<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549


                                   FORM 10-Q


                       QUARTERLY REPORT UNDER SECTION 13
                    OF THE SECURITIES EXCHANGE ACT OF 1934


For Quarter Ended August 31, 2001                 Commission File Number 0-13394


                            VIDEO DISPLAY CORPORATION
             (Exact name of registrant as specified on its charter)


            Georgia                                            58-1217564
(State or other jurisdiction of                             (I.R.S.Employer
 incorporation or organization)                            Identification No.)



              1868 Tucker Industrial Drive, Tucker, Georgia 30084
                    (Address of principal executive offices)



Registrant's telephone number including area code:               770-938-2080

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days.


                           Yes               No   X
                                                -----


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:


           Class                               Outstanding at August 31, 2001
--------------------------                     ------------------------------
Common Stock, No Par Value                               4,746,748
<PAGE>

                            VIDEO DISPLAY CORPORATION

                                      INDEX
<TABLE>
<CAPTION>
<S>          <C>                                                                                           <C>
PART I.      FINANCIAL INFORMATION                                                                         Page

             Item 1.  Financial Statements (unaudited)

               Consolidated balance sheets - August 31, 2001 (unaudited) and
                 February 28, 2001                                                                         3-4

               Consolidated statements of income -
                 Six months ended August 31, 2001 and 2000 (unaudited)                                       5

               Consolidated statements of shareholders' equity and comprehensive income -
                 Twelve months ended February 28, 2001 and the six months
                 ended August 31, 2001 (unaudited)                                                           6

               Consolidated statements of cash flows - six months
                 ended August 31, 2001 and 2000 (unaudited)                                                7-8

               Notes to consolidated financial statements -
                 August 31, 2001 (unaudited)                                                              9-12

             Item 2.  Management's Discussion and Analysis of Financial
                        Condition and Results of Operations                                              12-15



PART II.     OTHER INFORMATION

             Item 1. Legal Proceedings                                                                      16
             Item 2. Changes in Securities                                                                  16
             Item 3. Defaults upon its Senior Securities                                                    16
             Item 4. Submission of Matters to a Vote of Security Holders                                    16
             Item 5. Other Information                                                                      16
             Item 6.  Exhibits and Reports on Form 8-K                                                      16
</TABLE>

SIGNATURES

                                       2
<PAGE>

                   Video Display Corporation and Subsidiaries
                           CONSOLIDATED BALANCE SHEETS
                                     ASSETS

<TABLE>
<CAPTION>

                                                                             August 31,             February 28,
                                                                                2001                    2001
                                                                             UNAUDITED                (NOTE A)
                                                                        ---------------------     ------------------
<S>                                                                     <C>                       <C>
Assets
Current Assets
   Cash and cash equivalents                                            $          1,842,000      $       4,137,000
   Accounts receivable, less allowance for
      possible losses of $256,000 and $289,000                                    12,549,000             11,115,000
   Inventories (Note B)                                                           30,761,000             29,778,000
   Prepaid expenses                                                                3,286,000              1,995,000
                                                                        --------------------      -----------------
Total current assets                                                              48,438,000             47,025,000
                                                                        --------------------      -----------------

Property, plant and equipment:
   Land                                                                              600,000                600,000
   Buildings                                                                       6,101,000              5,453,000
   Machinery and equipment                                                        18,309,000             17,850,000
                                                                        --------------------      -----------------
                                                                                  25,010,000             23,903,000
  Accumulated depreciation and amortization                                      (16,282,000)           (15,651,000)
                                                                        --------------------      -----------------
Net property, plant, and equipment                                                 8,728,000              8,252,000
                                                                        --------------------      -----------------

Other assets                                                                       2,515,000              2,209,000
                                                                        --------------------      -----------------

Total assets                                                            $         59,681,000      $      57,486,000
                                                                        ====================      =================
</TABLE>
The accompanying notes are an integral part of these statements.

