<PAGE>
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                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                  FORM 10-K/A
 
                                AMENDMENT NO. 1
 
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
 
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
                         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 Offices)                      (Zip Code)
</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 or 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.  / /
 
    1,854,692 shares of common stock were outstanding as of March 17, 1997.
 
    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 March 17, 1997 was $2,335,968.
 
    The Exhibit Index is located on page 35 of this filing.
 
Documents Incorporated by Reference: none
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<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,
financial services, and convenience store industry groupings are the most
significant.
 
    Zimmerman's typical customer is a United States based retailer which
operates at least several hundred branded locations; 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 interior
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 a small 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 from
April, 1982 until December 31, 1996 at which time it became a public company
through Independence Holding Company's distribution of its ownership of
Zimmerman to Independence Holding Company'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 $4.0 billion to $6.0 billion
in sales per annum.
 
    Zimmerman's management believes that its target market, which consists of
large national retailers requiring either long run or short run production
quantity signage, generates sales of approximately $1.0 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 (compared
on the basis of estimated annual net sales) approximately four larger firms, two
to three firms of about the same size and approximately ten smaller firms. 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 Acme Wiley Corporation, Collins
Sign Company, Inc., Cummings Incorporated, Dualite, Inc., Everbrite, Inc.,
Federal Sign Company, Milwaukee Sign Company, Inc., Mulholland Harper Co.,
Plasti-Line, Inc. and Young Electric Sign Company. Zimmerman's competitors for
the business of large, national and regional retailing organizations have
estimated annual sales up to $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, convenience stores and financial services organizations. In 1996,
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 1996, the Company had one petroleum industry customer, Citgo, which
accounted for approximately 22% of net sales. The Company has provided sign
products to this customer since the 1970's and believes that, in all material
respects, it is the customer's sole sign supplier. Although no other major
customer accounted for more than 10% of sales in 1996, sales to two customers
accounted for 10% and 9% of net sales, respectively. These customers are a
petroleum retailer and an automotive company.
 
    The Company contracts with its major customers under a variety of
arrangements which range from one to three year contracts. Most 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
 
    Zimmerman had, on average, 440 employees during 1996 of which 338 employees
were covered under collective bargaining agreements.
 
BACKLOG
 
    As of December 31, 1996, Zimmerman's backlog of unshipped orders totaled
$20.7 million compared to $24.1 million as of December 31, 1995. Customer
commitments to order signs for shipment under 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
 
                                       4
<PAGE>
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 quarter 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.
 
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
 
Tyler          Corporate Headquarters
               and Customer Service              12,000        Leased
 
Dallas         Sales and Administrative           1,000        Leased
</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 Zimmerman. 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
 
    The following matters were approved by Zimmerman's shareholders' unanimous
written consent during the fourth quarter of 1996:
 
    1.  November 1, 1996--the declaration of a special dividend in the aggregate
       amount of $19,701,000 to the Company's shareholders
 
    2.  December 3, 1996--a 3,863.94 for 1 stock split of the Company's common
       stock, implementation of the Company's Stock Option Plan, Amended and
       Restated Articles of Incorporation, and Amended and Restated Bylaws
 
    3.  December 30, 1996--the election of Carl A. Goldman and Roy T.K. Thung as
       directors
 
                                       5
<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.
 
    During January and February 1997, based on information available from market
makers and NASDAQ, the Company believes the per share prices for the Company's
Common Stock were as follows:
 
<TABLE>
<CAPTION>
       PRICE                  BID                  ASKED
--------------------  --------------------  --------------------
  HIGH        LOW       HIGH        LOW       HIGH        LOW
---------  ---------  ---------  ---------  ---------  ---------
<S>        <C>        <C>        <C>        <C>        <C>
$    4.50  $    2.50  $    3.25  $    2.50  $    4.50  $    3.00
</TABLE>
 
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 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,
                                                             -----------------------------------------------------
                                                               1996       1995       1994       1993       1992
                                                             ---------  ---------  ---------  ---------  ---------
                                                                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                          <C>        <C>        <C>        <C>        <C>
STATEMENTS OF OPERATIONS:
Net Sales..................................................  $  41,275  $  41,667  $  36,427  $  33,001  $  23,941
Costs and Expenses:
  Cost of goods sold.......................................     32,415     32,529     28,227     26,143     19,949
  Selling, general and administrative expenses.............      4,428      4,155      4,024      3,721      3,294
  Management fees..........................................        600        600        600        600        600
  Interest expense, net....................................        996        782        433        291        365
  Stock distribution costs.................................      1,106     --         --         --         --
                                                             ---------  ---------  ---------  ---------  ---------
  Total costs and expenses.................................     39,545     38,066     33,284     30,755     24,208
                                                             ---------  ---------  ---------  ---------  ---------
Income (loss before) federal income taxes..................      1,730      3,601      3,143      2,246       (267)
Federal income taxes.......................................        588      1,224      1,069        768        (91)
                                                             ---------  ---------  ---------  ---------  ---------
Net income (loss)..........................................  $   1,142  $   2,377  $   2,074  $   1,478  $    (176)
                                                             ---------  ---------  ---------  ---------  ---------
                                                             ---------  ---------  ---------  ---------  ---------
BALANCE SHEET DATA:
  Total assets.............................................  $  28,154  $  25,957  $  22,287  $  18,097  $  13,578
  Current liabilities......................................      9,462      7,839      8,129      6,287      3,970
  Long-term debt, excluding current installments...........     28,555      9,422      7,839      4,715      3,900
  Stockholders' equity (deficit)(1)........................     (9,863)     8,696      6,319      7,095      5,618
PER SHARE DATA(2)
  Cash dividends declared per common share.................  $   10.62     --      $    1.54     --         --
  Net income (loss) per common share.......................  $     .62  $    1.28  $    1.12  $     .80  $    (.09)
  Book value per common share..............................  $   (5.32) $    4.69  $    3.41  $    3.83  $    3.03
</TABLE>
 
------------------------
 
(1) Dividends of $2,850,000 and $19,701,000 were declared in 1994 and 1996,
    respectively.
 
(2) 1,854,692 shares are outstanding all periods.
 
                                       6
<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 Independence Holding Company 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 focused 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 1995, 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 were essentially flat from 1995 to 1996, decreasing 0.9%
from $41.7 million to $41.3 million, primarily because the Company did not add
any new high volume customers in 1996 and several projects contemplated by
existing customers were delayed or not implemented. 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 1996, and accounted for approximately 6% and 10%
of total sales in 1995 and 1994, respectively. Since 1994, substantially all
international sales have been to financial institutions in Mexico. Management of
Zimmerman believes that through its established contacts in Mexico, Zimmerman is
positioned to obtain orders if the Mexican economy improves. Management of
Zimmerman intends to pursue international opportunities and continue to expand
sales of products and services to its domestic customers.
 
                                       7
<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,
                                                              -------------------------------
                                                                1996       1995       1994
                                                              ---------  ---------  ---------
<S>                                                           <C>        <C>        <C>
Net sales...................................................      100.0%     100.0%     100.0%
Cost of goods sold..........................................       78.5       78.1       77.5
Selling, general and administrative expenses................       10.7       10.0       11.1
Management fees.............................................        1.5        1.4        1.6
Interest expense, net.......................................        2.4        1.9        1.2
Stock distribution costs....................................        2.7     --         --
                                                              ---------  ---------  ---------
  Total costs and expenses..................................       95.8       91.4       91.4
                                                              ---------  ---------  ---------
Income before federal income taxes..........................        4.2        8.6        8.6
Federal income taxes........................................        1.4        2.9        2.9
                                                              ---------  ---------  ---------
Net income..................................................        2.8%       5.7%       5.7%
                                                              ---------  ---------  ---------
                                                              ---------  ---------  ---------
</TABLE>
 
1996 COMPARED TO 1995
 
    Net sales for 1996 decreased $0.4 million, or 0.9%, from $41.7 million in
1995 to $41.3 million in 1996. The decline in net sales resulted primarily from
a decrease in sales to financial institutions of approximately $2.5 million,
$2.1 million of which was associated with a decline in sales to Mexican banking
institutions, and a decrease in sales to fast food customers of $0.8 million.
Declines in sales to these groups were partially offset by increases in sales to
the Company's automotive retailing and other retailing customers.
 
    Cost of goods sold decreased $0.1 million, or 0.4% from $32.5 million in
1995 to $32.4 million in 1996. This decrease was primarily a result of the net
sales decrease as noted above. As a percentage of net sales, cost of goods sold
increased from 78.1% in 1995 to 78.5% in 1996. Manufacturing costs increased as
a percentage of net sales in 1996 because of higher costs incurred on certain
automotive account products and higher costs associated with discontinuing
certain products.
 
