provision  for  income  taxes  attributable  to
continuing operations are as follows:


                                                1998       1999       2000
                                               -----      -----       -----
                                                      (IN THOUSANDS)
Current:
  Federal.................................... $(6,992)   $(7,624)    $ --
  State......................................    (566)      (500)      --
  Foreign....................................  (2,938)    (3,325)      340
                                               ------    -------     ----
    Total current tax........................ (10,496)   (11,449)     340

Deferred:
  Federal...................................    1,345     (1,879)      --
  State.....................................     (992)       858       --
  Foreign...................................    1,201      1,275       --
                                              -------    --------    ----
    Total deferred tax......................    1,554        254       --
Total (benefit) provision for taxes.........  $(8,942)  $(11,195)    $340
                                              =======    =======     =====

For fiscal 1998 and 1999, a federal current tax benefit has been recorded to the
extent the  current  year tax loss can be carried  back and for a portion of the
tax loss carried forward.

The reconciliation of income tax attributable to operations computed at the U.S.
federal statutory tax rates to income tax expense is as follows:

<TABLE>
<CAPTION>

                                                              1998       1999          2000
                                                              ----       ----          ----
                                                                     (IN THOUSANDS)
<S>                                                         <C>        <C>        <C>
Tax expense at statutory rate.............................. $(7,917)   $(24,745)   $(19,258)
State income tax expense/(benefit) (net of federal tax)....  (1,013)        233         --
Non-deductible goodwill amortization.......................     354       4,708       2,434
Non-deductible expenses....................................      42         478         682
Losses without benefit.....................................       8      10,461      16,472
Rate differential related to foreign operations............    (416)     (2,364)         10
Other......................................................                  34          --
                                                            -------    --------    --------
                                                            $(8,942)   $(11,195)       $340
                                                            =======    ========    =========
</TABLE>

13. SEGMENT INFORMATION

In accordance  with  Financial  Accounting  Standards  Board  Statement No. 131,
Disclosures about Segments of an Enterprise and Related  Information,  set forth
below is selected financial information about the Company's reportable operating
segments.

Description of Segments

As described in Note 3, the company disposed of its Communications Group and MES
segments in April,  2000 and May,  2000,  respectively.  During fiscal 2000, the
Company's  continuing  audiovisual  operations were comprised of three segments:
Presentation   Services  (formerly  known  as  Hotel  Services),   Audio  Visual
Headquarters  (formerly  known as  Staging  and  Meeting  Services)  and  Rental
Services.  Presentation  Services provides audiovisual equipment rental services
to hotels via an on-site presence of both equipment and technical support staff.
Audio Visual  Headquarters  is a provider of  audiovisual  equipment,  technical
labor  and  related   staging   services  to  production   companies  and  other
corporations   for  use  during   meetings,   trade   shows,   conventions   and
presentations. Rental Services is a remote full service provider on an as-needed
basis to local and national corporations, convention centers and smaller hotels.

During fiscal 1999, the Company reorganized its audiovisual  services businesses
into the three  segments  discussed  above.  Prior to fiscal  1999,  the Company
operated  the  audiovisual  services  businesses  on a  combined  basis.  It  is
impracticable to furnish separate financial data relating to fiscal year 1998 in
conformity with the current reporting  segments within the audiovisual  services
group.


                                                                             31
<PAGE>



                        AUDIO VISUAL SERVICES CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. SEGMENT INFORMATION (Continued)

Measurement of Segment Profit or Loss

The Company evaluates  performance based upon revenues,  gross profit and profit
or  loss  from  operations  before  interest,  income  taxes,  depreciation  and
amortization ("EBITDA").  The accounting policies of the reportable segments are
the  same as  those  described  in Note 2,  Summary  of  Significant  Accounting
Policies.  Intradivision  sales are recorded at the Company's costs; there is no
intercompany profit or loss on intradivision sales.


YEAR ENDED SEPTEMBER 30, 1998 (AMOUNTS IN THOUSANDS)
                                                             AUDIO
                                                             VISUAL
                                                           ---------
Revenue................................................    $361,157
Gross Profit...........................................      86,626
EBITDA.................................................      38,548
Segment assets.........................................     143,697
Capital expenditures...................................      30,791

YEAR ENDED SEPTEMBER 30, 1999 (AMOUNTS IN THOUSANDS)

                                       AUDIO                          TOTAL
                      PRESENTATION     VISUAL     RENTALS             AUDIO
                        SERVICES    HEADQUARTERS  SERVICES  OTHER(a)  VISUAL
                        --------    ------------  --------  -------   ------
Revenue...............  $261,597      $89,390    $22,212   22,319   $395,518
Gross Profit..........    52,894        8,149      6,480    8,834     76,357
EBITDA................    37,142       11,416      4,176   (2,607)    50,127(b)
Segment assets........    87,192       32,161     12,771       --    132,124
Capital
  expenditures........    21,347        8,962      2,583      196     33,088


(a)  Primarily represents the results of operations of the Company's design
     and installation business, which was disposed in June, 1999.

(b)  Excludes $8.4 million in  costs incurred during fiscal 1999 related to
     the Company's former Atlanta-based audiovisual headquarters.

