<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-Q

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the quarterly period ended FEBRUARY 28, 1998
                                       OR
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from                      to

Commission file number: 0-1461

                            THE TODD-AO CORPORATION
             (Exact name of registrant as specified in its charter)

       DELAWARE                                                13-1679856
(State or other jurisdiction                                (I.R.S. Employer
of incorporation)                                           Identification No.)


            900 N. SEWARD STREET, HOLLYWOOD, CALIFORNIA        90038
               (Address of principal executive offices)      (Zip Code)

Registrant's telephone number, including area code: (213) 962-5304

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

The number of shares of common stock outstanding at April 1, 1998 was: 
8,238,450 Class A Shares and 1,747,178 Class B Shares.

<PAGE>

THE TODD-AO CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FEBRUARY 28, 1998

<TABLE>
<CAPTION>
INDEX
-------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION                                             Page
<S>                                                                         <C>
  Item 1- FINANCIAL STATEMENTS

    The following financial statements are filed herewith:

      Consolidated Balance Sheets, February 28, 1998 and August 31, 1997     3

      Consolidated Statements of Income and Retained Earnings for the
          Six and Three Months Ended February 28, 1998 and 1997              5

      Consolidated Statements of Cash Flows for the Six Months Ended
          February 28, 1998 and 1997                                         6

      Notes to Consolidated Financial Statements for the Six Months
          Ended February 28, 1998                                            8

  Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS                    10


PART II - OTHER INFORMATION

  Item 1 - Legal Proceedings                                                13

  Item 6 - Exhibits and Reports on Form 8-K                                 13
     
           Signature                                                        13

</TABLE>


<PAGE>

                           THE TODD-AO CORPORATION
                                       
                         CONSOLIDATED BALANCE SHEETS
                            (DOLLARS IN THOUSANDS)
                                       
                                       
                                    ASSETS
<TABLE>
<CAPTION>
                                                           August 31,        February 28,
                                                           ----------        ------------
                                                              1997               1998
                                                           ----------        ------------
<S>                                                         <C>                <C>
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . .   $  5,127           $  2,779
Marketable securities . . . . . . . . . . . . . . . . . .      1,977              1,344
Trade receivables
  (net of allowance for doubtful accounts of $641 at
  February 28, 1998 and $562 at August 31, 1997)  . . . .     13,176             16,487
Inventories (first-in first-out basis)  . . . . . . . . .        625                556
Income tax receivable . . . . . . . . . . . . . . . . . .        671                671
Deferred income taxes . . . . . . . . . . . . . . . . . .        368                 12
Other . . . . . . . . . . . . . . . . . . . . . . . . . .      2,168              2,479
                                                            ---------          ---------
Total current assets  . . . . . . . . . . . . . . . . . .     24,112             24,328
                                                            ---------          ---------
INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . .        997                730
                                                            ---------          ---------
PROPERTY AND EQUIPMENT - At Cost:
Land  . . . . . . . . . . . . . . . . . . . . . . . . . .      4,270              4,270
Buildings . . . . . . . . . . . . . . . . . . . . . . . .     10,994             10,994
Leasehold improvements  . . . . . . . . . . . . . . . . .     10,203             10,250
Lease acquisition costs . . . . . . . . . . . . . . . . .      2,187              2,187
Equipment . . . . . . . . . . . . . . . . . . . . . . . .     54,707             52,143
Equipment under capital leases  . . . . . . . . . . . . .      1,540              1,417
Construction in progress  . . . . . . . . . . . . . . . .        920             11,100
                                                            ---------          ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . .     84,821             92,361
Accumulated depreciation and amortization . . . . . . . .    (27,697)           (29,763)
                                                            ---------          ---------
Property and equipment - net  . . . . . . . . . . . . . .     57,124             62,598
                                                            ---------          ---------
GOODWILL
  (net of accumulated amortization of $1,073 at
  February 28, 1998 and $602 at August 31, 1997)  . . . .     19,162             18,691
                                                            ---------          ---------
OTHER ASSETS  . . . . . . . . . . . . . . . . . . . . . .      2,056              1,834
                                                            ---------          ---------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . .   $103,451           $108,181
                                                            ---------          ---------
                                                            ---------          ---------
</TABLE>


               See notes to consolidated financial statements.