                                       3

<PAGE>

                   Video Display Corporation and Subsidiaries
                     CONSOLIDATED BALANCE SHEETS - CONTINUED
                      LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                             August 31,             February 28,
                                                                                2001                    2001
                                                                             UNAUDITED                (NOTE A)
                                                                        ---------------------     ------------------
<S>                                                                      <C>                      <C>
Liabilities and Shareholders' Equity
Current liabilities
   Accounts payable                                                     $          6,840,000      $       5,856,000
   Accrued liabilities                                                             3,099,000              3,208,000
   Customer advances                                                                 653,000              1,652,000
   Lines of credit (Note E)                                                        3,294,000              3,017,000
   Notes payable to shareholders                                                   4,189,000              3,736,000
   Convertible subordinated debentures (Note H)                                          ---              1,775,000
   Current maturities of long-term debt (Note D)                                   2,205,000              1,470,000
                                                                        ---------------------     ------------------
Total current liabilities                                                         20,280,000             20,714,000

Convertible subordinated debentures (Note H)                                       1,000,000                     --
Lines of credit (Note E)                                                           9,836,000              8,500,000
Long-term debt, less current maturities (Note D)                                   4,426,000              5,520,000
Minority interest                                                                    156,000                153,000
                                                                        ---------------------     ------------------
Total liabilities                                                                 35,698,000             34,887,000
                                                                        ---------------------     ------------------

Commitments

Shareholders' equity
   Preferred stock, no par value - 2,000,000 shares
      authorized; none issued and outstanding                                            ---                    ---
   Common stock, no par value - 10,000,000 shares
      authorized; 4,747,000 and 4,559,000 issued and
      outstanding (Note C)                                                         3,814,000              3,034,000
Additional paid in capital                                                            92,000                 92,000
Retained earnings                                                                 21,537,000             20,952,000
Accumulated other comprehensive income                                           (1,460,000)            (1,479,000)
                                                                        ---------------------     ------------------
Total shareholders' equity                                                        23,983,000             22,599,000
                                                                        ---------------------     ------------------
Total liabilities and shareholders' equity                              $         59,681,000      $      57,486,000
                                                                        =====================     ==================
</TABLE>

The accompanying notes are an integral part of these statements.

                                       4
<PAGE>

                   Video Display Corporation and Subsidiaries
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                            Quarter Ended August 31,               Six Months Ended August 31,
                                                            2001               2000                 2001                 2000
                                                     ---------------     ----------------     ---------------      ----------------
<S>                                                  <C>                 <C>                  <C>                  <C>
Net Sales                                            $    18,821,000     $     18,061,000     $    36,300,000      $     34,681,000

Cost of goods sold                                        13,012,000           12,354,000          25,090,000            23,808,000
                                                     ---------------     ----------------     ---------------      ----------------

   Gross profit                                            5,809,000            5,707,000          11,210,000            10,873,000
                                                     ---------------     ----------------     ---------------      ----------------

Operating expenses
   Selling and delivery                                    1,711,000            1,632,000           3,179,000             3,203,000
   General and administrative                              3,143,000            2,849,000           6,200,000             5,687,000
                                                     ---------------     ----------------     ---------------      ----------------
                                                           4,854,000            4,481,000           9,379,000             8,890,000
                                                     ---------------     ----------------     ---------------      ----------------

   Operating profit                                          955,000            1,226,000           1,831,000             1,983,000
                                                     ---------------     ----------------     ---------------      ----------------

Other income (expense)
   Interest expense                                         (450,000)            (584,000)           (928,000)             (943,000)
   Other, net                                                 74,000             (181,000)             46,000              (190,000)
                                                    ----------------     ----------------     ---------------      ----------------
                                                            (376,000)            (765,000)           (882,000)           (1,133,000)
                                                    ----------------     ----------------     ---------------      ----------------

   Income before minority interest                           579,000              461,000             949,000               850,000

Minority interest expense                                      2,000               (4,000)              3,000                (3,000)
                                                      --------------     ----------------     ---------------      ----------------

   Income before income taxes                                577,000              465,000             946,000               853,000

Income tax expense                                           225,000              163,000             361,000               311,000
                                                      --------------       --------------     ---------------      ----------------