YEAR ENDED SEPTEMBER 30, 2000 (AMOUNTS IN THOUSANDS)


                                           AUDIO
                        PRESENTATION       VISUAL     RENTALS
                          SERVICES      HEADQUARTERS  SERVICES     TOTAL
                          ---------     -----------   --------   ---------
Revenue.................  $314,231        $88,772    $23,783     $426,786
Gross Profit...........     61,671          8,273      4,311       74,255
EBITDA.................     43,542         12,878     (1,463)      54,957
Segment assets.........     86,580         32,036     11,667      130,283
Capital expenditures...     20,746          6,929      2,868       30,543


                                                                             32
<PAGE>





                        AUDIO VISUAL SERVICES CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. SEGMENT INFORMATION (Continued)


RECONCILIATIONS TO CONSOLIDATED STATEMENT OF OPERATIONS (AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                          1998        1999        2000
                                                                          ----        ----        ----
<S>                                                                     <C>          <C>       <C>
Total external revenue for reportable segments.......................   $361,157   $386,891    $420,414
Intradivision revenue for reportable segments........................        601      8,627       6,372
Elimination of intradivision revenue.................................       (601)    (8,627)     (6,372)
                                                                        ---------   --------    -------
   Total consolidated revenue........................................   $361,157    $386,891   $420,414
                                                                        ========    ========   ========
Total "EBITDA" for reportable segments...............................    $38,548     $50,127    $54,957
Rental equipment write-downs included in cost of rental revenue......        --       (3,700)    (4,715)
Restructuring charge.................................................     (4,364)     (8,880)       --
Loss on disposal of assets...........................................        --      (16,500)    (3,000)
Reserves/write-offs relating to accounts receivable..................        --       (6,167)       --
Costs related to the former Atlanta-based audiovisual headquarters...        --       (8,407)       --
Corporate reorganization and other costs.............................        --          --     (11,005)
Corporate expenses...................................................     (5,378)    (12,592)    (9,493)
                                                                         -------    --------    -------
Total operating income (loss) before depreciation and amortization
   expense...........................................................     28,806      (6,119)    26,744
Depreciation and amortization expense,
   including depreciation in cost of revenue.........................     26,617      29,364     35,461
                                                                         -------     -------    -------
   Total operating income (loss) from continuing operations..........     $2,189    $(35,483)   $(8,717)
                                                                         =======     ========   ========
RECONCILIATIONS TO CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS)
                                                                          1998       1999       2000
                                                                           ----      ----       ----
Total assets for reportable segments................................    $143,697    $132,124   $130,284
Goodwill, net.......................................................     419,581     409,204    272,009
Corporate and other assets..........................................       3,983      12,558     11,996
Assets of discontinued operations...................................     130,688     105,583        --
                                                                        --------    --------   --------
   Total consolidated assets........................................    $697,949    $659,469   $414,289
                                                                        ========    ========   ========
RECONCILIATIONS TO CONSOLIDATED CAPITAL EXPENDITURES
                                                                          1998       1999       2000
                                                                          ----       ----       ----

Total capital expenditures for reportable segments.................      $30,791    $33,088     $30,543
Capital expenditures for discontinued operations...................       15,663     11,420       5,875
Corporate capital expenditures.....................................          --         902         397
                                                                         -------    -------     -------
   Total consolidated capital expenditures.........................      $46,454    $45,410     $36,815
                                                                         =======    ========    =======
</TABLE>

14. COMMITMENTS AND CONTINGENCIES

Minimum annual rentals under noncancelable  leases,  excluding escalations based
upon  increases  in real estate  taxes and  operating  expenses,  are payable as
follows,  for the  year  ended  September  30,  2001--$6.6  million;  2002--$4.7
million;   2003--$3.5   million;   2004--$2.3   million;   2005--$1.5   million;
thereafter--$0.7 million; totaling $19.3 million.

Rent expense  charged to operations in fiscal 1998,  fiscal 1999 and fiscal 2000
was $3.5 million, $4.6 million and $5.8 million, respectively.

On March 25, 1999,  a  shareholder  class action was filed in the United  States
District Court for the Southern  District of New York (the "Southern  District")
against the Company  and certain of its current and former  officers  and one of
its  directors.  On  May 7,  1999,  a  shareholder  class  action  substantially
identical  to the March 25th action was filed in the Southern  District  against
the  Company  and the same  individuals  named in the March  25th  action.  Both
lawsuits allege, among other things, that defendants misrepresented the

                                                                             33
<PAGE>



                        AUDIO VISUAL SERVICES CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

14. COMMITMENTS AND CONTINGENCIES (Continued)

Company's  ability to integrate  various  companies it was acquiring and alleges
violations of Sections  10(b) and 20(a) of the  Securities  Exchange Act of 1934
and various rules  promulgated  thereunder.  The lawsuits seek unspecified money
damages, plus costs and expenses,  including attorneys' fees and expert fees. In
November,  1999,  the Court issued an order  consolidating  the lawsuits  into a
single action and appointing  lead  plaintiffs and lead counsel.  The plaintiffs
filed a  consolidated  amended  complaint in January 2000. In February 2000, the
Company filed a motion to dismiss the consolidated amended complaint.

Although the Company  believes it has  meritorious  defenses to this action,  in
light of the  inherent  uncertainties  and the  burden  and  expense  of lengthy
litigation,  the Company reached an agreement in principle in late June, 2000 to
settle  the  class  action  which  was  announced  on July 20,  2000.  Under the
agreement,  all  claims  against  the  Company  and  the  individuals  named  as
defendants in the action will be dismissed  without  presumption or admission of
any liability or wrongdoing.  The principal  terms of the agreement call for the
payment  to the  plaintiff  class of the sum of $15.0  million.  The  settlement
amount was paid in its entirety by the Company's insurance carrier. The terms of
the settlement are subject to, among other things,  court approval and execution
of  definitive  settlement  documentation.

In addition to the litigation described above, from time to time, the Company is
a party to various in legal proceedings incidental to its business. Although the
ultimate disposition of these proceedings is not determinable, in the opinion of
the Company,  none of such  proceedings  has had or is likely to have a material
adverse effect on the Company's  results of operations,  financial  condition or
liquidity.

15. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Interest paid was $21.9 million,  $33.5 million and $46.7 during the years ended
September 30, 1998, 1999 and 2000,  respectively.  Taxes paid were $12.2 million
and  $0.3  million   during  the  years  ended   September  30,  1998  and  2000
respectively. No taxes were paid during the year ended September 30, 1999.

16. EARNINGS PER COMMON SHARE

The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
                                                                                        1998         1999          2000
                                                                                        ----         ----          ----

                                                                                          (AMOUNTS IN THOUSANDS,
                                                                                         EXCEPT PER SHARE AMOUNTS)
<S>                                                                               <C>               <C>          <C>
Net income for basic and diluted earnings per share:
   Income (loss) from continuing operations....................................... $(13,677)        $(59,506)   $ (55,365)
Discontinued operations:
   Income (loss) from operations (net of income taxes)............................   14,612            7,213      (16,458)
   Loss on disposal of assets.....................................................       --               --      (40,313)
                                                                                   --------         --------    ----------
    Income (loss) from discontinued operations....................................   14,612            7,213      (56,771)
    Extraordinary charge..........................................................      605               --           --
    Net income (loss).............................................................     $330         $(52,293)   $(112,136)
                                                                                   ========         =========   ==========
Weighted average shares of common stock outstanding:
   Weighted average shares of common stock outstanding for basic
      earnings per share..........................................................   23,616           23,695       23,857
   Effect of stock options........................................................       --              --           --
                                                                                   --------        ---------    ---------
   Weighted average shares of common stock outstanding for diluted
      earnings per share..........................................................   23,616           23,695       23,857
                                                                                   ========         ========    =========
Basic and diluted earnings (loss) per share:
   Income (loss) from continuing operations before extraordinary charge...........   $(0.58)          $(2.51)      $(2.32)
   Income (loss) from discontinued operations (net of income taxes)...............     0.62             0.30       $(2.38)
   Extraordinary charge...........................................................    (0.03)              --           --
                                                                                    --------        --------    ----------
   Net income.....................................................................    $0.01          $(2.21)      $(4.70)
                                                                                    ========        ========    ==========
</TABLE>

                                                                             34
<PAGE>
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

                                                                             35
<PAGE>



                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

See  "Executive  Officers and  Directors of the Company" set forth in Item 4A of
Part I hereto.

Based  solely  upon  review of the Forms 3, 4 and 5 and any  amendments  thereto
furnished  to the  Company  pursuant  to Rule  16a-3(c)  promulgated  under  the
Exchange  Act, the Company is not aware of any failure of any officer,  director
or beneficial owner of more than 10% of the Common Stock to timely file with the
Securities and Exchange  Commission any Form 3, 4 or 5 in respect of the Company
during fiscal year 2000,  except for (i) each of Bryan D. Langton and C. Anthony
Wainwright,  directors of the Corporation, each of whom did not file a report on
Form  5  in  respect  of  shares  issued  to  them  in  fiscal  1999  under  the
Corporation's  Non-Employee  Directors Stock Plan, as amended,  and subsequently
made  such  disclosure  on a Form 5 filed  in  respect  of  transactions  in the
Corporation's  equity  securities  during  fiscal 2000,  (ii) each of Michael J.
O'Brien and Kenneth R. Sanders,  Executive Vice  Presidents of the  Corporation,
each  of  whom  did not  file a  report  on  Form 3 and  subsequently  made  the
disclosures  required  on such form on a Form 5, and (iii)  John C.  Voaden,  an
Executive Vice President of the Corporation, who did not file a report on Form 5
in  respect of options  granted  to him in fiscal  1999 under the  Corporation's
Amended  and  Restated  1996  Stock  Option  Plan  and  subsequently  made  such
disclosure  on a Form 5 filed in respect of  transactions  in the  Corporation's
equity securities during fiscal 2000.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth certain  information  concerning the compensation
paid or accrued by the  Company  for  services  rendered  to the Company and its
subsidiaries  in all capacities  for the fiscal years ended  September 30, 1998,
1999 and 2000, by its Chief  Executive  Officer and each of the Company's  other
executive  officers whose total salary and bonus exceeded  $100,000  during such
fiscal year (collectively, the "Named Executive Officers"):


                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                          LONG-TERM
                                                                                         COMPENSATION
                                                                                 ----------------------------
                                                                ANNUAL
                                                             COMPENSATION         RESTRICTED     SECURITIES
                                                          ------------------        STOCK        UNDERLYING     ALL OTHER
NAME AND PRINCIPAL POSITION                               SALARY       BONUS        AWARDS        OPTIONS     COMPENSATION
---------------------------                               ------       -----       --------      -----------   ------------
<S>                                                      <C>         <C>          <C>             <C>          <C>
Robert K. Ellis(1)
Chairman of the Board and Chief Executive
     Officer of the Company
     2000........................................       $245,000     $122,500     $100,500(7)    470,000            --

Digby J. Davies(2)
President, Acting Chief Financial Officer and
  Chief Operating Officer of the Company
     2000........................................       $195,000      $97,500      $80,625(7)    375,000            --

Michael J. O'Brien(3)
Executive Vice President of the Company and
  Chief Executive Officer of Audio Visual
    Headquarters
     2000........................................       $291,800     $283,160      $22,875(7)     73,000            --
     1999........................................       $207,072     $103,950           --            --            --
     1998........................................       $269,322     $120,476           --        20,000            --

Kenneth R. Sanders(4)
Executive Vice President of the Company and
  Chief Operating Officer of Presentation Services
     2000........................................       $253,334     $250,141      $22,875(7)     73,000        43,000(8)
     1999........................................       $210,420      $65,030           --        60,000            --
     1998........................................       $160,643      $80,245           --            --            --

