<PAGE>   1
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-K

     [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
         For the fiscal year ended   August 31, 1997

                                       OR

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
         For the transition period from to

                        Commission file number 333-1742

                                   AMC, INC.
             (Exact name of registrant as specified in its charter)

GEORGIA                                               58-2201031
(State or other jurisdiction of                       (IRS Employer
incorporation or organization)                        Identification  No.)

240 PEACHTREE ST., N.W.  SUITE 2200, ATLANTA, GA.     30303
(Address of principal executive offices)              (Zip Code)


                                 (404) 220-2000
              (Registrant's telephone number, including area code)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

    TITLE OF EACH CLASS             NAME OF EACH EXCHANGE ON WHICH REGISTERED
             NONE                                     NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                                      NONE

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 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 registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K [X]

Neither the Registrant's common stock nor its Fixed Rate Class A Secured Notes
due July 31, 2000 have a trading market. As of November 14, 1997, 39,122,840
shares of the Registrant's voting stock was held by non-affiliates of the
Registrant.

             APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES     NO
                          ---    ---

As of November 14, 1997 the Registrant had 61,962,751 shares of common stock,
par value $1 per share outstanding.

Documents incorporated by reference:  None.




<PAGE>   2




                                   AMC, Inc.
                           Annual Report on Form 10-K
                   FOR THE FISCAL YEAR ENDED AUGUST 31, 1997

                               Table of Contents

                                     PART I

<TABLE>
<CAPTION>
                                                                            Page
<S>                                                                         <C>
Item 1    - Business                                                          1

Item 2    - Properties                                                        4

Item 3    - Legal Proceedings                                                 6

Item 4    - Submission of Matters to a Vote of Security Holders               6

                                    PART II

Item 5    - Market for Registrant's Common Equity and Related
            Stockholder Matters                                               6

Item 6    - Selected Financial Data                                           7

Item 7    - Management's Discussion and Analysis of Financial
            Condition and Results of Operations                               8

Item 7A   - Quantitative and Qualitative Disclosures About Market Risk       14

Item 8    - Financial Statements and Supplementary Data                      15

Item 9    - Changes in and Disagreements with Accountants on
            Accounting and Financial Disclosure                              16

                                    PART III

Item 10  - Directors and Executive Officers of the Registrant                16

Item 11  - Executive Compensation                                            18

Item 12  - Security Ownership of Certain Beneficial Owners and Management    19

Item 13  - Certain Relationships and Related Transactions                    21

                                    PART IV

Item 14  - Exhibits, Financial Statement Schedules, and Reports on Form 8-K  24
</TABLE>

<PAGE>   3



                                     PART I

ITEM 1.  BUSINESS

GENERAL

AMC, Inc. (the "Company" or "AMC") was formed in 1995 in conjunction with a
series of transactions which involved the exchange of certain assets, debt and
equity and the debt restructuring of Mr. John C. Portman, Jr. ("Mr. Portman")
and a group of affiliated entities (collectively, the "Portman Companies")
(these transactions, collectively the "Formation Transactions"). As a result of
these transactions, the initial assets of AMC included the Atlanta Merchandise
Mart (the "Merchandise Mart"), the Atlanta Apparel Mart (the "Apparel Mart"),
the Atlanta Gift Mart (the "Gift Mart"; the Merchandise Mart, the Apparel Mart
and the Gift Mart hereinafter collectively, the "Marts"), and the assets of the
Atlanta Market Center Management Company, Inc. ("AMCMC") which operated the
Marts and was merged into AMC. The Company's primary business is the operation
of the Marts and the management of trade shows in conjunction with the Marts,
which historically have generated more than 90% of the Company's revenues from
both rental and trade show revenues. Additionally, the Company manages trade
shows on behalf of third parties at other locations.

For revenue and related financial data, see Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Item 8,
"Financial Statements and Supplementary Data" included herein. For the history
of the Company and a discussion of the Formation Transactions see "--Formation
Transactions."

TRADE SHOW AND MART INDUSTRY OVERVIEW

Trade marts allow wholesalers, principally manufacturers and their
representatives (collectively, "Manufacturers"), to offer their goods to a broad
range of retailers at a single location. Trade marts offer Manufacturers
permanent showrooms for year round exhibition of their products. By committing
to permanent space, in addition to having the availability of a year round sales
facility, a Manufacturer has the ability to construct significant tenant
improvements and is assured of a specific location and the ability to
participate in the trade shows held at the trade mart during the lease term.
Additional temporary showrooms are made available during periodic
industry-specific trade shows. Buyers attend trade shows because they offer the
opportunity to view and compare products of numerous Manufacturers in a time and
cost efficient manner.

Trade shows are held at trade marts or at other exhibition facilities. A trade
show is generally located in a city which offers convenient transportation and
adequate infrastructure to support a large number of attendees. Trade shows are
typically prominent in industries in which products are non-standardized, change
frequently or require physical inspection before purchase. The success of a
trade show depends both upon the breadth of merchandise offered and
participation by a large number of buyers.

Trade shows are attended by buying groups of large retailers who prefer the
efficiency of purchasing associated therewith over individual meetings with
Manufacturers. Additionally, trade shows are attended by many retailers who
cannot afford to visit numerous Manufacturers and whose purchasing power may not
warrant visits from sales representatives of Manufacturers. For these reasons,
management believes that trade shows represent an essential buying opportunity
for smaller retail purchasers.

BUSINESS OF THE COMPANY

Each of the Marts focuses on a specific industry. The Apparel Mart, with
approximately 1.0 million rentable square feet, is a wholesale buying facility
for purchasers of fashion accessories, jewelry and women's, children's and men's
apparel. The Gift Mart houses approximately 1.0 million square feet of giftware.
The Merchandise Mart, which has approximately 1.7 million rentable square feet,
houses holiday and floral products, rugs, home accents, fine linens and garden
products.


                                       1


<PAGE>   4


The success of a particular trade mart or trade show depends upon its ability to
attract Manufacturers of a broad range of merchandise which in turn attracts a
substantial number of buyers. Similarly, a Manufacturer of merchandise seeks the
opportunity to sell its products to the broadest number of buyers. Accordingly,
the Company markets to both Manufacturers and buyers.

The Company seeks out Manufacturers primarily through industry lists and
targeted mailings. In addition, the Company identifies Manufacturers at other
trade marts and trade shows in its industries and markets to them as well.
Similarly, the Company attempts to attract new and additional buyers for its
trade shows and Marts by targeted mailings using industry lists. The Company
also keeps records of all persons participating as buyers at its trade shows and
Marts and advises them of upcoming trade shows through direct mailings. Further,
the Company markets its Marts and trade shows through industry publications.

Wholesaling activities, on which the Company's revenues depend, are affected by
the general level of economic activity in the United States. Economic factors
which affect retailing such as interest rates, economic growth and consumer
confidence, also have a direct impact on the Company's business. In addition,
economic conditions in the housing industry have a direct impact on the demand
for many of the products offered through the Company's Marts and the trade shows
managed by the Company.

The Company provides many services which are important to attract both
Manufacturers and buyers to its facilities. For example, the Company provides
food services which are used by Manufacturers to entertain buyers. The Company
also focuses on cross-merchandising opportunities by educating buyers about the
variety of goods available from its various Marts. Additionally, the Company
offers services such as seminars, fashion shows, parties, entertainment, hotel
reservation services and negotiated airline discounts to attract buyers. Such
services and promotions are described in marketing materials prepared by the
Company and mailed directly to buyers. The Company believes its marketing
efforts to attract buyers are important to Manufacturers who evaluate a trade
mart based, among other things, upon the number of buyers who visit it.

The Company continually seeks to introduce new product lines in its Marts. In
recent years, the Marts have focused on product lines which present
cross-selling opportunities with existing product lines because a related line
of products can be introduced more efficiently if a critical mass of related
merchandise already exists. The Company's strategy has also been to expand
existing product lines and, accordingly, the number of Manufacturers represented
at its Marts. The Company's goal is to become a cross-category buying
destination where buyers can satisfy their buying requirements in a short period
of time rather than having to travel to a number of different trade shows.
Aerial walkways between the Company's Marts facilitate cross-selling
opportunities.

RECENT DEVELOPMENTS

The Company has created a holiday and floral center in the Merchandise Mart by
securing leases from new tenants and relocating existing tenants from the Gift
Mart. The creation of this center has provided additional cross-merchandising
opportunities for the Company. The Company is currently expanding the holiday
and floral center by rebuilding two additional floors in the Merchandise Mart
which will be available for the January 1998 market. Additionally, the Company
has created a fashion accessory center in the Apparel Mart and will
cross-merchandise this center with the Gift Mart by the addition of a pedestrian
bridge which will also be completed for the January 1998 market.

SEASONALITY

The number of trade shows or markets in a particular industry is keyed to the
major sales seasons for such industry. A majority of the Company's trade shows
occur from January through September of each calendar year. Accordingly, the
Company experiences periodic fluctuations in its trade show revenues, with the
lowest revenues occurring in the period from October through December of each
calendar year. Other revenues of the Company, such as parking and advertising
sales, fluctuate periodically with trade show revenues, as these revenues are
significantly impacted by the timing and number of trade shows.


                                       2


<PAGE>   5


COMPETITION

The Company's Marts and trade shows compete with a variety of other trade marts
and trade shows throughout the United States. In addition, new or additional
trade marts or trade shows may be organized by existing competitors or new
market entrants which may adversely impact the Company's operations.

Existing competitors to the Apparel Mart include the New York garment district
and regional marts located in Dallas, Chicago, San Francisco and Miami. Existing
competitors to the Gift Mart include regional marts located in New York, Dallas,
Chicago, San Francisco and Los Angeles, as well as trade shows owned or managed
by a large competitor in New York, Boston, Washington, D.C., Chicago, and San
Francisco. Existing competitors to the Merchandise Mart include the Surfaces
show in the area rug industry; mill showrooms and a semi-annual trade show in
New York in the home textile industry; and High Point, North Carolina and trade
marts in Dallas and San Francisco in the home accents and furniture industries.

The Company believes the primary basis on which trade marts compete is the
critical mass of merchandise, the cost of transportation to a trade mart and the
availability and cost of local accommodations, transportation, food and other
services. Because of its location in Atlanta with its favorable air
transportation, infrastructure, accommodations and services, the convenience and
efficiencies of the Marts, and the breadth of its product line in a concentrated
area and emphasis on cross-merchandising, the Company believes it distinguishes
itself from, and is well positioned to compete against, other marts and trade
shows in each of its industries.

The Company also faces some indirect competition from Manufacturers who engage
in direct retail sales. Developments in telecommunication could establish
additional direct contact between Manufacturers and buyers.

FORMATION TRANSACTIONS

Prior to October 2, 1995, the assets and businesses owned by the Company were
included in various partnerships and corporations controlled by Mr. Portman and
the Portman Companies. Mr. Portman and the Portman Companies have been involved
in designing, developing, operating and owning office buildings, hotels, trade
marts and trade shows throughout the world for more than 40 years.

In 1991, as a result of declines in commercial real estate markets, Mr. Portman
and the Portman Companies were unable generally to meet their debt obligations.
Accordingly, Mr. Portman, the Portman Companies and substantially all of their
creditors entered into the Override and Collateral Pool Agreement dated August
23, 1991 (as amended, the "OCPA"). Commencing in 1993, as a result of the
inability to sell or refinance certain assets of the Portman Companies as
contemplated by the OCPA, the parties to the OCPA began discussions to explore
ways to terminate the OCPA and to restructure the debt governed thereby.

In November 1995, a final plan was implemented which involved exchanges of
certain assets, debt and equity, as well as debt restructurings, with an
effective date of October 2, 1995 (the "Formation Date"). In a series of
transactions, the OCPA was terminated and Portman Holdings, L.P., a Georgia
limited partnership ("Portman Holdings"), in which AMC has no ownership
interest, and AMC were formed. Certain assets subject to the OCPA and certain
interests in the Portman Companies were transferred to Portman Holdings, which
is controlled by Mr. Portman. Except for its equity interest in AMC, after
completion of the restructurings, all of the net assets held by Portman Holdings
are assets and liabilities of entities other than the predecessor companies to
AMC. Other assets subject to the OCPA, as more fully described below, were
transferred to AMC.

On the Formation Date there were five classes of creditors (Classes A through E)
under the OCPA holdings claims against Mr. Portman personally. In addition, each
of the Apparel Mart, Merchandise Mart and the Gift Mart were encumbered by
separate mortgage loans. As a part of the OCPA termination, certain of this debt
was forgiven and the remainder was restructured, resulting in an extraordinary
gain of approximately $68.0 million for two of the predecessor companies, The
Atlanta Apparel Mart and the Atlanta Merchandise Mart, L.P. The debt was
restructured as follows:


                                       3


<PAGE>   6

-    Debt outstanding under the Class A Claims of $10,740,239 on the Formation
     Date was modified to become (1) the Fixed Rate Class A AMM Escrow Notes due
     July 31, 1997 in the principal amount of $1,656,007 (the "AMM Escrow
     Bonds") and (2) the Class A Elevated Antecedent Debt Notes due July 31,
     2000 in the principal amount of $8,033,600 (the "Antecedent Debt Notes");
-    Debt outstanding under the Class B, C and D Claims of $280,329,854 on the
     Formation Date, which represented personal obligations of Mr. Portman,
     were extinguished in exchange for the transfer by Mr. Portman of interests
     in certain assets securing such claims.  Such interests were then
     contributed to AMC by the claimants for 29,203,000 common shares of AMC;
     the distribution was regarded as a distribution to Mr. Portman for
     accounting purposes;
-    Debt outstanding under the Class E claims of $8,483,953 on the Formation
     Date was extinguished with no further consideration;
-    Of the debt outstanding on the then existing Apparel Mart mortgage
     financing of approximately $162,000,000 on the Formation Date, $72,000,000
     was forgiven and the balance was transferred to AMC and modified to become
     $80,000,000 in principal amount of Private Placement Notes issued directly
     to the members of the lending syndicate.  In addition, the members of the
     lending syndicate received 10,790,000 shares of common stock of AMC and
     warrants to purchase an additional approximately 8,409,000 common shares
     of AMC;
-    Of the debt outstanding on the then existing Merchandise Mart mortgage
     financing of approximately $153,000,000 on the Formation Date, $60,000,000
     was forgiven and the balance was transferred to AMC and modified to become
     $80,000,000 in principal amount of Private Placement Notes issued directly
     to the members of the lending syndicate.  In addition, the members of the
     lending syndicate received 11,300,000 shares of common stock of AMC and
     warrants to purchase an additional approximately 8,807,000 common shares
     of AMC (all Private Placement Notes referred to collectively as the "Mart
     Bonds");
-    Debt outstanding on the then existing Gift Mart mortgage financing of
     approximately $107,282,009 on the Formation Date was modified to extend the
     term, to increase the interest rate and to reflect numerous other changes
     from the original financing (such debt, the "Gift Mart Mortgage Loan").

The foregoing transactions are referred to collectively as the "Formation." In
the Formation, assets of approximately $214.9 million and liabilities of
approximately $345.4 million, representing all of the assets and liabilities of
the Marts and AMCMC (the "Atlanta Market Center Companies" or the "Predecessor
Companies"), and the AMM Escrow Bonds and the Antecedent Debt Notes were
transferred to AMC. In addition, AMC received a $3,756,306 Purchase Money Note
of AMC Orlando, Inc., a Florida Corporation ("AMC Orlando") and a $446,220
Purchase Money Note of AMC Tampa, Inc., a Florida corporation ("AMC Tampa").
Further, AMC received all of the common stock of LFGP, Inc., a Georgia
corporation ("LFGP") (which holds a 49.9981% general partnership interest in
Portman Lightfair Associates L.P. ("Portman Lightfair")), and E.C. Holdings,
Inc., a Georgia corporation ("EC Holdings") (which indirectly holds an interest
in two mixed use complexes located in San Francisco, California). The
investments in LFGP and EC Holdings have insignificant or no carrying values.
Finally, AMC received a small parcel of unimproved property in Atlanta, Georgia
(the "Unimproved Land") with a carrying value of approximately $.4 million.


EMPLOYEES

The Company had approximately 220 full-time employees on August 31, 1997. In
addition, the Company hires temporary employees as needed to support its
operations during peak trade shows. No material segment of the Company's
employees are represented by a union or similar organization. The Company
believes its relationships with its employees are satisfactory.

ITEM 2.  PROPERTIES

The Company's principal executive offices are located at 240 Peachtree Street,
N.W., Suite 2200, Atlanta, Georgia 30303, and its telephone number is (404)
220-2000. The executive offices are located in the Merchandise Mart.

The Company owns or ground leases the parcels of land on which its three Marts
are located. The Marts, which are wholly-owned by the Company, are adjacent to
one another and are connected by aerial walkways.

                                       4


<PAGE>   7



Apparel Mart

The Apparel Mart, which was opened in 1979 and expanded in 1989, is a 15-story
building located on an approximately 3.6 acre site. The property is comprised of
eleven separate tracts of land, approximately 65% of which is ground leased to
the Company. The facility has approximately 1.0 million rentable square feet
currently devoted to permanent space, and approximately 156,000 rentable square
feet currently devoted to temporary exhibit space. Additionally, the building
has a 15-story atrium, a penthouse theater that seats approximately 1,000, a
restaurant and on-site parking, all of which the Company owns. As of August 31,
1997, approximately 50% of the showroom space was leased. Additional rental of
exhibit space occurs during the Company's trade shows. The Apparel Mart is
subject to a deed to secure debt which secures the obligations of the Company
under a revolving line of credit (the "Revolver"), and a deed to secure debt
which secures the Mart Bonds.

Merchandise Mart

The Merchandise Mart, a 23 story building which was opened in 1961 and expanded
in 1967 and 1986, is located on an approximately 2.3 acre site. The property is
comprised of eight parcels, seven of which represent 0.6 acre and are ground
leased by the Company. The remaining 1.7 acre parcel is owned by the Company.
The 23-story building has approximately 1.2 million rentable square feet
currently devoted to permanent space and approximately 492,000 rentable square
feet currently devoted to temporary exhibit space. As of August 31, 1997, the
permanent space in the Merchandise Mart was approximately 69% leased. Additional
rental of exhibit space occurs during the Company's trade shows. The Merchandise
Mart is subject to a deed to secure debt which secures the obligations of the
Company under the Revolver and a deed to secure debt which secures the Mart
Bonds.

Gift Mart

The Gift Mart, which was opened in January 1992, is an 18-story building located
on an approximately 1.8 acre site. The Company owns this property, which is
subject to a deed to secure debt which secures the Gift Mart Mortgage Loan. The
building contains approximately 1.0 million rentable square feet, which is all
permanent space, and a five-level parking garage. As of August 31, 1997,
approximately 94% of such space was leased.

