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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-K/A



xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934



For The Fiscal Year Ended December 31, 2002



OR



 ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the Transition Period From
 to .





COMMISSION FILE NUMBER: 0-27644



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Digital Generation Systems, Inc.

(Exact Name of Registrant as Specified in its Charter)



|Delaware                                                       |  | 94-3140772                             
|-------------------------------------------------------------- |  | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification Number)



750
West John Carpenter Freeway, Suite 700

Irving, Texas 75039

(Address Of Principal Executive Offices, Including Zip Code)



(972) 581-2000

(Registrants Telephone Number, Including Area Code)



Securities registered pursuant to Section 12(b) of the Act: None

Securities
registered pursuant to the Section 12 (g) of the Act: Common Stock ($0.001 par value)



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 and (2) has
been subject to such filing requirements for the past 90 days.

YES x NO ̈



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ̈



Indicate by check mark if the
registrant is an accelerated filer. YES ̈NO x



The aggregate market value of the Common Stock held by
non-affiliates of the registrant, based upon the closing sale price of the Common Stock on June 28, 2002, as reported on the Nasdaq National Market, was approximately $36.4 million. Shares of Common Stock held by each officer and director of the
registrant and by each person who may be deemed to be an affiliate have been excluded. This determination of affiliate status is not necessarily a conclusive determination for other purposes.



As of March 31, 2003, the registrant had 70,949,656 shares of
Common Stock outstanding.



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AMENDMENT NO. 1



The undersigned Registrant hereby amends Part III, to read as
follows:



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT



|Name                         |  | Age |  | Title(s)                              |  | Expiration of Term
|---------------------------- |  | --- |  | ------------------------------------- |  | ------------------
|Scott K. Ginsburg (2)        |  | 50  |  | Chairman of the Board                 |  | 2004              
|Matthew E. Devine            |  | 54  |  | Chief Executive Officer and Director  |  | 2004              
|Omar A. Choucair             |  | 41  |  | Chief Financial Officer and Director  |  | 2003              
|Jeffrey A. Dankworth         |  | 47  |  | President of StarGuide and Director   |  | 2005              
|Robert C. Ryan               |  | 49  |  | General Intellectual Property Counsel |  | N/A               
|Stephen N. Sparkman          |  | 37  |  | Corporate Controller                  |  | N/A               
|Lawrence D. Lenihan, Jr. (2) |  | 38  |  | Director                              |  | 2004              
|David M. Kantor (2)          |  | 46  |  | Director                              |  | 2003              
|Cappy R. McGarr (1)          |  | 51  |  | Director                              |  | 2005              
|Eric L. Bernthal             |  | 56  |  | Director                              |  | 2003              
|Robert J. Schlegel (1)       |  | 53  |  | Director                              |  | 2005              
|Kevin C. Howe (1)            |  | 54  |  | Director                              |  | 2005              

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|(1) |  | Member of the Audit Committee
|--- |  | -----------------------------

|(2) |  | Member of the Compensation Committee
|--- |  | ------------------------------------



Scott K. Ginsburg joined the Company in December 1998 as Chief Executive Officer and Chairman of the Board. In July 1999, Matthew
E. Devine assumed the responsibilities of Chief Executive Officer, but Mr. Ginsburg remains the Companys Chairman. Mr. Ginsburg founded the Boardwalk Auto Group in 1998, which consists of several car dealerships located in the Dallas area.
From 1997 to 1998, Mr. Ginsburg served as Chief Executive Officer and Director of Chancellor Media (now AMFM Corporation). Mr. Ginsburg founded Evergreen Media Corporation in 1988, and was the co-founder of Statewide Broadcasting, Inc. and H&G
Communications, Inc. Mr. Ginsburg earned a B.A. from George Washington University in 1974 and a J.D. from Georgetown University in 1978.



Matthew E. Devinejoined the Company in July 1999 as Chief Executive Officer and Director. Prior to joining the Company, Mr. Devine
served as Chief Financial Officer of AMFM Corporation (formerly Chancellor Media) and served as Chief Financial Officer, Executive Vice President, Treasurer, Secretary and Director for Evergreen Media Corporation. Between 1975 and 1988, Mr. Devine
served in various finance positions at AMR Corporation, parent company to American Airlines.



