<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              AND EXCHANGE ACT OF 1934


                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2000

                         COMMISSION FILE NUMBER: 0-23159

                          Vari-Lite International, Inc.
                          -----------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                       75-2239444
           --------                                       ----------
           (State or other jurisdiction of          (I.R.S. Employer
         incorporation or organization)                Identification No.)

           201 Regal Row, Dallas, Texas                            75247
           ----------------------------                            -----
           (Address of principal executive offices)          (Zip Code)

        Registrant's telephone number including area code: (214) 630-1963
                                                           --------------

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

     Indicate the number of shares outstanding of each of the Issuer's classes
    of common stock, as of the latest practicable date: As of February 12, 2001,
                there were 7,800,003 shares of Common Stock outstanding.

<PAGE>

                          VARI-LITE INTERNATIONAL, INC.
                     INDEX TO QUARTERLY REPORT ON FORM 10-Q
                     FOR THE QUARTER ENDED DECEMBER 31, 2000


<TABLE>
<CAPTION>

                                                                                        Page
<S>                                                                                     <C>
PART I. - FINANCIAL INFORMATION

Item 1. Financial Statements:

        Condensed Consolidated Balance Sheets as of
        September 30, 2000 and December 31, 2000..........................               3

        Condensed Consolidated Statements of Income and Comprehensive
        Income for the three months ended December 31, 1999 and 2000......               4

        Condensed Consolidated Statements of Cash Flows for
        the three months ended December 31, 1999 and 2000.................               5

        Notes to Condensed Consolidated Financial Statements..............               6

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations.........................................              11

Item 3. Quantitative and Qualitative Disclosures About Market Risk........              14

PART II. - OTHER INFORMATION

Item 1. Legal Proceedings.................................................              15

Item 6. Exhibits and Reports on Form 8-K..................................              15

SIGNATURES................................................................              16

</TABLE>

                                       2

<PAGE>


                 VARI-LITE INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                   (UNAUDITED)

                        (IN THOUSANDS EXCEPT SHARE DATA)

<TABLE>
<CAPTION>

                                                                                        SEPTEMBER 30,       DECEMBER 31,
                                                                                            2000               2000
                                                                                           ------             ------
<S>                                                                                   <C>              <C>
                                     ASSETS

CURRENT ASSETS:
   Cash............................................................................   $     4,315      $        5,947
   Receivables, less allowance for doubtful accounts of $740 and $672..............        12,369              10,285
   Inventory.......................................................................        13,695              14,921
   Prepaid expense and other current assets........................................         1,352               1,441
                                                                                       ----------        ------------
      TOTAL CURRENT ASSETS.........................................................        31,731              32,594
EQUIPMENT AND OTHER PROPERTY:
   Lighting and sound equipment....................................................       123,210              97,988
   Machinery and tools.............................................................         5,678               3,389
   Furniture and fixtures..........................................................         5,089               4,286
   Office and computer equipment...................................................        10,377              10,607
   Work in progress and raw materials inventory....................................           680                   -
                                                                                       ----------        ------------
                                                                                          145,034             116,270
      Less accumulated depreciation and amortization...............................        84,097              66,561
                                                                                       ----------        ------------
                                                                                           60,937              49,709
OTHER ASSETS.......................................................................         2,035               2,187
                                                                                       ----------        ------------
      TOTAL ASSETS.................................................................   $    94,703      $       84,490
                                                                                       ==========        ============
                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Accounts payable and accrued expenses...........................................   $    10,873      $       10,231
   Unearned revenue................................................................         3,272               1,432
   Income taxes payable............................................................            82                 693
   Current portion of long-term obligations........................................        19,599               5,627
                                                                                       ----------        ------------
      TOTAL CURRENT LIABILITIES....................................................        33,826              17,983
LONG-TERM OBLIGATIONS..............................................................        18,136              16,449
DEFERRED INCOME TAXES..............................................................           993               3,087
                                                                                       ----------        ------------
      TOTAL LIABILITIES............................................................        52,955              37,519
COMMITMENTS AND CONTINGENCIES  (Note 8)                                                         -                   -
STOCKHOLDERS' EQUITY:
   Preferred Stock, $0.10 par value (10,000,000 shares authorized; no shares                    -                   -
      issued)......................................................................
   Common Stock, $0.10 par value (40,000,000 shares authorized; 7,845,167 shares
      issued; 7,800,003 shares outstanding)........................................           785                 785
   Treasury Stock..................................................................          (186)               (186)
   Additional paid-in capital......................................................        25,026              25,026
   Stockholder notes receivable....................................................           (19)                 (7)
   Accumulated other comprehensive income (loss) - foreign currency translation
      adjustment...................................................................          (319)                490
   Retained earnings...............................................................        16,461              20,863
                                                                                       ----------        ------------