    Selling, general, and administrative expenses increased $0.2 million, or
6.6%, from $4.2 million in 1995 to $4.4 million in 1996. This increase was
caused by general inflation and increased customer service personnel.
 
    In 1996, the Company incurred $1.1 million of expense associated with its
financial restructuring and spin-off from its former parent, Independence
Holding Company. These expenses were primarily associated with payments in
consideration of cancellation of all outstanding options to purchase Zimmerman
Common Stock, a fee paid to an officer of Zimmerman in connection with the
refinancing of Zimmerman's indebtedness, and other consulting, legal and
accounting, and bank loan arrangement fees.
 
    Management fees remained unchanged at $0.6 million in 1996. The Company's
management fee arrangement terminated at December 31, 1996 when it was spun-off
from Independence Holding Company.
 
    Interest expense increased $0.2 million or 27.4% from $0.8 million in 1995
to $1.0 million in 1996. Higher interest expense was incurred to finance
restructuring costs associated with the Company's spin-off from Independence
Holding Company and, to a lesser extent, to finance increased working capital
requirements in 1996.
 
                                       8
<PAGE>
    Income before federal income taxes decreased $1.9 million or 51.9% from $3.6
million in 1995 to
$1.7 million in 1996. This decrease was primarily the result of causes explained
above, most notably expenses related to the Company's restructuring and spin-off
from Independence Holding Company, a lower gross profit margin, and higher
staffing expenses resulting from an increase in personnel.
 
    The Company's net income applicable to common shares was $1.1 million or
$0.62 per share for the year ended December 31, 1996 compared to $2.4 million or
$1.28 per share in 1995. In 1996, the Company incurred additional interest
expenses and stock distribution costs of approximately $1.4 million or, on an
after tax basis, $0.48 per share, in conjunction with its spin-off from
Independence Holding Company on December 31, 1996.
 
1995 COMPARED TO 1994
 
    Net sales for 1995 increased by $5.2 million, or 14.4%, from $36.4 million
in 1994 to $41.6 million in 1995. The increase in net sales resulted primarily
from an increase in sales to petroleum marketing customers, which was offset, in
part, by a $2.9 million decline in sales to financial institutions, $2.3 million
of which was associated with a decline in sales to Mexican banking institutions.
A broadened product line, increased sales to a significant customer, and brand
expansion activities with several petroleum marketing customers contributed to
increased sales to the petroleum sector of Zimmerman's business. Sales to
financial institutions in Mexico decreased significantly in 1995 as a result of
difficult economic conditions in Mexico.
 
    Cost of goods sold increased $4.3 million, or 15.2%, from $28.2 million in
1994 to $32.5 million in 1995. This increase was primarily a result of net sales
increases as noted above. As a percentage of net sales, cost of goods sold
increased from 77.5% in 1994 to 78.1% in 1995. Manufacturing costs increased as
a percentage of net sales in 1995 because of higher costs incurred on Mexican
bank projects, and certain manufacturing cost overruns associated with new
products sold to petroleum marketing customers.
 
    Selling, general and administrative expenses increased from $4.0 million in
1994 to $4.2 million in 1995, primarily as a result of an increased level of net
sales. Selling, general and administrative expenses, as a percent of net sales,
declined from 11.1% in 1994 to 10.0% in 1995.
 
    Interest expense, net, increased $0.4 million from $0.4 million in 1994 to
$0.8 million in 1995. The increase was primarily attributable to higher interest
rates and increased debt levels associated with expanded working capital
financing requirements.
 
    Federal income taxes increased from $1.1 million in 1994 to $1.2 million in
1995. This increase is due to higher income levels in 1995. Zimmerman's federal
tax rate in 1994 and 1995 was 34%.
 
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.
 
LIQUIDITY; CAPITAL RESOURCES
 
    Zimmerman's net sales have increased from $23.9 million in 1992 to $41.3
million in 1996. 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, including accrued
expenses and customer deposits).
 
                                       9
<PAGE>
    Although backlog declined in 1996 and sales decreased slightly during 1996,
operating working capital increased $2.1 million to $16.5 million. Accounts
receivable increased $0.9 million primarily because of slower payments from one
customer. Inventories increased by $0.9 million, as a result of a planned
increase in certain finished goods inventories and, to a lesser extent, as a
result of customers postponing projects. Accounts payable declined by $0.3
million due to payments to vendors. As a result, operating working capital
increased by $2.1 million in 1996.
 
    During 1995, operating working capital increased $4.2 million to $14.4
million. Accounts receivable increased $1.6 million primarily because of
increased net sales and slower payments from one customer. Inventories increased
by $2.2 million, primarily as a result of an increase in net sales and, to a
lesser extent, as a result of customers postponing projects from 1995 to 1996.
Accounts payable declined by $0.4 million due to slight reductions in accruals
and payments to vendors. As a result, operating working capital increased by
$4.2 million in 1995.
 
    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 $24.1 million at December 31, 1995
to $20.7 million at December 31, 1996. Approximately 4% 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.
 
    During 1996, Zimmerman's cash flows used in operations totaled $1.1 million.
Zimmerman also utilized $0.6 million of cash flow on capital expenditures and
paid a $18.7 million cash dividend. These cash requirements were provided by
$20.0 million in increased borrowings and repayment of $0.4 million in notes
receivable due the Company. As a result, cash remained unchanged at $0.1
million.
 
    During 1995, cash flows used in operations totaled $1.5 million. Zimmerman
spent $0.7 million on capital items and borrowed $1.7 million in long-term debt,
resulting in a net decrease in cash of $0.5 million.
 
    Capital projects to reduce product costs, improve product quality, increase
manufacturing efficiency and operating flexibility and expand production
capacity resulted in expenditures of $0.6 million in 1996, compared with $0.7
million in 1995. At December 31, 1996, there were no material commitments for
capital expenditures. 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 the fourth quarter of 1996, the Company refinanced and substantially
increased its bank borrowings, declared a $19.7 million dividend to its
shareholders, of which $18.7 million was paid in cash and $1.0 million is
reflected as a deferred dividend payable, and was spun-off by its former parent
company, Independence Holding Company. In conjunction with these transactions,
Zimmerman entered into a $23.0 million credit facility with one bank which
consists of a $17.0 million Revolving Credit Facility and a $6.0 million Term
Loan. Additionally, the Company entered into a $10.0 million Subordinated Credit
Agreement with another bank. The $10.0 million term loan obtained under the
Subordinated Credit Agreement is guaranteed by a subsidiary of Independence
Holding Company. Significant terms and conditions of the credit facilities with
both banks are described in the Company's audited financial statements and
accompanying footnotes incorporated herein. Due to higher than anticipated
borrowings and lower than anticipated 1996 earnings, the Company was not in
compliance with certain covenants of its credit agreements as of December 31,
1996. The Company's credit agreements were amended, and the Company is in
compliance with the modified terms.
 
    At December 31, 1996, the Company had borrowed $13.7 million under its $17.0
million Revolving Credit Facility. The full amounts of the $6.0 million term
loan and $10.0 million subordinated term loan were outstanding. Zimmerman
believes that its credit facilities will satisfy its planned operational
requirements for 1997. As it indicated in the Form 10A/2 filed with the
Securities and Exchange Commission on
 
                                       10
<PAGE>
December 16, 1996, which document is referenced as Exhibit 99.1 to this Form
10-K, the Company intends to explore the possibility of obtaining equity from
public or private financings, but there can be no assurance that any such equity
financing can be obtained on terms acceptable to the Company.
 
INFLATION
 
    During the periods presented, inflation had a relatively minor effect on
Zimmerman's reported results of operations. In recent years, the U.S. rate of
inflation has been relatively low.
 
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.
 
                                       11
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements and Financial Statement Schedule
 
<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                                -----
<S>                                                                                                          <C>
Independent Auditors' Report...............................................................................          13
 
Financial Statements:
 
  Balance Sheets at December 31, 1996 and 1995.............................................................          14
 
  Statements of Operations for the years ended December 31, 1996, 1995 and 1994............................          15
 
  Statements of Stockholders' Equity (Deficit) for the years ended December 31, 1996, 1995 and 1994........          16
 
  Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994............................          17
 
  Notes to Financial Statements............................................................................          18
 
Financial Statement Schedule as of and for the years ended December 31, 1996, 1995 and 1994:
 
  Schedule II - Valuation and Qualifying Accounts..........................................................          34
</TABLE>
 
                                       12
<PAGE>
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Zimmerman Sign Company:
 
We have audited the financial statements of Zimmerman Sign Company as listed in
the accompanying index. In connection with our audits of the financial
statements, we also have audited the financial statement schedule as listed in
the accompanying index. 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 financial statement
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, 1996 and 1995, and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1996, 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.
 
