10-Q/A

                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C. 20549

                           ------------------------

                                 FORM 10-Q/A

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

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FOR QUARTER ENDED MARCH 31, 1995                 COMMISSION FILE NUMBER 0-17295


                          THE KUSHNER-LOCKE COMPANY
             (Exact name of registrant as specified in its charter)

       California                                               95-4079057
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

            11601 Wilshire Blvd., 21st Floor, Los Angeles, CA    90025
                 (Address of principal executive offices)      (Zip Code)

          Registrant's telephone number, including area code (310) 445-1111

              Securities registered pursuant to Section 12(b) of the Act:
                                    Not applicable

              Securities registered pursuant to Section 12(g) of the Act:
                            Common Stock, without par value
                  10% Convertible Subordinated Debentures, Series A
                13 3/4% Convertible Subordinated Debentures, Series B
                            Common Stock Purchase Warrants

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
                       ----                               ----

Number of shares of registrant's common stock outstanding as of June 30,
1995: 32,081,983





    The undersigned registrant (the "Registrant") hereby amends the following
items of its Quarterly Report on Form 10-Q for the quarter ended March 31,
1995 (the "Report") as follows:


                                  Exhibit 10.3

    The Registrant hereby deletes the information set forth in Exhibit 10.3
included as part of the Report and replaces such Exhibit in its entirety with
Exhibit 10.3 included herewith.




                                  SIGNATURES

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 KUSHNER-LOCKE COMPANY
                                        --------------------------
                                        (Registrant)

Dated: July 31, 1995                    /s/ Peter Locke
                                        ----------------------------------
                                        Peter Locke
                                        Co-Chairman of the Board, Co-Chief
                                        Executive Officer and President

Dated: July 31, 1995                    /s/ Donald Kushner
                                        -----------------------------------
                                        Donald Kushner
                                        Co-Chairman of the Board,  Co-Chief
                                        Executive Officer and Secretary

Dated: July 31, 1995                    /s/ Lenore Nelson
                                        -----------------------------------
                                        Lenore Nelson
                                        Chief Financial Officer, Executive
                                        Vice President and Assistant Secretary

EX-10.3

EXHIBIT 10.3

                       [SAVOY PICTURES, INC. LETTERHEAD]

Dated: As of February 6, 1995

KL Features, Inc.
The Kushner-Locke Company
c/o Ziffren Brittenham Branca & Fischer
2121 Avenue of the Stars
Los Angeles, California  90067

    RE: "Pinocchio"
        -----------

Gentlemen:

    This letter shall serve to confirm the agreement between Savoy Pictures,
Inc. ("Savoy"), on the one hand, and KL Features, Inc. and The Kushner-Locke
Company (collectively "K-L"), on the other hand, in connection with the
development, production, financing and distribution of a live-action
feature-length theatrical motion picture tentatively entitled "Pinocchio"
("Picture") to be based on the existing screenplay presently entitled "The
Legend of Pinocchio" written by Sherry Mills and Joyce Warren (the
"Underlying Materials"), as follows:

        A.  BASIC TERMS:  The basic terms and conditions of the parties'
agreement are as set forth in the InterOffice Memo ("Memo") which is attached
hereto as Exhibit "A" (and incorporated herein by this reference) and which
has been initialed by the parties hereto.

        B. K-L REPRESENTATIONS: K-L hereby represents and warrants to Savoy
as follows: (i) K-L owns all right, title and interest in and to the
Underlying Materials and the Picture, free and clear of any and all third
party claims, liens or encumbrances; and (ii) K-L has the right to enter into
this Agreement and the consent of no other party is required in order to give
effect to the undertakings, representations and warranties of K-L hereunder.






        C. INDEMNIFICATION: K-L hereby agrees to indemnify and hold harmless
Savoy (and Savoy's parent and affiliated companies, and its and their
respective officers, directors, employees, licensees and assigns)
(collectively, the "Savoy Indemnified Parties") from and against any loss,
liability, damage, claim, action, cause of action or expense (including
reasonable attorneys' fees and court costs) which may be incurred by the
Savoy Indemnified Parties by reason of a breach of the representations and
warranties described in Paragraph B above.

    The balance of the terms and conditions shall be negotiated in good faith
by the parties in accordance with Savoy's customary parameters for deals of
this type (but in any event consistent with the provisions set forth in the
Memo). However, unless and until a more formal agreement is entered into by
the parties hereto, this agreement shall constitute the legally binding
obligation of the parties hereto with respect to the subject matter hereof.

    Entered into as of this ____ day of _____________, 1995.

                                       SAVOY PICTURES, INC.

                                       By: _____________________________
                                       Its: ____________________________

                                       KL FEATURES, INC.