Net income                                           $       352,000     $        302,000     $       585,000      $        542,000
                                                     ===============     ================     ===============      ================


Basic earnings per share of common stock             $          0.07     $           0.06     $          0.13      $           0.12
                                                     ===============     ================     ===============      ================

Diluted earnings per share of common stock           $          0.07     $           0.06     $          0.12      $           0.12
                                                     ===============     ================     ===============      ================

Basic weighted average shares outstanding                  4,747,000            4,548,000           4,654,000             4,548,000
                                                     ===============     ================     ===============      ================

Diluted weighted average shares outstanding                5,009,000            5,041,000           5,004,000             5,108,000
                                                     ===============     ================     ===============      ================
</TABLE>
The accompanying notes are an integral part of these statements.

                                       5
<PAGE>

                  Video Display Corporation and Subsidiaries
              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND
                             COMPREHENSIVE INCOME
          For the Twelve Months Ended February 28, 2001 (Audited) and
               the Six Months Ended August 31, 2001 (Unaudited)

<TABLE>
<CAPTION>

                                                                                  Accumulated                          Current
                                                                 Additional          Other                              Period
                                                  Common           Paid In       Comprehensive       Retained       Comprehensive
                                                  Stock            Capital           Income          Earnings           Income
                                                  -----            -------           ------          --------           ------
<S>                                          <C>                <C>            <C>                  <C>             <C>
Balance at February 29, 2000                  $ 2,994,000         $ 92,000      $(1,401,000)         $20,921,000     $      ---

  Net income for the year                             ---              ---              ---               31,000         31,000
  Unrealized loss on marketable
     equity securities                                ---              ---          (29,000)                 ---        (29,000)
  Currency translation adjustment                     ---              ---          (49,000)                 ---        (49,000)
  Issuance of common stock
     under stock option plan                       40,000              ---              ---                  ---            ---
                                              -----------         --------      -----------          -----------     ----------
Balance at February 28, 2001                    3,034,000           92,000       (1,479,000)          20,952,000        (47,000)
                                              ===========         ========      ===========          ===========     ==========
  Net income for the period                           ---              ---              ---              585,000        585,000

  Issuance of common stock under stock
  option plan                                       5,000
  Conversion of debentures to common stock        775,000
  Currency translation adjustment                     ---              ---           19,000                  ---         19,000
                                              -----------         --------      -----------          -----------     ----------
Balance at August 31, 2001                    $ 3,814,000         $ 92,000      $(1,460,000)         $21,537,000     $  604,000
                                              ===========         ========      ===========          ===========     ==========
</TABLE>

                                       6
<PAGE>

                   Video Display Corporation and Subsidiaries
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                       For the Six Months Ended August 31,

<TABLE>
<CAPTION>
                                                                                2001                    2000
                                                                        -------------------       ------------------
<S>                                                                     <C>                       <C>
Net cash provided by (used in) operating activities                     $        (1,046,000)      $         (858,000)
                                                                        -------------------       ------------------

Investing activities
Purchase of property, plant, and equipment                                       (1,008,000)                (820,000)
Purchase of stock of Lexel Imaging Systems, Inc.                                         --               (3,000,000)
Purchase of assets of IST                                                                --               (1,598,000)
(Increase) decrease in other assets                                              (1,280,000)                 257,000
                                                                        -------------------       ------------------
Net cash used in investing activities                                            (2,288,000)              (5,161,000)
                                                                        -------------------       ------------------

Financing activities
Proceeds from long-term debt and lines of credit                                 15,862,000               20,665,000
Proceeds from exercise of stock option                                                5,000                       --
Proceeds on note receivable                                                              --                   51,000
Payments on long-term debt and lines of credit                                  (14,846,000)             (14,657,000)
                                                                        -------------------       ------------------
Net cash provided (used) in financing activities                                  1,021,000                6,059,000
                                                                        -------------------       ------------------

Effect of exchange rates on cash                                                     18,000                  (63,000)
                                                                        -------------------       ------------------

Net increase (decrease) in cash                                                  (2,295,000)                 (23,000)

Cash, beginning of period                                                         4,137,000                4,235,000
                                                                        -------------------       ------------------

Cash, end of period                                                     $         1,842,000       $        4,212,000
                                                                        ===================       ==================
</TABLE>
The accompanying notes are an integral part of these statements.