                                          KPMG Peat Marwick LLP
 
Dallas, Texas
February 7, 1997
 
                                       13
<PAGE>
                             ZIMMERMAN SIGN COMPANY
                                 BALANCE SHEETS
                           DECEMBER 31, 1996 AND 1995
 
<TABLE>
<CAPTION>
                                  ASSETS (NOTE 4)                                        1996           1995
-----------------------------------------------------------------------------------  -------------  -------------
<S>                                                                                  <C>            <C>
Current assets:
  Cash.............................................................................  $     132,483  $     107,756
  Accounts receivable, net of allowance for doubtful accounts of $100,000 in 1996
    and $100,288 in 1995 (note 11).................................................     10,140,903      9,283,962
  Inventories (note 2).............................................................     13,607,758     12,658,987
  Prepaids and other current assets................................................        356,372        282,228
  Receivable from parent company (note 10).........................................        126,453         74,925
  Notes and accrued interest receivable (note 10)..................................       --              400,313
                                                                                     -------------  -------------
    Total current assets...........................................................     24,363,969     22,808,171
Property, plant and equipment, net (note 3)........................................      3,152,903      3,068,611
Other assets.......................................................................        637,069         80,313
                                                                                     -------------  -------------
                                                                                     $  28,153,941  $  25,957,095
                                                                                     -------------  -------------
                                                                                     -------------  -------------
                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
-----------------------------------------------------------------------------------
Current liabilities:
  Current installments of long-term debt (note 4)..................................  $   1,170,000  $     266,750
  Accounts payable.................................................................      5,124,465      5,792,971
  Accrued expenses.................................................................      1,408,615      1,191,888
  Dividend payable (note 5)........................................................      1,000,000       --
  Customer deposits................................................................        758,637        587,101
                                                                                     -------------  -------------
    Total current liabilities......................................................      9,461,717      7,838,710
                                                                                     -------------  -------------
Long-term debt, excluding current installments (note 4)............................     28,555,000      9,422,188
                                                                                     -------------  -------------
Stockholders' equity (deficit) (note 5):
  Preferred stock, $.01 par value. Authorized 2,000,000 shares; none issued........       --             --
  Common stock, $.01 par value. Authorized 15,000,000 shares; 1,854,692 shares
    issued and outstanding (note 6)................................................         18,547         18,547
  Additional paid-in capital.......................................................       --              441,128
  Retained earnings (accumulated deficit)..........................................     (9,881,323)     8,236,522
                                                                                     -------------  -------------
  Total stockholders' equity (deficit).............................................     (9,862,776)     8,696,197
Commitments (notes 7, 9 and 12)
                                                                                     -------------  -------------
                                                                                     $  28,153,941  $  25,957,095
                                                                                     -------------  -------------
                                                                                     -------------  -------------
</TABLE>
 
                See accompanying notes to financial statements.
 
                                       14
<PAGE>
                             ZIMMERMAN SIGN COMPANY
                            STATEMENTS OF OPERATIONS
                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
 
<TABLE>
<CAPTION>
                                                                          1996           1995           1994
                                                                      -------------  -------------  -------------
<S>                                                                   <C>            <C>            <C>
Net sales (note 11).................................................  $  41,275,477     41,666,570     36,426,651
Cost of goods sold..................................................     32,415,051     32,529,430     28,226,620
                                                                      -------------  -------------  -------------
  Gross profit......................................................      8,860,426      9,137,140      8,200,031
Selling, general and administrative expenses........................      4,427,911      4,154,690      4,023,721
Management fees (note 10)...........................................        600,000        600,000        600,000
Interest expense, net...............................................        996,253        781,516        433,482
Stock distribution costs (note 1(a))................................      1,105,917       --             --
                                                                      -------------  -------------  -------------
  Income before federal income taxes................................      1,730,345      3,600,934      3,142,828
Federal income taxes (note 8).......................................        588,317      1,224,317      1,068,595
                                                                      -------------  -------------  -------------
  Net income........................................................  $   1,142,028      2,376,617      2,074,233
                                                                      -------------  -------------  -------------
                                                                      -------------  -------------  -------------
Net income per share................................................  $        0.62           1.28           1.12
                                                                      -------------  -------------  -------------
                                                                      -------------  -------------  -------------
</TABLE>
 
                 See accompanying notes to financial statements
 
                                       15
<PAGE>
                             ZIMMERMAN SIGN COMPANY
 
                  STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
 
<TABLE>
<CAPTION>
                                     PREFERRED STOCK           COMMON STOCK                      RETAINED       TOTAL
                                  ----------------------  ----------------------  ADDITIONAL     EARNINGS    STOCKHOLDERS'
                                    NUMBER                  NUMBER        PAR       PAID-IN    (ACCUMULATED     EQUITY
                                   OF SHARES   PAR VALUE   OF SHARES     VALUE      CAPITAL      DEFICIT)     (DEFICIT)
                                  -----------  ---------  -----------  ---------  -----------  ------------  ------------
<S>                               <C>          <C>        <C>          <C>        <C>          <C>           <C>
Balances at December 31, 1993...          --   $      --   1,854,692   $  18,547     441,128     6,635,672     7,095,340
 
Dividends declared..............          --          --          --          --          --    (2,850,000)   (2,850,000)
 
Net income......................          --          --          --          --          --     2,074,233     2,074,233
                                       -----   ---------  -----------  ---------  -----------  ------------  ------------
 
Balances at December 31, 1994...          --          --   1,854,692      18,547     441,128     5,859,905     6,319,580
 
Net income......................          --          --          --          --          --     2,376,617     2,376,617
                                       -----   ---------  -----------  ---------  -----------  ------------  ------------
 
Balances at December 31, 1995...          --          --   1,854,692      18,547     441,128     8,236,522     8,696,197
 
Dividends declared..............          --          --          --          --    (441,128)  (19,259,873)  (19,701,001)
 
Net income......................          --          --          --          --          --     1,142,028     1,142,028
                                       -----   ---------  -----------  ---------  -----------  ------------  ------------
 
Balances at December 31, 1996...          --   $      --   1,854,692   $  18,547          --    (9,881,323)   (9,862,776)
                                       -----   ---------  -----------  ---------  -----------  ------------  ------------
                                       -----   ---------  -----------  ---------  -----------  ------------  ------------
</TABLE>
 
                See accompanying notes to financial statements.
 
                                       16
<PAGE>
                             ZIMMERMAN SIGN COMPANY
                            STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
 
<TABLE>
<CAPTION>
                                                                           1996           1995           1994
                                                                      --------------  -------------  -------------
<S>                                                                   <C>             <C>            <C>
Cash flows from operating activities:
  Net income........................................................  $    1,142,028  $   2,376,617  $   2,074,233
  Adjustments to reconcile net income to net cash provided by (used
    in) operating activities:
    Depreciation and amortization...................................         525,988        435,590        349,835
    Provision (credit) for losses on accounts receivable............            (288)       (49,712)         5,000
    Changes in operating assets and liabilities:
    Accounts receivable.............................................        (856,653)    (1,507,427)    (2,705,219)
    Inventories.....................................................        (948,771)    (2,161,980)    (2,159,587)
    Prepaids and other current assets...............................         (74,144)      (131,884)       210,131
    Receivable from/payable to parent company.......................         (51,528)       (26,551)     1,557,947
    Accrued interest receivable.....................................        --              (10,346)       (14,967)
    Other assets....................................................        (556,756)       (17,127)        12,394
    Customer deposits...............................................         171,536       (870,437)       456,366
    Accounts payable and accrued expenses...........................        (451,779)       464,457      1,385,655
                                                                      --------------  -------------  -------------
      Net cash provided by (used in) operating activities...........      (1,100,367)    (1,498,800)     1,171,788
                                                                      --------------  -------------  -------------
Cash flows from investing activities:
  Purchases of property, plant and equipment........................        (610,281)      (693,581)    (1,083,269)
  Proceeds from notes receivable....................................         400,313       --              125,000
                                                                      --------------  -------------  -------------
      Net cash used in investing activities.........................        (209,868)      (693,581)      (958,269)
                                                                      --------------  -------------  -------------
Cash flows from financing activities:
  Dividends paid....................................................     (18,701,001)      --           (2,850,000)
  Proceeds from revolving line of credit............................       5,075,000      2,200,000      2,275,000
  Proceeds from subordinated debt...................................      10,000,000       --            1,000,000
  Proceeds from term loan...........................................       6,000,000        750,000       --
  Principal payments on long-term debt..............................      (1,038,938)    (1,250,750)      (150,750)
                                                                      --------------  -------------  -------------
      Net cash provided by financing activities.....................       1,335,062      1,699,250        274,250
                                                                      --------------  -------------  -------------
Net increase (decrease) in cash.....................................          24,727       (493,131)       487,769
Cash at beginning of year...........................................         100,756        600,887        113,118
                                                                      --------------  -------------  -------------
Cash at end of year.................................................  $      132,483  $     107,756  $     600,887
                                                                      --------------  -------------  -------------
                                                                      --------------  -------------  -------------
</TABLE>
 
