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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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Form 10-Q

(Mark One)

|/x/ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2001

OR

|/ / | Transition Report Pursuant to Section 13 Or 15(d) of the Securities Exchange Act of 1934
|--- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number: 0-1461

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

Delaware(State or other jurisdiction
of incorporation)

13-1679856(I.R.S. Employer Identification No.)520 Broadway, Santa Monica, CA(Address of principal executive offices)

90401(Zip Code)


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

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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past
90 days. Yes /x/  No / /

The
number of shares of common stock outstanding at August 8, 2001 was 5,362,418 Class A shares and 32,970,374 Class B shares.

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LIBERTY LIVEWIRE CORPORATION
Quarterly Report on Form 10-Q
June 30, 2001

Index

|                                                                                             |  |                                                                                                                                                                  |  | Page
|-------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Part IFinancial Information                                                                 |  |                                                                                                                                                                 
|Item 1- Financial Statements                                                                 |  |                                                                                                                                                                 
|                                                                                             |  | The following financial statements are filed herewith:                                                                                                           |  |     
|                                                                                             |  | Condensed Consolidated Balance Sheets, June 30, 2001 (Unaudited) and December 31, 2000 (Audited)                                                                 |  | 3   
|                                                                                             |  | Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2001 and for the Three and Six Months Ended May 31, 2000 (Unaudited) |  | 5   
|                                                                                             |  | Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2001 and May 31, 2000 (Unaudited)                                              |  | 6   
|                                                                                             |  | Notes to Condensed Consolidated Financial Statements                                                                                                             |  | 8   
|Item 2Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 16                                                                                                                                                              
|Item 3Quantitative and Qualitative Disclosures About Market Risk                            |  | 20                                                                                                                                                              
|Part IIOther Information                                                                    |  |                                                                                                                                                                 
|Item 1Legal Proceedings                                                                     |  | 20                                                                                                                                                              
|Item 6Exhibits and Reports on Form 8-K                                                      |  | 21                                                                                                                                                              
|Signature                                                                                    |  | 21                                                                                                                                                              

2

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LIBERTY LIVEWIRE CORPORATION    Condensed Consolidated Balance Sheets  (Amounts in thousands, except share and per share amounts)

Assets

|                                                                                                                                              |                                                                                                                       | June 30,
2001 |           | December 31,
2000
|--------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ------------- | --------- | -----------------
|
|Current assets:                                                                                                                               |                                                                                                                       |               |           |                  
|                                                                                                                                              | Cash and cash equivalents                                                                                             |               | $         | 12,977           
|                                                                                                                                              | Marketable securities                                                                                                 |               |           | 1,449            
|                                                                                                                                              | Trade receivables (net of allowance for doubtful accounts of $7,809 at June 30, 2001 and $5,567 at December 31, 2000) |               |           | 103,201          
|                                                                                                                                              | Inventories                                                                                                           |               |           | 5,417            
|                                                                                                                                              | Deferred income taxes, net                                                                                            |               |           | 6,295            
|                                                                                                                                              | Prepaid deposits and other                                                                                            |               |           | 20,613           
|                                                                                                                                              |                                                                                                                       |               |           |                  
|                                                                                                                                              | Total current assets                                                                                                  |               |           | 149,952          
|                                                                                                                                              |                                                                                                                       |               |           |                  
|Property, plant and equipment (net of accumulated depreciation and amortization of $69,523 at June 30, 2001 and $35,076 at December 31, 2000) |                                                                                                                       |               | 410,924   |                  
|Due from parent                                                                                                                               |                                                                                                                       |               | 6,438     |                  
|Goodwill and identifiable intangible assets (net of accumulated amortization of $42,925 at June 30, 2001 and $21,356 at December 31, 2000)    |                                                                                                                       |               | 670,415   |                  
|Other assets (net of accumulated amortization of $1,483 at June 30, 2001 and $555 at December 31, 2000)                                       |                                                                                                                       |               | 11,965    |                  
|                                                                                                                                              |                                                                                                                       |               |           |                  
|                                                                                                                                              |                                                                                                                       | $             | 1,249,694 |                  
|                                                                                                                                              |                                                                                                                       |               |           |                  

