<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 MAY 31, 1999
                                       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 July 7, 1999 was:
7,948,194 Class A Shares and 1,747,178 Class B Shares.

<PAGE>

THE TODD-AO CORPORATION

QUARTERLY REPORT ON FORM 10-Q

MAY 31, 1999

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

PART I - FINANCIAL INFORMATION                                             Page

  Item 1- FINANCIAL STATEMENTS

    The following financial statements are filed herewith:

      Condensed Consolidated Balance Sheets, May 31, 1999
        (Unaudited) and August 31, 1998                                       3

      Condensed Consolidated Statements of Income and Retained Earnings
        for the Nine and Three Months Ended May 31, 1999 and
        1998 (Unaudited)                                                      5

      Condensed Consolidated Statements of Cash Flows for the Nine Months
        Ended May 31, 1999 and 1998 (Unaudited)                               6

      Notes to Condensed Consolidated Financial Statements for the Nine
        Months Ended May 31, 1999 (Unaudited)                                 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

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                    ASSETS
                                                                                    AUGUST 31,       MAY 31,
                                                                                  -------------  --------------
                                                                                      1998           1999
                                                                                    (AUDITED)     (UNAUDITED)
                                                                                  -------------  -------------
<S>                                                                               <C>            <C>
CURRENT ASSETS
Cash and cash equivalents..............................................                $  3,997      $   3,122
Marketable securities..................................................                   1,490          1,450
Trade receivables
   (net of allowance for doubtful accounts of $1,768 at
   August 31, 1998 and $1,379 at May 31, 1999) ........................                  18,164         19,727
Income tax receivable..................................................                   1,397          1,339
Inventories (first-in first-out basis).................................                     783            680
Deferred income taxes..................................................                     301            279
Prepaid deposits and other.............................................                   3,629          2,635
                                                                                  -------------  -------------
Total current assets...................................................                  29,761         29,232
                                                                                  -------------  -------------
INVESTMENTS............................................................                     956          1,128
                                                                                  -------------  -------------
PROPERTY AND EQUIPMENT - At Cost:
Land...................................................................                   4,270          4,270
Buildings..............................................................                  11,293         17,525
Leasehold improvements.................................................                  15,054         14,935
Lease acquisition costs................................................                   2,187          2,187
Equipment..............................................................                  76,172         79,006
Equipment under capital leases.........................................                   1,151          1,151
Construction in progress...............................................                   1,466          3,250
                                                                                  -------------  -------------
Total..................................................................                 111,593        122,324
Accumulated depreciation and amortization..............................                 (38,046)       (46,267)
                                                                                  -------------  -------------
Property and equipment - net...........................................                  73,547         76,057
                                                                                  -------------  -------------
GOODWILL
   (net of accumulated amortization of $1,646 at
   August 31, 1998 and $2,558 at May 31, 1999).........................                  29,193         28,281
                                                                                  -------------  -------------
OTHER ASSETS...........................................................                   1,909          2,319
                                                                                  -------------  -------------
TOTAL..................................................................               $ 135,366     $  137,017
                                                                                  =============  =============

</TABLE>

             See notes to condensed consolidated financial statements.

                                       3
<PAGE>

                             THE TODD-AO CORPORATION

                 CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                     AUGUST 31,      MAY 31,
                                                                                   -------------  -------------
                                                                                        1998           1999
                                                                                     (AUDITED)     (UNAUDITED)
                                                                                   -------------  -------------
<S>                                                                                <C>            <C>
  CURRENT LIABILITIES:
  Accounts payable.......................................................            $   6,464       $   5,253
  Accrued liabilities:
     Payroll and related taxes...........................................                3,520           3,944
     Interest............................................................                  369             688
     Equipment lease.....................................................                  569             751
     Other...............................................................                3,201           1,733
  Income taxes payable...................................................                1,090           1,635
  Current maturities of long-term debt...................................                  537             158
  Capitalized lease obligations - current................................                  422             341
  Deferred income........................................................                  897             942
                                                                                   -----------    ------------
  Total current liabilities..............................................               17,069          15,445
                                                                                   -----------    ------------
  LONG-TERM DEBT.........................................................               44,654          50,663
  DEFERRED COMPENSATION AND OTHER........................................                  266             190
  DEFERRED GAIN ON SALE/LEASEBACK TRANSACTIONS...........................                6,085           4,465
  DEFERRED INCOME TAXES..................................................                4,911           4,911
  OTHER..................................................................                2,061           1,225
                                                                                   -----------    ------------
  Total liabilities......................................................               75,046          76,899
                                                                                   -----------    ------------
  COMMITMENTS AND CONTINGENCIES