Omar A. Choucairjoined the Company as Chief Financial Officer in July 1999. Prior to joining the Company, Mr. Choucair served as Vice President of Finance for AMFM Corporation (formerly
Chancellor Media), and served as Vice President of Finance for Evergreen Media before it was acquired by Chancellor Media in 1997. Prior to entering the media industry, Mr. Choucair was a Senior Manager at KPMG LLP, where he specialized in media and
telecommunications clients. Mr. Choucair received a B.B.A. from Baylor University and became a Director in February 2001.



Jeffrey A. Dankworth has been President and a director of StarGuide since 1995 and a director of the Company since February 2001.
Prior to co-founding StarGuide in 1994, Mr. Dankworth was an entrepreneur in the entertainment media and professional sports industries where he led the development of various media joint ventures in professional sports including the NFL Quarterback
Club. As an attorney, Mr. Dankworth has extensive experience in various areas of business development, including the negotiation and management of media partnerships, licensing programs, and joint ventures. Between 1984 and 1994, Mr. Dankworth was
Of Counsel with the law firm of Mitchell, Silberberg & Knupp and prior to that was an associate with the law firm of Gibson, Dunn & Crutcher (1981-1984). Mr. Dankworth received both an undergraduate and a graduate degree from The University
of California at Los Angeles.



Robert C.
Ryan has been General Intellectual Property Counsel of StarGuide Digital Networks since 1996. As an attorney, Mr. Ryan has extensive experience in technology and intellectual property law and media partnerships, licensing programs, joint
ventures, antitrust law, and business contracts. Mr. Ryan was a founding equity partner and director at McAndrews, Held & Malloy from 1988 until he joined his then-client, StarGuide, in 1996. Mr. Ryan first became a patent attorney in 1979 and
from 1979 through 1988 was associated with the intellectual property law firm, Banner & Witcoff, where he became a partner in 1983 and an equity partner in 1987. Mr. Ryan also has been an Adjunct Associate Professor at the Northwestern
University Technological Institute and at the John Marshall Law School, where he co-founded and taught from 1990 through 1998 leading post-graduate intellectual property practice classes in conjunction with Judge Paul R. Michel of the United States
Court of Appeals for the Federal Circuit. Mr. Ryan received a B.S. in Industrial Engineering and B.A. in Economics from the University of Illinois at Champaign-Urbana in 1976 and a J.D. from Northwestern University in 1979.



Stephen N. Sparkman joined the Company as Corporate
Controller in January 2000. Prior to joining the Company, Mr. Sparkman was Corporate Controller of Alpha Holdings Inc., a plastics manufacturing concern based in Dallas. From 1997 to 1999, Mr. Sparkman was Controller and Chief Financial Officer of
Group & Pension Administrators, Inc., a third party health and pension administrator based in Richardson, Texas. From 1991 until 1997, Mr. Sparkman served as Controller of Baker Atlas (formerly Wedge Dia-Log, Inc.), an oil field service company
based in Grand Prairie, Texas. From 1988 until 1991, Mr.



2



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Sparkman worked at KPMG LLP.
Mr. Sparkman received a B.B.A. from The University of Texas at Austin and is a Certified Public Accountant.



Lawrence D. Lenihan, Jr. has been a member of the Board of Directors of the Company since July 1997. Mr. Lenihan is a Managing
Director of Pequot Capital Management, Inc. He joined the predecessor to this firm, Dawson-Samberg Capital Management, in 1996. Prior to joining Pequot, Mr. Lenihan was a principal at Broadview Associates, LLC from 1993 to 1996. Prior to joining
Broadview, Mr. Lenihan held several positions at IBM, most recently as the leader of an interactive multimedia software product business. Mr. Lenihan graduated from Duke University with a B.S. in Electrical Engineering and he holds an M.B.A. from
the Wharton School of Business at the University of Pennsylvania. He currently serves as a director of several public and private companies including Accruent, Klocwork, Netegrity, USSearch, Inc., Performaworks, Swingtide and Elance.