                                       7
<PAGE>

                  Video Display Corporation and Subsidiaries
               CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                      For the Six Months Ended August 31,

<TABLE>
<CAPTION>

                                                                                2001                    2000
                                                                        ---------------------     ------------------
<S>                                                                    <C>                        <C>
Reconciliation of Net Earnings from Operations
   to Net Cash Provided by (Used in)
   Operating Activities

Net earnings from operations                                            $            585,000      $         542,000

Adjustments to reconcile net earnings to net cash
   provided by operations:
Depreciation and amortization                                                        875,000                755,000
Change in allowance for doubtful accounts                                            (37,000)               (68,000)

Changes in working capital, net of effects
   from acquisitions:
Accounts receivable                                                               (1,248,000)            (1,649,000)
Inventories                                                                         (583,000)                (6,000)
Prepaid expenses                                                                    (414,000)              (349,000)
Accounts payable and accrued expenses                                               (227,000)               (73,000)
Minority interests                                                                     3,000                (10,000)
                                                                        --------------------      -----------------

Net cash provided by (used in) operations                               $         (1,046,000)     $        (858,000)
                                                                        ====================      =================
</TABLE>

The accompanying notes are an integral part of these statements.

                                       8
<PAGE>

                  Video Display Corporation and Subsidiaries
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

The balance sheet at February 28, 2001 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

In the opinion of management, the accompanying unaudited consolidated financial
statements reflect all adjustments "consisting of only normal accruals"
necessary to present fairly the Company's consolidated financial position as of
August 31, 2001 and the Consolidated Statement of Earnings for the six months
ended August 31, 2001 and 2000.

NOTE B - INVENTORIES

Inventories are stated at the lower of cost (first in, first out) or market.

Inventories consist of:

                                     August 31,          February 28,
                                       2001                 2001
                                 -----------------    ---------------

Raw materials                  $         4,447,000   $      4,511,000
Finished goods                          26,314,000         25,267,000
                                 -----------------    ---------------
                               $        30,761,000   $     29,778,000
                                 =================    ===============


NOTE C - STOCK DIVIDEND

In March 2001, the Company's Board of Directors declared a stock dividend of
0.20 shares of common stock for each common share outstanding. The stock
dividend was issued on April 16, 2001 to all common stock shareholders of record
as of March 31, 2001. In accordance with SFAS No. 128, "Earnings per Share," all
per share data for all periods presented in the consolidated financial
statements reflect the increase in the amount of common stock outstanding
resulting from the stock dividend.

                                       9
<PAGE>

                  Video Display Corporation and Subsidiaries
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE D - LONG-TERM DEBT

<TABLE>
<CAPTION>
Long-term debt consisted of the following:                                          August 31,               February 28,
                                                                                       2001                     2001
                                                                               -----------------          ----------------
<S>                                                                           <C>                       <C>
Term loan facility; floating interest rate based on an adjusted LIBOR
rate (6.5% as of August 31, 2001), quarterly principal payments
commenced November 1999 and maturing November 2005;
collateralized by assets of Aydin Display, Inc.                               $      5,000,000          $           5,625,000

Mortgage payable to bank; interest not to exceed 7.5% and maturing
December 2003; collateralized by land and building.                                    649,000                        671,000

Other                                                                                  982,000                        694,000
                                                                               ----------------          ---------------------
                                                                                     6,631,000                      6,990,000
Less current portion                                                                 2,205,000                      1,470,000
                                                                               ----------------          ---------------------
                                                                              $      4,426,000          $           5,520,000
                                                                               ================          =====================
</TABLE>

NOTE E - LINES OF CREDIT AND SHORT-TERM DEBT

At February 28, 2001, the Company had a $5,500,000 primary line of credit (the
"Primary Line") and a $3,500,000 secondary line of credit (the "Secondary Line")
secured by substantially all of the assets of the Company. The Primary Line's
interest rate was a fixed rate of 7.25% and borrowings are limited by eligible
accounts receivable and inventory, as defined in the Primary Line agreement. As
of February 28, 2001 the outstanding balance on the Primary Line was $5,500,000.

