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                                    UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549

                                      FORM 10-K

(Mark One)
     /x/  Annual report pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934 for the fiscal year ended December 31, 1997.

     / /  Transition report pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934 for the transition period from
                             to                    .

COMMISSION FILE NUMBER: 033-72810

                               UNIVERSAL OUTDOOR, INC.
                (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                ILLINOIS                               36-2827496
      (State or other jurisdiction                  (I.R.S. Employer
     of incorporation or organization)              Identification No.)

               311 SOUTH WACKER DRIVE, SUITE 6400, CHICAGO, ILLINOIS 60606
                                TELEPHONE: (312) 431-0822
                   (Address and telephone number of the of the
                     registrant's principal executive office)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (312) 431-0822

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

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

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
                                   Yes   X    No
                                        ----       ----

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [   ]

     As of March 20, 1997, the aggregate market value of the registrant's common
stock, par value $.01 per share, held by non-affiliates of the registrant was
not determinable. There is no public market for the registrant's common stock.

     As of March 20, 1997, the number of shares outstanding of the registrant's
Common Stock, par value $0.01 per share, was 10,000 shares.

                         DOCUMENTS INCORPORATED BY REFERENCE

Universal Outdoor Holdings, Inc.'s Registration Statement on Form S-3 filed with
the Securities and Exchange Commission (File No. 333-32607)

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                               CROSS REFERENCE SHEET
                                        AND
                                 TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                         PAGE NUMBER
                                                                         OR REFERENCE
                                                                         ------------
<S>                                                                      <C>
PART I
     Item 1 -- Business. . . . . . . . . . . . . . . . . . . . . . . . .        1
     Item 2 -- Properties. . . . . . . . . . . . . . . . . . . . . . . .       10
     Item 3 -- Legal Proceedings . . . . . . . . . . . . . . . . . . . .       11
     Item 4 -- Submission of Matters to a Vote of Security Holders . . .       11

PART II
     Item 5 -- Market for the Company's Common Stock and Related
               Stockholder Matters . . . . . . . . . . . . . . . . . . .       12
     Item 6 -- Selected Financial Data . . . . . . . . . . . . . . . . .       13
     Item 7 -- Management's Discussion and Analysis of
               Financial Condition and Results of Operations . . . . . .       14
     Item 8 -- Financial Statements and Supplementary Data . . . . . . .       21
     Item 9 -- Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosures. . . . . . . . . . .       40

PART III
     Item 10 -- Executive Officers and Directors . . . . . . . . . . . .       41
     Item 11 -- Executive Compensation . . . . . . . . . . . . . . . . .       43
     Item 12 -- Security Ownership of Certain Beneficial Owners and
                Management . . . . . . . . . . . . . . . . . . . . . . .       44
     Item 13 -- Certain Relationships and Related Transactions . . . . .       45

PART IV
     Item 14 - Exhibits, Financial Schedules, and Reports on Form 8-K. .       47

</TABLE>


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                                        PART I

                                  ITEM 1 -- BUSINESS

GENERAL

     Universal Outdoor, Inc. (the "Company") is a leading outdoor advertising
company operating approximately 33,994 advertising display faces in 3 large,
regional operating areas: the MIDWEST (Chicago (IL), Minneapolis/St. Paul (MN),
Indianapolis (IN), Milwaukee (WI), Des Moines (IA), Evansville (IN) and Dallas
(TX)), the SOUTHEAST (Orlando (FL), Jacksonville (FL), Ocala (FL) and the
Atlantic Coast and Gulf Coast areas of Florida, Memphis (TN), Tunica (MS),
Chattanooga (TN), and Myrtle Beach (SC)) and the EAST COAST (New York (NY),
Baltimore (MD), Washington, D.C., Philadelphia (PA), Northern New Jersey,
Wilmington (DE), Salisbury (MD) and Hudson Valley (NY)). The Company was
incorporated in Illinois in 1975.  The Company  is a wholly-owned subsidiary of
Universal Outdoor Holdings, Inc. ("Parent").  The Company and its consolidated
subsidiaries constitute the operating subsidiaries of Parent.  As used herein,
references to the "Company" include the consolidated subsidiaries of the
Company, unless the context otherwise requires.

