<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                                   FORM 10-K

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

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                         COMMISSION FILE NUMBER 0-21737
                            ------------------------

                             ZIMMERMAN SIGN COMPANY

             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                            <C>
                 TEXAS                                      75-0864498
       (State of incorporation)                (I.R.S. Employer Identification No.)

  9846 HIGHWAY 31 EAST, TYLER, TEXAS                          75705
    (Address of principal executive                         (Zip Code)
               offices)
</TABLE>

                                  903-535-7400
                               (Telephone Number)

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

          Securities registered pursuant to Section 12 (g) of the Act:
                         COMMON STOCK, $0.01 PAR VALUE

                                (Title of Class)
                            ------------------------

    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 the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /

    The aggregate market value of the common stock held by non-affiliates of the
Registrant computed by reference to the average bid and asked prices of such
stock as of February 29, 2000 was $2,406,972.

    1,269,549 shares of common stock were outstanding as of March 16, 2000.

    The Exhibit Index is located on page 32 of this filing.

    DOCUMENTS INCORPORATED BY REFERENCE. PORTIONS OF THE PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS SCHEDULED FOR MAY 19, 1999 ARE INCORPORATED BY
REFERENCE INTO PART III OF THIS FILING.

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--------------------------------------------------------------------------------
<PAGE>
                                     PART I

ITEM 1. BUSINESS

                                    BUSINESS

GENERAL

    Zimmerman Sign Company (hereinafter, "Zimmerman" or the "Company") operates
as a leading manufacturer of site identification products with a primary focus
on serving large, national and regional retailers. From its plant locations in
Texas, Zimmerman manufactures and sells a variety of signage products which
range from large highway-located site identification signs to medium-sized brand
and product identification signs and building fascia, and smaller signs for
automatic teller machines, gasoline pump toppers, and other specialty purposes.
Zimmerman also provides installation services. A majority of Zimmerman's revenue
is derived from sales to customers in the petroleum marketing industry.
Zimmerman also supplies customers in other industries of which the automotive,
general retail and financial services groupings are the most significant.

    Zimmerman's typical customer is a United States based retailer which
operates at least several hundred branded locations; however, many customers
have company-owned and/or independently-owned facilities numbering in the
several thousands. In addition to new store openings, demand for Zimmerman's
products and services is driven by same store maintenance, obsolescence,
facilities upgrading, and brand expansion. Most of Zimmerman's sales have been
to United States based customers; however, Zimmerman has sold product to and
managed installation for international customers.

    Zimmerman's principal manufactured product is an exterior site and/or brand
identification sign which is double-faced, pole-mounted, and internally
illuminated. In addition, Zimmerman provides a full complement of related
services, including graphics design, production engineering, expedited
manufacturing and delivery, installation management and maintenance.

    Zimmerman is a Texas based company with corporate headquarters in Tyler,
production facilities in Longview and Jacksonville, and an office in Dallas.
Zimmerman began business as a partnership in 1901, was incorporated in Texas in
1953, and has operated under its current name, Zimmerman Sign Company, since
1987. The Company was a subsidiary of Independence Holding Company ("IHC") from
April, 1982 until December 31, 1996 at which time it became a public company
through IHC's distribution of its ownership of Zimmerman to IHC's shareholders.

PRODUCTS AND SERVICES

    Zimmerman's products include exterior illuminated signs, which vary from
high-rise site identification signs (100-250 square feet) to medium-sized,
on-site identification signs (40-100 square feet), as well as specialty products
such as building fascia, building mounted letters, gasoline pump toppers and
spandrels, and automatic teller machine signage. Zimmerman also produces steel
poles for certain of its sign products. Typically, Zimmerman's products carry
underlying warranties from paint, plastic and electrical component manufacturers
together with a Zimmerman one-year warranty covering workmanship defects.
Zimmerman has not experienced any material expense as a result of warranty
claims.

    Zimmerman provides design, engineering, and prototype development services,
as well as site survey and installation management services.

    The Company carries product liability insurance and has not experienced any
material product liability claims.

                                       2
<PAGE>
INDUSTRY OVERVIEW

    The United States sign and related products industry is large and highly
fragmented, consisting of over 4,000 participants. Management believes that,
depending on the amount of point of purchase product display and point of
purchase signage included, market size ranges from $5.0 billion to $$7.0 billion
in sales per annum.

    Zimmerman's management believes that its target market, which consists of
large national and regional retailers requiring either long run or short run
production quantity signage, generates sales of approximately $1.2 billion
annually. In addition, Zimmerman pursues special re-identification projects
driven by one-time corporate name changes; this business is often caused by an
acquisition or consolidation, involves very short lead times, and requires high
volume production sign applications.

    In the high unit volume production market, customers generally demand
several hundred or more identical units annually. The Company's target market
retailing organizations also have custom production signage requirements which
normally entail delivery of much lower quantities of a specific sign product
over a given year, sometimes as low as five to ten units. Specifications
governing graphics and engineering consistency are equally demanding in both the
high unit volume production and the lower unit volume custom-production markets.
Most of Zimmerman's customers have annual site identification requirements that
span both market components.

COMPETITION

    In serving the above markets, Zimmerman frequently competes with
approximately four larger firms, three to four firms of about the same size and
approximately ten smaller firms (compared on the basis of estimated annual net
sales). In general, these competitors and Zimmerman are the only domestic sign
manufacturers that have the capacity or manufacturing applications to satisfy
the structural or graphics consistency demanded by production quantity sign
users. Zimmerman's principal competitors are Chandler Signs Incorporated,
Collins Sign Company, Inc., Cummings Incorporated, Dualite, Inc., Everbrite,
Inc., Federal Sign Company, Milwaukee Sign Company, Inc., Heath and Company,
Inc., Plasti-Line, Inc., Sign Resource and Young Electric Sign Company.
Zimmerman's competitors for the business of large, national and regional
retailing organizations each have estimated annual sales of between $20.0
million and $140 million, and some have greater financial and manufacturing
resources than Zimmerman. However, Zimmerman believes that its products,
contracts, terms, and warranty are consistent with those standard in the
industry and that it has the ability and resources to compete effectively and
expand in its markets. Management of Zimmerman believes that sales growth will
result from a combination of market expansion, new customers and extension of
product lines.

CUSTOMERS

    In order to evaluate marketing effectiveness, customer service requirements,
and monitor other internal results, Zimmerman tracks its customers by industry
groupings. These industry groupings include petroleum retailers, automobile
manufacturers, general retailers, convenience stores and financial services
organizations. In 1999, the petroleum retailing industry constituted the
Company's single largest industry grouping, as it has for many years.

    As a general rule, the Company's petroleum customers primarily rely on the
Company for product engineering, product production and delivery services. Sign
installation and maintenance services are most often provided by independent
contractors selected by the customer. Despite this general rule, the Company
does provide significant installation services to some of its petroleum
customers. Zimmerman believes its non-petroleum customers outsource more of
their facilities identification requirements than its petroleum customers and,
therefore, rely upon Zimmerman to manage sign installation through
subcontractors employed by Zimmerman.

                                       3
<PAGE>
PRINCIPAL CUSTOMERS

    In 1999, the Company had two petroleum industry customers which accounted
for more than 10% of net sales: Citgo, which accounted for approximately 14% of
net sales, and Conoco, which accounted for approximately 13% of net sales. The
Company has provided sign products to Citgo since the 1970's and to Conoco since
1997 and believes that, in all material respects, it is these customers' sole
sign supplier. The Company also had one automotive manufacturing customer, Ford
Motor Company, which accounted for approximately 10% of net sales in 1999. No
other major customer accounted for more than 10% of sales in 1999.

    The Company contracts with its major customers under a variety of
arrangements which range from one to three year contracts. Many contracts have
thirty-day cancellation provisions.

MARKETING

    Zimmerman sells its products and services to large national and regional
retailers through its five person direct sales force. When appropriate,
Zimmerman's design, engineering, and prototyping services are utilized to
support sales and marketing efforts. Zimmerman believes that its customers
purchase Zimmerman's products and services on the basis of competitive pricing,
product quality, delivery schedules, and support services.

MANUFACTURING

    Zimmerman's manufacturing operations generally involve metal working,
plastic screening and molding, and electrical component installation and sign
assembly. Primary processes include metal cutting, bending, and welding. Plastic
face fabrication operations incorporate distortion screening of sign graphics
onto sheet plastic and vacuum molding of prescreened sign faces. Electrical
components are installed during sign assembly.

MATERIALS

    The principal materials utilized in Zimmerman's manufacturing operations are
aluminum, plastic, steel, and electrical components. Most plastic and aluminum
components are customer specific. As a result, the majority of Zimmerman's
inventory purchases are made in conjunction with firm purchase orders from its
customers. Zimmerman believes that its sources of supply and the availability of
raw materials are adequate.

RESEARCH AND DEVELOPMENT

    Sign advancements are made at each of Zimmerman's plants. Product
development and improvement involves periodic experimental work with new paints,
painting applications, plastics and composites, and electrical apparatuses.
Typically, product advancements entailing more than engineering or structural
improvements are made in a coordinated effort among the raw material producer,
Zimmerman and the end user. Historically, amounts spent by Zimmerman on product
development, which have not been charged directly to the customer, have been
immaterial.

EMPLOYEES

    During 1999, Zimmerman had, on average, 618 employees of which 505 employees
were covered under collective bargaining agreements.

BACKLOG

    As of December 31, 1999, Zimmerman's backlog of unshipped orders totaled
$20.2 million compared to $26.4 million as of December 31, 1998. Customer
commitments to order signs for shipment under

                                       4
<PAGE>
blanket orders constitute a major component of Zimmerman's backlog. Generally,
management anticipates all backlog will be shipped within twelve months.
Zimmerman's customers typically place orders for very large dollar amounts;
therefore, backlog statistics can change significantly within short periods of
time. This fact, coupled with project scheduling changes, decreases the
reliability of backlog as a business indicator.

