<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON D.C.  20549

                                   FORM 10-Q

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

                        For the quarterly period ended
                                 June 30, 1998
 
                 ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
            (Exact name of registrant as specified in its charter)

                         Commission File No. 333-3338

     MINNESOTA                                            41-1540241
     (State or other jurisdiction of                      (I.R.S. Employer
     incorporation or organization)                       Identification No.)

                             ____________________

                        ADAMS OUTDOOR ADVERTISING, INC.
            (Exact name of registrant as specified in its charter)

                        Commission File No. 333-3338-01

     MINNESOTA                                            41-1540245
     (State or other jurisdiction of                      (I.R.S. Employer
     incorporation or organization)                       Identification No.)

                       1380 West Paces Ferry Road, N.W.
                             Suite 170, South Wing
                              Atlanta, GA  30327
                   (Address of principal executive offices)

                                (404) 233-1366
             (Registrant's telephone number, including area code)

          Securities Registered Pursuant to Section 12(b) of the Act:
                                     None.

          Securities Registered Pursuant to Section 12(g) of the Act:
                         10 3/4% Senior Notes Due 2006

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  
                                        ---       ---  

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.  (Applicable only to Adams
Outdoor Advertising, Inc.)

Class                 Outstanding as of August 12, 1998
-----                 ---------------------------------
Common Stock,
$.001 par value       10,000
<PAGE>
 
                 ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
                        ADAMS OUTDOOR ADVERTISING, INC.

                 Securities and Exchange Commission Form 10-Q
                  for the Second Quarter Ended June 30, 1998

                                     INDEX
                                                                   Page Number
                                                                   -----------
PART I.   FINANCIAL INFORMATION

  Item 1.  Financial Statements

           Consolidated  Balance Sheets of Adams Outdoor
           Advertising Limited Partnership as of
           June 30, 1998 and December 31, 1997 (unaudited).............  1
 
           Consolidated Statements of Operations of
           Adams Outdoor Advertising Limited Partnership
           for the quarters and six months ended June 30, 1998
           and June 30, 1997 (unaudited)...............................  2
 
           Consolidated Statements of Cash Flows of
           Adams Outdoor Advertising Limited Partnership
           for the six months ended June 30, 1998
           and June 30, 1997 (unaudited)...............................  3
 
           Notes to Interim Consolidated Financial Statements of
           Adams Outdoor Advertising Limited Partnership (unaudited)...  4
 
           Balance Sheets of Adams Outdoor
           Advertising, Inc. as of June 30, 1998 and
           December 31, 1997 (unaudited)...............................  5
 
           Statements of Operations of
           Adams Outdoor Advertising, Inc. for the quarters
           and six months ended June 30, 1998 and
           June 30, 1997 (unaudited)...................................  6
 
           Statements of Cash Flows of
           Adams Outdoor Advertising, Inc. for the
           six months ended June 30, 1998 and
           June 30, 1997 (unaudited)...................................  7
 
           Notes to Interim Financial Statements of
           Adams Outdoor Advertising, Inc. (unaudited).................  8

  Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations.........................  9

                                       i
<PAGE>
 
PART II. OTHER INFORMATION

  Item 1.  Legal Proceedings..........................................  14
  Item 2.  Changes in Securities......................................  14
  Item 3.  Defaults Upon Senior Securities............................  14
  Item 4.  Submission of Matters to a Vote of Security Holders........  14
  Item 5.  Other Information..........................................  14
  Item 6.  Exhibits and Reports on Form 8-K...........................  14
 
SIGNATURES............................................................  15

                                       ii
<PAGE>
 
                 ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
                            (Dollars in thousands)
 