                 See accompanying notes to financial statements
 
                                       17
<PAGE>
                             ZIMMERMAN SIGN COMPANY
 
                         NOTES TO FINANCIAL STATEMENTS
 
                           DECEMBER 31, 1996 AND 1995
 
(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 is a manufacturer of commercial
exterior signs with its operations located in east Texas. The Company's
customers, consisting primarily of petroleum retailers, automotive retailers and
financial institutions, are located principally in the United States and Mexico.
 
    Effective December 31, 1996, IHC's 80.14% investment in the Company was
distributed to holders of record of IHC common stock as of December 20, 1996.
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. Costs associated with the stock distribution aggregated
approximately $1,106,000 and have been charged to operations during the year
ended December 31, 1996.
 
    (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. Such deferred loan costs are amortized over the term of the
loan using the interest method.
 
    (e) REVENUE RECOGNITION
 
    Revenue is recognized upon the shipment of product unless installation is
required, at which time revenue is recognized when the installation is complete.
Sales returns and allowances are not significant.
 
    (f) INCOME TAXES
 
    Through December 31, 1996, the Company is included in the consolidated
federal income tax return filed by IHC. Under a tax sharing agreement with
Holdings, the Company is required to pay to Holdings
 
                                       18
<PAGE>
                             ZIMMERMAN SIGN COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1996 AND 1995
 
(1) GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
total income taxes (both current and deferred) computed for financial reporting
purposes as determined as if the Company filed a separate income tax return.
 
    Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities of Holdings are calculated 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 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
 
    Prior to January 1, 1996, the Company accounted 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 on the date of grant only if the
current market price of the underlying stock exceeded the exercise price. On
January 1, 1996, the Company adopted Statement of Financial Accounting Standards
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, which permits entities to
recognize as expense over the vesting period the fair value of all stock-based
awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to
continue to apply the provisions of APB Opinion No. 25 and provide pro forma net
income and pro forma earnings per share disclosures for employee stock option
grants made in 1995 and future years as if the fair-value-based method defined
in SFAS No. 123 had been applied. The Company has elected to continue to apply
the provisions of APB Opinion No. 25 and provide the pro forma disclosure
provisions of SFAS No. 123.
 
    (h) STATEMENTS OF CASH FLOWS
 
    The Company paid $828,594, $730,958 and $458,341 for interest in 1996, 1995
and 1994, respectively. Additionally, the Company paid $588,316, $1,224,317 and
$1,068,595 for income taxes to Holdings in 1996, 1995 and 1994, respectively.
 
    (i) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
 
    The Company adopted the provisions of Statement of Financial Accounting
Standards No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR
LONG-LIVED ASSETS TO BE DISPOSED OF, on January 1, 1996. This Statement requires
that long-lived assets and certain identifiable intangibles be reviewed 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. Adoption of this Statement did not have
a material impact on the Company's financial position, results of operations or
liquidity.
 
    (j) 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
 
                                       19
<PAGE>
                             ZIMMERMAN SIGN COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1996 AND 1995
 
(1) GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
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.
 
    (k) NET INCOME PER SHARE
 
    Net income per share is based on 1,854,688 weighted average shares
outstanding during each period presented after giving retroactive effect to the
common stock split described in note 5.
 
(2) INVENTORIES
 
    A summary of inventories at December 31, 1996 and 1995 follows:
 
<TABLE>
<CAPTION>
                                                                               1996           1995
                                                                           -------------  -------------
<S>                                                                        <C>            <C>
Raw materials............................................................  $   5,594,473  $   5,375,196
Work in process..........................................................      5,268,782      5,609,708
Finished goods...........................................................      2,744,503      1,674,083
                                                                           -------------  -------------
                                                                           $  13,607,758  $  12,658,987
                                                                           -------------  -------------
                                                                           -------------  -------------
</TABLE>
 
(3) PROPERTY, PLANT AND EQUIPMENT
 
    A summary of property, plant and equipment at December 31, 1996 and 1995
follows:
 
<TABLE>
<CAPTION>
                                                                                  1996          1995
                                                                              ------------  ------------
<S>                                                                           <C>           <C>
Land........................................................................  $    343,730  $    343,730
Building....................................................................     1,585,737     1,550,504
Manufacturing equipment.....................................................     2,047,101     1,783,642
Transportation equipment....................................................       147,663       129,201
Leasehold improvements......................................................     1,294,508     1,252,646
Office furniture and equipment..............................................     1,821,307     1,580,412
                                                                              ------------  ------------
                                                                                 7,240,046     6,640,135
Less accumulated depreciation and amortization..............................     4,087,143     3,571,524
                                                                              ------------  ------------
                                                                              $  3,152,903  $  3,068,611
                                                                              ------------  ------------
                                                                              ------------  ------------
</TABLE>
 
                                       20
<PAGE>
                             ZIMMERMAN SIGN COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1996 AND 1995
 
(4) LONG-TERM DEBT
 
    Long-term debt consists of the following at December 31, 1996 and 1995:
 
<TABLE>
<CAPTION>
                                                                                           1996           1995
                                                                                       -------------  ------------
<S>                                                                                    <C>            <C>
Revolving line of credit to a bank, due July 31, 1999, monthly interest at prime plus
  .25% or LIBOR plus 2.75% (8.41% at December 31, 1996)..............................  $  13,725,000  $  8,650,000
Secured term note payable to a bank, due September 1, 2004, monthly payments ($79,000
  through June 1, 1997, $116,000 through December 1, 1997, and $137,000 thereafter)
  plus interest at prime plus 1.125% or LIBOR plus 3.575% (9.16% at December 31,
  1996)..............................................................................      6,000,000       --
Subordinated notes, due October 31, 2001, quarterly payments of interest at prime
  plus 0.5% or bank off-shore rate plus 1.6875% (7.19% at December 31, 1996).........     10,000,000       --
Secured note payable to a bank, paid in 1996.........................................       --              68,000
Secured note payable to a bank, paid in 1996.........................................       --             320,938
Secured note payable to a bank, paid in 1996.........................................       --             650,000
                                                                                       -------------  ------------
                                                                                          29,725,000     9,688,938
Less current installments............................................................      1,170,000       266,750
                                                                                       -------------  ------------
                                                                                       $  28,555,000  $  9,422,188
                                                                                       -------------  ------------
                                                                                       -------------  ------------
</TABLE>
 
    In connection with the distribution of the Company's common stock to IHC
shareholders, the Company entered into a loan agreement in October 1996 with a
bank which provides for a $23,000,000 credit facility (in the form of a
$17,000,000 revolving line of credit, of which $3,275,000 was available for
additional borrowings at December 31, 1996, and a $6,000,000 term note) and
entered into a subordinated note purchase agreement with another bank under
which the Company issued $10,000,000 of subordinated notes which have been
guaranteed by an affiliate of IHC in consideration of a $475,000 fee by the
Company. The proceeds from the loan agreement and the subordinated notes were
used to repay existing long-term debt, declare a dividend of $19,701,000 to its
shareholders and fulfill net contractual obligations to senior officers of the
Company in the amount of approximately $700,000.
 
    The credit agreements related to the senior facility 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 senior notes payable are secured by all of the Company's assets
including inventory and accounts receivable.
 
    The estimated fair value of notes payable and long-term debt approximates
their carrying value at December 31, 1996 and 1995.
 
