<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, 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 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 11, 1999 was:
7,747,212 Class A Shares and 1,747,178 Class B Shares.

<PAGE>

THE TODD-AO CORPORATION

QUARTERLY REPORT ON FORM 10-Q

NOVEMBER 30, 1998

INDEX
-------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION                                             Page

     Item 1- FINANCIAL STATEMENTS

       The following financial statements are filed herewith:

          Consolidated Balance Sheets, November 30, 1998 and
                 August 31, 1998                                              3

          Consolidated Statements of Income and Retained Earnings for the
                 Three Months Ended November 30, 1998 and 1997                5

          Consolidated Statements of Cash Flows for the Three Months Ended
                 November 30, 1998 and 1997                                   6

          Notes to Consolidated Financial Statements for the Three Months
                 Ended November 30, 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                                                  14

 Item 6 - Exhibits and Reports on Form 8-K                                   14

          Signature                                                          14


                                          2

<PAGE>

                              THE TODD-AO CORPORATION

                            CONSOLIDATED BALANCE SHEETS
                               (DOLLARS IN THOUSANDS)


                                       ASSETS




<TABLE>
<CAPTION>

                                                              AUGUST 31,    NOVEMBER 30,
                                                              ----------   -------------
                                                                1998           1998
                                                              ----------   -------------
<S>                                                           <C>          <C>
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . . . . . . . . . . $   3,997     $    5,765
Marketable securities. . . . . . . . . . . . . . . . . . . .     1,490          1,329
Trade receivables
 (net of allowance for doubtful accounts of $1,829 at
 November 30, 1998 and $1,768 at August 31, 1998)  . . . . .    18,164         22,568
Income tax receivable. . . . . . . . . . . . . . . . . . . .     1,397          1,384
Inventories (first-in first-out basis) . . . . . . . . . . .       783            661
Deferred income taxes. . . . . . . . . . . . . . . . . . . .       301            301
Prepaid deposits and other . . . . . . . . . . . . . . . . .     3,629          3,579
                                                             ---------     ----------
Total current assets . . . . . . . . . . . . . . . . . . . .    29,761         35,587
                                                             ---------     ----------
INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . .       956            738
                                                             ---------     ----------
PROPERTY AND EQUIPMENT - At Cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . .     4,270          4,270
Buildings. . . . . . . . . . . . . . . . . . . . . . . . . .    11,293         10,251
Leasehold improvements . . . . . . . . . . . . . . . . . . .    15,054         16,055
Lease acquisition costs. . . . . . . . . . . . . . . . . . .     2,187          2,187
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . .    76,172         79,315
Equipment under capital leases . . . . . . . . . . . . . . .     1,151          1,151
Construction in progress . . . . . . . . . . . . . . . . . .     1,466          2,903
                                                             ---------     ----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . .   111,593        116,132
Accumulated depreciation and amortization. . . . . . . . . .   (38,046)       (41,099)
                                                             ---------     ----------
Property and equipment - net . . . . . . . . . . . . . . . .    73,547         75,033
                                                             ---------     ----------
GOODWILL
 (net of accumulated amortization of $1,993 at
 November 30, 1998 and $1,646 at August 31, 1998). . . . . .    29,193         28,843
                                                             ---------     ----------
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . .     1,909          2,181
                                                             ---------     ----------
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 135,366     $  142,382
                                                             ---------     ----------
                                                             ---------     ----------

</TABLE>


                  See notes to consolidated financial statements.


                                          3

<PAGE>

                              THE TODD-AO CORPORATION

                      CONSOLIDATED BALANCE SHEETS (CONTINUED)
                               (DOLLARS IN THOUSANDS)


