<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 NOVEMBER 30, 1997
                                          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 Identification No.)
of incorporation)

         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 January 5, 1998 was:
8,248,970 Class A Shares and 1,747,178 Class B Shares.


<PAGE>

THE TODD-AO CORPORATION

QUARTERLY REPORT ON FORM 10-Q

NOVEMBER 30, 1997

INDEX
--------------------------------------------------------------------------------

PART I - FINANCIAL INFORMATION                                              Page

  Item 1- FINANCIAL STATEMENTS

     The following financial statements are filed herewith:

       Consolidated Balance Sheets, November 30, 1997 and August 31, 1997     3

       Consolidated Statements of Income and Retained Earnings for the
          Three Months Ended November 30, 1997 and 1996                       5

       Consolidated Statements of Cash Flows for the Three Months Ended
          November 30, 1997 and 1996                                          6

       Notes to Consolidated Financial Statements for the Three Months
          Ended November 30, 1997                                             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


                                          2
<PAGE>

                              THE TODD-AO CORPORATION

                            CONSOLIDATED BALANCE SHEETS
                               (DOLLARS IN THOUSANDS)


                                       ASSETS


                                                       AUGUST 31, NOVEMBER 30,
                                                       ---------- ------------
                                                         1997         1997
                                                       ---------- ------------

CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . . . . .     $    5,127   $    3,539
Marketable securities. . . . . . . . . . . . . . .          1,977        1,783
Trade receivables
 (net of allowance for doubtful accounts of $633 at
 November 30, 1997 and $562 at August 31, 1997)  .         13,176       15,763
Inventories (first-in first-out basis) . . . . . .            625          588
Income tax receivable. . . . . . . . . . . . . . .            671          671
Deferred income taxes. . . . . . . . . . . . . . .            368          359
Other. . . . . . . . . . . . . . . . . . . . . . .          2,168        2,694
                                                       ----------   ----------
Total current assets . . . . . . . . . . . . . . .         24,112       25,397
                                                       ----------   ----------
INVESTMENTS. . . . . . . . . . . . . . . . . . . .            997          736
                                                       ----------   ----------

PROPERTY AND EQUIPMENT - At Cost:
Land . . . . . . . . . . . . . . . . . . . . . . .          4,270        4,270
Buildings. . . . . . . . . . . . . . . . . . . . .         10,994       11,045
Leasehold improvements . . . . . . . . . . . . . .         10,203       10,239
Lease acquisition costs. . . . . . . . . . . . . .          2,187        2,187
Equipment. . . . . . . . . . . . . . . . . . . . .         54,707       51,298
Equipment under capital leases . . . . . . . . . .          1,540        1,540
Construction in progress . . . . . . . . . . . . .            920        5,697
                                                       ----------   ----------
Total. . . . . . . . . . . . . . . . . . . . . . .         84,821       86,276
Accumulated depreciation and amortization. . . . .        (27,697)     (27,902)
                                                       ----------   ----------

Property and equipment - net . . . . . . . . . . .         57,124       58,374
                                                       ----------   ----------
GOODWILL
 (net of accumulated amortization of $845 at
 November 30, 1996 and $602 at August 31, 1997). .         19,162       18,967
                                                       ----------   ----------
OTHER ASSETS . . . . . . . . . . . . . . . . . . .          2,056        2,583
                                                       ----------   ----------
TOTAL. . . . . . . . . . . . . . . . . . . . . . .     $  103,451   $  106,057
                                                       ----------   ----------
                                                       ----------   ----------


                  See notes to consolidated financial statements.


