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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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 September 30, 2002   
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|     
|      |  | 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

LIBERTY LIVEWIRE CORPORATION

---

(Exact name of registrant as specified in its charter)


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

(310) 434-7000

---

(Registrants telephone number, including area code)


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 November 1, 2002 was
4,884,049 shares of Class A Common Stock and 47,670,417 shares of Class B
Common Stock.





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TABLE OF CONTENTS



|                            |                                                                                               |                                                             |  |  |  |  |  | 
|--------------------------- | --------------------------------------------------------------------------------------------- | ----------------------------------------------------------- |  |  |  |  |  | 
|                            |                                                                                               | Condensed Consolidated Balance Sheets                      
|                            |                                                                                               | Condensed Consolidated Statements of Operations (Unaudited)
|                            |                                                                                               | Condensed Consolidated Statements of Cash Flows (Unaudited)
|                            |                                                                                               | Notes to Condensed Consolidated Financial Statements       
|                            | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                            | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                          
|                            | ITEM 4. CONTROLS AND PROCEDURES.                                                             
|PART II  OTHER INFORMATION
|                            | Item 1. Legal Proceedings                                                                    
|                            | Item 2. Changes in Securities and Use of Proceeds                                            
|                            | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURE                  
|CERTIFICATIONS             
|Exhibit 10.1               
|Exhibit 10.2               
|Exhibit 10.5               



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LIBERTY LIVEWIRE CORPORATION

Report on Form 10-Q for the Period Ended September 30, 2002

|                               |  |                                                                                                                             |  |   
|------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------- |  | --
|Table of Contents              |  | Page                                                                                                                       
|                               |  |                                                                                                                            
|Part I  FINANCIAL INFORMATION |  |                                                                                                                            
|                              
|Item 1.                        |  | Financial Statements                                                                                                        |  |   
|                               |  | Condensed Consolidated Balance Sheets, September 30, 2002 (Unaudited) and December 31, 2001 (Audited)                       |  | 3 
|                               |  | Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30,
2002 and 2001 (Unaudited) |  | 4 
|                               |  | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and 2001
(Unaudited)           |  | 5 
|                               |  | Notes to Condensed Consolidated Financial Statements                                                                        |  | 6 
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                       |  | 12
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                  |  | 21
|Item 4.                        |  | Control and Procedures                                                                                                      |  | 21
|                              
|Part II  OTHER INFORMATION    |  |                                                                                                                            
|                              
|Item 1.                        |  | Legal Proceedings                                                                                                           |  | 21
|Item 2.                        |  | Changes in Securities and Use of Proceeds                                                                                   |  | 22
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                                                            |  | 22
|                               |  | Signature                                                                                                                   |  | 23
|                               |  | Certifications                                                                                                              |  | 24

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LIBERTY LIVEWIRE CORPORATION
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share data)

|                                                                                                                                                                                   |                                                                                                           |                            |          |               |         |              |          |        |         | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | -------------------------- | -------- | ------------- | ------- | ------------ | -------- | ------ | ------- | 
|                                                                                                                                                                                   |                                                                                                           |                            |          | September 30, |         | December 31,
|                                                                                                                                                                                   |                                                                                                           |                            |          | 2002          |         | 2001        
|                                                                                                                                                                                   |                                                                                                           |                            |          |               |         |             
|                                                                                                                                                                                   |                                                                                                           |                            |          | (Unaudited)   |         | (Audited)   
|Current Assets:                                                                                                                                                                    |                                                                                                           |                            |          |               |         |              |          |       
|                                                                                                                                                                                   | Cash and cash equivalents                                                                                 |                            | $        | 6,197         |         |              | $        | 23,433 |        
|                                                                                                                                                                                   | Trade receivables, net of allowance for doubtful accounts of $9.0
million and $12.0 million, respectively |                            |          | 86,829        |         |              |          | 96,696 |        
|                                                                                                                                                                                   | Inventories                                                                                               |                            |          | 4,397         |         |              |          | 4,016  |        
|                                                                                                                                                                                   | Deferred income taxes, net                                                                                |                            |          | 6,184         |         |              |          | 5,006  |        
|                                                                                                                                                                                   | Prepaid deposits and other                                                                                |                            |          | 21,243        |         |              |          | 14,237 |        
|                                                                                                                                                                                   |                                                                                                           |                            |          |               |         |              |          |       
|                                                                                                                                                                                   |                                                                                                           | Total current assets       |          |               | 124,850 |              |          |        | 143,388 | 
|                                                                                                                                                                                   |                                                                                                           |                            |          |               |         |              |          |       
|Property, plant and equipment, at cost, net of accumulated
depreciation and amortization of $99.6 million and $147.8 million,
respectively                                         |                                                                                                           |                            | 311,326  |               |         |              | 316,077  |       
|Goodwill and identifiable intangible assets, net of accumulated
amortization of $45.4 million and $43.4 million, respectively                                                      |                                                                                                           |                            | 432,367  |               |         |              | 448,909  |       
|Other assets, net                                                                                                                                                                  |                                                                                                           |                            | 15,243   |               |         |              | 11,317   |       
|                                                                                                                                                                                   |                                                                                                           |                            |          |               |         |              |          |       
|                                                                                                                                                                                   |                                                                                                           | Total assets               |          | $             | 883,786 |              |          | $      | 919,691 | 
|                                                                                                                                                                                   |                                                                                                           |                            |          |               |         |              |          |       
|Current Liabilities:                                                                                                                                                               |                                                                                                           |                            |          |               |         |              |          |       
|                                                                                                                                                                                   | Current maturities of long-term debt and capital lease obligations                                        |                            | $        | 17,856        |         |              | $        | 19,129 |        
|                                                                                                                                                                                   | Accounts payable                                                                                          |                            |          | 30,680        |         |              |          | 38,906 |        
|                                                                                                                                                                                   | Accrued expenses and other liabilities                                                                    |                            |          | 65,910        |         |              |          | 76,345 |        
|                                                                                                                                                                                   | Due to parent company, net                                                                                |                            |          | 10,851        |         |              |          | 5,439  |        
|                                                                                                                                                                                   |                                                                                                           |                            |          |               |         |              |          |       
|                                                                                                                                                                                   |                                                                                                           | Total current liabilities  |          |               | 125,297 |              |          |        | 139,819 | 
|                                                                                                                                                                                   |                                                                                                           |                            |          |               |         |              |          |       
|Long-term debt and capital lease obligations                                                                                                                                       |                                                                                                           |                            | 395,837  |               |         |              | 424,556  |       
|Convertible subordinated notes, net                                                                                                                                                |                                                                                                           |                            | 200,610  |               |         |              | 183,685  |       
|Deferred income taxes, net                                                                                                                                                         |                                                                                                           |                            | 6,573    |               |         |              | 5,006    |       
|Other liabilities                                                                                                                                                                  |                                                                                                           |                            | 11,480   |               |         |              | 13,177   |       
|                                                                                                                                                                                   |                                                                                                           |                            |          |               |         |              |          |       
|                                                                                                                                                                                   |                                                                                                           | Total liabilities          |          |               | 739,797 |              |          |        | 766,243 | 
|                                                                                                                                                                                   |                                                                                                           |                            |          |               |         |              |          |       
|Commitments and contingencies                                                                                                                                                      |                                                                                                           |                            |          |               |         |              |          |       
|Stockholders Equity:                                                                                                                                                              |                                                                                                           |                            |          |               |         |              |          |       
|                                                                                                                                                                                   | Common Stock:                                                                                             |                            |          |               |         |              |          |        |        
|Class A; authorized 300,000,000 shares of $0.01 par value;
5,339,094 issued; 4,884,032 and 5,334,022 outstanding as of
September 30, 2002 and December 31, 2001, respectively      |                                                                                                           |                            | 49       |               |         |              | 53       |       
|Class B; convertible, authorized 100,000,000 shares of $0.01 par
value;
47,670,417 and 34,393,330 issued and outstanding at September 30,
2002 and December 31, 2001, respectively |                                                                                                           |                            | 477      |               |         |              | 344      |       
|Additional paid-in capital                                                                                                                                                         |                                                                                                           |                            | 647,981  |               |         |              | 617,933  |       
|Treasury stock; 16,251 and 1,508 shares at cost at September 30,
2002 and December 31, 2001, respectively                                                                          |                                                                                                           |                            | (124     | )             |         |              | (28      | )     
|Accumulated deficit                                                                                                                                                                |                                                                                                           |                            | (499,107 | )             |         |              | (446,082 | )     
|Other                                                                                                                                                                              |                                                                                                           |                            | 136      |               |         |              | (1,356   | )     
|Accumulated other comprehensive loss                                                                                                                                               |                                                                                                           |                            | (5,423   | )             |         |              | (17,416  | )     
|                                                                                                                                                                                   |                                                                                                           |                            |          |               |         |              |          |       
|                                                                                                                                                                                   |                                                                                                           | Total stockholders equity |          |               | 143,989 |              |          |        | 153,448 | 
|                                                                                                                                                                                   |                                                                                                           |                            |          |               |         |              |          |       
|Total liabilities and stockholders equity                                                                                                                                         |                                                                                                           | $                          | 883,786  |               |         | $            | 919,691  |       
|                                                                                                                                                                                   |                                                                                                           |                            |          |               |         |              |          |       

See notes to condensed consolidated financial statements

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

|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |            |         | 
|--------------------------------------------------------------------------- | ------------------------------------------ | ------------------------ | ------- | ------------------ | ------ | ----------------- | ------- | ---------- | ------ | ---- | ------- | ---------- | ------- | - | ------- | ---------- | ------- | 
|                                                                            |                                            |                          |         | Three Months Ended |        | Nine Months Ended
|                                                                            |                                            |                          |         | September 30,      |        | September 30,    
|                                                                            |                                            |                          |         |                    |        |                  
|                                                                            |                                            |                          |         | 2002               |        | 2001              |         | 2002       |        | 2001
|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |     
|Net revenues                                                                |                                            | $                        | 130,274 |                    |        | $                 | 142,648 |            |        | $    | 394,307 |            |         | $ | 444,653 |           
|Cost of services                                                            |                                            |                          | 79,211  |                    |        |                   | 89,925  |            |        |      | 239,510 |            |         |   | 273,884 |           
|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|                                                                            |                                            | Gross profit             |         |                    | 51,063 |                   |         |            | 52,723 |      |         |            | 154,797 |   |         |            | 170,769 | 
|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|Operating expenses:                                                         |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|                                                                            | Selling, general and administrative        |                          |         | 31,562             |        |                   |         | 30,371     |        |      |         | 97,013     |         |   |         | 95,997     |        
|                                                                            | Depreciation and amortization              |                          |         | 17,034             |        |                   |         | 33,277     |        |      |         | 50,909     |         |   |         | 93,155     |        
|                                                                            | Non-cash compensation expense (income)     |                          |         | 1,028              |        |                   |         | (10,051    | )      |      |         | (140       | )       |   |         | 808        |        
|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|                                                                            |                                            | Total operating expenses |         |                    | 49,624 |                   |         |            | 53,597 |      |         |            | 147,782 |   |         |            | 189,960 | 
|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|Income (loss) from operations                                               |                                            |                          | 1,439   |                    |        |                   | (874    | )          |        |      | 7,015   |            |         |   | (19,191 | )         
|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|                                                                            | Interest expense, net                      |                          |         | 16,607             |        |                   |         | 14,808     |        |      |         | 48,248     |         |   |         | 44,102     |        
|                                                                            | Other (income) expense, net                |                          |         | (7,088             | )      |                   |         | 2,436      |        |      |         | (10,148    | )       |   |         | 2,696      |        
|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|Loss before income taxes and change in accounting principle                 |                                            |                          | (8,080  | )                  |        |                   | (18,118 | )          |        |      | (31,085 | )          |         |   | (65,989 | )         
|Income tax provision (benefit)                                              |                                            |                          | 666     |                    |        |                   | 258     |            |        |      | 1,712   |            |         |   | (3,068  | )         
|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|Loss before change in accounting principle                                  |                                            |                          | (8,746  | )                  |        |                   | (18,376 | )          |        |      | (32,797 | )          |         |   | (62,921 | )         
|Change in accounting principle, net of income tax benefit                   |                                            |                          |        |                    |        |                   |        |            |        |      | (20,227 | )          |         |   |        |           
|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|Net loss                                                                    |                                            | $                        | (8,746  | )                  |        | $                 | (18,376 | )          |        | $    | (53,024 | )          |         | $ | (62,921 | )         
|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|Weighted average number of common and common equivalent
shares outstanding: |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|                                                                            | Basic and diluted                          |                          |         | 42,781,046         |        |                   |         | 37,981,528 |        |      |         | 41,062,416 |         |   |         | 37,677,408 |        
|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|Net loss per common share  basic and diluted                               |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|                                                                            | Loss before change in accounting principle |                          | $       | (0.20              | )      |                   | $       | (0.48      | )      |      | $       | (0.80      | )       |   | $       | (1.67      | )      
|                                                                            | Change in accounting principle             |                          |         |                   |        |                   |         |           |        |      |         | (0.49      | )       |   |         |           |        
|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           
|                                                                            | Net loss per common share                  |                          | $       | (0.20              | )      |                   | $       | (0.48      | )      |      | $       | (1.29      | )       |   | $       | (1.67      | )      
|                                                                            |                                            |                          |         |                    |        |                   |         |            |        |      |         |            |         |   |         |           