                        LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>

                                                                  AUGUST 31,    NOVEMBER 30,
                                                                 -----------    ------------
                                                                    1998           1998
                                                                 -----------    ------------
<S>                                                              <C>            <C>
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . .   $    6,464     $    5,358
Accrued liabilities:
  Payroll and related taxes. . . . . . . . . . . . . . . . . .        3,520          5,900
  Interest . . . . . . . . . . . . . . . . . . . . . . . . . .          369            537
  Equipment lease. . . . . . . . . . . . . . . . . . . . . . .          569            563
  Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .        3,201          1,945
  Income taxes payable . . . . . . . . . . . . . . . . . . . .        1,090          1,557
Current maturities of long-term debt . . . . . . . . . . . . .          537            515
Capitalized lease obligations - current. . . . . . . . . . . .          422            396
Deferred income. . . . . . . . . . . . . . . . . . . . . . . .          897            878
                                                                 ----------     ----------
Total current liabilities. . . . . . . . . . . . . . . . . . .       17,069         17,649
                                                                 ----------     ----------
LONG-TERM DEBT . . . . . . . . . . . . . . . . . . . . . . . .       44,654         51,994
DEFERRED COMPENSATION AND OTHER. . . . . . . . . . . . . . . .          266            135
DEFERRED GAIN ON SALE/LEASEBACK TRANSACTIONS . . . . . . . . .        6,085          5,469
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . . . . . .        4,911          5,787
OTHER. . . . . . . . . . . . . . . . . . . . . . . . . . . . .        2,061          1,715
                                                                 ----------     ----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . .       75,046         82,749
                                                                 ----------     ----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Common Stock:
  Class A; authorized 30,000,000 shares of $0.01 par value;
  issued 7,868,869 at November 30, 1998 and 8,438,700 at
  August 31, 1998. . . . . . . . . . . . . . . . . . . . . . .           84             79
  Class B; authorized 6,000,000 shares of $0.01 par value;
  issued and outstanding 1,747,178 . . . . . . . . . . . . . .           17             17
Additional capital . . . . . . . . . . . . . . . . . . . . . .       40,805         36,823
Treasury stock (121,657 and 235,151 shares at cost
  As of November 30, 1998 and August 31, 1998, respectively) .       (2,338)        (1,118)
Retained earnings. . . . . . . . . . . . . . . . . . . . . . .       20,538         22,838
Accumulated comprehensive income:
 Unrealized gains (losses) on marketable securities
 and long-term investments . . . . . . . . . . . . . . . . . .          198            (23)
 Cumulative foreign currency translation adjustment. . . . . .        1,016          1,017
                                                                 ----------     ----------
Total stockholders' equity . . . . . . . . . . . . . . . . . .       60,320         59,633
                                                                 ----------     ----------
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $  135,366     $  142,382
                                                                 ----------     ----------
                                                                 ----------     ----------


</TABLE>



                  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, 1998 AND 1997
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                                    1997          1998
                                                                -----------    -----------
<S>                                                             <C>            <C>
REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . .  $    25,024    $    33,947
                                                                -----------    -----------
COSTS AND EXPENSES:
Operating costs and other expenses . . . . . . . . . . . . . .       19,314         25,705
Depreciation and amortization. . . . . . . . . . . . . . . . .        2,421          3,403
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . .          412            866
Equipment lease expense - net. . . . . . . . . . . . . . . . .           27             55
Other (income) expense - net . . . . . . . . . . . . . . . . .           98            144
                                                                -----------    -----------
Total costs and expenses . . . . . . . . . . . . . . . . . . .       22,272         30,173
                                                                -----------    -----------
INCOME BEFORE PROVISION FOR INCOME TAXES . . . . . . . . . . .        2,752          3,774
  PROVISION FOR INCOME TAXES . . . . . . . . . . . . . . . . .          979          1,306
                                                                -----------    -----------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . .        1,773          2,468
RETAINED EARNINGS BEGINNING OF PERIOD. . . . . . . . . . . . .       17,711         20,510
LESS:  DIVIDENDS PAID. . . . . . . . . . . . . . . . . . . . .         (147)          (140)
                                                                -----------    -----------
RETAINED EARNINGS END OF PERIOD. . . . . . . . . . . . . . . .  $    19,337    $    22,838
                                                                -----------    -----------
                                                                -----------    -----------

NET INCOME PER COMMON SHARE:
Net income available to common stockholders. . . . . . . . . .  $     1,773    $     2,468
Effect of dilutive securities:
  5% convertible debentures. . . . . . . . . . . . . . . . . .           70             67
                                                                -----------    -----------
Net income available to common stockholders
  plus assumed conversions . . . . . . . . . . . . . . . . . .  $     1,843    $     2,535
                                                                -----------    -----------