SEASONALITY

    Seasonal influences tend to negatively impact Zimmerman's sales in the first
and last quarters of the calendar year. Zimmerman ships its product nationally
and adverse weather typically impedes outside sign installation in the first
quarter. Adverse weather conditions and holidays often negatively impact fourth
quarter shipments, particularly in the month of December. Normal seasonal trends
in Zimmerman's business are sometimes offset, however, by large, special
projects involving corporate identification and/or brand name changes.

EXECUTIVE OFFICERS OF THE COMPANY

    The following table sets forth information relating to the executive
officers of the Company.

<TABLE>
<CAPTION>
NAME                            AGE      POSITION
----                          --------   --------
<S>                           <C>        <C>
David E. Anderson...........     55      Chairman and Director
Tom E. Boner................     61      President, Treasurer and Director
Michael W. Coppinger........     53      Vice President, Sales
John T. Griggs..............     42      Vice President, Manufacturing
Jeffrey P. Johnson..........     38      Vice President, Chief Financial Officer and Secretary
Michael St. Onge............     53      Vice President, Corporate Services
</TABLE>

    David E. Anderson has been Chairman of Zimmerman since November 1996 and a
Director since 1982. Mr. Anderson was Chairman of Zimmerman Holdings, Inc.
(formerly the immediate parent company of Zimmerman) for more than five years
prior to November 1996. From 1981 until 1986, he was Executive Vice President
and a Director of Independence Holding Company. Previously, Mr. Anderson was a
Vice President of The Dyson-Kissner-Moran Corporation and a Vice President of
Continental Illinois National Bank and Trust Company of Chicago.

    Tom E. Boner has been President, Treasurer and a Director of Zimmerman since
1984, having joined Zimmerman in 1981 as Director of Sales and Marketing. From
1970 to 1975, he was in sales with American Sign and Indicator, and from 1976
until 1981, was with American Bank Equipment Company. Mr. Boner served as a
Director of the International Sign Association from 1986 until 1995 and was
Chairman thereof in 1993.

    Michael W. Coppinger has been Vice President, Sales of Zimmerman since 1987,
having joined Zimmerman in 1982 as a Regional Sales Manager. From 1973 to 1981,
he was with State Sign of Houston as a sales representative and was a Branch
Manager for Bajon Sign of Corpus Christi from 1981 to 1982. He is a past
President of the Texas Sign Association.

    John T. Griggs has been Vice President, Manufacturing of Zimmerman since
1987. Previously, he was a National Sales Manager for Tenncon, Inc. and held
manufacturing and inventory management positions with Aladdin Industries.

    Jeffrey P. Johnson has been Vice President and Chief Financial Officer of
Zimmerman since 1990 and Secretary of Zimmerman since December 1996. He joined
Zimmerman in 1985 as Controller. Previously, Mr. Johnson was employed with Price
Waterhouse. Mr. Johnson is a CPA and a member of the AICPA and the Texas Society
of CPAs. He is a Director and current President of the Texas Sign Association
and a Director of the Southwest Sign Council of the International Sign
Association.

                                       5
<PAGE>
    Michael F. St. Onge has been Vice President, Corporate Services of Zimmerman
since January 1996. Mr. St. Onge was with Jim Pattison Sign Group for more than
five years prior to joining Zimmerman and most recently served 5 years as
Executive Vice President and General Manager of the Group's Pacific Northwest
Region. He is a former Director and past Chairman of the International Sign
Association.

ENVIRONMENTAL MATTERS

    Compliance with Federal, state and local laws regulating the discharge of
materials into the environment or otherwise relating to the protection of the
environment has not had, nor is it expected to have, a material effect upon
Zimmerman's capital expenditures, earnings or competitive position.

ITEM 2. PROPERTIES

    The following table sets forth certain information with respect to
Zimmerman's properties, all of which are located in Texas.

<TABLE>
<CAPTION>
       LOCATION                    FUNCTION                     SQUARE FEET       OWNED OR LEASED
       --------                    --------                     -----------       ---------------
       <S>                         <C>                          <C>               <C>
       Jacksonville                Sign manufacturing             102,000              Leased
                                   Pole manufacturing              10,000               Owned

       Longview                    Sign manufacturing              75,000               Owned
                                   Sign manufacturing             160,000              Leased

       Tyler                       Corporate Headquarters          15,000              Leased
                                   and Customer Service

       Dallas                      Sales and                        1,400              Leased
                                   Administrative
</TABLE>

ITEM 3. LEGAL PROCEEDINGS

    Zimmerman is party to various legal proceedings, all of which are of an
ordinary or routine nature incidental to the operations of the Company.
Management believes that the final resolution of all matters currently pending
will not have a materially adverse effect on the Company's financial position or
result of operations.

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

    No matters were submitted to a vote of Zimmerman's shareholders during the
fourth quarter of 1999.

                                       6
<PAGE>
                                    PART II

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

    Zimmerman's common stock ("Common Stock") is traded under the symbol ZSCO on
the National Association of Securities Dealers, Inc. Over the Counter Bulletin
Board. The Company was a majority owned subsidiary of Independence Holding
Company until December 31, 1996 when Independence Holding Company distributed
all its investment in the Company to Independence Holding Company's common
shareholders. Accordingly, there was no public market for the Company's Common
Stock until January 1997.

    Based on information available from the NASDAQ Trading and Market Services
OTC Bulletin Board Daily Trade and Quote Summary Report, the Company believes
that the table below sets forth the range of high and low bid prices for the
Company's Common Stock:

<TABLE>
<CAPTION>
                                                                   BID PRICE
                                                              -------------------
                                                                HIGH       LOW
                                                              --------   --------
<S>                                                           <C>        <C>
For the Year 1998
  Quarter Ended:
  March 31, 1998............................................   3.7500     3.5625
  June 30, 1998.............................................   4.0000     3.5625
  September 30, 1998........................................   3.9375     3.7500
  December 31, 1998.........................................   3.7500     3.5625

For the Year 1999
  Quarter Ended:
  March 31, 1999............................................   3.7500     3.5625
  June 30, 1999.............................................   3.7500     3.3750
  September 30, 1999........................................   3.5000     3.0625
  December 31, 1999.........................................   3.5000     3.1250
</TABLE>

    The above OTC market quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.

    The Company had approximately 2,418 holders of record of its common stock as
of March 2, 2000. A dividend of $19,701,000 was declared in 1996 in conjunction
with the Company's spin-off from its former parent, Independence Holding
Company. No further dividends are anticipated in the foreseeable future. The
Company has determined that it will utilize any earnings to expand its business
and to reduce its indebtedness.

                                       7
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

    The following is a summary of selected financial data with respect to the
Company for each of the last five fiscal years. The selected financial data
below should be read in conjunction with the accompanying Financial Statements
and notes thereto, and Management's Discussion and Analysis of Financial
Condition and Results of Operation (see Item 7, below).

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                 ----------------------------------------------------
                                                   1999       1998       1997       1996       1995
                                                 --------   --------   --------   --------   --------
                                                       (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                              <C>        <C>        <C>        <C>        <C>
STATEMENTS OF OPERATIONS:
Net sales......................................  $54,506    $48,619    $44,047    $41,275    $41,667
Costs and Expenses:
  Cost of goods sold...........................   43,589     38,076     34,692     32,415     32,529
  Selling, general and administrative
    expenses...................................    5,527      5,722      5,470      4,428      4,155
  Management fees..............................       --         --         --        600        600
  Interest expense, net........................    2,271      2,299      2,419        996        782
  Stock distribution costs.....................       --         --         --      1,106         --
                                                 -------    -------    -------    -------    -------
    Total costs and expenses...................   51,387     46,097     42,581     39,545     38,066
                                                 -------    -------    -------    -------    -------
    Income before federal income taxes and
      extraordinary item.......................    3,119      2,522      1,466      1,730      3,601
Federal income taxes...........................    1,081        896        517        588      1,224
Extraordinary item (net of income taxes).......       --        369         --         --         --
                                                 -------    -------    -------    -------    -------
    Net income.................................    2,038      1,257        949      1,142      2,377
Preferred stock dividend and accretion.........      594        129         --         --         --
                                                 -------    -------    -------    -------    -------
    Net income applicable to common stock......  $ 1,444    $ 1,128    $   949    $ 1,142    $ 2,377
                                                 =======    =======    =======    =======    =======
BALANCE SHEET DATA:
Total assets...................................  $30,601    $31,307    $29,481    $28,154    $25,957
Current liabilities............................    9,880     10,225     11,856      9,462      7,839
Long-term debt, excluding current
  installments.................................   22,017     23,235     26,011     28,555      9,422
Redeemable preferred stock.....................    5,927      4,506         --         --         --
Stockholders' equity (deficit) (1) (3).........   (7,263)    (6,660)    (8,386)    (9,863)     8,696
PER SHARE DATA (2)
Cash dividends declared per common share.......       --         --         --    $ 10.62         --
Net income per common share--
  Basic and diluted
    Income before extraordinary item...........  $  1.14    $  0.81    $  0.51    $  0.62    $  1.28
    Extraordinary item (3).....................       --      (0.20)        --         --         --
                                                 -------    -------    -------    -------    -------
    Net income.................................  $  1.14    $  0.61    $  0.51    $  0.62    $  1.28
                                                 =======    =======    =======    =======    =======
Book value per common share....................  $ (5.72)   $ (3.59)   $ (4.52)   $ (5.32)   $  4.69
</TABLE>

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

(1) A dividend of $19,701,000 was declared in 1996.