David M. Kantorhas been a member of the Board of
Directors of the Company since August 1999. Mr. Kantor is a media industry consultant and Vice Chairperson and CEO of Reach Media, a company that develops, acquires and partners in quality media and marketing opportunities targeting the African
American population. Formerly, he was Senior Vice President for Network Operations of AMFM, Inc. (formerly Chancellor Media Corporation) and President of ABC Radio Network, having previously served as Executive Vice President. Prior to joining ABC
Radio Network, he held executive positions with Cox Cable and Satellite Music Network. Mr. Kantor holds a B.S. from the University of Massachusetts and an MBA from Harvard Business School.



Cappy R. McGarr has been a member of the Board of Directors of the Company since February 2001. Mr.
McGarr is President of McGarr Capital Holdings, LLC, an asset management company. He received Bachelor of Arts, Bachelor of Journalism and Master of Business Administration degrees from the University of Texas at Austin. Upon completing his graduate
degree in 1977, Mr. McGarr was employed by Goldman, Sachs & Co. He serves on the Board of Trustees of The National Archives Foundation and the Board of Directors of the Lyndon Baines Johnson Foundation.



Eric L. Bernthal has been a member of the Board of
Directors of the Company since February 2001. Mr. Bernthal is the Managing Partner of the Washington, DC office of Latham & Watkins, a law firm with more than 1,500 attorneys worldwide. He has practiced corporate and telecommunications law for
over 30 years, specializing in transactional and regulatory matters. Mr. Bernthal has represented companies in the media, communications, health care, consumer products and retail industries. Mr. Bernthal has been a partner in Latham & Watkins
since 1986. Prior to joining Latham, Mr. Bernthal was an associate and then a partner in the Washington, DC law firm of Arent, Fox, Kintner, Plotkin & Kahn, from 1972 to 1986. He served on that law firms Executive Committee for five years.
Mr. Bernthal served as law clerk to the Honorable Ruggero J. Aldisert of the United States Court of Appeals for the Third Circuit in Philadelphia from 1970 to 1972. He earned an undergraduate degree from Columbia University in 1967 and a graduate
degree from George Washington University Law Center.



Robert J. Schlegel has been a member of the Board of Directors of the Company since February 2001. Mr. Schlegel has been the CEO of The Pavestone Company, a manufacturer of decorative, environmental-friendly concrete landscape
products, since 1980. Mr. Schlegel also built a health care company, PeopleCare Heritage Centers, including 2,200 nursing retirement care beds in 13 Texas facilities. Mr. Schlegel has been actively involved in the Dallas community with the Trinity
Christian Academy, the Cox School of Business at Southern Methodist University, the Salvation Army, Students in Free Enterprise, the Alzheimers Association, the Dallas Symphony, the Young Presidents Organization and his own foundation,
the Schlegel Horizons Foundation. Mr. Schlegel graduated with a B.A. degree in Economics from Wilfrid Laurier University in 1972.



Kevin C. Howeis the Managing Partner of Mercury Ventures and has been a member of the Board of Directors of the Company since
February 2001. Mercury Ventures manages 3 different funds that invest in emerging technology companies that focus on Internet applications. Mr. Howe serves on the board of two publicly traded technology firms, the Company and The Sage Group, plc.
which is traded on the London Stock Exchange. Mr. Howe also sits on the boards of seven privately held technology firms. In 1985, he co-founded DacEasy, an early leader in packaged application software. In 1987, Mr. Howe led the sale of DacEasy to
Insilco (a Fortune 500 company). In 1991, Mr. Howe led the carve-out of DacEasy from Insilco and subsequent sale to The Sage Group, plc. which had market capitalization of over $7 billion. He was CEO of the US operations responsible for operations
and acquisitions until 1999. In 1993, Mr. Howe also co-founded Martin Howe Associates, which was an early leader in the merchant credit card processing industry and a pioneer in wireless solutions. The company was sold in 1997 to PMT, a Nasdaq
listed company. Mr. Howe received his MBA from SMU in 1976.



3



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OTHER INFORMATION



In September 1999, a civil lawsuit was
filed by the Securities and Exchange Commission in the United States District Court for the Southern District of Florida against Scott Ginsburg, the Chairman of the Board of the Company, his brother and his father. The lawsuit alleged that Mr.
Ginsburg had violated the insider trading provisions of the federal securities laws by communicating material, non-public information to his brother in 1996 regarding the securities of EZ Communications, Inc. (EZ) and in 1997 regarding
the securities of Katz Media, Inc. (Katz). The lawsuit further alleged that Mr. Ginsburgs father and brother, relying upon the information allegedly furnished by Mr. Ginsburg, purchased securities in EZ and Katz, and subsequently
profited from the sale of such securities.