<PAGE>

                           THE TODD-AO CORPORATION
                                       
                         CONSOLIDATED BALANCE SHEETS
                            (DOLLARS IN THOUSANDS)
                                 (CONTINUED)
                                       
                                       
                     LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                           August 31,        February 28,
                                                           ----------        ------------
                                                              1997               1998
                                                           ----------        ------------
<S>                                                        <C>               <C>
CURRENT LIABILITIES:
  Accounts payable  . . . . . . . . . . . . . . . . . . .   $  5,302           $  4,933
  Accrued liabilities:
    Payroll and related taxes   . . . . . . . . . . . . .      2,507              2,692
    Interest  . . . . . . . . . . . . . . . . . . . . . .        422                660
    Equipment lease . . . . . . . . . . . . . . . . . . .        279                210
    Other   . . . . . . . . . . . . . . . . . . . . . . .      1,533              1,188
    Income taxes payable  . . . . . . . . . . . . . . . .        105              1,335
Current maturities of long-term debt  . . . . . . . . . .        578                578
Capitalized lease obligations - current   . . . . . . . .         35                  2
Deferred income . . . . . . . . . . . . . . . . . . . . .      1,459              1,400
                                                            ---------          ---------
Total current liabilities   . . . . . . . . . . . . . . .     12,220             12,998
                                                            ---------          ---------
LONG-TERM DEBT  . . . . . . . . . . . . . . . . . . . . .     25,430             22,960
DEFERRED COMPENSATION AND OTHER . . . . . . . . . . . . .        326                188
DEFERRED GAIN ON SALE/LEASEBACK . . . . . . . . . . . . .      3,437              7,313
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . .      4,659              4,637
                                                            ---------          ---------
Total liabilities . . . . . . . . . . . . . . . . . . . .     46,072             48,096
                                                            ---------          ---------

STOCKHOLDERS' EQUITY:
Common Stock:
  Class A; authorized 30,000,000 shares of $0.01 par 
  value; issued and outstanding 8,238,450 at 
  February 28, 1998 and 8,284,925 at 
  August 31, 1997 . . . . . . . . . . . . . . . . . . . .         83                 84
  Class B; authorized 6,000,000 shares of $0.01 par
  value; issued and outstanding 1,747,178 . . . . . . . .         17                 17
Additional capital  . . . . . . . . . . . . . . . . . . .     39,996             40,446
Treasury stock  . . . . . . . . . . . . . . . . . . . . .       (691)            (1,180)
Retained earnings . . . . . . . . . . . . . . . . . . . .     17,711             20,505
Unrealized gains on marketable securities and
  long-term investments . . . . . . . . . . . . . . . . .         94                 86
Cumulative foreign currency translation adjustment  . . .        169                127
                                                            ---------          ---------
Total stockholders' equity  . . . . . . . . . . . . . . .     57,379             60,085
                                                            ---------          ---------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . .   $103,451           $108,181
                                                            ---------          ---------
                                                            ---------          ---------
</TABLE>


                  See notes to consolidated financial statements.
<PAGE>

                           THE TODD-AO CORPORATION
                                       
           CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
        FOR THE SIX AND THREE MONTHS ENDED FEBRUARY 28, 1998 AND 1997
              (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 

