SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

                         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        of (I.R.S. Employer
             incorporation or organization)       Identification No.)


           111 West Ocean Boulevard, Suite 1110, Long Beach, CA 90802
           ----------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (562) 366-0620

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 / /

The registrant had 25,057,346 shares of Common Stock (par value $0.01 per share)
outstanding as of May 9, 2001.
<PAGE>
                                                                               2


                                      INDEX

PART I.    Financial Information
Item 1.         Financial Statements (Unaudited)

                Consolidated Balance Sheets as of
                March 31, 2001 and September 30, 2000........................  3

                Consolidated Statements of Operations for
                the six months ended March 31, 2001 and 2000.................  4

                Consolidated Statements of Operations for
                the three months ended March 31, 2001 and 2000...............  5

                Consolidated Statements of Cash Flows for
                the six months ended March 31, 2001 and 2000.................  6

                Consolidated Statement of Changes in Stockholders'
                Equity for the six months ended March 31, 2001 and 2000......  7

                Notes to Consolidated Financial Statements...................  8

Item 2.         Management's Discussion and Analysis of
                Financial Condition and Results of Operations................ 14

Item 3.         Quantitative and Qualitative
                Disclosures About Market Risk ............................... 20

PART II. Other Information

Item 1.         Legal Proceedings............................................ 21

Item 2.         Changes in Securities........................................ 21

Item 4.         Submission of Matters to a Vote of Security Holders.......... 21

Item 5.         Other Information ........................................... 22

Item 6.         Exhibits and Reports on Form 8-K............................. 23

SIGNATURES................................................................... 25

<PAGE>
                                                                              3

                        Audio Visual Services Corporation
                           Consolidated Balance Sheets

                                                        March 31,  September 30,
ASSETS                                                     2001        2000
                                                       (unaudited)    (Note 1)
                                                        ---------    ---------

                                                        (amounts in thousands)
Current Assets:

Cash and cash equivalents                                  $   --    $   1,272
Trade accounts receivable - net of allowance for
    doubtful accounts of $4,112 and $4,310 at
    March 31, 2001 and September 30, 2000, respectively    50,738       47,585
Prepaid expenses and other current assets                   8,433       14,782
                                                        ---------    ---------
          Total Current Assets                             59,171       63,639

Property and equipment - net                               69,747       68,103
Goodwill - net                                            267,471      272,009
Other assets                                               11,158       10,538
                                                        ---------    ---------

          TOTAL ASSETS                                  $ 407,547    $ 414,289
                                                        =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Current portion of long-term debt                       $ 361,450      $    --
Trade accounts payable                                      9,590       13,249
Accrued expenses and other current liabilities             35,744       38,427
Taxes payable                                               1,258          830
                                                        ---------    ---------

Total Current Liabilities                                 408,042       52,506

Long-term debt                                                 --      344,957
Deferred tax liability                                      7,339        7,350
Other liabilities                                           1,454        1,922
                                                        ---------    ---------

          TOTAL LIABILITIES                               416,835      406,735

Stockholders' Equity:

Preferred stock, $0.01 par value:

2,000 shares authorized, none issued and outstanding at
    March 31, 2001 and September 30, 2000, respectively      --           --
Common stock, $0.01 par value:
    102,000 voting shares authorized 25,057 and
    24,568 shares issued and outstanding at
    March 31, 2001 and September 30, 2000, respectively       251          246
Additional paid-in capital                                168,344      168,170
Deferred compensation                                        (325)        (250)
Accumulated other comprehensive loss                       (8,645)      (7,828)
Accumulated deficit                                      (168,913)    (152,784)
                                                        ---------    ---------

TOTAL STOCKHOLDERS' (DEFICIT) EQUITY                       (9,288)       7,554
                                                        ---------    ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              $ 407,547    $ 414,289
                                                        =========    =========

See accompanying notes to the unaudited consolidated financial statements.
<PAGE>
                                                                               4

                        Audio Visual Services Corporation
                      Consolidated Statements of Operations
                            For the Six Months Ended
                                   (unaudited)

                                                                March 31,
                                                            2001        2000
                                                          ---------   ---------
                                                          (amounts in thousands)

Revenue                                                   $ 217,739   $ 209,974

Cost of revenue                                             180,416     173,030
                                                          ---------   ---------

Gross profit                                                 37,323      36,944
                                                          ---------   ---------

Operating expenses:
    Selling, general and administrative
      expenses (note 4)                                      21,728      29,046
    Loss on sale of assets (note 5)                              --       3,000
    Depreciation and amortization                             6,359       5,828
                                                          ---------   ---------

          Total operating expenses                           28,087      37,874
                                                          ---------   ---------

Operating income (loss)                                       9,236        (930)

Interest expense, net                                        25,180      21,345
                                                          ---------   ---------

Loss from continuing operations before taxes                (15,944)    (22,275)
    Provision (benefit) for taxes                               185        (330)
                                                          ---------   ---------

Loss from continuing operations                             (16,129)    (21,945)

Discontinued operations (note 3)
    Loss from operations (less income taxes
      of $330)                                                   --     (16,458)
    Loss on disposal of assets (less income taxes of $0)         --     (40,313)
                                                          ---------   ---------

Loss from discontinued operations                                --     (56,771)
                                                          ---------   ---------

Net loss                                                  $ (16,129)  $ (78,716)
                                                          =========   =========

Basic and diluted loss per common share:

        Loss from continuing operations                   $   (0.65)  $   (0.93)
        Loss  from discontinued operations, net of tax           --       (2.39)
                                                          ---------   ---------

Net loss per common share                                 $   (0.65)  $   (3.32)
                                                          ---------   =========

See accompanying notes to the unaudited consolidated financial statements.
<PAGE>
                                                                               5

                        Audio Visual Services Corporation
                      Consolidated Statements of Operations
                           For the Three Months Ended
                                   (unaudited)

                                                                March 31,
                                                            2001        2000
                                                          ---------   ---------
                                                          (amounts in thousands)

Revenue                                                   $ 111,651   $ 111,207

Cost of revenue                                              91,711      90,606
                                                          ---------   ---------

Gross profit                                                 19,940      20,601
                                                          ---------   ---------

Operating expenses:
    Selling, general and administrative
      expenses (note 4)                                      10,561      18,305
    Loss on disposal of assets (note 5)                          --       3,000
    Depreciation and amortization                             3,209       3,011
                                                          ---------   ---------

          Total operating expenses                           13,770      24,316
                                                          ---------   ---------