In
April 2002, a jury found that Mr. Ginsburg did make these communications, known as tipping, and therefore concluded that he had violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3
thereunder. In July 2002, the United States District Court imposed a $1,000,000 civil penalty against Mr. Ginsburg.



Mr. Ginsburg filed a motion asking the Court to set aside its ruling and the verdict of the jury. On December 19, 2002, the United States
District Court granted Mr. Ginsburgs motion for judgment notwithstanding the verdict. The Court overturned the jury verdict in its entirety and set aside the civil penalty.



On February 13, 2003, the Securities and Exchange Commission filed a Notice of Appeal, seeking to reverse the
Courts decision and challenging the Courts earlier refusal to impose an injunction against Mr. Ginsburg.



SECTION 16 (a) BENEFICIAL OWNERSHIP

REPORTING COMPLIANCE



The members of the Board of Directors, the
executive officers of the Company and persons who hold more than 10% of the Companys outstanding common stock are subject to the reporting requirements of Section 16 (a) of the Securities Exchange Act of 1934, as amended, which require them to
file reports with respect to their ownership of the Companys common stock and their transactions in such common stock. Based upon (i) the copies of Section 16 (a) reports that the Company received from such persons for their 2002 fiscal year
transactions in the common stock and their common stock holdings and (ii) the written representation received from one or more of such persons that no annual Form 5 reports were required to be filed by them for the 2002 fiscal year, the Company
believes that all reporting requirements under Section 16 (a) for such fiscal year were met in a timely manner by its executive officers, Board members and greater than ten-percent shareholders at all times during the 2002 fiscal year.



4



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ITEM 11. EXECUTIVE
COMPENSATION



The following Summary
Compensation Table sets forth the compensation earned by the Companys Chief Executive Officer and the four other most highly compensated executive officers (collectively, the Named Officers).



|                                                                                         |  |                |  | Annual Compensation (1)    |  |       | Long-Term Compensation Awards Securities Underlying Options
|---------------------------------------------------------------------------------------- |  | -------------- |  | -------------------------- |  | ----- | -----------------------------------------------------------
|Name and Principal Position                                                              |  | Year           |  | Salary                     |  | Bonus |                                                            
|Scott K. Ginsburg Chairman of the Board                                                  |  | 2002 2001 2000 |  | $250,000 $250,000 $250,000 |  | $ $ $ |                                                         
|Matthew E. Devine Chief Executive Officer                                                |  | 2002 2001 2000 |  | $250,000 $250,000 $250,000 |  | $ $ $ |                                                         
|Omar A. Choucair Chief Financial Officer                                                 |  | 2002 2001 2000 |  | $175,000 $175,000 $150,000 |  | $ $ $ | 21,250                                                   
|Jeffrey A. Dankworth President of StarGuide Digital Networks, Inc.                       |  | 2002 2001 2000 |  | $250,000 $250,000 $250,000 |  | $ $ $ |                                                         
|Robert C. Ryan General Intellectual Property Counsel of StarGuide Digital Networks, Inc. |  | 2002 2001 2000 |  | $275,000 $275,000 $203,624 |  | $ $ $ |   20,376                                                 

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|(1) |  | Annual compensation amounts for 2000 represent the combined amounts and awards for services performed by the individuals related to both Digital Generation Systems,
Inc. and StarGuide Digital Networks, Inc.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | For 2002, represents reimbursement of automobile expenses ($32,612), travel expenses incurred during 1999 and 2000 but not reimbursed by the Company until 2002
($706,305) and miscellaneous expenses ($16,931). For 2001, represents reimbursement of automobile expenses ($12,000) and travel expenses incurred during 1999 and 2000 ($155,542). Effective January 1, 2001, the Company ceased reimbursement of
expenses, related to Mr. Ginsburgs airplane, incurred after such date. For 2000, represents reimbursement of automobile expenses ($12,000) and travel expenses incurred during 1999 and 2000 ($168,000).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Represents reimbursement of automobile expenses.
|--- |  | ------------------------------------------------

|(4) |  | For 2002, includes medical expense reimbursement of $19,895. For 2001, includes forgiveness of loan ($400,000) and medical expense reimbursement ($20,733).
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