      TOTAL STOCKHOLDERS' EQUITY...................................................        41,748              46,971
                                                                                       ----------        ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...................................   $    94,703      $       84,490
                                                                                       ==========        ============

</TABLE>


                      See notes to condensed consolidation financial statements.
                                                 3
<PAGE>


                 VARI-LITE INTERNATIONAL, INC. AND SUBSIDIARIES

      CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

              FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND 2000

                                   (UNAUDITED)

                        (IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
                                                                               1999          2000
                                                                               ----          ----
<S>                                                                        <C>           <C>
Rental revenues............................................................$   23,876    $   17,922
Product sales and services revenues........................................     3,803         2,456
                                                                           ----------    ----------
   TOTAL REVENUES..........................................................    27,679        20,378
Rental cost................................................................    10,844         7,179
Product sales and services cost............................................     2,398         1,992
                                                                           ----------    ----------
   TOTAL COST OF SALES.....................................................    13,242         9,171
                                                                           ----------    ----------
   GROSS PROFIT............................................................    14,437        11,207
Selling, general and administrative expense................................     9,880         8,863
Research and development expense...........................................     1,195         1,215
                                                                           ----------    ----------
   TOTAL OPERATING EXPENSES................................................    11,075        10,078
                                                                           ----------    ----------
Gain on sale of concert sound reinforcement business.......................         -        (7,100)
                                                                           ----------    ----------
OPERATING INCOME...........................................................     3,362         8,229
Interest expense (net).....................................................     1,260         1,071
                                                                           ----------    ----------
INCOME BEFORE INCOME TAX...................................................     2,102         7,158
Income tax expense.........................................................       830         2,755
                                                                           ----------    ----------
NET INCOME.................................................................     1,272         4,403
Other comprehensive loss-foreign currency translation adjustments..........      (357)         (184)
Reclassification adjustment - sale of continental European operations......         -           993
                                                                           ----------    ----------
COMPREHENSIVE INCOME.......................................................$      915    $    5,212
                                                                           ==========    ==========
WEIGHTED AVERAGE BASIC SHARES OUTSTANDING.................................. 7,800,003     7,800,003
                                                                           ==========    ==========
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING................................ 7,800,003     7,826,066
                                                                           ==========    ==========
PER SHARE INFORMATION
BASIC AND DILUTED:
    Net income.............................................................$     0.16    $     0.56

</TABLE>




            See note to condensed consolidated financial statements.
                                       4
<PAGE>


                 VARI-LITE INTERNATIONAL, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND 2000

                                   (UNAUDITED)

                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                         1999          2000
                                                                                         ----          ----
<S>                                                                                   <C>           <C>
Cash flows from operating activities:
   Net income.......................................................................  $  1,272      $  4,403
   Adjustments to reconcile net income to net cash provided by operating activities:
      Depreciation and amortization.................................................     3,576         2,671
      Amortization of note discount and deferred loan fees..........................        47           306
      Provision for doubtful accounts...............................................        15            15
      Deferred income taxes.........................................................       235         2,094
      Gain on sale of concert sound reinforcement business..........................         -        (7,100)
      Gain on sale of equipment and other property..................................      (821)         (156)
       Net change in assets and liabilities:
        Accounts receivable.........................................................    (1,672)         (366)
        Prepaid expenses............................................................       365          (176)
        Inventory...................................................................      (284)       (1,225)
        Other assets................................................................      (109)         (232)
        Accounts payable, accrued liabilities and income taxes payable..............    (1,822)        1,532
        Unearned revenue............................................................       181        (1,507)
                                                                                      --------      --------
        Net cash provided by operating activities...................................       983           259

