<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549

                                  FORM 10-Q/A

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


For Quarter Ended AUGUST 31, 1996               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  X       No
                                 ---         ---

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, 1996
   --------------------------          ------------------------------
   Common Stock, No Par Value                     3,907,413
<PAGE>
 
                           VIDEO DISPLAY CORPORATION


                                     INDEX


                                                                  PAGE
                                                                  ----
PART I.  FINANCIAL INFORMATION
         --------- -----------

         Item 1.  Financial Statements (unaudited)
           Consolidated balance sheets - August 31, 1996
             and February 29, 1996                                 3-4

           Consolidated statements of operations -
             Fiscal Quarter and Six Months ended
             August 31, 1996 and 1995                                5

           Consolidated statements of shareholders'
             equity - Twelve months ended February 29, 1996
             and the Six Months Ended August 31, 1996                6

           Consolidated statements of cash flows -
             Six Months Ended August 31, 1996 and 1995             7-8

           Notes to consolidated financial statements -
             August 31, 1996                                      9-11

         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
 
SIGNATURES

                                       2
<PAGE>
 
                  VIDEO DISPLAY CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                    ASSETS
<TABLE>
<CAPTION>
 
                                                As restated
                                                 August 31,   February 29,
                                                   1996           1996
                                               -------------  -------------
                                                 UNAUDITED      (NOTE B)
ASSETS
<S>                                            <C>            <C>
Current assets:
 Cash and cash equivalents (including
  restricted cash of $72,000 and $63,000)       $  1,416,000  $  1,057,000
 Notes and accounts receivable, less
  allowance for possible losses of
  $139,000                                         6,139,000     5,039,000
 Receivable from affiliates                               --       558,000
 Note receivable, net of unamortized
  discount of $36,000 and $33,000,
  respectively (Note D)                              144,000       144,000
 Inventories:
  Raw materials                                    4,170,000     3,272,000
  Finished goods                                  17,625,000    16,178,000
 Prepaid expenses                                    396,000       276,000
 Deferred income taxes                               497,000       497,000
                                                ------------  ------------
Total current assets                              30,387,000    27,021,000
 
Property, plant and equipment:
 Land                                                435,000       355,000
 Buildings                                         3,903,000     3,606,000
 Machinery and equipment                          12,748,000    11,862,000
                                                ------------  ------------
                                                  17,086,000    15,823,000
 Accumulated depreciation and amortization       (12,005,000)  (11,307,000)
                                                ------------  ------------
                                                   5,081,000     4,516,000
 
Investments (Note E)                                 464,000       622,000
 
Note receivable, net of unamortized
 discount of $86,000 and $146,000 and
 allowance for possible losses of
 $321,000 (Note D)                                   658,000       730,000
 
Goodwill, net of accumulated amortization
 of $776,000 and $729,000 (Note C)                 2,372,000     1,369,000
 
Other assets                                         226,000       161,000
                                                ------------  ------------
 
Total assets                                    $ 39,188,000  $ 34,419,000
                                                ============  ============
</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>
                                              As restated
                                               August 31,   February 29,
                                                  1996          1996
                                              ------------  -------------
                                               UNAUDITED      (NOTE B)
<S>                                           <C>           <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Note payable (Note F)                       $ 9,770,000    $ 9,089,000
  Notes payable to officers and
    shareholders (Note F)                       1,225,000        220,000
  Accounts payable                              3,780,000      2,457,000
  Accrued liabilities                           1,694,000      1,878,000
  Current maturities of long-term debt
    (Note F)                                    1,384,000      1,381,000
                                              -----------    -----------
Total current liabilities                      17,853,000     15,025,000
 
Long-term debt (Note F)                         1,694,000      2,340,000
Convertible debentures (Note C)                 2,000,000            ---
Deferred income taxes                             407,000        403,000
Minority interests                                389,000        372,000
 
Commitments and contingencies (Note G)                ---            ---
 
SHAREHOLDERS' EQUITY
  Preferred stock, no par value - shares
    authorized 2,000,000; none issued and
    outstanding                                       ---            ---
  Common stock, no par value - shares
    authorized 10,000,000; issued and
    outstanding shares 3,907,000                3,529,000      3,529,000
  Additional paid-in capital                       81,000         81,000
  Retained earnings                            14,482,000     13,655,000
  Net unrealized gain (loss) on marketable
    equity securities                            (100,000)       200,000
  Currency translation adjustments             (1,147,000)    (1,186,000)
                                              -----------    -----------
 
  Total shareholders' equity                   16,845,000     16,279,000

Total liabilities and shareholders' equity    $39,188,000    $34,419,000
                                              ===========    ===========
</TABLE> 

       The accompanying notes are an integral part of these statements.

