This effect is actually quite simple. The script below handles the whole process in just a few lines of code. It first takes a BitmapData 'snapshot' of the MovieClip your applying the effect to. Then it runs a perlin noise filter over it. The DisplacementMapFilter shifts the pixels around to create the distortion. By pushing the starting point of the noise filter, it appears to shift the displacement across the image, creating the water shimmer effect.

Here's ActionScript 2.0 version of WaterFX.as, which should reside on the top level of you AS class directory:

import flash.filters.DisplacementMapFilter; import flash.display.BitmapData; import flash.geom.Point; /* WaterFX.apply(myMovieClip); */ class WaterFX { public static function apply(mc:MovieClip) { mc.myBitmap = new BitmapData(mc._width, mc._height, false, 0); mc.myDispl = new DisplacementMapFilter(mc.myBitmap, new Point(0, 0), 1, 1, 10, 50, "ignore", 0, 1); mc.filters = [mc.myDispl]; mc.water_i = 1; mc.onEnterFrame = function(){ updateWater(this); } } public static function updateWater(mc){ mc.myBitmap.perlinNoise(20,3,2,0,false,true,1,true,[new Point(), new Point(mc.water_i, mc.water_i/8)]); mc.filters = mc.filters; mc.water_i += 1; } }

Download Files:

water_example.fla
WaterFX.as