Periodically, the Company redesignates space as rentable, non-rentable,
permanent or temporary.

Other Properties

The Company indirectly owns small minority interests in two mixed use complexes
in San Francisco's financial district through EC Holdings. The Embarcadero
Center ("EC"), in which the Company owns an approximately 3.4% interest, is
comprised of four office buildings, a retail mall and a hotel. The adjacent
Embarcadero Center West ("ECW"), in which the Company owns an approximately 6.7%
interest, is comprised of two office buildings and a hotel. Pursuant to the
limited partnership agreements for EC and ECW, the general partners of such
partnerships can make capital calls from time to time. Management currently
intends to sell its interests in both these partnerships. Any net proceeds from
such sales must be used to amortize the Antecedent Debt Notes.

The Company also owns the Unimproved Land, an approximately 0.3 acre tract of
land in downtown Atlanta. The land currently is used for surface parking, which
generates sufficient net income to cover its operating costs. The Company is
actively marketing the land for sale; however, if the property were sold, any
net proceeds must be used to amortize the Antecedent Debt Notes. The stock
representing the Company's interests in EC Holdings and the Unimproved Land has
been pledged as security for the Antecedent Debt Notes. Under the terms of the
Antecedent Debt Notes, since the Company did not liquidate its interest in EC
Holdings or the Unimproved Land by October 2, 1997, the Antecedent Debt Note
holders are entitled to direct the trustee for the bonds to foreclose upon the
Company's interest in EC Holdings and the Unimproved Land.



                                       5


<PAGE>   8


Leases

The leases for tracts of land that are a part of the Apparel Mart site have
terms expiring from February 2066 to August 2071. The leases for tracts of land
that are a part of the Merchandise Mart site have terms expiring in June 2061.
Under the terms of these leases, the Company may assign, sublet or encumber its
leasehold interests in such properties. The only event of default is the failure
of the Company to pay when due rent, taxes, assessments or other charges
required to be paid to the lessor or to pay premiums for insurance policies
required to be maintained by the Company pursuant to the terms of each lease. If
the Company fails to cure such default within 90 days of receiving a notice of
default, the lessor may take possession of the property.

Management believes that its properties are currently adequate and suitable to
conduct its business and will remain so in the foreseeable future.

ITEM 3.  LEGAL PROCEEDINGS.

On April 19, 1993, a former employee of AMCMC filed suit against AMCMC for
breach of contract and related tort claims. On January 19, 1996, the trial court
granted summary judgment in favor of AMC on all counts. On March 5, 1997, the
Georgia Court of Appeals reversed the trial court, and directed that judgment be
entered in favor of the former employee on the breach of contract count and
remanded the case for trial on the tort claims. The amount awarded for the
breach of contract claim was approximately $247,000 plus interest, which has
been estimated at $73,000. AMC has filed a petition seeking review by the
Georgia Supreme Court.

The Company is subject to certain other claims in the ordinary course of
business.

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

None.


                                    PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The Company's issued and outstanding common stock is not actively traded and
there is not an established public trading market for such shares. As of August
31, 1997, there were approximately 23 shareholders of the Company's common
stock. There were no dividends declared on the Company's common stock during the
year ended August 31, 1997. The Company's debt agreements restrict dividend
payments and it has no intention of paying dividends in the foreseeable future.


                                       6


<PAGE>   9


ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth, for the periods and dates indicated, summary
historical consolidated financial data derived from the consolidated financial
statements of the Company and should be read in conjunction with the
consolidated financial statements and related notes included elsewhere herein.
(Due to the Formation Transactions, interest expense subsequent to October 2,
1995 is not comparable to interest expense prior to October 2, 1995).






<TABLE>
<CAPTION>
                                              AMC, INC.                             PREDECESSOR COMPANIES
                                     -----------------------------  ------------------------------------------------------
                                                     PERIOD FROM    PERIOD FROM
                                                     OCTOBER 2,      JANUARY 1,
                                                        1995            1995
                                      YEAR ENDED       THROUGH        THROUGH              YEAR ENDED DECEMBER 31,         
                                      AUGUST 31,     AUGUST 31,      OCTOBER 1,     -------------------------------------- 
                                         1997           1996            1995           1994           1993         1992         
                                     -------------  --------------  -------------   ------------   -----------  -----------     
                                      (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)                                             
<S>                                  <C>            <C>             <C>             <C>            <C>          <C>             
STATEMENT OF OPERATIONS:                                                                                                        
Revenues                                $ 70,745     $  62,767       $  53,300      $  63,189     $  63,177     $  61,930       
Operating expenses, exclusive of                                                                                                
    depreciation and amortization         41,418        37,165          27,721         36,681        35,205        34,777       
 Depreciation and amortization            13,534        11,515           9,559         13,511        14,472        12,811       
    Operating Income                      15,793        14,087          16,020         12,997        13,500        14,342       
Interest Expense                           8,375         7,780          25,560         25,946        24,018        28,840       
Other expenses (income)                    1,096        (4,396)           (346)           373          (310)         (415)      
Income tax expense                         2,443         3,402               -              -             -             -       
Income before                                                                                                                   
    extraordinary item                  $  3,879     $   7,301       $  (9,194)     $ (13,322)    $ (10,208)    $ (14,083)      
Income before extraordinary item                                                                                                
    per share - primary                 $    .06     $     .12       $         (a)  $         (a) $         (a) $         (a)   
Income before extraordinary item                                                                                                
    per share - fully diluted           $    .06     $     .10       $         (a)  $         (a) $         (a) $         (a)   
                                                                                                                                
                                                                                                                                
                                                                                                                                
BALANCE SHEET DATA:                                                                                                             
Total assets                            $229,521     $ 235,222       $ 214,133      $ 213,675     $ 219,903     $ 236,739       
Long-term debt and revolving                                                                                                    
line of credit                          $312,145     $ 325,968       $ 354,505      $ 407,532     $ 410,541     $ 414,094       
Long-term advances from                                                                                                         
    affiliate                           $      -     $       -       $       -      $  12,048     $  12,048     $  12,048       
Deficit                                 $(99,308)    $(103,187)      $(152,165)     $(231,015)    $(220,210)    $(207,966)      
                                                                                                                                
                                                                                                                                
OTHER:                                                                                                                          
 Distributions to                                                                                                               
    stockholders/partners               $      -     $       -       $     103      $   1,077     $   1,694     $   2,526       
                                                                                                                

(a)  Not applicable

</TABLE>





                                       7










<PAGE>   10


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

OVERVIEW

AMC was formed effective October 2, 1995 with a fiscal year end of August 31.
For purposes of discussion of the results of operations of AMC, Inc. and
subsidiaries for the year ending August 31, 1997 compared to the prior period,
audited results for AMC, Inc. and subsidiaries for the period from October 2,
1995 to August 31, 1996, have been combined with the unaudited results for the
Atlanta Market Center Companies (predecessor companies) for the period from
September 1, 1995 to October 1, 1995 ("Combined 1996") and have been set forth
in the table below. For purposes of discussion of the results of operations of
AMC, Inc. and subsidiaries for the period from October 2, 1995 through August
31, 1996 ("Fiscal 1996") compared to the prior period, comparative unaudited
amounts for the Atlanta Market Center Companies for the comparable period from
October 1, 1994 through August 31, 1995 ("Comparable 1995 Period"), have been
set forth below. The fiscal year for the Atlanta Market Center Companies ended
on December 31. The following discussion and analysis should be read in
conjunction with the accompanying audited consolidated financial statements and
related notes of the Company which provide additional information on financial
activities and conditions. References herein to the Company mean AMC, Inc. after
October 2, 1995 and the Atlanta Market Center Companies prior thereto.

Effective October 2, 1995, Mr. Portman and The Portman Companies entered into a
series of agreements with their lenders to restructure their existing
indebtedness (the "Formation Transactions"). Under the terms of these
agreements, the net assets of the Atlanta Market Center Companies were
contributed to AMC, Inc., which had been formed principally for such purpose. In
exchange for the existing debt reduced by certain amounts forgiven by the
lenders, the creditors of Mr. Portman and certain affiliates, including the
creditors of the Company, received approximately 82.5% of the equity interest in
the Company, the Mart Bonds, the AMM Escrow Bonds, and the Antecedent Debt
Notes.

This restructuring has been accounted for as a troubled debt restructuring in
accordance with Statement of Financial Accounting Standards No. 15, "Accounting
by Debtors and Creditors for Troubled Debt Restructurings" (SFAS 15). As a
result of this troubled debt restructuring in which the existing debt exceeded
the fair value of the equity interests issued and the total future principal and
interest payments called for under the Mart Bonds, the Mart Bonds have initially
been recorded at an amount equal to the total future cash payments, including
interest, specified by their terms in accordance with SFAS 15. All future cash
payments will be accounted for as a reduction of the carrying amount of the Mart
Bonds, and no interest expense will be recognized on the Mart Bonds. As a
result, interest expense subsequent to October 2, 1995 is not comparable to
interest expense prior to October 2, 1995.

RESULTS OF OPERATIONS

General

The Company's principal sources of revenues are rental revenues from the lease
of showroom and exhibition space in the Marts and trade show revenues which
relate to specific shows staged for related industries. The Company leases
showroom space over terms ranging from one to ten years with rent payable
monthly over the term of the lease. In addition, the Company rents exhibition
space during markets thereby affording non-tenant Manufacturers an opportunity
to exhibit merchandise during a specific trade show.

The number of trade shows or markets in a particular industry is keyed to the
major sales seasons for such industry. A majority of the trade shows occur from
January through September of each calendar year. Accordingly, the Company
experiences periodic fluctuations in its trade show revenues, with the lowest
revenues occurring in the period from October through December of each calendar
year. Other revenues of the Company, such as parking and advertising sales,
fluctuate periodically with trade show revenues as these revenues are
significantly impacted by the timing and number of trade shows.

Certain indirect operating expenses, such as marketing and administrative
expenses, are incurred in advance of the ultimate receipt of revenues related to
such marketing efforts, particularly in the case of trade shows.
Accordingly,

                                       8


<PAGE>   11

the relationship of operating income to revenues will vary from period to period
based on the timing of trade shows and the Company's general marketing efforts.

The Company generally provides for losses on tenant receivables that are more
than 60 days delinquent. Such policy has resulted in bad debt expense that has
been determined to be generally reflective of experienced losses. The Company
does continue to pursue collection of such receivables once reserved and does
not write them off until collection efforts indicate write-off is appropriate.
Since rents are due no later than the beginning of each month and accrued
accordingly, all rental receivables at a period-end are past due. This
ultimately results in larger aggregate allowances as a percentage of total
receivables. There are no individually significant tenant receivables for which
there is an allowance at any of the reporting period-ends, nor are there any
trends, events, or conditions resulting in the allowance which management
expects will materially impact future operating results, liquidity, or capital
resources.

















                                       9


<PAGE>   12


Year ended August 31, 1997 compared to Combined 1996.

                           AMC, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF EARNINGS
          FOR THE YEARS ENDED AUGUST 31, 1997 AND FOR THE PERIOD FROM
                       OCTOBER 2, 1995 TO AUGUST 31, 1996

                 ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)
                         COMBINED STATEMENT OF EARNINGS
            FOR THE PERIOD FROM SEPTEMBER 1, 1995 TO OCTOBER 1, 1995
                             (AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                   Period from      Period from
                                                                    October 2,      September 1,
                                                  Year Ended         1995 to          1995 to        Year Ended
                                                   August           August 31,       October 1,      August 31,
                                                    1997              1996              1995            1996
                                                  ----------       -----------      -------------    -----------
Revenues:                                                                            (unaudited)     (unaudited)
<S>                                                <C>                <C>               <C>             <C>   
    Rental                                         $ 49,538           43,916            3,883           47,799
    Trade Shows                                      16,818           14,844              866           15,710
    Other                                             4,389            4,007              229            4,236
                                                   --------         --------         --------         --------
Total Revenues                                       70,745           62,767            4,978           67,745

Operating Expenses:
    Building Operations                               9,318            9,256              126            9,382
    Trade Shows                                       2,953            2,703             (222)           2,481
    Marketing                                         5,511            4,210            1,130            5,340
    General and Administrative                       18,511           15,922            1,927           17,849
    Bad Debt                                            642              933               (1)             932
    Property Taxes                                    4,483            4,141              353            4,494
    Depreciation and amortization                    13,534           11,515              731           12,246
                                                   --------         --------         --------         --------
Total Operating Expenses                             54,952           48,680            4,044           52,724
                                                   --------         --------         --------         --------

    Operating Income                                 15,793           14,087              934           15,021

Other Income (Expenses):
    Interest Expense                                 (8,375)          (7,780)          (2,944)         (10,724)
    Interest Income                                     443              546               37              583
    Proceeds from insurance claim                        --              884               --              884
    Olympic related income, net                        (371)           3,317               --            3,317
    Other                                            (1,168)            (351)            (268)            (619)
                                                   --------         --------         --------         --------
Income Before Income Taxes                            6,322           10,703           (2,241)           8,462

    Income Tax Expense                                2,443            3,402               (1)           3,401

                                                   ========         ========         ========         ========
Net Income (Loss)                                  $  3,879            7,301           (2,240)           5,061
                                                   ========         ========         ========         ========
</TABLE>

Rental revenues increased approximately $1,739,000 during the year ended August
31, 1997 compared to Combined 1996. Rental revenues in the Gift Mart increased
approximately $490,000 due to an increase in rental rates, partially offset by a
decrease in occupancy. Rental revenues increased approximately $2,531,000 in the
Merchandise Mart, reflecting an increase in both occupancy and rental rates.
Rental revenues in the Apparel Mart decreased approximately $1,283,000,
reflecting a decrease due to occupancy, offset by an increase due to rental



                                       10

<PAGE>   13

rates and increased exhibition space in the Apparel Mart. Trade show revenues
increased approximately $1,108,000 during the year ended August 31, 1997
compared to Combined 1996 due to improved results for the January and July Gift
Shows and increased exhibition space in the Apparel Mart.

Trade show expenses increased approximately $472,000 during the year ended
August 31, 1997 compared to Combined 1996 due to increases in costs associated
with the gift and apparel shows. Marketing expenses increased approximately
$171,000 during the year ended August 31, 1997 compared to Combined 1996 due to
an increase in publishing expense as the Company expanded its trade show related
publishing operations. General and administrative expenses increased
approximately $662,000 during the year ended August 31, 1997 compared to
Combined 1996 primarily due to an increase in personnel and employee benefits
costs and certain other fees. Bad debt expense decreased approximately $290,000
during the year ended August 31, 1997 compared to Combined 1996 due to improved
collection efforts during 1997.

Depreciation and amortization expense increased approximately $1,288,000 during
the year ended August 31, 1997 compared to Combined 1996 primarily due to the
write-off of certain building and tenant improvements disposed of when two
floors of the Merchandise Mart were rebuilt for the expansion of the Holiday and
Floral Center, as well as other capital improvements made during 1997.

The increase in operating income of $772,000 during the year ended August 31,
1997 over Combined 1996 results primarily from improved occupancy and rental
rates in the Marts.

Interest expense decreased approximately $2,349,000 during the year ended August
31, 1997 as compared to Combined 1996. This decrease in interest expense was due
to the reduction of the Gift Mart Mortgage Loan balance as well as the fact
that, subsequent to the formation of AMC on October 2, 1995, interest on certain
of the Company's debt obligations is charged against the carrying value of the
obligations and no interest expense is recognized.

The Company received $884,000 during Combined 1996 from the cash settlement of
an insurance claim relating to litigation. Olympic related income represents
revenues, net of direct costs, of business undertaken by the Company
specifically related to the 1996 Centennial Olympic Games. Both the insurance
claim and the Olympic related income are non-recurring in nature.

Other expenses during the year ended August 31, 1997 increased as a result of a
reserve of approximately $407,000 for an affiliate note receivable and accrued
litigation costs of $320,000 (see Part 3 -- Legal Proceedings).

The decrease in income tax expense to approximately $2,443,000 for the year
ended August 31, 1997 as compared to $3,401,000 for Combined 1996 resulted from
a decrease in income before income taxes.

Net income was approximately $3,879,000 for the year ended August 31, 1997
compared to $5,061,000 for Combined 1996. The decrease in net income is
primarily due to the recognition of non-recurring Olympic related income in
Combined 1996, along with non-recurring Olympic related expenses in 1997.




                                       11


<PAGE>   14



Fiscal 1996 compared to the Comparable 1995 Period

                           AMC, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF EARNINGS
             FOR THE PERIOD FROM OCTOBER 2, 1995 TO AUGUST 31, 1996

                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)
                         COMBINED STATEMENT OF EARNINGS
             FOR THE PERIOD FROM OCTOBER 1, 1994 TO AUGUST 31, 1995
                             (AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>
                                     Period from    Period from
                                      October 2,     October 1,
                                        1995 to       1994 to
                                      August 31,     August 31,
                                         1996           1995
                                     -----------    -----------
                                                    (unaudited)
<S>                                  <C>            <C>     
Revenues:
    Rental                             $ 43,916       $ 42,208
    Trade Shows                          14,844         14,869
    Other                                 4,007          4,005
                                       --------       --------
Total Revenues                           62,767         61,082

Operating Expenses:
    Building Operations                   9,256          8,874
    Trade Shows                           2,703          2,333
    Marketing                             4,210          4,176
    General and Administrative           15,922         14,842
    Bad Debt                                933            875
    Property Taxes                        4,141          4,236
    Depreciation and amortization        11,515         12,774
                                       --------       --------
Total Operating Expenses                 48,680         48,110
                                       --------       --------

    Operating Income                     14,087         12,972

Other Income (Expenses):
    Interest Expense                     (7,780)       (30,241)
    Interest Income                         546            416
    Proceeds from insurance claim           884            147
    Olympic related income, net           3,317             --
    Other                                  (351)          (180)
                                       --------       --------
Income Before Income Taxes               10,703        (16,886)

    Income Tax Expense                    3,402             --

                                       ========       ========
Net Income (Loss)                      $  7,301        (16,886)
                                       ========       ========
</TABLE>



                                       12

<PAGE>   15

Rental revenues increased approximately $1,708,000 during Fiscal 1996 compared
to the Comparable 1995 Period. Rental revenues in the Gift Mart increased
approximately $1,590,000 mainly due to an increase in rental rates. Rental
revenues decreased approximately $490,000 in the Merchandise Mart, reflecting a
decrease in occupancy offset by an increase in rental rates. Rental revenues in
the Apparel Mart increased approximately $607,000 reflecting an increase in
rental rates and in occupancy. Trade show and other revenues remained stable.