See
notes to condensed consolidated financial statements

3

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LIBERTY LIVEWIRE CORPORATIONCondensed Consolidated Balance Sheets (Continued)
(Amounts in thousands, except share and per share amounts)

Liabilities and Stockholders' Equity

|                                             |                                                                                                                                                   | June 30,
2001 |           | December 31,
2000 |  
|-------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | --------- | ----------------- | -
|
|Current liabilities:                         |                                                                                                                                                   |               |           |                   |  
|                                             | Accounts payable and accrued liabilities                                                                                                          |               | $         | 91,411            |  
|                                             | Interest rate swap and accrued interest                                                                                                           |               |           | 6,891             |  
|                                             | SARs compensation payable                                                                                                                         |               |           | 11,459            |  
|                                             | Current maturities of long-term debt and capital lease obligations                                                                                |               |           | 9,228             |  
|                                             |                                                                                                                                                   |               |           |                   |  
|                                             | Total current liabilities                                                                                                                         |               |           | 118,989           |  
|                                             |                                                                                                                                                   |               |           |                   |  
|Long-term debt and capital lease obligations |                                                                                                                                                   |               | 430,096   |                   |  
|Convertible subordinated debt                |                                                                                                                                                   |               | 152,735   |                   |  
|Other liabilities                            |                                                                                                                                                   |               | 2,385     |                   |  
|Deferred income taxes, net                   |                                                                                                                                                   |               | 9,558     |                   |  
|                                             |                                                                                                                                                   |               |           |                   |  
|                                             | Total liabilities                                                                                                                                 |               |           | 713,763           |  
|                                             |                                                                                                                                                   |               |           |                   |  
|Commitments and contingencies                |                                                                                                                                                   |               |           |                   |  
|Stockholders' equity:                        |                                                                                                                                                   |               |           |                   |  
|Common stock:                                |                                                                                                                                                   |               |           |                   |  
|                                             | Class A; authorized 300,000,000 shares of $0.01 par value; issued 5,362,418 at June 30, 2001 and 5,384,506 at December 31, 2000                   |               |           | 54                |  
|                                             | Class B; authorized 100,000,000 shares of $0.01 par value; issued and outstanding 32,970,374 at June 30, 2001 and 31,612,716 at December 31, 2000 |               |           | 330               |  
|Additional paid-in capital                   |                                                                                                                                                   |               | 604,300   |                   |  
|Retained deficit                             |                                                                                                                                                   |               | (54,338   | )                 |  
|Deferred tax asset to be utilized by parent  |                                                                                                                                                   |               | (4,532    | )                 |  
|Accumulated other comprehensive loss         |                                                                                                                                                   |               | (9,623    | )                 |  
|Other stockholders'equity                    |                                                                                                                                                   |               | (260      | )                 |  
|                                             |                                                                                                                                                   |               |           |                   |  
|Total stockholders' equity                   |                                                                                                                                                   |               | 535,931   |                   |  
|                                             |                                                                                                                                                   |               |           |                   |  
|                                             |                                                                                                                                                   | $             | 1,249,694 |                   | $
|                                             |                                                                                                                                                   |               |           |                   |  

See
notes to condensed consolidated financial statements

4

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LIBERTY LIVEWIRE CORPORATION    Condensed Consolidated Statements of Operations (Unaudited)    (Amounts in thousands, except share and per share amounts)