5



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The following
table contains information concerning the stock option grants made to each of the Named Officers for 2002. No stock appreciation rights were granted to these individuals during such year.



|                     |  | Individual Grant (1)                            |  | Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation For Option Term
|-------------------- |  | ----------------------------------------------- |  | ----------------------------------------------------------------------------------------------
|Name                 |  | Number of Securities Underlying Options Granted |  | % Of Total Options Granted to Employees In 2002                                               
|                     |  |                                                 |  |                                                                                               
|Scott K. Ginsburg    |  | 25,000                                          |  | 1.1                                                                                           
|Matthew E. Devine    |  | 25,000 500,000                                  |  | 1.1 22.2                                                                                      
|Omar A. Choucair     |  | 250,000                                         |  | 11.1                                                                                          
|Jeffrey A. Dankworth |  | 25,000                                          |  | 1.1                                                                                           
|Robert C. Ryan       |  | 25,000                                          |  | 1.1                                                                                           

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|1. |  | Each of the options listed above have a term of 7 years, subject to earlier termination upon termination of employment. In the event of a merger of the Company with
or into another corporation or other legal entity, where vested options have not been assumed or substituted by such successor corporation or other entity, such options will be exercisable for a period for a period of 15 days from the date of notice
thereof, and will terminate upon the expiration of such period. The Companys 1992 Stock Option Plan provides that upon a change in control, the unvested options granted to each of the Companys executive officers will be subject to
accelerated vesting to the extent of 50% of such unvested options. A change in control is defined as (i) merger or acquisition of the Company resulting in a 50% or greater change in the total voting power of the Company immediately following such
transaction, or (ii) certain changes in the majority composition of the Companys Board of Directors during a 24-month period, which changes are not initiated by the Board of Directors.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The following
table sets forth information concerning option exercises during the 2002 fiscal year and option holdings as of the end of the 2002 fiscal year with respect to each of the Named Officers. No stock appreciation rights were outstanding at the end of
the year.



|Name                 |  | Shares Acquired on Exercise |             | Value Realized |               | Number of Securities Underlying Unexercised Options at
Fiscal Year End |             | Value of Unexercised in-the-Money Options at Fiscal
Year End (1)
|-------------------- |  | --------------------------- | ----------- | -------------- | ------------- | ---------------------------------------------------------------------- | ----------- | ----------------------------------------------------------------
|                     |  |                             | Exercisable |                | Unexercisable |                                                                        | Exercisable |                                                                 
|Scott K. Ginsburg    |  |                            |             | $              |              |                                                                        | 457,258     |                                                                 
|Matthew E. Devine    |  |                            |             | $              |              |                                                                        | 1,399,565   |                                                                 
|Omar A. Choucair     |  |                            |             | $              |              |                                                                        | 444,285     |                                                                 
|Jeffrey A. Dankworth |  |                            |             | $              |              |                                                                        | 197,278     |                                                                 
|Robert C. Ryan       |  |                            |             | $              |              |                                                                        | 395,410     |                                                                 

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|(1) |  | Based on the fair market value of the Companys common stock at December 31, 2002, of $1.07 per share, less the exercisable price payable for each share.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



DIRECTOR COMPENSATION



Except for grants of stock options, directors of the Company
generally do not receive compensation for services provided as a director other than reimbursement for documented reasonable expenses incurred in connection with attendance at meetings of the Companys Board of Directors and the committees
thereof. The Company also does not pay compensation for committee participation or special assignments of the Board of Directors.



Non-employee Board members are eligible for option grants pursuant to the provisions of the Companys 1995 Director Option Plan. The
exercise price per share of all options granted under the 1995 Director Option Plan shall be equal to the fair market value of a share of the Companys common stock on the date of grant of the option. The terms of the options granted are ten
years.



Directors who are also employees of the
Company are eligible to receive options for common stock directly under the 1992 Stock Option Plan and, if officers of the Company, are eligible to receive incentive cash bonus awards and are eligible to participate in the 1996 Employee Stock
Purchase Plan.



EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL
ARRANGEMENTS



None of the Companys current
executive officers have employment or severance agreements with the Company, and their employment may be terminated at any time at the discretion of the Board of Directors.



COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION



The members of the Compensation Committee are Messrs. Ginsburg, Lenihan and Kantor. Other than Mr. Ginsburg,
the Companys Chairman of the Board and former Chief Executive Officer, none of these individuals was at any time during 2002, or at any other time, an officer or employee of the Company.



No executive officer of the Company serves as a member of the
board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Companys Board of Directors or Compensation Committee.



7



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ITEM 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



Equity
Compensation Plan Information:



The
following table provides information about the securities authorized for issuance under the Companys equity compensation plans as of December 31, 2002:



|                                                           |  | (a)                                                                                             |  | (b)                                                                         |      | (c)                                                                                                                                            
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------
|Plan Category                                              |  | Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) |  | Weighted-average exercise price of outstanding options, warrants and rights |      | Number of securities remaining available for future issuance
under equity compensation plans (excluding securities reflected in column (a))
(2)
|Equity compensation plans approved by security holders     |  | 9,772,338                                                                                       |  | $                                                                           | 2.36 |                                                                                                                                                
|Equity compensation plans not approved by security holders |  |                                                                                                |  | $                                                                           |     |                                                                                                                                                
|                                                           |  |                                                                                                 |  |                                                                             |      |                                                                                                                                                
|Total                                                      |  | 9,772,338                                                                                       |  | $                                                                           | 2.36 |                                                                                                                                                
|                                                           |  |                                                                                                 |  |                                                                             |      |                                                                                                                                                

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|(1) |  | This table excludes an aggregate of 7,823,033 shares issuable upon exercise of outstanding options and warrants assumed by the Company in connection with the
Companys merger with StarGuide Digital Networks, Inc. in January 2001. The weighted-average exercise price of the excluded options and warrants is $2.64 per share.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Includes 68,679 shares issuable under the Companys Employee Stock Purchase Plan, of which approximately 9,399 shares are issuable in connection with the
current offering period, which ends on April 30, 2003.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Beneficial Ownership
Information:



The following table sets
forth, as of January 31, 2003 (except where otherwise noted), certain information with respect to shares beneficially owned by (i) each person who is known by the Company to be the beneficial owner of more than five percent of the Companys
outstanding shares of common stock, (ii) each of the Companys directors and the executive officers named in the Summary Compensation Table and (iii) all current directors and executive officers as a group. Beneficial ownership has been
determined in accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares).
In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire shares (for example, upon exercise of an option or warrant) within sixty (60) days of the date as of which the information is provided; in
computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of such acquisition rights. As a result, the percentage of
outstanding shares of any person as shown in the following table does not necessarily reflect the persons actual voting power at any particular date.



|                                                                                                                            |  | Shares Beneficially Owned
as of January 31, 2003 (1) (2) | 
|--------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------- | 
|Beneficial Owner                                                                                                            |  | Number of Shares                                         | 
|Scott Ginsburg (3) Moon Doggie Family Partnership 4707 Park Lane Dallas, Texas 75220                                        |  | 31,934,139                                               | 
|                                                                                                                           
|Entities and individuals associated with Pequot Capital Management, Inc. (4) 354 Pequot Avenue Southport, Connecticut 06490 |  | 5,195,603                                                | 
|                                                                                                                           
|C.D.A.S., Inc. (5) 2897 Granite Pointe Court Reno, NV 89511                                                                 |  | 2,858,575                                                | 
|                                                                                                                           
|Matthew E. Devine (6)                                                                                                       |  | 2,706,273                                                | 
|Omar A. Choucair (7)                                                                                                        |  | 634,069                                                  | 
|Lawrence D. Lenihan, Jr (8)                                                                                                 |  | 5,236,992                                                | 
|David M. Kantor (9)                                                                                                         |  | 46,389                                                   | 
|Cappy R. McGarr (10)                                                                                                        |  | 169,445                                                  | 
|Jeffrey A. Dankworth (11)                                                                                                   |  | 5,598,320                                                | 
|Eric L. Bernthal (10)                                                                                                       |  | 744,669                                                  | 
|Robert J. Schlegel (10)                                                                                                     |  | 299,709                                                  | 
|Kevin Howe (10)                                                                                                             |  | 173,049                                                  | 
|Robert Ryan (12)                                                                                                            |  | 753,132                                                  | 
|All current directors and executive officers as a group                                                                     |  | 48,296,188                                               | 