(2) For basic earnings per share, 1,854,692 common shares were outstanding in
    all periods except 1999 when 1,269,549 shares are outstanding.

(3) See Note 4 to the Financial Statements.

                                       8
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

    The following discussion of Zimmerman's financial condition and results of
operations should be read in conjunction with the financial statements of
Zimmerman and the notes thereto included elsewhere herein.

GENERAL

    Zimmerman began operations as a sign manufacturer in 1901. Privately owned
until its acquisition by IHC in 1982, Zimmerman was, throughout most of the
1980's, generally regarded as a regional manufacturer of custom signs which had
also established a small amount of national account business.

    In the 1980's, Zimmerman refocused its business to concentrate almost
exclusively on satisfying the site identification needs of large national and
regional retailers in the United States. It concentrated its marketing efforts
on several major retailing sectors and broadened its product line to provide
both standard long-production-run site identification products and more
specialized shorter-run items. During this period, Zimmerman also began to
restructure and expand its product design and installation service capabilities.
In the 1980's, sales to petroleum marketing companies produced much of
Zimmerman's growth and at times accounted for over 90% of Zimmerman's annual
sales.

    From 1991 through 1997, Zimmerman's sales grew significantly. This growth
was internally generated and resulted from expansion of several customer
relationships established in earlier periods, plus the addition of several new
large customers. Sales increased 10.4% in 1998, from $44.0 million in 1997 to
$48.6 million in 1998. This increase is attributable to continued volume
strength in the petroleum marketing companies and growth in the automotive and
general retailing companies, which industry groupings were enhanced by sales
volume from several new customers which were added in late 1997. Sales increased
12.1% in 1999, from $48.6 million in 1998 to $54.5 million in 1999. This
increase is primarily attributable to continued growth in the automotive
industry group, which had sales volume increases from two new customers added in
1998 along with growth in the financial services industry group which had
revenue increases from a significant new customer.

    In the 1990's, approximately 50% of Zimmerman's sales growth is attributable
to the petroleum retailing market. The other half is spread among several
retailing groupings, foremost of which are the automotive and financial services
groups. Most of Zimmerman's sales have been to United States based customers;
however, Zimmerman has sold product to and managed installation for
international customers. Sales to customers with headquarters located outside of
the United States accounted for less than 1% of total sales in 1999, 1998 and
1997. Since 1994, substantially all international sales have been to financial
institutions in Mexico. Management of Zimmerman intends to pursue international
opportunities and expand sales of products and services to its domestic
customers.

                                       9
<PAGE>
RESULTS OF OPERATIONS

    The following table sets forth the percentage relationship to net sales of
certain statement of operations items for the periods presented.

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
                                                   ------------------------------
                                                     1999       1998       1997
                                                   --------   --------   --------
<S>                                                <C>        <C>        <C>
Net sales........................................    100.0%     100.0%     100.0%
Cost of goods sold...............................     80.0       78.3       78.8
Selling, general and administrative expenses.....     10.1       11.8       12.4
Interest expense, net............................      4.2        4.7        5.5
                                                    ------     ------     ------
  Total costs and expenses.......................     94.3       94.8       96.7
Income before federal income taxes and
  extraordinary item.............................      5.7        5.2        3.3
Federal income taxes.............................      2.0        1.8        1.2
Extraordinary item...............................       --        0.8         --
                                                    ------     ------     ------
Net income.......................................      3.7%       2.6%       2.1%
                                                    ======     ======     ======
</TABLE>

1999 COMPARED TO 1998

    Net sales for 1999 increased $5.9 million, or 12.1%, from $48.6 million in
1998 to $54.5 million in 1999. The increase in net sales resulted primarily from
an increase in sales to automotive retailers of approximately $4.1 million and
an increase in sales to financial services customers of $2.1 million. Increased
sales to current customers along with sales to a significant new customer
contributed to the increased sales to automotive retailers. Increased sales to a
significant new customer accounted for the increase in sales to the financial
services industry grouping.

    Cost of goods sold increased $5.5 million, or 14.4%, from $38.1 million in
1998 to $43.6 million in 1999. The increase was primarily a result of the net
sales increase as noted above. As a percentage of net sales, cost of goods sold
increased from 78.3% in 1998 to 80.0% in 1999. Manufacturing costs increased as
a percentage of net sales in 1999 primarily because of higher overhead expenses
related to head count increases and increased costs related to having an
additional plant.

    Selling, general and administrative expenses decreased $0.2 million, or
3.5%, from $5.7 million in 1998 to $5.5 million in 1999. The decrease was
primarily a result of a casualty insurance claim associated with a fire in our
Longview facility which was partially offset by costs associated with headcount
increases and general inflation.

    Interest expense remained constant from 1998 to 1999 at $2.3 million. This
was primarily because lower average debt balances throughout 1999 were largely
offset by higher average interest rates in 1999.

    Income before federal income taxes and extraordinary item increased $0.6
million, or 24.0%, from $2.5 million in 1998 to $3.1 million in 1999. This
increase was primarily the result of the significant sales volume increase,
explained above, enhanced by the selling, general and administrative expense
improvement, also explained above.

    The extraordinary item explained in the 1998 compared to 1997 analysis below
was not repeated in 1999.

    Preferred stock dividend and accretion increased $0.5 million from
$0.1 million in 1998 to $0.6 million in 1999. This increase was due to a full
year of preferred stock dividend and accretion in 1999 as compared to only
fourth quarter costs in 1998. Preferred stock dividend and accretion was related
to the 8.0% Series A Redeemable Preferred Stock which was issued on
September 30, 1998 as part of the Refinancing Transaction (as defined below).

                                       10
<PAGE>
    The Company's net income applicable to common shares was $1.4 million, or
$1.14 per share (basic and diluted) for the year ended December 31, 1999
compared to $1.1 million, or $0.61 per share (basic and diluted) in 1998, an
increase of 86.9% per share (both basic and diluted). The increase is
attributable to the sales volume increase and costs as described above.

1998 COMPARED TO 1997

    Net sales for 1998 increased $4.6 million, or 10.4%, from $44.0 million in
1997 to $48.6 million in 1998. The increase in net sales resulted primarily from
an increase in sales to general retail customers of approximately $2.4 million
and an increase in sales to automotive retailers of approximately $1.3 million.
Increased sales to current customers, along with sales to a significant new
customer and brand expansion activities with several customers contributed to
increased sales to general retailers. Increased sales to a significant new
customer accounted for the increase in sales to automotive retailers.

    Cost of goods sold increased $3.4 million, or 9.8% from $34.7 million in
1997 to $38.1 million in 1998. The increase was a result of the net sales
increase as noted above. As a percentage of net sales, cost of goods sold
decreased from 78.8% in 1997 to 78.3% in 1998. Manufacturing costs decreased
slightly as a percentage of net sales in 1998 because the mix of sales volume in
1998 had slightly better direct cost margins.

    Selling, general and administrative expenses increased $0.2 million, or
4.6%, from $5.5 million in 1997 to $5.7 million in 1998. The increase was
primarily a result of higher payroll and benefit costs associated with office
and customer service personnel, which were partially offset by amortization
costs related to the 1996 spin-off being charged to income as an extraordinary
item instead of as an administrative expense.

    Interest expense decreased $0.1 million or 5.2% from $2.4 million in 1997 to
$2.3 million in 1998. Lower interest expense was incurred primarily as a result
of lower average interest rates in 1998, along with the Refinancing Transaction
(as defined below) completed on September 30, 1998 which replaced outstanding
subordinated debt with new subordinated debt and preferred stock. See
"Liquidity; Capital Resources."

    Income before federal income taxes and extraordinary item increased $1.0
million or 72.0% from $1.5 million in 1997 to $2.5 million in 1998. This
increase was primarily the result of the significant sales volume increase,
explained above, leveraging the fairly constant costs also explained above.

    The extraordinary item of $0.4 million in 1998 was related to certain debt
issuance costs associated with retired borrowings which were formerly being
amortized over the life of the borrowings. This debt was retired as part of the
September 30, 1998 Refinancing Transaction and the unamortized expense was
charged to income as an extraordinary item.

    Preferred Stock dividend and accretion of $0.1 million was related to the
8.0% Series A Redeemable Preferred Stock which was issued on September 30, 1998
as part of the Refinancing Transaction.

    The Company's net income applicable to common shares was $1.1 million, or
$0.61 per share for the year ended December 31, 1998 compared to $0.9 million,
or $0.51 per share in 1997, an increase of 19.6% per share on a basic and
diluted basis. The increase is attributable to the sales volume increase and
cost stability as described above.

PRICING; VOLUME

    Zimmerman believes that increases in costs have generally been recovered by
a combination of price and unit volume increases during each of the years
presented. Price increases have been small over the past several years; however,
changes in the cost of raw materials, which constitutes Zimmerman's largest cost
element, have not materially impacted manufacturing costs over the periods
presented.

                                       11
<PAGE>
LIQUIDITY; CAPITAL RESOURCES

    Zimmerman's net sales have increased from $23.9 million in 1992 to
$54.5 million in 1999. During periods of sales growth, Zimmerman typically
experiences increases in accounts receivable, inventories, trade payables and
backlog and, as a result, increases its investment in operating working capital
(defined as accounts receivable plus inventories, less accounts payable, accrued
expenses and customer deposits).

    In 1999, while sales increased by over 12.0%, operating working capital
decreased $0.6 million from $18.2 million in 1998 to $17.6 million in 1999, or
3.3%. This decrease was almost entirely attributable to reductions in inventory,
which decreased $0.7 million due to a concerted initiative by management to
reduce inventory levels. Customer deposits increased by $0.4 million in 1999,
while accounts receivable declined by $0.1 million and accruals also declined by
$0.4 million.