     This Item 1 contains forward-looking statements that involve risks and
uncertainties.  When used in this Item 1, the words "anticipate", "believe",
"estimate", and "expect" and similar expressions as they relate to the Company
and its management are intended to identify such forward-looking statements.
The Company's actual results, performance, or achievements could differ
materially from the results expressed in, or implied by, such forward-looking
statements.  Factors that could affect such results, performance, or
achievements are set forth in "Risk Factors" in the Final Prospectus dated
August 15, 1997 filed in connection with the Parent's Registration Statement on
Form S-3 filed with the Securities and Exchange Commission (File No. 333-32607).

INDUSTRY OVERVIEW

     Advertisers purchase outdoor advertising for a number of reasons. Outdoor
advertising offers repetitive impact and a relatively low cost
per-thousand-impressions, a commonly used media measurement, as compared to
television, radio, newspapers, magazines and direct mail marketing. Accordingly,
because of its cost-effective nature, outdoor advertising is a good vehicle to
build mass market support. In addition, outdoor advertising can be used to
target a defined audience in a specific location and, therefore, can be relied
upon by local businesses concentrating on a particular geographic area where
customers have specific demographic characteristics. For instance, restaurants,
motels, service stations and similar roadside businesses may use outdoor
advertising to reach potential customers close to the point of sale and provide
directional information. Other local businesses such as television and radio
stations and consumer products companies may wish to appeal more broadly to
customers and consumers in the local market. National brand name advertisers may
use the medium to attract customers generally and build brand awareness. In all
cases, outdoor advertising can be combined with other media such as radio and
television to reinforce messages being provided to consumers.

     The outdoor advertising industry has experienced significant change in
recent periods due to a number of factors. First, the entire "out-of-home"
advertising category has expanded to include, in addition to traditional
billboards and roadside displays, displays in shopping centers and malls,
airports, stadiums, movie theaters and supermarkets, as well as on taxis,
trains, buses, blimps and subways. Second, while the

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outdoor advertising industry has experienced a decline in the use of outdoor
advertising by tobacco companies, it has increased its visibility with and
attractiveness to local advertisers as well as national retail and consumer
product-oriented companies. Third, the industry has benefitted significantly
from improvements in production technology, including the use of computer
printing, vinyl advertising copy and improved lighting techniques, which have
facilitated a more dynamic, colorful and creative use of the medium. These
technological advances have allowed the outdoor advertising industry to
respond more promptly and cost effectively to the changing needs of its
advertising customers and make greater use of advertising copy used in other
media. Lastly, the outdoor advertising industry has benefitted from the
growth in automobile travel time for business and leisure due to increased
highway congestion and continued demographic shifts of residences and
businesses from the cities to outlying suburbs.

OPERATING STRATEGY

     The Company's objective is to be the leading provider of outdoor
advertising services in each of its three regional operating areas and to expand
its presence in attractive new markets. The Company believes that regional
clusters provide it with significant opportunities to increase revenue and
achieve cost savings by delivering to local and national advertisers efficient
access to multiple markets or highly targeted areas.

     Management intends to implement the following operating strategy:

 -  MAXIMIZE RATES AND OCCUPANCY.  Through continued emphasis on customer sales
and service, quality displays and inventory management, the Company seeks to
maximize advertising rates and occupancy levels in each of its markets. The
Company has recruited and trained a strong local sales staff supported by local
managers operating under specific, sales-based compensation targets designed to
obtain the maximum potential from the Company's display inventory.

-  INCREASE MARKET PENETRATION.  The Company seeks to expand operations within
its existing markets through new construction, with an emphasis on painted
bulletins, which generally command higher rates and longer term contracts from
advertisers than other types of display faces. In addition, the Company
historically has acquired, and intends to continue to acquire, additional
advertising display faces in its existing markets as opportunities become
available.

 -  PURSUE STRATEGIC ACQUISITIONS.  In addition to improved penetration of its
existing markets, the Company also seeks to grow by acquiring additional display
faces in closely proximate new markets. Such new markets allow the Company to
capitalize on the operating efficiencies and cross-market sales opportunities
associated with operating in multiple markets within distinct regions. The
Company intends to develop new regional operating areas in regions where
attractive growth and consolidation opportunities exist.