                                       By: [Signature of Donald Kushner]
                                       Its: ____________________________

                                       THE KUSHNER-LOCKE COMPANY

                                       By: [Signature of Donald Kushner]
                                       Its: ____________________________




[SAVOY PICTURES ENTERTAINMENT, INC. LETTERHEAD]

                              INTEROFFICE MEMO

TO:      ROB FRIED
FROM:    HARRIS MASLANSKY
DATE:    JANUARY 12, 1995 (REVISED FEBRUARY 6, 1995)
SUBJECT: "PINOCCHIO" -- DEAL TERMS

Following is a summary of the basic deal terms for the production and
distribution of the above picture:

1.  BUDGET AND PRODUCTION COST: The budget will not exceed $25M, including a
contingency approved by the bond company, bond fee, and financing charges
(including bank commitment and interest charges). The target budget will be
$XXX** all-in with a maximum of $25M. Savoy and Kushner-Locke ("K-L") will
co-finance the negative cost portion of the budget including the bond and
contingency 50/50. If Savoy chooses to cash flow the picture, it will be
assumed that Savoy's advances bear interest at the same borrowing rate as K-L
is paying on its part. In addition, Savoy shall charge the picture with an
amount equal to the K-L bank commitment and financing charges to be recouped
as part of Savoy's contribution. Is is contemplated that $XXX** will be the
agreed-upon budgeted item for cast and that any cast breakage must be
approved by K-L and Savoy.

K-L must provide Savoy a satisfactory chain-of-title as a condition to
Savoy's obligation to proceed with any production funding in addition to the
$750K for development. Savoy to use good faith efforts to expeditiously
approved the chain-of-title, and will notify K-L of any prospective problems.
If K-L is unable to satisfy Savoy as the chain-of-title, K-L will immediately
reimburse Savoy for all monies advanced by Savoy.

K-L will verify development spending to date and subject to the following.
Savoy will be responsible for advancing over an agreed-upon cash flow
schedule an amount equal to the already outstanding K-L development monies.
At the point that K-L and Savoy have each advanced an equal amount, Savoy and
K-L will together continue to advance development monies as agreed pursuant
to the cash flow schedule until each party has advanced in the aggregate
$750K.

K-L will have a period of 45 days from execution of the agreement, or the
point at which each party has advanced $750K, whichever is sooner, to provide
Savoy with satisfactory evidence that it has put in place its share of the
production financing. If at the expiration of this 45-day period, K-L has not
succeeded, despite having exercised good faith efforts, in providing Savoy
with satisfactory evidence that is has put in place its share of the
production financing, Savoy shall elect to take one of the following options:


- ---------------------
 * Savoy has approved Chain of Title.

** Confidential treatment requested.



(a) to extend the period for 30 days by which K-L must satisfy Savoy with
satisfactory evidence; or

(b) to commit to remain involved for a period of 45 days in the development
and production of the picture with K-L in accordance with these deal terms
(at which point if K-L has provided satisfactory evidence that it has put
into place its share of the production financing, the parties will proceed to
production and, if K-L has not provided satisfactory evidence, then Savoy may
make the election under 1(c)); or

(c) to terminate its involvement with the picture, in which case K-L shall
reimburse Savoy, with interest, for Savoy's investment in the picture and
Savoy shall assign to K-L all of Savoy's rights in the picture.

All pre-production costs as provided in the cash flow schedule will also be
borne 50/50. Producer's fees, not including line producer fees, will not
exceed $XXX** and neither party will charge overhead to the other.

2. RIGHTS: Savoy will have all motion picture and allied rights in perpetuity
throughout the Domestic territories (US and Canada excluding French Canada
for which Savoy will have the economic benefit, and their respective
territories and possessions and commonwealths including Puerto Rico as well
as US and Canadian military bases and embassies throughout the world and all
airlines and ships flying the flag of the US or Canada). Guarantees received
by K-L for French Canada will be considered part of Savoy's contribution to
the production costs and any overages will be paid over to Savoy and
accounted for as Gross receipts. K-L will be entitled to a XXX%** sales
commission on the guarantees received for French Canada.

3. APPROVALS: Subject to the parameters of approved budget, K-L and Savoy
have mutual approval (with Savoy's decision final) of the budget, however,
notwithstanding the foregoing (budget cannot exceed $25M, and cast cannot
exceed $XXX** without full mutual approval), cash flow schedule, production
schedule, screenplay, (approved -- however, a rewrite will be done and
material changes in the screenplay are subject to mutual approval, with
Savoy's decision final) additional writers, director (Steve Barron is
pre-approved), principal cast, principal crew and other key creative elements
including the special effects company and locations, the line producer, UPM
and production auditor. Attached is a list of pre-approved elements.
[Still waiting for approved list.] Each party agrees that it will not
exercise its approvals to frustrate production, nor act inconsistently with
the budget parameters.