Cash flows from investing activities:
   Capital expenditures, including rental equipment.................................    (1,120)       (1,568)
   Proceeds from sale of concert sound reinforcement business.......................         -        11,946
   Proceeds from sale of European operations........................................         -         5,258
   Proceeds from sale of equipment..................................................     1,522           276
                                                                                      --------      --------
        Net cash provided by investing activities...................................       402        15,912

Cash flows from financing activities:
   Proceeds from issuance of debt...................................................    20,460        18,845
   Principal payments on debt.......................................................   (19,180)      (32,838)
   Proceeds from payments on stockholder notes receivable...........................         3            12
                                                                                      --------      --------
        Net cash provided by (used in) financing activities.........................     1,283       (13,981)
Effect on cash from foreign currency translation adjustment.........................       (94)         (558)
                                                                                      --------      --------
Net increase in cash during the period..............................................     2,574         1,632
Cash, beginning of period...........................................................     1,969         4,315
                                                                                      --------      --------
Cash, end of period.................................................................  $  4,543      $  5,947
                                                                                      ========      ========

SUPPLEMENTAL CASH FLOW INFORMATION
   Cash paid for interest expense...................................................  $  1,019      $  1,100
   Cash paid for income taxes.......................................................  $    473      $    492

</TABLE>




           See notes to condensed consolidation financial statements.
                                       5
<PAGE>


                 VARI-LITE INTERNATIONAL, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

                        (IN THOUSANDS EXCEPT SHARE DATA)


1. Interim Financial Information

     The accompanying unaudited condensed consolidated financial statements of
Vari-Lite International, Inc. (the "Company") have been prepared by the Company
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.

     In the opinion of management, the condensed consolidated financial
statements contain all adjustments, consisting of normal recurring adjustments,
considered necessary to present fairly the consolidated financial position,
results of operations and cash flows of the Company. The results of operations
for the three-month period ended December 31, 2000 are not necessarily
indicative of the results of operations that may be expected for any other
interim periods or for the fiscal year ending September 30, 2001.

     For further information, refer to the consolidated financial statements and
accompanying notes included in the Company's Annual Report on Form 10-K for the
year ended September 30, 2000.

2. Inventory

     Inventory consists of the following:

<TABLE>
<CAPTION>
                                            September 30,           December 31,
                                                2000                    2000
                                                ----                    ----
<S>                                         <C>                     <C>
Raw materials..............................   $12,341                $ 13,224
Work in progress...........................       698                     654
Finished goods.............................       656                   1,043
                                              -------                --------
                                              $13,695                $ 14,921
                                              =======                ========
</TABLE>

3. Segment Reporting

     The Company's chief operating decision maker is considered to be the
Company's Chief Operating Officer ("COO"). The COO reviews financial information
presented on a consolidated basis accompanied by disaggregated information about
revenues by geographic region and by product lines for purposes of making
operating decisions and assessing financial performance. The Company has three
reportable segments: North America, Europe and Asia, which are organized,
managed and analyzed geographically and operate in a single industry segment.
Information about the Company's operations for the three months ended December
31, 1999 and 2000 is presented below:

                                       6
<PAGE>


                 VARI-LITE INTERNATIONAL, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

                        (IN THOUSANDS EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                         NORTH AMERICA    ASIA     EUROPE   INTERCOMPANY    TOTAL
                                         -------------    ----     ------   ------------    -----
DECEMBER 31, 1999:
------------------
<S>                                      <C>             <C>       <C>      <C>             <C>
Net Revenues from unaffliliated
  customers.............................    $14,425      $4,245    $9,009     $      -      $27,679
Intersegment sales......................      5,277           -         -       (5,277)           -
                                            -------      ------    ------     --------      -------
  Total net revenues....................     19,702       4,245     9,009       (5,277)      27,679
Operating income .......................      2,582         895     1,857       (1,972)       3,362
Depreciation and amortization...........      3,017          47       512            -        3,576
Total assets............................     92,124       8,919    16,008       (8,508)     108,543