<TABLE> 
<CAPTION> 
                                                                   June 30,      December 31,
                     ASSETS                                         1998            1997
                                                                  ---------    --------------  
<S>                                                               <C>            <C> 
Current assets:
 Cash and cash equivalents                                         $  3,946      $  3,121
 Investments                                                          1,851         1,281
 Accounts receivable, less allowance for doubtful accounts of
  $785 and $700 at June 30, 1998 and December 31, 1997,
  respectively                                                        9,605         7,576
 Accounts receivable from related parties                               106           228
 Receivables from employees                                             170            89
 Inventories                                                            120           142
 Prepaid rent                                                         3,017         2,452
 Prepaid expenses                                                       585           795
                                                                   --------      --------
 
   Total current assets                                              19,400        15,684
 
Property, plant and equipment, net                                   50,275        51,090
Intangible assets, net                                                9,843        10,450
Other assets                                                            248           250
                                                                   --------      --------
 
                                                                   $ 79,766      $ 77,474
                                                                   ========      ========
 
                     LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
 
Current liabilities:
 Current installments of long-term debt                            $     -       $  4,000
 Accounts payable                                                       535           540
 Interest payable                                                     3,766         4,042
 Accrued expenses and other liabilities                               2,599         2,673
 Deferred compensation                                                1,402         1,332
                                                                   --------      --------
 
  Total current liabilities                                           8,302        12,587
 
Long-term debt                                                      136,934       131,034
Deferred compensation                                                 2,989         3,439
                                                                   --------      --------
 
   Total liabilities                                                148,225       147,060
 
Partners' equity (deficit):
 General partners' deficit                                          (67,829)      (67,829)
 Limited partners' deficit                                             (630)       (1,757)
                                                                   --------      --------
 
  Total partners' deficit                                           (68,459)      (69,586)
                                                                   --------      --------
 
Commitments and contingencies
 
                                                                   $ 79,766      $ 77,474
                                                                   ========      ======== 
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.

                                       1
<PAGE>
 
                 ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                            (Dollars in Thousands)
<TABLE>
<CAPTION>
                                                    Quarter Ended             Six Months Ended
                                                       June 30,                   June 30,
                                                   1998      1997             1998        1997
                                                  ------    ------           ------      ------
<S>                                               <C>       <C>              <C>         <C>
Gross Revenues                                   $18,622   $16,163            $34,364   $30,216
 Less agency commissions                           1,866     1,504              3,393     2,799
                                                 -------   -------            -------   ------- 
 
 Net outdoor advertising revenue                  16,756    14,659             30,971    27,417
 
Operating expenses:
 Direct advertising expenses                       7,898     7,213             15,367    14,353
 Corporate general and administrative              1,105       879              2,109     1,532
 Depreciation and amortization                     2,070     1,987              4,133     3,973
 Deferred compensation                               203       124                331       247
                                                 -------   -------            -------   -------  
 
  Total operating expenses                        11,276    10,203             21,940    20,105
                                                 -------   -------            -------   -------  
                                          
  Operating income                                 5,480     4,456              9,031     7,312
                                                 -------   -------            -------   -------  
 
Other expenses (income):
 Interest expense                                  3,646     3,676              7,291     7,278
 Interest expense - related parties                    6         0                 14        14
 Other expenses (income), net                         68        (3)                62       (13)
 (Gain) loss on disposals of property, plant
  and equipment, net                                  15       (50)                19       (47)
                                                 -------   -------            -------   -------  
 
  Total other expenses                             3,735     3,623              7,386     7,232
                                                 -------   -------            -------   -------  
 
  Net income                                     $ 1,745   $   833            $ 1,645   $    80
                                                 =======   =======            =======   =======
</TABLE>
 
 
See accompanying notes to unaudited interim consolidated financial statements.