See notes to condensed consolidated financial statements

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

|                                                          |                                                              |   |                   |         |      |   |          |          |  
|--------------------------------------------------------- | ------------------------------------------------------------ | - | ----------------- | ------- | ---- | - | -------- | -------- | -
|                                                          |                                                              |   | Nine Months Ended
|                                                          |                                                              |   | September 30,    
|                                                          |                                                              |   |                  
|                                                          |                                                              |   | 2002              |         | 2001
|                                                          |                                                              |   |                   |         |     
|Net cash flows provided by operating activities           |                                                              | $ | 28,703            |         |      | $ | 36,102   |         
|                                                          |                                                              |   |                   |         |      |   |          |         
|Cash flows from investing activities:                     |                                                              |   |                   |         |      |   |          |         
|                                                          | Proceeds from sales of marketable securities and investments |   |                   |        |      |   |          | 22,946   |  
|                                                          | Proceeds from disposal of fixed assets                       |   |                   | 3,608   |      |   |          |         |  
|                                                          | Capital expenditures                                         |   |                   | (44,981 | )    |   |          | (52,522  | )
|                                                          | Acquisitions, net                                            |   |                   |        |      |   |          | (140,232 | )
|                                                          |                                                              |   |                   |         |      |   |          |         
|Net cash flows used in investing activities               |                                                              |   | (41,373           | )       |      |   | (169,808 | )       
|                                                          |                                                              |   |                   |         |      |   |          |         
|Cash flows from financing activities:                     |                                                              |   |                   |         |      |   |          |         
|                                                          | Borrowings of long-term debt                                 |   |                   | 8,955   |      |   |          | 50,056   |  
|                                                          | Payments of long-term debt and capital lease obligations     |   |                   | (39,819 | )    |   |          | (29,643  | )
|                                                          | Payments of non-convertible subordinated debt                |   |                   |        |      |   |          | (13,801  | )
|                                                          | Borrowings under convertible subordinated notes, net         |   |                   | 14,151  |      |   |          | 127,539  |  
|                                                          | Proceeds from the issuance of common stock                   |   |                   | 13,293  |      |   |          |         |  
|                                                          | Repurchase of shares                                         |   |                   | (1,411  | )    |   |          |         |  
|                                                          | Other, net                                                   |   |                   | (94     | )    |   |          | (85      | )
|                                                          |                                                              |   |                   |         |      |   |          |         
|Net cash flows (used in) provided by financing activities |                                                              |   | (4,925            | )       |      |   | 134,066  |         
|                                                          |                                                              |   |                   |         |      |   |          |         
|Effect of exchange rate changes on cash                   |                                                              |   | 359               |         |      |   | (201     | )       
|                                                          |                                                              |   |                   |         |      |   |          |         
|Net (decrease) increase in cash and cash equivalents      |                                                              |   | (17,236           | )       |      |   | 159      |         
|Cash and cash equivalents at beginning of period          |                                                              |   | 23,433            |         |      |   | 19,466   |         
|                                                          |                                                              |   |                   |         |      |   |          |         
|Cash and cash equivalents at end of period                |                                                              | $ | 6,197             |         |      | $ | 19,625   |         
|                                                          |                                                              |   |                   |         |      |   |          |         

See notes to condensed consolidated financial statements

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LIBERTY LIVEWIRE CORPORATION
Notes to Condensed Consolidated Financial Statements
September 30, 2002
(Unaudited)

1. Description of Business

Liberty Livewire Corporation (Liberty Livewire or the Company)
provides services necessary to complete the creation of original content
including feature films, television shows, television commercials, music
videos, promotional and identity campaigns and corporate communications
programming; services necessary to facilitate the global maintenance,
management and distribution of existing content libraries; and services
necessary to assemble and distribute programming for cable and broadcast
networks via fiber, satellite and the Internet.

The Companys assets and operations are primarily comprised of the
historical business of the Company, formerly known as the Todd-AO Corporation
and ten companies acquired during 2001 and 2000: Four Media Company (4MC);
Virgin Media Group Limited (Virgin); the sound post-production and certain
related businesses of Soundelux Entertainment Group of Delaware, Inc.
(Soundelux); Triumph Communications, Inc. (Triumph); Video Services
Corporation (VSC); Group W Network Services and 100% of the capital stock of
Asia Broadcast Centre Pte. Ltd. and Group W Broadcast Pte. Ltd. (collectively
GWNS); Livewire Network Services, LLC (LNS); Soho Group Limited (Soho);
Visiontext Limited (Visiontext); and Cinram-POP DVD Center LLC now known as
Stream Santa Monica (Stream). The combination and integration of the
acquired entities allow the Company to offer its clients a complete range of
services, from image capture to last mile distribution.

2. Basis of Presentation

The accompanying unaudited condensed consolidated financial data as of
September 30, 2002 and December 31, 2001 and for the three and nine months
ended September 30, 2002 and 2001 have been prepared in accordance with
generally accepted accounting principles for interim financial information and
the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete financial
statements. However, the Company believes that the disclosures are adequate to
make the information presented not misleading. Certain reclassifications have
been made to prior period balances in order to conform to the current period
presentation. Operating results for the quarter are not necessarily indicative
of the results that may be expected for the year ending December 31, 2002.
These consolidated financial statements should be read in conjunction with the
Consolidated Financial Statements and the notes thereto included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2001.

The condensed consolidated financial statements include the accounts of
the Company and its subsidiaries after elimination of all significant
intercompany transactions and accounts.

3. Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations,and SFAS No. 142, Goodwill and Other Intangible Assets.SFAS No.
141 requires that all business combinations initiated after June 30, 2001 be
accounted for under the purchase method. SFAS No. 142 addresses the financial
accounting and reporting for acquired goodwill and other intangible assets.
Under the new rules, the Company is no longer required to amortize goodwill and
other intangible assets with indefinite lives, but is required to test such
assets periodically for impairment. SFAS No. 142 also requires that intangible
assets with estimable useful lives be amortized over their respective estimated
useful lives to their estimated residual values, and be reviewed for
impairment.

Effective January 1, 2002, the Company adopted SFAS No. 142 and in
accordance with its provisions, the Company recorded a transitional impairment
charge of $20.2 million against goodwill related to its Entertainment
Television reporting unit, which is part of the Pictures Group. The charge has
been reflected as a cumulative effect of a change in accounting principle in
the nine months ended September 30, 2002. Fair value of each reporting unit was
determined through the use of an outside independent valuation consultant,
Bearing Point (formerly KPMG Consulting, Inc.), which is not affiliated with
the Companys independent auditors, KPMG LLP. The consultant used both the
income approach and market approach in determining fair value.

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In accordance with SFAS No. 142, the Company has ceased amortizing
goodwill totaling $420.8 million as of the beginning of fiscal year 2002,
including $17.5 million of acquired assembled workforce and $1.7 million of
tradename related intangible assets previously classified as identifiable
intangible assets. As a result, for the three and nine months ended September
30, 2002, the Company did not recognize $6.9 million and $20.9 million of
amortization expense, respectively, that would have been recognized had the
previous standards been in effect. The following table presents identifiable
intangible assets subject to amortization and estimated future amortization
under the provisions of SFAS No. 142 as of September 30, 2002 (in thousands):

|                               |                                                                 |      |        |        |       | 
|------------------------------ | --------------------------------------------------------------- | ---- | ------ | ------ | ----- | 
|Identifiable intangible assets |                                                                 |      |        |       
|                               | Employment agreements                                           |      | $      | 8,188  |      
|                               | Non-compete agreements                                          |      |        | 3,414  |      
|                               |                                                                 |      |        |       
|                               |                                                                 |      | 11,602 |       
|                               | Accumulated amortization                                        |      |        | (5,299 | )    
|                               |                                                                 |      |        |       
|                               |                                                                 | $    | 6,303  |       
|                               |                                                                 |      |        |       
|Estimated amortization expense |                                                                 |      |        |       
|                               |                                                                 | 2002 |        | $      | 2,309 | 
|                               |                                                                 | 2003 |        |        | 2,309 | 
|                               |                                                                 | 2004 |        |        | 2,309 | 
|                               |                                                                 | 2005 |        |        | 1,109 | 
|                               |                                                                 |      |        |       
|                               |                                                                 |      | 8,036  |       
|                               | Less: Amortization for the nine months ended September 30, 2002 |      |        | (1,733 | )    
|                               |                                                                 |      |        |       
|                               |                                                                 | $    | 6,303  |       
|                               |                                                                 |      |        |       

The following table presents the impact of SFAS No. 142 on net loss and
net loss per share had the standard been in effect for the three and nine
months ended September 30, 2001 (amounts in thousands, except per share data):

|                                                |                                                                |                 |        |                    |   |                   |         |       |        |      |         |   |   |   |         |        |        | 
|----------------------------------------------- | -------------------------------------------------------------- | --------------- | ------ | ------------------ | - | ----------------- | ------- | ----- | ------ | ---- | ------- | - | - | - | ------- | ------ | ------ | 
|                                                |                                                                |                 |        | Three Months Ended |   | Nine Months Ended
|                                                |                                                                |                 |        | September 30,      |   | September 30,    
|                                                |                                                                |                 |        |                    |   |                  
|                                                |                                                                |                 |        | 2002               |   | 2001              |         | 2002  |        | 2001
|                                                |                                                                |                 |        |                    |   |                   |         |       |        |     
|Reported net loss                               |                                                                | $               | (8,746 | )                  |   | $                 | (18,376 | )     |        | $    | (53,024 | ) |   | $ | (62,921 | )     
|                                                | Amortization of goodwill                                       |                 |        |                   |   |                   |         | 9,015 |        |      |         |  |   |   |         | 24,806 |       
|                                                | Amortization of acquired assembled workforce
intangible assets |                 |        |                   |   |                   |         | 1,512 |        |      |         |  |   |   |         | 4,535  |       
|                                                | Income tax effect                                              |                 |        |                   |   |                   |         |      |        |      |         |  |   |   |         | (1,331 | )     
|                                                |                                                                |                 |        |                    |   |                   |         |       |        |      |         |   |   |   |         |       
|                                                |                                                                | Net adjustments |        |                    |  |                   |         |       | 10,527 |      |         |   |  |   |         |        | 28,010 | 
|                                                |                                                                |                 |        |                    |   |                   |         |       |        |      |         |   |   |   |         |       
|Adjusted net loss                               |                                                                | $               | (8,746 | )                  |   | $                 | (7,849  | )     |        | $    | (53,024 | ) |   | $ | (34,911 | )     
|                                                |                                                                |                 |        |                    |   |                   |         |       |        |      |         |   |   |   |         |       
|Reported net loss per share  basic and diluted |                                                                | $               | (0.20  | )                  |   | $                 | (0.48   | )     |        | $    | (1.29   | ) |   | $ | (1.67   | )     
|                                                |                                                                |                 |        |                    |   |                   |         |       |        |      |         |   |   |   |         |       
|Adjusted net loss per share  basic and diluted |                                                                | $               | (0.20  | )                  |   | $                 | (0.21   | )     |        | $    | (1.29   | ) |   | $ | (0.93   | )     
|                                                |                                                                |                 |        |                    |   |                   |         |       |        |      |         |   |   |   |         |       

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets,which establishes a single
accounting model for the impairment or disposal of long-lived assets, including
discontinued operations. SFAS No. 144 superseded SFAS No. 121 and APB Opinion
No. 30, Reporting the Results of Operations  Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions.The provisions of SFAS No. 144 are effective
in fiscal years beginning after December 15, 2001, with early adoption
permitted, and in general are to be applied prospectively. The Companys
adoption of SFAS No. 144 effective January 1, 2002 did not have a material
impact on its results of operations and financial position.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit and Disposal Activities. SFAS No. 146 nullifies Emerging
Issues Task Force (EITF) issue 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). Under EITF issue 94-3, a liability for an
exit cost is recognized at the date of an entitys commitment to an exit plan.
Under SFAS No. 146, the liabilities associated with an exit or disposal
activity will be measured at fair value and recognized when the liability is
incurred and meets the definition of a liability in the FASBs conceptual
framework. This statement is effective for exit or disposal activities
initiated after December 31, 2002. The Company believes the adoption of SFAS
No. 146 will not have a material impact on the Companys financial statements.