                                       4
<PAGE>
 
                  VIDEO DISPLAY CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
            For the Fiscal Quarter and Six Months Ended August 31,
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                        As restated                 As restated
                                            1996          1995          1996          1995
                                        ------------  ------------  ------------  ------------
<S>                                     <C>           <C>           <C>           <C>
Net sales                               $12,961,000   $11,492,000   $25,059,000   $23,443,000
Cost of goods sold                        8,376,000     7,236,000    16,435,000    14,698,000
                                        -----------   -----------   -----------   -----------
     Gross profit                         4,585,000     4,256,000     8,624,000     8,745,000
 
Operating expenses:
  Selling and delivery                    1,111,000     1,108,000     2,052,000     2,260,000
  General and administrative              2,372,000     2,233,000     4,808,000     4,477,000
                                        -----------   -----------   -----------   -----------
                                          3,483,000     3,341,000     6,860,000     6,737,000
 
     Operating profit                     1,102,000       915,000     1,764,000     2,008,000
 
Other income (expense)
  Interest expense                         (331,000)     (273,000)     (614,000)     (565,000)
  Other, net                                 (1,000)      (58,000)        9,000       (46,000)
                                        -----------   -----------   -----------   -----------
                                           (332,000)     (331,000)     (605,000)     (611,000)
 
     Income before minority interest        770,000       584,000     1,159,000     1,397,000
Minority interest                             9,000        11,000        14,000        12,000
                                        -----------   -----------   -----------   -----------
     Income before income taxes             761,000       573,000     1,145,000     1,385,000

Income taxes                                187,000       208,000       318,000       423,000
                                        -----------   -----------   -----------   -----------
     Net Income                         $   574,000   $   365,000   $   827,000   $   962,000
                                        ===========   ===========   ===========   ===========

Earnings per share of common stock      $      0.14   $      0.09   $      0.21   $      0.24
                                        ===========   ===========   ===========   ===========

Weighted average shares outstanding       3,986,000     4,017,000     3,986,000     4,017,000
                                        ===========   ===========   ===========   ===========                           
</TABLE> 

       The accompanying notes are an integral part of these statements.

                                       5
<PAGE>
 
                  VIDEO DISPLAY CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
               For the Twelve Months Ended February 29, 1996 and
                     the Six Months Ended August 31, 1996
<TABLE>
<CAPTION>
                                                                                            Net Unrealized
                                                                                            Gain (Loss) on
                                                                    Foreign                   Concurrent
                                                                   Currency     Additional    Marketable
                                         Common      Retained     Translation    Paid In        Equity
                                          Stock      Earnings     Adjustments    Capital      Securities
                                       -----------  -----------  -------------  ----------  ---------------
<S>                                    <C>          <C>          <C>            <C>         <C>
Balance at February 28, 1995           $3,821,000   $11,876,000   $(1,020,000)        --     $ (81,000)
  Net earnings for year                        --     1,779,000            --         --            --
  Contribution of capital from                                                              
    gain realized on sale of stock                                                          
    by officer                                 --            --            --    $81,000            --
  Repurchase and retirement of                                                              
    168,000 shares of common stock       (292,000)           --            --         --            --
  Currency translation adjustment              --            --      (166,000)        --            --
  Net unrealized gain on noncurrent                                                         
    marketable equity securities               --            --            --         --       281,000
                                       ----------   -----------  ------------    -------     ---------
Balance at February 29, 1996           $3,529,000   $13,655,000   $(1,186,000)   $81,000     $ 200,000
                                                                                            
  Net income for year to date                  --       827,000            --         --            --
  Currency translation adjustment              --            --        39,000         --            --
  Unrealized loss on marketable                                                             
  equity securities                            --            --            --         --      (300,000)
                                       ----------   -----------  ------------    -------    ----------
                                       $3,529,000   $14,482,000   $(1,147,000)   $81,000    $(100,000)
                                       ==========   ===========   ===========    =======    ========= 
</TABLE> 

       The accompanying notes are an integral part of these statements.