|                                                      |                                    | Post Todd Merger |            | Pre Todd Merger |  
|----------------------------------------------------- | ---------------------------------- | ---------------- | ---------- | --------------- | -
|
|
|Revenues                                              |                                    | $                | 147,702    |                 | $
|                                                      |                                    |                  |            |                 |  
|Costs and expenses:                                   |                                    |                  |            |                 |  
|                                                      | Operating costs and other expenses |                  |            | 126,951         |  
|                                                      | Non-cash compensation expense      |                  |            | 5,730           |  
|                                                      | Depreciation and amortization      |                  |            | 29,132          |  
|                                                      | Interest                           |                  |            | 15,704          |  
|                                                      | Other expensenet                  |                  |            | 134             |  
|                                                      |                                    |                  |            |                 |  
|                                                      | Total costs and expenses           |                  |            | 177,651         |  
|                                                      |                                    |                  |            |                 |  
|Loss before benefit for income taxes                  |                                    |                  | (29,949    | )               |  
|Provision (benefit) for income taxes                  |                                    |                  | 1,102      |                 |  
|                                                      |                                    |                  |            |                 |  
|Net loss                                              |                                    | $                | (31,051    | )               | $
|                                                      |                                    |                  |            |                 |  
|Weighted average shares outstandingbasic and diluted |                                    |                  | 38,332,792 |                 |  
|                                                      |                                    |                  |            |                 |  
|Net loss per common sharebasic and diluted           |                                    | $                | (0.81      | )               | $
|                                                      |                                    |                  |            |                 |  

See
notes to condensed consolidated financial statements

5

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LIBERTY LIVEWIRE CORPORATION    Condensed Consolidated Statements of Cash Flows (Unaudited)  (Amounts in thousands)

|                                                     |                                                                         | Post Todd Merger |         | Pre Todd Merger |  
|---------------------------------------------------- | ----------------------------------------------------------------------- | ---------------- | ------- | --------------- | -
|
|
|Net cash flows provided by operating activities      |                                                                         | $                | 21,188  |                 | $
|                                                     |                                                                         |                  |         |                 |  
|Cash Flows from Investing Activities:                |                                                                         |                  |         |                 |  
|                                                     | Purchase of marketable securities and investments                       |                  |         |                |  
|                                                     | Proceeds from sales of equipment, marketable securities and investments |                  |         | 8,975           |  
|                                                     | Investment in LNS                                                       |                  |         | (300            | )
|                                                     | Cash paid for GWNS, net of cash received                                |                  |         | (107,902        | )
|                                                     | Capital expenditures                                                    |                  |         | (33,965         | )
|                                                     |                                                                         |                  |         |                 |  
|                                                     | Net cash flows used in investing activities                             |                  |         | (133,192        | )
|                                                     |                                                                         |                  |         |                 |  
|Cash Flows from Financing Activities:                |                                                                         |                  |         |                 |  
|                                                     | Borrowings of long-term debt                                            |                  |         | 37,859          |  
|                                                     | Borrowings under convertible subordinated debt                          |                  |         | 95,801          |  
|                                                     | Payments of long-term debt and capital lease obligations                |                  |         | (13,958         | )
|                                                     | Payments of non-convertible subordinated debt                           |                  |         | (13,801         | )
|                                                     | Payments for SARs exercised                                             |                  |         | (85             | )
|                                                     | Proceeds from exercise of stock options                                 |                  |         |                |  
|                                                     |                                                                         |                  |         |                 |  
|Net cash flows provided by financing activities      |                                                                         |                  | 105,816 |                 |  
|Effect of exchange rate changes on cash              |                                                                         |                  | (301    | )               |  
|                                                     |                                                                         |                  |         |                 |  
|Net (decrease) increase in cash and cash equivalents |                                                                         |                  | (6,489  | )               |  
|Cash and cash equivalents at beginning of period     |                                                                         |                  | 19,466  |                 |  
|                                                     |                                                                         |                  |         |                 |  
|Cash and cash equivalents at end of period           |                                                                         | $                | 12,977  |                 | $
|                                                     |                                                                         |                  |         |                 |  

See
notes to condensed consolidated financial statements

6

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LIBERTY LIVEWIRE CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Amounts in thousands)
(Continued)

Supplemental Disclosures of Non Cash Investing and Financing Activities:

The
Company recorded a discount of $23 million on the borrowing under the Liberty Subordinated Credit Agreement as a result of a beneficial conversion rate at the date of the borrowing. As of
June 30, 2001, $1.2 million of the discount has been amortized.

The
Company recorded a liability in the amount of $3.8 million for changes in the fair value of its interest rate swap.

Pursuant
to the Liberty Subordinated Credit Agreement, the Company issued Class B common stock valued at $8.1 million to Liberty Media as payment of interest.