DECEMBER 31, 2000:
------------------
Net Revenues from unaffliliated
 customers..............................    $12,533      $4,169    $3,676     $      -      $20,378
Intersegment sales......................      1,375          35        10       (1,420)           -
                                            -------      ------    ------     --------      -------
  Total net revenues....................     13,908       4,204     3,686       (1,420)      20,378
Operating income........................      5,562       1,768       899            -        8,229
Depreciation and amortization...........      1,977          78       616            -        2,671
Total assets............................     67,289      10,191    16,298       (9,288)      84,490

</TABLE>

4. Debt

     On December 19, 1997, the Company entered into $50,000 multicurrency
revolving credit facility (the "Old Credit Facility") and canceled its existing
credit facility. As of December 31, 1999, the commitment under the Old Credit
Facility, as amended on August 25, 1999, was $44,458. Borrowings under the Old
Credit Facility were $32,200 at September 30, 2000. Subsequent to September 30,
2000, the Company used proceeds of $22,200 from the sale of the Company's
concert sound reinforcement business, the sale of the Company's continental
European rental operations and the funding of the London Bank Loan (hereinafter
defined) to reduce borrowings under the Old Credit Facility to $10,000.

     On December 29, 2000, Vari-Lite, Inc. a wholly owned subsidiary of the
Company ("Vari-Lite"), entered into a three-year $24,500 credit facility (the
"New Credit Facility") which includes a $12,000 term loan (the "Term Loan"), a
$5,000 revolving credit facility (the "Revolver") and a $3,000 term commitment
to fund capital expenditures (the "Capital Expenditure Loan"). The Revolver and
the Capital Expenditure Loan commitments will increase to $7,500 and $5,000,
respectively, by January 15, 2002, if the Company achieves specific financial
performance. The Term Loan and Capital Expenditure Loan amortize over 84 months
(subject to a balloon payment on termination of the New Credit Facility as
discussed below). Borrowings under the Revolver are subject to availability
under a borrowing base of eligible inventory and accounts receivable (as defined
in the New Credit Facility). Initially, all outstanding borrowings under the New
Credit

                                       7
<PAGE>


                 VARI-LITE INTERNATIONAL, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

                        (IN THOUSANDS EXCEPT SHARE DATA)


Facility bear interest at the lender's base rate or LIBOR, plus a rate margin
of .75% and 2.50%, respectively. Beginning on January 15, 2002, all
outstanding balances under the New Credit Facility will bear interest at the
lender's base rate or LIBOR, plus a rate margin ranging from 0.25% to 0.75%
or 2.00% to 2.50%, respectively, based upon the Company's ratio of Adjusted
Funded Debt to EBITDA (as defined in the New Credit Facility). The New Credit
Facility is guaranteed by the Company and is secured by all of the stock and
substantially all of the assets of Vari-Lite, and a pledge of 65% of the
outstanding capital stock of the Company's foreign subsidiaries. A commitment
fee of 0.25% is charged on the average daily unused portion of the New Credit
Facility. The New Credit Facility contains compliance covenants, including
requirements that the Company achieve certain financial ratios. In addition,
the New Credit Facility places limitations on annual capital expenditures and
on the ability to incur additional indebtedness, make certain loans or
investments, sell assets, pay dividends or reacquire the Company's stock. The
New Credit Facility terminates on December 31, 2003. Upon termination of the
New Credit Facility, the entire outstanding indebtedness thereunder becomes
due and payable in full.

     On November 23, 2000, the Company entered into a British pounds sterling
4,000 (USD 5,800) term loan with a United Kingdom bank (the "London Bank Loan").
The London Bank Loan, which accrues interest at the rate of 9.1% per annum and
amortizes over 48 months, is secured by all of the assets of the Company's
London operations. Other terms of the London Bank Loan include certain financial
covenants, limitations on capital expenditures and intercompany payments and the
guarantee of the Company.