                                       6
<PAGE>
 
                           VIDEO DISPLAY CORPORATION
                           STATEMENTS OF CASH FLOWS 
                      For the Six Months ended August 31,
<TABLE>
<CAPTION>
                                                  As restated
                                                      1996          1995
                                                  -----------    -----------
<S>                                               <C>            <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES         $   504,000    $ 2,036,000
 
INVESTING ACTIVITIES
 
Purchase of property, plant and equipment            (262,000)      (119,000)
Purchase of investment                                    ---       (157,000)
Increase in investments                                   ---         37,000
Teltron acquisition                                   (40,000)           -0-
Z-Axis acquisition - cash received                    150,000            -0-
(Increase) decrease in other assets                   (64,000)           -0-
                                                  -----------    -----------
Net cash used in investing activities                (216,000)      (239,000)
 
FINANCING ACTIVITIES
 
Proceeds from long-term debt and
  lines of credit                                  11,426,000     16,231,000
Proceeds on note receivable                            90,000         75,000
Payments on long-term debt and
  lines of credit                                 (11,283,000)   (17,224,000)
Repurchase of common stock                                ---       (291,000)
Contribution of capital from
  sale of stock by officer                                            81,000
Payments on note to shareholder                           ---            -0-
                                                  -----------    -----------
Net cash used in financing activities                 233,000     (1,128,000)
 
Effect of exchange rates on cash                     (162,000)        98,000
                                                  -----------    -----------
 
Net increase (decrease) in cash                       359,000        767,000
 
Cash, beginning of period                           1,057,000        104,000
                                                  -----------    -----------
 
Cash, end of period                               $ 1,416,000    $   871,000
                                                  ===========    ===========
</TABLE>

       The accompanying notes are an integral part of these statements.

                                       7
<PAGE>
 
                           VIDEO DISPLAY CORPORATION
                           STATEMENTS OF CASH FLOWS
                      For the Six Months ended August 31,

                                                     As restated
                                                         1996          1995
                                                     -----------   -----------
RECONCILIATION OF NET EARNINGS FROM
  CONTINUING OPERATIONS TO NET CASH
  PROVIDED BY (USED IN) OPERATING
  ACTIVITIES

Net earnings from continuing operations              $   827,000   $   962,000

ADJUSTMENTS TO RECONCILE NET EARNINGS
  TO NET CASH PROVIDED BY OPERATIONS:
  Depreciation and amortization                          618,000       912,000
  Amortized interest on note receivable                  (18,000)      (21,000)
  Decrease in allowance for doubtful accounts                ---        (2,000)
                                                     -----------   -----------

CHANGES IN OPERATING ASSETS AND LIABILITIES
  NET OF EFFECTS FROM ACQUISITIONS:
  (Increase) decrease in accounts receivable             140,000      (392,000)
  Increase in inventory                               (1,183,000)     (926,000)
  (Increase) decrease in prepaid expenses                (98,000)       54,000
  Increase (decrease) in accounts payable
    and accrued expenses                                (201,000)    1,428,000
  Increase in minority interest                           17,000        21,000
                                                     -----------    ----------

NET CASH PROVIDED BY (USED IN) CONTINUING
  OPERATIONS                                         $   504,000   $ 2,036,000
                                                     ===========   ===========

NONCASH INVESTING AND FINANCING ACTIVITIES
------------------------------------------
  Demand note payable issued in conjunction
    with Teltron acquisition                         $   900,000           ---
  Convertible debentures issued in conjunction
    with Z-Axis acquisition                          $ 2,000,000           ---

                                       8
<PAGE>
                  VIDEO DISPLAY CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE A - RESTATEMENT OF PREVIOUS FILING

The three and nine months ended November 30, 1996 results have been restated to
reflect the reduction of gross margin and the related tax effects which are
attributed primarily to the consumer parts division. The adjustment resulted in
the reduction of the carrying value of product inventories.