On
February 1, 2001, the Company acquired substantially all of the U.S. assets of the business unit known as Group W Network Services and 100% of the outstanding capital stock of its wholly
owned subsidiaries Asia Broadcast Centre Pte., Ltd. and Group W Yarra Broadcast Pte., Ltd. In connection with the acquisition, the Company paid cash as follows:

Assets acquired:Property, plant and equipmentnet

$
46,622Trade and other receivablesnet


7,203Prepaid deposits and other


3,681Other assets


1,360Goodwill


63,055Liabilities assumed:Accounts payable and accrued expenses


(7,032
)Long-term debt and capital lease obligations


(6,987
)Cash paid in acquisition, net of cash received

$
107,902


See
notes to condensed consolidated financial statements

7

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LIBERTY LIVEWIRE CORPORATION    Notes To Condensed Consolidated Financial Statements

1.  Change in Control and Basis of Presentation



8

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2.  Acquisitions



(Amounts in thousands)

2001

2000Revenues

$
307,474

$
314,495Net loss

$
(44,632
)
$
(26,315
)Net loss per common shareBasic and Diluted

$
(1.16
)
$
(0.70
)


9

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3.  Comprehensive Income



Pre Todd Merger

Post Todd MergerLivewire

Todd-AOSix Months
Ended
June 30,
2001

Six Months
Ended
May 31,
2000Net loss

$
(44,545
)
$
(2,234
)Unrealized gain on marketable securities


2,237


6,315Mark-to-market loss for derivative transactions


(3,775
)

Foreign currency translation adjustments


(1,151
)

189Comprehensive (loss) income

$
(47,234
)
$
4,270


4.  Segment Reporting



10

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(Amounts in thousands)

Post Todd Merger

|Livewire           |                               | Content
Preparation |   | Content
Management |  | Content
Distribution |        | Other |   | Total 
|------------------ | ----------------------------- | ------------------- | - | ------------------ |  | -------------------- | ------ | ----- | - | ------
|Six Months Ended   |                               |                     |   |                    |  |                      |        |       |   |       
|                   | June 30, 2001 (Unaudited):    |                     |   |                    |  |                      |        |       |   |       
|                   | Revenues                      |                     | $ | 177,167            |  | $                    | 49,533 |       | $ | 75,305
|                   | EBITDA                        |                     |   | 33,519             |  |                      | 14,778 |       |   | 17,721
|                   | Capital expenditures          |                     |   | 20,387             |  |                      | 3,671  |       |   | 3,336 
|                   | Depreciation and amortization |                     |   | 28,481             |  |                      | 5,398  |       |   | 11,215
|Three Months Ended |                               |                     |   |                    |  |                      |        |       |   |       
|                   | June 30, 2001 (Unaudited):    |                     |   |                    |  |                      |        |       |   |       
|                   | Revenues                      |                     | $ | 83,300             |  | $                    | 25,530 |       | $ | 38,872
|                   | EBITDA                        |                     |   | 12,890             |  |                      | 7,043  |       |   | 8,722 
|                   | Capital expenditures          |                     |   | 10,453             |  |                      | 1,626  |       |   | 477   
|                   | Depreciation and amortization |                     |   | 14,968             |  |                      | 2,329  |       |   | 7,065 