    Zimmerman's backlog, which consists primarily of blanket purchase orders
from customers for sign products which the customer has not yet released for
shipment to retail locations, decreased from $26.4 million at December 31, 1998
to $20.2 million at December 31, 1999. Approximately 7% of backlog consists of
orders for sign installation services, while most of the remainder consists of
orders for manufactured products covered by blanket purchase orders for which
the customer has not yet requested delivery. Zimmerman's customers typically
place orders for very large dollar amounts; therefore, backlog statistics can
change significantly within short periods of time.

    During 1999, cash flows provided by operating activities were $3.3 million.
Zimmerman utilized $0.9 million on capital expenditures, paid $0.5 million in
preferred dividends, purchased treasury stock for $0.7 million and made net
repayments of $1.2 million of long-term debt. These cash flows from operations
and identified cash requirements resulted in cash remaining unchanged at $0.1
million.

    In 1999, capital projects to reduce product costs, improve product quality,
increase manufacturing efficiency and operating flexibility and expand
production capacity resulted in expenditures of $0.9 million, compared with $0.5
million in 1998. At December 31, 1999, there were no material commitments for
capital expenditures, although management expects similar or greater projects in
the future. Capital expenditures related to environmental projects have not been
significant in the past and are not expected to be significant in the
foreseeable future.

    During January 1999, the Company purchased 357,143 shares of its common
stock from its largest stockholder at a cost of $625,000 in cash and 6,250
shares of the Company's 6% Series C Preferred Stock, which has a liquidation and
redemption value of $625,000. Additionally, the Company purchased 228,000 shares
of its common stock from an officer of the Company at a cost of $98,000 in cash
and 7,000 shares of the Company's 6% Series B Preferred Stock, which has a
liquidation and redemption value of $700,000. The Series B and Series C
Preferred Stock are subordinate to the Company's Series A Preferred Stock. The
Company had 1,269,549 shares of common stock outstanding immediately following
the aforementioned stock purchases. In connection with the aforementioned stock
purchases, the Company cancelled 343,655 of its outstanding warrants. The
cancelled warrants were not included in the determination of the Notes and
Series A Preferred Stock carrying values as cancellation was intended under the
conditions of the Agreement. At December 31, 1999, common shares outstanding
assuming exercise of the outstanding options (including 35,921 options that have
not yet been granted) and warrants would be 2,308,808.

    On September 30, 1998, the Company entered into new credit facilities with
its existing lender totaling $23.5 million (consisting of a $17.0 million
revolving credit facility and $6.5 million of senior term loans) to replace an
existing credit facility with a revolving credit line and term loan totaling
$20.6 million of available credit, of which $16.5 million was outstanding
immediately preceding the transaction. The terms and conditions of the new
credit facilities are substantially the same as the previous facility except
that the due date was extended and the available credit was increased.

    Also, on September 30, 1998, the Company entered into a Senior Subordinated
Note, Preferred Stock and Warrant Purchase Agreement with Bank of America
Capital Investors and certain members of

                                       12
<PAGE>
Company management pursuant to which the Company issued $4.0 million of senior
subordinated notes ("Notes") and 52,500 shares of preferred stock, 8% Series A
("Preferred Stock") which has a liquidation and redemption value of
$5.25 million and is mandatorily redeemable on September 30, 2006 ("Refinancing
Transaction"). The Preferred Stock is also redeemable at the option of the
Company and if redeemed prior to September 30, 2003, the redemption value would
increase between 1% and 5%. In connection with the issuance of the Notes and
Preferred Stock, the Company issued warrants representing the right to purchase
up to 37% of the Company's common stock (161,880 warrants related to the Notes
and 1,036,034 warrants related to the Preferred Stock) at an exercise price of
$3.79 per share, the approximate market price of the common stock at the
transaction date. The carrying values of the Notes and Preferred Stock were
reduced to reflect the estimated fair value of the warrants, $0.70 per share,
which has been included in additional paid in capital. Additionally, Preferred
Stock issuance costs of $0.3 million were netted against the proceeds received
upon issuance and the subordinated debt issuance costs of $0.2 million are
included in other assets and are being amortized over the term of the related
debt. The Notes and Preferred Stock are being accreted from their current
carrying values to their redemption values over the lives of the respective
instruments using the interest method.

    On September 30, 1998, the Company repaid its existing $10.0 million
subordinated loan maturing in 2001 and paid the $1.0 million dividend payable.
As part of the Refinancing Transaction described above, debt issuance costs of
$0.4 million (net of related tax effects) associated with the retired borrowings
were charged to income as an extraordinary item. These costs were formerly being
amortized over the life of the subordinated notes.

    At December 31, 1999, the Company had borrowed $14.9 million under its $17.0
million revolving credit facility. At December 31, 1999, $4.4 million of the
$6.5 million senior term loans and $4.0 million of the subordinated term loan
were outstanding. Zimmerman believes that its credit facilities will satisfy its
planned operational requirements for 2000. The Company intends to explore the
possibility of obtaining equity from public or private financings. The Company
completed the Refinancing Transaction on September 30, 1998. Further, the
Company has examined and continues to explore alternative capital sources in
addition to the transaction described above; however, there can be no assurance
that any further equity financing can be obtained on terms acceptable to the
Company.

    The Company is assessing the reporting and disclosure requirements of
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. This statement establishes
accounting and reporting standards for derivative instruments and hedging
activities. This statement requires that all derivatives be recognized as either
assets or liabilities in the balance sheet and measured at fair value. The
accounting for changes in fair value of a derivative (that is, gains and losses)
depends on the intended use of the derivative and resulting designation. This
statement amends and supersedes a number of existing SFAS's, and nullifies or
modifies a number of the consensuses reached by the Emerging Issues Task Force.
This statement is effective for financial statements for fiscal years beginning
after June 15, 2000. At the present time, the Company has not quantified the
effect of adoption or the continuing impact of such adoption. The Company will
adopt the provisions of SFAS No. 133 in the first quarter of fiscal year 2001.

INFLATION

    During the periods presented, inflation did not have a material effect on
Zimmerman's results of operations. In recent years, the U.S. rate of inflation
has been relatively low.

YEAR 2000 CONSIDERATIONS

    The Company uses and relies on a wide variety of information technologies,
computer systems and manufacturing equipment containing computer-related
components. The Company did not experience any business interruptions related to
the Year 2000 Issue. The Company is continuing to monitor its computer

                                       13
<PAGE>
systems and equipment and expects that the Year 2000 Issue will not have a
material adverse effect on its business, financial condition or results of
operations.

FORWARD LOOKING INFORMATION

    This report and other reports and statements filed by the Company from time
to time with the Securities and Exchange Commission (collectively, "SEC
Filings") contain or may contain certain forward-looking statements and
information that are based on beliefs of, and information currently available
to, the Company's management as well as estimates and assumptions made by the
Company's management. When used in SEC Filings, the words "anticipate,"
"believe," "estimate," "expect," "future," "intend," "plan" and similar
expressions as they relate to the Company or the Company's management, identify
forward-looking statements. Such statements reflect the current views of the
Company with respect to future events and are subject to certain risks,
uncertainties and assumptions relating to the Company's operations and results
of operations, competitive factors and pricing pressures, shifts in market
demand, the performance and needs of the industries served by the Company, the
costs of product development and other risks and uncertainties, including, in
addition to any uncertainties specifically identified in the text surrounding
such statements, uncertainties with respect to changes or developments in
social, economic, business, industry, market, legal and regulatory circumstances
and conditions and actions taken or omitted to be taken by third parties,
including the Company's stockholders, customers, suppliers, business partners,
competitors, and legislative, regulatory, judicial and other governmental
authorities and officials. Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect, actual
results may vary significantly from those anticipated, believed, estimated,
expected, intended or planned.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

    The Company has an interest rate collar agreement that is used to reduce the
potential impact of fluctuations in interest rates on floating-rate long-term
debt. A one percent change in interest rates on floating rate long-term debt
above the floor or ceiling rates contained in the interest rate collar
agreements would impact interest expense by approximately $0.2 million. The
Company believes it has no other instruments subject to any significant interest
rate risk, foreign currency exchange risk, commodity price risk or other
significant market risk.