  STOCKHOLDERS' EQUITY:
  Common Stock:
     Class A; authorized 30,000,000 shares of $0.01 par value;
     8,438,700 issued at August 31, 1998 and 7,778,888 issued
     at May 31, 1999.....................................................                   84              78
     Class B; authorized 6,000,000 shares of $0.01 par value; issued and
     outstanding 1,747,178...............................................                   17              17
  Additional paid-in capital.............................................               40,805          35,960
  Treasury stock (235,151 and 72,859 shares at cost
      as of August 31, 1998 and May 31, 1999, respectively)..............               (2,338)           (585)
  Retained earnings......................................................               20,538          23,546
  Accumulated comprehensive income:
      Unrealized gains on marketable securities
      and long-term investments..........................................                  198             239
      Cumulative foreign currency translation adjustment.................                1,016             863
                                                                                   -----------    ------------
  Total stockholders' equity.............................................               60,320          60,118
                                                                                   -----------    ------------
  TOTAL..................................................................          $   135,366      $  137,017
                                                                                   ===========    ============
</TABLE>

            See notes to condensed consolidated financial statements.

                                       4
<PAGE>

                             THE TODD-AO CORPORATION

              CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
             FOR THE NINE AND THREE MONTHS ENDED MAY 31, 1999 AND 1998
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                            (UNAUDITED)
                                                                               NINE MONTHS                THREE MONTHS
                                                                       --------------------------  --------------------------
                                                                          1998          1999          1998          1999
                                                                       ------------  ------------  ------------  ------------
<S>                                                                    <C>           <C>           <C>           <C>
  REVENUES.....................................................           $  74,858     $  90,428    $   27,252    $   28,093
                                                                       ------------  ------------  ------------  ------------
  COSTS AND EXPENSES:
  Operating costs and other expenses...........................              59,163        73,050        21,635        23,457
  Depreciation and amortization ...............................               7,418         9,735         2,704         3,364
  Interest.....................................................               1,071         2,454           482           836
  Equipment lease expense - net ...............................                 164           908            53           488
  Other expense (income) - net ................................                (220)         (895)          (97)         (192)
                                                                       ------------  ------------  ------------  ------------
  Total costs and expenses ....................................              67,596        85,252        24,777        27,953
                                                                       ------------  ------------  ------------  ------------
  INCOME BEFORE PROVISION FOR INCOME TAXES.....................               7,262         5,176         2,475           140
  PROVISION FOR INCOME TAXES...................................               2,546         1,749           848            78
                                                                       ------------  ------------  ------------  ------------
  NET INCOME...................................................               4,716         3,427      $  1,627    $       62
                                                                                                   ============  ============
  RETAINED EARNINGS BEGINNING OF PERIOD........................              17,711        20,538
  LESS:   DIVIDENDS PAID.......................................                (443)         (419)
                                                                       ------------  ------------
  RETAINED EARNINGS END OF PERIOD..............................           $  21,984     $  23,546
                                                                       ============  ============
  NET INCOME PER COMMON SHARE:
  Net income available to common stockholders..................           $   4,716     $   3,427      $  1,627    $       62
  Effect of dilutive securities:
     5% convertible debentures ................................                 209           191            50            62
                                                                       ------------  ------------  ------------  ------------
  Net income available to common stockholders
     plus assumed conversions .................................           $   4,925     $   3,618      $  1,677    $      124
                                                                       ------------  ------------  ------------  ------------
  WEIGHTED AVERAGE SHARES
     OUTSTANDING - BASIC.......................................          10,004,781     9,489,372     9,954,606     9,455,280
  Effect of dilutive securities:
     Stock options.............................................             508,008       349,902       588,313       288,319
     5% convertible debentures.................................             711,057       661,453       711,057       643,341
                                                                       ------------  ------------  ------------  ------------
  WEIGHTED AVERAGE SHARES
     OUTSTANDING - DILUTED.....................................          11,223,846    10,500,727    11,253,976    10,386,940
                                                                       ------------  ------------  ------------  ------------
  NET INCOME PER COMMON SHARE - BASIC..........................           $    0.47      $   0.36      $   0.16    $     0.01
                                                                       ============  ============  ============  ============
  NET INCOME PER COMMON SHARE - DILUTED........................           $    0.44      $   0.34      $   0.15    $     0.01
                                                                       ============  ============  ============  ============
</TABLE>

                See notes to consolidated financial statements.