Building operations expense increased approximately $382,000 during Fiscal 1996
compared to the Comparable 1995 Period due primarily to increases in
cleaning, insurance, and repairs and maintenance costs, offset by a decrease in
utilities expense. Trade show expenses increased approximately $370,000 during
Fiscal 1996 compared to the Comparable 1995 Period due to increases in costs
associated with the gift and apparel shows. General and administrative expenses
increased approximately $1,080,000 during Fiscal 1996 compared to the Comparable
1995 Period due to an increase in personnel and employee benefits costs.
Property tax expense decreased approximately $95,000 during Fiscal 1996 compared
to the Comparable 1995 Period primarily due to a lower assessed value of the
Merchandise Mart.

Depreciation and amortization expense decreased approximately $1,259,000 during
Fiscal 1996 compared to the Comparable 1995 Period due to certain improvements
becoming fully depreciated during 1995.

The increase in operating income of $1,115,000 was the result of increased
permanent space revenue.

Interest expense decreased approximately $22,461,000 during Fiscal 1996 compared
to the Comparable 1995 Period. This decrease in interest expense was due to the
fact that, subsequent to the formation of AMC on October 2, 1995, interest on
certain of the Company's debt obligations is charged against the carrying value
of the obligations and no interest expense is recognized.

The Company received $884,000 during Fiscal 1996 and the predecessor companies
received $147,000 during the Comparable 1995 Period from the cash settlement of
an insurance claim relating to litigation. Olympic related income represents
revenues, net of direct costs, of business undertaken by the Company
specifically related to the 1996 Centennial Olympic Games. Both the insurance
claim and the Olympic related income are non-recurring in nature.

Income tax expense was $3,402,000 for Fiscal 1996. No income tax expense was
recognized during the Comparable 1995 Period due to the fact that prior to the
formation of the Company, the predecessor companies were partnerships or S
corporations, and any liability for income taxes was that of the partners and
stockholders and not that of the Company.

Net income was approximately $7,301,000 for Fiscal 1996, as compared to a net
loss of approximately $16,886,000 for the Comparable 1995 Period. The increase
in net income is primarily due to the fact that, subsequent to the formation of
AMC on October 2, 1995, interest on certain of the Company's debt obligations is
charged against the carrying value of the obligations and no interest expense is
recognized.

Liquidity and Capital Resources

The Company's primary sources of cash are operating cash flows and borrowings
under the Revolver. The availability of operating cash flows generated by the
Gift Mart is limited by the terms of the Gift Mart Mortgage Loan. Cash flows
from operations less capital improvements of the Gift Mart must be used to repay
principal outstanding on the Gift Mart financing and cannot be used to fund
operations or capital improvements of other properties of the Company. Principal
payments on the Gift Mart financing totaled approximately $4.4 million for the
year ended August 31, 1997, $4.3 million for the period from October 2, 1995
through August 31, 1996, and $3.2 million for the period from January 1, 1995
through October 1, 1995.

Borrowings on the Revolver of up to $10 million may be used solely to fund
operations and capital improvements and for acquisition and start-up costs for
new trade shows in an amount not to exceed $2.5 million. At August 31, 1997 the
Company had approximately $6.9 million available under the Revolver.


                                       13

<PAGE>   16

Cash flows from operations of the Company, excluding the cash flow from the
operations of the Gift Mart, were approximately $20.6 million during the year
ended August 31, 1997, $10.5 million during the period from October 2, 1995
through August 31, 1996, and $9.2 million for the period from January 1, 1995
through October 1, 1995. Under the terms of the Mart Bonds, the Company is
required to use certain portions of its cash flows to repay its indebtedness.
The terms of such debt also limit the Company's ability to incur additional debt
or to create additional liens. Accordingly, such provisions may limit the
Company's ability to make required capital improvements.

Significant capital expenditures were incurred over the past several years and
ongoing capital expenditures will be necessary to adequately maintain the
Company's properties. Total capital expenditures were approximately $11.9
million for the year ended August 31, 1997, $8.7 million for the period from
October 2, 1995 through August 31, 1996, and $6.2 million for the period from
January 1, 1995 through October 1, 1995. Capital expenditures, including tenant
improvements, of approximately $10.0 million are budgeted for fiscal year 1998.
There can be no assurance, however, that changes in the competitive environment,
governmental regulations, or unforeseen loss or damage will not cause capital
expenditures to exceed management's estimate.

Long-term debt repayments totaled approximately $16.9 million for the year ended
August 31, 1997, $14.5 million for the period from October 2, 1995 through
August 31, 1996, and $3.2 million for the period from January 1, 1995 through
October 1, 1995. Principal payments to reduce the indebtedness under the Gift
Mart financing and the Mart Bonds will be determined based upon cash flows of
the Gift Mart and of the Company, respectively.

Management expects that cash flows from operations and borrowings under the
Revolver will be sufficient to fund operations, debt service prior to maturity
and planned capital expenditures provided that the Company can maintain its
operating revenues and expenses at current levels and that no unforeseen capital
improvements are required. There can be no assurance the Company can maintain
current revenue levels which are affected by changing economic conditions in the
specific industries represented at its Marts and trade shows. In addition, there
can be no assurance that the overall level of capital expenditures will not
increase as the Marts age. In the event that operating cash flows and borrowings
under the Revolver are insufficient, the Company would be required to seek
additional financing; however, the Company's ability to do so is limited under
the terms of the Revolver.

The remaining principal balance on the Gift Mart Mortgage Loan is due on July
31, 1998, with an option to extend the maturity date for one year, if specified
performance levels are achieved. The Company's Mart Bonds and Antecedent Debt
Notes are due and payable on July 31, 2000. The Company will not generate
sufficient operating cash flow to repay such indebtedness and will be required
to extend the maturity dates of its indebtedness, secure alternative financing
or raise additional capital, or any combination thereof, to repay these
obligations. There can be no assurance that the Company will be able to extend
the maturity dates of any of its indebtedness, secure alternative financing or
raise additional capital.

The stock representing the Company's interests in EC Holdings and the Unimproved
Land has been pledged as security for the Antecedent Debt Notes. Under the terms
of the Antecedent Debt Notes, since the Company did not liquidate its interest
in EC Holdings or the Unimproved Land by October 2, 1997, the Antecedent Debt
Note holders are entitled to direct the trustee for the bonds to foreclose upon
the Company's interest in EC Holdings and the Unimproved Land.

Inflation

The Company deals with the effects of inflation by adjusting rental rates on new
leases and renewal leases. In times of higher inflation, the Company's operating
results are negatively impacted due to the fact that most lease terms are from
one to five years while the term of most service contracts is one year or less.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.


                                       14

<PAGE>   17

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial statements follow immediately and are listed in Item 14 of Part IV of
the report.


                                       15



<PAGE>   18


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
AMC, Inc.:


We have audited the accompanying consolidated balance sheets of AMC, Inc. and
subsidiaries (Company) as of August 31, 1997 and 1996, and the related
consolidated statements of earnings, stockholders' deficit, and cash flows for
the year ended August 31, 1997 and the period from October 2, 1995 through
August 31, 1996, and the combined statements of earnings, deficit, and cash
flows of the Atlanta Market Center Companies (Predecessor) for the period from
January 1, 1995 through October 1, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As discussed in note 1, AMC, Inc. was formed and organized effective October 2,
1995 principally to own and operate the businesses of certain affiliated
companies as part of a restructuring of the existing indebtedness of such
companies. The assets and liabilities of the Company have been recorded at their
historical cost. Included in stockholders' deficit are accumulated net losses of
the Predecessor of approximately $51,116,000.

In our opinion, the aforementioned consolidated financial statements of the
Company present fairly, in all material respects, the financial position of AMC,
Inc. and subsidiaries as of August 31, 1997 and 1996, and the results of their
operations and their cash flows for the year ended August 31, 1997 and the
period from October 2, 1995 through August 31, 1996, in conformity with
generally accepted accounting principles. Further, in our opinion, the
aforementioned combined financial statements of the Predecessor present fairly,
in all material respects, the results of their operations and their cash flows
for the period from January 1, 1995 through October 1, 1995, in conformity with
generally accepted accounting principles.



                                    /s/ KPMG PEAT MARWICK LLP

Atlanta, Georgia
October 17, 1997


                                      F-1

<PAGE>   19


                           AMC, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets

                            August 31, 1997 and 1996

<TABLE>
<CAPTION>
                      Assets                                           1997             1996
                      ------                                           ----             ----
<S>                                                               <C>               <C>        
Current assets:
    Cash                                                          $    520,854        1,052,082
    Restricted cash (note 7)                                         2,598,375        2,623,528
    Restricted escrow deposits (note 7)                              4,510,529          739,779
    Current maturities of notes receivable, net of allowance
      for doubtful note receivable of $390,422 in 1997
      (note 6)                                                         939,076        1,050,632

    Receivables:
      Tenants                                                        3,087,250        5,931,489
      Affiliate (note 3)                                               421,602          369,753
      Other                                                             26,225           42,721
                                                                  ------------      -----------
                                                                     3,535,077        6,343,963
      Less allowance for doubtful receivables                        1,628,859        2,205,797
                                                                  ------------      -----------
           Net receivables                                           1,906,218        4,138,166
                                                                  ------------      -----------

    Prepaid property taxes                                              88,745          313,613
    Deferred income taxes (note 10)                                  2,425,495        1,819,528
    Other assets                                                       378,333          894,612
                                                                  ------------      -----------
           Total current assets                                     13,367,625       12,631,940
                                                                  ------------      -----------

Commercial property, at cost (notes 5, 7, and 8)                   333,615,976      321,708,239
    Less accumulated depreciation                                  136,636,802      123,305,557
                                                                  ------------      -----------
           Net commercial property                                 196,979,174      198,402,682
                                                                  ------------      -----------

Notes receivable, less current maturities (note 6)                     939,080        2,157,042
Investment in affiliates (notes 4 and 7)                                83,336           50,663
Deferred income taxes (note 10)                                     17,319,644       20,368,611
Other assets                                                           831,823        1,610,598
                                                                  ------------      -----------
                                                                  $229,520,682      235,221,536
                                                                  ============      ===========
</TABLE>

See accompanying notes to consolidated and combined financial statements.


                                      F-2


<PAGE>   20





<TABLE>
<CAPTION>
             Liabilities and Stockholders' Deficit                   1997                1996
             -------------------------------------                   ----                ----
<S>                                                             <C>                 <C>        
Current liabilities:
    Current portion of long-term debt (note 7)                  $  14,400,000         12,512,703

    Accounts payable:
      Trade and other                                              10,686,335          6,253,639
      Affiliates (note 3)                                              30,000             30,000
                                                                -------------       ------------
           Total accounts payable                                  10,716,335          6,283,639
                                                                -------------       ------------

    Accrued interest payable                                          728,124            698,617
    Deferred revenue                                                1,901,022          2,226,144
    Accrued loan extension fees (note 7)                              268,205            268,205
                                                                -------------       ------------
           Total current liabilities                               28,013,686         21,989,308

Long-term debt, less current portion (note 7)                     294,665,115        313,455,103
Revolving line of credit (note 8)                                   3,079,804                 --
Security deposits                                                   2,802,372          2,427,838
Accrued loan extension fees, excluding current
    installments (note 7)                                             268,205            536,410
                                                                -------------       ------------
           Total liabilities                                      328,829,182        338,408,659
                                                                -------------       ------------

Stockholders' deficit (note 11):
    Company common stock - $1 par value; 100,000,000
      shares authorized;  61,962,751 shares issued and
      outstanding                                                  61,962,751         61,962,751
    Capital deficit                                              (172,450,472)      (172,450,472)
    Retained earnings                                              11,179,221          7,300,598
                                                                -------------       ------------
           Total stockholders' deficit                            (99,308,500)      (103,187,123)

Commitments and contingencies (notes 3, 8, 11, 13, and 14)

                                                                -------------       ------------
                                                                $ 229,520,682        235,221,536
                                                                =============       ============
</TABLE>


                                      F-3

<PAGE>   21


                           AMC, INC. AND SUBSIDIARIES
                       Consolidated Statements of Earnings
                 For the Year ended August 31, 1997 and for the
               Period from October 2, 1995 through August 31, 1996

                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)
                       Combined Statement of Earnings
           For the Period from January 1, 1995 through October 1, 1995


<TABLE>
<CAPTION>
                                                                              October 2, 1995    January 1, 1995
                                                              Year ended         through             through
                                                            August 31, 1997   August 31, 1996    October 1, 1995
                                                            ---------------   ---------------    ---------------
<S>                                                         <C>               <C>                <C>       
Revenues:
    Rental (note 12)                                         $ 49,537,795        43,915,842        34,943,066
    Trade shows                                                16,818,191        14,844,458        14,921,358
    Other revenues                                              4,389,243         4,006,791         3,435,821
                                                             ------------       -----------        ----------
           Total revenues                                      70,745,229        62,767,091        53,300,245
                                                             ------------       -----------        ----------

Operating expenses:
    Building operations (note 13)                               9,317,618         9,256,018         7,384,004
    Trade shows                                                 2,953,339         2,703,534         2,218,820
    Marketing                                                   5,510,784         4,209,982         3,332,447
    General and administrative                                 18,511,174        15,922,176        11,471,439
    Bad debt expense                                              641,772           932,909           667,830
    Property taxes                                              4,483,506         4,140,775         2,646,181
    Depreciation and amortization                              13,533,656        11,514,878         9,559,359
                                                             ------------       -----------        ----------
           Total operating expenses                            54,951,849        48,680,272        37,280,080
                                                             ------------       -----------        ----------

           Operating income                                    15,793,380        14,086,819        16,020,165
                                                             ------------       -----------        ----------

Other (income) expenses:
    Interest expense - affiliated indebtedness (note 3)                --                --         1,433,437
    Interest expense - other indebtedness
      (notes 7 and 8)                                           8,374,876         7,780,170        24,126,266
    Interest income (note 6)                                     (442,717)         (545,747)         (350,049)
    Earnings from investment in affiliates (note 4)              (100,464)          (88,738)          (89,985)
    Proceeds from insurance claim (note 16)                            --          (883,881)         (147,216)
    Expenses (income), net resulting from
      one-time event (note 17)                                    371,447        (3,316,512)               --
    Other (notes 6 and 14)                                      1,268,615           439,329           241,511
                                                             ------------       -----------        ----------
           Total other expenses, net                            9,471,757         3,384,621        25,213,964
                                                             ------------       -----------        ----------

           Income (loss) before income taxes
               and extraordinary item                           6,321,623        10,702,198        (9,193,799)

Deferred income tax expense (note 10)                           2,443,000         3,401,600                --
                                                             ------------       -----------        ----------
           Income (loss) before extraordinary item              3,878,623         7,300,598        (9,193,799)

Extraordinary item - gain on debt restructuring
    (notes 1 and 7)                                                    --                --        67,995,635
                                                             ------------       -----------        ----------

           Net income                                        $  3,878,623         7,300,598        58,801,836
                                                             ============       ===========        ==========

Net income per share - primary (note 2(i))                            .06               .12
                                                             ============       ===========

Net income per share - fully diluted (note 2(i))                      .06               .10
                                                             ============       ===========
</TABLE>


See accompanying notes to consolidated and combined financial statements.


                                      F-4

<PAGE>   22



                           AMC, INC. AND SUBSIDIARIES

                Consolidated Statements of Stockholders' Deficit
                 For the Year ended August 31, 1997 and for the
               Period from October 2, 1995 through August 31, 1996

                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)
                          Combined Statement of Deficit
           For the Period from January 1, 1995 through October 1, 1995

<TABLE>
<CAPTION>
                                                                       Common          Capital       Retained
                                                                        stock          deficit       earnings       Total
                                                                    ------------    ------------    ----------   ------------
<S>                                                                 <C>             <C>             <C>          <C>
Predecessor balance at December 31, 1994                            $      1,500    (231,016,918)           --   (231,015,418)
Net income                                                                    --      58,801,836            --     58,801,836
Contribution of capital through forgiveness of debt (note 3)                  --      20,125,663            --     20,125,663
Contributions (note 3)                                                        --         103,534            --        103,534
Interest on capital contribution receivable from partner (note 3)             --         (77,566)           --        (77,566)
Distributions to stockholder                                                  --        (102,896)           --       (102,896)
                                                                    ------------    ------------    ----------   ------------
Predecessor balance at October 1, 1995                                     1,500    (152,166,347)           --   (152,164,847)

Net equity resulting from the restructure of debt and the
    formation of the Company (notes 1 and 11)                             (1,500)     41,665,059            --     41,663,559
                                                                    ------------    ------------    ----------   ------------
Balance at October 2, 1995                                                    --    (110,501,288)           --   (110,501,288)

Issuance of the Company's common stock on November 17, 1995
    (note 11)                                                         62,173,153     (62,173,153)           --             --
Contribution of capital through principal repayment on AMM
    Escrow Bonds                                                              --          13,567            --         13,567
Receipt and retirement of treasury stock                                (210,402)        210,402            --             --
Net income                                                                    --              --     7,300,598      7,300,598
                                                                    ------------    ------------    ----------   ------------
Balance at August 31, 1996                                            61,962,751    (172,450,472)    7,300,598   (103,187,123)

Net income                                                                    --              --     3,878,623      3,878,623
                                                                    ------------    ------------    ----------   ------------

Balance at August 31, 1997                                          $ 61,962,751    (172,450,472)   11,179,221    (99,308,500)
                                                                    ============    ============    ==========   ============
</TABLE>


See accompanying notes to consolidated and combined financial statements.