Operating income (loss)                                       6,170      (3,715)

Interest expense, net                                        12,403      10,742
                                                          ---------   ---------

Loss from continuing operations before taxes                 (6,233)    (14,457)
     Provision (benefit) for taxes                               --          --
                                                          ---------   ---------

Loss from continuing operations                              (6,233)    (14,457)

Discontinued operations (note 3)
    Loss from operations (less income taxes
      of $330)                                                   --      (9,814)
    Loss on disposal of assets (less income taxes of $0)         --     (40,313)
                                                          ---------   ---------

Loss from discontinued operations                                --     (50,127)
                                                          ---------   ---------

Net loss                                                  $  (6,233)  $ (64,584)
                                                          =========   =========

Basic and diluted loss per common share:

         Loss from continuing operations                  $   (0.25)  $   (0.61)
         Loss from discontinued operations, net of tax           --       (2.12)
                                                          ---------   ---------

Net loss per common share                                 $   (0.25)  $   (2.73)
                                                          =========   =========

See accompanying notes to the unaudited consolidated financial statements.
<PAGE>
                                                                               6

                        Audio Visual Services Corporation
                      Consolidated Statements of Cash Flows
                            For the Six Months Ended
                                   (unaudited)

                                                                 March 31,
                                                              2001       2000
                                                            --------   --------
                                                          (amounts in thousands)
Cash flows from operating activities:
   Net loss                                                 $(16,129)  $(78,716)

   Adjustments to reconcile net income to net cash
      used in operating activities:

         Depreciation and amortization                        18,999     24,236
         Fixed asset write-off                                   180      2,500
         Loss on disposition of assets                            --     40,313

   Change in assets and liabilities:

         Increase in trade accounts receivable                (3,153)    (7,195)
         Increase in deferred charges                             --     (8,735)
         Decrease in prepaid expenses and
            other current assets                               2,649      1,099
         (Increase) decrease in other assets                    (620)     2,419
         Increase in assets held for sale                         --     (6,082)
         Increase (decrease) in trade accounts payable        (3,659)     5,211
         Increase in deferred income                              --     15,563
         Increase in accrued expenses and
            other liabilities                                     55      7,351
         Increase (decrease) in taxes payable and
            deferred taxes                                       417       (821)
                                                            --------   --------

   Net cash used in operating activities                      (1,261)    (2,857)
                                                            --------   --------

Cash flow used in investing activities:

         Purchase of property and equipment                  (16,511)   (20,679)
         Acquisition of intangibles and businesses,
            net of cash acquired                                  --       (229)
                                                            --------   --------

   Net cash used in investing activities                     (16,511)   (20,908)
                                                            --------   --------

Cash flow provided by financing activities:

         Repayments of long-term debt                             --    (55,206)
         Proceeds from long-term debt                         16,493     77,625
                                                            --------   --------

   Net cash provided by financing activities                  16,493     22,419
                                                            --------   --------

Translation effect on cash and cash equivalents                    7       (329)

Net decrease in cash                                          (1,272)    (1,675)
Cash, beginning of period                                      1,272      1,675
                                                            --------   --------

Cash, end of period                                         $     --   $     --
                                                            ========   ========

Supplemental disclosure of cash flow information:

              Interest paid                                 $ 16,856   $ 23,339
                                                            ========   ========

              Income taxes paid                             $    239   $    198
                                                            ========   ========

See accompanying notes to the unaudited consolidated financial statements.
<PAGE>
                                                                               7

                        Audio Visual Services Corporation
            Consolidated Statement of Changes in Stockholders' Equity
                For the Six Months Ended March 31, 2001 and 2000
                                   (unaudited)
                             (amounts in thousands)

<TABLE>
<CAPTION>
                                                 Common Stock                                                          Accumulated
                                              ----------------   Additional                    Other                      Total
                                                                   Paid-in     Retained    Comprehensive   Deferred    Stockholders'
                                              Shares    Amount     Capital     Earnings       Income     Compensation     Equity
                                              ------    ------   ----------    ---------   ------------- ------------  -------------
<S>                                           <C>        <C>      <C>          <C>            <C>          <C>           <C>
For the six months ended March 31, 2001:

Balance at September 30, 2000                 24,568     $246     $168,170     $(152,784)     $(7,828)     $   (250)     $   7,554

Net loss                                          --       --           --       (16,129)          --            --        (16,129)

Foreign currency translation adjustment           --       --           --            --         (817)           --           (817)
                                              ------     ----     --------     ---------      -------      --------      ---------

Comprehensive loss                                --       --           --            --           --            --        (16,946)
                                              ------     ----     --------     ---------      -------      --------      ---------

Restricted Stock Plan                             --       --           --            --           --           104            104

Issuance of restricted common stock              489        5          174            --           --          (179)            --
                                              ------     ----     --------     ---------      -------      --------      ---------


Balance at March 31, 2001                     25,057     $251     $168,344     $(168,913)     $(8,645)     $   (325)     $  (9,288)
                                              ======     ====     ========     =========      =======      ========      =========

For the six months ended March 31, 2000:

Balance at September 30, 1999                 23,697     $236     $167,677     $ (40,648)     $(4,785)           --      $ 122,480

Net loss                                          --       --           --       (78,716)          --            --        (78,716)

Foreign currency translation adjustment           --       --           --            --       (2,033)           --         (2,033)
                                                                                                           --------      ---------

Comprehensive loss                                --       --           --            --           --            --        (80,749)
                                              ------     ----     --------     ---------      -------      --------      ---------


Balance at March 31, 2000                     23,697     $236     $167,677     $(119,364)     $(6,818)     $     --      $  41,731
                                              ======     ====     ========     =========      =======      ========      =========
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

                                      -7-
<PAGE>
                                                                               8

                        Audio Visual Services Corporation
                   Notes To Consolidated Financial Statements
                                   (Unaudited)

1.   INTERIM FINANCIAL INFORMATION

     The accompanying consolidated financial statements of Audio Visual Services
     Corporation (the "Company") have been prepared in accordance with generally
     accepted  accounting  principles for interim financial  information and the
     instructions  to Form 10-Q and Article 10 of Regulation  S-X.  Accordingly,
     they do not  include  all of the  information  and  footnotes  required  by
     generally accepted accounting principles for complete financial statements.
     In the opinion of management, the consolidated financial statements contain
     all  adjustments,  consisting of normal recurring  adjustments,  considered
     necessary to present fairly the consolidated financial position, results of
     operations and cash flows of the Company. The results of operations for the
     three months  ended March 31, 2001 are not  necessarily  indicative  of the
     results of operations that may be expected for any other interim periods or
     for the year ending December 31, 2001.