                                       14
<PAGE>
                             ZIMMERMAN SIGN COMPANY
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Independent Auditors' Report................................     16
Balance Sheets as of December 31, 1999 and 1998.............     17
Statements of Operations for three years ended December 31,
  1999......................................................     18
Statements of Stockholders' Deficit for three years ended
  December 31, 1999.........................................     19
Statements of Cash Flows for three years ended December 31,
  1999......................................................     20
Notes to Financial Statements...............................     21

SCHEDULE
Schedule 1--Valuation and Qualifying Accounts for
  three years ended December 31, 1999.......................     30
</TABLE>

                                       15
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

The Board of Directors

Zimmerman Sign Company:

    We have audited the accompanying balance sheets of Zimmerman Sign Company as
of December 31, 1999 and 1998, and the related statements of operations,
stockholders' deficit and cash flows for each of the years in the three-year
period ended December 31, 1999. In connection with our audits of the financial
statements, we also have audited the accompanying financial statement schedule.
These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule 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.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Zimmerman Sign Company as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1999 in
conformity with generally accepted accounting principles. Also, in our opinion,
the related 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 LLP]

Dallas, Texas
February 4, 2000

                                       16
<PAGE>
                             ZIMMERMAN SIGN COMPANY
                                 BALANCE SHEETS
                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                 1999          1998
                                                              -----------   ----------
<S>                                                           <C>           <C>
                           ASSETS
Current assets:
  Cash......................................................  $   113,914      126,339
  Accounts receivable, net of allowance for doubtful
    accounts of $100,000 in 1999 and 1998 (note 11).........   10,139,711   10,190,998
  Inventories (note 2)......................................   16,081,386   16,771,487
  Prepaids and other current assets.........................      147,828      198,083
  Deferred tax assets (note 8)..............................      529,911      618,927
                                                              -----------   ----------
    Total current assets....................................   27,012,750   27,905,834
Property, plant and equipment, net (note 3).................    3,353,990    2,957,926
Other assets................................................      234,140      431,678
Deferred tax assets (note 8)................................           --       11,148
                                                              -----------   ----------
                                                              $30,600,880   31,306,586
                                                              ===========   ==========
           LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Current installments of long-term debt (note 4)...........  $ 1,219,000    1,167,000
  Accounts payable..........................................    6,179,551    6,607,601
  Accrued expenses..........................................    1,610,358    1,806,837
  Income taxes payable......................................       81,228      262,070
  Customer deposits.........................................      789,452      381,289
                                                              -----------   ----------
    Total current liabilities...............................    9,879,589   10,224,797
                                                              -----------   ----------
Deferred tax liability (note 8).............................       40,318           --
Long-term debt, excluding current installments (note 4):
  Bank debt.................................................   18,083,695   19,313,500
  Subordinated notes........................................    3,933,546    3,921,988
                                                              -----------   ----------
    Total long-term debt....................................   22,017,241   23,235,488
                                                              -----------   ----------
Redeemable preferred stock (note 4):
  8% Series A, $.01 par value, redemption value of
    $5,250,000; 52,500 shares authorized, issued and
    outstanding.............................................    4,601,904    4,505,889
  6% Series B, $.01 par value, redemption value of $700,000;
    7,000 shares authorized, issued and outstanding.........      700,000           --
  6% Series C, $.01 par value, redemption value of $625,000;
    6,250 shares authorized, issued and outstanding.........      625,000           --
                                                              -----------   ----------
    Total redeemable preferred stock........................    5,926,904    4,505,889
                                                              -----------   ----------
Stockholders' deficit (notes 5 and 6):
  Common stock, $.01 par value. Authorized 15,000,000
    shares; issued 1,854,692 shares; outstanding 1,269,549
    shares in 1999 and 1,854,692 in 1998....................       18,547       18,547
  Additional paid-in capital................................      478,647      574,662
  Accumulated deficit.......................................   (5,712,366)  (7,252,797)
  Treasury stock, at cost; 585,143 common shares............   (2,048,000)          --
                                                              -----------   ----------
    Total stockholders' deficit.............................   (7,263,172)  (6,659,588)
Commitments and contingencies (notes 7 and 12)
                                                              -----------   ----------
                                                              $30,600,880   31,306,586
                                                              ===========   ==========
</TABLE>

                See accompanying notes to financial statements.

                                       17
<PAGE>
                             ZIMMERMAN SIGN COMPANY
                            STATEMENTS OF OPERATIONS
                      THREE YEARS ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                             1999          1998         1997
                                                          -----------   ----------   ----------
<S>                                                       <C>           <C>          <C>
Net sales (note 11).....................................  $54,505,527   48,619,408   44,047,109
Cost of goods sold......................................   43,588,577   38,075,791   34,691,459
                                                          -----------   ----------   ----------
  Gross profit..........................................   10,916,950   10,543,617    9,355,650
Selling, general and administrative expenses............    5,526,772    5,722,514    5,469,949
Interest expense........................................    2,271,010    2,298,915    2,419,178
                                                          -----------   ----------   ----------
  Income before federal income taxes
    and extraordinary item..............................    3,119,168    2,522,188    1,466,523
Federal income taxes (note 8)...........................    1,081,198      896,027      517,186
                                                          -----------   ----------   ----------
  Income before extraordinary item......................    2,037,970    1,626,161      949,337
Extraordinary item--debt restructure (net of income tax
  benefit of $35,120) (note 4)..........................           --      369,007           --
                                                          -----------   ----------   ----------
  Net income............................................    2,037,970    1,257,154      949,337
Preferred stock dividend and accretion (note 4).........      593,554      129,003           --
                                                          -----------   ----------   ----------
  Net income applicable to common stock.................  $ 1,444,416    1,128,151      949,337
                                                          ===========   ==========   ==========
Basic and diluted net income per share (note 1(l)):
  Income before extraordinary item......................  $      1.14         0.81         0.51
  Extraordinary item....................................           --        (0.20)          --
                                                          -----------   ----------   ----------
    Net income..........................................  $      1.14         0.61         0.51
                                                          ===========   ==========   ==========
</TABLE>

                See accompanying notes to financial statements.

                                       18
<PAGE>
                             ZIMMERMAN SIGN COMPANY
                      STATEMENTS OF STOCKHOLDERS' DEFICIT
                      THREE YEARS ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                   COMMON STOCK
                              ----------------------   ADDITIONAL                                  TOTAL
                              OUTSTANDING               PAID-IN     ACCUMULATED    TREASURY    STOCKHOLDERS'
                                SHARES       AMOUNT     CAPITAL       DEFICIT       STOCK         DEFICIT
                              -----------   --------   ----------   -----------   ----------   -------------
<S>                           <C>           <C>        <C>          <C>           <C>          <C>
Balances at December 31,
  1996......................   1,854,692    $18,547           --    (9,881,323)           --    (9,862,776)
Contribution of deferred tax
  assets (note 8)...........          --         --           --       527,035            --       527,035
Net income..................          --         --           --       949,337            --       949,337
                               ---------    -------      -------    ----------    ----------    ----------
Balances at December 31,
  1997......................   1,854,692     18,547           --    (8,404,951)           --    (8,386,404)
Issuance of warrants (note
  4)........................          --         --      598,665            --            --       598,665
Net income..................          --         --           --     1,257,154            --     1,257,154
Preferred stock dividend....          --         --           --      (105,000)           --      (105,000)
Accretion of preferred stock
  (note 4)..................          --         --      (24,003)           --            --       (24,003)
                               ---------    -------      -------    ----------    ----------    ----------
Balances at December 31,
  1998......................   1,854,692     18,547      574,662    (7,252,797)           --    (6,659,588)
Net income..................          --         --           --     2,037,970            --     2,037,970
Purchase of treasury
  stock.....................    (585,143)        --           --            --    (2,048,000)   (2,048,000)
Preferred stock dividend....          --         --           --      (497,539)           --      (497,539)
Accretion of preferred stock
  (note 4)..................          --         --      (96,015)           --            --       (96,015)
                               ---------    -------      -------    ----------    ----------    ----------
Balances at December 31,
  1999......................   1,269,549    $18,547      478,647    (5,712,366)   (2,048,000)   (7,263,172)
                               =========    =======      =======    ==========    ==========    ==========
</TABLE>

                See accompanying notes to financial statements.

                                       19
<PAGE>
                             ZIMMERMAN SIGN COMPANY
                            STATEMENTS OF CASH FLOWS
                      THREE YEARS ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                            1999          1998          1997
                                                         -----------   -----------   -----------
<S>                                                      <C>           <C>           <C>
Cash flows from operating activities:
  Net income                                             $ 2,037,970     1,257,154       949,337
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
    Extraordinary item--debt restructure...............           --       369,007            --
    Depreciation and amortization......................      614,745       711,490       862,375
    Deferred income taxes..............................      140,482       (55,528)      (47,512)
    Changes in operating assets and liabilities:
      Accounts receivable..............................       51,287       195,832      (245,927)
      Inventories......................................      690,101    (2,176,253)     (987,476)
      Prepaids and other current assets................      163,300      (159,512)     (101,406)
      Receivable from Holdings.........................           --            --       126,453
      Customer deposits................................      408,163      (645,545)      268,197
      Accounts payable and accrued expenses............     (805,371)      491,007     1,652,421
                                                         -----------   -----------   -----------
        Net cash provided by (used in) operating
          activities...................................    3,300,677       (12,348)    2,476,462
                                                         -----------   -----------   -----------
Cash flows from investing activities:
  Purchases of property, plant and equipment...........     (926,316)     (520,438)     (497,929)
  Proceeds on sales of property, plant and equipment...           --            --        88,662
                                                         -----------   -----------   -----------
        Net cash used in investing activities..........     (926,316)     (520,438)     (409,267)
                                                         -----------   -----------   -----------
Cash flows from financing activities:
  Dividends paid.......................................     (497,539)   (1,105,000)           --
  Proceeds from revolving line of credit...............    2,668,000     4,500,000    21,525,000
  Issuance of subordinated debt and related warrants...       11,558     4,000,000            --
  Proceeds from term loans.............................      260,000     5,500,000            --
  Payments on revolving line of credit.................   (2,918,000)   (2,150,000)  (22,425,000)
  Payments on term loans...............................   (1,187,805)     (194,500)           --
  Payments on long-term notes..........................           --   (14,830,000)   (1,170,000)
  Issuance of preferred stock and related warrants.....           --     5,250,000            --
  Payments for treasury stock..........................     (723,000)           --            --
  Issuance costs related to preferred stock............           --      (250,310)           --
  Issuance costs related to subordinated debt..........           --      (190,743)           --
                                                         -----------   -----------   -----------
        Net cash provided by (used in) financing
          activities...................................   (2,386,786)      529,447    (2,070,000)
                                                         -----------   -----------   -----------
Net decrease in cash...................................      (12,425)       (3,339)       (2,805)
Cash at beginning of year..............................      126,339       129,678       132,483
                                                         -----------   -----------   -----------
Cash at end of year....................................  $   113,914       126,339       129,678
                                                         ===========   ===========   ===========
</TABLE>

                See accompanying notes to financial statements.