                                       21
<PAGE>
                             ZIMMERMAN SIGN COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1996 AND 1995
 
(4) LONG-TERM DEBT (CONTINUED)
    The aggregate maturities of long-term debt are as follows:
 
<TABLE>
<S>                                                              <C>
Year ending December 31:
1997...........................................................  $1,170,000
1998...........................................................   1,644,000
1999...........................................................  15,058,000
2000...........................................................     400,000
2001...........................................................  10,400,000
Thereafter.....................................................   1,053,000
                                                                 ----------
  Total........................................................  $29,725,000
                                                                 ----------
                                                                 ----------
</TABLE>
 
(5) STOCKHOLDERS' EQUITY (DEFICIT)
 
    On December 3, 1996, the Board of Directors of the Company approved a
3,864-for-1 common stock split thereby increasing the Company's issued and
outstanding stock to 1,854,692 shares. The accompanying financial statements
have been retroactively restated to reflect the stock split. In connection with
the stock split, authorized common shares were increased from 500 shares to
15,000,000 shares and the par value was reduced from $100 to $.01 per share. In
addition, the Company increased the number of authorized shares of preferred
stock from 500 to 2,000,000 shares and reduced the par value from $100 to $.01
per share.
 
    During the year ended December 31, 1996, the Company declared a dividend to
its shareholders of $19,701,000. At December 31, 1996, $1,000,000 of the
dividend was unpaid and included as a payable in the accompanying balance sheet.
 
(6) STOCK OPTIONS
 
    The Company had a stock option agreement which provided for the granting of
incentive stock options to certain key employees. The stock options were
exercisable for a period of eight years from date of grant (December 15, 1990)
and became fully vested on December 15, 1995. In connection with the
transactions described in note 5, the options were terminated in November 1996.
 
    In November 1996, Zimmerman adopted the Stock Option Plan (the "New Plan").
In connection with the establishment of the New Plan, 185,000 shares of common
stock are reserved for issuance at exercise prices which are intended to equal
the market value of the common stock at the date of grant. The New Plan provides
for the grant of incentive stock options to employees, officers and directors.
As of December 31, 1996, no options have been granted under the New Plan.
 
(7) LEASES
 
    The Company has several noncancellable operating leases, primarily for
office and plant facilities in Dallas, Jacksonville and Tyler, Texas, that
expire on various dates through 2000. 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. The Company's former Dallas plant is being
subleased through the expiration of the primary lease term.
 
                                       22
<PAGE>
                             ZIMMERMAN SIGN COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1996 AND 1995
 
(7) LEASES (CONTINUED)
    Approximate future minimum lease payments and rents and sublease receipts
under operating lease commitments with initial or noncancellable terms in excess
of one year as of December 31, 1996 follow:
 
<TABLE>
<CAPTION>
                                                                                  OPERATING    OPERATING
                                                                                    LEASE      SUBLEASE
                                                                                   PAYMENTS    RECEIPTS
                                                                                  ----------  -----------
<S>                                                                               <C>         <C>
Year ending December 31:
  1997..........................................................................  $  296,511   $  64,800
  1998..........................................................................     252,490      64,800
  1999..........................................................................     125,975      64,800
  2000..........................................................................      29,880      27,000
</TABLE>
 
    Total rental expense for operating leases was approximately $313,000 in
1996, $314,000 in 1995 and $254,000 in 1994. Total sublease rental income for
operating leases was approximately $65,000 in 1996, $54,000 in 1995 and $68,000
in 1994.
 
(8) INCOME TAXES
 
    Through December 31, 1996, the Company is included in the consolidated
federal income tax return filed by IHC. Under a tax sharing agreement with
Holdings, the Company is required to pay to Holdings total income taxes computed
for financial reporting purposes (see note 1) and, accordingly, deferred tax
assets and liabilities are maintained on the financial accounting records of
IHC.
 
    Beginning in 1997, the Company will be required to file a separate federal
income tax return. Accordingly, existing deferred tax assets and liabilities
previously settled with IHC will be recognized in the financial statements
through a cumulative adjustment to accumulated deficit.
 
    The provision for income taxes approximates statutory rates for 1996, 1995
and 1994 and was computed in all material respects as if the Company filed a
separate income tax return. Income tax expense consists of the following:
 
<TABLE>
<CAPTION>
                                                                     1996         1995          1994
                                                                  ----------  ------------  ------------
<S>                                                               <C>         <C>           <C>
Current expense.................................................  $  622,456  $  1,209,294  $  1,144,043
Deferred expense (benefit)......................................     (34,139)       15,023       (75,448)
                                                                  ----------  ------------  ------------
                                                                  $  588,317  $  1,224,317  $  1,068,595
                                                                  ----------  ------------  ------------
                                                                  ----------  ------------  ------------
</TABLE>
 
                                       23
<PAGE>
                             ZIMMERMAN SIGN COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1996 AND 1995
 
(8) INCOME TAXES (CONTINUED)
    Deferred federal income taxes result from temporary differences in reporting
income and expenses for financial and tax purposes. A summary of the source and
tax effect of these differences follows:
 
<TABLE>
<CAPTION>
                                                                         1996        1995        1994
                                                                      ----------  ----------  ----------
<S>                                                                   <C>         <C>         <C>
Excess tax depreciation over book depreciation......................  $   21,332  $   36,197  $    4,410
Bad debt expense less (greater) than actual write-offs allowable for
  tax purposes......................................................          98      16,902      (1,700)
Costs capitalized for tax purposes and expensed for financial
  reporting purposes................................................     (55,569)    (38,076)    (78,158)
                                                                      ----------  ----------  ----------
    Deferred expense (benefit)......................................  $  (34,139) $   15,023  $  (75,448)
                                                                      ----------  ----------  ----------
                                                                      ----------  ----------  ----------
</TABLE>
 
(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 employees represented by the
bargaining units was approximately $160,200 in 1996, $122,600 in 1995 and,
$68,700 in 1994.
 
(10) RELATED PARTY TRANSACTIONS
 
    Management fees paid to Holdings were $600,000 in each of the years 1996,
1995 and 1994. In addition, the Company pays federal income taxes, if any, to
Holdings (see note 8). The account balances are noninterest bearing. Following
is a summary of transactions included in the receivable from parent company:
 
<TABLE>
<CAPTION>
                                                                                 1996          1995
                                                                             ------------  -------------
<S>                                                                          <C>           <C>
Transfers of cash to Holdings..............................................  $  1,239,844  $   1,850,868
Federal income tax expense.................................................      (588,316)    (1,224,317)
Management fees............................................................      (600,000)      (600,000)
Receivable from parent company at beginning of year........................        74,925         48,374
                                                                             ------------  -------------
Receivable from parent company at end of year..............................  $    126,453  $      74,925
                                                                             ------------  -------------
                                                                             ------------  -------------
</TABLE>
 
    Beginning January 1, 1997, the management fees previously paid to Holdings
will no longer be incurred; however, it is expected that the Company will incur
partially offsetting additional costs to replace the services previously
provided by Holdings.
 
    On December 15, 1990, the Company entered into agreements to loan an
aggregate of $500,000 to four members of management. Interest charged on these
notes is computed at rates which approximate the prime rate associated with the
Company's revolving line of credit. Interest earned on these notes was $25,781
in 1996, $25,313 in 1995 and $28,063 in 1994. The outstanding balances of these
notes were repaid on November 1, 1996.
 
                                       24
<PAGE>
                             ZIMMERMAN SIGN COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
                           DECEMBER 31, 1996 AND 1995
 
(11) CONCENTRATIONS OF RISK
 
    The Company has certain customers, primarily in the petroleum retailing
industry, that individually account for greater than 10% of net sales in 1996,
1995 and 1994. In 1996, the Company had one such customer accounting for
approximately $9,227,000 of net sales. Additionally, accounts receivable from
one customer exceeded 10% of total accounts receivable at December 31, 1996. In
1995, the Company had three such customers, accounting for approximately
$9,668,000, $5,128,000 and $4,470,000 of net sales. In 1994, there were two such
customers, accounting for approximately $7,012,000 and $4,062,000 of net sales.
Ten percent of the Company's net sales were to customers outside of the United
States during 1994.
 
    At December 31, 1996, the Company employed 416 people of which 153 are
covered under a collective bargaining agreement expiring November 30, 1997. An
additional 158 of these employees are covered under a collective bargaining
agreement expiring December 1, 1999.
 
(12) RETIREMENT PLAN
 
    In August 1995, the Company began sponsoring a retirement plan in accordance
with Section 401(k) of the Internal Revenue Code which allows substantially all
employees 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 $52,915 in 1996 and $23,688
in 1995.
 