     The balance sheet at September 30, 2000 has been derived from the Company's
     audited financial  statements at that date, but does not include all of the
     information  and  footnotes  required  by  generally  accepted   accounting
     principles for complete financial statements. During the three months ended
     December 31, 2000,  the Company  changed its fiscal year end from September
     30th to December 31st. The Company filed its Transition Report on Form 10-Q
     for the  transition  period  October 1, 2000  through  December 31, 2000 on
     February 14, 2001. The Company will include  audited  financial  statements
     covering the  transition  report period within the Company's  Annual Report
     filed on Form 10-K for the period ending December 31, 2001.

2.   FINANCIAL CONDITION

     As of May 3,  2001,  the  Company  had  total  debt  outstanding  of $375.0
     million,  of which  $362.1  million was  outstanding  under its  previously
     existing  credit  facility (the "Credit  Agreement")  and $12.9 million was
     outstanding  under its $16.0 million senior  revolving credit facility (the
     "New Credit Agreement" and together with the Credit Agreement,  the "Credit
     Agreements").  All principal and accrued interest amounts outstanding under
     the Credit  Agreement  and the New Credit  Agreement  are due on October 1,
     2001 and March 31, 2002, respectively (the "Maturity Dates").  Accordingly,
     all  outstanding  debt  associated  with  the  Credit  Agreements  has been
     classified as short-term in the accompanying  consolidated balance sheet at
     March  31,  2001.  The  Company  recognizes  that it will be  necessary  to
     refinance or  restructure  its  indebtedness  on or before October 1, 2001.
     Further,  there  can be no  assurance  that  the  Company  will  be able to
     refinance or restructure  its  indebtedness or that it will be able to take
     such other action to reduce its  indebtedness  prior to October 1, 2001. In
     the event  that the  Company  is unable to  refinance  or  restructure  the
     indebtedness under the Credit Agreements by such date, the lenders would be
     entitled to exercise all or any of their rights and remedies provided under
     the Credit Agreements.  Any such exercise of rights and remedies thereunder
     would  likely  have a  material  adverse  effect  on the  Company,  raising
     uncertainty as to whether the Company would continue as a going concern. No
     adjustments  have been made to the carrying value of assets and liabilities
     in the accompanying financial statements to reflect this uncertainty.

     On January 29, 2001, the Company entered into the New Credit Agreement with
     The Chase Manhattan Bank and Chase Securities,  Inc.  providing the Company
     with  an  additional  revolving  credit  facility  to be  utilized  for the
     purchase of new  audiovisual  equipment and other working  capital needs of
     the  Company.  The New Credit  Agreement  is secured,  on a first  priority
     basis, by

                                      -8-
<PAGE>
                                                                               9

     the same  collateral  that  secures  the Credit  Agreement;  therefore,  in
     connection  with  entering into the New Credit  Agreement,  the Company was
     required  to  obtain a  further  amendment  to its  Credit  Agreement  (the
     "January  2001  Amendment")   which  permitted  the  subordination  of  the
     collateral  in  favor  of the  lenders  under  the  New  Credit  Agreement.
     Approximately   $1.1  million  in  debt  issuance  fees  were  incurred  in
     connection with the New Credit Agreement.  Such fees will be amortized over
     the term of the New Credit  Agreement.  Similar  to the  Credit  Agreement,
     interest on outstanding  amounts under the New 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
     New Credit  Agreement has  substantially  the same  financial  covenants as
     those required under the Credit Agreement.

     In May, 2001, the Company notified the lenders under the Credit  Agreements
     that it was not in compliance with certain financial covenants set forth in
     the March 2000 Amendment and the New Credit  Agreement;  specifically,  the
     financial covenant relating to the minimum required Consolidated Unadjusted
     EBITDA,  as  defined  in the Credit  Agreements,  for the four  consecutive
     quarters  ended  March 31,  2001.  The  Company  obtained a waiver from its
     lenders  waiving  all  defaults  arising  from its  failure to achieve  the
     minimum required  Unadjusted  Consolidated  EBITDA for the four consecutive
     quarters ended March 31, 2001. No amendments to the Credit  Agreements were
     made in connection with the waiver.


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Certain  reclassifications  have been made to the  Company's  statement  of
     operations  for the six months  ended  March 31, 2001 and for the three and
     six months  ended  March 31,  2000 to conform  to the  presentation  of the
     results of operations for the three months ended March 31, 2001.

     REVENUE RECOGNITION

     Revenue is  recognized  over the period in which audio visual  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 business, and equipment rentals.

     GOODWILL

     Goodwill represents the excess of 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
     $32.2  million  and $27.7  million as of March 31, 2001 and  September  30,
     2000,   respectively.   Other  long-lived  assets  represent  property  and
     equipment.

     Goodwill is  allocated to the  operating  segments.  The carrying  value of
     goodwill  for  each  operating   segment  is  reviewed  if  the  facts  and
     circumstances,  such as  significant  declines  in sales,  earnings or cash
     flows or material adverse changes in the business climate,  suggest that it
     may be impaired.  Similarly, the carrying value of other long-lived assets,
     including any associated  goodwill,  is reviewed for impairment when events
     or  circumstances  indicate that the carrying value of these assets may not
     be recoverable.  If this review indicates that the carrying

                                      -9-
<PAGE>
                                                                              10

     values  will not be  recoverable,  as  determined  based  on the  estimated
     undiscounted cash flows of the related businesses or assets,  impairment is
     measured by  comparing  the  carrying  value to fair  value.  Fair value is
     determined  based  on  quoted  market  values,  discounted  cash  flows  or
     appraisals.  Impairment for long-lived  assets to be disposed is identified
     and measured  based upon its estimated  recovery using quoted market values
     or appraisals.

     The Company  periodically  reviews its goodwill and other long-lived assets
     to determine potential  impairment,  if any. In performing such review, the
     Company uses its most recent available  earnings  projections and estimated
     future  cash  flows  expected  to result  from the use of the  assets.  The
     Company uses its  projected  earnings  before  interest,  depreciation  and
     amortization   ("EBITDA")  as  a  measurement  of  its  future  cash  flows
     projections.  In performing  the review using  estimated  future cash flows
     (undiscounted and without interest charges),  the Company will recognize an
     impairment  loss if the sum of the expected  future cash flows is less than
     the carrying amount of the goodwill and other long-lived assets.