WEIGHTED AVERAGE SHARES
  OUTSTANDING - BASIC. . . . . . . . . . . . . . . . . . . . .   10,016,631      9,535,765

Effect of dilutive securities:
  Stock options. . . . . . . . . . . . . . . . . . . . . . . .      534,573        331,538
  5% convertible debentures. . . . . . . . . . . . . . . . . .      711,057        697,677
                                                                -----------    -----------

WEIGHTED AVERAGE SHARES
  OUTSTANDING - DILUTED. . . . . . . . . . . . . . . . . . . .   11,262,261     10,564,980
                                                                -----------    -----------

NET INCOME PER COMMON SHARE - BASIC. . . . . . . . . . . . . .  $      0.18    $      0.26
                                                                -----------    -----------
                                                                -----------    -----------
NET INCOME PER COMMON SHARE - DILUTED. . . . . . . . . . . . .  $      0.16    $      0.24
                                                                -----------    -----------
                                                                -----------    -----------
</TABLE>


                   See notes to consolidated financial statements.


                                          5

<PAGE>

                              THE TODD-AO CORPORATION

                       CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED NOVEMBER 30, 1998 AND 1997
                              (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>

                                                                    1997           1998
                                                                 ----------     ----------
<S>                                                              <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income. . . . . . . . . . . . . . . . . . . . . . . . . .   $    1,773     $    2,468
 Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization. . . . . . . . . . . . . . . .        2,421          3,403
  Deferred income taxes. . . . . . . . . . . . . . . . . . . .          623            876
  Deferred compensation and other. . . . . . . . . . . . . . .         (127)          (130)
  Amortization of deferred gain on
   sale/leaseback transaction. . . . . . . . . . . . . . . . .         (453)          (616)
 (Gain) on sale of marketable securities
   and investments . . . . . . . . . . . . . . . . . . . . . .          (27)            --
 Loss (gain) on disposition of fixed assets. . . . . . . . . .           22            (39)
 Shares issued for stock award . . . . . . . . . . . . . . . .           66             --
 Changes in assets and liabilities (net of acquisitions):
   Trade receivables, net. . . . . . . . . . . . . . . . . . .       (3,384)        (4,404)
   Inventories and other current assets. . . . . . . . . . . .         (207)           169
   Accounts payable and accrued liabilities. . . . . . . . . .        2,283            172
   Income taxes payable, net . . . . . . . . . . . . . . . . .          794            480
   Provision for liabilities . . . . . . . . . . . . . . . . .           --           (346)
   Deferred income . . . . . . . . . . . . . . . . . . . . . .          230            (19)
                                                                 ----------     ----------
Net cash provided by operating activities: . . . . . . . . . .        4,014          2,014
                                                                 ----------     ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Proceeds from sale of marketable securities
  and investments. . . . . . . . . . . . . . . . . . . . . . .          517            161
 Proceeds from disposition of fixed assets . . . . . . . . . .           --            101
 Capital expenditures. . . . . . . . . . . . . . . . . . . . .       (6,682)        (4,601)
 Other assets. . . . . . . . . . . . . . . . . . . . . . . . .         (558)          (291)
                                                                 ----------     ----------
Net cash flows used in investing activities: . . . . . . . . .    $  (6,723)     $  (4,630)
                                                                 ----------     ----------

</TABLE>


                                          6

<PAGE>

                              THE TODD-AO CORPORATION

                       CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED NOVEMBER 30, 1998 AND 1997
                              (DOLLARS IN THOUSANDS)
                                    (CONTINUED)


<TABLE>
<CAPTION>

                                                                        1997          1998
                                                                   ----------     ----------
<S>                                                                <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt . . . . . . . . . . . . . . . . .    $   1,400      $   8,060
  Payments on long-term debt . . . . . . . . . . . . . . . . . .       (8,809)          (742)
  Payments on capital lease obligations. . . . . . . . . . . . .          (28)           (26)
  Proceeds from sale/leaseback transaction . . . . . . . . . . .        8,500             --
  Proceeds from issuance of common stock . . . . . . . . . . . .          158             --
  Treasury stock purchases . . . . . . . . . . . . . . . . . . .         (325)        (2,767)
  Dividends paid . . . . . . . . . . . . . . . . . . . . . . . .         (147)          (141)
                                                                   ----------     ----------