<TABLE>
<CAPTION>
                                                       Six Months                     Three Months
                                                  --------------------------    -------------------------
                                                     1997           1998          1997            1998
                                                  ----------     -----------    ----------    -----------
<S>                                               <C>            <C>            <C>           <C> 
REVENUES .......................................  $  39,681      $   47,606     $   19,341    $   22,582
                                                  ----------     -----------    ----------    -----------
COSTS AND EXPENSES:                                          
Operating costs and other expenses .............     30,659          37,528         15,102        18,214
Depreciation and amortization ..................      3,187           4,714          1,565         2,293
Interest .......................................        327             589            106           177
Equipment lease expense - net ..................        155             111             63            84
Other expense (income) - net ...................         99            (123)            60          (221)
                                                  ----------     -----------    ----------    -----------
Total costs and expenses .......................     34,427          42,819         16,896        20,547
                                                  ----------     -----------    ----------    -----------
INCOME BEFORE PROVISION FOR INCOME TAXES .......      5,254           4,787          2,445         2,035
PROVISION FOR INCOME TAXES .....................      1,965           1,698            927           719
                                                  ----------     -----------    ----------    -----------
NET INCOME .....................................      3,289           3,089         $1,518        $1,316
                                                                                ----------    -----------
                                                                                ----------    -----------
RETAINED EARNINGS BEGINNING OF PERIOD ..........     12,267          17,711
LESS:  DIVIDENDS PAID ..........................       (268)           (295)
                                                  ----------     -----------
RETAINED EARNINGS END OF PERIOD ................  $  15,288      $   20,505
                                                  ----------     -----------
                                                  ----------     -----------
NET INCOME PER COMMON SHARE:                                 
Net income available to common stockholders ....  $   3,290      $    3,089     $    1,519    $    1,316
Effect of dilutive securities:                               
  5% convertible debentures ....................         --             159             --            75
                                                  ----------     -----------    ----------    -----------
Net income available to common stockholders                
  plus assumed conversions .....................  $   3,290      $    3,248     $    1,519    $    1,391
                                                  ----------     -----------    ----------    -----------

WEIGHTED AVERAGE SHARES                                      
  OUTSTANDING - BASIC ..........................  9,150,617      10,004,781      9,931,585     9,987,278
Effect of dilutive securities:                               
  Stock options ................................    619,719         510,835        592,214       487,096
  5% convertible debentures ....................         --         711,057             --       711,057
                                                  ----------     -----------    ----------    -----------
WEIGHTED AVERAGE SHARES                                      
  OUTSTANDING - DILUTED ........................  9,770,336      11,226,673     10,523,799    11,185,431
                                                  ----------     -----------    ----------    -----------

NET INCOME PER COMMON SHARE - BASIC ............  $    0.36      $     0.31     $     0.15    $     0.13
                                                  ----------     -----------    ----------    -----------
                                                  ----------     -----------    ----------    -----------

NET INCOME PER COMMON SHARE - DILUTED ..........  $    0.34      $     0.29     $     0.14    $     0.12
                                                  ----------     -----------    ----------    -----------
                                                  ----------     -----------    ----------    -----------
</TABLE>

                  See notes to consolidated financial statements. 
<PAGE>

                              THE TODD-AO CORPORATION
                                          
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 AND 1997
                              (DOLLARS IN THOUSANDS) 


<TABLE>
<CAPTION>

                                                             1997       1998
                                                           --------   --------
<S>                                                        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income.............................................. $  3,289   $  3,089
    Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
    Depreciation and amortization.........................    3,187      4,714
    Deferred income taxes, net............................        2        334
    Deferred compensation.................................      (40)      (138)
    Amortization of deferred gain on
      sale/leaseback transaction..........................     (736)    (1,060)
    (Gain) loss on sale of marketable securities 
      and investments.....................................       --        (49)
    (Gain) loss on disposition of fixed assets............      (23)         8
    Shares issued for stock award.........................       --         66
    Changes in assets and liabilities (net of acquisitions):
      Trade receivables...................................   (4,246)    (3,311)
      Inventories and other current assets................       20        (39)
      Accounts payable and accrued liabilities............      380       (291)
      Accrued equipment lease.............................      (20)       (69)
      Income taxes payable, net...........................      672      1,230
      Deferred income.....................................      876        (59)
                                                           --------   --------
Net cash flows provided by operating activities:..........    3,361      4,425
                                                           --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of marketable securities and investments.......   (5,901)       (38)
  Proceeds from sale of marketable securities
    and investments.......................................      527        979
  Proceeds from disposition of fixed assets...............       26          5
  Capital expenditures....................................   (6,511)   (13,189)
   Other assets...........................................     (118)        75
                                                           --------   --------
Net cash flows (used in) investing activities:............ $(11,977)  $(12,168)
                                                           --------   --------
</TABLE>
<PAGE>