     The Company has borrowed money to purchase computer equipment and office
furniture and fixtures and conventional lighting equipment. These loans are
typically amortized over three years and bear interest at various rates ranging
from 1.50% to 10.35%. Proceeds received under this type of financing were
approximately $1,879 and $1,135 for the three-month periods ending December 31,
1999 and 2000, respectively, and borrowings outstanding under this type of
financing at December 31, 1999 and 2000 were approximately $4,158 and $4,228,
respectively.

5. Net Income Per Share

     Basic earnings per share are computed based upon the weighted average
number of common shares outstanding. Diluted earnings per share reflects the
dilutive effect, if any, of stock options and warrants.

     For the three-month period ended December 31, 2000, earnings per share
excludes 708,245 stock options and 296,057 warrants which are anti-dilutive, but
includes 26,055 options which are dilutive. For the three-month period ended
December 31, 1999, earnings per share excludes 762,200 stock options and 296,057
warrants which were anti-dilutive.

6. Accounting Standards Changes

                                       8
<PAGE>


                 VARI-LITE INTERNATIONAL, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

                        (IN THOUSANDS EXCEPT SHARE DATA)


     In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." As amended by SFAS No. 137 and
SFAS No. 138, the Statement is effective for all fiscal years beginning after
June 15, 2000. SFAS No. 133, as amended, establishes accounting and reporting
standards for derivative instruments, including certain deriavative instruments
embedded in other contracts and for hedging activities. Under SFAS No. 133,
certain contracts that were not formerly considered derivatives may now meet the
definition of a derivative. The Company adopted SFAS No. 133 effective October
1, 2000. The adoption of SFAS No. 133 did not have a significant impact on the
financial position or results of operations of the Company because the Company
does not have significant derivative activity.

7. Dispositions

     On October 26, 2000, the Company sold 100% of its interest in Vari-Lite
International Europe, B.V. ("VLI Europe") and 0.4% of its interest in Vari-Lite
Production Services, SAS and Vari-Lite sold all of the VARI*LITE-Registered
Trademark- equipment used in those operations. VLI Europe owned 100% of
Vari-Lite Production Services, N.V., 99.6% of Vari-Lite Production Services, SAS
and 100% of Vari-Lite Production Services, AB. This transaction resulted in a
pre-tax charge of $3,200 which was recorded as an asset impairment in the fourth
quarter of fiscal year 2000.

     On November 17, 2000, the Company transferred substantially all of the
assets of Showco, Inc. to Clearsho, Inc. ("Clearsho"), which assumed certain of
Showco's contract liabilities, in exchange for the sole membership interest in
Clearsho. On November 17, 2000, Showco sold 100% of its interest in Clearsho
which resulted in a net pre-tax gain of $7,100.

8. Commitments, Contingencies and Legal Proceedings

     In the ordinary course of its business, the Company is from time to time
threatened with or named as a defendant in various lawsuits, including patent
infringement claims. Additionally, the Company has filed lawsuits claiming
infringements of its patents by third parties for which the Company has been
subject to counterclaims.

     In November 1999, Coemar S.p.A. and Clay Paky S.p.A. filed separate
lawsuits against the Company in the United States District Court for the
Southern District of New York. The suits were transferred to the United States
District Court for the Northern District of Texas on July 12, 2000. The lawsuits
seek declarations from the court that a certain patent of the Company is
invalid, unenforceable and/or not infringed by Coemar S.p.A. and Clay Paky
S.p.A. In December 2000, the Company negotiated a settlement with Coemar S.p.A.
and Clay Paky S.p.A, the specific terms of which are confidential, but included
a cash settlement paid to the Company and authorization for Coemar S.p.A. and
Clay Paky S.p.A to continue to sell all

                                       9
<PAGE>


                 VARI-LITE INTERNATIONAL, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

                        (IN THOUSANDS EXCEPT SHARE DATA)


existing products that were subject to the Company's patents. The lawsuits
are currently stayed pending Coemar S.p.A. and Clay Paky S.p.A's compliance
with the settlement terms.

9. Pro Forma Financial Statements (Unaudited)

     Pro forma adjustments to the condensed consolidated statement of operations
for the three months ended December 31, 1999 and 2000 reflect adjustments to
eliminate the results of continental European operations sold in October
2000 and Showco sold in November 2000. (See Note 7) and the reduction of
interest expense as a result of the decrease in debt. The Pro Forma Financial
Statements are presented for informational purposes only and do not purport to
be indicative of the results of operations that actually would have been
achieved had the disposition been consummated on the financial statement date or
for any future period.