Net cash flows provided by financing activities: . . . . . . . .          749          4,384
  Effect of exchange rate changes on cash. . . . . . . . . . . .          372             --
                                                                   ----------     ----------

NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS. . . . . . . . . . . . . . . . . . . . . . . .       (1,588)          1,768
CASH AND CASH EQUIVALENTS AT
 BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . .        5,127          3,997
                                                                   ----------     ----------
 CASH AND CASH EQUIVALENTS AT
END OF PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . .    $   3,539      $   5,765
                                                                   ----------     ----------
                                                                   ----------     ----------
SUPPLEMENTAL DISCLOSURES OF
 CASH FLOW INFORMATION:

Cash paid during the period for:
  Interest . . . . . . . . . . . . . . . . . . . . . . . . . . .    $     327      $     653
                                                                   ----------     ----------
                                                                   ----------     ----------
  Income taxes . . . . . . . . . . . . . . . . . . . . . . . . .    $       0      $       0
                                                                   ----------     ----------
                                                                   ----------     ----------


</TABLE>


                                          7
<PAGE>

THE TODD-AO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 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 adopted Statement of Financial Accounting Standards ("SFAS")
     No. 128, "Earnings Per Share" ("EPS"), during the year ending August 31,
     1998 and has restated its net income per common share disclosures for prior
     periods to comply with SFAS No. 128.  Under SFAS No. 128, primary EPS is
     replaced by "Basic" EPS, 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" EPS, which
     is computed similarly to fully diluted EPS, 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 earnings per
     share using the treasury stock method.

4.   On May 8, 1998, Todd Europe, a wholly owned United Kingdom subsidiary of
     the Company, purchased substantially all of the outstanding shares of
     Tele-Cine Cell Group plc. ("TeleCine"), a U.K. Corporation.  The purchase
     price of the shares was $17,948 (L11,011) of which $15,741 was paid in cash
     and $2,207 is represented by unsecured loan notes guaranteed as to
     principal only and bearing interest at a fixed rate of 4.5% payable
     annually in arrears.  Included above is  cash in the amount of $495 which
     was paid by Todd Europe for costs incurred in connection with the
     acquisition.  TeleCine is a London based facility that specializes in video
     post-production and special effects providing services to the film and
     television industries.

     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, 1997 is presented as if
     the acquisition had occurred on September 1, 1997.  Pro forma adjustments
     for TeleCine are primarily to eliminate operations discontinued as part of
     the acquisition plan, to adjust depreciation to estimated useful lives of
     assets acquired, amortization of goodwill, interest expense on borrowings
     in connection with the acquisition, and income taxes.

<TABLE>
<CAPTION>
                                                                      1997
                                                                   ---------
          <S>                                                     <C>
          Revenues . . . . . . . . . . . . . . . . . . . . . . .   $  30,410
                                                                   ---------
                                                                   ---------
          Net income . . . . . . . . . . . . . . . . . . . . . .   $   2,478
                                                                   ---------
                                                                   ---------
          Net income per common share - Basic. . . . . . . . . .   $    0.25
                                                                   ---------
                                                                   ---------
          Net income per common share - Diluted. . . . . . . . .   $    0.23
                                                                   ---------
                                                                   ---------

</TABLE>


                                          8
<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
     statement 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 currently is 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 $1,400.