John C. Voaden(5)
Executive Vice President of the Company and
  Chief Executive Officer of Presentation Services
     2000........................................       $264,105      $50,000      $22,875(7)     73,000            --
     1999........................................         93,819       50,000           --        75,000            --

Christopher A. Sinclair(6)
Former Chairman of the Board, President and Chief
  Executive Officer of the Company
   2000..........................................       $375,887      250,000           --            --        700,000(9)
   1999...........................................      $326,923      250,000           --       600,000            --

</TABLE>

                                                                             36
<PAGE>


Footnotes to Summary Compensation Table

(1)  Mr. Ellis commenced his employment with the Company in April, 2000.
(2)  Mr. Davies commenced his employment with the Company in April, 2000.
(3)  Mr.  O'Brien was appointed  Executive  Vice President of the Company in May
     2000 and during 1999 and 1998, Mr.  O'Brien  served as the Chief  Executive
     Officer of Audio Visual Headquarters.
(4)  Mr.  Sanders was appointed  Executive Vice President of the Company in July
     2000,  prior thereto and during 1999 and 1998, Mr. Sanders served as Senior
     Vice President and Executive Vice President of Presentation Services.
(5)  Mr. Voaden commenced his employment with the Company on May 3, 1999.
(6)  Mr. Sinclair served as President and Chief Executive Officer of the Company
     from December 21, 1998 through May 15, 2000.
(7)  The Company granted to each of Messrs.  Ellis and Davies 268,000 shares and
     215,000  shares,  respectively,  of  restricted  stock under the  Company's
     Amended and  Restated  1996 Stock  Option  Plan.  Such shares vest in their
     entirety on April 4, 2002. The Company granted to each of Messrs.  O'Brien,
     Sanders and Voaden 61,000 shares of  Restricted  Stock,  which also vest in
     their entirety on April 4, 2002. The value of the Restricted Stock for each
     of the Named  Executives,  based upon a closing price of $0.50 per share on
     September 29, 2000,  for each of Messrs.  Ellis and Davies was $134,000 and
     $107,500, respectively, and for each of Messrs. O'Brien, Sanders and Voaden
     was $30,500.
(8)  All  other  compensations  consists  of  payments  made to Mr.  Sanders  in
     connection with vacation accruals.
(9)  All other compensation  consists of severance payments made to Mr. Sinclair
     in connection with the termination of his employment with the Company.

OPTION GRANTS

The  following  table sets forth the  grants of options  with  respect to Common
Stock during the year ended September 30, 2000, to the Named Executive Officers:

<TABLE>
<CAPTION>

                                         OPTION GRANTS IN LAST FISCAL YEAR

                        INDIVIDUAL GRANTS                               POTENTIAL REALIZABLE
                        -----------------                                 VALUE AT ASSUMED
                                                                       ANNUAL RATES OF STOCK
                                 % OF TOTAL                            PRICE APPRECIATION FOR
                                 OPTIONS                                    OPTION TERM
                                 GRANTED TO      EXERCISE OR           ----------------------
                     OPTIONS     EMPLOYEES IN    BASE PRICE  EXPIRATION
NAME                 GRANTED     FISCAL YEAR     PER SHARE      DATE       5%        10%
----                 -------     -----------     ---------      ----       --        ---
<S>                 <C>           <C>            <C>          <C>        <C>        <C>
Robert K. Ellis      470,000(a)      28.9         $0.46875     6/28/10    $138,553  $351,121
Digby J. Davies      375,000(a)      23.1          0.46875     6/28/10     110,548   280,150
Michael J. O'Brien    73,000(a)       4.5          0.46875     6/28/10      21,520    54,536
Kenneth R. Sanders    73,000(a)       4.5          0.46875     6/28/10      21,520    54,536
John C. Voaden        73,000(a)       4.5          0.46875     6/28/10      21,520    54,536

</TABLE>

(a) Such options vest in their entirety on April 4, 2002.

EMPLOYMENT AGREEMENTS

The Company has entered into employment  agreements with Messrs.  Ellis, Davies,
O'Brien,  Sanders and Voaden.  Each of Messrs.  Ellis's and Davies's  employment
agreements  expires  on  April 5,  2002,  provided  that  the term of each  such
agreement shall be extended for successive  periods of one year, unless at least
one year prior to the end of the initial  term or any renewal  term either party
has given the other party notice of its  intention to terminate  the  agreement.
Messrs. O'Brien,  Sanders and Voaden are employed by the Company on an "at will"
basis,  and their  respective  employment  may be terminated by the Company upon
notice.

The annual base salary of Messrs.  Ellis,  Davies,  O'Brien,  Sanders and Voaden
currently is $500,000, $400,000, $290,000, $250,000 and $250,000,  respectively.
Each executive is also entitled to fringe  benefits and to an annual bonus based
on Company performance against targets and the fulfillment of certain management
objectives  established  by the Board each year.  Pursuant to the terms of their
respective employment agreements, during the first 18 months of the initial term
of their employment with the Company, the Company is required to pay the Messrs.
Ellis and Davies,  a  guaranteed  bonus of $250,000  per annum and  $200,000 per
annum,  respectively,  payable in each case monthly in arrears.  Pursuant to the
terms of their respective employment agreements,  the Company is required to pay
to Messrs.  O'Brien,  Sanders and Voaden a minimum  bonus of  $58,000,  $52,400,
$50,000,  respectively, for the fiscal year ended September 30, 2000. Under each
agreement the Board is to review the employee's salary at least annually and the
salary amounts may be increased in the Board's discretion.