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* Less than 1% of the outstanding
shares of common stock.



|(1) |  | Except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment
power with respect to all shares of common stock. To the Companys knowledge, the entities named in the table have sole voting and investment power with respect to all shares of Common stock shown as beneficially owned by them. Unless otherwise
indicated, the business address of each beneficial owner listed is 750 West John Carpenter Freeway, Suite 700, Irving, Texas 75039.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



9



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|(2) |  | The number of shares of common stock deemed outstanding as of January 31, 2003 was 70,810,696. The number of beneficially owned shares includes shares issuable
pursuant to stock options and warrants that may be exercised within sixty days after January 31, 2003.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) |  | Based on a filing with the Securities and Exchange Commission, dated January 22, 2001, indicating beneficial ownership as of such date. Includes 22,028,594 shares
held in the name of Scott K. Ginsburg and 2,920,134 shares held in the name of Moon Doggie Family Partnership, L.P. Scott K. Ginsburg, the Companys Chairman of the Board, is the sole general partner of Moon Doggie Family Partnership, L.P.
Includes options exercisable into 467,154 shares of common stock, warrants issued to Moon Doggie Family Partnership, L.P. exercisable into 3,008,527 shares of common stock and warrants issued to Scott K. Ginsburg exercisable into 3,509,730 shares of
common stock.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) |  | Includes 375,367 shares held in the name of Pequot Offshore Private Equity Fund, Inc., 2,964,740 shares held in the name of Pequot Private Equity Fund, L.P., 823,902
shares held in the name of Pequot International Fund, Inc. and 823,902 shares held in the name of Pequot Partners Fund, L.P. Pequot Capital Management, Inc. is the investment advisor to Pequot Offshore Private Equity Fund, Inc., Pequot Private
Equity Fund, L.P., Pequot International Fund, Inc. and Pequot Partners Fund, L.P. (the Pequot Funds) and may be deemed to beneficially own all of such shares. Pequot Capital Management, Inc. acquired beneficial ownership of such shares
from Dawson-Samberg Capital Management, Inc., the former investment advisor to the Pequot Funds. On January 1, 1999, Dawson-Samberg Capital Management, Inc. spun-off a portion of its investment management business to Pequot Capital Management, Inc.,
including the beneficial ownership of all of such shares formerly held by Dawson-Samberg Capital Management, Inc. Lawrence D. Lenihan, Jr., a member of the Companys Board of Directors, is a principal and minority shareholder of Pequot Capital
Management, Inc. Mr. Lenihan disclaims beneficial ownership of all shares held or beneficially owned by or through such entity. Includes warrants exercisable into 207,692 shares of common stock.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) |  | Based on most recent information received from C.D.A.S., Inc.
|--- |  | -------------------------------------------------------------



|(6) |  | Includes options exercisable into 1,441,330 shares of common stock and warrants exercisable into 303,310 shares of common stock.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------



|(7) |  | Includes options exercisable into 523,544 shares of common stock and warrants exercisable into 86,660 shares of common stock.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------



|(8) |  | Includes 5,195,603 shares beneficially owned by affiliated entities of Pequot Capital Management, Inc., of which Mr. Lenihan disclaims beneficial ownership as set
forth in footnote 4 above. Includes options exercisable into 41,389 shares of common stock.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(9) |  | Includes options exercisable into 36,389 shares of common stock.
|--- |  | ----------------------------------------------------------------



|(10) |  | Includes options exercisable into 26,389 shares of common stock.
|---- |  | ----------------------------------------------------------------



|(11) |  | Includes options exercisable into 207,174 shares of common stock.
|---- |  | -----------------------------------------------------------------



|(12) |  | Includes options exercisable into 405,306 shares of common stock.
|---- |  | -----------------------------------------------------------------



10



---



ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS



During 2002 and 2001, the Company paid approximately $1,435,000 and $424,000 in legal fees, respectively to Latham & Watkins, a law firm for which Eric L. Bernthal is a partner.