The following table identifies the affected accounts:

<TABLE>
<CAPTION>
                              August 31, 1996                      August 31, 1996
                           As Previously Reported     Adjusted       As Restated
                           ----------------------     --------     ---------------
<S>                        <C>                        <C>          <C>
Balance Sheet
  Current assets                $30,351,000           $  36,000      $30,387,000
  Total assets                  $39,152,000           $  36,000      $39,188,000
  Current liabilities           $17,438,000           $ 415,000      $17,853,000
  Shareholders' equity          $17,224,000           $(379,000)     $16,845,000
  Total liabilities and
    shareholders' equity        $39,152,000           $  36,000      $39,188,000
</TABLE>

<TABLE>
<CAPTION>
                                        Three Months Ended                                  Six Months Ended
                                         August 31, 1996                                    August 31, 1996
                              As                                                  As
                          Previously                            As            Previously                            As
                           Reported        Adjusted          Restated          Reported        Adjusted          Restated
                         -----------       ---------       -----------       -----------       ---------       -----------
<S>                      <C>               <C>             <C>               <C>               <C>             <C>
Net sales                $12,961,000       $    --         $12,961,000       $25,059,000       $    --         $25,059,000
Cost of goods sold         8,089,000         287,000         8,376,000        15,824,000         611,000        16,435,000
Operating expenses         3,483,000            --           3,483,000         6,860,000            --           6,860,000
Other income
  (expense)                 (332,000)           --            (332,000)         (605,000)           --            (605,000)
Income taxes                 296,000        (109,000)          187,000           550,000        (232,000)          318,000
Net income               $   752,000       $ 178,000       $   574,000       $ 1,206,000       $ 379,000       $   827,000
Earnings per share       $      0.18       $   (0.04)      $      0.14       $      0.30       $    0.09       $      0.21
</TABLE>

                                       9

<PAGE>
                           VIDEO DISPLAY CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE B - 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.

Investments in 50% or less-owned affiliated companies are accounted for on the
equity method.

The balance sheet at February 29, 1996 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, 1996 and the Consolidated Statement oF Earnings for the six months
ended August 31, 1996 and 1995.


NOTE C - ACQUISITIONS

In April 1996, the Company exercised its option to purchase substantially all
the assets and assume the liabilities oF Teltron Technologies, Inc. ("TTI") for
a purchase price of $963,000 consisting of cash of $63,000 and a demand note
payable of $900,000 with interest payable monthly at prime plus one percent.

June 1, 1996, the Company acquired 100% of the stock of Z-Axis, Inc. The Company
issued $2,000,000 in face value of 8% five year convertible subordinated
debentures in payment of the acquisition. The debentures have a 5-year maturity
date and can be converted into common shares based upon the quoted fair market
value of the Company's stock on the date such conversion is elected. An
additional amount of debentures may be due based upon a performance contingency
formula during the years of February 28, 1997, 1998, and 1999 inclusive.

                                       10
<PAGE>
                  VIDEO DISPLAY CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


PRO FORMA CONSOLIDATED RESULTS OF OPERATIONS
--------------------------------------------

The following table summarizes unaudited pro forma consolidated results of
operations of the Company, assuming the acquisitions had occurred at the
beginning of each of the following periods:

<TABLE>
<CAPTION>
                              Three months ended             Six months ended
                                   August 31,                    August 31,
                              1996           1995           1996           1995
                              ----           ----           ----           ----
<S>                       <C>            <C>            <C>            <C>
Net sales                 $12,961,000    $12,546,000    $26,093,000    $25,352,000
Earnings from cont. 
  operations              $ 1,102,000    $ 1,127,000    $ 1,938,000    $ 2,290,000    
Net earnings              $   574,000    $   497,000    $   935,000    $ 1,138,000
Net earnings per share    $      0.14    $      0.12    $      0.24    $      0.28
</TABLE>


NOTE D - SETTLEMENT OF LITIGATION

The Company and Global Products, Inc. ("Global") entered into a settlement
agreement ("Settlement"), effective February 16, 1995 in which both parties
agreed to dismiss all litigation, claims and counter claims related to the
dispute between the two parties. The settlement contained provisions whereby
certain assets, previously owned by Summit Organization, Ltd., Global and its
affiliates, were transferred to the Company.