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##### Table of Contents



4. Acquisitions

On February 1, 2001, the Company acquired GWNS from Viacom, Inc. On
August 23, 2001, the Company acquired from Cinram U.S. Holdings, Inc. the 51%
interest in Stream that it did not already own. On September 6, 2001, the
Company acquired the remaining 99% interest in LNS that it did not already own,
thereby acquiring the operations of Ascent Network Services.

In accordance with the requirements of SFAS No. 141, Business
Combinations, the following unaudited pro forma consolidated financial
information is presented as if each acquisition was consummated on January 1,
2001. The unaudited pro forma information includes the results of operations
for the period prior to the acquisitions, adjusted for amortization of
goodwill, depreciation, interest expense on borrowings incurred to fund the
acquisitions, and income taxes. The unaudited pro forma information is not
necessarily indicative of the results of operations had these events actually
occurred on January 1, 2001, nor is it necessarily indicative of future results
(in thousands, except per share data):

|                                                                                |  |                   |         |      |  |   |         |  
|------------------------------------------------------------------------------- |  | ----------------- | ------- | ---- |  | - | ------- | -
|                                                                                |  | Nine Months Ended
|                                                                                |  | September 30,    
|                                                                                |  |                  
|                                                                                |  | 2002              |         | 2001
|                                                                                |  |                   |         |     
|Revenues                                                                        |  | $                 | 394,307 |      |  | $ | 459,421 |  
|                                                                                |  |                   |         |      |  |   |         |  
|Loss before change in accounting principle                                      |  | $                 | (32,797 | )    |  | $ | (66,127 | )
|                                                                                |  |                   |         |      |  |   |         |  
|Net loss                                                                        |  | $                 | (53,024 | )    |  | $ | (66,127 | )
|                                                                                |  |                   |         |      |  |   |         |  
|Loss per common share before change in accounting
principle  basic and diluted |  | $                 | (0.80   | )    |  | $ | (1.76   | )
|                                                                                |  |                   |         |      |  |   |         |  
|Net loss per common share  basic and diluted                                   |  | $                 | (1.29   | )    |  | $ | (1.76   | )
|                                                                                |  |                   |         |      |  |   |         |  

5. Comprehensive Loss

Comprehensive loss is defined as all changes in shareholders equity,
except those resulting from investments by or distributions to shareholders.
The Companys comprehensive loss is as follows (amounts in thousands):

|                                                                |  |                   |         |      |  |   |         |  
|--------------------------------------------------------------- |  | ----------------- | ------- | ---- |  | - | ------- | -
|                                                                |  | Nine Months Ended
|                                                                |  | September 30,    
|                                                                |  |                  
|                                                                |  | 2002              |         | 2001
|                                                                |  |                   |         |     
|Net loss                                                        |  | $                 | (53,024 | )    |  | $ | (62,921 | )
|Unrealized gain on available for sale securities                |  |                   |        |      |  |   | 2,278   |  
|Mark-to-market loss for derivative transactions                 |  |                   | (519    | )    |  |   | (9,993  | )
|Gain/(loss) on foreign currency translation                     |  |                   | 7,226   |      |  |   | (4,085  | )
|Reclassification adjustment for amortization on cash flow hedge |  |                   | 5,286   |      |  |   |        |  
|                                                                |  |                   |         |      |  |   |         |  
|Net gain/(loss) recognized in other comprehensive loss          |  |                   | 11,993  |      |  |   | (11,800 | )
|                                                                |  |                   |         |      |  |   |         |  
|Total comprehensive loss                                        |  | $                 | (41,031 | )    |  | $ | (74,721 | )
|                                                                |  |                   |         |      |  |   |         |  

6. Long-Term Debt

The Company entered into a credit agreement, dated as of December 22,
2000, as amended by Amendment No. 1, dated as of November 1, 2001, and as
further amended by Amendment No. 2, dated as of March 26, 2002, with several
lenders from time to time parties to the credit agreement, BANC OF AMERICA
SECURITIES LLC, as Lead Arranger and Book Manager, BANK OF AMERICA, N.A., as
administrative agent for the Lenders, SALOMON SMITH BARNEY INC., as Syndication
Agent, and THE BANK OF NEW YORK COMPANY, INC., as Documentation Agent (the
Senior Credit Agreement) and entered into the First Amended and Restated
Liberty Subordinated Credit Agreement, dated December 22, 2000 (as supplemented,
the Liberty Subordinated Credit Agreement), with Liberty Media Corporation.
The Company also borrowed $10.0 million from Heller Financial Leasing, Inc.
pursuant to a credit agreement dated June 22, 2001 (the Heller Credit
Agreement).

Senior Credit Agreement

On March 26, 2002, the Company amended its Senior Credit Agreement under
which, at anytime prior to September 30, 2002, new lenders could be added to
the agreement, with the consent of current lenders, and the Company could
potentially increase the available borrowings thereunder by an additional $60.0
million. As of September 30, 2002, no new lenders were added to the Senior
Credit Agreement and the available borrowings were not increased. As of
September 30, 2002, the Company had borrowed $367.8 million (including letters
of credit of $1.1 million) under the Senior Credit Agreement, and $43.2 million
was available for future

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borrowings thereunder subject to the Companys compliance with its
covenants at the time of, and after giving effect to, the requested future
borrowings. The Company was in compliance with all of its financial covenants
in the Senior Credit Agreement at September 30, 2002. As of September 30,
2002, the effective interest rate on the Senior Credit Agreement was 4.66%.

On November 13, 2002,
the Company finalized Amendment No. 3 to its Senior
Credit Agreement. This amendment provides the Company with greater financial
flexibility by providing for more favorable leverage ratio tests and more favorable fixed
charge coverage ratio tests. It also
removes some restrictions on the transactions the Company and its subsidiaries
may enter into. In consideration for the above changes, the Company agreed to higher
interest rates on the loans until the Companys leverage ratio is reduced below
4:00 to 1:00, new restrictions on the use of the proceeds from the sale of
assets, and a permanent reduction of $40.0 million in the amount available for
future borrowings under the Senior Credit Agreement. After giving
effect to this amendment, $3.2 million is available for future borrowings under
the Senior Credit Agreement. The foregoing discussion of Amendment
No. 3 to the Senior Credit Agreement is qualified by the
complete text of the document, which is filed as Exhibit 10.5 to this
report and hereby incorporated by reference herein.

Liberty Subordinated Credit Agreement

At September 30, 2002, the Company had borrowed $220.3 million under the
Liberty Subordinated Credit Agreement. Of the total amount borrowed, $206.2
million was used for funding acquisitions (the Acquisition Funds) and is
represented by convertible notes in the amount borrowed, which are convertible
into the Companys Class B Common Stock at $10.00 per share. The remainder of
the total amount borrowed, $14.1 million, was used for working capital, capital
expenditures and repayment of principal under the Senior Credit Agreement and
was borrowed pursuant to Supplements No. 1, 2 and 3 to the Liberty Subordinated
Credit Agreement (each described below). The effective annual interest rate
for 2002 on the Liberty Subordinated Credit Agreement is 10.0%.

June 2002 Consent Letters and Supplements No. 1 and No. 2

The Liberty Subordinated Credit Agreement allows the Company to borrow the
Acquisition Funds and up to an additional $100.0 million from Liberty Media
with the consent of, and on terms determined by, Liberty Media (the Additional
Available Funds). The parties to the Senior Credit Agreement agreed in a
letter dated June 28, 2002 (the Senior Credit Agreement Consent Letter) and
the parties to the Heller Credit Agreement agreed in a separate letter dated
June 28, 2002 (the Heller Consent Letter and, together with the Senior Credit
Agreement Consent Letter, the June 2002 Consent Letters), that, with respect
to $25.0 million of the Additional Available Funds, borrowed to purchase capital assets and fund the award in the arbitration
matter with Paul Dujardin (the Dujardin Arbitration Award), (1) convertible notes could
be issued that could be convertible into the Companys Class B Common Stock at
a price per share determined by the Company, rather than at $10.00 per share as
permitted under the Senior Credit Agreement, and (2) such borrowed
funds could be repaid to Liberty Media before the Company pays amounts owed
under the Senior Credit Agreement, provided that, among other conditions, such
repayment is funded solely with proceeds of additional equity contributions
from Liberty Media or any of its affiliates other than the Company or any of
its subsidiaries. The Companys ability to determine the conversion rights
under the Liberty Subordinated Credit Agreement with respect to Additional
Available Funds does not affect the conversion rights for amounts previously
borrowed under the Liberty Subordinated Credit Agreement and may be determined
on a case by case basis only on amounts borrowed with respect to the $25.0
million of Additional Available Funds to which the June 2002 Consent Letters
apply.

On June 28, 2002, the Company and Liberty Media entered into Supplement
No. 1 to the Liberty Subordinated Credit Agreement (Supplement No. 1), under
which the Company borrowed $6.5 million for the purchase of capital assets, and
issued a promissory note, dated June 28, 2002, in the same amount that is
convertible into the Companys Class B Common Stock at $3.50 per share, which
represents a $0.56 per share premium over the $2.94 per share closing price of
the Companys Class A Common Stock on that day.

On July 24, 2002, the Company and Liberty Media entered into Supplement
No. 2 to the Liberty Subordinated Credit Agreement (Supplement No. 2), under
which the Company borrowed an additional $2.3 million to fund part of the
Dujardin Arbitration Award, and issued a promissory note in the same amount
that is convertible into the Companys Class B Common Stock at $3.50 per share
which represents a $1.55 per share premium over the $1.95 per share closing
price of the Companys Class A Common Stock on that day.

September 2002 Consent Letters and Supplement No. 3

On August 13, 2002, the Company entered into an agreement with Liberty
Media under which it may draw $25.0 million of Additional Available Funds as
needed through, at Liberty Medias option: (a) subordinated loans under the Liberty
Subordinated Credit Agreement with a
conversion price per share equal to 115% of the average market price of the
Companys Class A Common Stock for the five most recent trading days ending on
and including the date which is two business days prior to the date of the
borrowing, (b) sales of the Companys Class B Common Stock to Liberty Media at
a purchase price per share equal to the average market price of the Companys
Class A Common Stock for the five most recent trading days ending on and
including the date which is two business days prior to the date of the stock
sale, or (c) any combination of (a) or (b) (Supplement No. 3). Any draws
under Supplement No. 3 are subject to the Companys obtaining any necessary
consents and approvals and issuing any required notices, including, to the
extent applicable, stockholder approval of the issuance of shares of Class B
Common Stock to Liberty Media, whether as a sale of stock or upon conversion of
a loan (Stockholder Consent). Liberty Media, which then held over 87% of the
outstanding common stock and over 99% of the voting power of the outstanding
common stock and now holds over 90% of the

9



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outstanding common stock and over 99% of the voting power of the
outstanding common stock, agreed in Supplement No. 3 to vote in favor of any
Stockholder Consent. Proceeds of the loans or stock sales under Supplement No.
3 must be used for capital expenditures, payment of the principal amount of
loans made under the Senior Credit Agreement or working capital.

On September 26, 2002, the parties to the Senior Credit Agreement agreed
in a letter dated September 26, 2002 and the parties to the Heller Credit
Agreement agreed in a separate letter dated September 26, 2002 (collectively,
the September 2002 Consent Letters), with respect to an additional $25.0
million of the Additional Available Funds (over and above the $25.0 million
contemplated in the June 2002 Consent Letters), that convertible notes could be
issued that could be convertible into the Companys Class B Common Stock at a
price per share determined by the Company that was no less than 115% of the
average daily market price of the Companys Class A Common Stock for the five
most recent trading days ending on and including the date which is two business
days prior to the date of the borrowing.