                              THE TODD-AO CORPORATION
                                          
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 AND 1997
                              (DOLLARS IN THOUSANDS) 
                                    (CONTINUED)
<TABLE>
<CAPTION>

                                                             1997        1998
                                                           --------    -------
<S>                                                        <C>         <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt...........................  $  6,900    $ 6,400
  Payments of long-term debt.............................   (14,831)    (8,870)
  Payments on capital lease obligations..................      (406)       (33)
  Net proceeds from issuance of common stock.............    15,603        182
  Proceeds from sale/leaseback transaction...............        --      8,500
  Treasury stock transactions............................        --       (489)
  Dividends paid.........................................      (268)      (295)
                                                           --------    -------

Net cash flows provided by financing activities:.........     6,998      5,395
  Effect of exchange rate changes on cash................        24         --
                                                           --------    -------

NET (DECREASE) IN CASH AND
  CASH EQUIVALENTS.......................................    (1,594)    (2,348)
CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD....................................     3,385      5,127
                                                           --------    -------
CASH AND CASH EQUIVALENTS AT
  END OF PERIOD..........................................  $  1,791    $ 2,779
                                                           --------    -------
                                                           --------    -------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:

  Interest...............................................  $    475    $   303
                                                           --------    -------
                                                           --------    -------

  Income taxes...........................................  $  1,080         --
                                                           --------    -------
                                                           --------    -------
</TABLE>
<PAGE>

THE TODD-AO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 
(Dollars in Thousands, except per share amounts)       
-------------------------------------------------------------------------------

If complete notes were to accompany these statements they would be 
substantially in the same form as those to the Company's Financial Statements 
for the Year Ended August 31, 1998.  In addition the following notes are 
applicable:

1.  In the opinion of management for the Company, all adjustments (which
    comprise only normal recurring accruals) necessary for a fair presentation 
    of the results of operations have been included.

2.  The consolidated financial statements include the Company and its wholly
    owned subsidiaries.

3.  The Company has adopted Statement of Financial Accounting Standards No. 
    128 ("SFAS No. 128"), "Earnings Per Share", beginning in its second 
    quarter ending February 28, 1998 and has restated all prior periods 
    presented to comply with the provisions of SFAS No. 128.  Under SFAS No. 
    128, net income per common share is replaced by "Basic" net income per 
    common share, which excludes dilution and is computed by dividing income 
    available to common shareholders by the weighted average number of common 
    shares outstanding for the period.  "Diluted" net income per common share 
    reflects the potential dilution that could occur if securities or other 
    contracts to issue common stock were exercised or converted into common 
    stock.  When dilutive, stock options are included as share equivalents in 
    computing diluted net income per common share using the treasury stock 
    method.  Certain dilutive securities with an impact of 671,750 shares and 
    673,000 shares for the six and three months ended February 28, 1998, 
    respectively, and 351,500 shares and 703,000 shares for the six and three 
    months ended February 28, 1997, respectively, are not included in the 
    calculation of diluted net income per common share because the option's 
    exercise price was greater than the average market price of the common 
    shares.

4.  On June 20, 1997, the Company and its newly formed, wholly owned 
    subsidiary Todd-AO Hollywood Digital ("THD") acquired the assets and 
    certain liabilities of Hollywood Digital Limited Partnership ("Hollywood 
    Digital").  Hollywood Digital is a digital based post-production facility 
    providing sound and video services to the film, television and 
    advertising industries.  In consideration of the purchase, the Company 
    paid $17,761 in cash to pay down existing debt of Hollywood Digital.  The 
    Company also issued convertible subordinated notes in the amount of 
    $8,399.  The notes are convertible into the Company's Class A Common 
    Stock at the conversion price of $11.812 per share at any time before the 
    maturity date.

    The acquisition is being accounted for under the purchase method of 
    accounting. The following unaudited pro forma consolidated financial 
    information for the six months ended February 28, 1997 is presented as if 
    the acquisition had occurred on September 1, 1996.  Pro forma adjustments 
    for Hollywood Digital are primarily to non-recurring legal and other 
    non-operating costs, amortization of goodwill, interest expense on 
    borrowings in connection with the acquisition, and income taxes.
    