     The net equipment lease expense is as follows for the three months ended:
<TABLE>
<CAPTION>

                                                                   LEASE #1   LEASE #2      TOTAL
                                                                   --------   --------    -------
            <S>                                                   <C>         <C>        <C>
            NOVEMBER 30, 1998
            Equipment lease costs. . . . . . . . . . . . . . . .   $    315   $    354    $   669
            Amortization of deferred gain
               on sale of equipment. . . . . . . . . . . . . . .       (368)      (246)      (614)
                                                                   --------   --------    -------
            Equipment lease expense, net . . . . . . . . . . . .   $    (53)  $    108    $    55
                                                                   --------   --------    -------
                                                                   --------   --------    -------

            NOVEMBER 30, 1997
            Equipment lease costs. . . . . . . . . . . . . . . .   $    424   $     56    $   480
            Amortization of deferred gain
               on sale of equipment. . . . . . . . . . . . . . .       (367)       (86)      (453)
                                                                   --------   --------    -------
            Equipment lease expense, net . . . . . . . . . . . .   $     57   $    (30)   $    27
                                                                   --------   --------    -------
                                                                   --------   --------    -------
</TABLE>

     In December 1998, the Company signed a third agreement with its bank to
     implement the sale/leaseback of certain equipment for up to $10,000.  An
     aggregate of $8,809 of sound studio and video equipment was sold and leased
     back on December 30, 1998.  The agreement consists of a base 2-year term
     plus five additional 1-year terms amortizing to approximately 41% and
     terminates on December 30, 2005.

6.   The Company has a stock repurchase program under which 2,300,000 shares may
     be purchased from time to time in the open market or in private
     transactions.  As of November 30, 1998, 1,563,456 shares had been
     repurchased.  1,432,705 of these shares have been cancelled and returned to
     authorized but unissued status.

7.   In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
     "Reporting Comprehensive Income."  The Company adopted SFAS No. 130
     beginning in the first quarter of fiscal 1999.  Comprehensive income is
     defined as all changes in shareholders' equity, except those resulting from
     investments by or distributions to shareholders.  The Company's
     comprehensive income is as follows for the three months ended:

<TABLE>
<CAPTION>
                                                   NOVEMBER 30,   NOVEMBER 30,
                                                   ------------   ------------
                                                      1997            1998
                                                   ------------   ------------
          <S>                                      <C>            <C>
          Net income . . . . . . . . . . . . . . .  $     1,773    $     2,468
          Unrealized gain (loss) on marketable
            securities and long-term investments .           35           (221)
          Foreign currency translation
            adjustments. . . . . . . . . . . . . .          385              1
                                                   ------------   ------------
          Comprehensive income . . . . . . . . . .  $     2,193    $     2,248
                                                   ------------   ------------
                                                   ------------   ------------
</TABLE>

                                          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 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 consists of five 1-year
     terms amortizing to approximately 42% with interest at LIBOR rates ranging
     from plus .75% to plus 2% based on the leverage ratio (Funded
     Indebtedness/EBITDA excluding convertible subordinated notes issued by
     Company in connection with the Hollywood Digital acquisition) and
     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 $60,000 in revolving loans (including up to 50% in Multi-currency) until
     November 30, 2001.  On that date and quarterly thereafter until August 31,
     2003, 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, 2003.
     Annually, the Company may request an automatic extension of the revolving
     period of the facility for one year that 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, CD,
     and LIBOR rates ranging from plus .75% to plus 2.125% based on the leverage
     ratio.  The leverage ratio that determines the rate ranges from less than
     1:1 to greater than 2.5:1.  The leverage ratio may not exceed 3.5:1 until
     February 28, 2000.  Thereafter, the leverage ratio 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.  Net
     Worth is not to be less than $54,000 plus net proceeds from issuance of
     equity plus 50% of consolidated net income subsequent to May 31, 1998
     (excluding the effect of stock repurchases up to $8,000 during the fiscal
     year ending August 31, 1999).

     In December 1998, the Company signed a third agreement with its bank to
     implement the sale/leaseback of certain equipment for up to $10,000.  An
     aggregate of $8,809 of sound studio and video equipment was sold and leased
     back on December 30, 1998.  The agreement consists of a base 2-year term
     plus five additional 1-year terms amortizing to approximately 41% and
     terminates on December 30, 2005.  The agreement provides for interest at
     the same LIBOR rates and terms as the second sale/leaseback agreement (see
     above).

     Management evaluated capital raising alternatives including capital and
     operating leases, sale/leaseback and other sources of long-term debt
     including bank and public financing.  Based upon cost, structure and term
     the sale/leaseback financing provided incremental funding with a favorable
     impact on earnings per share as compared with available alternative debt
     financings.