Each  executive  may be terminated  for "cause" (as defined in the  agreements),
with all  compensation  ceasing.  Under  the  employment  agreement  for each of
Messrs.  Ellis and Davies, if the executive is terminated without cause or if he
resigns  for "good  reason"  (as


                                                                             37
<PAGE>


defined),  the executive is entitled to full  compensation  and benefits for the
remaining term of the agreement.  "Good reason" includes, in the case of each of
Messrs. Ellis and Davies, a change in control (as defined) of the Company. Under
the employment  agreements for each of Messrs.  O'Brien,  Sanders and Voaden, if
the executive is terminated without cause or if he resigns for "good reason" (as
defined in their respective employment agreements), the executive is entitled to
a payment  equal to 12 months  annual base salary and any annual  bonus to which
the  executive may be entitled in respect only of the fiscal year of the Company
in which such termination or resignation, as the case may be, occurs and further
prorated by reference to the number of days actually  worked by the executive in
such fiscal year.

Each  employment  agreement  also contains  provisions  concerning  the grant of
Restricted  Stock and Stock  Options.  The grant of Stock Options and Restricted
Stock is  further  subject to the terms and  conditions  of a  Restricted  Stock
Agreement and Stock Option Agreement, which were executed by and between each of
Messrs.  Ellis,  Davies,  O'Brien,  Sanders  and  Voaden  and  the  Company.  In
connection  with the grant of Stock Options and  Restricted  Stock,  the Company
also  agreed  that in the event  there is a Change in Control (as defined in the
Company's  Amended and Restated 1996 Stock Option Plan) and the aggregate  value
of Stock  Options  and  Restricted  Stock on the date of the  consummation  of a
Change in Control is less than  $1,000,000 in the case of each of Messrs.  Ellis
and Davies,  and  $250,000 in the case of each of Messrs.  O'Brien,  Sanders and
Voaden, the Company shall be required to pay each of them within sixty (60) days
thereafter  the amount by which the aggregate  value is less than  $1,000,000 or
$250,000, as the case may be.

Each  employment  agreement  includes  provisions  restricting  the  executive's
ability to compete with the Company and solicit the clients and employees of the
Company  following  termination of employment.  Each  employment  agreement also
provides that in the event of the employee's  death, the employee's  beneficiary
will receive a payment equal to four months' base salary.

BOARD OF DIRECTORS MEETINGS AND COMMITTEES

The Board of Directors has an audit committee and a compensation committee.  The
Board of  Directors  does not  presently  have a  nominating  committee or other
committee performing a similar function.

At present,  the Board of Directors of the Company is composed of six directors.
Pursuant to the terms of a  stockholders  agreement,  dated as of March 15, 1996
(the "Stockholders Agreement"),  subject to certain conditions,  Warburg, Pincus
Investors,  L.P.  ("Warburg")  currently  has the right to  designate  up to two
persons for nomination to the Board. See "Certain Relationships and Transactions
with Related  Persons--Stockholders  Agreement."  The designee of Warburg is Mr.
Libowitz.  In addition,  Mr. Cook,  a director of the Company  since 1992,  is a
Senior Adviser to EMW LLC and a former  Managing  Director of EMW LLC. The Board
of Directors held seven (7) meetings during fiscal 2000.

The Compensation  Committee of the Board of Directors of the Company  determines
the salaries and bonuses of the Company's executive officers and administers the
Company's  Amended and Restated  1996 Option  Plan.  During the  Company's  last
completed  fiscal  year Errol M. Cook  served as  Chairman  of the  Compensation
Committee,  and each of Bryan D.  Langton,  David  E.  Libowitz  and C.  Anthony
Wainwright  served as members of the  Compensation  Committee.  The Compensation
Committee held four (4) meetings during fiscal 2000.

The Audit  Committee of the Board of Directors  recommends  the  appointment  of
auditors and oversees the accounting and audit functions of the Company.  During
the Company's last completed  fiscal year Bryan D. Langton served as Chairman of
the Audit Committee,  and C. Anthony  Wainwright served as a member of the Audit
Committee. The Audit Committee held four (4) meetings during fiscal 2000.

None of the  members of the Board of  Directors  failed  during  fiscal  2000 to
attend at least 75 percent of the aggregate of: (1) the total number of meetings
of the Board of  Directors  held  during the period for which he was a director;
and (2) the total  number of  meetings  held by all  committees  of the Board of
Directors on which he served during the periods that he served.

Compensation of Directors

Directors  who are  not  employees  or  officers  of the  Company  receive  cash
compensation  of $12,500 per annum  payable  quarterly in arrears.  In addition,
non-employee  directors  receive $1,000 for each meeting of the Board or meeting
of a committee of the Board that they attend in person and $750 for each meeting
of  the  Board  or  meeting  of a  committee  of  the  Board  that  they  attend
telephonically.  Mr. Libowitz has waived his right to receive any  compensation.
Directors are also reimbursed for certain expenses in connection with attendance
at Board and committee  meetings.  Other than with respect to  reimbursement  of
expenses,  directors who are employees or officers of the Company do not receive
additional compensation for services as a director.

Effective March 11, 1996, the Company adopted the Non-Employee  Directors' Stock
Plan,  pursuant to which the Company awards  directors (other than (i) directors
affiliated   with   Warburg,   who  have  waived  their  right  to  receive  any
compensation, (ii) Errol Cook, who has


                                                                             38
<PAGE>


waived his right to receive  shares under such plan, or (iii)  directors who are
employees of the Company) upon their becoming a director and on each anniversary
thereof  shares  of  Common  Stock  having  a  market  value  of  $12,500.   The
Non-Employee Directors' Stock Plan, as amended, provides that the maximum number
of shares of Common Stock  available for issue under the plan is 100,000  shares
(of which 20,866  shares have been  issued),  subject to  adjustment  to prevent
dilution or expansion of rights.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                        SECURITIES BENEFICIALLY OWNED BY
                      PRINCIPAL STOCKHOLDERS AND MANAGEMENT

The following  table sets forth  certain  information  regarding the  beneficial
ownership  of the Common  Stock as of December 12, 2000 with respect to (i) each
person  known by the Company to be the  beneficial  owner of more than 5% of the
Common  Stock,  (ii) each  director of the Company,  (iii) each of the executive
officers of the Company and (iv) all  directors  and  executive  officers of the
Company as a group.