                                          3
<PAGE>

                              THE TODD-AO CORPORATION

                      CONSOLIDATED BALANCE SHEETS (CONTINUED)
                               (DOLLARS IN THOUSANDS)


                        LIABILITIES AND STOCKHOLDERS' EQUITY


                                                       AUGUST 31, NOVEMBER 30,
                                                       ---------- ------------
                                                         1997         1997
                                                       ---------- ------------
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . . .     $    5,302   $    6,494
Accrued liabilities:
  Payroll and related taxes. . . . . . . . . . . .          2,507        3,335
  Interest . . . . . . . . . . . . . . . . . . . .            422          510
  Equipment lease. . . . . . . . . . . . . . . . .            279          275
  Other. . . . . . . . . . . . . . . . . . . . . .          1,533        1,419
  Income taxes payable . . . . . . . . . . . . . .            105        1,007
Current maturities of long-term debt . . . . . . .            578          592
Capitalized lease obligations - current. . . . . .             35            7
Deferred income. . . . . . . . . . . . . . . . . .          1,459        1,498
                                                       ----------   ----------
Total current liabilities. . . . . . . . . . . . .         12,220       15,137
                                                       ----------   ----------
LONG-TERM DEBT . . . . . . . . . . . . . . . . . .         25,430       18,007
DEFERRED COMPENSATION AND OTHER. . . . . . . . . .            326          199
DEFERRED GAIN ON SALE/LEASEBACK. . . . . . . . . .          3,437        7,921
DEFERRED INCOME TAXES. . . . . . . . . . . . . . .          4,659        5,266
                                                       ----------   ----------
Total liabilities. . . . . . . . . . . . . . . . .         46,072       46,530
                                                       ----------   ----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Common Stock:
  Class A; authorized 30,000,000 shares of $0.01
  par value; issued and outstanding 8,248,970 at
  November 30, 1997 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       40,422
Treasury stock . . . . . . . . . . . . . . . . . .           (691)      (1,016)
Retained earnings. . . . . . . . . . . . . . . . .         17,711       19,337
Unrealized gains on marketable securities and
long-term investments. . . . . . . . . . . . . . .             94          129
Cumulative foreign currency translation adjustment            169          554
                                                       ----------   ----------
Total stockholders' equity . . . . . . . . . . . .         57,379       59,527
                                                       ----------   ----------
TOTAL. . . . . . . . . . . . . . . . . . . . . . .     $  103,451   $  106,057
                                                       ----------   ----------
                                                       ----------   ----------


                  See notes to consolidated financial statements.


                                          4
<PAGE>

                               THE TODD-AO CORPORATION

              CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
               FOR THE THREE MONTHS ENDED NOVEMBER 30, 1997 AND 1996
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


                                                          1996         1997
                                                       ----------   ----------

REVENUES . . . . . . . . . . . . . . . . . . . . .     $   20,340   $   25,024
                                                       ----------   ----------
COSTS AND EXPENSES:
Operating costs and other expenses . . . . . . . .         15,557       19,314
Depreciation and amortization. . . . . . . . . . .          1,622        2,421
Interest . . . . . . . . . . . . . . . . . . . . .            221          412
Equipment lease expense - net. . . . . . . . . . .             92           27
Other (income) expense - net . . . . . . . . . . .             39           98
                                                       ----------   ----------
Total costs and expenses . . . . . . . . . . . . .         17,531       22,272
                                                       ----------   ----------
INCOME BEFORE PROVISION FOR INCOME TAXES . . . . .          2,809        2,752
PROVISION FOR INCOME TAXES . . . . . . . . . . . .          1,038          979
                                                       ----------   ----------
NET INCOME . . . . . . . . . . . . . . . . . . . .          1,771        1,773
RETAINED EARNINGS BEGINNING OF PERIOD. . . . . . .         12,267       17,711
LESS:  DIVIDENDS PAID. . . . . . . . . . . . . . .           (122)        (147)
                                                       ----------   ----------
RETAINED EARNINGS END OF PERIOD. . . . . . . . . .     $   13,916   $   19,337
                                                       ----------   ----------
                                                       ----------   ----------
NET INCOME PER COMMON SHARE AND
 COMMON SHARE EQUIVALENTS. . . . . . . . . . . . .           0.20         0.17
                                                       ----------   ----------
                                                       ----------   ----------
WEIGHTED AVERAGE SHARES OUTSTANDING. . . . . . . .      9,016,706   10,551,204
                                                       ----------   ----------
                                                       ----------   ----------


                  See notes to consolidated financial statements.