<TABLE>
                                                                Three months ended
                                                                   December 31
                                                            ---------------------------
                                                                1999          2000
                                                                ----          ----
<S>                                                            <C>           <C>
Total revenues.........................................        $21,280       $18,752
Total cost of sales....................................          9,890         8,509
                                                               -------       -------
Gross profit...........................................         11,390        10,243
Total operating expenses...............................          9,507         9,722
                                                               -------       -------
Operating income.......................................          1,883           521
Interest expense (net).................................            995           908
                                                               -------       -------
Income (loss) before income taxes......................            888          (387)
Income tax expense (benefit)...........................            351          (153)
                                                               -------       -------
Net income (loss)......................................        $   537       $  (234)
                                                               =======       =======

</TABLE>






                                       10
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 2000 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 1999

     REVENUES. Total revenues decreased 26.4%, or $7.3 million, to $20.4 million
in the three-month period ended December 31, 2000, compared to $27.7 million in
the three-month period ended December 31, 1999. The revenue decrease was
attributable primarily to the factors set forth below.

     RENTAL REVENUES. Rental revenues decreased 24.9%, or $6.0 million, to $17.9
million in the three-month period ended December 31, 2000, compared to $23.9
million in the three-month period ended December 31, 1999. This decrease was
primarily due the sale the Company's continental European rental operations in
October 2000 and the sale of its concert sound reinforcement business in
November 2000 which accounts for $1,592 of rental revenues in the three-month
period ended December 31, 2000 compared to $6,312 in the three-month period
ended December 31, 1999.

     PRODUCT SALES AND SERVICES REVENUES. Product sales and services revenues
decreased 35.4%, or $1.3 million, to $2.5 million in the three-month period
ended December 31, 2000, compared to $3.8 million in the three-month period
ended December 31, 1999. This decrease was primarily due to the sale in November
1999 of used automated lighting equipment to the Company's Australian
distributor in connection with the conversion of that distributor to an
independent dealer.

     RENTAL COSTS. Rental cost decreased 33.8%, or $3.6 million, to $7.2 million
in the three-month period ended December 31, 2000, compared to $10.8 million in
the three-month period ended December 31, 1999. Rental cost as a percentage of
rental revenues decreased to 40.1% in the three-month period ended December 31,
2000, from 45.4% in the three-month period ended December 31, 1999. The decrease
in rental cost as a percentage of total rental revenues was primarily due to the
sale of the Company's continental European operations in October 2000 which
historically had higher rental costs than the Company's North American or Asian
operations.

     PRODUCT SALES AND SERVICES COSTS. Product sales and services cost decreased
16.9%, or $0.4 million, to $2.0 million in the three-month period ended December
31, 2000, compared to $2.4 million in the three-month period ended December 31,
1999. Product sales and services cost as a percentage of product sales and
services revenues increased to 81.1% in the three-month period ended December
31, 2000, from 63.1% in the three-month period ended December 31, 1999,
primarily due to manufacturing inefficiencies incurred during the three-month
period ended December 31, 2000, as the Company transitioned its production to
new products and lower costs associated with the sale of used automated
lighting equipment to the Company's Australian distributor in November 1999.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense decreased 10.3%, or $1.0 million, to $8.9 million in the
three-month period ended December 31, 2000, compared to $9.9 million in the
three-month period ended December 31, 1999. This expense as a percentage of
total revenues increased to 43.5% in the three-month period ended December 31,
2000, from 35.7% in the three-month period ended December 31, 1999, primarily
due to the sale of the Company's

                                       11
<PAGE>


continental European rental operations in October 2000, the sale of its
concert sound reinforcement business in November 2000 and costs related to
the closing of the Company's Hong Kong rental operations.

     RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense in the
three-month period ended December 31, 2000 was approximately the same as in the
three-month period ended December 31, 1999. However, this expense as a
percentage of total revenues increased to 6.0% in the three-month period ended
December 31, 2000, from 4.3% in the three-month period ended December 31, 1999
as a result of decreased revenues.