<TABLE>
<CAPTION>

                                                                           BENEFICIAL
                                                                           OWNERSHIP(1)
                                                                          -------------
                                                                   NUMBER OF
                                                                   SHARES OF       PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER                             COMMON STOCK      COMMON STOCK
------------------------------------                             ------------      ------------
<S>                                                              <C>                <C>
5% HOLDERS

Warburg, Pincus Investors, L.P.(2)..........................      6,664,236(3)            26.6%
   466 Lexington Avenue
   10th Floor
   New York, New York 10017

State of Wisconsin Investment Board.........................      2,820,000(4)            11.3
   P.O. Box 7842
   Madison, Wisconsin 53707

Lord, Abbett & Co.
   767 Fifth Avenue
   New York, New York 10153.................................      2,399,797(5)             9.6

Raymond S. Ingleby..........................................      1,724,549(3)(6)          6.9
c/o Fylde Office Services Bureau
      28 Orchard Road
      St. Annes-on-Sea
      Lancashire FY8 1PF
      England

DIRECTORS AND EXECUTIVE OFFICERS

Digby J. Davies.............................................       348,200 (7)(8)         1.4
Robert K. Ellis.............................................       401,200 (8)(9)         1.6
Michael J. O'Brien..........................................       194,200 (8)(10)          *
Kenneth R. Sanders..........................................       194,200 (8)(10)          *
John C. Voaden..............................................       194,200 (8)(10)          *
Errol M. Cook(2)............................................         1,625                  *
Bryan D. Langton............................................        36,197 (11)             *
David E. Libowitz(2)........................................     6,664,236  (3)          26.6
C. Anthony Wainwright.......................................         9,669                  *
All executive officers and directors as a group (9 persons).     7,377,727               29.4

</TABLE>
*  Less than 1%

(1)  Except where  otherwise  indicated,  the Company  believes that all parties
     listed in the table,  based on information  provided by such persons,  have
     sole voting and dispositive power over the securities beneficially owned by
     them, subject to community property laws, where applicable. For purposes of
     this  table,  a person or group of persons is deemed to be the  "beneficial
     owner" of any shares  that such person or group of persons has the right to
     acquire  within 60 days.  For  purposes  of  computing  the  percentage  of
     outstanding shares held by each person or group of persons named above on a
     given date, any security that such person or group of persons has the right
     to acquire within 60 days is deemed to be outstanding, but is not deemed to
     be outstanding for the purpose of computing the percentage ownership of any
     other person.

(2)  The sole general partner of Warburg, Pincus Investors,  L.P. ("Warburg") is
     Warburg  Pincus  & Co.,  a New York  general  partnership  ("WP").  EMW LLC
     manages Warburg.  The members of EMW LLC are  substantially the same as the
     partners  of WP.  Lionel I.  Pincus is the  managing  partner of WP and the
     managing  member of EMW LLC and may be deemed to control each of WP and EMW
     LLC. David E. Libowitz,  a director of the Company,  is a Managing Director
     and member of

                                                                             39
<PAGE>


     EMW LLC, and a general  partner of WP. As such, Mr.  Libowitz may be deemed
     to have an indirect  pecuniary  interest  (within the meaning of Rule 16a-1
     under the Exchange Act) in an indeterminate portion of the shares of Common
     Stock beneficially  owned by Warburg.  Mr. Errol M. Cook, a director of the
     Company,  is a Senior Adviser to EMW LLC. Each of Messrs. Cook and Libowitz
     disclaims  "beneficial  ownership"  of the  Common  Stock  owned by Warburg
     within  the  meaning  of Rule  13d-3  under the  Exchange  Act.  (Footnotes
     continued on next page)

                                                                             40
<PAGE>


(Footnotes continued from previous page)

(3) Includes  400,000  shares of Common  Stock  pledged to Warburg by Raymond S.
    Ingleby in connection with loan made by Warburg to Mr. Ingleby.  Mr. Ingleby
    has sole voting power in respect of such pledged  shares.  Includes  666,000
    shares of Common  Stock  pledged  to  Warburg by  Voltaire  Investments  LLC
    ("Voltaire")  as  security  in  connection  with the sale of such  shares to
    Voltaire  by  Warburg.  Voltaire  has sole  voting  power in respect of such
    pledged shares.

(4) As disclosed in Amendment  No. 2, dated August 10, 2000, to  Schedule 13G.

(5) As disclosed in Amendment No.2, dated January 19, 2000 to Schedule 13G.

(6) Includes 85,000 shares held of record  by  the  Raymond  and  Leigh  Ingleby
    Foundation, Inc.

(7) Includes    215,000   shares  of  Common  Stock   issued   pursuant  to  the
    Corporation's   Amended and  Restated  1996 Stock  Option Plan (the  "Option
    Plan"), which shares vest and become non-forfeitable on April 4, 2002.

(8) Includes 133,200 shares owned by Voltaire, of which such person is a member.
    Such shares represent individual's pro rata economic interest in shares that
    are owned by  Voltaire.  Shares have been  pledged to Warburg by Voltaire as
    security in connection with the sale of such shares to Voltaire by Warburg.