Both IFG and Film Finances (Film Finances is subject to Savoy's approval of the
cut-through guarantee) are pre-approved for the completion bond.

- -----------------------
** Confidential treatment requested.



4. KUSHNER-LOCKE PARTICIPATION IN THE DOMESTIC TERRITORY:

   A. Gross Participation: K-L to receive XXX%** of Adjusted Gross (which
   shall mean Gross Proceeds less only costs incurred for conversion,
   checking, claims, collections, copyright and royalties, residuals, trade
   dues, licenses and taxes) to the extent that such participation would
   exceed $XXX** until "Initial Actual Breakeven."

   B. Home Video: Royalties will be XXX%** of wholesale list price for rental
   units and XXX%** of wholesale list price for sell-through units and no
   distribution fee shall be charged.

   C. Bonuses: K-L shall receive the following bonuses:

      After CBE (the point at which Savoy has recovered all its distribution
   expenses, all "pre-break Participants" if any, and its production costs
   plus interest) with no distribution fee, K-L shall receive XXX%** of
   further Gross until it has received $XXX**;

      at $XXX** of domestic theatrical film rentals (US and Canada, K-L shall
   receive an additional $XXX**;

      at $XXX** of domestic theatrical film rentals (US and Canada, K-L shall
   receive an additional $XXX**; and

      at $XXX** of domestic theatrical film rentals (US and Canada), K-L shall
   receive an additional $XXX**.

   D. Net Participation: K-L to receive XXX%** of XXX%** of Net Proceeds with
      Breakeven calculated with a XXX%** fee.

5. THIRD PARTY PARTICIPATIONS: All Participations, deferments and bonuses
   including those payable under "4" above on account of the Domestic
   distribution will be paid by Savoy, and Participations under "4A" and "4C"
   will be included as an additional expense in determining Net Profits. Once
   Net Profits are reached, the Domestic share of all third party
   Participations are to be borne from K-L's XXX%**. All third party
   Participations with respect to Domestic distribution shall be subject to
   mutual approval however, K-L shall have approval of Participations outside
   of the Domestic territories but shall not use that approval to frustrate
   Savoy's decisions as to casting. Based upon the budgeted amount for cast,
   additional Participations may be granted by Savoy to the approved cast
   without the additional approval of K-L as long as those percentages do not
   exceed XXX%** of the talent's existing precedent. Savoy shall pay
   residuals, if any, for the Domestic territory. Foreign and Domestic
   Participations will be uncrossed. K-L will have a hard floor of XXX%** of
   XXX%* of Net Proceeds. All Foreign residuals and participations will be
   borne by K-L.


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** Confidential treatment requested.



6. REVENUES FROM OTHER RIGHTS: Merchandising, novelization, music publishing,
   soundtrack album, commercial tie-ins, interactive games, CD-ROM, music
   video, electronic games and other ancillary rights in the picture will be
   split 50/50 on a worldwide basis between Savoy and K-L and will not be
   included in paragraph "4" computations. Savoy and K-L will mutually
   determine who is best suited to handle the exploitation of these rights
   (Savoy has tie-breaker vote). However, neither party will charge a fee for
   arranging the exploitation of these rights.

7. OTHER: Savoy to have final cut for the Domestic territory as well as the
   right to designate the release title, Kushner, Locke, and Mortoff ("K/L/M")
   to receive "Produced by" or "Executive Producer" credits as K-L elects, in
   an order to be designated by K/L/M, which credited K/L/M agree may be share
   with other designated third parties, with K/L/M's credits appearing in
   first position as between K/L/M and such third party (-ies). K/L/M's
   credits shall be accorded both on-screen and in paid advertising, subject
   to Savoy's standard "excluded ads provisions." Savoy to receive customary
   releasing and presentation credits in the Domestic territory. K-L's NON-
   animated logo to appear on-screen in main titles immediately following the
   Savoy animated logo and production credits to appear on-screen in main
   titles immediately after Savoy's standard "excluded ad provisions." K-L to
   be consulted regarding the initial Domestic theatrical advertising campaign
   and general release pattern as well as the creation of the trailers and
   one-sheets/posters. Savoy's decisions final.*

   K-L and Savoy to have mutual approval of initial press release and
   announcements.

8. FOREIGN RELEASE: Foreign theatrical release can be day and date with
   Savoy's Domestic theatrical release. However, K-L will have an outside date
   of four months after delivery, or XXXX**, whichever is sooner.


CC:  Steven Burkow
     Victor Kaufman
     Lew Korman
     Donald Kushner
     Peter Locke
     Larry Mortoff
     Jessica Roddy
     Bruce Tobey



- ----------------------
 * If prior to release of the picture, Savoy allows a third party
production/financing entity the use of an animated logo on screen for the
theatrical motion picture, Savoy agrees that it will allow K-L the use of its
animated logo in the main titles.**

** Confidential treatment required.