                                      F-5

<PAGE>   23



                           AMC, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                 For the Year ended August 31, 1997 and for the
               Period from October 2, 1995 through August 31, 1996

                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)
                                                                           
                        Combined Statement of Cash Flows
           For the Period from January 1, 1995 through October 1, 1995


<TABLE>
<CAPTION>
                                                                           October 2, 1995    January 1, 1995
                                                           Year ended          through            through
                                                        August 31, 1997    August 31, 1996    October 1, 1995
                                                        ---------------    ---------------    ---------------
<S>                                                     <C>                <C>                <C>       
Cash flows from operating activities:
    Net income                                            $  3,878,623         7,300,598        58,801,836
    Adjustments to reconcile net income to
      net cash provided by operating activities:
        Extraordinary item - gain on debt
          restructuring                                             --                --       (67,995,635)
        Amortization of protected interest rate
          agreements                                           132,500           143,542           587,067
        Depreciation and other amortization                 14,012,924        11,954,207         9,769,445
        Earnings on investment in affiliates                  (100,464)          (88,738)          (89,985)
        Provision for doubtful note receivable                 390,442                --                --
        Deferred income tax expense                          2,443,000         3,401,600                --
        Decrease (increase) in net receivables               2,231,948        (1,543,404)         (417,498)
        Decrease (increase) in prepaid expenses
          and other assets                                     705,743          (439,132)         (878,135)
        Increase (decrease) in accounts payable,
          security deposits, and other accrued
          expenses                                           4,539,025        (1,085,365)        1,321,622
        Increase (decrease) in accrued interest
          payable                                               29,507        (1,636,305)        8,548,149
        Increase in unpaid interest added to
          mortgage loan payable                                     --                --         6,471,907
        Decrease in deferred revenue                          (325,122)         (119,875)       (3,687,698)
        Increase in accrued interest on contribution
          receivable from partner                                   --                --           (77,566)
                                                          ------------       -----------       -----------
              Net cash provided by operating
                 activities                                 27,938,126        17,887,128        12,353,509
                                                          ------------       -----------       -----------

Cash flows from investing activities:
    Decrease (increase) in restricted cash                      25,153           (82,374)         (338,776)
    Principal repayments of notes receivable                   939,076           994,852                --
    Additions to commercial property                       (11,907,737)       (8,707,226)       (6,177,088)
    Investment in affiliate                                    (32,673)               --                --
    Distributions from affiliate                               100,464                --                --
    Increase in cash management advances
      to affiliate                                                  --                --           (34,541)
                                                          ------------       -----------       -----------
              Net cash used in investing activities        (10,875,717)       (7,794,748)       (6,550,405)
                                                          ------------       -----------       -----------
</TABLE>


                                                                     (Continued)


                                      F-6

<PAGE>   24


                           AMC, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows

                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)
                        Combined Statement of Cash Flows


<TABLE>
<CAPTION>
                                                                         October 2, 1995  January 1, 1995
                                                          Year ended         through          through
                                                       August 31, 1997   August 31, 1996  October 1, 1995
                                                       ---------------   ---------------  ---------------
<S>                                                    <C>               <C>              <C>        
Cash flows from financing activities:
    Partner contributions                                $         --               --          103,534
    Net proceeds from revolving line of credit              3,079,804               --               --
    Principal repayments of mortgage loan                  (4,389,988)      (4,330,179)      (3,232,357)
    Proceeds from mortgage loan                                    --               --          306,732
    Principal payments of AMM Escrow Bonds                   (512,703)      (1,143,304)              --
    Mart Bond interest payments                           (12,000,000)      (9,000,000)              --
    (Increase) decrease in restricted escrow
      deposits, net of deposits used to reduce the
      mortgage loan payable                                (3,770,750)       4,025,674       (2,723,366)
                                                         ------------      -----------      -----------
              Net cash used in financing activities       (17,593,637)     (10,447,809)      (5,545,457)
                                                         ------------      -----------      -----------

              Net (decrease) increase in cash                (531,228)        (355,429)         257,647

Cash at beginning of period                                 1,052,082        1,407,511        1,149,864
                                                         ------------      -----------      -----------

Cash at end of period                                    $    520,854        1,052,082        1,407,511
                                                         ============      ===========      ===========

Supplemental disclosure of cash flow
    information - cash paid during the year
    for interest                                         $  8,212,869        9,272,933        9,952,580
                                                         ============      ===========      ===========

Supplemental disclosure of noncash investing
  and financing activities:
      Contribution of capital through forgiveness
        of interest-bearing advances from affiliate,
        inclusive of accrued interest of $8,077,663
        (note 3)                                         $         --               --       20,125,663
                                                         ============      ===========      ===========

      Net equity resulting from debt
        restructuring and formation of AMC, Inc. 
        (note 11)                                        $         --       41,663,559               --
                                                         ============      ===========      ===========

      Principal repayment on AMM Escrow
        Bonds through contribution from
        stockholder                                      $         --           13,567               --
                                                         ============      ===========      ===========
</TABLE>


See accompanying notes to consolidated and combined financial statements.


                                      F-7


<PAGE>   25





                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements

                            August 31, 1997 and 1996


(1)    Organization, Business, and Basis of Presentation

       Except as noted below, the accompanying financial statements reflect the
       consolidated accounts of AMC, Inc. and subsidiaries (the "Company"). The
       financial statements for the period from January 1, 1995 through October
       1, 1995 reflect the combined accounts of the Atlanta Market Center
       Companies (the "Predecessor"). The Company was incorporated as a Georgia
       corporation on September 29, 1995 and organized effective October 2,
       1995. The Company was formed to own and manage trade marts, trade shows,
       special events, and consumer shows and activities reasonably related
       thereto. The principal assets of the Company are the Atlanta Apparel
       Mart, the Atlanta Merchandise Mart, and the Atlanta Gift Mart buildings
       containing permanent showroom and exhibition space. The Company has a
       fiscal year end of August 31.

       Prior to October 2, 1995, the assets and businesses owned by the Company
       were included in various partnerships and corporations controlled by John
       C. Portman, Jr. ("Portman"). Included in the Predecessor are the Atlanta
       Apparel Mart ("AAM") -- (a limited partnership); Atlanta Merchandise
       Mart, L.P. ("AMM") -- (a limited partnership); Atlanta Gift Mart, L.P.
       ("AGM") -- (a limited partnership); and Atlanta Market Center Management
       Company, Inc. ("AMCMC") -- (an S Corporation).

       Portman was a general partner in each of the partnerships and the sole
       stockholder of AMCMC. Other partnership interests in AAM, AMM, and AGM
       were owned by Portman or by Portman affiliates. AAM, AMM, and AGM are
       collectively referred to as "the Marts."

       In addition to the Marts and AMCMC, included in the Predecessor was
       Portman's indirect ownership interest in Lightfair International
       Associates (see note 4) and EC Holdings, Inc. Lightfair International
       Associates is a New York general partnership which manages an annual
       trade show featuring commercial lighting products and services for
       professionals involved in design, planning, maintenance, and/or
       construction industries. EC Holdings, Inc. holds an interest in limited
       partnerships which own two mixed-use complexes in San Francisco's
       financial district.

       Also included in the Predecessor was Pisa Associates, L.P. ("Pisa") which
       owned and maintained a 14,460-square-foot parcel of unimproved property,
       used for surface parking, located near the Marts in Atlanta, Georgia.

       In 1991, Portman, Portman Properties (a proprietorship of Portman), and
       certain other affiliates, including those owning the assets and
       businesses discussed above, restructured substantially all of their then
       existing indebtedness under an Override and Collateral Pool Agreement
       ("OCPA"). Portman and certain affiliates subsequently defaulted on
       several provisions of the OCPA.

                                                                     (Continued)


                                      F-8

<PAGE>   26


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


       Effective October 2, 1995 (the "Formation Date"), the OCPA was terminated
       and existing indebtedness of Portman and affiliates was further
       restructured through a series of agreements with the applicable creditors
       whereby the Company would be formed to hold Portman's mart-related and
       certain other assets. In exchange for certain net assets, with a deficit
       book value for accounting purposes, contributed to the Company by Portman
       Holdings, L.P. (a partnership indirectly controlled by Portman), Portman
       Holdings, L.P. received 17.56% (10,880,302 shares) of the equity interest
       in the Company, which for accounting purposes is regarded as a
       distribution to Portman of approximately $10,880,000. The net assets
       contributed by Portman Holdings, L.P. for the shares of common stock it
       received had been contributed to Portman Holdings, L.P. by CGS
       Associates, L.P., a partnership in which Portman owned no interest but
       which was wholly owned by family members, employees, and former employees
       of Portman.

       On the Formation Date there were five classes of creditors (Classes A
       through E) under the OCPA holding claims against Portman personally. In
       addition, each of the Marts were encumbered by separate mortgage loans.
       As part of the OCPA termination, certain of this debt was forgiven and
       the remainder was restructured, resulting in an extraordinary gain of
       approximately $68.0 million for AAM and AMM. The debt was restructured as
       follows:

          -  Class A Claims: On the Formation Date, there were two types of
             Class A claims under the OCPA. One type, in the aggregate amount of
             $2,706,639 held by the lending syndicate that held the mortgage
             loan on the Atlanta Merchandise Mart, was paid down to $1,656,007,
             which balance was modified to become the Fixed Rate Class A AMM
             Escrow Notes due July 31, 1997 in the principal amount of
             $1,656,007 (the "AMM Escrow Bonds"). Those bonds were issued
             directly to the thirteen banks comprising the lending syndicate
             which held the mortgage loan on the Atlanta Merchandise Mart and
             have been fully repaid as of August 31, 1997. The other type of
             Class A claim, in the aggregate amount of $8,033,600 held by eight
             separate banks in varying amounts (being the banks which agreed to
             fund new working capital to Portman when the OCPA was put in
             place), was modified to become the Class A Elevated Antecedent Debt
             Notes due July 31, 2000 in the principal amount of $8,033,600 (the
             "Elevated Antecedent Debt Notes").

          -  Class B, C, and D Claims: On the Formation Date, the Class B, C,
             and D claims under the OCPA, which represented personal obligations
             of Portman, were determined to aggregate $280,329,854. These claims
             were extinguished in exchange for the transfer by Portman of
             interests in certain assets which had previously secured such
             claims. Such interests, which had a deficit book value for
             accounting purposes, were then contributed to the Company by the
             claimants for approximately 29,203,000 shares of common stock of
             the Company. Because the transfer was in satisfaction of personal
             obligations, the issuance of shares to the claimants is regarded as
             a distribution to Portman of approximately $29,203,000 for
             accounting purposes.

          -  Class E Claims:  On the Formation Date, the Class E claims under 
             the OCPA aggregated $8,483,953.  These claims were extinguished 
             for no further consideration.

                                                                     (Continued)


                                      F-9

<PAGE>   27


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

            Notes to Consolidated and Combined Financial Statements


          -  Atlanta Apparel Mart Financing: On the Formation Date, the then
             existing Atlanta Apparel Mart mortgage financing was held by a
             lending syndicate comprised of seven banks and had an outstanding
             balance of approximately $162,000,000. On the Formation Date,
             approximately $72,000,000 of this debt (while still an obligation
             of AAM) was forgiven and the balance of approximately $90,000,000
             was transferred to the Company and modified to become $80,000,000
             in principal amount of the private placement notes issued directly
             to the individual members of the lending syndicate. In addition,
             the members of the lending syndicate received an aggregate of
             approximately 10,790,000 shares of common stock of the Company, as
             well as warrants to purchase an additional approximately 8,409,000
             shares (see note 11).

          -  Atlanta Merchandise Mart Financing: On the Formation Date, the then
             existing Atlanta Merchandise Mart mortgage financing was held by a
             lending syndicate comprised of thirteen banks or other financial
             institutions and had an outstanding balance of approximately
             $153,000,000. On the Formation Date, approximately $60,000,000 of
             this debt (while still an obligation of AMM) was forgiven. A
             portion of this debt in the amount of $2,706,639 constituted a
             Class A claim, which was dealt with as described above. The balance
             of approximately $91,000,000 was transferred to the Company and
             modified to become the remaining $80,000,000 in principal amount of
             the private placement notes issued directly to the individual
             members of the lending syndicate. In addition, the members of the
             lending syndicate received an aggregate of approximately 11,300,000
             shares of common stock of the Company, as well as warrants to
             purchase an additional approximately 8,807,000 shares (see note
             11).

          -  AGM Financing: On the Formation Date, the then existing Atlanta
             Gift Mart mortgage financing was held by a lending syndicate
             comprised of five banks and had an outstanding balance of
             $107,282,009. On the Formation Date, this financing was modified to
             extend the term, to increase the interest rate, and to reflect
             numerous other changes from the original loan documentation (see
             note 7).

       AMC, Inc. common shares were issued and the debt restructuring was
       finalized on November 17, 1995; however, effective control of the net
       assets of the predecessor entities was transferred to the Company on
       October 2, 1995, from which date the risks and rewards of ownership were
       those of the shareholders of AMC, Inc. Because the measurement date for
       determining the restructured debt and related amounts forgiven was
       October 2, 1995 and because the risks and rewards of ownership were
       transferred to the AMC, Inc. shareholders effective October 2, 1995, the
       impact of recording the debt restructuring on its effective date rather
       than the date upon which such restructuring was finalized is not material
       to the Company's consolidated financial statements.

       This restructuring has been accounted for as a troubled debt
       restructuring in accordance with Statement of Financial Accounting
       Standards (SFAS) No. 15, Accounting by Debtors and Creditors for Troubled
       Debt Restructurings. Accordingly, the assets and liabilities of the
       Company have been recorded at their historical cost, and stockholders'
       deficit represents the excess of liabilities over assets. Included in
       stockholders' deficit are accumulated net losses of and total partners'
       excess withdrawals from the Predecessor of approximately $51,116,000 and
       $101,049,000, respectively.

                                                                     (Continued)


                                      F-10

<PAGE>   28


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


       The accompanying consolidated financial statements of the Company include
       the accounts of the Company and its wholly owned subsidiaries: GMGP,
       Inc.; Gift Mart Limited Partner, Inc.; LFGP, Inc.; and EC Holdings, Inc.

       All significant intercompany accounts and transactions have been
       eliminated in the consolidated and combined financial statements.

(2)    Summary of Significant Accounting Policies

       (a)   Method of Accounting

             The accompanying financial statements have been prepared on the
             accrual basis of accounting. Certain reclassifications have been
             made to the 1996 and 1995 financial statements to conform to the
             presentation in the 1997 financial statements.

       (b)   Restricted Escrow Deposits

             Restricted escrow deposits represent deposits for the payment of
             property taxes, insurance, and ground lease payments that are
             required by the Company's lenders.

       (c)   Receivables

             The Company's receivables primarily relate to billings to tenants
             who lease space in the mart buildings and billings to affiliates
             for reimbursable expenses. The Company generally provides for
             losses on tenant receivables that are more than 60 days delinquent.
             Provisions for losses on affiliate receivables are recorded based
             on specific analysis of the affiliate's ability to pay.

       (d)   Commercial Property

             Commercial property is carried at cost and is depreciated using
             straight-line and accelerated methods over the estimated useful
             lives of the assets as follows:

<TABLE>
             <S>                                               <C>        
             Buildings and improvements                        15 to 40 years
             Tenant improvements                               3 to 5 years
             Furniture, fixtures, and equipment                5 to 7 years
</TABLE>

             Commercial property is reviewed for impairment whenever events or
             changes in circumstances indicate that the carrying amount of an
             asset may not be recoverable. Recoverability is measured by a
             comparison of the carrying amount of the asset to future net cash
             flows expected to be generated by the asset. If such assets are
             considered to be impaired, the impairment to be recognized is
             measured by the amount by which the carrying amount of the assets
             exceeds the fair value of the assets.

       (e)   Trade Show Revenue and Expense

             Trade show revenues are generally collected in advance and
             initially recorded as deferred revenue. Trade show revenues are
             recognized in the month the related show occurs. Direct costs of
             trade shows are deferred as prepaid expense and recognized in the
             month the related trade show occurs.

                                                                     (Continued)


                                      F-11


<PAGE>   29


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


       (f)   Management Fees

             The Company recognizes management fee income in accordance with the
             terms of its management agreements. The Company entered into
             management agreements with certain affiliates: CGS Associates,
             L.P.; AMC Orlando, Inc.; AMC Tampa, Inc.; and an unrelated party,
             Inforum Associates. The management agreement with AMC Tampa, Inc.
             was terminated in September 1997 (note 6).

             Under the terms of the agreements with AMC Tampa, Inc. and AMC
             Orlando, Inc., the Company earns a management fee equal to 3% of
             the managed company's gross revenue, as defined. Under the terms of
             the agreement with CGS Associates, L.P., the Company earns a
             management fee equal to 1.5% of gross revenues, as defined, through
             December 31, 1995 and earns a management fee equal to 3% of gross
             revenues, as defined, thereafter.

             Under the terms of the agreement with Inforum Associates, the
             Company manages the Convention Facilities and Food Service
             Contractor of the Inforum facility and receives as a management fee
             40% of the Combined Net Cash Flow (as defined) of the Convention
             Facilities and Food Service operations.

             The Company or Predecessor earned approximately $554,000, $446,000,
             and $584,000 in management fees for the year ended August 31, 1997,
             the 335-day period ended August 31, 1996, and the 274-day period
             ended October 1, 1995, respectively.

       (g)   Marketing Costs

             The Company incurs costs for various marketing and advertising
             efforts. All costs related to marketing and advertising are
             expensed in the period incurred or if directly related to specific
             trade shows are expensed in the month the related show occurs.

       (h)   Income Taxes

             The Company accounts for income taxes using an asset and liability
             approach. Deferred income taxes are recognized for the tax
             consequences of "temporary differences" by applying enacted
             statutory tax rates applicable to future years to differences
             between the financial statement carrying amounts and the tax bases
             of existing assets and liabilities. Additionally, the effect on
             deferred taxes of a change in tax rates is recognized in earnings
             in the period that includes the enactment date.

             For the Predecessor, no provision has been made for income taxes
             because any liability for income taxes is that of the partners and
             shareholders of the predecessor companies.

                                                                     (Continued)


                                      F-12

<PAGE>   30


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


       (i)   Income Per Share

             Weighted average shares outstanding for the year ended August 31,
             1997 and the 335-day period ended August 31, 1996 were
             approximately 62,000,000. Primary net income per share has been
             calculated assuming no common stock equivalents resulting from
             outstanding warrants since such warrants are exercisable only upon
             certain conditions and such conditions have not yet occurred (note
             11). As a result of total warrants exceeding 20% of current
             outstanding shares, fully diluted net income per share is based on
             the weighted-average number of shares outstanding and common stock
             equivalents, determined using the modified treasury stock method,
             derived from dilutive warrants.
 
       (j)   Recent Accounting Pronouncement

             In February 1997, the Financial Accounting Standards Board issued
             SFAS No. 128, Earnings Per Share. SFAS No. 128 supersedes
             Accounting Principles Board Opinion No. 15, Earnings Per Share, and
             specifies the computation, presentation, and disclosure
             requirements for earnings per share (EPS). SFAS No. 128 replaces
             the presentation of primary EPS with a presentation of basic EPS
             and fully diluted EPS with diluted EPS. It also requires dual
             presentation of basic and diluted EPS on the face of the income
             statement for all entities with complex capital structures and
             requires a reconciliation of the numerator and denominator of the
             basic EPS computation to the numerator and denominator of the
             diluted EPS computation. SFAS No. 128 is effective for financial
             statements for annual periods ending after December 15, 1997. The
             impact on the Company's financial statements of the provisions of
             SFAS No. 128 is not expected to be material.

       (k)   Use of Estimates

             The financial statements have been prepared in conformity with
             generally accepted accounting principles. In preparing the
             financial statements, management uses estimates and assumptions
             relating to the reporting of assets and liabilities and the
             disclosure of contingent assets and liabilities as of the balance
             sheet date and reporting of revenues and expenses during the
             period. Actual results could differ from these estimates.