                                          5
<PAGE>

                              THE TODD-AO CORPORATION

                       CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED NOVEMBER 30, 1997 AND 1996
                              (DOLLARS IN THOUSANDS)


                                                          1996         1997
                                                       ----------   ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income. . . . . . . . . . . . . . . . . . . .     $    1,771   $    1,773
 Adjustments to reconcile net income to net cash
  provided by (used in) operating activities:
  Depreciation and amortization. . . . . . . . . .          1,622        2,421
  Deferred income taxes, net . . . . . . . . . . .              2          623
  Deferred compensation. . . . . . . . . . . . . .            (15)        (127)
  Amortization of deferred gain on
   sale/leaseback transactions . . . . . . . . . .           (368)        (453)
  (Gain) on sale of marketable securities
   and investments . . . . . . . . . . . . . . . .             --          (27)
  Loss on disposition of fixed assets. . . . . . .             --           22
  Shares issued for stock award. . . . . . . . . .             --           66
  Changes in assets and liabilities (net of
   acquisitions):
   Trade receivables . . . . . . . . . . . . . . .         (4,123)      (3,384)
   Inventories and other current assets. . . . . .           (185)        (207)
   Accounts payable and accrued liabilities. . . .            443        2,283
   Income taxes payable, net . . . . . . . . . . .          1,116          794
   Deferred income . . . . . . . . . . . . . . . .            167          230
                                                       ----------   ----------
Net cash provided by operating activities: . . . .            430        4,014
                                                       ----------   ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Proceeds from sale of marketable securities
   and investments . . . . . . . . . . . . . . . .            530          517
 Capital expenditures. . . . . . . . . . . . . . .         (3,654)      (6,682)
 Other assets. . . . . . . . . . . . . . . . . . .           (153)        (558)
                                                       ----------   ----------
Net cash flows (used in) investing activities: . .     $   (3,277)  $   (6,723)
                                                       ----------   ----------


                                          6
<PAGE>

                               THE TODD-AO CORPORATION

                       CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED NOVEMBER 30, 1997 AND 1996
                               (DOLLARS IN THOUSANDS)
                                    (CONTINUED)


                                                          1996         1997
                                                       ----------   ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt . . . . . . . . . .     $    6,900   $    1,400
  Payments on long-term debt . . . . . . . . . . .         (4,838)      (8,809)
  Payments on capital lease obligations. . . . . .           (155)         (28)
  Proceeds from sale/leaseback transaction . . . .             --        8,500
  Net proceeds from issuance of common stock . . .         14,155          158
  Treasury stock transactions. . . . . . . . . . .             --         (325)
  Dividends paid . . . . . . . . . . . . . . . . .           (122)        (147)
                                                       ----------   ----------


Net cash flows provided by financing activities: .         15,940          749
  Effect of exchange rate changes on cash. . . . .             55          372
                                                       ----------   ----------


NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS . . . . . . . . . . . . . . . .         13,148       (1,588)
CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD. . . . . . . . . . . . . . .          3,385        5,127
                                                       ----------   ----------

CASH AND CASH EQUIVALENTS AT
  END OF PERIOD. . . . . . . . . . . . . . . . . .     $   16,533   $    3,539
                                                       ----------   ----------
                                                       ----------   ----------


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
  Interest . . . . . . . . . . . . . . . . . . . .     $      254   $      327
                                                       ----------   ----------
                                                       ----------   ----------


Income taxes . . . . . . . . . . . . . . . . . . .     $        0   $        0
                                                       ----------   ----------
                                                       ----------   ----------


                                          7
<PAGE>

THE TODD-AO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1997
(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, 1997.  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.   Net income per common share is computed based on the weighted average
     number of common and common equivalent shares outstanding for each of the
     years presented including common share equivalents arising from the assumed
     exercise of any outstanding dilutive stock options.  Fully diluted earnings
     per share are not materially different from primary earnings per share.

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 $11.875 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 three months ended November 30, 1996 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.

                                                      1996
                                                    --------
          Revenues . . . . . . . . . . . . .        $ 25,315
                                                    --------
                                                    --------
          Net income . . . . . . . . . . . .        $  2,128
                                                    --------
                                                    --------
          Net income per common share. . . . .      $   0.24
                                                    --------
                                                    --------


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.