<TABLE>
<CAPTION>

                                                           1997
                                                          -------
         <S>                                              <C>
         Revenues...................................      $50,116
                                                          -------
                                                          -------
         Net income.................................      $ 3,857
                                                          -------
                                                          -------
         Net income per common share - Basic........      $  0.39
                                                          -------
                                                          -------
         Net income per common share - Diluted......      $  0.37
                                                          -------
                                                          -------
</TABLE>


<PAGE>

5.  In November 1997 and December 1994 the Company signed agreements with its
    bank to implement the sale/leaseback of certain equipment.  The five year
    agreements terminate on December 1, 2002 and December 30, 1999,
    respectively, and are being treated as operating leases for financial
    statements purposes.  On November 3, 1997 an aggregate of $8,500 of sound
    studio equipment was sold and leased back (lease #2).  The total deferred
    gain on the transaction to be amortized over five years is $4,937.  The
    annual lease cost is expected to be approximately $1,400.  On December 30,
    1994 an aggregate of $11,218 was sold and leased back (lease #1).  The
    total deferred gain on the transaction to be amortized over five years is
    $7,345.  The annual lease cost currently is approximately $1,500.
  
    The net equipment lease expense for the six months ended February 28, 1998 
    is as follows:
  

<TABLE>
<CAPTION>

                                        LEASE #1       LEASE #2      TOTAL
                                        --------       --------      -----
<S>                                     <C>            <C>           <C>

    Equipment lease costs...........    $ 775          $ 396         $ 1,171
    Amortization of deferred gain
      on sale of equipment..........     (737)          (323)         (1,060)
                                        -----          -----         -------
    Equipment lease expense, net....    $  38          $ (73)        $   111
                                        -----          -----         -------
                                        -----          -----         -------

</TABLE>

6.  The Company has a stock repurchase program under which 1,300,000 shares may
    be purchased from time to time in the open market or in private 
    transactions. As of February 28, 1998, 961,156 shares had been repurchased.
    831,856 of these shares have been cancelled and returned to authorized but 
    unissued status.

7.  On October 10, 1996, the Company filed a registration statement with the
    Securities and Exchange Commission.  Proceeds from the offering, net of 
    costs totaled $15,512.  The funds received were used to pay down existing 
    debt in the amount of $9,102.  The remaining funds were used in the 
    acquisition of Hollywood Digital and for other general corporate purposes.

8.  On April 6, 1998, the Company announced that the Board of Directors of
    London-based Tele-Cine Cell Group plc. ("Tele-Cine") unanimously resolved
    to recommend an offer to be made by the Company's wholly owned subsidiary,
    Todd-AO Europe Holding Company, Ltd. ("TAO Europe"), to purchase the entire
    issued and to be issued ordinary share capital of Tele-Cine for
    approximately L9,954 ($16,600).  The offer will be conditional upon
    acceptance by holders of 90% of Tele-Cine's ordinary shares.  Shareholders,
    representing 53.6% of the ordinary shares outstanding, have signed
    "irrevocable undertakings" to accept the offer.  TAO Europe is offering
    Tele-Cine shareholders 80 pence ($1.33) in cash for each share they own, or
    notes with a nominal value of 80 pence paying 4.5% interest.  Tele-Cine
    provides post-production, production and special effects services to the
    film and video industry.  The purchase offer will be funded by the
    Company's credit facility which will be amended to accommodate the terms of
    the offer.

<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
          (DOLLARS IN THOUSANDS, EXCEPT AMOUNTS PER SHARE)

1.  Material Changes in Financial Condition

    In December 1994, the Company signed agreements with its bank to implement
    the sale/leaseback of certain equipment and a long-term credit facility. An
    aggregate of $11,218 of sound studio equipment was sold and leased back on
    December 30, 1994. The sale/leaseback agreement, which terminates on 
    December 30, 1999, consists of five 1-year terms amortizing to approximately
    40%.  The agreement, amended in December 1997, provides for interest at the 
    same Libor rates and terms as the second sale/leaseback agreement (see 
    below).