The Secondary Line bears interest at the bank's base rate (6.5% as of August 31,
2001) plus 0.5%. A commitment fee of 0.5% is charged on the unused portion of
the line. Borrowings under the Secondary Line are limited by eligible accounts
receivable and inventory, as defined. As of August 31, 2001, the outstanding
balance on the Secondary Line was $3,294,000. The Secondary Line agreement
contains affirmative and negative covenants including requirements related to
tangible net worth, indebtedness to tangible net worth and cash flow coverage.
Based upon the ninety day extension signed on September 30,2001, the Company is
in default of the tangible net worth covenant by approvimately $200,000.
Dividend payments, capital expenditures and acquisitions have certain
restrictions. The Secondary Line expires on December 31, 2001. The Company is
investigating alternative sources of financing for when this line expires.

In May 2000, the Company entered into a $3,000,000 note payable with its primary
bank to finance the acquisition of Lexel Imaging Systems, Inc. ("Lexel"). The
note bore interest at LIBOR (6.5% as of February 28, 2001) plus 2%. The CEO of
the Company guaranteed the note. On May 4, 2001, the Company and its bank agreed
to consolidate its existing Primary Line and the $3,000,000 Lexel acquisition
loan into one primary credit facility.

                                       10
<PAGE>

                  Video Display Corporation and Subsidiaries
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

Accordingly, as of February 28, 2001 the combined outstanding amount of
$8,500,000 related to the Primary Line ($5,500,000) and the Lexel note
($3,000,000) was classified as long-term in the consolidated balance sheet. In
May 2001, the Company and its Primary lender agreed to consolidate the
$5,500,000 line and the $3,000,000 term note into one facility that bears an
interest rate based on a floating LIBOR rate, based on a debt to EBITDA ratio,
as defined. The effective rate at August 31, 2001 was 6.920%. The note matures
on July 1, 2003. At August 31, 2001, the outstanding balance on the Primary Line
was $9,836,000. The amount of credit available for advance was reduced by
$500,000 on July 1, 2001 and will be reduced by an additional $500,000 on July
1, 2002. Advance rates will remain the same as under the previous line and
included a commitment fee of 0.25% for the unused portion. The new agreement
contains affirmative and negative covenants including requirements related to
tangible net worth and debt service coverage. Additionally, dividend payments,
capital expenditures and acquisitions have certain restrictions. Substantially
all of the Company's retained earnings are restricted based upon these
covenants.

NOTE F - SUPPLEMENTAL CASH FLOW INFORMATION

                                                         August 31,   August 31,
                                                           2001          2000
                                                       ------------  -----------
Cash paid for
Interest                                              $     928,000  $   943,000
                                                       ============   ==========
Income taxes, net of refunds                          $     235,000  $   441,000
                                                        ===========   ==========

Non Cash Transactions;
Conversion to Common Stock of Convertible Debentures  $     775,000  $       -0-
                                                       ============   ==========

NOTE G - ACQUISITION

In June 2001 the Company announced the acquisition of the outstanding common
stock of XKD Corporation ("XKD"), a manufacturer of high resolution displays
used in training, simulation, ruggedized military and industrial applications.
The purchase price includes royalty payments up to $2,000,000 based on specific
future revenues of XKD, options to acquire 10,000 shares of the Company's common
stock, and the release of indemnification of the seller of personal obligations
of corporate notes payable in the amount of $1,900,000.

The following table summarizes the unaudited pro forma consolidated results of
operations of the Company, assuming the acquisitions had occurred at the
beginning of the following fiscal periods. The pro forma financial information
is not necessarily indicative of what would have occurred had the acquisitions
been made as of that date, nor is it indicative of future results of operations.