                                       2
<PAGE>
 
                 ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                         (DOLLARS IN THOUSANDS)       
<TABLE> 
<CAPTION> 
                                                                     Six Months Ended
                                                                        June 30,
                                                                    1998          1997
                                                                 ---------     ---------
<S>                                                              <C>               <C>
 
Cash flows from operating activities:                            
 Net Income                                                        $ 1,645      $     80
 Adjustments to reconcile net income to cash (used in)
  provided by operating activities: 
   Depreciation                                                      3,713         3,547
   Amortization of intangible assets                                   687           715
   Deferred compensation expense                                       712           605
   Payments of Deferred Compensation                                (1,092)       (1,540)
   Barter (income) loss                                               (141)           10
   Loss (gain) on disposals of property, plant and  
    equipment, net                                                      19           (47)
   Purchases of investments                                           (571)         (358)
 
 Changes in assets and liabilities:
   Increase in accounts receivable, net                             (1,966)         (663)
   Decrease in inventories                                              23             3
   Increase in prepaid rent and other prepaid expenses                (354)         (581)
   Decrease (increase) in other assets                                   3          (101)
   Decrease in accounts payable and accrued expenses                    (5)         (534)
   (Decrease) increase in interest payable                            (276)          222
   Decrease in other liabilities  - long term                          (75)          (26)
                                                                  --------      --------  
 
     Net cash provided by operating activities                       2,322         1,332
 
Cash flows from investing activities:
           Additions to property, plant and equipment               (2,799)       (3,002)
           Proceeds from sale of property, plant
            and equipment                                                1            57
                                                                  --------      --------  
 
           Net cash used in investing activities                    (2,798)       (2,945)
 
Cash flows from financing activities:
           Debt financing costs                                        (81)           (2)
           Payments on revolving line of credit                     (4,844)       (4,935)
           Advances on revolving line of credit                      6,744         6,394
           Distributions to partners                                  (518)       (1,063)
                                                                  --------      --------  
 
             Net cash provided by financing activities               1,301           394
                                                                  --------      --------  
 
             Net increase (decrease) in cash and cash equivalents      825        (1,219)
 
 
Cash and cash equivalents at beginning of period                     3,121         3,533
                                                                  --------      --------  
 
Cash and cash equivalents at end of period                        $  3,946      $  2,314
                                                                  ========      ========  
</TABLE> 
 
 
See accompanying notes to unaudited interim consolidated financial statements.
 

                                       3
<PAGE>
 
                 ADAMS OUTDOOR ADVERTISING LIMITED PARTNERSHIP
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 1998
                                 (UNAUDITED)

(1) BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements included herein
have been prepared by Adams Outdoor Advertising Limited Partnership (the
"Company") in accordance with the instructions for Form 10-Q and therefore, do
not include all information and footnotes necessary for a fair presentation of
financial position, results of operations, and cash flows in conformity with
generally accepted accounting principles.  All adjustments consist of normal
recurring accruals, which are necessary for a fair presentation of the
information for the periods described.  Certain information and footnote
disclosures normally included in consolidated financial statements prepared in
accordance with generally accepted accounting principles have been considered or
omitted pursuant to such rules and regulations.  Although the Company believes
that the disclosures are adequate to make the information presented not
misleading, it is suggested that these consolidated financial statements be read
in conjunction with the Company's 1997 Annual Report on Form 10-K.

(2)  REFINANCING

On March 12, 1996, the Company refinanced (the "Refinancing") its debt structure
by issuing $105 million of 10 3/4%, Senior Notes due 2006 ("Senior Notes") under
an Indenture (the "Indenture"), and entered into a $15 million revolving line of
credit (the "Credit Facility").  On December 2, 1996 the Credit Facility was
increased to allow borrowings of up to $35 million on a revolving basis.  On
March 31, 1998, the Company entered into an additional $3 million senior
unsecured credit facility.  As of June 30, 1998, there were no borrowings
against this facility.  Substantially all of the assets of the Company are
pledged to secure indebtedness of up to $35.0 million (of which approximately
$31.9 million was outstanding as of June 30, 1998) under the Credit Facility
and, accordingly, the lenders thereunder will have a prior claim on those
assets.  Permitted borrowings under the Credit Facility are subject to various
conditions.  In addition, the availability of borrowings are subject to
compliance with certain financial covenants. The agreement governing the Credit
Facility contains a number of covenants that are more restrictive than those
contained in the Indenture, including covenants requiring the Company to
maintain certain financial ratios that become more restrictive over time.
Adverse operating results could cause noncompliance with one or more of these
covenants, reducing the Company's borrowing availability, and, in certain
circumstances, entitling the lenders to accelerate the maturity of outstanding
borrowings.