                                       5

<PAGE>

                             THE TODD-AO CORPORATION

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE NINE MONTHS ENDED MAY 31, 1999 AND 1998
                              (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                         (UNAUDITED)
                                                                                     1998           1999
                                                                                 -------------  -------------
<S>                                                                              <C>            <C>
  CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income.........................................................              $   4,716      $   3,427
    Adjustments to reconcile net income to net cash
       provided by operating activities:
       Depreciation and amortization...................................                  7,418          9,735
       Deferred income taxes, net......................................                    (18)            22
       Deferred compensation and other.................................                    (39)          (229)
       Amortization of deferred gain on
           sale/leaseback transaction..................................                 (1,673)        (1,856)
       (Gain) on sale of marketable securities
           and investments.............................................                    (49)            --
       (Gain) loss on disposition of fixed assets......................                      8           (253)
       Shares issued for stock award...................................                     66             --
       Changes in assets and liabilities (net of acquisitions):
          Trade receivables, net.......................................                  1,577         (1,563)
          Inventories and other current assets.........................                 (1,298)         1,094
          Accounts payable and accrued liabilities.....................                  1,953         (1,936)
          Accrued equipment lease......................................                    100            182
          Income taxes payable, net....................................                  1,731            606
          Provision for liabilities....................................                     --           (836)
          Deferred income..............................................                   (760)            45
                                                                                 -------------  -------------
  Net cash flows provided by operating activities: ....................                 13,732          8,438
                                                                                 -------------  -------------
  CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of marketable securities and investments..................                   (251)           (91)
    Proceeds from sale of marketable securities
       and investments.................................................                    979             --
    Acquisition of Tele-Cine Cell Group plc............................                (16,145)            --
    Proceeds from disposition of fixed assets..........................                     17            370
    Capital expenditures...............................................                (17,216)       (20,023)
    Other assets.......................................................                      9           (409)
                                                                                 -------------  -------------
  Net cash flows (used in) investing activities: ......................             $  (32,607)    $  (20,153)
                                                                                 -------------  -------------
</TABLE>

                                       6
<PAGE>

                             THE TODD-AO CORPORATION

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE NINE MONTHS ENDED MAY 31, 1999 AND 1998
                             (DOLLARS IN THOUSANDS)
                                  (CONTINUED)
<TABLE>
<CAPTION>
                                                                                       (UNAUDITED)
                                                                                    1998          1999
                                                                                -------------  ------------
<S>                                                                             <C>            <C>
  CASH FLOWS FROM FINANCING ACTIVITIES:
    Borrowings of long-term debt.........................................           $  22,206     $  17,605
    Payments of long-term debt...........................................              (9,436)      (11,976)
    Payments on capital lease obligations................................                 (80)          (81)
    Net proceeds from issuance of common stock...........................                 206             5
    Proceeds from sale/leaseback transaction.............................               8,500         8,809
    Treasury stock transactions..........................................              (1,195)       (3,103)
    Dividends paid.......................................................                (443)         (419)
                                                                                -------------  ------------
  Net cash flows provided by financing activities:.......................              19,758        10,840
    Effect of exchange rate changes on cash .............................                  --            --
                                                                                -------------  ------------
  NET INCREASE (DECREASE) IN CASH
      AND CASH EQUIVALENTS...............................................                 883          (875)
  CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.......................               5,127         3,997
                                                                                -------------  ------------
  CASH AND CASH EQUIVALENTS AT END OF PERIOD.............................            $  6,010     $   3,122
                                                                                =============  ============
  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the period for:
    Interest.............................................................            $    736     $   2,013
                                                                                =============  ============
    Income taxes.........................................................            $    860     $     240
                                                                                =============  ============
</TABLE>

SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING AND FINANCING ACTIVITIES:

1998:

     On May 8, 1998 the Company acquired substantially all of the outstanding
     shares of Tele-Cine Cell Group plc. (See Note 4). In connection with the
     acquisition the Company paid cash as follows:

<TABLE>
  <S>                                                                                      <C>
  Assets acquired:
      Property and equipment.....................................................          $  8,378
      Trade and other receivables................................................             7,279
      Investments................................................................               119
      Inventory..................................................................               200
      Goodwill...................................................................            16,380

  Liabilities assumed:
      Accounts payable and accrued liabilities...................................            (3,038)
      Bank loan..................................................................            (2,489)
      Equipment leases...........................................................              (438)
      Deferred tax liability.....................................................            (4,800)
      Provision for liabilities and charges......................................            (3,239)

  Long-term debt issued to sellers...............................................            (2,207)
                                                                                        -----------
  Cash paid in acquisition.......................................................          $ 16,145
                                                                                        ===========
</TABLE>

                 See notes to consolidated financial statements.

                                       7
<PAGE>

THE TODD-AO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MAY 31, 1999 (UNAUDITED)
(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 condensed 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-AO Europe Holding Co., Ltd. ("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 nine months ended May 31, 1998 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>
                                                                              1998
                                                                           -----------
    <S>                                                                    <C>
    Revenues..........................................................        $ 88,755
                                                                           ===========
    Net income........................................................         $ 6,103
                                                                           ===========
    Net income per common share - Basic...............................         $  0.61
                                                                           ===========
    Net income per common share - Diluted.............................         $  0.56
                                                                           ===========
</TABLE>

                                       8
<PAGE>

5.     In December 1998, November 1997 and December 1994 the Company signed
       agreements with its bank to implement the sale/leaseback of certain
       equipment. The agreements terminate on December 30, 2005, December 1,
       2002 and December 30, 1999, respectively, and are being treated as
       operating leases for financial statement purposes. On December 30, 1998,
       November 3, 1997 and December 30, 1994 an aggregate of $8,809, $8,500 and
       $11,218, respectively, of sound studio and video equipment was sold and
       leased back. The total deferred gain on the transactions to be amortized
       over five to seven years is $12,525. The annual lease cost currently is
       approximately $3,350.

       The net equipment lease expense is as follows for the nine months ended:

<TABLE>
<CAPTION>
                                                           MAY 31,         MAY 31,
                                                       -------------  --------------
                                                            1998           1999
                                                       -------------  --------------
<S>                                                    <C>            <C>
Equipment lease costs............................         $   1,837       $   2,764
Amortization of deferred gain
   on sale of equipment..........................            (1,673)         (1,856)
                                                       -------------  --------------
Equipment lease expense, net.....................          $    164        $    908
                                                       =============  ==============

</TABLE>

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 May 31, 1999, 1,621,756 shares had been repurchased.
       1,557,905 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 nine months ended:

<TABLE>
<CAPTION>
                                                          MAY 31,        MAY 31,
                                                      -------------  --------------
                                                           1998           1999
                                                      -------------  --------------
<S>                                                   <C>            <C>
Net income.....................................           $   4,716       $   3,427
Unrealized gain (loss) on marketable
    securities and long-term investments.......                 167              41
Foreign currency translation
    Adjustments................................                 (40)           (153)
                                                      -------------   --------------
Comprehensive income...........................           $   4,843       $   3,315
                                                      =============   ==============

</TABLE>

8.     On June 8, 1999 the Company and its indirect wholly owned subsidiary
       Todd-AO East, Inc signed a merger agreement with Sound One Corporation
       ("Sound One"), a New York corporation. The Boards of Directors of each
       company approved the acquisition of Sound One by the Company pursuant to
       a merger of Todd-AO East, Inc. into Sound One in accordance with the
       Internal Revenue Code of 1986 and the provisions of the merger agreement
       with the result that all of the issued and outstanding shares of common
       stock of Sound One shall be extinguished in exchange for cash
       consideration of $11.50 per share. The merger was completed on June 22,
       1999. The transaction is to be accounted for as a purchase and the
       acquisition price is equal to the sum of: (1) $11,961 in cash for the
       common stock (2) $800 in cash to be paid for non-compete agreements (3)
       approximately $200 in acquisition costs. The funds to be paid for the
       common stock were provided by the Company's institutional lender and the
       other cash requirements by the Company's operational cash flows. Sound
       One is the leading post production sound facility in New York servicing
       the entertainment industry.