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   Melville  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 and six  months  ended  March 31,  2000.  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  are
     presented in the following table.

                                         Three months      Six months ended
                                        ended March 31,        March 31,
                                        2001      2000      2001      2000
                                       ------   -------    ------   --------

     Revenue                           $   --   $80,410    $   --   $138,946
     Cost of Revenue                       --    54,826        --     94,943
     Selling, general and
       administrative expenses             --    31,686        --     53,378
     Depreciation and Amortization         --     3,322        --      6,671
                                       ------   -------    ------   --------


     Operating loss                        --    (9,424)       --    (16,046)
     Interest expense net                  --        60        --         82
                                       ------   -------    ------   --------

     Income (Loss) from operations
       before tax                          --    (9,484)       --    (16,128)

     Tax provision                         --      (330)       --       (330)
                                       ------   -------    ------   --------

     Income (Loss) from discontinued
       operations                      $   --   $(9,814)   $   --   $(16,458)
                                       ======   =======    ======   ========
<PAGE>
                                                                              11

4.   CORPORATE REORGANIZATION COSTS

     In March,  2000, the Company  recorded a charge of $3.6 million  related to
     its  corporate  office and certain  divisional  reorganization  plans.  The
     charge,  which relates to severance  payments made in May,  2000,  has been
     included in selling,  general and administrative expenses for the three and
     six months ended March 31, 2000 in the Company's accompanying  consolidated
     statement of operations.

5.   LOSS ON DISPOSAL OF ASSETS

     During the three months ended March 31,  2000,  the Company  wrote off $3.0
     million of assets  relating to audio  visual  services  businesses  sold in
     August, 1999.

6.   SEGMENT INFORMATION

     Set forth  below is  selected  financial  information  about the  Company's
     continuing operating segments.

     Description of Segments

     Prior to January 1, 2001, the Company's  operations were divided into three
     reportable  segments:  Presentation  Services,  Audio  Visual  Headquarters
     ("AVHQ") and Rental  Services.  On January 1, 2001,  the Company merged its
     Rental  Services  business  segment into the AVHQ  business  unit and began
     managing and  reporting its  operations  through two  reportable  segments:
     Presentation  Services  and AVHQ.  The  segment  information  for all prior
     periods has been restated to conform to the current period's  presentation.
     Presentation  Services  provides  audiovisual  equipment rental services to
     hotels via an on-site  presence of both  equipment  and  technical  support
     staff.  AVHQ 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.  In
     addition,  AVHQ is a remote full service  provider on an as-needed basis to
     local and national corporations, convention centers and smaller hotels.

     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").  Interdivision  sales  are  recorded  at the
     Company's costs;  there is no intercompany  profit or loss on interdivision
     sales.

     Three Months Ended March 31, 2001 (Amounts in Thousands)


                          Presentation
                          Services         AVHQ                    Total
                          ------------   -------                 --------

     Revenue              $86,118        $28,156                 $114,274
     Gross profit          15,425          4,515                   19,940
     EBITDA                13,390          5,359                   18,749
<PAGE>
                                                                              12

     Three Months Ended March 31, 2000 (Amounts in Thousands)


                          Presentation
                          Services         AVHQ       Other       Total
                          ------------   -------      -----     --------

     Revenue              $82,413       $30,365      $    --    $112,778
     Gross profit          19,158         4,086       (2,643)     20,601
     EBITDA                13,969         4,158           --      18,127




     Reconciliations  to  Consolidated   Statement  of  Operations  (Amounts  in
     Thousands)

                                                          Three Months Ended
                                                               March 31,
                                                          2001          2000
                                                       ---------      ---------

     Total external revenue for reportable segments    $ 111,651      $ 111,207
     Intradivision revenue for reportable segments         2,623          1,571
     Elimination of intradivision revenue                 (2,623)        (1,571)
                                                       ---------      ---------

     Total consolidated revenue                        $ 111,651      $ 111,207
                                                       =========      =========

     Total "EBITDA" for reportable segments            $  18,749      $  18,127
     Corporate expenses                                    2,801          4,025
     Corporate reorganization costs                           --          3,600
     Loss on sale of assets                                   --          3,000
     Fixed asset write-off                                    --          2,500
                                                       ---------      ---------

     Total consolidated operating income before
       depreciation and amortization expense
       and interest expense, net                          15,948          5,002
     Depreciation and amortization expenses,
       including depreciation in cost of revenue           9,778          8,717
     Interest expense, net                                12,403         10,742
                                                       ---------      ---------

       Total consolidated operating loss
         from continuing operations before taxes       $  (6,233)     $ (14,457)
                                                       =========      =========

     Six Months Ended March 31, 2001 (Amounts in Thousands)

                        Presentation
                        Services         AVHQ                    Total
                        ------------   -------                 --------

     Revenue             $166,915       $54,947                  $221,862
     Gross profit          30,023       7,300                      37,323
     EBITDA                24,817       8,487                      33,304

<PAGE>
                                                                              13

     Six Months Ended March 31, 2000 (Amounts in Thousands)


                        Presentation
                        Services         AVHQ       Other        Total
                        ------------   -------      -----      --------

     Revenue             $156,887      $56,292     $    --     $213,179
     Gross profit          32,962        6,419      (2,437)      36,944
     EBITDA                23,966        6,884          --       30,850

     Reconciliations  to  Consolidated   Statement  of  Operations  (Amounts  in
     Thousands)

                                                            Six Months Ended
                                                               March 31,
                                                         2001           2000
                                                       ---------      ---------

     Total external revenue for reportable segments    $ 217,739      $ 209,974
     Intradivision revenue for reportable segments         4,123          3,205
     Elimination of intradivision revenue                 (4,123)        (3,205)
                                                       ---------      ---------

     Total consolidated revenue                        $ 217,739      $ 209,974
                                                       =========      =========

     Total "EBITDA" for reportable segments            $  33,304      $  30,850
     Corporate expenses                                    5,069          9,503
     Fixed asset write-off                                    --          2,500
     Loss on sale of assets                                   --          3,000
                                                       ---------      ---------

     Total consolidated operating income before
       depreciation and amortization expense
       and interest expense, net                          28,235         15,847
     Depreciation and amortization expenses,
       including depreciation in cost of revenue          18,999         16,777
     Interest expense, net                                25,180         21,345
                                                       ---------      ---------