                                       4
<PAGE>
 
                        ADAMS OUTDOOR ADVERTISING, INC.
                                        
                                BALANCE SHEETS
                                  (Unaudited)
<TABLE> 
<CAPTION> 
                                                                             June 30,       December 31,
                                                                              1998             1997
                                ASSETS                                   ---------------  ---------------
<S>                                                                     <C>              <C>
Investment............................................................         $  40            $  40
                                                                               =====            =====
 
                        STOCKHOLDER'S EQUITY
Preferred stock, $0.001 par value
       Authorized 800,000 shares; no shares issued and outstanding....         $  -             $  -
Common stock, $0.001 par value
      Authorized 200,000 shares; 10,000 shares issued and outstanding.           100              100
Additional paid-in capital............................................           900              900
Common stock subscribed...............................................          <960>            <960>
                                                                               -----            -----
                                                                               $  40            $  40
                                                                               =====            =====
 
</TABLE>
 
       See accompanying notes to unaudited interim financial statements

                                       5
<PAGE>
 
                        ADAMS OUTDOOR ADVERTISING, INC.

                            STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
                                                                                

                                               Quarter Ended   Six Months Ended
                                                  June 30,          June 30,
                                               1998     1997     1998     1997
                                               ----     ----     ----     ----
Revenues.....................................  $ -      $ -      $ -      $ -
Expenses.....................................    -        -        -        - 
                                               ----     ----     ----     ----
Net income (loss)............................  $ -      $ -      $ -      $ -
                                               ====     ====     ====     ====









        See accompanying notes to unaudited interim financial statements

                                       6
<PAGE>
 
                        ADAMS OUTDOOR ADVERTISING, INC.

                            STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                                        
                                                            Six Months Ended
                                                                June 30,
                                                                -------- 
                                                            1998        1997
                                                            ----        ----
Cash flows from operating activities......................  $ -         $ -
Cash flows from investing activities......................    -           -
Cash flows from financing activities......................    -           -
                                                            ----        ----
   Net change in cash.....................................    -           -
Cash at beginning of period...............................    -           -
Cash at end of period.....................................  $ -         $ -
                                                            ====        ====



        See accompanying notes to unaudited interim financial statements

                                       7
<PAGE>
 
                        ADAMS OUTDOOR ADVERTISING, INC.
                                        
                     NOTES TO INTERIM FINANCIAL STATEMENTS
                                 JUNE 30, 1998
                                  (UNAUDITED)

(1) BASIS OF PRESENTATION

The accompanying unaudited financial statements included herein have been
prepared by Adams Outdoor Advertising, Inc.  ("AOAI") in accordance with the
instructions for Form 10-Q and, therefore, do not include all information and
footnotes necessary for a fair presentation of financial position, results of
operations, and cash flow in conformity with generally accepted accounting
principles. All adjustments consist of normal recurring accruals, which are
necessary for a fair presentation of the information for the periods described.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been considered or omitted pursuant to such rules and regulations.
Although AOAI believes that the disclosures are adequate to make the information
presented not misleading, it is suggested that these financial statements be
read in conjunction with AOAI's 1997 Annual Report on Form 10-K.

                                       8
<PAGE>
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Except for its interests and activities as managing general partner of Adams
Outdoor Advertising Limited Partnership (the "Company"), Adams Outdoor
Advertising, Inc. ("AOAI") has nominal assets and does not conduct any
operations. Accordingly, the following "Management's Discussion and Analysis of
Financial Condition and Results of Operations" relate to the Company and the
consolidated financial statements of the Company included in this filing.