                                                                     (Continued)


                                      F-13

<PAGE>   31


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


(3)    Transactions with Affiliates

       Transactions with affiliates are summarized as follows:

       (a)   Accounts Receivable

             Accounts receivable from affiliates primarily represent management
             fees, cash management advances, and reimbursable expenses and are
             summarized as follows:

<TABLE>
<CAPTION>
                                                           August 31,
                                                      --------------------
                                                        1997         1996
                                                      --------     -------
             <S>                                      <C>          <C>    
             Affiliate receivables                    $421,602     369,753
             Less allowance for doubtful affiliate
             receivables                                68,329          --
                                                      --------     -------

             Net affiliate receivables                $353,273     369,753
                                                      ========     =======
</TABLE>

             During 1996, the Company wrote off approximately $904,000 of
             receivables from Portman Apparel Associates, L.P.; Race Events
             Joint Venture; and other affiliates, as these accounts were
             determined to be uncollectible. As approximately $670,000 of these
             amounts had been reserved at October 1, 1995, an additional
             approximate $234,000 has been recorded as bad debt expense in the
             1996 consolidated financial statements.

       (b)   Accounts Payable to and Interest-Bearing Advances from Affiliates

             Accounts payable to affiliates represent certain reimbursable
             expenses or noninterest-bearing advances. During 1995, the
             Predecessor had interest-bearing advances from Portman Properties
             that bore interest at the prime rate plus 1%. Interest expense
             recorded on those affiliate advances approximated $1,433,000. These
             interest-bearing advances and related accrued interest were
             forgiven during 1995 resulting in a contribution of capital of
             $20,125,663.

       (c)   Contributions from Affiliate

             With the development of the Atlanta Gift Mart in 1990, the Atlanta
             Merchandise Mart discontinued leasing space to gift industry
             tenants. Due to the significant impact of this event on AMM's cash
             flow, AMM's lenders required escrow deposits by AMM, guaranteed by
             Portman, which were to be paid by AGM as compensation to AMM for
             the lost revenue from the displaced gift industry tenants and to
             reimburse AMM for marketing and associated costs to renovate space
             for new tenants.

                                                                     (Continued)


                                      F-14


<PAGE>   32


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


               The Escrow Agreements provided for an initial deposit of
               $15,331,000, which was funded from the AGM construction loan. Of
               this amount, $3,911,271 was distributed to Portman on December
               29, 1989 and was recorded as a capital contribution receivable
               from partner. The remainder was funded during 1990 and treated as
               a capital contribution from Portman to AMM. The $3,911,271,
               initially distributed to Portman, was contributed to an affiliate
               by Portman. The outstanding amount of the capital contribution
               receivable, plus accrued interest at 8.5%, has been included as a
               component of the Predecessor's capital deficit. Interest income
               earned related to this capital contribution receivable was
               $77,566 for the 274-day period ended October 1, 1995. As of the
               Formation Date the capital contribution receivable was
               recharacterized and is no longer receivable.

         (d)   Other

               Effective October 2, 1995, the Company entered into various
               services agreements with Portman Holdings, L.P., and other
               affiliates. The Company has agreed to provide telephone and human
               resource services through November 13, 1997 and computer services
               through August 31, 1998 at certain defined rates. Portman
               Holdings, L.P. has agreed to provide risk management services to
               the Company through December 31, 1997 for an annual fee of
               $100,000 plus certain other costs and fees. An agreement whereby
               Portman Holdings, L.P. provided financial and strategic planning
               services for a monthly fee of $10,000 was terminated effective
               February 18, 1997. Service agreements generally provide for
               automatic one-year extensions and permit termination with notice.

(4)    Investment in Affiliates

       The Company, through its wholly owned subsidiary LFGP, Inc., owns an
       approximate 50% general partnership interest in a limited partnership,
       Portman Lightfair Associates, L.P. ("PLALP"). The primary asset of PLALP
       is its one-third ownership interest in Lightfair International
       Associates, a New York general partnership. The Company's and
       Predecessor's investment in PLALP and PLALP's investment in Lightfair
       International Associates are accounted for using the equity method of
       accounting. The carrying value of this investment is $83,336 and $50,663
       at August 31, 1997 and 1996, respectively.

       Earnings of $100,464, $88,738, and $89,985 for the year ended August 31,
       1997, the 335-day period ended August 31, 1996, and the 274-day period
       ended October 1, 1995, respectively, related to the Company's or
       Predecessor's indirect investment in Lightfair International Associates
       are included in earnings from investment in affiliates in the
       accompanying consolidated and combined statements of earnings.

                                                                     (Continued)


                                      F-15


<PAGE>   33


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


       The Company, through its wholly owned subsidiary EC Holdings, Inc., also
       owns an interest in limited partnerships which own two mixed-use
       complexes in San Francisco's financial district. Embarcadero Center
       Investors Partnership, in which the Company owns approximately 3.4%
       interest, is comprised of four office buildings, a retail mall, and a
       hotel. The adjacent Embarcadero Center West, in which the Company owns
       approximately 6.7% interest, through three limited partnerships, is
       comprised of two office buildings and a hotel. These investments are
       known collectively as EC Holdings and are accounted for using the equity
       method of accounting. At August 31, 1997 and 1996, these investments have
       no carrying value.

(5)    Commercial Property

       A summary of commercial property follows:

<TABLE>
<CAPTION>
                                                                 August 31,
                                                        ----------------------------
                                                            1997             1996
                                                        ------------     -----------
       <S>                                              <C>              <C>       
       Land                                             $ 19,338,993      19,338,993
       Buildings and improvements                        255,732,677     248,882,626
       Tenant improvements                                34,888,292      31,252,570
       Furniture, fixtures, and equipment                 21,685,708      21,069,400
       Construction in progress                            1,970,306       1,164,650
                                                        ------------     -----------

                                                        $333,615,976     321,708,239
                                                        ============     ===========
</TABLE>

       Construction in progress primarily relates to building and tenant
       improvements under construction.

(6)    Notes Receivable

       Effective October 2, 1995, Portman redeemed his entire ownership interest
       in two affiliated companies (AMC Orlando, Inc. and AMC Tampa, Inc.) in
       exchange for a total of $1,050,632 in cash and $4,202,526 in notes
       receivable. The notes receivable were contributed by Portman to the
       Company and are pledged as collateral to the AMM Escrow Bonds described
       in note 7. These notes receivable mature on October 2, 1999, and are
       summarized as follows:

<TABLE>
<CAPTION>
                                                       August 31,
                                                ------------------------
                                                   1997           1996
                                                ----------     ---------
       <S>                                      <C>            <C>      
       Receivable from:
         AMC Orlando, Inc.                      $1,878,156     2,817,232
         AMC Tampa, Inc.                           390,442       390,442
                                                ----------     ---------
                                                 2,268,598     3,207,674
       Less allowance for doubtful note
         receivable                                390,442            --
                                                ----------     ---------
                                                $1,878,156     3,207,674
                                                ==========     =========
</TABLE>

                                                                     (Continued)


                                      F-16

<PAGE>   34


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


       The notes bear interest at 7.5% per annum and require payment of interest
       quarterly. The principal amounts are payable in equal aggregate
       semiannual payments of $525,316 over the term of the notes. Interest
       income related to these notes of $208,100 and $239,524 for the year ended
       August 31, 1997 and the 335-day period ended August 31, 1996,
       respectively, is included in interest income in the accompanying
       consolidated statements of earnings.

       During 1997, the Company fully reserved the AMC Tampa, Inc. note due to
       nonpayment. The Company also reserved all related accrued interest and
       accounts receivable from AMC Tampa, Inc. For the year ended August 31,
       1997, the Company recorded approximately $469,000 as other expense in the
       accompanying consolidated statement of earnings to fully reserve all
       receivables due from AMC Tampa, Inc.

       In September 1997, the Company foreclosed on the AMC Tampa, Inc. note
       receivable and assumed control of AMC Tampa, Inc.

(7)    Long-Term Debt

       Long-term debt is summarized as follows:

<TABLE>
<CAPTION>
                                                             August 31,
                                                   ----------------------------
                                                       1997             1996
                                                   ------------     -----------
       <S>                                         <C>              <C>        
       Gift Mart Mortgage Loan                     $ 98,561,842     102,951,830
       Mart Bonds (face amount of $160,000,000)     203,200,000     215,200,000
       Elevated Antecedent Debt Notes                 7,303,273       7,303,273
       AMM Escrow Bonds                                      --         512,703
                                                   ------------     -----------
                                                    309,065,115     325,967,806
       Less current portion                          14,400,000      12,512,703
                                                   ------------     -----------

                                                   $294,665,115     313,455,103
                                                   ============     ===========
</TABLE>

                                                                     (Continued)


                                      F-17

<PAGE>   35


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


       Gift Mart Mortgage Loan - The Company has a mortgage loan payable (the
       "Gift Mart Mortgage Loan") secured by a first mortgage on the land,
       building, and improvements of Atlanta Gift Mart, L.P., along with Atlanta
       Gift Mart, L.P.'s interest as lessor in all existing and future leases of
       the property. The mortgage loan payable arose from a previous
       construction loan payable. This loan was restructured effective August
       23, 1991 with an extension in maturity date to December 30, 1994 and
       further extended to December 30, 1995 during 1994. Effective October 2,
       1995, the construction loan was again restructured with an extension in
       maturity date to July 31, 1998. In connection therewith, the Company
       incurred an extension fee equal to 1% of the principal balance
       outstanding at October 2, 1995, payable in four equal annual
       installments. In addition, the mortgage loan payable may be extended for
       one additional year if certain performance levels are achieved. As of
       August 31, 1997, the Company had achieved the performance levels
       specified by the mortgage agreement, and management fully intends to
       extend the maturity date of the mortgage loan. The loan bears interest at
       a floating rate equal to the prime rate plus 1% or LIBOR plus 2% or the
       Interbank Offered Rate plus 2% at the option of Atlanta Gift Mart, L.P.
       At August 31, 1997 and 1996, the weighted average interest rates on the
       mortgage loan balance outstanding approximated 8.02% and 7.84%,
       respectively. Over the term of the mortgage loan, net cash flows of
       Atlanta Gift Mart, L.P., as defined, plus payments received by Atlanta
       Gift Mart, L.P. on the $730,327 in Antecedent Debt Bonds it holds, must
       be applied to reduce the outstanding principal balance of the mortgage
       loan. The mortgage loan is partially guaranteed by Portman.

       Effective October 2, 1995, Atlanta Gift Mart, L.P. entered into a Rate
       Cap Transaction Agreement (the "Rate Cap Agreement"), which defines a
       guaranteed rate for the payment of interest on the mortgage loan. This
       protected interest rate agreement has an effective term from November 1,
       1995 to September 1, 1998. The cost of the Rate Cap Agreement was
       $397,500, is included, net of accumulated amortization, in other assets
       at August 31, 1997 and 1996, and is being amortized to interest expense
       over the term of the agreement. Amortization expense for the year ended
       August 31, 1997 and the 335-day period ended August 31, 1996 was $132,500
       and $143,542, respectively. The Rate Cap Agreement provides for the
       reimbursement of interest incurred when the reference interest rate
       provided for in the agreement exceeds the guaranteed interest rate. The
       notional amount of the Rate Cap Agreement is $40,000,000 through January
       2, 1996, increases to $100,000,000 through January 2, 1997, and decreases
       to $95,000,000 and $90,000,000 through January 2, 1998 and September 1,
       1998, respectively. A guaranteed interest rate of 9% was tied to these
       notional amounts.

       The mortgage loan agreement requires that Atlanta Gift Mart, L.P.
       maintain specified quarterly levels of net operating income and obtain
       approval from its lenders before making certain capital expenditures or
       incurring certain operating costs. The mortgage loan agreement requires
       that cash of Atlanta Gift Mart, L.P. be held by the lender and restricted
       for payment of operating expenses and other costs as approved by the
       lender based on monthly funding budgets, and interest and principal on
       the mortgage loan.

       Restricted escrow deposits at August 31, 1997 and 1996 represent deposits
       for the payment of property taxes that are required by the mortgage loan
       lender.

                                                                     (Continued)


                                      F-18

<PAGE>   36


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


       Mart Bonds - At October 1, 1995 mortgage loans payable that were
       restructured and a portion subsequently exchanged for notes payable (the
       "Mart Bonds") as described in (d) below are summarized as follows:

<TABLE>
         <S>                                                            <C>   
         AMM(a)                                                         $141,687,296   
         AAM(b)                                                          162,108,691
                                                                        ------------
                                                                         303,795,987
         Reduction to reflect AAM and AMM debt
              restructuring (see note 1)                                  56,572,532
                                                                        ------------
                                                                        $247,223,455
                                                                        ============
</TABLE>

         (a)    AMM was obligated on a mortgage loan (AMM Mortgage Loan) from a
                bank that, as of October 1, 1995, was in default regarding
                certain performance standards and required payments of interest.
                A portion of this debt was forgiven by the lenders effective
                October 2, 1995. As a result of such partial forgiveness
                accounted for in accordance with SFAS No. 15, accrued interest
                of $11,423,103 has been eliminated and the principal amount of
                the AMM Mortgage Loan has been reduced by $17,820,659, resulting
                in a gain on restructuring of debt as more fully described in
                (c) below.

         (b)    AAM was obligated on a mortgage loan (AAM Mortgage Loan) from a
                bank that, as of October 1, 1995, was in default regarding
                certain performance standards. A portion of this debt was
                forgiven by the lenders effective October 2, 1995. As a result
                of such partial forgiveness accounted for in accordance with
                SFAS No. 15, the principal amount of the AAM Mortgage Loan has
                been reduced by $38,751,873, resulting in a gain on
                restructuring of debt as more fully described in (c) below.

         (c)    The components of the extraordinary gain on debt restructuring 
                as discussed in (a) and (b) above are summarized as follows:

<TABLE>
<CAPTION>
                                                 AMM           AAM          Total
                                            ------------   -----------   -----------
         <S>                                <C>            <C>           <C>        
         Outstanding mortgage loan
           payable and related accrued
           interest immediately preceding
           debt restructuring               $153,110,399   162,108,691   315,219,090
         Extraordinary gain on debt
           restructuring                     (29,243,762)  (38,751,873)  (67,995,635)
                                            ------------   -----------   -----------
         
         Carrying value of debt after
           restructuring                    $123,866,637   123,356,818   247,223,455
                                            ============   ===========   ===========
</TABLE>

                                                                     (Continued)


                                      F-19

<PAGE>   37


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


         (d)    Effective October 2, 1995, the Company issued the Mart Bonds in
                the face amount of $160,000,000 and an equity interest in AMC,
                Inc. (see note 11) to the lenders of the AMM Mortgage Loan and
                the AAM Mortgage Loan in modification of existing indebtedness
                to the lenders as a part of the aforementioned troubled debt
                restructuring. The Mart Bonds earn interest at the rate of 7.5%
                per annum until July 31, 1997 and 9.0% per annum thereafter
                through maturity on July 31, 2000. Interest only is payable
                quarterly in arrears. Over the term of the Mart Bonds, 50% of
                net cash flows (as defined) in excess of $10,000,000 must be
                paid as principal reductions on the Mart Bonds within 120 days
                after the end of each fiscal year. Additionally, net proceeds
                from any future refinancing of the mortgage loan discussed
                above, after repayment of the Elevated Antecedent Debt Notes
                discussed below, must be used to reduce principal on the Mart
                Bonds. The remaining principal is due at maturity. The Mart
                Bonds are secured by a deed to secure debt on both the Atlanta
                Apparel Mart and the Atlanta Merchandise Mart properties and a
                pledge of related assets, subject to the first lien discussed in
                note 8. The Mart Bonds become immediately redeemable at 101% of
                par upon certain changes in ownership or management of the
                Company as defined.

                The Mart Bonds were recorded at an amount equal to the total
                future cash payments, including interest, specified by their
                terms in accordance with SFAS No. 15. All future cash payments
                will be accounted for as a reduction of the carrying amount of
                the Mart Bonds, and no interest expense will be recognized on
                the Mart Bonds.

       Elevated Antecedent Debt Notes - Effective October 2, 1995, the Company
       issued the Elevated Antecedent Debt Notes in the amount of $8,033,600 to
       certain other creditors, of which $730,327 in principal amount were
       issued to Atlanta Gift Mart, L.P. and pledged to Atlanta Gift Mart,
       L.P.'s lender of the mortgage loan discussed above. The Elevated
       Antecedent Debt Notes are noninterest-bearing and mature on July 31,
       2000. The Elevated Antecedent Debt Notes are secured by the Company's
       investment in EC Holdings, Inc., the common stock of the Company's wholly
       owned subsidiaries, GMGP, Inc. and Gift Mart Limited Partner, Inc. (which
       own the partnership interests of Atlanta Gift Mart, L.P.), Portman's
       direct and indirect limited partnership interest in JPA Shanghai
       Associates, Ltd., and unimproved land owned by the Company. Under certain
       conditions as defined in the bond agreements, such as the failure of the
       Company to liquidate the above-mentioned assets, the Elevated Antecedent
       Debt Noteholders are entitled to direct that the trustee for the bonds
       foreclose upon the aforementioned collateral (with the exception of the
       common stock of GMGP, Inc. and Gift Mart Limited Partner, Inc.) at any
       time after October 2, 1997 relating to EC Holdings, Inc. and the
       undeveloped land and after October 2, 1998 for the limited partnership
       interest in JPA Shanghai Associates, Ltd., but only if the noteholders
       have first exercised their rights to foreclose on the properties held by
       EC Holdings, Inc. and the unimproved land.

       AMM Escrow Bonds - Effective October 2, 1995, the Company issued the AMM
       Escrow Bonds in the amount of $1,656,007 to certain lenders. The AMM
       Escrow Bonds bore interest at 8.5% per annum beginning November 1, 1995
       and were paid in full in 1997.

                                                                     (Continued)


                                      F-20

<PAGE>   38


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


       The Company's debt agreements include various covenants including
       required financial ratios and other requirements and restrictions on
       additional indebtedness, investments, transactions with affiliated
       companies, and payment of dividends.

(8)    Revolving Line of Credit

       At August 31, 1997 and 1996, the Company had available a revolving line
       of credit with a commercial bank in the amount of $10,000,000, of which
       $3,079,804 was outstanding at August 31, 1997. Amounts under the line of
       credit are available to cover operating shortfalls, capital improvements,
       debt service on other outstanding debt, and certain costs, up to
       $2,500,000, associated with acquisition and start-up of new trade shows.
       The line of credit matures on October 2, 2000 and bears interest at the
       prime rate plus 1% or LIBOR plus 2.15% at the Company's option, payable
       monthly for prime rate loans and monthly, quarterly, or semiannually for
       LIBOR rate loans. In addition, a commitment fee of .5% per annum on the
       average daily unused portion of the line is payable quarterly in arrears.
       Amounts outstanding under the line of credit are secured by a first lien
       on the Atlanta Apparel Mart and the Atlanta Merchandise Mart properties
       as well as related assets.