On September 30, 2002, the Company received $17.2 million under Supplement
No. 3 in consideration of the Companys issuance of a convertible note in the
amount of $5.3 million that is convertible, subject to Stockholder Consent,
into the Companys Class B Common Stock at $1.94 per share and sale of
7,070,000 shares of its Class B Common Stock at a price of $1.69 per share for
total proceeds of $11.9 million. The conversion price of the convertible note
and purchase price of the shares sold were calculated in accordance with
Supplement No. 3. The proceeds were used to repay borrowings under the Senior
Credit Agreement, for capital expenditures and for working capital.

On October 17, 2002, the Company borrowed $4.0 million under Supplement
No. 3 to the Liberty Subordinated Credit Agreement and issued a convertible
note in the same amount that is convertible, subject to Stockholder Consent,
into the Companys Class B Common Stock at $1.56 per share. The conversion
price was calculated in accordance with Supplement No. 3. The proceeds were
used for working capital.

7. Stock Appreciation Rights

The accrued expense attributed to stock appreciation rights as of
September 30, 2002 and December 31, 2001 was $44,000 and $3.2 million,
respectively. The Companys statements of operations for the nine months ended
September 30, 2002 and 2001 include non-cash income of $3.2 million and
non-cash expense of $0.8 million, respectively, due to changes in the stock
price underlying the stock appreciation rights during each period presented.

8. Earnings Per Share

As a result of losses, convertible subordinated notes, warrants and stock
options that could potentially dilute basic earnings per share in the future
were not included in the computation of diluted earnings per share because to
do so would have been antidilutive. Amounts excluded were 30,169,290 and
29,246,674 at September 30, 2002 and 2001, respectively.

9. Financial Instruments

The Companys statement of operations for the nine months ending September
30, 2002 includes $9.9 million of non-cash income related to mark-to-market
adjustments on interest rate swap agreements which had a combined fair market
value of $9.5 million and $14.7 million as of September 30, 2002 and December
31, 2001, respectively, in favor of our counterparties. Additionally, during
the nine months ended September 30, 2002, the Company realized non-cash
interest expense of $5.3 million, related to the $6.4 million of unrealized
losses included in accumulated other comprehensive income as of December 31,
2001. The remaining $1.1 million of unrealized losses will be recorded as
interest expense during the remainder of fiscal year 2002.

10. Business Segment Information

The Companys business units have been aggregated into three reportable
segments: the Pictures Group, the Media Group, and the Networks Group. The
Pictures Group, which is comprised of the Companys Entertainment Television,
Commercial Television and Audio divisions, earns revenues by providing services
necessary to complete the creation of original content including feature films,
television shows, television commercials, music videos, promotional and
identity campaigns and corporate communications programming. The Media Group
provides services necessary to facilitate the global maintenance, management
and distribution of existing content libraries; access to physical and virtual
content, restoration and preservation of damaged content and creation of high
resolution professional masters from original camera negative for global home,
broadcast, pay-per-view and emerging new media channels. The Media Groups
results also include our Digital Media Management initiative. The Networks
Group provides services

10



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necessary to assemble and distribute programming for cable and broadcast
networks via fiber, satellite and the Internet to viewers in North America,
Europe and Asia. Additionally, the Networks Group includes the results of the
Companys Bandwidth Management initiative. Corporate related items and
unallocated income and expenses are reflected in the Corporate and Other column
listed below. Corporate and Other includes the results of the Companys
Interactive Media initiative and its Enterprise Solutions Group.

The Company evaluates performance based upon several factors, including
segment income (loss) before income taxes, interest, depreciation and
amortization of intangibles. The Company believes that EBITDA is an important
measure of its financial performance. The Company defines EBITDA as earnings
before interest, taxes, depreciation and amortization, excluding gains and
losses on asset sales and unusual charges such as restructuring, integration
and impairment. The Companys investments in new infrastructure, machine
capacity, technology and goodwill arising from its significant acquisition
activity have produced a relatively high depreciation and amortization expense
and have historically been a significant annual non-cash charge to earnings.
EBITDA is calculated before depreciation and, prior to the adoption of SFAS
142, amortization charges and, in businesses with significant non-cash
expenses, is widely used as a measure of cash flow available to pay interest
and repay debt, and, to the extent available after debt service and other
required uses, to make acquisitions or invest in capital equipment and new
technologies. EBITDA does not represent cash generated from operating
activities in accordance with Generally Accepted Accounting Principles GAAP
and should not be considered in isolation or as a substitute for other measures
of performance prepared in accordance with GAAP. EBITDA does not reflect that
portion of the Companys capital expenditures that may be required to maintain
its market share, revenues and leadership position in its industry. Moreover,
not all EBITDA will be available to pay interest or repay debt. The Companys
presentation of EBITDA may not be comparable to similarly titled measures
reported by other companies. Certain reclassifications have been made to the
prior periods reported herein to conform to the current periods presentation.

Summarized financial information concerning the Companys reportable
segments is shown in the following table (in thousands):

|                                 |                     |   |                    |         |                   |   |         |         |      |   |         |         |   |   |         |         |  
|-------------------------------- | ------------------- | - | ------------------ | ------- | ----------------- | - | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                 |                     |   | Three Months Ended |         | Nine Months Ended
|                                 |                     |   | September 30,      |         | September 30,    
|                                 |                     |   |                    |         |                  
|                                 |                     |   | 2002               |         | 2001              |   | 2002    |         | 2001
|                                 |                     |   |                    |         |                   |   |         |         |     
|Revenues from external customers |                     |   |                    |         |                   |   |         |         |      |   |         |         |   |   |         |        
|                                 | Pictures Group      |   | $                  | 63,987  |                   |   | $       | 78,349  |      |   | $       | 201,267 |   |   | $       | 251,787 |  
|                                 | Media Group         |   |                    | 25,464  |                   |   |         | 25,070  |      |   |         | 75,872  |   |   |         | 77,980  |  
|                                 | Networks Group      |   |                    | 40,823  |                   |   |         | 39,229  |      |   |         | 117,168 |   |   |         | 114,886 |  
|                                 |                     |   |                    |         |                   |   |         |         |      |   |         |         |   |   |         |        
|                                 |                     | $ | 130,274            |         |                   | $ | 142,648 |         |      | $ | 394,307 |         |   | $ | 444,653 |        
|                                 |                     |   |                    |         |                   |   |         |         |      |   |         |         |   |   |         |        
|EBITDA                           |                     |   |                    |         |                   |   |         |         |      |   |         |         |   |   |         |        
|                                 | Pictures Group      |   | $                  | 10,268  |                   |   | $       | 14,491  |      |   | $       | 34,839  |   |   | $       | 47,677  |  
|                                 | Media Group         |   |                    | 6,292   |                   |   |         | 7,738   |      |   |         | 20,377  |   |   |         | 23,217  |  
|                                 | Networks Group      |   |                    | 14,076  |                   |   |         | 11,969  |      |   |         | 37,441  |   |   |         | 35,081  |  
|                                 | Corporate and Other |   |                    | (11,135 | )                 |   |         | (11,846 | )    |   |         | (34,873 | ) |   |         | (31,203 | )
|                                 |                     |   |                    |         |                   |   |         |         |      |   |         |         |   |   |         |        
|                                 |                     | $ | 19,501             |         |                   | $ | 22,352  |         |      | $ | 57,784  |         |   | $ | 74,772  |        
|                                 |                     |   |                    |         |                   |   |         |         |      |   |         |         |   |   |         |        

The following table reconciles the Companys consolidated net loss to
segment EBITDA (in thousands):

|         |                                                           |   |                    |        |                   |   |         |         |      |   |         |         |   |   |         |        |  
|-------- | --------------------------------------------------------- | - | ------------------ | ------ | ----------------- | - | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------ | -
|         |                                                           |   | Three Months Ended |        | Nine Months Ended
|         |                                                           |   | September 30,      |        | September 30,    
|         |                                                           |   |                    |        |                  
|         |                                                           |   | 2002               |        | 2001              |   | 2002    |         | 2001
|         |                                                           |   |                    |        |                   |   |         |         |     
|Net loss |                                                           | $ | (8,746             | )      |                   | $ | (18,376 | )       |      | $ | (53,024 | )       |   | $ | (62,921 | )     
|Add:     |                                                           |   |                    |        |                   |   |         |         |      |   |         |         |   |   |         |       
|         | Change in accounting
principle, net of income tax
benefit |   |                    |       |                   |   |         |        |      |   |         | 20,227  |   |   |         |       |  
|         | Depreciation and amortization                             |   |                    | 17,034 |                   |   |         | 33,277  |      |   |         | 50,909  |   |   |         | 93,155 |  
|         | Non-cash compensation
(income) expense                    |   |                    | 1,028  |                   |   |         | (10,051 | )    |   |         | (140    | ) |   |         | 808    |  
|         | Interest expense, net                                     |   |                    | 16,607 |                   |   |         | 14,808  |      |   |         | 48,248  |   |   |         | 44,102 |  
|         | Other (income) expense, net                               |   |                    | (7,088 | )                 |   |         | 2,436   |      |   |         | (10,148 | ) |   |         | 2,696  |  
|         | Income tax (benefit) provision                            |   |                    | 666    |                   |   |         | 258     |      |   |         | 1,712   |   |   |         | (3,068 | )
|         |                                                           |   |                    |        |                   |   |         |         |      |   |         |         |   |   |         |       
|EBITDA   |                                                           | $ | 19,501             |        |                   | $ | 22,352  |         |      | $ | 57,784  |         |   | $ | 74,772  |       
|         |                                                           |   |                    |        |                   |   |         |         |      |   |         |         |   |   |         |       

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11. Related Party Transactions

For the three and nine months ended September 30, 2002, the Company issued
3,133,331 and 5,766,106 shares, respectively, of its Class B Common Stock to
Liberty Media and its affiliates in payment of $5.3 million and $15.4 million,
respectively, in interest under the Liberty Subordinated Credit Agreement.
Shares of Class B Common Stock are convertible into shares of the Companys
Class A Common Stock, on a one-for-one basis, at any time at the option of the
holder.

Liberty Media allocates salaries, benefits, business insurance and certain
other general and administrative expenses to the Company. In addition, the
Company reimburses Liberty Media for certain expenses, such as employee medical
costs, paid by Liberty Media on behalf of the Company. The Company has
determined the allocated and reimbursed amounts to be reasonable and equal to
the fair value of the expenses charged. Amounts allocated from Liberty Media to
the Company totaled $9.3 million and $5.3 million during the nine months ended
September 30, 2002 and 2001, respectively.
The increase in such amounts is primarily attributed to increased
insurance coverage and cost of insurance, both for the Company and
health insurance for employees.
During the three and nine months
ended September 30, 2002, the Company repaid $0.9 million and $3.9 million,
respectively, of its balance due to Liberty Media. The remaining balance is due
on demand.

On June 28, 2002 and July 24, 2002, the Company borrowed $6.5 million and
$2.3 million, respectively, under Supplement No. 1 and Supplement No. 2 to the
Liberty Subordinated Credit Agreement and issued convertible notes in the same
amounts that are convertible into the Companys Class B Common Stock at $3.50
per share (as further described in Note 6). The closing price of the Companys
Class A Common Stock on June 28, 2002 and July 24, 2002 was $2.94 per share and
$1.95 per share, respectively.

On July 24, 2002, the Company sold 440,981 unregistered and restricted
shares of its Class B Common Stock to Liberty Media for $3.05 per share for
proceeds of approximately $1.3 million. The closing price of the Companys
Class A Common Stock on July 24, 2002 was $1.95 per share. The proceeds of the
stock sale were used to fund part of the Dujardin Arbitration Award.

On August 13, 2002, the Company entered into Supplement No. 3 (as further
described in Note 6 above) with Liberty Media. Any draws under Supplement No. 3
are subject to the Companys obtaining any necessary consents and approvals and
issuing any required notices, including, to the extent applicable, Stockholder
Consent. Liberty Media, which then held over 87% of the outstanding common
stock and over 99% of the voting power of the outstanding common stock and now
holds over 90% of the outstanding common stock and over 99% of the voting
power, agreed in Supplement No. 3 to vote in favor of any Stockholder Consent.
Proceeds of the loans or stock sales under Supplement No. 3 must be used for
capital expenditures, payment of the principal amount of loans made under the
Senior Credit Agreement or working capital.