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<PAGE>

     In January 1998 the Company entered into a three year interest rate swap
     agreement for a notional amount of $10,000 to hedge the impact of
     fluctuations in interest rates on its floating rate credit facility.  Under
     the agreement, the Company is obligated to pay 5.65% in exchange for
     receiving three-month LIBOR on the notional amount.  Settlements are
     quarterly and the contract expires in March 2001.

     The credit facilities are available for general corporate purposes, capital
     expenditures and acquisitions.  Management believes that funds generated
     from operations, proceeds from the sale/leaseback agreements 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 fiscal year
     1999.

     In June 1997, the Company used $15,760 under the credit facility 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.  In May 1998, the Company used $14,000 under the credit
     facility to fund a substantial portion of the TeleCine acquisition.  As of
     November 30, 1998, the Company had $41,625 outstanding under the credit
     facility.

     The Company expects capital expenditures of approximately $21,000 for its
     Los Angeles, Santa Monica, New York City, Atlanta and London facilities in
     fiscal 1999. 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, 1998 COMPARED TO THREE MONTHS ENDED
     NOVEMBER 30, 1997

     Revenues increased $8,923 or 35.7% from $25,024 to $33,947 primarily due to
     the acquisition of TeleCine in May 1998 and to an increase in all other
     video and sound services of the Company.  TeleCine recorded video services
     revenues of $6,456 which was supplemented by an increase of $1,584 from the
     Company's other video divisions.  This increase includes revenues of $735
     from Todd-AO Video Services DVD formed in May 1998 to provide DVD product
     services to the major Hollywood studios and others.  Higher utilization and
     activity in the Company's sound services divisions was responsible for an
     increase in sound services revenues of $1,073.

     Operating costs and other expenses increased $6,391 or 33.1% from $19,314
     to $25,705.  Cost increases are related to the TeleCine acquisition
     ($4,809) and the other revenue increases described above.

     Depreciation and amortization increased $982 or 40.1% primarily due to the
     equipment and goodwill acquired in the TeleCine acquisition ($599) and to
     the assets placed in service in March 1998 in connection with the new THD
     Santa Monica facility ($294) as well as increased capital expenditures in
     other divisions.

     Interest expense increased $454 or 110.2% primarily due to the TeleCine
     acquisition financing.

     As a result of the above, income before taxes increased $1,022 or 37.1%
     from $2,752 to $3,774 and net income increased $695 or 39.2% from $1,773 to
     $2,468.


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<PAGE>

     MATERIAL CHANGES IN CASH FLOWS

     For the three months ended November 30, 1998, the Company generated $2,025
     in cash from operating activities compared to $4,014 in 1997.  Net income
     of $2,468 adjusted for depreciation and net amortization of $2,787 provided
     cash of $5,255 in 1998 compared to $3,741 in 1997.  Increases in accounts
     payable and other liabilities were restricted to $298 in 1998 compared to
     $3,307 in 1997. Cash provided by operations was utilized primarily to fund
     trade receivables and other current assets in both years.

     Net cash generated from operating activities supplemented by borrowings
     from the Company's credit facility of $8,060 were used to purchase treasury
     stock under the Company's stock repurchase program, reinvest in capital
     assets of the Company and to pay down long-term debt.

     OTHER BUSINESS INFORMATION

     On September 8, 1997, the Company and Disney Character Voices
     International, Inc. ("DCVI") committed to jointly establishing a dubbing
     and audio post production studio in Germany.  The Company and DCVI's German
     subsidiaries, TODD-AO GERMANY GMBH and BUENA VISTA INTERNATIONAL FILM
     PRODUCTION (GERMANY) GMBH have agreed to jointly build a state-of-the-art,
     all-digital post production complex in Munich.  The 36,000 square foot
     facility will include feature and video mixing studios, film and video
     dialogue recording rooms and editorial suites.  The Company will manage all
     technical and operational functions and DCVI will coordinate the creative
     services of the studios.  Additional joint ventures are contemplated for
     France, Italy, Spain and Asia.  The foreign language dubbing studios will
     provide each of those territories with state-of-the-art theatrical and
     television recording, mixing and editing facilities.