         Total consolidated operating loss
           from continuing operations before taxes     $ (15,944)     $ (22,275)
                                                       =========      =========

7.   EARNINGS PER COMMON SHARE

     The weighted  average number of shares used in the calculation of basic and
     diluted  earnings per common share was 24,996 and 23,697 for the six months
     ended March 31, 2001 and 2000, respectively,  and 25,057 and 23,697 for the
     three months ended March 31, 2001 and 2000, respectively.
<PAGE>
                                                                              14

                        Audio Visual Services Corporation

           Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

Results of Operations

Effective April 20, 2000 and May 9, 2000, the Company  disposed of substantially
all of the  assets of its  worldwide  Communications  Group  and its  U.K.-based
Melville Exhibition Services subsidiary,  respectively. The operating results of
each  of  the  disposed   businesses   have  been  segregated  and  reported  as
discontinued  operations in the  consolidated  statements of operations  for the
three and six months ended March 31, 2000.  The results of operations  below are
for the continuing  operations of the Company's  audiovisual services businesses
only  (which  are  comprised  of the  Presentation  Services  and  Audio  Visual
Headquarters  division)  and do not  include the  results of  operations  of the
disposed businesses.


Six Months Ended March 31, 2001 Compared to Six Months Ended March 31, 2000

Revenue.  The Company's  total revenue  increased  $7.7 million,  or 3.7%,  from
$210.0  million in the six months ended March 31, 2000 to $217.7  million in the
six  months  ended  March 31,  2001.  Excluding  interdivision  revenue  of $4.1
million, the Company's  Presentation Services division recognized $166.9 million
of revenue  during the six months ended March 31, 2001  compared with revenue of
$156.9  million during the six months ended March 31, 2000, an increase of $10.0
million,  or 6.4%. The increase is primarily  attributable to increased revenues
from new hotel properties as well as existing hotel  properties.  Revenue of the
Company's Audio Visual  Headquarters  division  decreased by approximately  $1.4
million to $54.9  million  for the six months  ended  March 31,  2001 from $56.3
million  for the six  months  ended  March  31,  2000  primarily  as a result of
revenues  lost  from  specific  events  which  did not  recur  this year and the
discontinuance of unprofitable business.

Gross  profit.  Consolidated  gross profit was $37.3  million for the six months
ended March 31, 2001,  an increase of $0.4 million from $36.9  million  reported
for the six  months  ended  March 31,  2000.  Gross  profit of the Audio  Visual
Headquarters  division  increased by  approximately  $0.9 million during the six
months ended March 31, 2001 as a result of lower costs of revenue, primarily the
costs  incurred to rent audio visual  equipment  from third parties  ("subrental
expense"),  salaries and related expenses and other miscellaneous  expenses. The
gross profit of the Presentation  Services  division  decreased by approximately
$2.9 million during the six months ended March 31, 2001 due to higher commission
rates paid to hotel properties and salary costs. The gross profit on revenue was
also impacted by $12.6 million and $10.9 for the six months ended March 31, 2001
and 2000, respectively, of depreciation expense related to rental equipment used
in the audio visual services  businesses.  Such depreciation expense is included
in cost of revenue. In addition,  $2.5 million related to fixed asset write-offs
was included in cost of revenue during the six months ended March 31, 2000.

Selling,  general  and  administrative  expenses.  Total  selling,  general  and
administrative  expenses  decreased $7.3 million,  or 25.2%, to $21.7 million in
the six months  ended March 31, 2001 from $29.0  million in the six months ended
March 31, 2000. Included in selling, general and administrative expenses for the
six months ended March 31, 2000 was a total of $3.6 million  related to one-time
corporate office  reorganization  charges,  including severance  payments.  As a
result of the corporate office reorganization,  total corporate costs, including
salaries,  rent and  professional  fees,  were  reduced  by  approximately  $0.9
million.  Selling,  general and  administrative  expenses,  as a  percentage  of
revenue,  was 10.0%  during the six months  ended March 31, 2001  compared  with
13.8% in the six months  ended March 31,  2000
<PAGE>
                                                                              15

primarily due to the corporate reorganization costs included in selling, general
and  administrative  expenses  during the six months ended March 31,  2000.  The
selling,  general and administrative  expenses of the Presentation  Services and
AVHQ business segments decreased by approximately $2.3 million and $0.6 million,
respectively,  from the prior year's  comparable  quarter as a result of certain
cost cutting plans implemented by the Company during the last year.

Depreciation and amortization. Depreciation and amortization expense for the six
months ended March 31, 2001 was $6.4  million,  an increase of $0.6 million from
$5.8 million in the  corresponding  period in the prior year,  primarily  due to
increased depreciation from additional computer software and hardware purchases.

Interest expense,  net.  Interest expense,  net increased by $3.8 million due to
higher borrowing costs.

Provision  for  taxes.  Taxes  reflect  an  allocation  based on the  full  year
anticipated  effective  tax rate.  The income tax  provision  for the six months
ended March 31, 2001 and 2000 relates to the Company's foreign operations.

Net loss. The Company  realized a net loss from  continuing  operations of $16.1
million in the six  months  ended  March 31,  2001  compared  to a net loss from
continuing  operations  of $21.9 million in the six months ended March 31, 2000.
The loss per common share from  continuing  operations  for the six months ended
March 31, 2001 was $0.65 as compared  with a loss per common  share of $0.93 for
the  comparable  period  in the  prior  year.  The loss per  common  share  from
discontinued operations was $ 2.39 for the six months ended March 31, 2000.


Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000

Revenue.  The Company's total revenue increased $0.5 million from $111.2 million
in the three months  ended March 31, 2000 to $111.7  million in the three months
ended March 31, 2001, after considering  interdivision  revenue  eliminations of
$2.6 million.  The Company's  Presentation  Services  division  recognized total
revenue of $86.1  million  during the three months ended March 31, 2001 compared
with revenue of $82.4  million  during the three months ended March 31, 2000, an
increase of $3.7 million,  or 4.5%.  The increase in primarily  attributable  to
increased  revenues from new hotel  properties  as well as existing  properties.
Revenue  of the  Company's  Audio  Visual  Headquarters  division  decreased  by
approximately $2.2 million, or 7.2%, to $28.2 million for the three months ended
March 31,  2001 from $30.4  million  for the three  months  ended March 31, 2000
primarily as a result of revenues lost from specific  events which did not recur
this year and the discontinuance of unprofitable business.