The pro forma amounts give effect to appropriate adjustments for the fair value
of the net assets acquired, amortization of the excess of the purchase price
over the net assets acquired, interest expense, and income taxes.

                                       11
<PAGE>

                   Video Display Corporation and Subsidiaries
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                     Three months ended          Six months ended
                                                         August 31,                  August 31,
                                                    2001        2000            2001            2000
                                                    ----        ----            ----            ----
<S>                                           <C>            <C>          <C>                <C>
Net sales                                     $  18,821,000  18,675,000   $  36,562,000      38,722,000
Earnings from continuing operations                 955,000   1,254,000       1,770,000       2,035,000
Net earnings                                  $     352,000     330,000         524,000         932,000
Basic earnings per share                      $        0.08        0.09   $        0.11            0.23
Diluted earnings per share                    $        0.07        0.09   $        0.11            0.21
</TABLE>

NOTE H - RELATED PARTY TRANSACTION

In May 2001, the CEO elected to extend the maturity date of his $1,000,000
convertible subordinated debenture to May 31, 2003. All other terms of the
original agreement remain intact. In August, the Company borrowed an additional
$300,000 from the CEO to assist in short term financing needs.


                                     PART I

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

Results of Operations
---------------------

     The following table sets forth, for the three and six months ended August
31, 2001 and 2000, the percentages which selected items in the Statements of
Income bear to total revenues:

<TABLE>
<CAPTION>
                                                     Fiscal Quarter                          Six Months
                                                    Ended August 31,                      Ended August 31,
                                                2001               2000                2001              2000
                                            ------------------ ------------------ ------------------- -------------
<S>                                         <C>                <C>                <C>                 <C>
Sales
   CRT Segment
      Data Display CRT's                         15.1    %          13.7    %            16.5    %        15.8   %
      Entertainment CRT's                         8.3               10.4                  8.8             11.8
      Electron Guns and Components                1.2                2.1                  1.8              2.9
      Monitors                                   58.1               53.9                 54.1             47.8
                                            ---------          ---------          -----------         --------
         Total CRT Segment                       82.7    %          80.1    %            81.2    %        78.3
   Wholesale Consumer Parts Segment              17.3               19.9                 18.9             21.7
                                            ---------          ---------          -----------         --------
                                                100.0              100.0                100.0    %       100.0   %
</TABLE>

                                      12
<PAGE>

<TABLE>
<S>                                         <C>                <C>                <C>                 <C>
Costs and expenses
   Cost of goods sold                            69.1    %          68.4    %            69.1    %        68.6   %
   Selling and delivery                           9.1                9.0                  8.8              9.2
   General and administrative                    16.7               15.8                 17.1             16.4
                                            ---------          ---------          -----------         --------
                                                 94.9    %          93.2    %            95.0    %        94.2   %

Income from Operations                            5.1    %           6.8    %             5.0    %         5.8   %

Interest expense                                  2.4                3.2                  2.6              2.7
Other income (expense)                            0.4               (1.0)                 0.2             (0.5)
                                            ---------          ---------          -----------         --------
Income before income taxes                        3.1    %           2.6    %             2.6    %         2.5   %
Provision for income taxes                        1.2                0.9                  1.0              0.9
                                            ---------          ---------          -----------         --------

Net income                                        1.9    %           1.7    %             1.6    %         1.6   %
                                            =========          =========          ===========         ========
</TABLE>

Net sales
---------

Consolidated net sales increased $760,000 and $1,619,000 for the three and six
months ended August 31, 2001 as compared to the same period ended August 31,
2000. CRT division sales increased $1,090,000 and $2,315,000, and wholesale
division sales decreased $330,000 and $695,000 for the comparative period.

CRT division sales included an increase of $1,551,000 and $3,585,000 over the
three and six month period a year ago due to increases within the data display
and monitor segments. Offsetting declines of $461,000 and $1,271,000 for the
three and six month comparative periods were attributed primarily to the
Entertainment and Component parts divisions of the CRT segment.