(13) FAIR VALUE OF FINANCIAL INSTRUMENTS
 
    The carrying values of accounts receivable, receivable from parent company
and accounts payable approximate fair value due to the short maturity of these
financial instruments.
 
                                       25
<PAGE>
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE
 
    None.
 
                                    PART III
 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
    The following table sets forth information relating to the directors and
executive officers of the Company.
 
<TABLE>
<CAPTION>
NAME                           AGE                                     POSITION
-------------------------      ---      -----------------------------------------------------------------------
<S>                        <C>          <C>
David E. Anderson                  52   Chairman and Director
 
Tom E. Boner                       58   President, Treasurer and Director
 
Michael W. Coppinger               50   Vice President--Sales
 
John T. Griggs                     39   Vice President--Manufacturing
 
Jeffrey P. Johnson                 35   Vice President, Chief Financial Officer and Secretary
 
Michael St. Onge                   50   Vice President--Customer Service
 
Carl A. Goldman                    62   Director
 
Steven B. Lapin                    51   Director
 
Roy T. K. Thung                    52   Director
</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. Mr.
Boner has over 25 years of experience in the sign industry. 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.
 
    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 of the Texas Sign Manufacturers Association and a
Director of the Southwest Sign Council of the International Sign Association.
 
    Michael F. St. Onge has been Vice President-Customer Service of Zimmerman
since January 1996. Mr. St. Onge has had 18 years of sign industry experience.
Mr. St. Onge was with Jim Pattison Sign Group's Pacific Northwest Region for
more than five years prior to joining Zimmerman serving most
 
                                       26
<PAGE>
recently as Executive Vice President and General Manager. He is a past Chairman
of the International Sign Association.
 
    Carl A. Goldman is co-founder and has been President and Chief Executive
Officer of Corporate Capital Consultants, Inc. since its inception in 1974.
Prior thereto, he spent ten years in the investment banking department of three
Wall Street firms and five years as Treasurer of The Franklin Corporation, a
small business investment company. Mr. Goldman has been a consultant to
Zimmerman and IHC since February 1996. Mr. Goldman became a director of
Zimmerman as of December 31, 1996.
 
    Steven B. Lapin has been a Director of Zimmerman since August 1992. He has
been President and Chief Operating Officer of Independence Holding Company since
November 1993, and for more than two years prior thereto, was its Executive Vice
President--Operations. Mr. Lapin has also been President and Chief Operating
Officer of Geneve Corporation since October 1993, and for more than two years
prior thereto, was Executive Vice President and Chief Operating Officer of
Geneve Corporation. Mr. Lapin is also a director of Independence Holding Company
and Geneve Corporation.
 
    Roy T. K. Thung has been a Director of Independence Holding Company since
December 1990. He has also served as Executive Vice President and Chief
Financial Officer of Independence Holding Company since November 1993, and for
more than two years prior thereto was Senior Vice President, Chief Financial
Officer and Treasurer of Independence Holding Company. Mr. Thung has also been
Executive Vice President and Chief Financial Officer of Geneve Corporation since
November 1993, and for more than two years prior thereto was Senior Vice
President and Chief Financial Officer of Geneve Corporation. Mr. Thung became a
director of Zimmerman as of December 31, 1996.
 
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
 
    The Company's directors, executive officers, and any person holding more
than ten percent of Zimmerman's Common Stock are required under the federal
securities laws to report their initial ownership of Zimmerman's Common Stock
and any subsequent changes in that ownership to the Securities and Exchange
Commission ("SEC"). Zimmerman is required to disclose any late filings of those
reports. During the fiscal year ended December 31, 1996, all Section 16(a)
filing requirements applicable to directors, executive officers and greater than
ten percent beneficial owners were complied with except for late filings of Form
3 by each of Messrs. Anderson, Boner, Coppinger, Johnson, Griggs and St. Onge in
connection with their ownership of stock of Zimmerman at the time Zimmerman's
registration statement became effective. In making this disclosure, the Company
has relied solely on the representations of its directors, executive officers
and its ten percent holders and copies of the reports that they have filed with
the SEC.
 
                                       27
<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION
 
SUMMARY COMPENSATION TABLE
 
    The following table sets forth compensation paid by Zimmerman to its chief
executive officer and the four next most highly compensated executive officers
for the years ended December 31, 1996, 1995, and 1994.
<TABLE>
<CAPTION>
                                                                                      LONG TERM COMPENSATION
                                                                     --------------------------------------------------------
                                                                                AWARDS                      PAYOUTS
                                             ANNUAL COMPENSATION     ----------------------------  --------------------------
                                                                                      RESTRICTED     SECURITY
NAME AND PRINCIPAL                         ------------------------   OTHER ANNUAL       STOCK      UNDERLYING       LTIP
POSITION                          YEAR      SALARY($)    BONUS($)     COMPENSATION    AWARDS ($)      OPTIONS     PAYOUTS ($)
------------------------------  ---------  -----------  -----------  ---------------  -----------  -------------  -----------
 
<S>                             <C>        <C>          <C>          <C>              <C>          <C>            <C>
David E. Anderson.............       1996     188,000            0         --             --            --            --
  Chairman (1)                       1995     188,000       52,441         --             --            --            --
                                     1994     182,000      118,000         --             --            --            --
 
Tom E. Boner..................       1996     155,500       40,000         --             --            --            --
  President and Treasurer            1995     150,500       43,410         --             --            --            --
                                     1994     145,000       80,856         --             --            --            --
 
Michael W. Coppinger..........       1996     104,300       20,000         --             --            --            --
  Vice President--Sales              1995     100,000       25,033         --             --            --            --
                                     1994      96,000       47,600         --             --            --            --
 
John T. Griggs................       1996     104,300       20,000         --             --            --            --
  Vice President--                   1995     100,000       24,534         --             --            --            --
  Manufacturing                      1994      96,200       50,800         --             --            --            --
 
Jeffrey P. Johnson............       1996     104,300       20,000         --             --            --            --
  Vice President and                 1995     100,000       25,033         --             --            --            --
  Chief Financial Officer            1994      95,000       47,600         --             --            --            --
 
<CAPTION>
 
NAME AND PRINCIPAL                  ALL OTHER
POSITION                        COMPENSATION(2) $
------------------------------  -----------------
<S>                             <C>
David E. Anderson.............        352,180
  Chairman (1)                          3,120
                                          744
Tom E. Boner..................        331,454
  President and Treasurer               2,652
                                          744
Michael W. Coppinger..........        135,854
  Vice President--Sales                 2,020
                                          714
John T. Griggs................         70,654
  Vice President--                      2,020
  Manufacturing                           716
Jeffrey P. Johnson............        135,854
  Vice President and                    2,020
  Chief Financial Officer                 707
</TABLE>
 
------------------------
 
(1) Mr. Anderson's compensation includes amounts received from Zimmerman
    Holdings, Inc., which had been Zimmerman's majority shareholder prior to the
    spin-off.
 
(2) Represents dollar value of premiums paid for term life insurance,
    contributions made under Zimmerman's 401(k) savings plan instituted in 1995,
    and other compensation. All amounts for 1994 represent term life insurance
    premiums. The amounts for 1995 and 1996 term life insurance for all
    executive officers were $744 and $704 respectively. 1996 All Other
    Compensation amounts for Messrs. Boner, Coppinger, Griggs and Johnson
    include payments to them by Zimmerman in November 1996 in the amounts of
    $326,000, $130,400, $65,200 and $130,400, respectively in consideration of
    the termination of all of their options to acquire Zimmerman Common stock;
    the balance of 1995 and 1996 All Other Compensation for each executive
    officer represents 401(k) contributions, except for Mr. Anderson, who also
    received $350,000 as a one-time fee in consideration for services performed
    in connection with the refinancing of Zimmerman's indebtedness.
 
EMPLOYMENT AGREEMENTS
 
    Mr. Anderson has entered into an amendment and restatement of his existing
employment agreement with Zimmerman for a term of four years commencing January
1, 1997 which, at the end of such initial four-year term, is automatically
renewable for continuous one-year periods unless earlier terminated in
accordance with the terms of the agreement. Pursuant to such agreement, Mr.
Anderson's annual base salary is not less than $125,000, as fixed by Zimmerman's
Board of Directors from time to time. Mr. Anderson is eligible also for a bonus
of up to 60% of his base salary, the amount of such bonus earned to be based
upon quantitative and qualitative benchmarks. Prior to December 31, 1999, under
certain circumstances after (a) a change of control of Zimmerman, (b) the
termination of Mr. Anderson's employment without cause or (c) his death or
disability, Mr. Anderson is entitled to a severance payment in the amount of
four years then-base salary plus the maximum earnable bonus. If such events
occur on or after December 31, 1999, Mr. Anderson is entitled to a severance
payment in the amount of three years' then-base salary plus three times the
greater of 50% of the maximum earnable bonus and the most recent bonus earned.
 