In conjunction with the above settlement, the Company received an unsecured note
receivable with a face value of $1,500,000 due in monthly installments of
$15,000 over a term of 100 months. The note is non-interest bearing for the
first 50 payments and interest bearing, at prime plus 1% over the remaining 50
payments. As of August 31, 1996, the note is recorded at a total of $802,000,
net of its discount and allowance.


NOTE E - MARKETABLE EQUITY SECURITIES AND INVESTMENTS

At February 29, 1996, the Company owned 266,000 shares of MicroTel
International, Inc. (MOL) which it accounts for as an available for sale
security. On September 3, 1996, in a move from the American Stock Exchange to
the NASDAQ Small Cap market, Microtel recognized a 1 for 5 reverse split
reducing the Company's ownership to 53,200 shares. Microtel's market value was
$166,000 and $465,000 at August 31, 1996 and February 29, 1996, respectively. In
accordance with SFAS 115, the Company has reflected unrealized gains and losses
on the MicroTel shares as a separate component of shareholders' equity.

                                       11
<PAGE>
                  VIDEO DISPLAY CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE F - LONG-TERM DEBT

<TABLE>
<CAPTION>
                                                                                   August 31,    February 29,
                                                                                   ----------    ------------
<S>                                                                                <C>           <C>
Long-term debt consisted of the following:

Term loan facility                                                                 $2,400,000     $2,800,000

Note payable to bank; quarterly principal payments of $10,000 plus interest at
  86% of prime (8.25% at August 1996); collateralized by land, building and
  equipment with a net book value of $660,000 at August 31, 1996                       59,000         69,000

Mortgage payable to bank; monthly principal payments of $5,000 plus interest at
  prime plus 1%; balloon payment of outstanding principal due October 1, 1996;
  collateralized by land and building with a net book value of
  $1,009,000 at August 31, 1996                                                       240,000        269,000

Note payable to industrial development authority; monthly payment of $4,000
  including interest at 6.5%; collateralized by land and building with a net 
  book value of $528,000 at August 31, 1996                                           200,000        217,000

Note payable to bank; monthly principal payments of $24,000 including interest
  at 9%; collateralized by computer equipment with a net book value of
  $505,000 at August 31, 1996                                                          51,000        154,000

Note payable to bank; monthly payment of $8,000 plus interest at prime plus 1%; 
  collateralized by machinery and equipment with a net book
  value of $400,000 at August 31, 1996                                                  7,000         53,000

Note payable to bank; monthly payment of $2,000 plus interest at prime plus 1%;
  collateralized by land and buildings with a net book value of $183,000               91,000        111,000

Other                                                                                  30,000         48,000
                                                                                   ----------     ----------
                                                                                    3,078,000      3,721,000
Less current portion                                                                1,384,000      1,381,000
                                                                                   ----------     ----------
                                                                                   $1,694,000     $2,340,000
                                                                                   ==========     ==========
</TABLE>

                                       12
<PAGE>
                  VIDEO DISPLAY CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE F - LONG-TERM DEBT (Continued)

On April 1, 1996, the Company acquired substantially all the assets and
assumed all the liabilities of Teltron Technologies, Inc. in exchange for a
demand note payable to an officer and shareholder of the Company in the amount
of $900,000 with interest payable monthly at prime plus one percent and cash of
$63,000.


NOTE G - CONTINGENCIES

On June 10, 1995, the Company and its principal shareholder were named in
an Administrative Order issued by the Environmental Protection Division (EPD) of
the Georgia Department of Natural Resources regarding the investigation and
removal of hazardous substances on certain property located in Atlanta, Georgia
which the principal shareholder partially leased to the Company. The Order
imposed obligations which are basically the same as those set forth in a Consent
Order which was entered into in 1994 between the EPD and a former owner of the
property. The former owner essentially took responsibility for the hazardous
materials and agreed to investigate and remove the substances. Due to the
acceptance of responsibility by the former owner, management considered this
matter resolved and consequently previous disclosure was not provided.