Certain matters discussed in this Quarterly Report on Form 10-Q are "forward-
looking statements" intended to qualify for the safe harbors from liability
established by the Private Securities Litigation Reform Act of 1995.  These
forward-looking statements can generally be identified as such because the
context of the statement will include forward-looking terminology such as
"believes," "anticipates," "expects,"  "would," "estimate," "continue," or the
negative thereof or variations thereon or comparable terminology.  Similarly,
statements that describe the Company's future plans, objectives or goals are
also forward-looking statements.  Such forward-looking statements are subject to
certain risks and uncertainties which could cause actual results to differ
materially from those anticipated as of the date of this report.  Certain of
such risks and uncertainties are described in close proximity to such forward-
looking statements.  Other factors that could effect such results, performance
or achievement are set forth in "Risk Factors" in Amendment No. 3 to the
Company's Registration Statement on Form S-4 (Registration No. 333-03338) as
updated by the Company's Annual Report on Form 10-K for the year ended December
31, 1997 including those risks to the Company presented by financial leverage,
government regulation with respect to zoning, restrictions on outdoor
advertising by the tobacco industry, competition and general economic
conditions.

RESULTS OF OPERATIONS

Quarter Ended June 30, 1998 Compared With Quarter Ended June 30, 1997
---------------------------------------------------------------------

Net revenues (gross revenues net of agency commissions) for the quarter ended
June 30, 1998 of $16.8 million increased by 14.3% from $14.7 million for the
comparable period in 1997.  This increase resulted from higher advertising rates
and an increase in the number of displays sold.

It has been reported that certain cigarette manufacturers who are defendants in
numerous class-action suits throughout the United States have reached agreement
with the Attorneys General of various states for an out of court settlement with
respect to such suits. The settlement is subject to various conditions including
approval and implementing legislation by the United States Congress. A reduction
in outdoor advertising by the tobacco industry would cause an immediate
reduction in the Company's direct revenue from such advertisers at least in the
immediate term following the imposition of such ban while alternate sources of
advertising are secured. Such ban would also increase the available space on the
existing inventory of billboards in the outdoor advertising industry. This could
in turn result in a reduction of outdoor advertising rates in each of the
Company's outdoor advertising markets or limit the ability of industry
participants to increase rates for some period of time. Accordingly, there can
be no assurance that the Company will immediately replace tobacco industry
advertising revenue in the event of a total ban of 

                                       9
<PAGE>
 
tobacco advertising on outdoor billboards and signs and the consequences of such
ban could have a material adverse affect on the Company. Furthermore, even in
the event the advertising ban does not take place, state and local governments
have recently proposed and some have enacted regulations restricting or banning
outdoor advertising of tobaccos in certain jurisdictions.

Direct advertising expenses for the quarter ended June 30, 1998 of $7.9 million
increased by 9.5% from $7.2 million for the comparable period in 1997.  The
increase was attributable to direct costs associated with increased sales from
new displays and an increase in sales commissions due to higher average rates.

Corporate, general and administrative expenses for the quarter ended June 30,
1998 of $1.1 million increased by 25.7% from $879,000 for the comparable period
in 1997.  This increase was attributable to increased professional fees, travel
expenses and costs associated with the new Company logo and identification
project.

Depreciation and amortization for the quarter ended June 30, 1998 of $2.1
million increased by 4.2% from $2.0 million for the comparable period in 1997.
Depreciation expense increased as a result of additions to property, plant and
equipment during 1997 and early 1998 from acquisitions and building of new
structures.

Deferred compensation expense for the quarter ended June 30, 1998 of $203,000
increased by 64.3% from $124,000 for the comparable period in 1997 primarily due
to increased Operating Profit and vesting.

Interest expense for the quarters ended June 30, 1998 and June 30, 1997 was $3.7
million.  For the quarter ended June 30, 1998 and June 30, 1997, the effective
interest rates were 10.2% and 10.4%, respectively on average outstanding
balances of $137.4 million and $135.9 million, respectively.

Net income for the quarter ended June 30, 1998 increased to $1.8 million from
$833,000 for the comparable period in 1997 as a result of the items discussed
above.