Gross profit.  Consolidated  gross profit was $19.9 million for the three months
ended March 31, 2001 as compared  with $20.6  million for the three months ended
March 31, 2000. Gross profit of the Audio Visual Headquarters division increased
by approximately  $0.4 million during the three months ended March 31, 2001 as a
result of lower  costs of  revenue,  primarily  subrental  costs,  salaries  and
related  expenses  and other  miscellaneous  expenses.  The gross  profit of the
Presentation  Services division  decreased by approximately  $3.7 million during
the three months  ended March 31, 2001 due to higher  commission  rates,  salary
costs and higher sub-rental expenses.  The gross profit on revenue for the three
months ended March 31, 2001 and 2000 was also impacted by approximately $6.6 and
$5.7 million,  respectively, of depreciation expense related to rental equipment
used in the audio  visual  services  businesses.  Such  depreciation  expense is
included in cost of revenue.  In addition,  $2.5 million  related to fixed asset
write-offs  was included in cost of revenue  during the three months ended March
31, 2000.
<PAGE>
                                                                              16

Selling,  general  and  administrative  expenses.  Total  selling,  general  and
administrative  expenses  decreased $7.7 million,  or 42.1%, to $10.6 million in
the three  months  ended March 31, 2001 from $18.3  million in the three  months
ended March 31, 2000. Included in selling,  general and administrative  expenses
for the three months ended March 31, 2000 was a total of $3.6 million related to
one-time corporate office reorganization charges,  including severance payments.
As a result of the  corporate  office  reorganization,  other  corporate  costs,
including  salaries,  rent and professional  fees, were reduced by approximately
$2.6 million  from the prior  year's  comparable  period.  Selling,  general and
administrative  expenses,  as a percentage of revenue, was 9.5% during the three
months ended March 31, 2001  compared with 16.5% in the three months ended March
31,  2000  primarily  due to the  corporate  reorganization  costs  included  in
selling, general and administrative expenses during the three months ended March
31,  2000.

Depreciation and  amortization.  Depreciation  and amortization  expense for the
three months ended March 31, 2001 was $3.2 million,  an increase of $0.2 million
from the  corresponding  period in the prior year,  primarily  due to  increased
depreciation from additional computer software and hardware purchases.

Interest expense,  net.  Interest expense,  net increased by $1.7 million due to
higher borrowing costs.

Provision  for  taxes.  Taxes  reflect  an  allocation  based on the  full  year
anticipated  effective  tax rate.  There was no income tax benefit for the three
months ended March 31, 2001 and 2000.

Net loss.  The Company  realized a net loss of $6.2  million in the three months
ended March 31, 2001 compared to a net loss of $14.5 million in the three months
ended March 31, 2000.  The loss per common share from  operations  for the three
months  ended March 31, 2001 was $0.25 as compared  with a loss per common share
of $0.61 for the comparable  period in the prior year. The loss per common share
for the  discontinued  operations was $2.12 for the three months ended March 31,
2000.


Liquidity and Capital Resources

The following  section provides certain  historical  information  concerning the
Company's existing credit facilities:

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  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 Holdings plc in late 1997.
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.

In May,  1998,  the Company  repaid  approximately  $26  million  under the Term
Facility thereby permanently reducing availability thereunder by such amount. In
December,  1998 and July, 1999, the terms of the Revolving Facility were amended
to reduce the aggregate availability thereunder from $300
<PAGE>
                                                                              17

million to $250 million,  to amend certain financial covenants contained therein
and to  increase  the  interest  rate on  amounts  outstanding  under 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 had arisen or might 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 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
six 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 was based on
post-September   30,  1999  consolidated   EBITDA  (as  defined  in  the  Credit
Agreement), and to restrictions on the amount of capital expenditures that could
be made by the Company  during the fiscal year ending  September  30, 2000.  The
minimum  required  consolidated  adjusted  EBITDA,  as defined,  for fiscal 2000
exceeded levels achieved in fiscal 1999.

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 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  Unadjusted  Consolidated  EBITDA,  as
defined in the Credit Agreements,  for the three month period ended December 31,
1999,  the six month period ended March 31, 2000,  the nine month period  ending
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 the 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.
<PAGE>
                                                                              18

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 its  previously  announced  sale of its  Communications
Division  (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 are being 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.

The maturity  date of each of the Term  Facility and the  Revolving  Facility is
October 1, 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 3.00% or (ii) an  alternate  base rate based upon the greatest of
(a) the agent bank's prime rate,  (b) the  six-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 the rate of 1% per
annum payable in arrears upon the termination of the Credit Agreement.

On January  29,  2001,  the Company  entered  into an  agreement  with The Chase
Manhattan Bank and Chase  Securities,  Inc. for a $16.0 million senior revolving
credit  facility (the "New Credit  Agreement")  to be utilized for investment in
audio visual  equipment and other working capital needs of the Company.  The New
Credit  Agreement  provided the Company with additional  liquidity to accelerate
and increase its investment in new audio visual rental equipment. The New Credit
Agreement is secured,  on a first priority  basis,  by the same  collateral that
secures the Credit  Agreement;  therefore,  in connection with entering into the
New Credit Agreement,  the Company was required to obtain a further amendment to
the  Credit  Agreement  (the  "January  2001  Amendment")  which  permitted  the
subordination  of the  collateral  in favor of the lenders  under the New Credit
Agreement.  The  maturity  date of the New Credit  Agreement  is March 31, 2002.
Approximately  $1.1 million in debt  issuance  fees were  incurred in
<PAGE>
                                                                              19

connection with the New Credit  Agreement.  Such fees will be amortized over the
term of the New Credit Agreement.  Similar to the Credit Agreement,  interest on
outstanding amounts under the New 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 New Credit Agreement has  substantially the same
financial covenants as those required under the Credit Agreement.

In May, 2001, the Company notified the lenders under the Credit  Agreements that
it was not in compliance with certain financial covenants set forth in the March
2000  Amendment  and the  New  Credit  Agreement;  specifically,  the  financial
covenant  relating to the minimum required  Consolidated  Unadjusted  EBITDA, as
defined in the Credit Agreements,  for the four consecutive quarters ended March
31, 2001.  The Company  obtained a waiver from its lenders  waiving all defaults
arising from its failure to achieve the minimum required Unadjusted Consolidated
EBITDA for the four consecutive  quarters ended March 31, 2001. No amendments to
the Credit Agreements were made in connection with the waiver.