       Covenants in the revolving line of credit agreement (1) restrict the
       acquisition of assets in excess of $10,000,000 for any fiscal year unless
       certain net worth requirements and debt coverage ratios are maintained;
       (2) restrict the payment of dividends or other distributions to
       stockholders; (3) restrict the incurrence of additional debt; (4) place
       restrictions on affiliate transactions, mergers, and disposal of assets;
       and (5) allow for acceleration of the amounts outstanding upon a default
       under this agreement or other debt agreements.

(9)    Fair Value of Financial Instruments

       At August 31, 1997 and 1996, the carrying amounts reported in the
       accompanying consolidated balance sheets for restricted escrow deposits,
       tenant, affiliate, and other receivables, accounts payable, other accrued
       expenses, and the revolving line of credit approximate their fair values
       due to the short-term nature of these accounts.

       The Company's notes receivable are from affiliated companies and have
       been priced based on agreements between Portman and those affiliates.
       Accordingly, the resulting fair value is not separately disclosed as
       there is no readily determinable fair value for such transactions between
       related parties.

       The Mart Bonds, AMM Escrow Bonds, and Elevated Antecedent Debt Notes
       resulted from the troubled debt restructuring discussed in note 1.
       Accordingly, due to the unique circumstances leading to the issuance of
       this debt and since there is no ready market available for this debt,
       determination of its fair value is not practicable.

       The carrying value of the Gift Mart Mortgage Loan at August 31, 1997 and
       1996 discussed in note 7 is a representative approximation of its fair
       value as it was restructured and extended as of October 2, 1995, with
       interest accruing at variable rates. The carrying value of the related
       interest rate protection agreement approximates fair value.

                                                                     (Continued)


                                      F-21

<PAGE>   39


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


(10)   Income Taxes

       The provision for income tax expense, principally Federal, consists of
       the following:

<TABLE>
<CAPTION>
                                                 October 2, 1995
                                  Year ended         through
                                August 31, 1997  August 31, 1996
                                ---------------  ---------------
       <S>                      <C>              <C>
       Current expense            $       --               --
       Deferred expense            2,443,000        3,401,600
                                  ----------        ---------

                                  $2,443,000        3,401,600
                                  ==========        =========
</TABLE>

       Total income tax expense recognized in the consolidated statements of
       operations differs from the amounts computed by applying the U.S. Federal
       income tax rate of 34% to pretax income as a result of the following:

<TABLE>
<CAPTION>
                                                                           October 2, 1995
                                                            Year ended         through
                                                          August 31, 1997  August 31, 1996
                                                          ---------------  ---------------
       <S>                                                <C>              <C>      
       Computed "expected" income tax expense                $2,149,352       3,638,747
       Increase (decrease) in income tax expense
          resulting from:
             State income taxes, net of Federal benefit         250,336         428,088
             Income recognized by Predecessor partners               --        (763,073)
             Other                                               43,312          97,838
                                                             ----------      ----------
       
                                                             $2,443,000       3,401,600
                                                             ==========      ==========
</TABLE>

       At August 31, 1997, the Company has a net operating loss carryforward for
       Federal income tax purposes of approximately $11,393,000 which is
       available to offset future taxable income, if any, through 2012.

                                                                     (Continued)


                                      F-22

<PAGE>   40


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


       Differences between accounting rules and tax laws cause differences
       between the bases of certain assets and liabilities for financial
       reporting purposes and tax purposes. The tax effects of these
       differences, to the extent that they are temporary, are recorded as
       deferred income tax assets and liabilities. In connection with the
       formation of the Company as of October 2, 1995, the Company recorded net
       deferred tax assets of $25,589,739. The tax effects of temporary
       differences that give rise to significant portions of the net deferred
       income tax assets at August 31, 1997 and 1996 are presented below:

<TABLE>
<CAPTION>
                                                               1997               1996
                                                               ----               ----
       <S>                                                 <C>                <C>       
       Deferred income tax assets:
           Allowance for doubtful accounts                 $   618,967           838,203
           Commercial property                              27,692,063        27,556,829
           Investment in affiliates                          1,840,354         2,033,964
           Mart Bonds                                       16,297,404        21,049,086
           Elevated Antecedent Debt Notes                      573,433           724,618
           Net operating loss carryforward                   4,329,729         1,290,321
           Other                                               640,153           865,088
                                                           -----------        ----------
                Gross deferred income tax assets            51,992,103        54,358,109
        
           Less valuation allowance                         31,878,127        31,614,294
                                                           -----------        ----------
                Deferred income tax assets                  20,113,976        22,743,815
       
       Deferred income tax liability - property taxes         (368,837)         (555,676)
                                                           -----------        ----------
            Net deferred income tax assets                 $19,745,139        22,188,139
                                                           ===========        ==========
  </TABLE>

       In assessing the realizability of deferred income tax assets, management
       considers whether it is more likely than not that some portion or all of
       the deferred income tax assets will not be realized. The ultimate
       realization of deferred income tax assets is dependent upon the
       generation of future taxable income during the periods in which those
       temporary differences become deductible. Management considers projected
       future taxable income and tax planning strategies in making this
       assessment. Based upon the projections of future taxable income over the
       periods in which the temporary differences resulting in the deferred
       income tax assets are deductible, management does not believe it is more
       likely than not that the Company will realize the benefits of all of
       these deductible differences. In particular, the benefit of the largest
       deferred income tax asset related to the commercial property will occur
       over an extended period of time or upon disposition of the property, if
       at all. Accordingly, management has generally recorded a valuation
       allowance against all deferred income tax assets other than those
       relating to the corporate notes payable and certain other items, for
       which projections of taxable income to be recorded during the periods in
       which the related differences reverse are sufficient to support their
       realizability. Projections of taxable income that have been considered in
       the determination of the valuation allowance reflect, during the next
       three years, annual percentage increases in pretax income from previous
       historical or projected results of approximately 78%, 41%, and 13%,
       respectively. Actual results could differ significantly from these
       estimates and impact the ultimate realization of the deferred tax assets.

                                                                     (Continued)


                                      F-23


<PAGE>   41


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


(11)   Stockholders' Deficit

       The following is a summary of the components of the beginning
       stockholders' deficit of AMC, Inc. as of October 2, 1995:

<TABLE>
       <S>                                                          <C>           
       (Deficit) equity of Predecessor companies:
           The Atlanta Apparel Mart                                 $ (47,015,555)
           Atlanta Merchandise Mart, L.P.                             (77,141,641)
           Atlanta Gift Mart, L.P.                                    (28,955,019)
           Atlanta Market Center Management Company, Inc.                 516,419
           Pisa Associates, L.P.                                          397,153
           Investment in Portman Lightfair Associates, L.P.                33,796
                                                                    -------------
                                                                     (152,164,847)
       
       Equity issued to The Atlanta Apparel Mart and the Atlanta
           Merchandise Mart, L.P. lenders in restructuring of 
           debt (see below)                                            22,090,121
                                                              
       Assets of other than Predecessor companies contributed-
           notes receivable (see note 6)                                4,202,526
                                                                    -------------
                                                              
       Liabilities of other than Predecessor companies assumed:
           Elevated Antecedent Debt Notes (see note 7)                 (7,303,273)
           AMM Escrow Bonds (see note 7)                               (1,656,007)
                                                                    -------------
                                                                       (8,959,280)
       
       Assets (liabilities) resulting from formation of AMC, Inc.
           and termination of the OCPA (see note 1):
             Deferred income taxes                                     25,589,739
             Accrued closing and other costs                           (3,490,436)
             Other                                                      2,230,889
                                                                    -------------
                                                                       24,330,192

       Stockholders' deficit as of October 2, 1995                  $(110,501,288)
                                                                    =============
</TABLE>

       In connection with the formation of the Company all assets contributed
       and liabilities assumed have been recorded at historical cost. The
       deferred income tax assets resulting from differing financial statement
       and tax bases for assets and liabilities contributed to the Company and
       the Company's status as a corporation filing under Subchapter C of the
       Internal Revenue Code have been recorded as a component of the capital
       deficit, as such deferred income tax assets were effectively contributed
       in the restructuring.

       As part of the troubled debt restructuring discussed in notes 1 and 7,
       the Company issued 22,090,121 shares of common stock to creditors of The
       Atlanta Apparel Mart and the Atlanta Merchandise Mart, L.P. in
       replacement of $22,090,121 in principal amount of debt outstanding to
       such creditors. The shares of common stock were issued to the creditors
       on November 17, 1995.

                                                                     (Continued)


                                      F-24

<PAGE>   42


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


       In connection with the aforementioned troubled debt restructuring as
       discussed in notes 1 and 7, a part of which resulted in the formation of
       AMC, Inc. and the issuance of 62,173,153 shares of common stock, $1 par
       value per share, to Portman Holdings, L.P. and certain creditors of
       Portman and affiliates, the Company has issued warrants to purchase
       29,171,178 additional shares of the Company's common stock to Portman and
       certain shareholders. The warrants will be exercisable (i) only during
       such time as the equity value of the Company (as determined by an
       independent valuation) equals or exceeds 150% of its equity value at
       formation and (ii) only during the five-year period commencing October 2,
       1997. The exercise price for each additional share of the Company's
       common stock is $1.

       Because the exercisability of the warrants is contingent upon the equity
       value of AMC, Inc. exceeding 150% of its value at the time of formation
       and at the present time it cannot be assumed that such condition is
       likely to occur, the issuance of the warrants has not been recorded in
       the Company's financial statements. In the event that such condition is
       met in the future or the Company determines it is likely to occur, the
       Company will record the cost of the warrants at such time. Such cost will
       be the difference between the per share equity value of the Company at
       the date this condition is met and the exercise price of $1 per share
       multiplied by the number of warrants then outstanding. Such cost will be
       amortized as additional interest cost over the remaining terms of the
       corporate notes payable or expensed at the time of determination if the
       corporate notes payable have matured.

(12)   Rental Revenues

       The Company is the lessor of showroom and exhibition space in the Marts.
       Approximate annual future rental payments to be received under existing
       noncancelable leases for the next five years and thereafter are
       summarized below:

<TABLE>
                      Fiscal year ending August 31:
                      <S>                                   <C>
                          1998                              $ 41,808,000
                          1999                                35,954,000
                          2000                                27,190,000
                          2001                                19,440,000
                          2002                                13,750,000
                          Thereafter                          31,466,000
                                                            ------------
                                                            $169,608,000
                                                            ============
</TABLE>

                                                                     (Continued)


                                      F-25

<PAGE>   43


                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


(13)   Commitments

       The Company is obligated under various long-term operating leases,
       primarily land leases. Approximate commitments under noncancelable
       long-term leases for the next five years and thereafter are summarized
       below:

<TABLE>
             <S>                                <C>        
             Fiscal year ending August 31:
                 1998                           $   558,000
                 1999                               558,000
                 2000                               325,000
                 2001                               268,000
                 2002                               259,000
                 Thereafter                      22,114,000
                                                -----------
                                                $24,082,000
                                                ===========

</TABLE>

       Total rental expense for the year ended August 31, 1997, the 335-day
       period ended August 31, 1996, and the 274-day period ended October 1,
       1995 was approximately $667,000, $463,000, and $373,000, respectively.

(14)   Contingencies

       On April 19, 1993, a former employee of AMCMC filed suit against AMCMC
       for breach of contract and related tort claims. On January 19, 1996, the
       trial court granted summary judgment in favor of AMC on all counts. On
       March 5, 1997, the Georgia Court of Appeals reversed the trial court on
       the breach of contract count and awarded the former employee
       approximately $320,000 in damages and interest. In addition, the case was
       remanded for trial on the tort claims. The Company accrued for the
       approximately $320,000 in damages and interest in the year ended August
       31, 1997 and has included this amount in other expenses in the
       accompanying consolidated statement of earnings. However, it is currently
       too early to make a judgment as to the outcome or estimate the possible
       damages related to the tort claims.

       The Company and certain affiliates are defendants in various other
       matters of litigation generally incidental to their business. Although it
       is difficult to predict the ultimate outcome of these cases, management
       believes, based on discussions with counsel, that any ultimate liability
       will not materially affect the consolidated financial position of the
       Company.

(15)   Employee Retirement Plans

       Employees of the Company or Predecessor participate in defined
       contribution retirement plans that cover substantially all employees over
       age 21. Retirement plan expense approximated $389,000, $300,000, and
       $326,000 for the year ended August 31, 1997; the 335-day period ended
       August 31, 1996; and the 274-day period ended October 1, 1995,
       respectively.

                                                                     (Continued)


                                      F-26

<PAGE>   44



                           AMC, INC. AND SUBSIDIARIES
                  ATLANTA MARKET CENTER COMPANIES (PREDECESSOR)

             Notes to Consolidated and Combined Financial Statements


(16)   Insurance Claim Receivable and Related Proceeds

       The Company received $883,881 during the 335-day period ended August 31,
       1996 and AMCMC received $147,216 during the 274-day period ended October
       1, 1995 from the cash settlement of an insurance claim relating to
       litigation under which Portman and certain affiliates were defendants.
       The insurance claim was filed by Portman and affiliates prior to the
       formation of the Company. When the claim was settled, by agreement,
       $147,216 was paid to AMCMC and a balance of $850,000 was held as security
       for an appeal bond issued in conjunction with the litigation.

       The rights to the proceeds of the insurance claim were assigned to the
       Company upon its formation. Due to the uncertainty surrounding the
       outcome of the litigation, the insurance claim receivable was fully
       reserved as of October 2, 1995. During 1996, the court ruled in favor of
       the defendants, the appeal bond was canceled and the insurance claim plus
       accrued interest were paid to the Company.

(17)   Expenses and Income, Net Resulting from One-Time Event

       For the 335-day period ended August 31, 1996, income, net resulting from
       one-time event, is the revenues net of direct costs of business
       undertaken by the Company specifically related to the 1996 Centennial
       Olympic Games. Due to the Company's location in Downtown Atlanta, the
       main center of activity of the Olympic Games, the Company enjoyed a
       one-time opportunity to conduct business activities not normally
       conducted by the Company, and to license available space in its
       facilities for other Olympic-related activities at rates not normally
       available to the Company. These business activities included housing and
       operating the Main Press Center for the Olympics; the operation of the
       AT&T Press Center, a facility for noncredentialed press; the operation of
       the International Sport Club which provided meals and entertainment for
       corporate customers on a per capita basis and to the general public on a
       daily admission fee basis; the rental and operation of concession kiosks
       on the Company's premises and on the Pisa surface parking lot; the rental
       of the AGM lobby for an exhibition of automobiles and for corporate
       entertainment; housing the Olympic coin and stamp show; and the rental of
       the AAM rooftop and balconies for network camera locations.

       For the year ended August 31, 1997, expenses, net resulting from one-time
       event, relate primarily to the write-off of Olympic-related receivables
       which became uncollectible during the year.


                                      F-27

<PAGE>   45


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The following table sets forth certain information regarding the directors and
executive officers of the Company as of August 31, 1997.


<TABLE>
<CAPTION>
NAME                                 AGE                           POSITION
------------------------------------------------------------------------------------------------
<S>                                  <C>       <C>
John C. Portman Jr.................   72       Chairman of the Board and Chief Executive Officer
John M. Ryan.......................   54       President and Director
Jeffrey L. Portman.................   38       Executive Vice President -- Sales and Marketing
Henry G. Almquist, Jr..............   40       Senior Vice President -- Finance & Accounting/
                                                 Chief Financial Officer
Virginia S. Gorday.................   52       Senior Vice President -- Operations and Administration
Neal G. Patton.....................   41         Secretary and General Counsel
Lawrence B. Gardner................   46       Vice President -- Human Resources
R. Charles Loudermilk, Sr..........   70       Director
D. Raymond Riddle..................   64       Director
A. J. Robinson.....................   42       Director
Stanley P. Steinberg...............   64       Director
Andrew Young.......................   65       Director
</TABLE>


John C. Portman, Jr. has served as Chairman of the Board and as Chief Executive
Officer of the Company since its formation. Prior thereto, Mr. Portman was the
principal of the Portman Companies for over 40 years. Mr. Portman has also
served as the Chairman of Portman Properties, Inc., the managing general partner
of Portman Holdings, since its formation. Mr. Portman was the general partner of
Los Angeles Bonaventure Company, which filed a petition under Chapter 11 of the
federal bankruptcy code within the last five years. Mr. Portman is also
President, sole director and sole shareholder of the general partner of Portman
Apparel Associates, L.P. ("Portman Apparel"), whose principal property was the
subject of a receivership action, which action resulted in foreclosure of such
property in April 1996. Mr. Portman is the father of Jeffrey L. Portman.

John M. Ryan has served as a Director and as President of the Company since its
formation. Prior thereto, he had served as President of AMCMC since June 1994,
as Chief Financial Officer and Executive Vice President of the Portman Companies
and Treasurer of related entities from September 1991 through October 1995, and
as Executive Vice President of Portman Capital Company, one of the Portman
Companies, for more than five years prior thereto. Mr. Ryan is an executive
officer of the general partner of Portman Apparel, whose principal property was
the subject of a receivership action which action resulted in foreclosure of
such property in April 1996.

Jeffrey L. Portman has served as Executive Vice President---Sales and Marketing
of the Company since its formation. Prior thereto, he had served as Executive
Vice President--Sales & Marketing for AMCMC since June 1994. He had served as
General Manager of the Atlanta Decorative Arts Center, a company owned and
controlled by Mr. Portman's wife, from July 1989 until June 1994. Jeffrey
Portman is the son of Mr. Portman.


                                       16

<PAGE>   46

Henry G. Almquist, Jr. has served as Senior Vice President - Finance and
Accounting/Chief Financial Officer of the Company since January 8, 1997. Prior
thereto, he had served as a Vice President of American Resurgens Management
Corporation from September 1995 to January 1997. Prior thereto, he had served as
a Vice President of Citicorp Real Estate, Inc. for more than five years.

Virginia S. Gorday has served as Senior Vice President - Operations and
Administration of the Company since its formation. Prior thereto, she had served
as Senior Vice President - Operations for AMCMC since March 13, 1995. She served
as Deputy Executive Director of Housing for the Atlanta Housing Authority from
November 1994 through March 1995. Prior thereto, she was Vice President -
Property Management for Peachtree Center Management Company, one of the Portman
Companies, for more than five years.

Neal G. Patton has served as Secretary and General Counsel of the Company since
its formation. Prior thereto, he had served as General Counsel of AMCMC since
November 1994. He served as Assistant General Counsel of the Portman Companies
from November 1986 to November 1994.

Lawrence B. Gardner has served as Vice President---Human Resources of the
Company since its formation. Prior thereto, he had served as Vice
President--Human Resources for the Portman Companies for more than five years.

R. Charles Loudermilk, Sr. has served as a Director of the Company since its
formation. Mr. Loudermilk has been the Chairman, Chief Executive Officer and
President of Aaron Rents, Inc., for more than five years. He is a member of the
Advisory Board of the Norfolk Southern Company, formerly a director of the
Chattahoochee Bank, and formerly the Chairman of the Board of Directors of the
Metropolitan Atlanta Rapid Transit Authority.  