     INTEREST EXPENSE. Interest expense decreased 15.0%, or $0.2 million, to
$1.1 million in the three-month period ended December 31, 2000, compared to $1.3
million in the three-month period ended December 31, 1999 as a result of a lower
debt balance in the three-month period ended December 31, 2000.

     INCOME TAXES. The effective tax rate in the three-month periods ended
December 31, 2000 and 1999 were 38.5% and 39.5%, respectively. This decrease was
due to the sale of the Company's continental European rental operations which
historically had higher tax rates.

LIQUIDITY AND CAPITAL RESOURCES

     Historically, the Company has financed its operations and capital
expenditures with cash flow from operations, bank borrowings and advances from
distributors and customers. The Company's operating activities generated cash
flow of $1.0 million and $0.3 million for the three-month periods ended December
31, 1999 and 2000, respectively.

     On December 19, 1997, the Company entered into the Old Credit Facility and
canceled its existing credit facility. As of December 31, 1999, the commitment
under the Old Credit Facility, as amended on August 25, 1999, was $44.5 million.
Borrowings under the Old Credit Facility were $32.2 million at September 30,
2000. Subsequent to September 30, 2000, the Company used proceeds of $22.2
million from the sale of the Company's concert sound reinforcement business, the
sale of the Company's continental European rental operations and the funding of
the London Bank Loan to reduce borrowings under the Old Credit Facility to $10.0
million.

     On December 29, 2000, Vari-Lite entered into the New Credit Facility which
includes the $12.0 Term Loan, the $5.0 million Revolver and the $3.0 million
Capital Expenditure Loan. The Revolver and the Capital Expenditure Loan
commitments will increase to $7.5 million and $5.0 million, respectively, by
January 15, 2002, if the Company achieves specific financial performance. The
Term Loan and Capital Expenditure Loan amortize over 84 months (subject to a
balloon payment on termination of the New Credit Facility as discussed below).
Borrowings under the Revolver are subject to availability under a borrowing base
of eligible inventory and accounts receivable (as defined in the New Credit
Facility). Initially, all outstanding borrowings under the New Credit Facility
bear interest at the lender's base rate or LIBOR, plus a rate margin of .75% and
2.50%, respectively. Beginning on January 15, 2002, all outstanding balances
under the New Credit Facility will bear interest at the lender's base rate or
LIBOR, plus a rate margin ranging from 0.25% to 0.75% or 2.00% to 2.50%,
respectively, based upon the Company's ratio of Adjusted Funded Debt to EBITDA
(as defined in the New Credit Facility). The New

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Credit Facility is guaranteed by the Company and is secured by all of the
stock and substantially all of the assets of Vari-Lite, and a pledge of 65%
of the outstanding capital stock of the Company's foreign subsidiaries. A
commitment fee of 0.25% is charged on the average daily unused portion of the
New Credit Facility. The New Credit Facility contains compliance covenants,
including requirements that the Company achieve certain financial ratios. In
addition, the New Credit Facility places limitations on annual capital
expenditures and on the ability to incur additional indebtedness, make
certain loans or investments, sell assets, pay dividends or reacquire the
Company's stock. The New Credit Facility terminates on December 31, 2003.
Upon termination of the New Credit Facility, the entire outstanding
indebtedness thereunder becomes due and payable in full.

     On November 23, 2000, the Company entered into the British pounds sterling
4.0 million (USD 5.8 million) London Bank Loan. The London Bank Loan, which
accrues interest at the rate of 9.1% per annum and amortizes over 48 months, is
secured by all of the assets of the Company's London operations. Other terms of
the London Bank Loan include certain financial covenants, limitations on capital
expenditures and intercompany payments and the guarantee of the Company.

     The Company has borrowed money to purchase computer equipment and office
furniture and fixtures and conventional lighting equipment. These loans are
amortized over six months to five years and bear interest at various rates
ranging from 1.50% to 10.35%. Proceeds received under this type of financing
were approximately $1.9 million and $1.1 million for the three-month periods
ending December 31, 1999 and 2000, respectively, and borrowings outstanding
under this type of financing at December 31, 1999 and 2000 were approximately
$4.2 million and $4.2 million for both years.