Pre Todd Merger

|Todd-AO            |                               | Content
Preparation |   | Content
Management |  | Content
Distribution |        | Other |   | Total
|------------------ | ----------------------------- | ------------------- | - | ------------------ |  | -------------------- | ------ | ----- | - | -----
|Six Months Ended   |                               |                     |   |                    |  |                      |        |       |   |      
|                   | May 31, 2000 (Unaudited)      |                     |   |                    |  |                      |        |       |   |      
|                   | Revenues                      |                     | $ | 44,293             |  | $                    | 12,650 |       | $ | 6,005
|                   | EBITDA                        |                     |   | 4,491              |  |                      | 2,619  |       |   | 1,657
|                   | Capital expenditures          |                     |   | 8,572              |  |                      | 464    |       |   | 725  
|                   | Depreciation and amortization |                     |   | 6,217              |  |                      | 1,011  |       |   | 933  
|Three Months Ended |                               |                     |   |                    |  |                      |        |       |   |      
|                   | May 31, 2000 (Unaudited)      |                     |   |                    |  |                      |        |       |   |      
|                   | Revenues                      |                     | $ | 22,436             |  | $                    | 6,473  |       | $ | 2,920
|                   | EBITDA                        |                     |   | 1,768              |  |                      | 1,590  |       |   | 862  
|                   | Capital expenditures          |                     |   | 1,447              |  |                      | 242    |       |   | 512  
|                   | Depreciation and amortization |                     |   | 3,227              |  |                      | 496    |       |   | 448  

11

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(Amounts in thousands)

|                               |  | Post Todd Merger |         | Pre Todd Merger |  
|------------------------------ |  | ---------------- | ------- | --------------- | -
|
|
|EBITDA                         |  | $                | 20,751  |                 | $
|Depreciation and amortization  |  |                  | (29,132 | )               |  
|Interest                       |  |                  | (15,704 | )               |  
|Non-cash compensation expense  |  |                  | (5,730  | )               |  
|Other expense, net             |  |                  | (134    | )               |  
|Income tax benefit (provision) |  |                  | (1,102  | )               |  
|                               |  |                  |         |                 |  
|Net loss                       |  | $                | (31,051 | )               | $
|                               |  |                  |         |                 |  



(Amounts in thousands)

|              |  | Post Todd Merger |         | Pre Todd Merger
|------------- |  | ---------------- | ------- | ---------------
|
|
|Revenue       |  |                  |         |                
|United States |  | $                | 116,506 |                
|Foreign       |  |                  | 31,196  |                
|              |  |                  |         |                
|Total Revenue |  | $                | 147,702 |                
|              |  |                  |         |                

(Amounts in thousands)

Post Todd Merger
Livewire
June 30,
2001

Pre Todd Merger
Todd-AO
May 31,
2000AssetsUnited States

$
1,085,925

$
116,086Foreign


163,769


47,986Total Assets

$
1,249,694

$
164,072


5.  Accounting Standards



12

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6.  Related Party Transactions



13

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7.  Stock Options and Stock Appreciation Rights



14

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8.  Taxes



9.  Subsequent Events



15

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



16

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17

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18

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19

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Item 3. Quantitative and Qualitative Disclosures About Market Risk



PART IIOTHER INFORMATION

Item 1. Legal Proceedings



20

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Item 2. Changes in Securities and Use of Proceeds



Item 6. Exhibits and Reports on Form 8-K

|    |  |     |  |                                                                                                                                                                                       
|--- |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | (1) |  | Master Security Agreement by and between Todd-AO Studios West, Todd-AO Studios East, Inc. and Heller Financial Leasing, Inc dated June 22, 2001 is filed herewith.                    
|    |  | (2) |  | Promissory Note No. 01 in the amount of $10 million between Todd-AO Studios West, Todd-AO Studios East, Inc. and Heller Financial Leasing, Inc. dated June 22, 2001 is filed herewith.
|    |  | (3) |  | Subordination Agreement dated June 22, 2001 between Liberty Media Corporation and Liberty Livewire Corporation is filed herewith.                                                     
|    |  | (4) |  | Liberty Livewire Corporation 2000 Incentive Plan approved by the Board of Directors as of August 6, 2001 and effective as of November 28, 2000 is filed herewith.                     
|    |  | (5) |  | 2000 Nonemployee Director Stock Option Plan of Liberty Livewire Corporation approved by the Board of Directors and effective as of August 6, 2001 is filed herewith.                  
|(b) |  | (1) |  | A report on Form 8-K was filed on May 25, 2001 disclosing the appointment of George C. Platisa to the position of Executive Vice President and Chief Financial Officer of the Company.

SIGNATURE

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.

|                    |  | LIBERTY LIVEWIRE CORPORATION
|------------------- |  | ----------------------------
|AUGUST 14, 2001DATE |  |                             

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