     FORWARD LOOKING STATEMENTS

     When used in this document, the words "believes", expects", 
     anticipates", "intends", and similar expressions are intended to 
     identify forward looking statements.  Such statements are subject to a 
     number of known risks and uncertainties.  Actual results in the future 
     could differ materially from those described in the forward looking 
     statements.  Such risks and uncertainties include, but are not limited 
     to, industry-wide market factors such as the timing of, and spending on, 
     feature film and television programming production, foreign and domestic 
     television advertising, and foreign and domestic spending by 
     broadcasters, cable companies and syndicators on first run and existing 
     content libraries.  In addition, the failure of the company to maintain 
     relationships with key customers and certain key personnel, more rapid 
     than expected technological obsolescence, and failure to integrate 
     acquired operations in expected time frames could also cause actual 
     results to differ materially from those described in forward looking 
     statements.

     YEAR 2000 COMPLIANCE ISSUE

     The Company is currently working to resolve the potential impact of the
     year 2000 on the processing of date-sensitive information by the Company's
     computerized information systems.  The year 2000 problem is the result of
     computer programs being written using two digits (rather than four) to
     define the applicable year.  Any of the Company's programs that have
     time-sensitive software may recognize a date using "00" as the year 1900
     rather than the year 2000, which could result in miscalculations or system
     failure.  The Company has conducted a review of its computer information
     systems and its technological operating equipment to identify the systems
     that could be affected by the year 2000 compliance issue.

     The Company uses purchased software programs for a variety of functions,
     including general ledger, accounts payable, and accounts receivable
     accounting packages as well as comprehensive facility management packages.
     These programs are generally Year 2000 compliant, and any software and/or
     computer systems not currently compliant will be upgraded during fiscal
     1999 under existing maintenance and other agreements and through normal
     replacement programs currently in place.  A review of the Company's
     equipment containing embedded microprocessors or other technology has
     revealed few systems that are not Year 2000 compliant and those that are
     not compliant are expected to be upgraded through normal maintenance
     replacements in fiscal 1999.  Operation of these



                                          12
<PAGE>

     systems is generally not time-sensitive and, if necessary, equipment
     settings can be adjusted without posing any significant operational
     problems for the Company.

     Based on these reviews, costs of addressing potential problems are not
     currently expected to have a material adverse impact on the Company's
     financial position, results of operations or cash flows in future periods.

     To date, the Company has not identified any system which presents a
     material risk of not being Year 2000 ready in a timely fashion or for which
     a suitable alternative cannot be implemented.  As the Company progresses
     with its Year 2000 conversion, however, it may identify systems which do
     present a material risk of Year 2000 disruption.  Such disruption may
     include, among other things, the inability to process transactions or
     information, to record or access data, or engage in similar normal business
     activities.  If the Company, its customers or vendors are unable to resolve
     such processing issues in a timely manner, it could result in a material
     financial risk.  Accordingly, the company will devote the necessary
     resources to resolve all significant Year 2000 issues in a timely manner.

     The discussion above contains certain forward looking statements.  The
     costs of the Year 2000 conversion, the date which the Company has set to
     complete such conversion, and possible risks associated with the Year 2000
     issue are based on the Company's current estimates and are subject to
     various uncertainties that could cause the actual results to differ
     materially from the Company's expectations.  Such uncertainties include,
     among others, the success of the Company in identifying systems that are
     not Year 2000 compliant, the nature and amount of programming required to
     upgrade or replace each of the affected systems, the availability of
     qualified personnel, consultants and other resources, and the success of
     the Year 2000 conversion efforts of others.


                                          13
<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)(a)    Lease Intended as Security dated as of December 30,
                         1998 between BA Leasing and Capital Corporation and The
                         Todd-AO Corporation.

               (1)(b)    Appendix to Lease Intended as Security dated as of
                         December 30, 1998 between BA Leasing and Capital
                         Corporation and The Todd-AO Corporation.

               (2)       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, 1999                      /s/  Silas R. Cross
----------------------             ------------------------------
            Date                             Silas R. Cross
                                        Chief Accounting Officer


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