During 2002, the Company paid approximately $105,000 in
federal income taxes on behalf of Robert Ryan in relation to stock options exercised.



ITEM 14. CONTROLS AND PROCEDURES



Our principal executive and financial officers have concluded, based on their evaluation as of a date within 90 days before the filing of this Form 10-K/A, that our disclosure controls and procedures under Rule 13a-14 of the
Securities Exchange Act of 1934 are effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the
SECs rules and forms, and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our principle executive and financial officers,
as appropriate to allow timely decisions regarding required disclosure.



Subsequent to our evaluation, there were no significant changes in internal controls or other factors that could significantly affect these internal controls.



PART IV



ITEM 15. EXHIBITS



99.1(a)     Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



11



---



SIGNATURES



Pursuant to the requirements of Section 13
or 15(d) 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.



|                      |  |  |  | DIGITAL GENERATION SYSTEMS, INC.
|--------------------- |  |  |  | --------------------------------
|                     
|Dated: April 30, 2003 |  |  |  | By:                             
|                      |  |  |  |                                 



In
accordance with the requirements of the Securities Exchange Act of 1934, this Amendment was signed below by the following persons on behalf of the Registrant and in the capacities and dates indicated.



|Signature                                |  | Title                                                                             |  | Date          
|---------------------------------------- |  | --------------------------------------------------------------------------------- |  | --------------
|                                        
|*Scott K.
Ginsburg                       |  | Chairman of the Board and Director (Principal Executive Officer)                  |  | April 30, 2003
|                                        
|/S/MATTHEW E. DEVINEMatthew E. Devine    |  | Chief Executive Officer And Director                                              |  | April 30, 2003
|                                        
|*Omar A.
Choucair                        |  | Chief Financial Officer and Director (Principal Financial and Accounting Officer) |  | April 30, 2003
|                                        
|*David M.
Kantor                         |  | Director                                                                          |  | April 30, 2003
|                                        
|*Lawrence
D. Lenihan, Jr.                |  | Director                                                                          |  | April 30, 2003
|                                        
|*Cappy R.
McGarr                         |  | Director                                                                          |  | April 30, 2003
|                                        
|*Jeffrey
A. Dankworth                    |  | Director                                                                          |  | April 30, 2003
|                                        
|*Eric L.
Bernthal                        |  | Director                                                                          |  | April 30, 2003
|                                        
|*Robert
J. Schlegel                      |  | Director                                                                          |  | April 30, 2003
|                                        
|*Kevin
Howe                              |  | Director                                                                          |  | April 30, 2003
|                                        
|By: /S/MATTHEW E. DEVINEAttorney-in-Fact |  |                                                                                   |  |               
|                                        
|                                         |  |                                                                                   |  |               



12



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CERTIFICATION OF CHIEF EXECUTIVE OFFICER



I, Matthew E. Devine, Chief Executive Officer, certify that:



| | 1. |  | I have reviewed this annual report on Form 10-K/A of Digital Generation Systems, Inc.
| | -- |  | -------------------------------------------------------------------------------------

| | 2. |  | Based on my knowledge, this annual report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report
(the Evaluation Date); and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. |  | The registrants other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Dated: April 30, 2003 |  | By: |  | /s/ MATTHEW E. DEVINEMatthew E. Devine Chief Executive Officer
|--------------------- |  | --- |  | --------------------------------------------------------------
|                     
|                      |  |     |  |                                                               
|                      |  |     |  |                                                               





13



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CERTIFICATION OF CHIEF FINANCIAL OFFICER



I, Omar A. Choucair, Chief Financial Officer, certify that:



| | 1. |  | I have reviewed this annual report on Form 10-K/A of Digital Generation Systems, Inc.
| | -- |  | -------------------------------------------------------------------------------------

| | 2. |  | Based on my knowledge, this annual report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report
(the Evaluation Date); and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of registrants board of directors (or persons performing the equivalent function):
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | e) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. |  | The registrants other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Dated: April 30, 2003 |  | By: |  | /s/ OMAR A. CHOUCAIROmar A. Choucair Chief Financial Officer
|--------------------- |  | --- |  | ------------------------------------------------------------
|                     
|                      |  |     |  |                                                             
|                      |  |     |  |                                                             





14