     The Company's business requires significant capital expenditures. Capital
expenditures for the three months ended December 31, 1999 and 2000 were
approximately $1.1 million and $1.6 million, respectively, of which
approximately $0.9 million and $1.2 million were for rental equipment
inventories. The majority of the Company's revenues are generated through the
rental of automated lighting systems and, as such, the Company must maintain a
significant amount of rental equipment to meet customer demands.

     The Company had a working capital surplus of $5.3 million and $14.6 million
at December 31, 1999 and 2000, respectively. The Company has historically
maintained working capital deficits since the bulk of its revenue generating
assets are classified as long-term assets rather than current assets. The
working capital surplus at December 31, 2000 is primarily the result of the
refinancing of the Company's senior bank debt and the overall reduction in
outstanding debt.

     Management believes that cash flow generated from operations and borrowing
capacity under the New Credit Facility will be sufficient to meet the Company's
anticipated operating cash and capital expenditure needs for the next twelve
months. Because the Company's future operating results will depend on a number
of factors, including the demand for the Company's products and services, the
success of the Company to market, sell and support products, the level of
competition, the success of the Company's research and development programs, the
Company's ability to achieve competitive and technological advances and general
and economic conditions and other factors beyond the Company's control, there
can be no assurance that sufficient capital resources will be available to fund
the expected expansion of its business beyond such period.

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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

     This report includes "forward-looking statements" as that phrase is defined
in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. When used in this report, the words
"anticipate," "believe," "estimate," "expect," "will," "could," "may" and
similar expressions, as they relate to management or the Company, are intended
to identify forward-looking statements. Such statements reflect the current
views of management with respect to future events and are subject to certain
risks, uncertainties and assumptions, including without limitation the following
as they relate to the Company: fluctuations in operating results and
seasonality; the success of the Company to market, sell and support products
sold; technological changes; reliance on intellectual property; dependence on
the entertainment industry; competition; dependence on management; foreign
exchange risk; international trade risk; dependence on key suppliers and
dependence on manufacturing facility. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company does not feel that the market risks for the three-month period
ended December 31, 2000 substantially changed from those risks outlined for the
year ended September 30, 2000 in the Company's Form 10-K.













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PART II  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     In the ordinary course of its business, the Company is from time to time
threatened with or named as a defendant in various lawsuits, including patent
infringement claims. Additionally, the Company has filed lawsuits claiming
infringements of its patents by third parties for which the Company has been
subject to counterclaims.

     In November 1999, Coemar S.p.A. and Clay Paky S.p.A. filed separate
lawsuits against the Company in the United States District Court for the
Southern District of New York. The suits were transferred to the United States
District Court for the Northern District of Texas on July 12, 2000. The lawsuits
seek declarations from the court that a certain patent of the Company is
invalid, unenforceable and/or not infringed by Coemar S.p.A. and Clay Paky
S.p.A. In December 2000, the Company negotiated a settlement with Coemar S.p.A.
and Clay Paky S.p.A, the specific terms of which are confidential, but included
a cash settlement paid to the Company and authorization for Coemar S.p.A. and
Clay Paky S.p.A to continue to sell all existing products that were subject to
the Company's patents. The lawsuits are currently stayed pending Coemar S.p.A.
and Clay Paky S.p.A's compliance with the settlement terms.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
    (a) Exhibits

         27.1   Financial Data Schedule

    (b) Reports on Form 8-K

        A Form 8-K was filed on November 13, 2000 reporting on the sale of the
    Company's continental European operations. A Form 8-K was filed December 4,
    2000 reporting on the sale of Showco, Inc.










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SIGNATURES

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

                                     VARI-LITE INTERNATIONAL, INC.

Date:  February 14, 2001             By:  /s/ JEROME L. TROJAN III
     -------------------                --------------------------
                                          Jerome L. Trojan III
                                          Vice President - Finance,
                                          Chief Financial Officer, Treasurer
                                          and Secretary (Principal Financial
                                          and Accounting Officer)






















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