The Company is the primary supplier of replacement CRTs to the entertainment
market. The decline in Entertainment sales continues to reflect the decline in
sales to major television retailers. Due to the continued decrease in retail
sales prices of mid-size television sets (25" to 30"), declines in extended
warranty sales by major television retailers have continued to occur. In turn,
the Company's entertainment division sales have been negatively impacted as a
majority of their sales within this division are for warranty related repairs.
Extended warranties on the larger size television sets (32" and up) are
anticipated to increase in volume and dollars as the demand for these sets have
increased and the CRT cost is more expensive than the smaller sized sets. This
increased volume will impact the division sales when more of these larger sets
fail under an extended warranty. This will not be a short-term occurrence but a
gradual change over the next few years as more of these larger sets enter the
market place and then fail under an extended warranty.

The increase in monitor division sales reflects increases of $1,031,000 posted
by the Company's subsidiary, Lexel Corporation in Lexington, Kentucky. These
increases are a result of increased volume due to the additions of the acquired
Raytheon and Image Sensing Technologies ("IST") product lines during the past
fiscal year. Additionally, the Company posted net sales of $433,000 from its
most recent acquisition of XKD Corporation in June 2002. Offsetting net declines
of $276,000 were spread throughout the various monitor locations. These declines
partly are the result of military contracts completed and not replaced or
replaced immediately upon completion. Additionally, declines have been
experienced in the commercial monitor market as a result of transitioning the
manufacture of the commercial monitors to Z-Axis from Aydin. During the
transition, lead times were increased causing former Aydin commercial customers
to seek other procurement alternatives. Z-Axis has taken steps to address these
issues and has been successful in reducing lead times. Additionally the Company
has allocated marketing personnel in this area in an attempt to reclaim lost
sales.

                                       13
<PAGE>

The decline in sales of the wholesale parts segment of $330,000 is attributed to
declines in consumer retail sales during the first quarter as compared to one
year ago. Sales to the larger distributors have slightly declined during the
comparative periods. Beginning in the second quarter of fiscal 2002, Fox
recognized revenues of $170,000 related to its new distribution agreement with
Applica Incorporated authorizing Fox International Ltd., Inc. ("Fox") to
distribute parts and accessories for the Black & Decker, Toaster Oven,
Profinish, Quick & Easy and Spacemaker product lines.

Gross margins
-------------

Consolidated gross profit margins decreased slightly to 30.9% from 31.6% and
30.9% from 31.4% for the three and six months ended August 31, 2001 as compared
to August 31, 2000. CRT division margins decreased to 29.2% from 31.3% and 29.5%
from 31.2% for the three and six month comparative periods. The wholesale
consumer parts increased to 38.0% from 32.7% and 36.6% from 31.6% for the three
and six month comparative periods.

The decline in CRT gross margins can be attributed to the increase in sales by
Lexel, which historically has had lower margins than other CRT segment
locations. As more volume is handled through Lexel, it is anticipated that those
margins should improve as they have from 12.1% to 19.2% for the six month
comparative periods.

Wholesale parts margins have increased due in part to higher margins on the
Black and Decker line. Additionally, margins have improved on sales to this
segment's major electronics distributor.

Operating expenses
------------------

Operating expenses as a percentage of sales have increased slightly from 24.8%
to 25.8% for the three month periods and from 25.6% to 25.9% for the six month
comparative periods.

The CRT division operating expenses declined as a percentage of sales but
increased in dollar amount by $363,000 during the comparative periods. Included
in these increases are expenses of the Company's latest acquisition, XKD, of
$130,000 and increases at Lexel of $82,000.

The wholesale consumer parts division operating expenses increased $127,000 for
the six months ended August 31, 2001 as compared to one year ago. Increased
delivery expense and marketing expenses have been the major component of the
additional costs incurred.

Interest expense
----------------

Interest expense decreased $134,000 and $15,000 for the three months and six
months ended August 31, 2001 as compared to one year ago. Overall, outstanding
debt is $179,000 lower at August 31, 2001 compared to a year ago. Interest rates
on several of the notes are based on prime or LIBOR which have declined during
the comparative periods.