The  securitized  collateral  under  the  Credit  Agreement  and the New  Credit
Agreement  consists  of  substantially  all of the assets of the Company and its
material  subsidiaries,  and the  Company  and its  material  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 Agreements contain 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.

Pursuant to the terms of the Credit Agreement and the New Credit Agreement,  all
principal and interest amounts outstanding thereunder are due on October 1, 2001
and March 31, 2002,  respectively,  (the  "Maturity  Dates").  Accordingly,  all
outstanding  debt  associated  with  the  Credit  Agreement  and the New  Credit
Agreement has been  classified as  short-term in the  accompanying  consolidated
balance  sheet  at  March  31,  2001.  The  Company  recognizes  that it will be
necessary to refinance or restructure its indebtedness on or before the Maturity
Dates.  While the Company has not  identified a  definitive  plan to address its
outstanding  indebtedness,  it is currently  assessing  various  refinancing  or
restructuring  options,  including,  among other things,  extending the Maturity
Dates and converting a portion of the Company's  existing  outstanding debt into
equity.  Since it has not  identified a specific  refinancing  or  restructuring
plan, it is too early to quantify any  anticipated  costs of executing the plans
or assessing the likelihood of the execution of such plan. In the event that the
Company is not able to  refinance  or  restructure  the  indebtedness  under the
Credit  Agreement or the New Credit  Agreement,  the Company's  lenders would be
entitled to  exercise  all or any of their other  rights or  remedies.  Any such
exercise of rights and remedies  thereunder would likely have a material adverse
effect on the  Company,  raising  uncertainty  as to whether the  Company  would
continue as a going concern.  There can be no assurance that the Company will be
able to refinance or  restructure  its  indebtedness  or that it will be able to
take such other action to reduce its  indebtedness  prior to October 1, 2001. No
adjustments  have been made to the carrying  value of assets and  liabilities in
the accompanying financial statements to reflect this uncertainty.

As of May 3, 2001, the Company had a total of $375.0 million  outstanding  under
the Credit Agreement and the New Credit Agreement. A total of $362.1 million was
outstanding under the Credit Agreement,  of which $200.5 million was outstanding
under the Revolving  Facility,  and $12.9 million was outstanding  under the New
Credit Agreement.  Cash on hand as of such date was $13.1 million.  The weighted
average  interest rate on  outstanding  indebtedness  was 8.5% as of March.  31,
2001.
<PAGE>
                                                                              20

As previously disclosed, the Company disposed of its Communications Division and
MES subsidiary in April and May, 2000,  respectively.  The following  table sets
forth certain cash flow  information for the Company's  combined  continuing and
discontinued  operations  for the six months  ended  March 31,  2000 and for the
Company's  continuing  audio visual  services  business units for the six months
ended March 31, 2001.

                                                     Six Months Ended March 31,
                                                      2001                2000
                                                    -------             -------

Net cash provided by (used in):

Operating activities                               $ (1,261)           $ (2,857)
Investing activities                                (16,511)            (20,908)
Financing activities                                 16,493              22,419

For the six months  ended March 31,  2001,  $1.3  million was used in  operating
activities.  The net loss adjusted for  depreciation  and amortization and fixed
asset write-offs  provided $3.1 million.  The net change in working capital used
$4.3 million,  with  decreases in prepaid  expenses and other current assets and
increases in accrued  expenses and other  liabilities  and taxes payable,  which
were more than offset by increases in accounts  receivable and other assets, and
decreases in trade accounts payable.  Investing activities used $16.5 million as
a result of audiovisual rental equipment purchases and additional investments in
computer software applications for new accounting systems.  Financing activities
provided $16.5 million from drawings under the Company's credit facility.

For the six months  ended March 31,  2000,  $2.9  million was used in  operating
activities.  The net loss adjusted for depreciation and amortization,  the fixed
asset  write-offs and the loss on disposition of assets  required $11.7 million.
The net change in working  capital  provided  $8.8  million,  with  decreases in
prepaid and other current assets, other assets and increases in accounts payable
and deferred income and accrued expenses and other liabilities,  which were more
than offset by increases in accounts  receivable and deferred charges and assets
held for sale and decreases in taxes payable.  Investing  activities  used $20.9
million due to property and equipment  additions.  Financing activities provided
$22.4 million in the six months ended March 31, 2000 under the Company's  Credit
Agreement,  of which  $77.6  million  was  provided  by the  drawings  under the
Company's Credit Agreement, offset by repayments of $55.2 million.

Capital  expenditures were $16.5 million and $20.7 million during the six months
ended March 31, 2001 and 2000,  respectively.  During the six months ended March
31, 2001 and 2000,  the purchase of  audiovisual  equipment  used in  operations
comprised the major portion of capital expenditures.

Item 3. 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>
                                                                              21

                                     PART II


OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

On March 25, 1999, a purported  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 former officers and one of its
former  directors.  On  May  7,  1999,  a  purported  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  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 principal 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 settlement call for the
payment  to the  plaintiff  class of the sum of $15.0  million.  The  settlement
amount was paid entirely by the Company's insurance carrier and was paid into an
account to be  administered  by  counsel  for the  plaintiffs.  The terms of the
settlement  are subject to, among other things,  court approval and execution of
definitive settlement documentation. In the event that the action is not finally
settled,  the Company  believes it has  meritorious  defenses to this action and
intends to 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 2.  CHANGES IN SECURITIES

(a)      See "ITEM 5. OTHER INFORMATION" below.

(b)      Not Applicable

(c)      Not Applicable

(d)      Not applicable.


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

(a)      Annual Meeting of Stockholders
         Date held:  March 2, 2001

(b)      Directors elected:

         Errol M. Cook
         Digby J. Davies
         Robert K. Ellis
         Bryan D. Langton
         David E. Libowitz
         C. Anthony Wainwright
<PAGE>
                                                                              22

(c)      Matters Voted Upon:

         1.       Election of Directors

                  Nominee                       Votes For        Votes Withheld

                  Errol M. Cook                 20,419,458           179,312
                  Digby J. Davies               20,422,558           176,212
                  Robert K. Ellis               20,422,608           176,162
                  Bryan D. Langton              20,420,458           178,312
                  David E. Libowitz             20,421,458           177,312
                  C. Anthony Wainwright         20,420,458           178,312

         2.       Approval and  Ratification of Appointment of Ernst & Young LLP
                  as  Independent  Auditors for the Fiscal Year Ending  December
                  31, 2001,  including,  the Transition Report Period October 1,
                  2000 through December 31, 2000.