Under Supplement No. 3,
on September 30, 2002, the Company borrowed $5.3 million and
issued a convertible note in the same amount that is convertible, subject to Stockholder
Consent, into the Companys Class B Common Stock at $1.94 per share, and sold
7,070,000 shares of its Class B Common Stock at a price of $1.69 per share for
a total purchase price of $11.9 million (as further described in Note 6 above).
The conversion price for the convertible note and the purchase price for the
shares sold were calculated pursuant to Supplement No. 3. Shares of Class B
Common Stock are convertible into shares of the Companys Class A Common Stock,
on a one-for-one basis, at any time at the option of the holder.

On October 17, 2002, the Company borrowed $4.0 million under Supplement
No. 3 to the Liberty Subordinated Credit Agreement and issued a convertible
note in the same amount that is convertible, subject to Stockholder Consent,
into the Companys Class B Common Stock at $1.56 per share. The conversion
price was calculated in accordance with Supplement No. 3.

12. Sale of Property

On September 17, 2002, the Company sold one of its domestic real estate
properties for $3.6 million, net of expenses, and recognized a gain of $1.8
million. The sale of this property did not impact operations, as this building
was vacant at the time of sale.




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

The following discussion and analysis provides information concerning our
results of operations and financial condition and should be read in conjunction
with the accompanying condensed consolidated financial statements and notes
thereto. Additionally, the following discussion and analysis should be read in
conjunction with Managements Discussion and Analysis of Financial Condition
and Results of Operations and financial statements included in our Annual
Report on Form 10-K for the year ended December 31, 2001. The following
discussion focuses on material trends, risks and uncertainties affecting our
results of operations and financial condition.

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Certain statements in this quarterly report on Form 10-Q constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. To the extent that such statements are not
recitations of historical fact, such statements constitute forward-looking
statements that, by definition, involve risks and uncertainties. Where, in any
forward-looking statement, the Company expresses an expectation or belief as to
future results or events, such expectation or belief is expressed in good faith
and believed to have a reasonable basis, but there can be no assurance that the
statement of expectation or belief will result or be achieved or accomplished.
The following include some but not all of the factors that could cause actual
results or events to differ materially from those anticipated:



| |  |  | industry-wide market factors such as the timing of, and spending on, feature film and television production;                                                      
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | foreign and domestic television advertising;                                                                                                                      
|
| |  |  | foreign and domestic spending by broadcasters, cable companies and
syndicators on first run and existing content libraries;                                       
|
| |  |  | the possibility of an industry-wide strike or other job action by or
affecting the Writers Guild, Screen Actors Guild or other major
entertainment industry union;
|
| |  |  | failure to maintain relationships with key customers and certain key personnel;                                                                                   
|
| |  |  | more rapid than expected technological obsolescence;                                                                                                              
|
| |  |  | failure to integrate acquired operations in expected time frames;                                                                                                 
|
| |  |  | continuing negative economic conditions potentially impacting our
ability to maintain compliance with our debt covenants.                                         

These forward-looking statements and such risks, uncertainties and other
factors speak only as of the date of this quarterly report, and the Company
expressly disclaims any obligation or undertaking to disseminate any updates or
revisions to any forward-looking statement contained herein, to reflect any
change in our expectations with regard thereto, or any other change in events,
conditions or circumstances on which any such statement is based. For a
discussion of additional factors which may affect future results of operations,
see Factors That May Affect Future Results of Operations below.

Overview

Liberty Livewire Corporation provides technical and creative services to
the entertainment industry. Our clients include the major motion picture
studios, independent producers, broadcast networks, cable channels, advertising
agencies and other companies that produce, own and/or distribute entertainment
content. Our assets and operations are primarily comprised of ten companies
acquired during 2001 and 2000. The combination and integration of these
acquired entities allow us to offer our clients a complete range of services,
from image capture to last mile distribution. We are able to offer
outsourcing solutions for the technical and creative requirements of our
clients that lower operating costs, reduce cycle times and increase reliability
and quality. We have organized our facilities and operations into the three
business segments, that we call Groups, as described below.

Pictures Group.Our Pictures Group provides services necessary to complete
the creation of original content including feature films, television shows,
television commercials, music videos, promotional and identity campaigns and
corporate communications programming. Our services begin once raw images are
captured and are completed when a final product is delivered to the last mile
distributor such as broadcast network, cable channel or an IP distributor. The
Pictures Group has three divisions: Entertainment Television, Commercial
Television and Audio.

Media Group.Our Media Group provides the services necessary to facilitate
the global maintenance, management and distribution of existing content
libraries. Through our facilities, we provide immediate access to physical and
virtual content, we restore and preserve damaged content, and we create high
resolution professional masters from original camera negative for global home
video, broadcast, pay-per-view and emerging new media distribution channels.

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Networks Group.Our Networks Group provides the services necessary to
assemble and distribute programming for cable and broadcast networks via fiber,
satellite and the Internet to audiences in North America, Europe and Asia. Our
Networks Group primarily provides dedicated facilities and resources designed
for specific client requirements on the basis of contractual agreements.

Acquisitions in 2001

On February 1, 2001, we acquired GWNS from Viacom, Inc. On August 23,
2001, we acquired from Cinram U.S. Holdings, Inc. the 51% interest in Stream
that we did not already own. On September 6, 2001, we acquired the remaining
99% interest in LNS that we did not already own, thereby acquiring the
operations of Ascent Network Services.

Earnings Before Interest Taxes Depreciation and Amortization

We believe that Earnings Before Interest Taxes Depreciation and
Amortization, or EBITDA, is an important measure of our financial performance.
We define EBITDA as earnings before interest, taxes, depreciation and
amortization, excluding gains and losses on asset sales and unusual charges
such as restructuring, integration and impairment. Our investments in new
infrastructure, machine capacity, technology and goodwill arising from our
significant acquisition activity have produced a relatively high depreciation
and, prior to the adoption of SFAS 142, amortization expense and have
historically been a significant annual non-cash charge to earnings. EBITDA is
calculated before depreciation and amortization charges and, in businesses with
significant non-cash expenses, is widely used as a measure of cash flow
available to pay interest and repay debt, and, to the extent available after
debt service and other required uses, to make acquisitions or invest in capital
equipment and new technologies. As a result, we view EBITDA as an important
measure of our financial performance and valuation. EBITDA does not represent
cash generated from operating activities in accordance with GAAP and should not
be considered in isolation or as a substitute for other measures of performance
prepared in accordance with GAAP. EBITDA does not reflect that portion of our
capital expenditures that may be required to maintain our market share,
revenues and leadership position in our industry. Moreover, not all EBITDA will
be available to pay interest or repay debt. Additionally, our presentation of
EBITDA may not be comparable to similarly titled measures reported by other
companies.

Critical Accounting Policies

Valuation of Goodwill, Other Intangible Assets and Long-lived Assets. We
perform goodwill impairment tests on an annual basis and on an interim basis if
an event or circumstance indicates that it is more likely than not that
impairment has incurred. In response to changes in industry and market
conditions, we may strategically realign our resources and consider
restructuring, disposing of, or otherwise exiting businesses. Such activities
could result in impairment of goodwill, other intangible assets and long-lived
assets. We are subject to the possibility of impairment of long-lived assets
arising in the ordinary course of business. We regularly consider the
likelihood of impairment and recognize impairment if the carrying amount of a
long-lived asset is not recoverable from its undiscounted cash flows in
accordance with SFAS 144. Impairment of long-lived assets is measured as the
difference between the carrying amount and fair value of the asset.

Effective January 1, 2002, we adopted SFAS No. 142 and in accordance with
its provisions, we recorded a transitional impairment charge of $20.2 million
against goodwill related to our Entertainment Television reporting unit, which
is part of the Pictures Group. The charge, which represents the difference
between the carrying value and the fair value of the goodwill, has been
reflected as the cumulative effect of a change in accounting principle in the
nine months ended September 30, 2002. Fair value of each reporting unit was
obtained through an outside independent valuation consultant, Bearing Point
(formerly KPMG Consulting, Inc.), which is not affiliated with our independent
auditors, KPMG LLP. The consultant used both the income approach and market
approach in determining fair value.

Valuation of Trade Receivables. We must make estimates of the
collectability of our trade receivables. Our management analyzes the
collectability based on historical bad debts, customer concentrations, customer
credit-worthiness, current economic trends and changes in our customer payment
terms. We record an allowance for doubtful accounts based upon specifically
identified receivables that we believe are uncollectable. In addition, we also
record an amount based upon a percentage of each aged category of our trade
receivables. These percentages are estimated based upon our historical
experience of bad debts. Our trade receivables balance was $86.8 million and
$96.7 million, net of allowance for doubtful accounts of $9.0 million and $12.0
million, as of September 30, 2002 and December 31, 2001, respectively.

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Amortization of goodwill

In accordance with SFAS No. 142, we ceased amortizing goodwill totaling
$420.8 million as of the beginning of fiscal year 2002, including $17.5 million
of acquired assembled workforce and $1.7 million of tradename related
intangible assets previously classified as identifiable intangible assets. As a
result, for the three and nine months ended September 30, 2002, we did not
recognize $6.9 million and $20.9 million of amortization expense, respectively,
that would have been recognized had the previous standards been in effect.
There can be no assurances that future goodwill impairment tests will not
result in a charge to earnings. For additional information regarding SFAS No.
142, see Note 3 to the Notes to Condensed Consolidated Financial Statements.

Results of Operations

The Pictures Groups revenues are primarily generated from fees for audio
and video post production, audio and video special effects and editorial
services for the television, film and advertising industries. The Media Group
provides owners of film libraries a broad range of restoration, preservation,
archiving, professional mastering and duplication services. The Media Groups
results also include our Digital Media Management initiative. The Networks
Groups revenues consist of fees relating to facilities and services necessary
to assemble and distribute programming for cable and broadcast networks across
the world via fiber, satellite and the Internet. The Network Groups results
also include our Bandwidth Management initiative. Corporate related items and
unallocated revenues and expenses are reflected in Corporate and Other, below.
Additionally, Corporate and Other includes the results of our Interactive Media
initiative and our Enterprise Solutions Group, which provides a blended
portfolio of consulting and other professional services to the entertainment
and media industry. Cost and expenses include costs of services which consist
primarily of production wages, facility costs and other direct costs; selling,
general and administrative expenses; depreciation and amortization; interest
expense and income taxes.

Our consolidated results of operations for the three and nine months ended
September 30, 2002, include the results of GWNS, Stream and LNS. Our
consolidated results of operations for the three and nine months ended
September 30, 2001 include the results of GWNS from its February 1, 2001
acquisition date, include the results of Stream from its September 1, 2001
acquisition date and include the results of LNS from its September 1, 2001
acquisition date. As a result, reported operating results are not comparable
between the periods presented.

Comparison of Reported Results for the Nine Months Ended September 30, 2002 and
2001 (unaudited).

|                 |                     |   |                   |         |      |   |         |         |  
|---------------- | ------------------- | - | ----------------- | ------- | ---- | - | ------- | ------- | -
|                 |                     |   | Nine Months Ended
|                 |                     |   | September 30,    
|                 |                     |   |                  
|                 |                     |   | 2002              |         | 2001
|                 |                     |   |                   |         |     
|Segment Revenues |                     |   |                   |         |      |   |         |        
|                 | Pictures Group      |   | $                 | 201,267 |      |   | $       | 251,787 |  
|                 | Media Group         |   |                   | 75,872  |      |   |         | 77,980  |  
|                 | Networks Group      |   |                   | 117,168 |      |   |         | 114,886 |  
|                 |                     |   |                   |         |      |   |         |        
|                 |                     | $ | 394,307           |         |      | $ | 444,653 |        
|                 |                     |   |                   |         |      |   |         |        
|Segment EBITDA   |                     |   |                   |         |      |   |         |        
|                 | Pictures Group      |   | $                 | 34,839  |      |   | $       | 47,677  |  
|                 | Media Group         |   |                   | 20,377  |      |   |         | 23,217  |  
|                 | Networks Group      |   |                   | 37,441  |      |   |         | 35,081  |  
|                 | Corporate and Other |   |                   | (34,873 | )    |   |         | (31,203 | )
|                 |                     |   |                   |         |      |   |         |        
|                 |                     | $ | 57,784            |         |      | $ | 74,772  |        
|                 |                     |   |                   |         |      |   |         |        
|                 | Net loss            |   | $                 | (53,024 | )    |   | $       | (62,921 | )
|                 |                     |   |                   |         |      |   |         |        

Revenues decreased $50.3 million, or 11.3%, to $394.3 million for the nine
months ended September 30, 2002 from $444.7 million for the nine months ended
September 30, 2001. Pictures Group revenues decreased by $50.5 million
resulting from unfavorable comparisons to 2001, which benefited from increased
television and feature film production as a result of the threatened actors and
writers strikes. Consequently, 2002 experienced lower film production due to a
soft feature market while studios released stock-piled product. Additionally,
Pictures Group revenues suffered as a result of challenging economic conditions
impacting film and television post production, and sluggishness in the
advertising market reducing television advertising spending. Furthermore,
Pictures Group revenues were impacted by the consolidation of certain
facilities. Media Group revenues decreased by $2.1 million as a result of
lower spending from larger clients for traditional media services partially
offset by higher demand for DVD mastering. Networks Group revenues increased
by $2.3 million resulting from the full year impact of the GWNS and LNS
acquisitions of $8.6

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million and an increase in our Bandwidth Management revenue of $1.7
million partially offset by a decrease of $8.0 million due to cancellation and
timing of various contracts, large network construction and installation
projects.