(9) Includes 268,000  shares of Common Stock issued pursuant to the Option Plan,
    which shares vest and become non-forfeitable on April 4, 2002.

(10)Includes 61,000 shares of Common  Stock issued pursuant to the Option Plan,
    which shares vest and become non-forfeitable on April 4, 2002.

(11)Includes   presently   exercisable   options to  purchase 18,000  shares of
    Common Stock at $21.3125  per share, which expire in November, 2006.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH RELATED PERSONS

STOCKHOLDERS AGREEMENT

Upon completion of the initial public offering of the Company's  Common Stock in
March,  1996, the Company entered into the  Stockholders  Agreement with Warburg
and Raymond S. Ingleby. The Stockholders Agreement contains, among other things,
various terms  regarding  nominations  for the Company's  Board of Directors and
certain registration rights granted by the Company. Pursuant to the terms of the
Stockholders Agreement, for so long as Warburg beneficially owns at least 20% or
10% of the  outstanding  shares  of  Common  Stock,  it will  have the  right to
designate  two  nominees  or  one  nominee,   respectively,  for  director.  The
Stockholders  Agreement also provides that for so long as Mr. Ingleby shall hold
office as the Chairman and Chief Executive Officer of the Company,  he will have
the right to be  designated as a nominee for director.  In December,  1998,  Mr.
Ingleby resigned from the position of Chief Executive Officer of the Company and
in May, 1999, Mr. Ingleby resigned as Chairman of the Company.  Accordingly, Mr.
Ingleby no longer has the automatic right to such nomination.

Additionally,  the Stockholders  Agreement  provides that Warburg is entitled to
three  "demand"  registrations,   which  may  be  exercised  at  any  time.  The
Stockholders Agreement also provides that Raymond S. Ingleby will be entitled to
one  "demand"  registration  with  respect to not less than 50% of the number of
shares of Common  Stock  that he  beneficially  owned  immediately  prior to the
completion of such initial public offering (i.e.,  1,396,356  shares),  provided
that Mr.  Ingleby may not exercise such  "demand"  until the earliest of (i) six
months after the effective date of a registration statement filed by the Company
in respect of shares of Common Stock owned by Warburg,  (ii) the distribution by
Warburg of shares of Common Stock to its  partners and (iii) March 15, 2001.  In
July,  1997,  Warburg  made a  distribution  of shares  of  Common  Stock to its
partners,  thereby triggering Mr. Ingleby's right to exercise such "demand." Mr.
Ingleby is also entitled to  "piggyback"  registration  rights in the event that
Warburg  exercises  a  "demand"  registration.  In  addition,  the  Stockholders
Agreement grants to Mr. Ingleby certain co-sale rights in the event that Warburg
sells, transfers or otherwise disposes of any shares of its Common Stock.


                                                                             41
<PAGE>



                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

       (a) The  following  documents  are filed as part of this Annual Report on
           Form 10-K:

             (1) The  response to this portion of Item 14 is set forth in Item 8
                 of Part II hereof.

             (2) Financial Statement Schedules.

             Schedules for which provision is made in the applicable  accounting
             regulations  of the  Securities  and  Exchange  Commission  are not
             required under the related  instructions or are  inapplicable,  and
             therefore have been omitted.

             (3) Exhibits

             See accompanying Index to Exhibits. The Company will furnish to any
             stockholder,  upon  written  request,  any  exhibit  listed  in the
             accompanying  Index to Exhibits upon payment by such stockholder of
             the Company's reasonable expenses in furnishing any such exhibit.

       (b) Reports on Form 8-K

             None.

                                                                             42

<PAGE>



                                   SIGNATURES

     PURSUANT  TO THE  REQUIREMENTS  OF  SECTION  13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED,  THE REGISTRANT HAS DULY CAUSED THIS REPORT TO
BE SIGNED ON ITS  BEHALF  BY THE  UNDERSIGNED,  THEREUNTO  DULY  AUTHORIZED,  ON
DECEMBER 28, 2000.

                                              AUDIO VISUAL SERVICES CORPORATION
                                                        (Registrant)

                                              By: /s/ Digby J. Davies
                                              ------------------------------
                                              President, Chief Operating Officer
                                              and Acting Chief Financial Officer

        PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, AS

AMENDED,  THIS REPORT HAS BEEN SIGNED BY THE FOLLOWING  PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>


        SIGNATURE                      TITLE                                          DATE
        ---------                      -----                                          ----
<S>                          <C>                                                 <C>
 /s/ ROBERT K. ELLIS        Chairman of the Board and Chief Executive             December 28, 2000
-------------------------   Officer (Principal executive Officer)
     Robert K. Ellis

/s/ DIGBY J. DAVIES         Director, President, Chief Operating Officer          December 28, 2000
-------------------------   and Acting Chief Financial Officer (Principal
    Digby J. Davies         Financial and Accounting Officer)


/s/ ERROL M. COOK           Director                                              December 28, 2000
-------------------------
    Errol M. Cook

/s/ BRYAN D. LANGTON        Director                                              December 28, 2000
-------------------------
    Bryan D. Langton

/s/ DAVID E. LIBOWITZ       Director                                              December 28, 2000
-------------------------
    David E. Libowitz

/s/ C. ANTHONY WAINWRIGHT   Director                                              December 28, 2000
-------------------------
    C. Anthony Wainwright
</TABLE>