                                       20
<PAGE>
                             ZIMMERMAN SIGN COMPANY

                         NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 1999 AND 1998

(1) GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    (A) GENERAL INFORMATION

    Zimmerman Sign Company (the Company) became a publicly-owned company on
    December 31, 1996. Prior to that date, the Company was a majority-owned
    subsidiary of Zimmerman Holdings, Inc. (Holdings). Holdings was a subsidiary
    of Independence Holding Company (IHC). The Company's common stock is
    registered with the Securities and Exchange Commission and quoted on the
    National Association of Securities Dealers Over the Counter Bulletin Board.
    The Company is a manufacturer of commercial exterior signs with its
    manufacturing operations located in East Texas. The Company's customers,
    consisting primarily of petroleum retailers, automotive retailers, general
    retailers and financial institutions, are principally located in North
    America.

    (B) INVENTORIES

    Inventories are recorded at the lower of cost (first-in, first-out) or
    market (net realizable value).

    (C) PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment are stated at cost. Improvements are
    capitalized and depreciated over the remaining life of the asset. Repair and
    maintenance costs are charged to operations as incurred.

    Property, plant and equipment are depreciated and amortized using the
    straight-line method over the following estimated useful lives of the
    respective assets or lease terms, if shorter:

<TABLE>
<CAPTION>
                                                              ESTIMATED LIFE
                                                                (IN YEARS)
                                                              --------------
<S>                                                           <C>
Building....................................................          25
Manufacturing equipment.....................................       5 - 8
Transportation equipment....................................       3 - 7
Leasehold improvements......................................      5 - 15
Office furniture and equipment..............................       3 - 8
</TABLE>

    (D) OTHER ASSETS

    Other assets are recorded at cost and consist primarily of deposits and
    deferred loan costs. Deferred loan costs are amortized over the term of the
    related loans using the interest method.

    (E) REVENUE RECOGNITION

    Revenue is recognized upon the shipment of product unless installation is
    required, in which case revenue is recognized when the installation is
    complete. Sales returns and allowances are not significant.

    (F) INCOME TAXES

    Income taxes are accounted for under the asset and liability method.
    Deferred tax assets and liabilities are recognized for the future tax
    consequences attributable to differences between the financial statement
    carrying amounts of existing assets and liabilities and their respective tax
    bases and

                                       21
<PAGE>
                             ZIMMERMAN SIGN COMPANY

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 1998

(1) GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
    operating loss and tax credit carryforwards. Deferred tax assets and
    liabilities are measured using enacted tax rates expected to apply to
    taxable income in the years in which those temporary differences are
    expected to be recovered or settled. The effect on deferred tax assets and
    liabilities of a change in tax rates is recognized in income in the period
    that includes the enactment date.

    (G) STOCK OPTION PLAN

    The Company accounts for its stock option plan in accordance with the
    provisions of Accounting Principles Board (APB) Opinion No. 25, ACCOUNTING
    FOR STOCK ISSUED TO EMPLOYEES, and related interpretations. As such,
    compensation expense would be recorded only if the current market price of
    the underlying stock exceeded the exercise price on the date of grant. The
    Company also provides pro forma disclosures required by Statement of
    Financial Accounting Standards (SFAS) No. 123, ACCOUNTING FOR STOCK-BASED
    COMPENSATION.

    (H) STATEMENTS OF CASH FLOWS

    The Company paid $2,221,608, $2,321,344 and $2,335,890 for interest in 1999,
    1998 and 1997, respectively. Additionally, the Company paid $1,121,865,
    $737,210 and $486,000 for income taxes in 1999, 1998 and 1997, respectively.
    (See note 4 for non-cash financing activities.)

    (I) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

    The Company reviews long-lived assets and certain identifiable intangibles
    for impairment whenever events or changes in circumstances indicate that the
    carrying amount of an asset may not be recoverable. Recoverability of assets
    to be held and used is measured by a comparison of the carrying amount of an
    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. Assets to be disposed of are reported at the
    lower of the carrying amount or fair value less costs to sell.

    (J) FAIR VALUE OF FINANCIAL INSTRUMENTS

    The Company defines the fair value of a financial instrument as the amount
    at which the instrument could be exchanged in a current transaction between
    willing parties. Financial instruments in the accompanying financial
    statements include accounts receivable, accounts payable and debt. The
    carrying values of accounts receivable and accounts payable approximate fair
    value.

    The estimated fair values of the secured revolving line of credit, secured
    term notes and the subordinated notes approximate their carrying values at
    December 31, 1999 and 1998.

    (K) USE OF ESTIMATES

    The preparation of financial statements in conformity with generally
    accepted accounting principles requires management to make estimates and
    assumptions that affect the reported amounts of assets and liabilities and
    disclosure of contingent assets and liabilities at the date of the financial
    statements and the reported amounts of revenues and expenses during the
    reporting period. Actual results could differ from those estimates.

                                       22
<PAGE>
                             ZIMMERMAN SIGN COMPANY

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 1998

(1) GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
    (L) NET INCOME PER SHARE

    Basic earnings per share (EPS) is computed by dividing income applicable to
    common stockholders by the weighted-average number of common shares
    outstanding for the period. Diluted EPS reflects the potential dilution that
    could occur if securities or other contracts to issue common stock were
    exercised or converted into common stock or resulted in the issuance of
    common stock that then shared in earnings of the entity. Income applicable
    to common stock gives effect to preferred stock dividends and accretion of
    preferred stock for the difference between carrying value and liquidation
    preference.

    Shares used in calculating basic and diluted net income per share are as
    follows at December 31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                1999        1998        1997
                                              ---------   ---------   ---------
<S>                                           <C>         <C>         <C>
Weighted-average common shares
  outstanding...............................  1,269,549   1,854,692   1,854,692
Dilutive securities--common stock options...        455       9,546       1,200
                                              ---------   ---------   ---------
Weighted-average common and potentially
  dilutive shares outstanding...............  1,270,004   1,864,238   1,855,892
                                              =========   =========   =========
</TABLE>

    Stock options and warrants totaling 916,059 shares in 1999 and 1,263,714
    shares in 1998 were excluded from the 1999 and 1998 net income per share
    calculations, respectively, as they were antidilutive. There were no
    antidilutive options or warrants during 1997.

    (M) RECLASSIFICATIONS

    Certain reclassifications have been made to the 1998 and 1997 financial
    statements to conform to the 1999 presentation.

(2) INVENTORIES

    A summary of inventories at December 31, 1999 and 1998 follows:

<TABLE>
<CAPTION>
                                                        1999          1998
                                                     -----------   -----------
<S>                                                  <C>           <C>
Raw materials......................................  $ 4,282,948     6,395,734
Work in process....................................    7,326,518     7,139,441
Finished goods.....................................    4,471,920     3,236,312
                                                     -----------   -----------
                                                     $16,081,386    16,771,487
                                                     ===========   ===========
</TABLE>

                                       23
<PAGE>
                             ZIMMERMAN SIGN COMPANY

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 1998

(3) PROPERTY, PLANT AND EQUIPMENT

    A summary of property, plant and equipment at December 31, 1999 and 1998
follows:

<TABLE>
<CAPTION>
                                                          1999         1998
                                                       ----------   ----------
<S>                                                    <C>          <C>
Land.................................................  $  262,930      262,930
Building.............................................   1,587,312    1,587,312
Manufacturing equipment..............................   2,693,086    2,733,752
Transportation equipment.............................      81,890      120,549
Leasehold improvements...............................   1,997,313    1,474,343
Office furniture and equipment.......................   1,824,915    1,962,187
                                                       ----------   ----------
                                                        8,447,446    8,141,073
Less accumulated depreciation and amortization.......   5,093,456    5,183,147
                                                       ----------   ----------
                                                       $3,353,990    2,957,926
                                                       ==========   ==========
</TABLE>

(4) LONG-TERM DEBT AND REDEEMABLE PREFERRED STOCK

    Long-term debt consists of the following at December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                        1999          1998
                                                     -----------   -----------
<S>                                                  <C>           <C>
Secured revolving line of credit with a bank, due
  September 30, 2001, monthly interest at prime
  plus .25% or LIBOR plus 2.75% (8.75% to 8.88% at
  December 31, 1999)...............................  $14,925,000    15,175,000
Secured term notes payable to a bank, due between
  October 1, 2002 and October 1, 2005, monthly
  payments of $97,250 plus interest at prime plus
  .25% to 1.5% or LIBOR plus 2.75% to 4.0% (8.75%
  to 8.88% at December 31, 1999)...................    4,377,695     5,305,500
Subordinated notes, $4,000,000 principal amount,
  due September 30, 2005, interest payable
  quarterly at 12%, quarterly payments of principal
  of $500,000 due beginning September 30, 2003 net
  of discount of $66,454...........................    3,933,546     3,921,988
                                                     -----------   -----------
                                                      23,236,241    24,402,488
Less current installments..........................    1,219,000     1,167,000
                                                     -----------   -----------
                                                     $22,017,241    23,235,488
                                                     ===========   ===========
</TABLE>

    On September 30, 1998, the Company entered into new credit facilities with
    its existing lender totaling $23,500,000 (of which $14,925,000 is
    outstanding on the revolving credit line and $4,377,695 is outstanding on
    the term notes at December 31, 1999) to replace an existing credit facility.