Costs of services decreased $34.4 million, or 12.6%, to $239.5 million for
the nine months ended September 30, 2002 from $273.9 million for the nine
months ended September 30, 2001. This is attributed to decreases across all of
our Groups primarily in production material, production personnel and equipment
expenses, as a result of the decreased production activity noted above.

Selling, general and administrative expenses increased $1.0 million, or
1.1%, to $97.0 million for the nine months ended September 30, 2002 from $96.0
million for the nine months ended September 30, 2001. The increase is
attributed to $3.9 million in severance costs, higher legal and professional
fees partially offset by lower personnel and support expenses.

As a result of the above, EBITDA, as defined, decreased $17.0 million, or
22.7%, to $57.8 million for the nine months ended September 30, 2002, from
$74.8 million for the nine months ended September 30, 2001. Pictures Group
EBITDA decreased $12.8 million due to the lower revenues described above
partially offset by lower costs, including savings from consolidations and
restructuring activities. Media Group EBITDA decreased $2.8 million due to
lower revenues described above and lower margins from such revenues and
increased spending of $1.1 million on our Digital Media Management initiative.
Networks Group EBITDA increased $2.4 million due to higher margin projects
secured early in the year as well as cost savings partially offset by
additional investments of $5.0 million in our Bandwidth Management initiative.
Corporate and Other EBITDA decreased $3.7 million due to severance of $3.9
million, increased professional and legal fees of $0.5 million partially offset
by reduced spending on our corporate initiatives and reduced costs resulting
from the consolidation of our corporate activities.

Depreciation and amortization decreased $42.2 million, or 45.4%, to $50.9
million for the nine months ended September 30, 2002, from $93.2 million for
the nine months ended September 30, 2001. Approximately $33.7 million of the
decrease is attributed to the Companys adoption of SFAS No. 142 pursuant to
which goodwill and other identifiable intangible assets with indefinite lives
are no longer amortized. The additional decrease of $8.5 million is attributed
to reduced depreciation expense associated with the asset impairment charge
recorded in the fourth quarter of 2001.

Non-cash compensation expense decreased $948,000, or 117.3%, to $140,000
in income for the nine months ended September 30, 2002, from $808,000 in
expense reported for the nine months ended September 30, 2001. Results for the
nine months ended September 30, 2002 included income of $3.2 million relating
to a decline in the value of the underlying stock price used to value employee
stock appreciation rights or SARs, offset by compensation expense of
$2.1
million relating to the issuance of in-the-money stock options pursuant to
our 2001 incentive compensation plan and unearned stock compensation
of $1.0 million. The expense recorded in the nine months
ended September 30, 2001 related primarily to the increase in value of the
underlying stock price used to value employee SARs.

Interest expense increased $4.1 million, or 9.4%, to $48.2 million for the
nine months ended September 30, 2002, from $44.1 million for the nine months
ended September 30, 2001. The increase is primarily attributed to additional
interest on borrowings under the Liberty Subordinated Credit Agreement.
Interest expense for the nine months ended September 30, 2002 included $15.6
million of non-cash expense related to interest under the Liberty Subordinated
Credit Agreement, $13.7 million related to interest under our Senior Credit
Facility, $12.3 million related to interest rate swaps (of which $5.3 million
is non-cash), $3.7 million of amortization of debt discounts and debt issuance
costs, and $2.9 million of interest related to capital leases, notes, and
mortgages.

Other income increased $12.8 million, or 476.4%, to $10.1 million for the
nine months ended September 30, 2002 from $2.7 million in expense for the nine
months ended September 30, 2001. For the nine months ended September 30, 2002,
other income primarily includes $9.9 million related to the decrease in the
market value for our counterparties of certain interest rate swap instruments and $1.8
million due to a gain from the sale of property, offset by $2.3 million related
to the payment of the Dujardin Arbitration Award. For the nine months ended
September 30, 2001, other expense included the loss from the sale of domestic
real estate property and the decrease in the market value of certain
freestanding interest rate swap instruments.

As a result of the above, the loss before income taxes and change in
accounting principle decreased $34.9 million, or 52.9%, to $31.1 million for
the nine months ended September 30, 2002 from $66.0 million for the nine months
ended September 30, 2001.

The provision for income taxes increased $4.8 million, or 154.8%, to $1.7
million for the nine months ended September 30, 2002, from a benefit of $3.1
million for the nine months ended September 30, 2001. The change is a result of
an increase in the valuation allowance. Our effective income tax rate for the
nine months ended September 30, 2002 was approximately 3.35% primarily due to
disallowed deductions for goodwill and interest expense of $20.2 million and
$18.2 million, respectively, and valuation allowances of $24.4 million.

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Effective January 1, 2002, we adopted SFAS No. 142 and in accordance with
its provisions, we recorded a transitional impairment charge of $20.2 million,
net of tax benefit, which has been reflected as a cumulative effect of a change
in accounting principle in the nine months ended September 30, 2002.

As a result of the above, our net loss decreased $9.9 million, or 15.7%,
to $53.0 million for the nine months ended September 30, 2002 from $62.9
million for the nine months ended September 30, 2001.

Comparison of Reported Results for the Three Months Ended September 30, 2002
and 2001 (unaudited).

|                 |                     |   |                    |         |      |   |         |         |  
|---------------- | ------------------- | - | ------------------ | ------- | ---- | - | ------- | ------- | -
|                 |                     |   | Three Months Ended
|                 |                     |   | September 30,     
|                 |                     |   |                   
|                 |                     |   | 2002               |         | 2001
|                 |                     |   |                    |         |     
|Segment Revenues |                     |   |                    |         |      |   |         |        
|                 | Pictures Group      |   | $                  | 63,987  |      |   | $       | 78,349  |  
|                 | Media Group         |   |                    | 25,464  |      |   |         | 25,070  |  
|                 | Networks Group      |   |                    | 40,823  |      |   |         | 39,229  |  
|                 |                     |   |                    |         |      |   |         |        
|                 |                     | $ | 130,274            |         |      | $ | 142,648 |        
|                 |                     |   |                    |         |      |   |         |        
|Segment EBITDA   |                     |   |                    |         |      |   |         |        
|                 | Pictures Group      |   | $                  | 10,268  |      |   | $       | 14,491  |  
|                 | Media Group         |   |                    | 6,292   |      |   |         | 7,738   |  
|                 | Networks Group      |   |                    | 14,076  |      |   |         | 11,969  |  
|                 | Corporate and Other |   |                    | (11,135 | )    |   |         | (11,846 | )
|                 |                     |   |                    |         |      |   |         |        
|                 |                     | $ | 19,501             |         |      | $ | 22,352  |        
|                 |                     |   |                    |         |      |   |         |        
|                 | Net loss            |   | $                  | (8,746  | )    |   | $       | (18,376 | )
|                 |                     |   |                    |         |      |   |         |        

Revenues decreased $12.4 million, or 8.7%, to $130.3 million for the three
months ended September 30, 2002 from $142.6 million for the three months ended
September 30, 2001. Pictures Group revenues decreased by $14.4 million,
primarily as a result of continuing challenging economic conditions impacting
film and television post production activities, reduced television advertising
spending continuing into the third quarter of 2002 and the consolidation of
certain facilities. Media Group revenues increased by $0.4 million as a result
of increased demand for DVD mastering partially offset by lower spending from
larger clients for traditional media services. Networks Group revenues
increased by $1.6 million due to continued work on projects secured early in
the year and timing of certain large network construction and installation
projects.

Costs of services decreased $10.7 million, or 11.9%, to $79.2 million for
the three months ended September 30, 2002 from $89.9 million for the three
months ended September 30, 2001. This is attributed to decreases across all of
our Groups primarily in personnel, facility, outside services, and equipment
expenses, to offset decreased revenues noted above.

Selling, general and administrative expenses increased $1.2 million, or
3.9%, to $31.6 million for the three months ended September 30, 2002 from $30.4
million for the three months ended September 30, 2001. The increase is
primarily attributed to certain severance costs incurred during the quarter,
higher business insurance and marketing expenses offset by lower personnel
costs.

As a result of the above, EBITDA, as defined, decreased $2.9 million, or
12.8%, to $19.5 million for the three months ended September 30, 2002, from
$22.4 million for the three months ended September 30, 2001. Pictures Group
EBITDA decreased $4.2 million due to the lower revenues described above
partially offset by cost reductions, including savings from consolidation and
restructuring activities. Media Group EBITDA decreased $1.4 million resulting
from lower margins driven by a change in the mix of business and increased
spending on our Digital Media Management initiative. Networks Group EBITDA
increased $2.1 million due to higher margin projects secured early in the year
as well as cost savings. Corporate and Other EBITDA increased $0.7 million due
to reduced costs resulting from consolidation of corporate activities partially
offset by increased spending of $0.7 million in our Enterprise Solutions and
New Products Group initiatives.

Depreciation and amortization decreased $16.2 million, or 48.8%, to $17.0
million for the three months ended September 30, 2002, from $33.3 million for
the three months ended September 30, 2001. Approximately $12.9 million of the
decrease is attributed to the Companys adoption of SFAS No. 142 pursuant to
which goodwill and other identifiable intangible assets with indefinite lives
are no longer amortized. The additional decrease of $3.3 million is attributed
to reduced depreciation expense associated with the asset impairment charge
recorded in the fourth quarter of 2001.

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Non-cash compensation income decreased $11.1 million, or 110.2%, to $1.0
million in expense for the three months ended September 30, 2002, from $10.1
million in income reported for the three months ended September 30, 2001. For
the quarter ended September 30, 2002, non-cash compensation included expense of
$1.0 million relating to the issuance of the in-the-money stock options
pursuant to our 2001 incentive compensation plan. The quarter ended September
30, 2001 included $10.1 million in income resulting from the decline in value
of the underlying stock price used to value employee SARS.

Interest expense increased $1.8 million, or 12.1%, to $16.6 million for
the three months ended September 30, 2002, from $14.8 million for the three
months ended September 30, 2001. The increase is primarily attributed to
additional interest on borrowings under the Liberty Subordinated Credit
Agreement. Interest expense for the three months ended September 30, 2002
included $5.4 million of non-cash expense related to interest under the Liberty
Subordinated Credit Agreement, $4.6 million related to interest under our
Senior Credit Facility, $4.2 million related to interest rate swaps (of which
$1.4 million is non-cash), $1.2 million of amortization of debt discounts and
debt issuance costs, and $1.2 million related to capital leases, notes and
mortgages.

Other income increased $9.5 million, or 391.0%, to $7.1 million for the
three months ended September 30, 2002 from $2.4 million in expense for the
three months ended September 30, 2001. For the quarter ended September 30,
2002, other income primarily included $4.9 million resulting
from the termination of certain interest rate swap instruments and
$1.8 million gain relating to the sale of property. For the quarter ended
September 30, 2001, other expense included the loss from the sale of domestic
real estate property and the decrease in the market value of certain interest rate swap instruments.

As a result of the above, the loss before income taxes and change in
accounting principle decreased $10.0 million, or 55.4%, to $8.1 million for the
three months ended September 30, 2002 from $18.1 million for the three months
ended September 30, 2001.

The provision for income taxes increased $0.4 million, or 158.1%, to $0.7
million for the three months ended September 30, 2002, from $0.3 million for
the three months ended September 30, 2001. The change is a result of increased
state income taxes.