During the quarter ending August 31, 1996, the Company learned that the EPD
informed the former owner that it had violated the Consent Order and commenced
its own clean-up activities through the use of an independent contractor. The
former owner strongly denies any violations under the Order. The EPD may attempt
to pursue reimbursement of its clean-up expenses from the former owner, the
Company, the principal shareholder, or any combination of these persons and
possibly others. The amount of any liability, if any, associated with this
potential claim is not currently determinable. Management believes that if any
claim is made by EPD, the Company would present a strong defense based upon the
disparity between the location of the CRT storage areas and the hazardous
substances discovered on the property and the lack of evidence that any
hazardous substances were or could have been released by the Company's CRTs.

                                       13
<PAGE>
                                    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 months ended August 31, 1996 and
1995, 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,
                                  Restated             Restated
                                   1996      1995        1996       1995
                                   ----      ----        ----       ----
<S>                               <C>       <C>         <C>        <C>
Sales
  CRT and components               51.4%      47.4%      49.6%      48.1%
  Wholesale electronic parts       48.6       52.6       50.4       51.9
                                  -----      -----      -----      -----
                                  100.0%     100.0%     100.0%     100.0%
                                  =====      =====      =====      =====
Cost and expenses
  Cost of goods sold               64.6%      63.0%      65.6%      62.7%
  Selling and delivery              8.6        9.6        8.2        9.6
  General and administrative       18.3       19.4       19.2       19.1
                                  -----      -----      -----      -----
                                   91.5       92.0       93.0       91.4
Income from Operations              8.5        8.0        7.0        8.6
Interest expense                   (2.6)      (2.5)      (2.5)      (2.5)
Other income (expense)               --       (0.5)        --       (0.2)
                                  -----      -----      -----      -----
  Income before income taxes        5.9        5.0        4.5        5.9
Provision for income taxes          1.4        1.8        1.2        1.8
                                  -----      -----      -----      -----
Net income                          4.5%       3.2%       3.3%       4.1%
                                  =====      =====      =====      =====
</TABLE>


NET SALES
---------

Consolidated net sales increased $1,469,000 or 12.8% for the three months
ended August 31, 1996 as compared to the same period one year ago. Consolidated
net sales increased by $1,616,000 or 6.9% for the six month period ended August
31, 1996 as compared to the six months ended August 31, 1995.

CRT sales increased $1,210,000 or 22.2% and $1,153,000 or 10.2% for the
three and six months ended August 31, 1996 as compared to August 31, 1995.

Wholesale parts sales increased $259,000 or 4.3% and $463,000 or 3.8% for
the same comparative periods.

                                       14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS - (Continued)

The increase of CRT sales can be attributed to the addition of two new
subsidiaries added in fiscal 1997. The new subsidiaries added $1,483,000 and
$1,653,000 to the three and six months ended August 31, 1996, respectively.

The net increase in wholesale parts sales includes increases of $1,363,000
in sales of replacement parts to major electronics distributors in the six
months ended August 31, 1996 compared to one year ago. The fire and safety
product line has added $390,000 year to date over one year ago. The offsetting
declines of $1,290,000 reflect the growing trend of small distribution companies
and consumer shops being absorbed or eliminated by large discount chains.

GROSS MARGINS
-------------

Consolidated gross margins as a percentage of sales were 35.4% verses
37.0% for the three months ended August 31, 1996 as compared to August 31, 1995.
Gross margins were 34.4% versus 37.3% for the same comparative six month
periods. The decline in margins can be attributed primarily to the consumer
parts division. While sales of replacement parts to major electronics
distributors increased $1,363,000 in the six months ended May 31, 1996, those
sales are at considerably lower margins than those generated from sales to other
dealer and end user consumers.

OPERATING EXPENSES
------------------

Selling and general and administrative expenses increased slightly in
dollar amounts in the three and six month comparative periods, but decreased as
a percentage of sales from 29% to 26.9% and 28.7% to 27.4% for the three and six
months ended August 31, 1996 and 1995.

INTEREST EXPENSE
----------------

Interest expense increased $58,000 for the three months and $49,000 for
the six months ended August 31, 1996 compared to the same periods a year ago.
There was a reduction of benefit of $82,000 year to date due to the expiration
of the interest swap agreements in May 1996, comparatively. Additional interest
expense was incurred due to the increased debt of $2,900,000 issued in
conjunction with the two acquisitions completed in the first half of this year.