                                       28
<PAGE>
    Mr. Boner has entered into an amendment and restatement of his existing
employment agreement with Zimmerman for a term of three years commencing January
1, 1997 which, at the end of such initial three-year term, is automatically
renewable for continuous one-year periods unless earlier terminated in
accordance with the agreement. Pursuant to such agreement, Mr. Boner's annual
base salary is not less than $155,000, as fixed by Zimmerman's Board of
Directors from time to time. In addition to his annual base salary under the
agreement, Mr. Boner will receive supplemental salary payments of $45,000 for
each of 1997 and 1998. Additionally, Mr. Boner is eligible to receive a bonus of
up to 60% of his base salary (exclusive of the supplemental salary payments),
the amount of such bonus earned to be based upon quantitative and qualitative
benchmarks. Under certain circumstances after (a) a change of control of
Zimmerman, (b) the termination of Mr. Boner's employment without cause or (c)
his death or disability, Mr. Boner is entitled to a severance payment equal to
three years' then-base salary (exclusive of the supplemental salary payments)
plus three times the maximum earnable bonus.
 
    Each of Messrs. Coppinger, Johnson and Griggs has entered into an amendment
and restatement of his existing employment agreement with Zimmerman for a term
of two years commencing January 1, 1997 which, at the end of such initial
two-year term, is automatically renewable for continuous one-year periods unless
earlier terminated in accordance with the agreement. Pursuant to such
agreements, Messrs. Coppinger, Johnson, and Griggs each will receive an annual
base salary of not less than $104,000, as fixed by Zimmerman's Board of
Directors from time to time. In addition to the annual base salary under his
employment agreement, each of these individuals will receive a supplemental
salary payment for each of 1997 and 1998 of $17,000, $11,500, and $11,500,
respectively. Additionally, each of these officers is eligible to receive a
bonus of up to 50% of his base salary, the amount of such bonus earned to be
based upon quantitative and qualitative benchmarks. Under certain circumstances
after (a) a change of control of Zimmerman, (b) the termination of such
officer's employment without cause or (c) such officer's death or disability,
such officer is entitled to a severance payment equal to two year's then-base
salary (exclusive of the supplemental salary payments) plus two times the
maximum earnable bonus.
 
STOCK OPTION PLAN
 
    In November 1996, Zimmerman's Board of Directors adopted, and its
shareholders approved, the Stock Option Plan. The purpose of the Stock Option
Plan is to provide employees, officers and directors with additional incentives
by increasing their proprietary interest in Zimmerman. The aggregate number of
shares of Zimmerman Common Stock with respect to which options may be granted
may not exceed 185,000 shares.
 
    The Stock Option Plan provides for the grant of incentive stock options
("ISOs") as defined in Section 422 of the Internal Revenue Code of 1986, as
amended, and nonqualified stock options (collectively "Awards"). The Stock
Option Plan is administered by the Compensation Committee. The Compensation
Committee has, subject to the terms of the Stock Option Plan, the sole authority
to grant Awards under the Stock Option Plan, to construe and interpret the Stock
Option Plan and to make all other determinations and take any and all actions
necessary or advisable for the administration of the Stock Option Plan.
 
    All of Zimmerman's full-time, salaried employees and members of the Board of
Directors are eligible to receive Awards under the Stock Option Plan. Options
will be exercisable during the period specified in each option agreement and
will generally be exercisable in installments pursuant to a vesting schedule to
be designated by the Compensation Committee. The provisions of option agreements
may provide for the acceleration of the exercisability in the event of certain
events including certain reorganizations and changes in control of Zimmerman. No
option will remain exercisable later than ten years after the date of grant. The
exercise prices for ISO's granted under the Stock Option Plan may be no less
than the fair market value of the Zimmerman Common Stock on the date of grant.
The exercise prices of nonqualified stock options are set by the Compensation
Committee.
 
                                       29
<PAGE>
    There are no federal income tax consequences upon the grant of an option
under the Stock Option Plan. Upon exercise of a nonqualified option, the
optionee generally will recognize ordinary income in the amount equal to the
difference between the fair market value of the option shares at the time of
exercise and the exercise price, and Zimmerman is generally entitled to a
corresponding tax deduction. When an optionee sells shares issued upon the
exercise of a non-qualified stock option, the optionee realizes short-term or
long-term capital gain or loss, depending on the length of the holding period,
but Zimmerman is not entitled to any tax deduction in connection with such sale.
 
    An optionee will not be subject to federal income taxation upon the exercise
of ISO's granted under the Stock Option Plan, and Zimmerman will not be entitled
to a federal income tax deduction by reason of such exercise. A sale of shares
of Zimmerman Common Stock acquired upon exercise of an ISO that does not occur
within one year after the exercise or within two years after the grant of the
option generally will result in the recognition of long-term capital gain or
loss by the optionee in the amount of the difference between the amount realized
on the sale and the exercise price, and Zimmerman is not entitled to any tax
deduction in connection therewith. If the sale of the shares received upon
exercise of an ISO occurs within one year after the exercise or within two years
from the date of the option grant (a "disqualifying disposition"), the optionee
generally will recognize ordinary income equal to the lesser of (i) the excess
of the fair market value of the shares on the date of exercise of the options
over the exercise price or (ii) the excess of the amount realized on the sale of
the shares over the exercise price. Any amount realized on a disqualifying
disposition in excess of the amount treated as ordinary income will be long-term
or short-term capital gain, depending upon the length of time the shares were
held. Zimmerman generally will be entitled to a tax deduction on a disqualifying
disposition corresponding to the ordinary income recognized by the optionee.
 
    As of April 15, 1997, Zimmerman granted options under the Stock Option Plan
to Mr. Goldman to purchase 10,000 shares. Zimmerman has granted, as of January
1, 1997, options under the Stock Option Plan to purchase 38,639 shares, 7,728
shares, 15,456 shares and 15,456 shares to Messrs. Boner, Griggs, Johnson and
Coppinger, respectively.
 
401(K) SAVINGS PLAN
 
    Zimmerman has a defined contribution savings plan (the "Savings Plan")
covering all full-time employees who have at least one year of service and who
are not members of a collective bargaining unit. Messrs. Anderson, Boner and
Johnson are the Savings Plan trustees. Participants in the Savings Plan may make
salary-reduction contributions pursuant to Section 401(k) of the Code. Zimmerman
makes matching contributions to each participant's account (not to exceed 50% of
a participant's contribution), up to a maximum of 3% of a participant's monthly
compensation.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
    Zimmerman paid Mr. Goldman $58,578 for consulting services performed in
1996. No other directors have interlocking or other relationships with other
boards or Zimmerman that require disclosure under Item 402(j) or Item 404 of SEC
Regulation S-K.
 
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
 
    Prior to December 31, 1996, Zimmerman did not have a Compensation Committee,
and executive compensation was set by the Board of Directors. Under the guidance
of the Board, compensation policies have been designed which align executive
compensation to performance in areas key to Zimmerman's long-term success.
Zimmerman's compensation objective is to maximize shareholder value by
attracting, rewarding, and retaining highly qualified and productive individuals
and by motivating executives and key employees toward achieving Zimmerman's
strategic goals and plans. The key components of Zimmerman's executive
compensation are base salary and annual incentive awards.
 
                                       30
<PAGE>
    The Board annually reviews and establishes base salaries, which are at
levels that the Board believes are competitive with industry and regional pay
practices and economic conditions. In determining appropriate salary levels, the
Board considers criteria including the individual's level and scope of
responsibility and performance contributions, as well as internal and market
comparisons. Zimmerman awards annual cash incentive bonuses to reward executive
officers and other key employees based upon individual performance and the
achievement of specific financial and operational goals determined for the year.
 
    In regard to Mr. Anderson, in 1996, he participated in Zimmerman's profit
incentive plan under which he was entitled to earn a cash incentive bonus of up
to 60% of base salary. The plan had an escalating schedule under which profit
incentive awards were linked to year-to-year improvement in Zimmerman's pre-tax
income. Through this mechanism, approximately two-thirds of Mr. Anderson's
achievable bonus in 1996 was directly tied to profit improvement. The remaining
one-third of Mr. Anderson's maximum earnable bonus was based upon the completion
of other specific corporate objectives established for such year.
 