As a result of the above, our net loss decreased $9.6 million, or 52.4%,
to $8.7 million for the three months ended September 30, 2002 from $18.4
million for the three months ended September 30, 2001.

Liquidity and Capital Resources

Cash provided by operating activities for the nine months ended September
30, 2002, was $28.7 million as compared to $36.1 million for the nine months
ended September 30, 2001. Cash and cash equivalents were $6.2 million at
September 30, 2002, a decrease of $13.4 million from September 30, 2001. This
decrease relates primarily to cash used for capital expenditures and payments
on long-term debt and capital lease obligations offset by cash provided by
operating activities.

Net cash used in investing activities was $41.4 million for the nine
months ended September 30, 2002 compared to $169.8 million for the nine months
ended September 30, 2001. During the nine months ended September 30, 2002, we
invested $45.0 million in property, plant and equipment, as compared to $52.5
million for the nine months ended September 30, 2001. In addition, we sold one
of our domestic real estate properties for $3.6 million, net of expenses.
During the nine months ended September 30, 2001 we acquired GWNS for $108.2
million, acquired LNS for $31.4 million, and acquired Stream for $0.6 million
and realized proceeds of $22.9 million from sales of marketable securities and
investments.

Net cash used in financing activities was $4.9 million for the nine months
ended September 30, 2002 compared to net cash provided by financing activities
of $134.1 million for the nine months ended September 30, 2001. During the nine
months ended September 30, 2002, $14.1 million was borrowed under our Liberty
Subordinated Credit Agreement and $13.3 million in proceeds were received from
the issuance of common stock. These proceeds were used to repay borrowings
under the Senior Credit Agreement, to fund the Dujardin Arbitration Award and
capital expenditures. Additionally, we borrowed $5.0 million under the Senior
Credit Agreement and $4.0 million under certain property mortgages. These
borrowings were used to fund capital expenditures and working capital. During
the nine months ended September 30, 2002 we repaid $29.8 million under our
Senior Credit Agreement and $10.0 million of debt related to capital leases,
mortgage notes and other borrowings.

At September 30, 2002, $367.8 million was outstanding under the Senior
Credit Agreement (including Letters of Credit of $1.1 million) and $43.2
million was available for future borrowings, subject to the terms of the Senior
Credit Agreement. At September 30, 2002, $220.3 million was outstanding under
the Liberty Subordinated Credit Agreement and $85.9 million was available for
future borrowings under the terms of the Liberty Subordinated Credit Agreement
with the consent of, and on terms determined by, Liberty Media.

18



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At September 30, 2002, we had borrowed $220.3 million under the Liberty
Subordinated Credit Agreement. Of the total amount borrowed, $206.2 million
were Acquisition Funds, represented by convertible notes in the amount
borrowed, which are convertible into our Class B Common Stock at $10.00 per
share. The remainder of the total amount borrowed, $14.1 million, was used for
working capital, capital expenditures and repayment of principal under the
Senior Credit Agreement and was borrowed pursuant to Supplements No. 1, 2 and 3
to the Liberty Subordinated Credit Agreement. The effective annual interest
rate for 2002 on the Liberty Subordinated Credit Agreement is 10.0%.

The Liberty Subordinated Credit Agreement allows us to borrow the
Acquisition Funds and the Additional Available Funds. Pursuant to the June
2002 Consent Letters, the parties to the Senior Credit Agreement and the
parties to the Heller Credit Agreement agreed that, with respect to $25.0
million of the Additional Available Funds, (1) convertible notes could be
issued that could be convertible into our Class B Common Stock at a price per
share determined by us, rather than at $10.00 per share as permitted under the
Senior Credit Agreement, and (2) to the extent these funds were borrowed to
purchase capital assets and fund the Dujardin Arbitration Award, such borrowed
funds could be repaid to Liberty Media before we pay amounts owed under the
Senior Credit Agreement, provided that, among other conditions, such repayment
is funded solely with proceeds of additional equity contributions from Liberty
Media or any of its affiliates other than us or any of our subsidiaries. Our
ability to determine the conversion rights under the Liberty Subordinated
Credit Agreement with respect to Additional Available Funds does not affect the
conversion rights for amounts previously borrowed under the Liberty
Subordinated Credit Agreement and may be determined on a case by case basis
only on amounts borrowed with respect to the $25.0 million of Additional
Available Funds to which the June 2002 Consent Letters apply.

On June 28, 2002 and July 24, 2002, we borrowed $6.5 million and $2.3
million, respectively, under Supplement No. 1 and Supplement No. 2 to the
Liberty Subordinated Credit Agreement and issued convertible notes in the same
amount that are convertible into our Class B Common Stock at $3.50 per share.
The funds borrowed under Supplement No. 1 were used for the purchase of capital
assets, and the funds borrowed under Supplement No. 2 were used to fund part of
the Dujardin Arbitration Award.

On August 13, 2002, we entered into Supplement No. 3 to the Liberty
Subordinated Credit Agreement under which we may draw $25.0 million of
Additional Available Funds as needed through, at Liberty Medias option: (a)
borrowings under the Liberty Subordinated Credit Agreement of subordinated
convertible loans with a conversion price per share equal to 115% of the
average market price of our Class A Common Stock for the five most recent
trading days ending on and including the date which is two business days prior
to the date of the borrowing, (b) sales of our Class B Common Stock to Liberty
Media at a purchase price per share equal to the average market price of our
Class A Common Stock for the five most recent trading days ending on and
including the date which is two business days prior to the date of the stock
sale, or (c) any combination of (a) or (b). Any draws under Supplement No. 3
are subject to our obtaining any necessary consents and approvals and issuing
any required notices, including, to the extent applicable, the Stockholder
Consent. Liberty Media, which then held over 87% of the outstanding common
stock and over 99% of the voting power of the outstanding common stock and now
holds over 90% of the outstanding common stock and over 99% of the voting power
of the outstanding common stock, agreed in Supplement No. 3 to vote in favor of
any Stockholder Consent. Proceeds of the loans or stock sales under Supplement
No. 3 must be used for capital expenditures, payment of the principal amount of
loans made under the Senior Credit Agreement or working capital.

On September 26, 2002, the parties to the Senior Credit Agreement and the
parties to the Heller Credit Agreement agreed pursuant to the September 2002
Consent Letters, that, with respect to an additional $25.0 million of the
Additional Available Funds (over and above the $25.0 million contemplated in
the June 2002 Consent Letters), convertible notes could be issued that could be
convertible into our Class B Common Stock at a price per share determined by us
that was no less than 115% of the average daily market price of our Class A
Common Stock for the five most recent trading days ending on and including the
date which is two business days prior to the date of the borrowing. The
foregoing discussion of the September 2002 Consent Letters is qualified by the
complete text of each respective document, which is filed as Exhibit 10.1 and
10.2 to this report and hereby incorporated by reference herein.

On September 30, 2002, we received $17.2 million under Supplement No. 3 in
consideration of our issuance of a convertible note in the amount of $5.3
million that is convertible, subject to Stockholder Consent, into our Class B
Common Stock at $1.94 per share and sale of 7,070,000 shares of our Class B
Common Stock at a price of $1.69 per share for a total purchase price of $11.9
million. The conversion price of the convertible note and purchase price of
the shares sold were calculated in accordance with Supplement No. 3. The
proceeds were used to repay borrowings under the Senior Credit Agreement, for
capital expenditures and for working capital. On October 17, 2002, we borrowed
$4.0 million under Supplement No. 3 and issued a convertible note in the same
amount that is convertible, subject to Stockholder Consent, into our Class B
Common Stock at $1.56 per share. The conversion price was calculated in
accordance with Supplement No. 3. The proceeds were used for working capital.

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On November 13, 2002, the Company finalized Amendment No. 3 to its Senior
Credit Agreement. This amendment provides the Company with greater financial
flexibility by providing for more favorable leverage ratio tests and more favorable fixed
charge coverage ratio tests. It also
removes some restrictions on the transactions the Company and its subsidiaries
may enter into. In consideration for the above changes, the Company agreed to higher
interest rates on the loans until the Companys leverage ratio is reduced below
4:00 to 1:00, new restrictions on the use of the proceeds from the sale of
assets, and a permanent reduction of $40.0 million in the amount available for
future borrowings under the Senior Credit Agreement. After giving
effect to this Amendment, $3.2 million is available for future borrowings
under the Senior Credit Agreement. The foregoing discussion of
Amendment No. 3 to the Senior Credit Agreement is qualified by
the complete text of the document, which is filed as
Exhibit 10.5 to this report and hereby incorporated by reference
herein.

As of September 30, 2002, borrowings related to real property mortgages
totaled $24.0 million, capital lease obligations totaled $15.6 million, and
other notes payable totaled $7.3 million. As of September 30, 2002, $2.3
million was available for future borrowings under two real property mortgage
notes. Proceeds from these notes are restricted in use to funding capital
expenditure initiatives for our United Kingdom operations.

We continue to monitor the credit markets and other sources of capital in
the event we are unable to generate sufficient cash flow from operations to
service our indebtedness or to make capital expenditures and other
discretionary investments. If we are required to raise capital in the future,
there can be no assurance that we will be able do so on favorable terms. If we
are unable to generate sufficient cash flow from operations in the future to
service our debt and working capital needs, we may be required to reduce
capital expenditures, sell assets or refinance all or a portion of our existing
debt or obtain additional financing. Our ability to make scheduled principal
debt payments, to pay interest or to refinance our indebtedness depends on our
future financial position and results of operations, which, to a certain
extent, are subject to general conditions in or affecting our industry and our
customers and to general economic, political, financial, competitive,
legislative and regulatory factors beyond our control, including the duration
and severity of the post September 11, 2001 economic environment.

The Company expects to fund its capital expenditure requirements with cash
flows from operating activities and, to the extent permitted by the Senior
Credit Agreement, proceeds derived from leasing transactions and sales of
non-strategic assets. To the extent that such cash flows, leasing transactions
and proceeds may be insufficient (after servicing the Companys existing
indebtedness and funding its working capital requirements) to provide adequate
funds for planned capital expenditures, the Company is exploring alternatives
to funding capital expenditures consistent with the restrictions contained in
the Senior Credit Agreement, such as loans and equity investments. Although
the Company monitors the credit markets and other sources of capital, there can
be no assurance that it will be able to secure funds for capital expenditures
or that, if such funds are available, such funds will be available on favorable
terms. If the Company cannot obtain additional funds for its capital
expenditures, and the cash flows, leasing transactions and proceeds described
above are insufficient (after servicing the Companys existing indebtedness and
funding its working capital requirements) to provide adequate funds for planned
capital expenditures, the Company may be required to reduce its planned capital
expenditures. Any such reduction in capital expenditures may have a negative
effect on the Companys business.

Factors That May Affect Future Results of Operations

In addition to the factors described above, the following factors may
affect our future results of operations.

The Company requires significant capital expenditures in order to remain
competitive in relevant markets, service existing customers and offer services
to new customers. Such capital expenditures are used to purchase new equipment
and construct, maintain and operate the infrastructure necessary to operate our
business. The Company expects to fund the acquisition of capital equipment
through operating and capital leases, cash flows from operating activities,
proceeds derived from sales of assets, loans and equity investments to the
extend permitted by the Senior Credit Agreement. The Companys inability to
obtain sufficient resources to acquire capital equipment will have a negative
effect on the Companys business.

In connection with several acquisitions that occurred during fiscal years
2000 and 2001, we incurred significant indebtedness to fund the transactions.
This indebtedness may result in a significant percentage of our cash flow being
applied to the payment of interest, and there can be no assurance that our
operations will generate sufficient cash flow to service the indebtedness. This
indebtedness, as well as any indebtedness we may incur in the future, and the
related financial covenants imposed upon the Company may adversely affect our
ability to finance new operations and pursue business opportunities that may be
in our best interests and that of our stockholders.