    Also, on September 30, 1998, the Company entered into a Senior Subordinated
    Note, Preferred Stock and Warrant Purchase Agreement (the Agreement) with
    Bank of America Capital Investors and certain members of Company management
    pursuant to which the Company issued $4,000,000 of

                                       24
<PAGE>
                             ZIMMERMAN SIGN COMPANY

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 1998

(4) LONG-TERM DEBT AND REDEEMABLE PREFERRED STOCK (CONTINUED)
    senior subordinated notes (Notes) and 52,500 shares of 8% Series A Preferred
    Stock, which has a liquidation and redemption value of $5,250,000 and is
    mandatorily redeemable on September 30, 2006 (Refinancing Transaction). The
    Series A Preferred Stock is also redeemable at the option of the Company and
    if redeemed prior to September 30, 2003, the redemption value would increase
    between 1% and 5%. In connection with the issuance of the Notes and Series A
    Preferred Stock, the Company issued warrants representing the right to
    purchase up to 37% of the Company's common stock (161,880 warrants related
    to the Notes and 1,036,034 warrants related to the Series A Preferred Stock)
    at an exercise price of $3.79 per share, the approximate market price of the
    common stock at the transaction date. The carrying values of the Notes and
    Series A Preferred Stock were reduced to reflect the estimated fair value of
    the warrants, $0.70 per share, which has been included in additional paid-in
    capital. Additionally, Series A Preferred Stock issuance costs of $250,310
    were netted against the proceeds received upon issuance and the subordinated
    debt issuance costs of $190,743 are included in other assets and are being
    amortized over the term of the related debt. The Notes and Series A
    Preferred Stock are being accreted from their current carrying values to
    their redemption values over the lives of the respective instruments using
    the interest method.

    During January 1999, the Company purchased 357,143 shares of its common
    stock from its largest stockholder at a cost of $625,000 in cash and 6,250
    shares of the Company's 6% Series C Preferred Stock, which has a liquidation
    and redemption value of $625,000. Additionally, the Company purchased
    228,000 shares of its common stock from an officer of the Company at a cost
    of $98,000 in cash and 7,000 shares of the Company's 6% Series B Preferred
    Stock, which has a liquidation and redemption value of $700,000. The Series
    B and Series C Preferred Stock are subordinate to the Company's Series A
    Preferred Stock. The Company had 1,269,549 shares of common stock
    outstanding immediately following the aforementioned stock purchases. In
    connection with the aforementioned stock purchases, the Company cancelled
    343,655 of its outstanding warrants. The cancelled warrants were not
    included in the determination of the Notes and Series A Preferred Stock
    carrying values as cancellation was intended under the conditions of the
    Agreement. At December 31, 1999, common shares outstanding assuming exercise
    of the outstanding options (including 35,921 options that have not yet been
    granted) and warrants would be 2,308,808.

    On September 30, 1998, the Company repaid its existing $10,000,000
    subordinated loan maturing in 2001 and paid the $1,000,000 dividend payable
    (see note 5). As part of the Refinancing Transaction described above, debt
    issuance costs of $369,007 (net of related tax effects) associated with the
    retired borrowings were charged to income as an extraordinary item. These
    costs were formerly being amortized over the life of the subordinated notes.

    The credit agreements related to the revolving line of credit and term notes
    and subordinated notes contain certain restrictive covenants, including
    restrictions on additional indebtedness, investments in or advances to
    others, acquisitions of other businesses, declaration and payment of
    dividends and repurchase of capital stock. The revolving line of credit and
    term notes payable are secured by all of the Company's assets including
    inventory and accounts receivable.

    The Company has limited involvement with derivative financial instruments
    and uses them principally to manage well-defined interest rate risks.
    Interest rate collar agreements are used to reduce the potential impact of
    fluctuations in interest rates on floating-rate long-term debt. At
    December 31,

                                       25
<PAGE>
                             ZIMMERMAN SIGN COMPANY

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 1998

(4) LONG-TERM DEBT AND REDEEMABLE PREFERRED STOCK (CONTINUED)
    1999, the Company has one three-year interest rate collar agreement for
    notional amounts aggregating $10,000,000. The agreements entitle the Company
    to receive or pay the counterparty (a major bank) on a quarterly basis, the
    amount, if any, by which the Company's interest rates on floating-rate
    long-term debt exceed or are less than the ceiling or floor rates (reset
    quarterly) under the agreements. The net amounts paid by the Company during
    the years ended December 31, 1999 and 1998 were not material to the
    financial statements.

    The aggregate maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
                        YEAR ENDING
                        DECEMBER 31,
                        ------------
<S>                                                           <C>
2000........................................................  $ 1,219,000
2001........................................................   16,144,000
2002........................................................    1,021,028
2003........................................................    1,337,000
2004 and thereafter.........................................    3,515,213
                                                              -----------
                                                              $23,236,241
                                                              ===========
</TABLE>

(5) STOCKHOLDERS' DEFICIT

    During the year ended December 31, 1996, the Company declared a dividend to
    its stockholders of $19,701,000. At December 31, 1997, $1,000,000 of the
    dividend was unpaid due to restrictive covenants of the subordinated notes
    and, accordingly, was presented as a payable in the accompanying balance
    sheet. On September 30, 1998, the Company paid the dividend as part of the
    Refinancing Transaction (see note 4).

(6) STOCK OPTIONS

    In November 1996, the Company adopted a stock option plan (the Plan) under
    which 185,000 shares of common stock are reserved for issuance at exercise
    prices which are equal to the market value of the common stock at the date
    of grant. The Plan provides for the grant of incentive stock options to
    employees, officers and directors. The Company did not grant options in
    1999. During 1998 and 1997, the Company granted options to acquire 61,800
    shares and 87,279 shares of common stock at $3.79 and $3.42 per share,
    respectively. The options granted during 1998 vest over a period of 4 years
    and expire 5 years after the date of grant. The options granted during 1997
    are fully vested and can be exercised at any time through 2005. No options
    were exercised during 1999, 1998 and 1997.

    The per share weighted-average fair value of stock options granted during
    1998 and 1997 was $1.14 and $1.27, respectively, on the date of grant using
    the Black-Scholes option-pricing model with the following weighted-average
    assumptions: 5.10% in 1998 and 6.59% in 1997, and an expected volatility of
    21% over the life of the options.

    The Company applies APB Opinion No. 25 in accounting for its Plan and,
    accordingly, no compensation cost has been recognized for its stock options
    in the financial statements. Had the Company determined compensation cost
    based on the fair value at the grant date for its stock options under

                                       26
<PAGE>
                             ZIMMERMAN SIGN COMPANY

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 1998

(6) STOCK OPTIONS (CONTINUED)
    SFAS No. 123, the Company's net income and diluted earnings per share for
    the years ended December 31, 1999, 1998 and 1997 would have been reduced to
    the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                              1999         1998         1997
                                           ----------   ----------   ----------
<S>                                        <C>          <C>          <C>
Net income:
  As reported............................  $2,037,970    1,257,154      949,337
  Pro forma..............................   2,026,075    1,247,553      876,180
Diluted net income per share:
  As reported............................        1.14          .61          .51
  Pro forma..............................        1.13          .60          .47
</TABLE>

(7) LEASES

    The Company has noncancelable operating leases, primarily for office and
    plant facilities in Dallas, Jacksonville and Tyler, Texas, that expire on
    various dates through 2004. The operating leases contain options at the end
    of the lease terms to extend the leases at the then fair rental value for a
    period of up to five years.

    Future minimum lease payments and sublease receipts under operating lease
    commitments with initial or noncancelable terms in excess of one year, at
    inception, as of December 31, 1999 follow:

<TABLE>
<CAPTION>
                                                         OPERATING    OPERATING
                      YEAR ENDING                          LEASE      SUBLEASE
                     DECEMBER 31,                         PAYMENTS    RECEIPTS
                     ------------                        ----------   ---------
<S>                                                      <C>          <C>
2000...................................................  $  674,191     27,000
2001...................................................     470,245         --
2002...................................................     362,632         --
2003...................................................     142,092         --
2004 and thereafter....................................      63,417         --
                                                         ----------    -------
  Total................................................  $1,712,577     27,000
                                                         ==========    =======
</TABLE>

    Total rental expense for operating leases was approximately $711,000 in
    1999, $574,000 in 1998 and $346,000 in 1997. Total sublease rental income
    for operating leases was approximately $65,000 in 1999, 1998 and 1997.

(8) INCOME TAXES

    In conjunction with the spin-off of the Company from its former parent,
    Holdings, on December 31, 1996, deferred tax assets of $527,035, formerly
    recorded by Holdings on its financial statements, became available to the
    Company and were recorded as a reduction of accumulated deficit on
    January 1, 1997.

                                       27
<PAGE>
                             ZIMMERMAN SIGN COMPANY

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 1998

(8) INCOME TAXES (CONTINUED)
    Income tax expense for the years ended December 31, 1999, 1998 and 1997
    differed from the amounts computed by applying the U.S. federal income tax
    rate of 34% to income before federal income taxes and extraordinary item as
    a result of the following:

<TABLE>
<CAPTION>
                                                   1999        1998       1997
                                                ----------   --------   --------
<S>                                             <C>          <C>        <C>
Computed "expected" tax expense...............  $1,060,517   857,544    498,618
Nondeductible meals and entertainment
  expenses....................................       7,672     5,791      8,206
Other.........................................      13,009    32,692     10,362
                                                ----------   -------    -------
                                                $1,081,198   896,027    517,186
                                                ==========   =======    =======
</TABLE>

    The components of federal income tax expense for the years ended
    December 31, 1999, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
                                                   1999        1998       1997
                                                ----------   --------   --------
<S>                                             <C>          <C>        <C>
Current expense...............................  $  940,716   951,555    564,698
Deferred expense (benefit)....................     140,482   (55,528)   (47,512)
                                                ----------   -------    -------
                                                $1,081,198   896,027    517,186
                                                ==========   =======    =======
</TABLE>

    The tax effects of temporary differences that give rise to significant
    portions of the deferred tax assets at December 31, 1999 and 1998 are
    presented below:

<TABLE>
<CAPTION>
                                                            1999       1998
                                                          --------   --------
<S>                                                       <C>        <C>
Accounts receivable allowance for doubtful accounts.....  $ 34,000     34,000
Inventories, principally due to differences of inventory
  capitalization for tax purposes.......................   396,772    485,771
Accrued vacation........................................    99,139     99,156
Property, plant and equipment, principally due to
  differences in depreciation...........................   (40,318)    11,148
                                                          --------   --------
                                                          $489,593    630,075
                                                          ========   ========
</TABLE>

    In assessing the realizability of deferred tax assets, management considers
    whether it is more likely than not that realization of some portion or all
    of the deferred 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 level of
    historical taxable income and projections for future taxable income over the
    periods that the deferred tax assets are deductible, management believes it
    is more likely than not that the Company will realize the benefits of these
    deductible differences.