Six Months Ended June 30, 1998 Compared With Six Months Ended June 30, 1997
---------------------------------------------------------------------------

Net revenues (gross revenues net of agency commissions) for the six months ended
June 30, 1998 of $31.0 million increased by 13.0% from $27.4 million for the
comparable period in 1997.  This increase resulted from higher advertising rates
and an increase in the number of displays sold.

Direct advertising expenses for the six months ended June 30, 1998 of $15.4
million increased by 7.1% from $14.4 million for the comparable period in 1997.
The increase was attributable to direct costs associated with increased sales
from new displays and an increase in sales commissions due to higher average
rates.

                                       10
<PAGE>
 
Corporate, general and administrative expenses for the six months ended June 30,
1998 of $2.1 million increased by 37.7% from $1.5 for the comparable period in
1997.  This increase was attributable to increased professional fees, travel
expenses and costs associated with the new Company logo and identification
project.

Depreciation and amortization for the six months ended June 30, 1998 of $4.1
million increased by 4.0% from $4.0 million for the comparable period in 1997.
Depreciation expense increased as a result of additions to property, plant and
equipment during 1997 and early 1998 from acquisitions and building of new
structures.

Deferred compensation expense for the six months ended June 30, 1998 of $331,000
increased by 33.7% from $247,000 for the comparable period in 1997 primarily due
to increased Operating Profit and vesting.

Interest expense for the six months ended June 30, 1998 and June 30, 1997 was
$7.3 million.  For the six months ended June 30, 1998 and June 30, 1997, the
effective interest rates were 10.3% on average outstanding balances of $137.1
million and $135.3 million, respectively.

Net income for the six months ended June 30, 1998 increased to $1.7 million from
$80,000 for the comparable period in 1997 as a result of the items discussed
above.

Operating Cash Flow is defined as operating income (loss) before (i)
depreciation and amortization expenses and (ii) deferred compensation expense.
As a partnership the Company is not subject to federal corporate income tax.
Operating Cash Flow is not intended to represent net cash provided by operating
activities as defined by generally accepted accounting principles and should not
be considered as an alternative to net income or loss as an indicator of the
Company's operating performance or to net cash provided by operating, investing
and financing activities as a measure of liquidity or ability to meet cash
needs. The Company believes Operating Cash Flow is a measure commonly reported
and widely used by analysts, investors and other interested parties in the media
industry. Accordingly, this information is disclosed herein to permit a more
complete comparative analysis of the Company's performance relative to other
companies in the media industry. Operating Cash Flow for the six months ended
June 30, 1998 of $13.5 million increased by 17.0% from $11.5 million for the
comparable period in 1997. Operating Cash Flow for the quarter ended June 30,
1998 of $7.8 million increased by 18.1% from $6.6 million for the comparable
period in 1997.


LIQUIDITY AND CAPITAL RESOURCES

In 1996 the Company, together with its managing general partner, AOAI placed
$105,000,000 of their 10 3/4% Senior Notes due 2006 issued under an indenture
(the "Indenture") and entered into a Credit Facility (the "Credit Facility). As
part of the Refinancing, substantially all of the Company's outstanding debt was
refinanced.  As a result of the Refinancing, the average maturities of the
Company's debt were extended to 2006.

                                       11
<PAGE>
 
Historically, the Company's cash needs have arisen from operating expenses
(primarily direct advertising expenses and corporate general and administrative
expenses), debt service, capital expenditures and deferred compensation payments
under phantom stock agreements.  As a result of the Refinancing, the Company's
interest expense has increased due to the higher weighted average interest rate.

The Company's primary sources of cash are net cash generated from operating
activities and borrowings under the Credit Facility.  The Company's net cash
provided by operations increased by 74.3% to $2.3 million for the six months
ended June 30, 1998 from $1.3 million for the six months ended June 30, 1997.

The Company expects that its capital expenditures during 1998 will be
approximately $5.0 million and will be primarily for new billboard construction
and the upgrading of existing displays. The Company made capital expenditures of
$2.8 million during the six months ended June 30, 1998 compared to $3.0 million
during the six months ended June 30, 1997.