INCOME TAXES
------------

The Company's effective tax rate for the second quarter of fiscal 1997
was 24.6% as compared to 36.3% for the same period a year ago. The effective tax
rate for the six months ended August 31, 1996 compared to August 31, 1995 was
27.8% versus 30.6%. The second quarter of fiscal 1997 reflected higher income
generated by foreign subsidiaries whereas the first quarter of fiscal 1996
reflected higher foreign income. The year to date figures are comparative. The
foreign subsidiary has a tax loss carry forward which is applicable to these
earnings.

                                       15
<PAGE>
FOREIGN CURRENCIES
------------------

The Company recorded a $39,000 increase to shareholders' equity in the
first six months of fiscal 1997 related primarily to the Company's Mexican
facility and the effects on its financial statements calculated using the
Mexican peso as its functional currency. The peso rebounded slightly in the
first quarter and remained stable in the second quarter accounting for the gain
reported.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Company's working capital was $12,534,000 at August 31, 1996 as compared to
$11,996,000 at February 29, 1996.

Net cash provided by operating activities for the six months ended August 31,
1996 was $504,000 on net income of $1,206,000.

Capital expenditures for fiscal 1997 are not anticipated to be significant other
than the leasehold improvements and moving costs associated with the relocation
of the Arizona electron gun facility to Stone Mountain, Georgia. Those
relocation costs are estimated to be $262,000.

In fiscal 1995, the Company entered into a new loan agreement with the bank
providing a $4,000,000 five year term loan and a one year $10,000,000 revolving
line of credit. The revolver has been extended through October 31, 1996. The
Company does not anticipate problems in the renegotiation of the debt.

In April 1996, the Company exercised its option to purchase substantially all
the assets and assume the liabilities of Teltron Technologies, Inc. ("TTI") from
officers and shareholders of the Company for cash and a demand note payable of
$900,000 as discussed in Note B of the financial statements.

On June 1, 1996, the Company acquired 100% of the stock of Z-Axis, Inc. The
Company issued $2,000,000 of 8% convertible subordinated debentures in payment
for the acquisition as discussed in Note B of the financial statements. Z-Axis,
Inc., founded in 1989 with strong support of the Company's management,
manufactures and markets specialty monochrome and color CRT monitor assemblies.

The Company is currently bidding on sales contracts for additional revenues
which could significantly increase its requirements for working capital. It is
the Company's intent to finance its short term capital requirements through its
existing bank borrowing relationships; however, longer term sources of more
permanent capital may be required if certain larger contracts are awarded to the
Company.

                                       16
<PAGE>
                                    PART II

ITEM 1.  LEGAL PROCEEDINGS

On June 10, 1995, the Company and its principal shareholder were named in an
Administrative Order issued by the Environmental Protection Division (EPD) of
the Georgia Department of Natural Resources regarding the investigation and
removal of hazardous substances on certain property located in Atlanta, Georgia
which the principal shareholder partially leased to the Company. The Order
imposed obligations which are basically the same as those set forth in a Consent
Order which was entered into in 1994 between the EPD and a former owner of the
property. The former owner essentially took responsibility for the hazardous
materials and agreed to investigate and remove the substances. Due to the
acceptance of responsibility by the former owner, management considered this
matter resolved and consequently previous disclosure was not provided.

During the quarter ending August 31, 1996, the Company learned that the EPD
informed the former owner that it had violated the Consent Order and commenced
its own clean-up activities through the use of an independent contractor. The
former owner strongly denies any violations under the Order. The EPD may attempt
to pursue reimbursement of its clean-up expenses from the former owner, the
Company, the principal shareholder, or any combination of these persons and
possibly others. The amount of any liability, if any, associated with this
potential claim is not currently determinable. Management believes that if any
claim is made by EPD, the Company would present a strong defense based upon the
disparity between the location of the CRT storage areas and the hazardous
substances discovered on the property and the lack of evidence that any
hazardous substances were or could have been released by the Company's CRTs.


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 six months ended August 31, 1996.

                                       17
<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



July 3, 1997                           By:  /s/ Ronald D. Ordway
                                           ------------------------
                                            Ronald D. Ordway               
                                            Chief Executive Officer
                               
                               
                               
                                       By:  /s/ Carol D. Franklin  
                                           ------------------------
                                            Carol D. Franklin
                                            Chief Financial Officer