D. Raymond Riddle has served as a Director of the Company since its formation.
Mr. Riddle retired as Chairman and Chief Executive Officer of National
Service Industries, Inc. ("NSI") in January 1995, and had served as President
and Chief Executive Officer of NSI beginning in January 1993. Prior thereto, he
had served as President and Chief Executive Officer of Wachovia Corporation of
Georgia for more than five years. Mr. Riddle serves on the Boards of Directors
of Atlanta Gas Light Company, Equifax, Inc., Fuqua Enterprises, Inc. and
Atlantic American Corporation.

A. J. Robinson has served as a Director of the Company since its formation. In
addition, he has served as the President of Portman Properties, Inc., the
managing general partner of Portman Holdings, since its formation. Prior
thereto, he had been employed by Portman Overseas, one of the Portman Companies,
first as Executive Vice President and then as President, for more than five
years.

Stanley P. Steinberg has served as a Director of the Company since its
formation. Mr. Steinberg has been Chairman and Chief Executive Officer of Sony
Retail Entertainment, a subsidiary of Sony Corporation of America since August
1994. He is currently Chairman of Aviation Entertainment Properties. Mr.
Steinberg was Executive Vice President of Walt Disney Imagineering, a
wholly-owned subsidiary of the Walt Disney Company, from January 1989 to July
1994. Prior thereto, he was Executive Vice President of the Portman Companies.

Andrew H. Young has served as a Director of the Company since its formation. Mr.
Young has been Co-Chairman and a senior partner of GoodWorks International, Inc.
since January 1997. He was Vice Chairman of Law Companies Group, Inc. from 1993
through January 1997, and a director of that company from August 1995 through
January 1997. He was Chairman of Law Companies International Group, Inc. (a
former subsidiary of Law Companies Group, Inc.) from 1990 to 1993. Mr. Young was
Mayor of Atlanta, Georgia from 1982 to 1990, United States Ambassador to the
United Nations from 1977 to 1979, and a member of the House of Representative of
the United States Congress from 1973 to 1977. Mr. Young is a director of Archer
Daniels Midland Company, Cox Communications, Inc., Film Fabricators, Inc., Host
Marriott Corporation, The Argus Board (The International Advisory Board of
Independent Newspapers Holdings Limited) and Thomas Nelson, Inc. He is Chairman
of the Southern Africa Enterprise Development Fund, a member of the Georgia Tech
Advisory Board, and a director of the Martin Luther King, Jr. Center. He was
Co-Chairman of the Atlanta Committee for the Olympic Games and a member of the
Board of the United States Olympic Committee. Mr. Young also served as the 1996
Chairman of the Greater Atlanta Chamber of Commerce.


                                       17

<PAGE>   47


ITEM 11.  EXECUTIVE COMPENSATION

The following table sets forth certain information concerning compensation of
the Company's Chief Executive Officer and the other four most highly compensated
officers. Compensation information prior to the Formation Date relates to AMCMC.

<TABLE>
<CAPTION>
===================================================================================================================
                                            SUMMARY COMPENSATION TABLE
==================================================================================================================
                                                                ANNUAL COMPENSATION
-----------------------------------------------------------------------------------------------
                                            FISCAL                              OTHER ANNUAL          ALL OTHER
NAME & PRINCIPAL POSITION                   PERIOD      SALARY      BONUS     COMPENSATION (3)       COMPENSATION
                                             (1)         (2)                                             (4)
==================================================================================================================
<S>                                         <C>         <C>         <C>       <C>                    <C>    
John C. Portman, Jr.                         1997       $700,000    $      -          $ 1,312              $     -
  Chairman of the Board and
  Chief Executive Officer
                                          ------------------------------------------------------------------------
  (effective 10/2/95) (5)                    1996        527,695           -            7,446                    -
                                          ------------------------------------------------------------------------
                                             1995              -           -            1,102                    -
==================================================================================================================
John M. Ryan                                 1997        280,000      91,700           31,900                7,500
  President and Director

                                          ------------------------------------------------------------------------
                                             1996        258,462     100,000            9,554                3,060
                                          ------------------------------------------------------------------------
                                             1995        215,392     150,000            5,390                    -
==================================================================================================================
Jeffrey L. Portman                           1997        175,000      45,325            5,294                7,500
  Executive Vice President -
  Sales and Marketing (6)
                                          ------------------------------------------------------------------------
                                             1996        123,045      50,000            9,606                    -
                                          ------------------------------------------------------------------------
                                             1995         57,692           -                -                    -
==================================================================================================================
Henry G. Almquist, Jr.                       1997         84,747      29,421              309                    -
  Senior Vice President, Finance &
   Accounting/Chief Financial Officer
                                          ------------------------------------------------------------------------
  (effective 1/8/97)                         1996              -           -                -                    -
                                          ------------------------------------------------------------------------
                                             1995              -           -                -                    -
==================================================================================================================
Neal G. Patton                               1997        125,008      28,289            1,908                6,581
  Secretary and General Counsel
                                          ------------------------------------------------------------------------
                                             1996        101,549       5,000              866                3,060
                                          ------------------------------------------------------------------------
                                             1995         81,618       5,000            1,227                    -
==================================================================================================================
</TABLE>

(1)  For the fiscal periods September 1, 1996 to August 31, 1997 ("1997"),
     October 2, 1995 to August 31, 1996 ("1996") and January 1, 1995 to October
     1, 1995 ("1995").
(2)  The Company does not have compensation agreements with its executive
     officers.
(3)  Includes club membership reimbursements and executive medical
     reimbursements.
(4)  Amounts reflect contributions made on behalf of each executive to the AMC
     Retirement Plan, a defined contribution retirement plan.
(5)  Prior to October 2, 1995, Mr. Portman was compensated through his interests
     in the other Portman Companies.
(6)  Prior to October 2, 1995, Jeffrey Portman was compensated by the Atlanta
     Decorative Arts Center ( "ADAC" ), which is owned and controlled by Mr.
     Portman's wife, Joan N. Portman, for his services. The 1995 salary amount
     reflects the amount reimbursed by the Company to ADAC.

COMPENSATION COMMITTEE

The Board of Directors has established a Compensation Committee, upon which
Messrs. Steinberg, Riddle, and Loudermilk serve. Mr. Steinberg is the Chairman
of the Compensation Committee. Each member of the Compensation Committee must be
an Independent Director. The Compensation Committee administers the


                                       18

<PAGE>   48

Company's incentive and stock option plans (if any) and other employee benefit
and compensation plans. Additionally, the Compensation Committee reviews, fixes
and determines the compensation paid by the Company and its subsidiaries to all
(1) directors, (2) executive officers, (3) employees whose aggregate annual
compensation (excluding leasing commissions) exceeds $100,000 and (4) employees
who are related to an executive officer or director of the Company or its
subsidiaries.

DIRECTOR COMPENSATION

The Company's Independent Directors receive an annual fee of $20,000, paid
quarterly, $1,000 for each Board of Directors meeting attended and $500 for each
committee meeting attended. Additionally, Independent Directors are reimbursed
for reasonable expenses incurred in connection with attendance at such meetings.

ACTION REQUIRING APPROVAL OF INDEPENDENT DIRECTORS

Pursuant to the Company's Bylaws, certain actions of the Company and its
subsidiaries require the affirmative approval of a majority of the Independent
Directors. These actions include: (1) adoption of the consolidated annual budget
and business plan; (2) any expenditure within the reasonable control of the
Company which would cause a line item in the approved consolidated annual budget
to be exceeded by more than 10%; (3) any transaction not provided for in the
approved consolidated annual budget involving in excess of 10% of the net worth
of the Company; (4) any amendment to the Company's Articles of Incorporation
involving the stated purpose of the Company; (5) the incurrence or refinancing
of debt not contemplated by the approved consolidated annual budget; (6) with
certain exceptions, the issuance of any security of the Company or any of its
subsidiaries or any security convertible into any such security or the grant of
a stock option or right to purchase any such security; (7) the dissolution,
merger, consolidation or liquidation of the Company or any of its subsidiaries;
(8) the election of directors of any subsidiary; and (9) any amendment to the
Bylaws of the Company or of any of the Company's subsidiaries.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

As of November 14, 1997, there were 61,962,751 shares of common stock, $1.00 par
value, of the Company ("Common Stock") outstanding. The following table sets
forth, as of November 14, 1997, certain information with respect to the
beneficial ownership of Common Stock by each person who owned, at such date at
least 5% of the outstanding Common Stock, each director of the Company who owns
Common Stock, each executive officer of the Company named in the Summary
Compensation Table above who owns Common Stock, and all directors and executive
officers of the Company as a group. Except as otherwise noted below, each such
person has sole voting and investment power with respect to all shares shown
below.

<TABLE>
<CAPTION>
                                                          AMOUNT AND
                                                            NATURE
                                                         OF BENEFICIAL                     PERCENT OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP                      OWNERSHIP                         CLASS
-------------------------------------                      ---------                         -----

<S>                                                      <C>                               <C>    
FBCC CO.                                                   16,426,613                        26.5105
  3419 Westminster, Lock Box 274
  Dallas, TX  75207
JOHN C. PORTMAN, JR.                                       11,372,408  (1)  (2)              18.3536
  Chief Executive Officer and Chairman
  240 Peachtree Street, N. W.
  Suite 2200
  Atlanta, Georgia  30303
JOAN N. PORTMAN                                            11,343,154  (3)  (4)   (5)        18.3064
  240 Peachtree Street, N. W.
  Suite 2200
  Atlanta, Georgia  30303
</TABLE>


                                       19

<PAGE>   49

<TABLE>
<CAPTION>
                                                          AMOUNT AND
                                                            NATURE
                                                         OF BENEFICIAL                     PERCENT OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP                      OWNERSHIP                         CLASS
-------------------------------------                      ---------                         -----

<S>                                                      <C>                               <C>    
PORTMAN HOLDINGS, L. P.                                    10,880,302  (1)                   17.5594
  303 Peachtree Street, N. E.
  Suite 4600
  Atlanta, Georgia  30308
PEACHTREE 400 ASSOCIATES, LTD.                              6,863,798                        11.0773
  303 Peachtree Street, N. E.
  Suite 4600
  Atlanta, Georgia  30308
351 HOLDINGS, L. P.                                         4,375,425                         7.0614
  303 Peachtree Street, N. E.
  Suite 4600
  Atlanta, Georgia  30308
UNIBANK A/S, NEW YORK                                       4,252,089                         6.8623
  13-15 West 54th Street
  New York, New York 10019
JEFFREY L. PORTMAN                                             13,568  (6)                         *
  240 Peachtree Street, N. W.
  Suite 2200
  Atlanta, Georgia  30303
JOHN M. RYAN                                                    3,254  (7)                         *
  240 Peachtree Street, N. W.
  Suite 2200
  Atlanta, Georgia  30303
STANLEY P. STEINBERG                                            3,254  (8)                         *
  240 Peachtree Street, N. W.
  Suite 2200
  Atlanta, Georgia  30303
ALL EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP (12        11,392,484                        18.3860
PERSONS)
</TABLE>


*    Less than 1%.
(1)  Includes 10,880,302 shares which are owned of record by Portman Holdings,
     with respect to which John C. Portman, Jr., as sole shareholder of Portman
     Properties, Inc., the sole general partner of Portman Holdings, has sole
     voting and investment power.
(2)  Includes 492,106 shares which are owned of record by Peachtree Hotel
     Company, with respect to which John C. Portman, Jr., as sole general
     partner of Peachtree Hotel Company, has sole voting and investing power.
(3)  Includes 4,375,425 shares owned by 351 Holdings, LP, with respect to which
     Joan N. Portman, as sole general partner of 351 Holdings, LP, has sole
     investment and voting power.
(4)  Includes 103,931 shares owned by CGS Associates, L.P., with respect to
     which Joan N. Portman, as sole general partner of CGS Associates, L.P., has
     sole voting and investment power.
(5)  Includes 6,863,798 shares owned by Peachtree 400 Associates, Ltd., with
     respect to which Joan N. Portman, as sole shareholder of the sole general
     partner of Peachtree 400 Associates, Ltd., has sole voting and investment
     power.
(6)  Such shares are owned of record by AMC Orlando, in which Jeffrey L. Portman
     is a shareholder.
(7)  Includes 3,254 shares owned of record by AMC Orlando, in which John M. Ryan
     is a shareholder.
(8)  Such shares are owned of record by AMC Orlando, in which Stanley P.
     Steinberg is a shareholder.


                                       20


<PAGE>   50


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

SERVICE AGREEMENTS

Prior to the formation of the Company, the Portman Companies shared personnel
who provided certain services, including risk management, tax services, human
resources services and legal services, to all of such affiliated entities.
Following the formation of the Company, such personnel continue to provide
certain of those services for both the Company and Portman Holdings pursuant to
a series of agreements as described below. The cost of such services was
determined based upon the cost of services obtained from third parties or the
direct personnel expenses of the personnel providing such services. The service
agreements have been approved by the Independent Directors of the Company.
Additional services may be provided from time to time by Portman Holdings and
the Company to each other during a transition period as the need arises. It is
the Company's intention that such services will also be reimbursed based on the
direct personnel expenses of the personnel providing such services or the cost
to the Company for such services.

Services Provided by Portman Holdings

The Company and Portman Holdings entered into an agreement dated December 11,
1996 (the "Risk Management Agreement") whereby Portman Holdings provides risk
management services to the Company. Portman Holdings receives $100,000 in twelve
equal monthly installments for these services. Portman Holdings is also
reimbursed for pre-approved out-of-pocket expenses and receives 50% of any
claims management fee which is reimbursed to the Company by insurance companies.
The Board of Directors has approved a one-year extension of the Risk Management
Agreement, which currently expires on December 31, 1997. The Risk Management
Agreement is subject to annual renewal by Portman Holdings and the Company.

The Company and Portman Holdings also entered into an agreement dated January
24, 1996 (the "Financial and Strategic Planning Agreement") whereby Portman
Holdings provided financial and strategic planning services to the Company.
Portman Holdings received $10,000 per month for these services. The Company
terminated the Financial and Strategic Planning Agreement effective February 18,
1997.

The Company and Portman Holdings also entered into an agreement dated January
24, 1996 (the "Staff Support Agreement" ) whereby Portman Holdings provides the
services of two support personnel to assist Mr. Portman. Portman Holdings
receives $5,000 per month for these services, which represents approximately one
half of the costs of providing such personnel. The Staff Support Agreement
expires on December 31, 1997, subject to annual renewal by Portman Holdings and
the Company.

The Company and Portman Holdings entered into an agreement dated November 14,
1995 ( the "Tax Services Agreement") whereby Portman Holdings provides tax
services to the Company on a time-available basis based on specified rates for
personnel involved. The Tax Services Agreement expired on December 31, 1996.

The Company and Portman Holdings entered into an agreement dated October 25,
1995 ( the "Cash Management Services Agreement") whereby Portman Holdings
provided the Company with the services of its cash management administrator in
implementing and administering the Company's cash management system. Services
were reimbursed at a rate of $30 per hour. The Cash Management Services
Agreement was terminated effective October 8, 1997.

The Company and Portman Holdings entered into an agreement dated February 1,
1997 ( the "Construction Management Services Agreement") whereby Portman
Holdings provided consulting services related to construction management.
Portman Holdings received $5,000 per month for these services. The Construction
Management Services Agreement was terminated effective October 31, 1997.

The Company and Portman Holdings entered into an agreement dated May 1, 1996 (
the "Security Services Agreement"), whereby Portman Holdings provided certain
security services for the Mart buildings. Portman 


                                       21

<PAGE>   51

Holdings received approximately $29,000 per year for such services. The Security
Services Agreement expired on December 31, 1996 and was not renewed.

Services provided by the Company

The Company and Portman Holdings entered into an agreement dated November 13,
1995 (the "Telephone Service Agreement") whereby the Company provides various
telephone services to Portman Holdings, its affiliates and ADAC. The services
include maintenance and consulting services at specified hourly rates, telephone
services based on cost plus a mark-up, and equipment at specified rates. The
Telephone Service Agreement had an initial term of one year, and automatically
extended for a second year. The agreement terminated on November 13, 1997. The
total billings for these services during the Company's 1997 fiscal year were
approximately $16,000.

The Company and Portman Holdings entered into an agreement dated November 13,
1995 (the "Human Resource Service Agreement") whereby the Company will provide
human resource services to Portman Holdings, its affiliates and ADAC. The fee
for the services is based on a fixed rate per employee per month and is payable
on a monthly basis. On November 13, 1997, the Company and Portman Holdings
entered into a new agreement which extended the original contract to December
31, 1997 and on a month to month basis thereafter. The total billings for these
services during the Company's 1997 fiscal year were approximately $84,000.

The Company and Portman Holdings have entered into an agreement dated November
13, 1995 (the "Legal Services Agreement") whereby the Company's legal department
will provide legal services to Portman Holdings and its affiliates on a time
available basis at specified hourly rates. The agreement expires on December 31,
1997. The total billings for these services during the Company's 1997 fiscal
year were approximately $64,000.

The Company and Portman Holdings entered into an agreement dated November 13,
1996 (the "Computer Service Agreement") whereby the Company provides computer
services to Portman Holdings, its affiliates and ADAC. The Computer Services
Agreement was amended effective October 8, 1997. Maintenance services are
provided at an hourly rate and access to hardware and software is provided at a
base rate of $7,000 per month subject to increases and additional costs in
certain circumstances. The Computer Service Agreement expires on August 31, 1998
and may be renewed at that time by mutual agreement between the Company and
Portman Holdings. The total billings for these services during the Company's
1997 fiscal year were approximately $64,000.

The Company and Portman Holdings entered into an agreement dated January 1, 1996
(the "AMC Security Services Agreement"), whereby the Company provided certain
security services for a building owned by Portman Holdings. AMC received
approximately $12,000 per year for such services. The AMC Security Services
Agreement expired on December 31, 1996 and was not renewed.

Interests in Portman Holdings

Mr. Portman is the sole shareholder of Portman Properties, Inc., the sole
general partner of Portman Holdings, and beneficially owns a 36.5783% interest
in such partnership. Joan N. Portman and Jeffrey L. Portman beneficially own
21.2417% and 4.6743% interest, respectively, in Portman Holdings, and the other
adult children of Mr. Portman and a trust, the beneficiaries of which are Mr.
Portman's adult children and their heirs, beneficially own an aggregate 37.5057%
interest in Portman Holdings.

OTHER AGREEMENTS, INDEBTEDNESS AND INTERESTS

The Company is a party to separate management agreements with AMC Orlando and
CGS Associates, L.P. ("CGS"). Additionally, as part of the formation of the
Company, the Company received a Purchase Money Note of AMC Orlando. This
Purchase Money Note bears interest at the rate of 7.5% per annum and is due and
payable on July 20, 1999. Further, the Company has accounts receivable from
certain affiliates, primarily representing management fees and reimbursable
expenses, upon which interest does not accrue.