                                                                             43
<PAGE>



                                INDEX TO EXHIBITS

The following is a list of all exhibits filed as part of this report
<TABLE>
<CAPTION>
EXHIBIT
NUMBER     DESCRIPTION OF DOCUMENT
------     -----------------------
<S>       <C>    <C>
  3.1       --    Restated Certificate of Incorporation of the Company, filed March 15, 1996, with the Secretary of
                  State of the State of Delaware (filed as Exhibit 3.1 to the Company's Quarterly Report on
                  Form 10-Q for the quarterly period ended March 31, 1996 and incorporated herein by reference).
  3.2       --    Certificate of Amendment to the Restated Certificate of Incorporation of the Company, filed
                  March 30, 1998, with the Secretary of State of the State of Delaware (filed as Exhibit 3.2 to the
                  Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1998 and
                  incorporated herein by reference).
  3.3       --    Certificate of Amendment to the Restated Certificate of Incorporation, as amended, of the Company,
                  filed June 29,  2000,  with the  Secretary  of the  State  of  Delaware  (filed  as  exhibit  3.3 to the
                  Company's Quarterly
                  Report on Form 10-Q for the quarterly period ended June 30, 2000 and incorporated herein by reference).
  3.4       --    Third Amended and Restated By-Laws of the Company (filed as Exhibit 3.3 to the Company's Quarterly
                  Report on Form 10-Q for the quarterly period ended December 31, 1998 and incorporated herein by
                  reference).
    4       --    Specimen of Certificate of Common Stock of the Company (filed as Exhibit 4 to the Company's
                  Registration Statement on Form S-1 (Registration No. 33-80481) and incorporated herein by
                  reference).
 10.1       --    Amended and Restated 1996 Stock Option Plan (filed as exhibit 10.7 to the Company's Quarterly
                  Report on Form 10-Q for the quarterly period ended June 30, 2000 and incorporated herein by
                  reference).
+10.2       --    Form of Stock Option Agreement for executive management in connection with Amended and Restated 1996
                  Stock Option Plan.
+10.3       --    Form of Restricted Stock Agreement for each of Robert K. Ellis and Digby J. Davies in connection with
                  the Amended and Restated 1996 Stock Option Plan.
+10.4       --    Form of Restricted Stock Agreement for each of Michael O'Brien, Kenneth R. Sanders and John C. Voaden in
                  connection with the Amended and Restated 1996 Stock Option Plan.
 10.5       --    Non-Employee Directors' Stock Plan of the Registrant (filed as an exhibit to the Company's Registration
                  Statement on Form S-1 (Registration No. 33-80481) and incorporated herein by reference).
+10.6       --    Employment Agreement, dated as of April 5, 2000, by and between the Company and Robert K. Ellis (filed
                  as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended
                  March 31, 2000 and incorporated herein by reference).
+10.7       --    Employment Agreement, dated as of April 5, 2000, by and between the Company and Digby J. Davies (filed
                  as Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended
                  March 31, 2000 and incorporated herein by reference).
+10.8       --    Employment Agreement, dated August 29, 2000, by and between the Company and Michael J. O'Brien.
+10.9       --    Employment Agreement, dated August 29, 2000, by and between the Company and Kenneth R. Sanders.
+10.10      --    Employment Agreement, dated August 29, 2000, by and between the Company and John C. Voaden.
 10.11      --    Credit Agreement, dated as of October 28, 1997 (the "Credit Agreement"), among the Company,
                  Company, Inc., the several lenders named therein and the Chase Manhattan Bank, as Administrative
                  Agent, and Merrill Lynch Capital Corporation, as Syndication Agent (schedules and exhibits
                  omitted--the Company agrees to furnish a copy of any schedule or exhibit to the Commission upon
                  request) (filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal year
                  ended September 30, 1997 and incorporated herein by reference).
 10.12      --    First Amendment and Agreement, dated as of March 31, 1998, to the Credit Agreement (schedules and
                  exhibits omitted--the Company agrees to furnish a copy of any schedule or exhibit to the Commission
                  upon request) (filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal
                  year ended September 30, 1998 and incorporated herein by reference).
 10.13      --    Second Amendment and Waiver, dated as of December 18, 1998, to the Credit Agreement (schedules and
                  exhibits omitted--the Company agrees to furnish a copy of any schedule or exhibit to the Commission
                  upon request) (filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal
                  year ended September 30, 1998 and incorporated herein by reference).
 10.14      --    Third Amendment and Waiver, dated as of July 30, 1999, to the Credit Agreement (schedules and
                  exhibits omitted--the Company agrees to furnish a copy of any schedule or exhibit to the Commission
                  upon request) (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
                  quarterly period ended June 30, 1999 and incorporated herein by reference).
 10.15      --    Fourth Amendment, Consent and Waiver, dated as of December 23, 1999, to the Credit Agreement
                  (schedules and exhibits omitted--the Company agrees to furnish a copy of any schedule or exhibit to
                  the Commission upon request) (filed as Exhibit 10.17 to the Company's Annual Report on Form 10-K
                  for the fiscal year ended September 30, 1999 and incorporated herein by reference).
 10.16      --    Fifth Amendment, Consent and Agreement, dated as of March 31, 2000, to the Credit Agreement (schedules
                  and exhibits omitted - the Company agrees to furnish a copy of any schedule or exhibit to the commission
                  upon request) (filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarterly period
                  ended March 31, 2000 and incorporated herein by reference).
 10.17      --    Stockholders Agreement, dated as of March 15, 1996, among the Company, Warburg, Pincus Investors,
                  L.P. and Raymond S. Ingleby (filed as an exhibit to the Company's Registration Statement on Form
                  S-1 (Registration No. 33-80481) and incorporated herein by reference).
   21       --    Subsidiaries of the Company.
   23       --    Consent of Ernst & Young LLP.
   27       --    Financial Data Schedule.

</TABLE>
   + Management  contracts or compensatory plans or arrangements  required to be
   filed as an  exhibit  to this Form  10-K  pursuant  to Item  14(a) (3) of the
   requirements to Form 10-K.
                                                                             44