Income taxes
------------

The effective tax rate for the six months ended August 31, 2001 was 38.1% as
compared to 36.5% for the same period one year ago.

Foreign currency translation
----------------------------

The Company's Mexican subsidiary reports on the basis of the functional currency
as being the US dollar. Any exchange

                                       14
<PAGE>

gains or losses due to the actual exchange of pesos and US dollars are currently
reflected in the Company's income statements. There were no significant gains or
losses for the current period reported.

Liquidity and capital resources
-------------------------------

The Company's working capital has increased to $28,158,000 at August 31, 2001
from $20,171,000 at August 31, 2000. The majority of the working capital
increase between the comparative quarters resulted from the reclassification of
the Primary Line of Credit from short term to long term in conjunction with the
new note agreement with the bank.

On May 4, 2001, the Company signed an agreement with its primary bank to
consolidate its existing Primary Line and the $3,000,000 Lexel acquisition loan
into one $10,000,000 credit facility. The interest rate is based on a floating
LIBOR rate based on a debt to EBITDA ratio, as defined. Depending on the ratio,
the LIBOR adjustment can fluctuate from 1.5% (for a ratio less than 1.75) to
3.0% (for a ratio greater than 4.25). The effective rate as of August 31, 2001
was 6.920%. The note matures on July 1, 2003. The amount of credit available for
advance was reduced by $500,000 on July 1, 2001 and additional $500,000 will be
reduced on July 1, 2002.

In May 2001, the CEO extended the maturity date of his convertible subordinated
debentures to May 31, 2003. All other terms and conditions of the original
agreement remain intact.

In June 2001, the Company acquired the outstanding stock of XKD Corporation in
exchange for future royalty payments not to exceed $800,000 to the previous
shareholder and additional royalties to a third party not to exceed $1,200,000
to be determined by sales of specific XKD products. The Company also issued
options for 10,000 shares of the Company's common stock, and indemnified the
seller of personal obligations of corporate notes payable.

There are no significant capital expenditures anticipated for fiscal 2002,
except for the building expansion planned for the Company's Teltron facility in
Birdsboro, Pennsylvania. Approximately 30,000 square feet will be added to the
existing 10,000 square feet facility. Most of the construction costs are to be
funded by a low interest industrial development loan. These costs are
anticipated to be approximately $900,000.

Forward-Looking Information
---------------------------

This report contains forward-looking statements and information that is based on
management's beliefs, as well as assumptions made by, and information currently
available to management. When used in this document, the words "anticipate",
"believe", "estimate", "intends", "will", and "expect" and similar expressions
are intended to identify forward-looking statements.

Such statements involve a number of risks and uncertainties. Among the factors
that could cause actual results to differ materially are the following: business
conditions, rapid or unexpected technological changes, product development,
inventory risks due to shifts in product demand, competition, domestic and
foreign government relations, fluctuations in foreign exchange rates, rising
costs for components or unavailability of components, the timing of orders
booked, lender relationships, and the risk factors listed from time to time in
the Company's reports filed with the Commission.

                                       15
<PAGE>

                                    PART II

Item 1.   Legal Proceedings

          No new legal proceedings or material changes in existing litigation
          occurred during the period ended August 31, 2001.

Item 2.   Changes in Securities

          None.

Item 3.   Defaults upon Senior Securities

          None.

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

          None

Item 5.   Other information

          None

Item 6.   Exhibits and Reports on Form 8-K

          The Company did not file any reports on Form 8-K during the
          quarter ended August 31, 2001.

                                       16

<PAGE>

                                  SIGNATURES

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




                                     VIDEO DISPLAY CORPORATION


October 15, 2001                By:  /s/ Ronald D. Ordway
                                     ---------------------------------------
                                     Ronald D. Ordway
                                     Chief Executive Officer



                                By:  /s/ Carol D. Franklin
                                     ---------------------------------------
                                     Carol D. Franklin
                                     Chief Financial Officer and Secretary