    In October 1997, the Company signed a second agreement with its bank to
    implement the sale/leaseback of certain equipment for up to $10,000 and
    restated the long-term credit facility signed in December 1994. An aggregate
    of $8,500 of sound studio equipment was sold and leased back on November 3,
    1997.  The sale/leaseback agreement, which consists of five 1-year terms
    amortizing to approximately 42% with interest at Libor rates plus .75% if 
    the leverage ratio (Funded Indebtedness/EBITDA but excluding convertible
    subordinated notes issued by Company in connection with the Hollywood 
    Digital acquisition) is under 1:1 and which increases .25% for each .5 
    increase in the ratio up to Libor plus 2% if the leverage ratio is greater 
    than 2.5:1, terminates on December 1, 2002.  Under the new First Amended 
    and Restated Credit Agreement, dated as of October 20, 1997, the Company 
    may borrow up to $50,000 (with a provision for an increase to $60,000 
    requiring Bank consent and Company Board approval) in revolving loans 
    (including up to 50% in Multi-currency) until November 30, 2000.  On that 
    date and quarterly thereafter until August 31, 2002, the revolving loan 
    commitment will reduce by 6.25% to 50% of the combined loan commitment on 
    the reduction date.  The remaining 50% will reduce to nil by the expiration
    of the agreement on December 31, 2002.  Annually, the Company may request 
    an automatic extension of the revolving period of the credit facility for 
    one year which will also extend the term period and the expiration date of 
    the agreement.  The Company also has the availability of Standby Letters of
    Credit up to $2,500 under the facility.  The credit facility provides for 
    borrowings at the Bank's Reference rates (plus .125%), CD rates (plus 
    0.875%) and Libor rates (plus .75%) which increase incrementally to plus 
    1%, 2.125% and 2%, respectively, based on the leverage ratio.  The leverage
    ratios which determine the rates range from less than 1:1 to greater than 
    2.5:1.  Leverage ratios may not exceed 3:1.  The facility includes 
    commitment fees at .2% to .5% (based on the leverage ratio) per annum on 
    the unused balance of the credit facility. Other material restrictions 
    include:  the coverage ratio (cash flow/fixed charges) may not be less than
    1.25:1; Other Indebtedness or Contingent Liabilities (excluding up to 
    $25,000 in Capital or Off Balance Sheet Leases, the convertible 
    subordinated notes issued in the Hollywood Digital acquisition and 
    non-recourse debt up to $50,000 of less than 100% owned Joint Ventures) 
    may not exceed $10,000 without the Bank's approval.  Minimum Tangible Net 
    Worth is not to be less than $25,000 plus net proceeds from issuance of 
    equity plus 50% of consolidated net income subsequent to May 31, 1997.

    The credit facilities are available for general corporate purposes, capital
    expenditures and acquisitions.  Management believes that funds generated 
    from operations, proceeds from the new sale/leaseback and the borrowings 
    available under the restated credit facility will be sufficient to meet the 
    needs of the Company at least through the end of 1998.

    On October 10, 1996, the Company filed a registration statement with the
    Securities and Exchange Commission.  Proceeds from the offering, net of 
    costs totaled $15,512.  The funds received were used to pay down existing 
    debt in the amount of $9,102.  The remaining funds were used in the 
    acquisition of Hollywood Digital and for other general corporate purposes.

<PAGE>

    In June 1997, the Company used $15,760 under the credit facility and $3,000
    from the proceeds of the offering described above to acquire the assets of
    Hollywood Digital.  In November 1997, the Company used $8,500 from the
    sale/leaseback of equipment described above to pay down the credit facility
    debt.  As of February 28, 1998, the Company had $14,275 outstanding under 
    the credit facility.

    The Company expects capital expenditures of approximately $22,500 for its 
    Los Angeles, Santa Monica, New York City, Atlanta and London facilities in 
    fiscal 1998. Included in this amount is $7,500 for a new facility in Santa
    Monica, California to service primarily the advertising clients of THD.  
    These capital expenditures will be financed by credit facilities and 
    internally generated funds.

    The Company does not believe that it is currently exposed to any 
    material foreign exchange rate risk and, at present, does not have a 
    policy for managing such risk beyond the utilization of local currency 
    borrowings to fund foreign acquisitions whenever possible.
  