At December 31, 1997, the Company's accrued liability for deferred compensation
payable under phantom stock agreements with key employees was $4.8 million in
the aggregate. The Credit Facility and the Indenture permit the payment of the
deferred compensation when due, subject to certain annual limitations.  Such
payments are scheduled to be paid during the 1998 through 2002 period.  During
the six months ended June 30, 1998, payments of deferred compensation totaled
$1.1 million compared to $1.5 million in the same 1997 period.

The Company has revolving credit facilities of up to $38.0 million, $35 million
secured and $3 million unsecured.  At June 30, 1998, the outstanding borrowings
were $31.9 million.  Substantially all of the assets of the Company are pledged
to secure indebtedness under the secured credit facility. The agreement
governing the secured credit facility contains a number of covenants that are
more restrictive than those contained in the Indenture, including covenants
requiring the Company to maintain certain financial ratios that become more
restrictive over time. Adverse operating results could cause noncompliance with
one or more of these covenants, reducing the Company's borrowing availability
and, in certain circumstances, entitling the lenders to accelerate the maturity
of outstanding borrowings.

The Company believes that net cash provided from operations and available credit
under its credit facilities will be sufficient to meet its cash needs for its
current operations, required debt payments, anticipated capital expenditures and
deferred compensation payments for the next twelve months.

IMPACT OF INFLATION

Through increases in operating costs could adversely affect the Company's
operations, management does not believe that inflation has had a material effect
on operating profit during the past several years.

                                       12
<PAGE>
 
SEASONALITY

Although revenues during the first and fourth quarter are slightly lower than
the other quarters, management does not believe that seasonality has a
significant impact on the operations or cash flow of the Company.

Information contained in this 10-Q including, without limitation, in the
foregoing Management's Discussion and Analysis of Financial Condition and
Results of Operations may contain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, which can be
identified by the use of forward-looking terminology as "may," "will," "would,"
"expect," "anticipate," "estimate," or "continue" or the negative thereof or
other variations thereon or comparable terminology.  Certain factors, including
financial leverage, government regulation with respect to zoning and
restrictions on outdoor advertising by the tobacco industry, competition and
general economic condition could cause actual results to differ materially from
those in such forward-looking statements.

                                       13
<PAGE>
 
                          PART II.  OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

  None.

ITEM 2.  CHANGES IN SECURITIES

  During the period covered by this Report, the constituent instruments defining
the rights of the holders of registered securities were not materially modified,
nor were the rights evidenced by the registered securities limited or qualified
by the issuance or modification of any other class of securities.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

  During the period covered by this Report, there has been no material default
with respect to any indebtedness of the Registrants.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  None.

ITEM 5.  OTHER INFORMATION

  None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) The following exhibits are included herein:

         (27) Financial data schedule

     (b) No reports on Form 8-K have been filed during the quarter for which the
         report is filed.

                                       14
<PAGE>
 
                                 SIGNATURES


Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrants have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date:  August 12, 1998                  ADAMS OUTDOOR ADVERTISING
                                        LIMITED PARTNERSHIP

                                        By Adams Outdoor Advertising, Inc.
                                          Its General Partner
 

                                        By  /s/ J. Kevin Gleason
                                        ---------------------------- 
                                          J. Kevin Gleason
                                          President and Chief Executive Officer


                                        By  /s/ Abe Levine
                                        ----------------------------      
                                          Abe Levine
                                          Chief Financial Officer
                                          (Principal Financial and Accounting 
                                           Officer)


                                        ADAMS OUTDOOR ADVERTISING, INC.
 


                                        By /s/ J. Kevin Gleason
                                        -----------------------------
                                          J. Kevin Gleason
                                          President and Chief Executive Officer


                                        By /s/ Abe Levine
                                        -----------------------------
                                          Abe Levine
                                          Chief Financial Officer
                                          (Principal Financial and Accounting 
                                           Officer)

                                       15