As part of our business strategy, we have acquired substantial operations
in several different geographic locations over the last two years. These
businesses have experienced varying profitability or losses in recent periods.
Since the aforementioned dates of acquisition, we have continued to work
extensively on the integration of these businesses. However, there can be no
assurances

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regarding the ultimate success of our integration efforts or regarding our
ability to maintain or improve the results of operations of these businesses.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Interest Rate Risks

We seek to reduce cash flow volatility associated with changes in interest
rates by entering into financial arrangements intended to provide a hedge
against a portion of the risks associated with such volatility. We continue to
have exposure to such risks to the extent they are not hedged. We assess
interest rate cash flow risk by continually identifying and monitoring changes
in interest rate exposures that may adversely impact expected future cash flows
and by evaluating hedging opportunities. Interest rate swap agreements are the
primary instruments used to manage interest rate fluctuation affecting our
$390.0 million of variable rate debt primarily associated with our Senior
Credit Agreement. At September 30, 2002, we had three interest rate swap
agreements with a combined fair market value of $9.5 million in favor of our
counterparties. In one swap agreement, we receive variable interest rate
payments and make fixed interest rate payments on a notional amount of $365.0
million. This swap agreement matures on June 30, 2003. In addition, we had two
interest rate swap agreements in the UK with a fair value of $0.3 million in
favor of our counterparties. These swap agreements mature on
March 10, 2016. Had market interest rate been 100 basis points
higher throughout the nine months ended September 30, 2002,
Liberty would have recorded approximately $2.9 million of
additional interest expense.

On July 1, 2002, we terminated our $165.0 million notional interest rate
swap for $1.5 million in cash proceeds. Additionally, we terminated a $200.0
million notional interest rate swap for cash proceeds of $1.4 million on
September 20, 2002 and $1.3 million on September 30, 2002.

Foreign Currency Risk

We continually monitor our economic exposure to changes in foreign
exchange rates and may enter into foreign exchange agreements where and when
appropriate. Whenever possible, we utilize local currency borrowings to fund
foreign acquisitions. At September 30, 2002, we did not have any foreign
exchange agreements. Substantially all of our foreign transactions are
denominated in foreign currencies, including the liabilities of our foreign
subsidiaries. Although our foreign transactions are not generally subject to
significant foreign exchange transaction gains or losses, the financial
statements of our foreign subsidiaries are translated into United States
dollars as part of our consolidated financial reporting. As a result,
fluctuations in exchange rates affect our financial position and results of
operations.




ITEM 4. CONTROLS AND PROCEDURES.

The Companys chief executive officer and chief financial officer
performed an evaluation of the Companys disclosure controls and procedures (as
defined in Rule 13a-14(c) and Rule 15d-14(c) of the Securities Exchange Act of
1934, as amended) as of a date within 90 days prior to the filing of this
quarterly report on Form 10-Q. Based on this evaluation, the Companys chief
executive officer and chief financial officer believe that such controls and
procedures effectively insure that information required to be disclosed in this
quarterly report on Form 10-Q is appropriately recorded, processed and
reported. There have been no significant changes in the Companys disclosure
controls and procedures or in other factors that could significantly affect
these controls subsequent to the date of their evaluation.




PART II  OTHER INFORMATION




Item 1. Legal Proceedings

There have been no material developments that have not been previously
reported in our legal proceedings disclosure in Part I, Item 3 of our Annual
Report on Form 10-K for the year ended December 31, 2001, filed April 1, 2002,
with the Securities and Exchange Commission, as updated by Part II, Item 1 of
each of our Quarterly Reports on Form 10-Q for the quarters ended March 31,
2002 and June 30, 2002, filed May 15, 2002 and August 14, 2002, respectively,
with the Securities and Exchange Commission. In addition, there have been no
new reportable events during the three months ended September 30, 2002.

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Item 2. Changes in Securities and Use of Proceeds

On July 24, 2002, the Company sold 440,981 shares of its Class B Common
Stock to Liberty Media for $1.3 million, or $3.05 per share, which represented
a represents a $1.10 per share premium over the $1.95 per share closing price
of the Companys Class A Common Stock on that day. The proceeds of the stock
sale were used to fund part of the Dujardin Arbitration Award. Such issuance
was not registered under the Securities Act of 1933, as amended, pursuant to
the exemption from registration afforded by Section 4(2) of that Act. Shares of
Class B Common Stock are convertible into shares of the Companys Class A
Common Stock, on a one-for-one basis, at any time at the option of the holder.

For the quarter ended September 30, 2002, the Company issued 3,133,311
shares of its Class B Common Stock to Liberty Media and its affiliates in
payment of $5.3 million in interest under the Liberty Subordinated Credit
Agreement. Such issuance was not registered under the Securities Act of 1933,
as amended, pursuant to the exemption from registration afforded by Section
4(2) of that Act. Shares of Class B Common Stock are convertible into shares of
the Companys Class A Common Stock, on a one-for-one basis, at any time at the
option of the holder.

In addition, on September 30, 2002, the Company issued 7,070,000 shares of
its Class B Common Stock to Liberty Media Corporation at a price of $1.69 per
share for total cash proceeds of $11.9 million. The purchase price represents
the average daily closing price of Livewires Class A common stock for the five
trading days ending on and including September 26, 2002. Such issuance was not
registered under the Securities Act of 1933, as amended, pursuant to the
exemption from registration afforded by Section 4(2) of that Act. Shares of
Class B Common Stock are convertible into shares of the Companys Class A
Common Stock, on a one-for-one basis, at any time at the option of the holder.




Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits



| | 10.1 |  | Consent Letter of Parties to the Senior Credit Agreement, dated September 26, 2002.                                                                                                                                                                                                                                      
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 10.2 |  | Consent Letter of Heller Financial Leasing, Inc., dated September 26, 2002.                                                                                                                                                                                                                                              
|
| | 10.3 |  | Stock Purchase Agreement, dated as of September 30, 2002, by and between the
Company and Liberty Media Corporation (Incorporated by reference to Exhibit 99.5
to the Companys Current Report on Form 8-K as filed with the Commission on
October 8, 2002, Commission File No. 0-1461).                                  
|
| | 10.4 |  | Promissory Note, dated September 30, 2002 of the Company in the original principal
amount of $5,349,700 for the benefit of Liberty Media Corporation (Incorporated by
reference to Exhibit 99.6 to the Companys Current Report on Form 8-K as filed
with the Commission on October 8, 2002, Commission File No. 0-1461).
|
| | 10.5 |  | Amendment No. 3, dated as of
November 13, 2002, to the Credit Agreement, dated as
of December 22, 2000 (as amended by Amendment No. 1, dated as of November 1, 2001,
and Amendment No. 2, dated as of March 26, 2002).                                                                                                   

(b)  Reports on Form 8-K.



| | 1. |  | A Current Report on Form 8-K was filed on August 14, 2002 that provided a
conformed copy of the certifications required by Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                 
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | A Current Report on Form 8-K was filed on October 8, 2002 that described
transactions under Supplement No. 3 to the First Amended and Restated
Credit Agreement, dated August 13, 2002, between the Company and Liberty
Media Corporation.

22



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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
| | ----------------------------



|November 14, 2002

Date |  | /s/ George C. Platisa
George C. Platisa
Executive Vice President and Chief Financial Officer
|----------------------- |  | --------------------------------------------------------------------------------------------

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CERTIFICATIONS

Certification of Chief Executive Officer

I, William R. Fitzgerald, certify that:

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. |  | I have reviewed
        this quarterly report on Form 10-Q of Liberty Livewire Corporation
        (the registrant);                                                                                                                                                                                                                                                                                                           
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|2. |  | Based on my knowledge,
        this quarterly report does not contain any untrue statement of a material
        fact or omit to state a material fact necessary to make the statements
        made, in light of the circumstances under which such statements were made,
        not misleading with respect to the period covered by this quarterly report;                                                                   
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|3. |  | Based on my knowledge,
        the financial statements, and other financial information included in
        this quarterly report, fairly present in all material respects the financial
        condition, results of operations and cash flows of the registrant as of,
        and for, the periods presented in this quarterly report;                                                                                      
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|4. |  | The registrants
        other certifying officers and I are responsible for establishing and maintaining
        disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
        and 15d-14) for the registrant and we have:                                                                                                                                                                                
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|   |  | a)                                                                                                                                                                                                                                                                                                                                                                                                                                |  | designed such disclosure controls
        and procedures to ensure that material information relating to the registrant,
        including its consolidated subsidiaries, is made known to us by others
        within those entities, particularly during the period in which this quarterly
        report is being prepared;
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|   |  | b)                                                                                                                                                                                                                                                                                                                                                                                                                                |  | evaluated the effectiveness
        of the registrants disclosure controls and procedures as of a date
        within 90 days prior to the filing date of this quarterly report
        (the Evaluation Date); and                                                                                                          
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|   |  | c)                                                                                                                                                                                                                                                                                                                                                                                                                                |  | presented in this quarterly
        report our conclusions about the effectiveness of the disclosure controls
        and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                        
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|5. |  | The
        registrants other certifying officers and I have disclosed, based
        on our most recent evaluation, to the registrants auditors and the
        audit committee of registrants board of directors (or persons performing
        the equivalent function):                                                                                                                                                   
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|   |  | a)                                                                                                                                                                                                                                                                                                                                                                                                                                |  | all significant deficiencies
        in the design or operation of internal controls which could adversely
        affect the registrants ability to record, process, summarize and
        report financial data and have identified for the registrants auditors
        any material weaknesses in internal controls; and 
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|   |  | b)                                                                                                                                                                                                                                                                                                                                                                                                                                |  | any fraud, whether or not material,
        that involves management or other employees who have a significant role
        in the registrants internal controls; and                                                                                                                                                         
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|6. |  | The registrants
        other certifying officers and I have indicated in this quarterly report
        whether or not there were significant changes in internal controls or
        in other factors that could significantly affect internal controls subsequent
        to the date of our most recent evaluation, including any corrective actions
        with regard to significant deficiencies and material weaknesses.



|Date:    November 14, 2002 | 
|-------------------------- | 



|/s/ WILLIAM R. FITZGERALD
William R. Fitzgerald
Chief Executive Officer | 
|----------------------------------------------------------------------- | 

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Certification of Chief Financial Officer

I, George C. Platisa, certify that:

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. |  | I have reviewed
        this quarterly report on Form 10-Q of Liberty Livewire Corporation
        (the registrant);                                                                                                                                                                                                                                                                                                           
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|2. |  | Based on my knowledge,
        this quarterly report does not contain any untrue statement of a material
        fact or omit to state a material fact necessary to make the statements
        made, in light of the circumstances under which such statements were made,
        not misleading with respect to the period covered by this quarterly report;                                                                   
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|3. |  | Based on my knowledge,
        the financial statements, and other financial information included in
        this quarterly report, fairly present in all material respects the financial
        condition, results of operations and cash flows of the registrant as of,
        and for, the periods presented in this quarterly report;                                                                                      
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|4. |  | The registrants
        other certifying officers and I are responsible for establishing and maintaining
        disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
        and 15d-14) for the registrant and we have:                                                                                                                                                                                
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|   |  | a.                                                                                                                                                                                                                                                                                                                                                                                                                                |  | designed such disclosure controls
        and procedures to ensure that material information relating to the registrant,
        including its consolidated subsidiaries, is made known to us by others
        within those entities, particularly during the period in which this quarterly
        report is being prepared;
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|   |  | b.                                                                                                                                                                                                                                                                                                                                                                                                                                |  | evaluated the effectiveness
        of the registrants disclosure controls and procedures as of a date
        within 90 days prior to the filing date of this quarterly report
        (the Evaluation Date); and                                                                                                          
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|   |  | c.                                                                                                                                                                                                                                                                                                                                                                                                                                |  | presented in this quarterly
        report our conclusions about the effectiveness of the disclosure controls
        and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                        
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|5. |  | The registrants
        other certifying officers and I have disclosed, based on our most recent
        evaluation, to the registrants auditors and the audit committee
        of registrants board of directors (or persons performing the equivalent
        function):                                                                                                                                                   
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|   |  | a.                                                                                                                                                                                                                                                                                                                                                                                                                                |  | all significant deficiencies
        in the design or operation of internal controls which could adversely
        affect the registrants ability to record, process, summarize and
        report financial data and have identified for the registrants auditors
        any material weaknesses in internal controls; and 
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|   |  | b.                                                                                                                                                                                                                                                                                                                                                                                                                                |  | any fraud, whether or not material,
        that involves management or other employees who have a significant role
        in the registrants internal controls; and                                                                                                                                                         
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                
|6. |  | The registrants
        other certifying officers and I have indicated in this quarterly report
        whether or not there were significant changes in internal controls or
        in other factors that could significantly affect internal controls subsequent
        to the date of our most recent evaluation, including any corrective actions
        with regard to significant deficiencies and material weaknesses.



|Date:    November 14, 2002 | 
|-------------------------- | 



|/s/ GEORGE C. PLATISA
George C. Platisa
Chief Financial Officer | 
|--------------------------------------------------------------- | 

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