(9) EMPLOYEE BENEFITS

    The Company makes payments to a multi-employer retirement plan for certain
    employees in accordance with the bargaining unit contracts. Under the terms
    of the union contracts, the Company is obligated to contribute 3% of gross
    wages paid to covered employees. Total expense paid for

                                       28
<PAGE>
                             ZIMMERMAN SIGN COMPANY

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 1998

(9) EMPLOYEE BENEFITS (CONTINUED)
    employees represented by the bargaining units was approximately $279,000 in
    1999, $220,000 in 1998 and $180,000 in 1997.

    In August 1995, the Company began sponsoring a retirement plan in accordance
    with Section 401(k) of the Internal Revenue Code that allows substantially
    all employees not covered by collective bargaining agreements to
    participate. The Company's contribution to the retirement plan is determined
    based on 50% of each dollar an employee contributes with a maximum of 3% of
    gross wages per employee. Contributions were approximately $71,000 in 1999,
    $58,000 in 1998 and $63,000 in 1997.

(10) RELATED PARTY TRANSACTIONS

    Included in long-term debt is approximately $779,000 of subordinated notes
    due to certain members of Company management.

(11) CONCENTRATIONS OF RISK

    The Company has certain customers, primarily in the petroleum retailing and
    automotive manufacturing industries, which individually account for greater
    than 10% of net sales in 1999, 1998 and 1997. In 1999, the Company had three
    such customers accounting for approximately $7,800,000, $6,900,000 and
    $5,200,000 of net sales. In 1998, the Company had three such customers
    accounting for approximately $7,500,000, $6,000,000 and $5,600,000 of net
    sales. In 1997, the Company had two such customers accounting for
    approximately $9,500,000 and $5,800,000 of net sales. Additionally, accounts
    receivable from one customer exceeded 10% of total accounts receivable at
    December 31, 1998.

(12) CONTINGENCIES

    The Company is a party to various legal proceedings arising in the ordinary
    course of business. While any proceeding or litigation has an element of
    uncertainty, management believes that the final outcome will not have a
    materially adverse effect on the Company's financial position, results of
    operations or liquidity.

                                       29
<PAGE>
                                                                      SCHEDULE 1

                             ZIMMERMAN SIGN COMPANY
                       VALUATION AND QUALIFYING ACCOUNTS
                      THREE YEARS ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                ADDITIONS
                                                  BALANCE AT    CHARGED TO                    BALANCE AT
                                                 BEGINNING OF   COSTS AND                       END OF
ALLOWANCE FOR DOUBTFUL ACCOUNTS                     PERIOD       EXPENSES    DEDUCTIONS (A)     PERIOD
-------------------------------                  ------------   ----------   --------------   ----------
<S>                                              <C>            <C>          <C>              <C>
Year ended December 31, 1999...................    $100,000       2,672          (2,672)        100,000
Year ended December 31, 1998...................     100,000       9,176          (9,176)        100,000
Year ended December 31, 1997...................     100,000       7,965          (7,965)        100,000
</TABLE>

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

(A) Write-off of uncollectible accounts.

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

    Information required by this Item is incorporated by reference from the
sections entitled "Election of Directors" and "Executive Officers" in the
Company's Proxy Statement for its 2000 Annual Meeting of Stockholders.
Information about Executive Officers of the Company is included in Item 1 of
Part I of this Annual Report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

    Information required by this Item is incorporated by reference from the
section entitled "Executive Compensation" in the Company's Proxy Statement for
its 2000 Annual Meeting of Stockholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Information required by this Item is incorporated by reference from the
section entitled "Principal Stockholders" in the Company's Proxy Statement for
its 2000 Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Information required by this Item is incorporated by reference from the
section entitled "Related Party Transactions" in the Company's Proxy Statement
for its 2000 Annual Meeting of Stockholders.

                                    PART IV

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

<TABLE>
<S>                     <C>
(a)(1)                  Financial Statements: See Index to Financial Statements and
                        Schedule 1 on page 15.
(a)(2)                  Financial Statement Schedule: See Index to Financial
                        Statements and Schedule 1 on page 15.
(a)(3)                  Exhibits: See Exhibit Index on page 32.
(b)                     Reports on Form 8-K: No report on Form 8-K was filed during
                        the quarter ended December 31, 1999.
</TABLE>

                                       30
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or Section 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, on
March 29, 2000.

<TABLE>
<S>                                                    <C>  <C>
                                                                   ZIMMERMAN SIGN COMPANY
                                                                        (REGISTRANT)

                                                       By:            /s/ DAVID E. ANDERSON
                                                            -----------------------------------------
                                                                        David E. Anderson
                                                                             CHAIRMAN
                                                                  (PRINCIPAL EXECUTIVE OFFICER)

                                                       By:            /s/ JEFFREY P. JOHNSON
                                                            -----------------------------------------
                                                                        Jeffrey P. Johnson
                                                            VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
                                                                  (PRINCIPAL ACCOUNTING OFFICER)
</TABLE>

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated as of the 29th day of March, 2000.

<TABLE>
<CAPTION>
                        NAME                                      TITLE                    DATE
                        ----                                      -----                    ----
<C>                                                    <S>                          <C>
                /s/ DAVID E. ANDERSON
     -------------------------------------------       Director, Chairman             March 29, 2000
                  David E. Anderson

                  /s/ TOM E. BONER
     -------------------------------------------       Director, President            March 29, 2000
                    Tom E. Boner

                 /s/ CARL A. GOLDMAN
     -------------------------------------------       Director                       March 29, 2000
                   Carl A. Goldman

                /s/ ANDREA P. JOSELIT
     -------------------------------------------       Director                       March 29, 2000
                  Andrea P. Joselit

                /s/ ROBERT F. PERILLE
     -------------------------------------------       Director                       March 29, 2000
                  Robert F. Perille
</TABLE>

                                       31
<PAGE>
                             ZIMMERMAN SIGN COMPANY
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
       EXHIBIT
         NO.                                       TITLE
---------------------                              -----
<S>                     <C>
 3.1                    Amended and Restated Articles of Incorporation of Zimmerman
                        Sign Company. (1)
 3.2                    Amended and Restated Bylaws of Zimmerman Sign Company,
                        amended and restated as of September 29, 1998. (1)
 4.1                    Distribution Agreement, dated as of November 26, 1996, by
                        and between Zimmerman Sign Company and Independence Holding
                        Company. (2)
 4.2                    Registration Rights Agreement, dated as of September 30,
                        1998, by and between Zimmerman Sign Company, Continental
                        Illinois Venture Corporation, MIG Partners VIII and certain
                        shareholders. (1)
 4.3                    Stockholders Agreement, dated as of September 30, 1998, by
                        and between Zimmerman Sign Company and certain shareholders.
                        (1)
 10.1                   Second Amended and Restated Revolving Credit and Term Loan
                        Agreement, dated as of September 30, 1998, by and between
                        Zimmerman Sign Company and Comerica Bank-Texas. (1)
 10.2                   Senior Subordinated Note, Preferred Stock and Warrant
                        Purchase Agreement, dated as of September 30, 1998, by and
                        between Zimmerman Sign Company, Continental Illinois Venture
                        Corporation, MIG Partners VIII and certain management
                        purchasers. (1)
 10.3                   Stock Option Plan of Zimmerman Sign Company, dated as of
                        December 1, 1996. (2)
 10.9                   Share Option Purchase Agreement, dated as of September 30,
                        1998, by and between Zimmerman Sign Company and certain
                        shareholders. (1)
 10.10                  Purchase Agreement, dated as of September 30, 1998, by and
                        between Zimmerman Sign Company and David E. Anderson. (1)
 10.11                  Letter Agreement, dated as of September 30, 1998, by and
                        between Zimmerman Sign Company and certain shareholders. (1)
 10.12                  Form of 12% Senior Subordinated Note issued by Zimmerman
                        Sign Company in connection with the Senior Subordinated
                        Note, Preferred Stock and Warrant Purchase Agreement, dated
                        as of September 30, 1998. (1)
 10.13                  Form of Stock Purchase Warrants issued by Zimmerman Sign
                        Company in connection with the Senior Subordinated Note,
                        Preferred Stock and Warrant Purchase Agreement, dated as of
                        September 30, 1998. (1)
 27.1                   Financial Data Schedule.
 99.1                   Registration Statement on Form 10/A-2 filed by Zimmerman
                        Sign Company with the Securities and Exchange Commission and
                        declared effective on December 16, 1996. (3)
</TABLE>

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

(1) Previously filed as an exhibit to the Company's Form 10-Q for the quarter
    ended September 30, 1998 and incorporated herein by reference.

(2) Previously filed as an exhibit to the Company's Registration Statement on
    Form 10 (No. 000-21737) and incorporated herein by reference.

(3) Previously filed (No. 000-21737).

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