                  Votes for:                    20,495,772
                  Votes against:                    76,048
                  Votes abstaining:                 26,950

ITEM 5.  OTHER INFORMATION

         On March 12, 2001,  the Company  announced  that it had advised the New
York Stock  Exchange  ("NYSE")  that the  Company  was moving the listing of its
common stock from the NYSE to the OTC Bulletin Board,  effective March 19, 2001.
This  announcement  followed several months of discussions with  representatives
from the NYSE concerning the Company's  continued listing on the NYSE. In spring
and summer,  2000, the Company  received  notices from the NYSE that its listing
fell below certain of the NYSE's continued listing criteria.  In response to the
notices  from the  NYSE,  the  Company  submitted  a  business  plan to the NYSE
demonstrating  the  Company's  ability  to  comply  with the  continued  listing
criteria  by the  November,  2001,  deadline  established  by the NYSE.  In late
summer,  2000,  the Company  announced  that the NYSE had accepted the Company's
business  plan,  subject to the Company's  meeting  certain  interim  objectives
outlined in the business plan. The Company  believed that attempting to meet the
future  interim  objectives  outlined in the business plan submitted to the NYSE
may not be in the best interests of the Company.  The trading symbol assigned to
the Company's listing of its common stock on the OTC Bulletin Board is: AVSV.
<PAGE>
                                                                              23

ITEM 6.             EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits Required by Item 601 of Regulation S-K:

         Exhibit
         Number                    Description of Document
         ------                    -----------------------

         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 of the Company, filed June 29, 2000, with the
                  Secretary of State 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).

         10.1     Credit Agreement, dated as of October 28, 1997 (the "Credit
                  Agreement"), among the Company, Caribiner, 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).

         10.2     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).

         10.3     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).

         10.4     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).
<PAGE>
                                                                              24


         10.5     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).

         10.6     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).

         10.7     Sixth Amendment, Consent and Agreement, dated as of January
                  29, 2001, 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
                  10.7 to the Company's Transition Report on Form 10-Q for the
                  three months ended December 31, 2000.)

         10.8     Waiver, dated May 4, 2001, to the Credit Agreement dated as of
                  October 29, 1997, Among the Company, Audio Visual Services
                  (NY) Corporation, the several banks And other financial
                  institutions, The Chase Manhattan Bank, as Administrative
                  Agent, And Merrill Lynch Capital Corporation, as Syndication
                  Agent.

         10.9     Senior Secured Revolving Credit Agreement, dated as of January
                  29, 2001, among the Company, Audio Visual Services (NY)
                  Corporation, the several lenders named therein, The Chase
                  Manhattan Bank, as Administrative Agent, and Chase Securities,
                  Inc., as Arranger (schedules and exhibits omitted - the
                  Company agrees to furnish a copy of any schedule or exhibit to
                  the Commission upon request) (filed as Exhibit 10.8 to the
                  Company's Transition Report on Form 10-Q for the three months
                  ended December 31, 2000.)

         10.10    Waiver, dated May 4, 2001, to the Senior Revolving Credit
                  Agreement dated as of January 29, 2001, among the Company,
                  Audio Visual Services (NY) Corporation, the several banks And
                  other financial institutions, The Chase Manhattan Bank, as
                  Administrative Agent, and Merrill Lynch Capital Corporation,
                  as Syndication Agent.

         10.11    Amended and Restated 1996 Stock Option Plan (filed as Exhibit
                  10.7 to the Company's Quarterly Report on Form 10-Q for the
                  period ended June 30, 2000 and incorporated herein by
                  reference).


(b)      Reports on Form 8-K:

         The Company filed the following report on Form 8-K during the three
months ended March 31, 2001:

         Date of Filing     Items Reported    Subject of Report

         March 14, 2001              5        Reporting that the Company's
                                              listing of its common Stock will
                                              move from the New York Stock
                                              Exchange to the OTC Bulletin
                                              Board, effective March 19, 2001.
<PAGE>
                                                                              25


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                       AUDIO VISUAL SERVICES CORPORATION.
                                  (Registrant)

Date:  May 15, 2001

                                        By: /s/ Digby J. Davies
                                            ------------------------------------
                                            Digby J. Davies
                                            President and Chief Operating
                                            Officer and Acting Chief Financial
                                            Officer (Principal Financial and
                                            Accounting Officer)
<PAGE>
                                                                              26


                                  EXHIBIT INDEX

         Exhibit
         Number                Description of Document Page Number
         ------                -----------------------------------

         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 of the Company, filed June 29, 2000, with the
                  Secretary of State 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).

         10.1     Credit Agreement, dated as of October 28, 1997 (the "Credit
                  Agreement"), among the Company, Caribiner, 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).

         10.2     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).

         10.3     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).

         10.4     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).
<PAGE>
                                                                              27


         10.5     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).

         10.6     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).

         10.7     Sixth Amendment, Consent and Agreement, dated as of January
                  29, 2001, 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
                  10.7 to the Company's Transition Report on Form 10-Q for the
                  three months ended December 31, 2000.)

         10.8     Waiver, dated May 4, 2001, to the Credit Agreement dated as of
                  October 29, 1997, Among the Company, Audio Visual Services
                  (NY) Corporation, the several banks And other financial
                  institutions, The Chase Manhattan Bank, as Administrative
                  Agent, And Merrill Lynch Capital Corporation, as Syndication
                  Agent.

         10.9     Senior Secured Revolving Credit Agreement, dated as of January
                  29, 2001, among the Company, Audio Visual Services (NY)
                  Corporation, the several lenders named therein, The Chase
                  Manhattan Bank, as Administrative Agent, and Chase Securities,
                  Inc., as Arranger (schedules and exhibits omitted - the
                  Company agrees to furnish a copy of any schedule or exhibit to
                  the Commission upon request) (filed as Exhibit 10.8 to the
                  Company's Transition Report on Form 10-Q for the three months
                  ended December 31, 2000.)

         10.10    Waiver, dated May 4, 2001, to the Senior Revolving Credit
                  Agreement dated as of January 29, 2001, among the Company,
                  Audio Visual Services (NY) Corporation, the several banks And
                  other financial institutions, The Chase Manhattan Bank, as
                  Administrative Agent, and Merrill Lynch Capital Corporation,
                  as Syndication Agent.

         10.11    Amended and Restated 1996 Stock Option Plan (filed as Exhibit
                  10.7 to the Company's Quarterly Report on Form 10-Q for the
                  period ended June 30, 2000 and incorporated herein by
                  reference).