                                       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

     Through May 31, 1999 the Company has signed three agreements with its
     bank to implement the sale/leaseback of certain equipment.  An aggregate of
     $28,527 of sound studio and video equipment has been sold and leased
     back.  The agreements terminate on December 30, 1999, December 1, 2002
     and December 30, 2005.  All the agreements provide for interest based on
     LIBOR rates.

     Under a new long-term credit agreement dated June 30, 1999 and expiring on
     May 31, 2004, the Company may borrow up to $80,000 in revolving loans
     until May 31, 2002.  On that date and thereafter the revolving loan
     commitment will reduce to nil by the expiration of the agreement.  Prior
     to May 31, 2002 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.  Prior to December
     31, 2000 the Company may make a one-time request to increase the credit
     line by up to $20,000.  Such increase to be at the sole discretion of
     the Banks.  The Company also has the availability of Standby Letters of
     Credit up to $20,000 under the facility.  The credit facility provides
     for borrowings based on the Bank's Reference, CD, and LIBOR rates. The
     facility includes commitment fees on the unused balance of the credit
     facility.  The agreement also contains various restrictive covenants
     which must be met by the Company.

     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.

     As of May 31, 1999, the Company had $40,225 outstanding under the credit
     facility which has been used principally to fund acquisitions of
     companies and equipment.

     The Company expects capital expenditures of approximately $25,000 for its
     Los Angeles, Santa Monica, New York City, Atlanta and London facilities in
     fiscal 1999. These capital expenditures will be financed by internally
     generated funds and borrowings under credit facilities.

     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.

                                      10

<PAGE>

2.   Material Changes in Results of Operations

     NINE MONTHS ENDED MAY 31, 1999 COMPARED TO NINE MONTHS ENDED MAY 31, 1998

     Revenues increased $15,570 or 20.8% from $74,858 to $90,428 primarily due
     to the acquisition of TeleCine in May 1998 ($15,834) and the formation of
     Todd-AO Video Services DVD ("TAO DVD") formed in May 1998 to provide DVD
     product services to the major Hollywood studios and others ($2,965).
     These increases were offset by lower utilization and activity in the
     Company's sound services divisions ($3,138) and the Company's other
     video services divisions ($91).

     Operating costs and other expenses increased $13,887 or 23.5% from $59,163
     to $73,050.  Cost increases are related to the TeleCine acquisition
     ($12,006) and the formation of TAO DVD ($1,771).  Costs in connection
     with the Company's other sound and video services divisions remained
     flat.

     Depreciation and amortization increased $2,317 or 31.2% primarily due to
     the equipment and goodwill acquired in the TeleCine acquisition ($1,534)
     and to assets placed in service in March 1998 in connection with the new
     THD Santa Monica facility ($671).

     Interest expense increased $1,383 or 129.1% primarily due to the TeleCine
     acquisition financing.

     Net equipment lease expense increased $744 as a result of the
     sale/leaseback to the Company's financial institution of certain
     equipment in December 1998.

     Net other income increased $675 primarily from an insurance settlement
     in the U.K. and a non-recurring executive stock bonus in the prior year.

     As a result of the above, income before taxes decreased $2,086 or 28.7%
     from $7,262 to $5,176 and net income decreased $1,289 or 27.3% from $4,716
     to $3,427.

     THREE MONTHS ENDED MAY 31, 1999 COMPARED TO THREE MONTHS ENDED MAY 31, 1998

     Revenues increased $841 or 3.1% from $27,252 to $28,093 primarily due to
     the acquisition of TeleCine in May 1998 ($3,950) and the formation of
     TAO DVD formed in May 1998 to provide DVD product services to the major
     Hollywood studios and others ($1,230). These increases were offset by
     lower utilization and activity in the Company's sound services
     divisions ($3,848) and the Company's other video services divisions
     ($491).