2.  Material Changes in Results of Operations

    SIX MONTHS ENDED FEBRUARY 28, 1998 COMPARED TO SIX MONTHS ENDED FEBRUARY 28,
    1997

    Revenues increased $7,925 or 20.0% from $39,681 to $47,606 primarily 
    due to the acquisition of Hollywood Digital in June 1997.  Video 
    services revenues from THD and the Company's other video divisions of 
    $12,525 were offset by the Company's sound services, which were down 
    compared to a particularly strong six months in the prior year.  This 
    was primarily due to downtime on three sound stages closed during the 
    period for renovation and conversion to digital technology and to 
    softness in the sound services market.

    Operating costs and other expenses increased $6,869 or 22.4% from 
    $30,659 to $37,528.  Cost increases related to the THD acquisition 
    ($8,376) and the Company's other video services divisions ($146) were 
    offset by a reduction in costs for the sound services divisions 
    related to their revenue decreases described above.

    Depreciation and amortization increased $1,527 or 47.9% primarily due 
    to the equipment and goodwill acquired with the THD acquisition.
  
    Interest expense increased $262 or 80.1% primarily due to the THD financing.

    As a result of the above, income before taxes decreased $467 from 
    $5,254 to $4,787 and net income decreased $200 from $3,289 to $3,089.

    THREE MONTHS ENDED FEBRUARY 28, 1998 COMPARED TO THREE MONTHS ENDED 
    FEBRUARY 28, 1997

    Revenues increased $3,241 or 16.8% from $19,341 to $22,582 primarily 
    due to the acquisition of Hollywood Digital in June 1997.  Video 
    services revenues from THD and the Company's other video divisions of 
    $5,641 were offset by the Company's sound services, which were down 
    compared to a particularly strong quarter in the prior year.  This was 
    primarily due to downtime on three sound stages closed for most of the 
    quarter for renovation and conversion to digital technology and to 
    softness in the sound services market.

    Operating costs and other expenses increased $3,112 or 20.6% from 
    $15,102 to $18,214.  Cost increases related to the THD acquisition 
    ($4,141) were offset by a reduction in costs for the sound services 
    divisions related to their revenue decreases described above.
  
    Depreciation and amortization increased $728 or 46.5% primarily due to 
    the equipment and goodwill acquired with the THD acquisition.

    Interest expense increased $71 or 67.0% primarily due to the THD 
    financing.

<PAGE>

    As a result of the above, income before taxes decreased $410 from 
    $2,445 to $2,035 and net income decreased $202 from $1,518 to $1,316.

    MATERIAL CHANGES IN CASH FLOWS

    For the six months ended February 28, 1998 the Company generated 
    $4,425 in cash from operating activities compared to $3,361 in 1997.  
    Cash provided by operating activities from net income of $3,089, 
    adjusted for depreciation and amortization of $3,654, was utilized 
    primarily to fund trade receivables.

    Net cash generated from operating activities supplemented by proceeds 
    from the sale/leaseback of certain equipment and borrowings from the 
    Company's credit facility totaling $14,900 were used to reinvest in 
    capital assets of the Company and to pay down long-term debt.

    OTHER BUSINESS INFORMATION

    THD is opened a separate facility in Santa Monica, California on March 
    23, 1998 to primarily service its advertising clients.  The present 
    Hollywood facility will expand its current feature and television 
    services.  

    Todd-AO UK Ltd. ("TAO UK"), which currently services eight 
    transmission feeds for Turner Entertainment Network, is in 
    negotiations to add two new feeds and upgrade two existing feeds in 
    fiscal year 1998.  This would increase transmission services provided 
    by TAO UK by approximately 40%.

<PAGE>

                            PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

    The Company is involved in litigation and similar claims incidental to 
    the conduct of its business.  None of the pending actions is 
    considered material.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

  (a).   (1)  Exhibit 27 Financial Data Schedule.





                                     SIGNATURE


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




                                             THE TODD-AO CORPORATION



   April 14, 1998                              /s/  Silas R. Cross
--------------------                         ------------------------------
        Date                                        Silas R. Cross
                                              Chief Accounting Officer