    Messrs. Boner, Coppinger, Griggs and Johnson also participate in Zimmerman's
profit incentive plan. As in the case of Mr. Anderson, the bonus awards listed
in the Summary Compensation Table for Messrs. Boner, Coppinger, Griggs and
Johnson reflect cash incentive awards under such plan.
 
    Under the Stock Option Plan, Zimmerman's executive officers will be eligible
to receive stock option grants at the discretion of the Compensation Committee.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    Listed below are the number of shares of Common Stock beneficially owned as
of April 15, 1997 by the holders of more than 5% of the Common Stock of the
Company.
 
<TABLE>
<CAPTION>
                                                                                COMMON STOCK    PERCENT
                                                                               --------------  ---------
<S>                                                                            <C>             <C>
Geneve Holdings, Inc. (1)....................................................       818,579       44.14%
  96 Cummings Point Road
  Stamford, CT. 06902
David E. Anderson............................................................       252,423       13.61%
  8350 N. Central Expressway
  Suite 600
  Dallas, TX 75206
Tom E. Boner.................................................................       100,462        5.31%
  9846 Highway 31 East
  Tyler, TX 75705
</TABLE>
 
------------------------
 
(1) According to (i) information disclosed in Schedule 13D dated January 6, 1997
    of Geneve Holdings, Inc. (together with its affiliates also referred to
    herein as "GHI") supplemented by (ii) information provided to the Company by
    GHI in response to a Company questionnaire, GHI is the beneficial owner of
    818,579 shares of Common Stock. By virtue of his ownership of capital stock
    of GHI, Mr. Edward Netter, Chairman of GHI, may be deemed to be the
    controlling person thereof. Mr. Netter disclaims beneficial ownership as to
    shares of Zimmerman Common Stock owned by GHI.
 
    To the best knowledge of the Company, each of GHI, Mr. Anderson and Mr.
Boner has sole investment and voting power with respect to the shares listed
above, and no other person or persons acting in concert own beneficially more
than 5% of the Common Stock.
 
    The following table sets forth for each director of the Company, the
Chairman and the three other most highly compensated executive officers of the
Company for the year ended December 31, 1996, and
 
                                       31
<PAGE>
for all directors and executive officers of the Company as a group, information
regarding beneficial ownership of Common Stock as of April 15, 1997.
 
<TABLE>
<CAPTION>
                                                                                            PERCENT OF
                                                                      NUMBER OF               CLASS
NAME                                                                    SHARES           ENTITLED TO VOTE
-------------------------------------------------------------  ------------------------  ----------------
<S>                                                            <C>                       <C>
David E. Anderson............................................    252,423                       13.61%
 
Tom E. Boner.................................................    100,462(1)                     5.31%
 
Michael W. Coppinger.........................................     38,639(2)                     2.07%
 
Carl A. Goldman..............................................     10,000(3)                     *
 
John T. Griggs...............................................     23,183(4)                     1.24%
 
Jeffrey P. Johnson...........................................     30,911(5)                     1.65%
 
Steven B. Lapin..............................................        100                        *
 
Roy T.K. Thung...............................................        250                        *
 
All directors and executive officers as a group (9
  persons)...................................................           (1)(2)(3)(4)(5)        23.88%
</TABLE>
 
------------------------
 
*   Represents less than 1% of the outstanding Common Stock.
 
(1) Includes 36,639 shares of Common Stock subject to options granted to Mr.
    Boner in January 1997 all of which shares are presently exercisable.
 
(2) Includes 15,456 shares of Common Stock subject to options granted to Mr.
    Coppinger in January 1997 all of which shares are presently exercisable.
 
(3) Constitutes 10,000 shares of Common Stock subject to options granted to Mr.
    Goldman on April 15, 1997, all of which shares are presently exercisable.
 
(4) Includes 7,728 shares of Common Stock subject to options granted Mr. Griggs
    in January 1997 all of which shares are presently exercisable.
 
(5) Includes 15,456 shares of Common Stock subject to options granted to Mr.
    Johnson in January 1997 all of which shares are presently exercisable.
 
    The Company was a majority owned subsidiary of Independence Holding Company
("IHC") until December 31, 1996, when IHC distributed all of its investment in
the Company to holders of IHC's common stock.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    The Company paid Mr. Goldman $58,578 for consulting services performed in
1996.
 
                                    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 Financial Statement
             Schedule on page 12.
(a)(2)     Financial Statement Schedule: See Index to Financial Statements and Financial
             Statement Schedule on page 12.
(a)(3)     Exhibits: See Exhibit Index on page 35.
(b)        Reports on Form 8-K: No report on Form 8-K was filed during the quarter ended
             December 31, 1996. The Company filed a Form 8-K on January 14, 1997 regarding the
             Company's spin-off from Independence Holding Company.
</TABLE>
 
                                       32
<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 April
30, 1997.
 
                                ZIMMERMAN SIGN COMPANY  (Registrant)
 
                                By:            /s/ DAVID E. ANDERSON
                                     -----------------------------------------
                                            David E. Anderson, CHAIRMAN
                                           (PRINCIPAL EXECUTIVE OFFICER)
 
    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 30th day of April, 1997.
 
       /s/ TOM E. BONER
------------------------------  Director, President
         Tom E. Boner
 
     /s/ CARL A. GOLDMAN
------------------------------  Director
       Carl A. Goldman
 
     /s/ STEVEN B. LAPIN
------------------------------  Director
       Steven B. Lapin
 
      /s/ ROY T.K. THUNG
------------------------------  Director
        Roy T.K. Thung
 
                                       33
<PAGE>
                             ZIMMERMAN SIGN COMPANY
                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
 
<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, 1996................................   $  100,288    $ (96,124)   $    95,836   $  100,000
Year ended December 31, 1995................................      150,000      (40,000)        (9,712)     100,288
Year ended December 31, 1994................................      145,000       24,693        (19,696)     150,000
</TABLE>
 
------------------------
 
(A) Recovery (write-off) of uncollectible accounts.
 
                                       34
<PAGE>
                             ZIMMERMAN SIGN COMPANY
                                 EXHIBIT INDEX
 
    All of the following exhibits have heretofore been filed with the Commission
and are incorporated herein by reference:
 
<TABLE>
<CAPTION>
 EXHIBIT NO.                                                TITLE
-------------  ------------------------------------------------------------------------------------------------
<C>            <S>
       3.1     Form of Amended and Restated Articles of Incorporation of Zimmerman Sign Company.
       3.2     Form of Amended and Restated Bylaws of Zimmerman Sign Company.
       4.1     Distribution Agreement, dated as of November 26, 1996, by and between Zimmerman Sign Company and
                 Independence Holding Company.
       4.2     Registration Rights Agreement, dated as of December 1, 1996, by and between Zimmerman Sign
                 Company and Geneve Holdings, Inc.
      10.1     First Amended and Restated Revolving Credit and Term Loan Agreement, dated as of October 31,
                 1996, by and between Zimmerman Sign Company and Comerica Bank-Texas.
      10.2     Subordinated Credit Agreement, dated as of October 31, 1996, between Zimmerman Sign Company and
                 Bank of America Illinois.
      10.3     Stock Option Plan of Zimmerman Sign Company, dated as of December 1, 1996.
      10.4     Form of Amended & Restated Employment Agreement, dated December 1, 1996, by and between
                 Zimmerman Sign Company and David E. Anderson.
      10.5     Form of Amended and Restated Employment Agreement, dated December 1, 1996, by and between
                 Zimmerman Sign Company and Tom E. Boner.
      10.6     Form of Amended and Restated Employment Agreement, dated December 1, 1996, by and between
                 Zimmerman Sign Company and Michael W. Coppinger.
      10.7     Form of Amended and Restated Employment Agreement, dated December 1, 1996, by and between
                 Zimmerman Sign Company and Jeffrey P. Johnson.
      10.8     Form of Amended and Restated Employment Agreement, dated December 1, 1996, by and between
                 Zimmerman Sign Company and John T. Griggs.
      10.9     First Amendment to Credit Agreement, dated December 31, 1996, between Zimmerman Sign Company and
                 Bank of America Illinois.
      10.10    First Amendment to Loan Agreement, dated December 31, 1996, between Zimmerman Sign Company and
                 Comerica Bank-Texas.
      27       Financial Data Schedule
      99.1     Registration Statement on Form 10/A-2 filed by Zimmerman with the Securities and Exchange
                 Commission and declared effective on December 16, 1996.
</TABLE>
 
                                       35