                                       22


<PAGE>   52

AMC Orlando and AMC Tampa

At August 31, 1997, AMC Orlando owed the Company approximately $70,000 in
addition to the Purchase Money Note in the principal amount of $1,878,156 with
accrued interest of $15,651. Jeffrey L. Portman beneficially owns an 10.9679%
interest in AMC Orlando, and Messrs. Steinberg and Ryan each beneficially own a
2.6302% interest, in AMC Orlando. Mr. Portman's other adult children
beneficially own an aggregate 59.1268% interest in AMC Orlando.

At August 31, 1997, AMC Tampa owed the Company approximately $68,000 in
receivables. The Company holds the Purchase Money Note of AMC Tampa which at
August 31, 1997 was in the principal amount of $390,442 with accrued interest of
$10,574. As of September 17, 1997, the Company foreclosed on the AMC Tampa note
receivable and assumed control of AMC Tampa.

CGS

At August 31, 1997, CGS owed the Company approximately $147,000. Joan N. Portman
beneficially owns a 62.6498% interest in CGS and Jeffrey L. Portman beneficially
owns a 5.1871% interest in CGS. Mr. Portman's other adult children beneficially
own an aggregate of 29.1511% interest in CGS.

Portman Apparel

At October 2, 1995, Portman Apparel owed the Company $514,658 which was reserved
and subsequently written off by the Company due to the foreclosure of Portman
Apparel's principal property. Mr. Portman is the sole shareholder, sole director
and President of S.F. Fashion Center, Inc., the sole general partner of Portman
Apparel and beneficially owns an 85.8% interest in such partnership. Messrs.
Ryan and Robinson, directors of the Company, beneficially own a 4.0% and 3.0%
interest, respectively, in Portman Apparel. An adult child of Mr. Portman also
beneficially owns a 0.2% interest in Portman Apparel. Mr. Ryan is an executive
officer of S. F. Fashion Center, Inc.


                                       23

<PAGE>   53



PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8 - K.

A.  Documents filed as part of this Form 10 - K:

<TABLE>
<S>                                                                                              <C>
1.  Financial Statements (included in Part II, Item 8):
         AMC, INC. AND SUBSIDIARIES
         THE ATLANTA MARKET CENTER COMPANIES (Predecessor)
         Independent Auditors' Report                                                            F-1 
         Consolidated Balance Sheet as of August 31, 1997 and 1996 (AMC, Inc.) 
         Consolidated Statements of Earnings for the year ended August 31, 1997
            and for the period from October 2, 1995 through August 31, 1996 (AMC, Inc.)
         Combined Statements of Earnings for the Period from January 1, 1995
             through October 1, 1995  (Predecessor)
         Consolidated Statements of Stockholders' Deficit for the year ended
            August 31, 1997 and for the period from October 2, 1995 through August 31, 1996 
            (AMC, Inc.) 
         Combined Statements of Deficit for the Period from January 1, 1995
             through October 1, 1995  (Predecessor)
         Consolidated Statements of Cash Flows for the year ended August 31, 1997 and for 
         the period from October 2, 1995 through August 31, 1996 (AMC, Inc.)
         Combined Statements of Cash Flows for the Period from January 1, 1995
             through October 1, 1995 (Predecessor)
         Notes to Consolidated and Combined Financial Statements





2.  Financial Statement Schedules (included in Part IV):
         Report of Independent Auditors                                                          S-1
         Schedule II Valuation and Qualifying Accounts                                           S-2
</TABLE>

Schedules not listed above have been omitted because the information required to
be set forth therein is not applicable or is included in the Financial
Statements or notes thereto.

3.  Exhibits

<TABLE>
<CAPTION>
     Exhibit No.                        Description
     <S>          <C>
         3.1      Articles of Incorporation (incorporated by reference to
                  Exhibit 3.1 to the Registrant's Registration Statement on Form
                  S-4 No. 333-1742 filed on May 24, 1996 ("Registration
                  Statement"))

         3.2      Articles of Amendment (incorporated by reference to Exhibit
                  3.2 of the Registration Statement)

         3.3      By-laws (incorporated by reference to Exhibit 3.3 of the
                  Registration Statement)

         4.1      Exchange and Registration Rights Agreement, dated as of
                  October 2, 1995, by and between the Company and the initial
                  holders of the Private Placement Notes named therein
                  (incorporated by reference to Exhibit 4.1 of the Registration
                  Statement)

         4.2      Shareholders Agreement, dated as of October 2, 1995, by and
                  between the Company and the initial shareholders of the
                  Company named therein, as amended (incorporated by reference
                  to Exhibit 4.2 of the Registration Statement)

         4.3      Indenture dated as of October 2, 1995 between the Company and
                  Reliance Trust Company 
</TABLE>


                                       24

<PAGE>   54

         as Trustee, relating to the Exchange Notes (including the form of the
         Exchange Notes) (incorporated by reference to Exhibit 4.3 of the
         Registration Statement)

4.4      First Amendment to Indenture, dated as of April 4, 1996, between the
         Company and Reliance Trust Company, as Trustee (incorporated by
         reference to Exhibit 4.4 of the Registration Statement)

4.5      Form of Warrants (incorporated by reference to Exhibit 4.5 of the
         Registration Statement)

10.1     Amended and Restated Credit Agreement dated as of October 2, 1995, by
         and among Atlanta Gift Mart, L.P., Bank of America National Trust and
         Savings Association, as Agent, and the other financial institutions
         named therein (incorporated by reference to Exhibit 10.1 of the
         Registration Statement)

10.2     Rate Cap Transaction Agreement dated as of July 28, 1995, between
         Atlanta Gift Mart, L.P. and NationsBank, N.A. (Carolinas) (incorporated
         by reference to Exhibit 10.2 of the Registration Statement)

10.3     Modification and Second Amended and Restated Deed to Secure Debt and
         Security Agreement dated as of October 2, 1995, by and among Atlanta
         Gift Mart, L.P. and Bank of America National Trust and Savings
         Association, as Agent (incorporated by reference to Exhibit 10.3 of the
         Registration Statement)

10.4     First Amended and Restated Sequestration Agreement dated as of October
         2, 1995, by and among Atlanta Gift Mart, L.P., Bank of America National
         Trust and Savings Association, as Agent, and the Company (incorporated
         by reference to Exhibit 10.4 of the Registration Statement)

10.5     Credit Agreement dated as of September 30, 1995, by and among the
         Company, The Provident Bank as Agent, and the other lenders named
         therein (incorporated by reference to Exhibit 10.5 of the Registration
         Statement)

10.6     Deed to Secure Debt and Security Agreement dated as of October 2, 1995,
         between the Company and The Provident Bank (incorporated by reference
         to Exhibit 10.6 of the Registration Statement)

10.7     Risk Management Agreement dated November 13, 1995, between the Company
         and Portman Holdings (incorporated by reference to Exhibit 10.7 of the
         Registration Statement)

10.8     Financial and Strategic Planning Agreement dated January 24, 1996,
         between the Company and Portman Holdings (incorporated by reference to
         Exhibit 10.8 of the Registration Statement)

10.9     Executive Office Staff Support Agreement dated January 24, 1996,
         between the Company and Portman Holdings (incorporated by reference to
         Exhibit 10.9 of the Registration Statement)

10.10    Tax Services Agreement dated November 14, 1995, between the Company and
         Portman Holdings (incorporated by reference to Exhibit 10.10 of the
         Registration Statement)

10.11    Cash Management Services Agreement dated October 25, 1995, between the
         Company and Portman Holdings (incorporated by reference to Exhibit
         10.11 of the Registration Statement)

10.12    Telephone Service Agreement dated November 13, 1995, between the
         Company and Portman Holdings (incorporated by reference to Exhibit
         10.12 of the Registration Statement)

10.13    Human Resource Service Agreement dated November 13, 1995, between the
         Company and Portman Holdings (incorporated by reference to Exhibit
         10.13 of the Registration Statement)

10.14    Legal Services Agreement dated November 13, 1995, between the Company
         and Portman Holdings (incorporated by reference to Exhibit 10.14 of the
         Registration Statement)

10.15    Computer Service Agreement dated November 13, 1995, between the Company
         and Portman Holdings (incorporated by reference to Exhibit 10.15 of the
         Registration Statement)

10.16    First Restatement of Management Agreement dated as of October 2, 1995,
         by and between AMC Orlando and AMCMC (incorporated by reference to
         Exhibit 10.16 of the 


                                       25

<PAGE>   55

         Registration Statement)

10.17    First Restatement of Management Agreement dated as of October 2, 1995,
         by and between AMC Tampa and AMCMC (incorporated by reference to
         Exhibit 10.17 of the Registration Statement)

10.18    First Restatement of Management Agreement dated as of October 2, 1995,
         by and between CGS and AMCMC (incorporated by reference to Exhibit
         10.18 of the Registration Statement)

10.19    Indenture of Lease dated as of November 1, 1968, by and between Mary
         Templis and Belle Frank as Trustees under the terms of the Will of
         Louis Templis, as Lessor, and the Company (by virtue of assignment), as
         Lessee (incorporated by reference to Exhibit 10.19 of the Registration
         Statement)

10.20    Indenture of Lease dated as of December 30, 1966, by and between The
         250 Spring Corp., as Lessor, and the Company (by virtue of assignment),
         as Lessee (incorporated by reference to Exhibit 10.20 of the
         Registration Statement)

10.21    Indenture of Lease dated as of September 1, 1972, by and between Bonnie
         Gordon Roe, as Lessor, and the Company (by virtue of assignment), as
         Lessee (incorporated by reference to Exhibit 10.21 of the Registration
         Statement)

10.22    Indenture of Lease dated as of October 27, 1969, by and between Shepard
         Bryan, as Lessor, and the Company (by virtue of assignment), as Lessee
         (incorporated by reference to Exhibit 10.22 of the Registration
         Statement)

10.23    Indenture of Lease dated as of November 1, 1969, by and between Jules
         G. Edwards, as Lessor, and the Company (by virtue of assignment), as
         Lessee, as amended by an Amendment to Indenture of Lease dated January
         16, 1970 (incorporated by reference to Exhibit 10.23 of the
         Registration Statement)

10.24    Indenture of Lease dated as of September 1, 1969, by and between Mrs.
         Dorothy Fielder Ewing, Frank K. Ewing, Morris M. Ewing, Nancy C. Ewing
         Hembrough, and Trust Company of Georgia, as Trustee, under the Will of
         Charles A. Ewing, as Lessor, and the Company (by virtue of assignment),
         as Lessee (incorporated by reference to Exhibit 10.24 of the
         Registration Statement)

10.25    Indenture of Lease dated as of July 1, 1969, by and between Alice L.
         Weeks, and James C. Weeks, as Lessor, and the Company (by virtue of
         assignment), as Lessee, as amended by a First Amendment to Indenture of
         Lease dated as of February 28, 1987 (incorporated by reference to
         Exhibit 10.25 of the Registration Statement)

10.26    Indenture of Lease dated as of September 1, 1968, by and between Paul
         A. Clark, as Lessor, and the Company (by virtue of assignment), as
         Lessee (incorporated by reference to Exhibit 10.26 of the Registration
         Statement)

10.27    Indenture of Lease dated as of September 1, 1969, by and between Sara
         K. Bernath, Myer Caplan, Elias Margoles, Alvin Saul, and Felice G.
         Silberstein, as Lessor, and the Company (by virtue of assignment), as
         Lessee (incorporated by reference to Exhibit 10.27 of the Registration
         Statement)

10.28    Indenture of Lease dated as of October 16, 1963, by and between
         Methodist Children's Home of North Georgia, Inc., as Lessor, and the
         Company (by virtue of assignment), as Lessee (incorporated by reference
         to Exhibit 10.28 of the Registration Statement)

10.29    Indenture of Lease dated October 1, 1963, by and between Mrs. Eula
         Sikes Hamilton, as Lessor, and the Company (by virtue of assignment),
         as Lessee (incorporated by reference to Exhibit 10.29 of the
         Registration Statement)

10.30    Indenture of Lease dated as of August 1, 1975, by and between William
         T. Davis as Lessor, and the Company (by virtue of assignment), as
         Lessee (incorporated by reference to Exhibit 10.30 of the Registration
         Statement)

10.31    Indenture of Lease dated October 16, 1963, by and between J. W. O'Neal,
         as Lessor, and the Company (by virtue of assignment), as Lessee
         (incorporated by reference to Exhibit 10.31 of the Registration
         Statement)

10.32    Indenture of Lease dated November 7, 1963, by and among Mrs. Anne Grant
         Owens, as Lessor, and the Company (by virtue of assignment), as Lessee
         (incorporated by reference 


                                       26

<PAGE>   56

         to Exhibit 10.32 of the Registration Statement)

10.33    Lease Agreement dated May 20, 1992, by and between Metropolitan Atlanta
         Rapid Transit Authority, as Lessor, and the Company (by virtue of
         assignment), as Lessee (incorporated by reference to Exhibit 10.33 of
         the Registration Statement)

10.34    Promissory Note dated October 2,1995, by and between AMC Tampa, Inc.
         and the Company (by virtue of assignment) (incorporated by reference to
         Exhibit 10.34 of the Registration Statement)

10.35    Promissory Note dated October 2, 1995, by and between AMC Orlando, Inc.
         and the Company (by virtue of assignment) (incorporated by reference to
         Exhibit 10.35 of the Registration Statement)

10.36    Noncompetition Agreement dated as of October 2, 1995, between John C.
         Portman, Jr. and the Company (incorporated by reference to Exhibit
         10.36 of the Registration Statement)

10.37    Construction Management Services Agreement dated April 1, 1996, between
         Portman Holdings and the Company (incorporated by reference to Exhibit
         10.37 of the Registration Statement)

10.38    Security Services Agreement dated January 1, 1996, between Portman
         Holdings and the Company (incorporated by reference to Exhibit 10.38 of
         the Registration Statement)

10.39    Security Services Agreement dated May 1, 1996 between Portman Holdings
         and the Company (incorporated by reference to Exhibit 10.39 of the
         Registration Statement)

10.40    Amendment dated October 8, 1997 to the Computer Service Agreement dated
         November 13, 1995, between the Company and Portman Holdings

10.41    Human Resources Services Agreement dated November 13, 1997 between the
         Company and Portman Holdings.

11.0     Computation of Earnings Per Common Share

21.1     Subsidiaries of the Company

24.1     Powers of Attorney

27.0     Financial Data Schedule (for SEC use only)

99.1     Letter of Transmittal

B. No reports on Form 8 - K were issued subsequent to the Registrant's Quarterly
Report on Form 10 - Q for the quarter ended November 30, 1997.


                                       27


<PAGE>   57



                                   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.

                                             AMC, Inc.
                                             (Registrant)


                                    By:      /s/ JOHN C. PORTMAN, JR.
                                             -----------------------------------
                                             John C. Portman, Jr.
                                             Chairman of the Board and
                                             Chief Executive Officer




                                             /s/ JOHN M. RYAN
                                             -----------------------------------
                                             John M. Ryan
                                             President



                                             /s/ HENRY G. ALMQUIST, JR.
                                             -----------------------------------
                                             Henry G. Almquist, Jr.
                                             Sr. Vice President - Finance and
                                             Accounting, Chief Financial Officer
                                             (Principal financial and accounting
                                             officer)

November 26, 1997


                                       28

<PAGE>   58


Pursuant to the requirements of the Securities Act of 1934, this Amendment to
Registration Statement has been signed by the following persons on November 26,
1997 in the capacities indicated.

<TABLE>
<CAPTION>
            Signature                                           Title
<S>                                          <C>
                                             Chairman of the Board and Chief Executive
     /S/ JOHN C. PORTMAN, JR.                Officer (principal executive officer)
------------------------------------
        John C. Portman, Jr.

        /S/ JOHN M. RYAN                     President and Director
------------------------------------
           John M. Ryan

                *                            Director
------------------------------------
    R. Charles Loudermilk, Sr.

                *                            Director
------------------------------------
        D. Raymond Riddle

                *                            Director
------------------------------------
         A. J. Robinson

                *                            Director
------------------------------------
      Stanley P. Steinberg

                *                            Director
------------------------------------
          Andrew Young
</TABLE>


                                       29
<PAGE>   59



*The undersigned by signing his name does hereby execute this Annual Report
pursuant to powers of attorney filed as exhibits to the Annual Report.

By:               /S/ HENRY G. ALMQUIST, JR.
                  --------------------------
                  HENRY G. ALMQUIST, JR
                  Attorney-in-Fact


                                       30
<PAGE>   60



                          Independent Auditors' Report


The Board of Directors
AMC, Inc.:

Under date of October 17, 1997, we reported on the consolidated balance sheets
of AMC, Inc. and subsidiaries (Company) as of August 31, 1997 and 1996, and the
related consolidated statements of earnings, stockholders' deficit and cash
flows for the year ended August 31, 1997 and the period from October 2, 1995
through August 31, 1996, and the combined statements of earnings, deficit and
cash flows of the Atlanta Market Center Companies (Predecessor) for the period
from January 1, 1995 through October 1, 1995 (included elsewhere in this Form
10-K). In connection with our audits of the aforementioned consolidated
financial statements of the Company and the combined financial statements of the
Predecessor, we also have audited the related financial statement schedule
listed in Item 14a(2). This financial statement schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.


                                    /S/ KPMG PEAT MARWICK LLP

Atlanta, Georgia
October 17, 1997


                                      S-1

<PAGE>   61



                                                                     Schedule II

                           AMC, INC. AND SUBSIDIARIES
     For the Year ended August 31, 1997 and the Period from October 2, 1995
                             through August 31, 1996

                       ATLANTA MARKET CENTER COMPANIES 
          For the Period From January 1, 1995 through October 1, 1995

                        VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
====================================================================================================================
                                               Additions
--------------------------------------------------------------------------------------------------------------------
                          Allowance at            Bad           Recoveries of                          Allowance
                          beginning of           debt             previous         Receivables         at end of
                             period             expense          write-offs        written off          period
--------------------------------------------------------------------------------------------------------------------
<S>                       <C>                   <C>             <C>                <C>                 <C>       
Allowance for
doubtful receivables:
--------------------------------------------------------------------------------------------------------------------
         1997                  $2,205,797           $641,772           $208,233      $(1,426,943)         $1,628,859
--------------------------------------------------------------------------------------------------------------------
         1996                   2,647,816            932,909             93,052       (1,467,980)          2,205,797
--------------------------------------------------------------------------------------------------------------------
         1995                   2,428,372            667,830             78,947         (527,333)          2,647,816
====================================================================================================================
</TABLE>


                                      S-2