                                          8
<PAGE>

     The net equipment lease expense for the period ended November 30, 1997 is
     as follows:

                                                LEASE #1   LEASE #2     TOTAL
                                                --------   --------    -------
          Equipment lease costs. . . . . . .     $   424    $    56     $  480
          Amortization of deferred gain
           on sale of equipment. . . . . . .     $  (367)   $   (86)    $ (453)
                                                --------   --------    -------
          Equipment lease expense, net . . .     $    57    $   (30)    $   27
                                                                       -------
                                                                       -------

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 November 30, 1997, 939,156 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.


                                          9
<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 consists of five
     1-year terms amortizing to approximately 40% with interest at Libor rates
     plus 1.5% which can increase to Libor plus 2% if the leverage ratio (Funded
     Indebtedness/EBITDA) is greater than 2:1, terminates on December 30, 1999.

     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 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 balances.  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 future consolidated
     net income.

     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.


                                          10
<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 November 30, 1997, the Company had $9,275 outstanding under
     the credit facility.

     The Company expects capital expenditures of approximately $18,000 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

     THREE MONTHS ENDED NOVEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED
     NOVEMBER 30, 1996

     Revenues increased $4,684 or 23.0% from $20,340 to $25,024 primarily due to
     the acquisition of Hollywood Digital ("THD") in June 1997.  THD recorded
     video services revenues of $5,734 for the quarter which were offset by the
     Company's sound services which were down compared to a particularly strong
     quarter in the prior year.  This was partially due to the commencement of
     construction projects on three sound stages which are being upgraded for
     digital technology.  The revenue increases for the Company's remaining
     video divisions was $1,150.

     Operating costs and other expenses increased $3,757 or 24.2% from $15,557
     to $19,314.  Cost increases related to the THD acquisition ($4,235) and the
     revenue increases for the Company's other video services divisions ($289)
     were offset by a reduction in costs for the sound services divisions
     related to their revenue decreases described above.

     Depreciation and amortization increased $799 or 49.3% primarily due to the
     equipment ($12,117) and goodwill ($14,100) included with the THD
     acquisition.

     Interest expense increased $161 or 72.9% primarily due to the THD
     acquisition financing.

     As a result of the above, income before taxes and net income remained
     relatively flat.

     Earnings per share decreased 15% from $0.20 to $0.17 from a 17% dilution in
     average shares outstanding primarily due to the November 1996 public
     offering when 1,645,000 shares were issued.  If the public offering had
     occurred as of September 1, 1996 and the bank credit facility debt paid
     down, the EPS as of November 30, 1996 would not have changed from $0.20.

     MATERIAL CHANGES IN CASH FLOWS

     For the three months ended November 30, 1997 the Company generated $4,014
     in cash from operating activities compared to $430 in 1996.  In addition to
     net income of $1,773, adjusted for depreciation and net amortization of
     $1,968, increases in accounts payable and other liabilities of $3,307 also
     increased cash provided by operations.  Cash was utilized primarily to fund
     trade receivables and other current assets.

     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 $9,900 were used to reinvest in capital assets of
     the Company and to pay down long-term debt.


                                          11
<PAGE>

     OTHER BUSINESS INFORMATION

     Due to shortened post production schedules for motion picture features, it
     has become the norm for clients to use two stages or more rather than one
     for the pre-mixing phase of the total post production sound mixing process.
     In view of this development, the Company is converting an ADR (Additional
     Dialogue Replacement) Stage at the Hollywood facilities into a new sound
     mixing stage primarily for dialogue pre-mixing services, but which can also
     be used for various other mixing services.  The newly converted stage will
     begin operating in the second quarter of fiscal year 1998.

     THD is expecting to open a separate facility in Santa Monica, California to
     primarily service its advertising clients.  The present Hollywood facility
     will expand its current feature and television services.  The new facility
     will begin operations during fiscal year 1998.


                                          12
<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



  January 13, 1998                    /s/   Silas R. Cross
--------------------               ------------------------------------
        Date                                Silas R. Cross
                                      Chief Accounting Officer


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