     Operating costs and other expenses increased $1,822 or 8.4% from $21,635
     to $23,457.  Cost increases are related to the TeleCine acquisition
     ($2,889) and the formation of TAO DVD ($681).  Costs in connection with
     the Company's other sound and video services divisions decreased in
     connection with the revenue decreases described above.

     Depreciation and amortization increased $660 or 24.4% primarily due to
     the equipment and goodwill acquired in the TeleCine acquisition ($517)
     and to assets placed in service in March 1998 in connection with the new
     THD Santa Monica facility ($135).

     Interest expense increased $354 or 73.4% primarily due to the TeleCine
     acquisition financing.

     Net equipment lease expense increased $435 as a result of the
     sale/leaseback to the Company's financial institution of certain
     equipment in December 1998.

     As a result of the above, income before taxes decreased $2,335 or 94.3%
     from $2,475 to $140 and net income decreased $1,565 or 96.2% from $1,627
     to $62.

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<PAGE>

     MATERIAL CHANGES IN CASH FLOWS

     For the nine months ended May 31, 1999, the Company generated $8,438 in
     cash from operating activities compared to  $13,732 in 1998.  Net income
     of $3,427 adjusted for depreciation and net amortization of $7,879
     provided cash of  $11,306 in 1999 compared to $10,461 in 1998.  A
     decrease  in accounts payable and other liabilities of approximately
     $2,000 in 1999 is compared to an increase of approximately $3,000 in
     1998.  Net cash provided by operations was utilized primarily to fund
     capital expenditures in both years.

     Net cash generated by proceeds from the sale/leaseback of certain
     equipment and net borrowings from the Company's credit facility totaling
     $14,438 were used to purchase treasury stock under the Company's stock
     repurchase program and to reinvest in capital assets of the Company.

     OTHER BUSINESS INFORMATION

     In May 1999, the Company retained the investment banking firm of Lazard
     Freres & Co. LLC, to advise the Company on possible strategic alliances,
     including but not limited to a sale, merger or joint venture.  Although
     there has been no decision as to any specific alternative and there is
     no assurance that a transaction will result from this process, the
     Company is exploring all alternatives which would maximize stockholder
     value and market valuation as well as strengthen its competitive
     position and global efforts to become the premier post production
     facility in the industry.

     In January 1999, the Company, through its newly-formed subsidiary,
     TODD-AO GERMANY GmbH, entered into a joint venture agreement with BUENA
     VISTA INTERNATIONAL FILM PRODUCTION (GERMANY) GmbH ("BVI"), an affiliate
     of Disney Enterprises, Inc.  This agreement established a partnership,
     which shall be known as Todd-AO [Germany] GmbH & Co. KG, which shall
     develop and operate a German language dubbing facility in Germany.
     Under the agreement, Disney Character Voices International, Inc.
     ("DCVI") shall give the Studio the first opportunity to dub all of its
     products appropriate for the German market, including live action and
     animated theatrical features, trailers, videos, television, and animated
     interactive projects.  To this venture, Todd-AO and BVI committed to a
     capital equivalent of $1,025 and a financial accommodation or loans not
     to exceed $2,975 each.

     On March 4, 1999, the Company and DCVI announced an agreement in
     principle to build the Studio in Munich, Germany.  A non-binding letter
     of intent, signed by the Company, DCVI and the Minister of the Free
     State of Bavaria, provides that the Studio would be located at the
     "Alte-Messe" in the heart of Munich, shall encompass 36,000 square feet
     and would include feature and video mixing studios, film and video
     dialogue recording rooms and editorial suites.  The City of Munich and
     the Free State of Bavaria have offered a subsidy of DM 27,000 for the
     construction, development and equipment of the Studio at this site
     location.  A definitive agreement is expected to be negotiated and
     signed by Todd-AO Germany and BVI, the joint venture partners.

     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.

                                      12

<PAGE>

     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 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 to the Company's financial position or results of operations.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

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

         (b).        (1)  A report on Form 8-K was filed on June 21, 1999
                          disclosing as an "Other Event" item the acquisition
                          by merger of Sound One Corporation.


                               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



      July 13, 1999                          /s/   Silas R. Cross
-----------------------                     ----------------------------
          Date                                     Silas R. Cross
                                              Chief Accounting Officer

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