 -  CAPITALIZE ON TECHNOLOGICAL ADVANCES.  The Company seeks to capitalize on
technological advances that enhance its productivity and increase its ability to
effectively respond to its customers' needs. The Company's continued investment
in equipment and technology provides for greater ongoing benefits in the areas
of sales, production and operation.

 -  MAINTAIN LOW COST STRUCTURE.  Through continued adherence to strict cost
controls, centralization of administrative functions and maintenance of low
corporate overhead, the Company seeks to maximize its Operating Cash Flow
Margin, which it believes to be among the highest in the industry. The Company


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believes that its centralized administration provides opportunities for
significant operating leverage from further expansion in existing markets and
from future acquisitions.

 -  DEVELOP OTHER OUT-OF-HOME MEDIA.  The Company seeks to develop other forms
of out-of-home media such as bus shelter or transit advertising in order to
enhance revenues in existing markets or provide access to new markets.

     Through implementation of this business strategy, the Company has increased
its outdoor advertising presence from 500 display faces in a single market in
1988 to approximately 33,994 in its markets at December 31, 1997.

ACQUISITIONS

     During the year ended December 31, 1997, the Company acquired the assets or
capital stock of  eleven outdoor advertising companies.

     THE MEMPHIS/TUNICA ACQUISITION.  In January 1997, the Company consummated
the acquisition of approximately 2,018 advertising display faces consisting of
bulletins and posters in and around Memphis, Tennessee and Tunica County,
Mississippi for a purchase price of approximately $72 million  plus 100,000
shares of the common stock of the Parent (the "Memphis/Tunica Acquisition").

     THE MATTHEW ACQUISITION. In January 1997, the Company consummated the
acquisition of approximately 1,035 advertising display faces consisting of
posters and bulletins in and around Metro New York, Northern New Jersey and
Hudson Valley for a purchase price of approximately $41 million (the "Matthew
Acquisition").

     THE FEBRUARY ACQUISITIONS. In February 1997, the Company acquired (i)
approximately 135 advertising display faces located in and around Evansville,
Indiana from Adcraft, Inc. for approximately $5.5 million and (ii) approximately
12 existing and 35 in-process display faces located in New Jersey from David
Klein Outdoor Advertising for approximately $5.3 million (the "February
Acquisitions").

     THE TRANSAD ACQUISITION. In March 1997, the Company acquired approximately
600 transit advertising panels in and around Memphis, Tennessee for
approximately $8.0 million from TransAd, Inc. (the "TransAd Acquisition").

     THE PENN ACQUISITION. In June 1997, the Company acquired the stock of
Penn-Baltimore, Inc. from Lamar Advertising Company for approximately $46.5
million and in connection with such purchase acquired approximately 1,450
advertising display faces located in Baltimore, Maryland (the "Penn
Acquisition").

     THE JULY ACQUISITIONS.  In July 1997, the Company acquired (i)
approximately 143 advertising display faces located in and around Memphis,
Tennessee from Swaney Outdoor Advertising, LLC for approximately $2.5 million
(the "Swaney Acquisition") and (ii) approximately 90 advertising display faces
located in and around New York City from Allied Outdoor Advertising for
approximately $51.0 million (the "Allied Acquisition").

     THE VISUAL ACQUISITION. In September 1997, the Company acquired the stock
of Visual Consultants Inc. and its subsidiary Visual Outdoor Advertising, Inc.
for approximately $2.4 million and in connection


                                          3

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with such purchase acquired approximately 325 advertising display faces
located in and around Chattanooga, Tennessee (the "Visual Acquisition").

     THE OCTOBER ACQUISITIONS. In October 1997, the Company acquired (i) from
Gaess Outdoor, Inc. approximately 25 advertising display faces located in and
around New York City for approximately $15.8 million (the "Gaess Acquisition"),
(ii) from Royal Outdoor Advertising approximately 85 advertising display faces
located in and around Chicago, Illinois for approximately $4.0 million (the
"Royal Acquisition") and (iii) from Paxson Communications Corporation 178
advertising display faces located in the Gulf Coast area of Florida for
approximately $4.4 million (the "Paxson Acquisition").

     THE TAGCO ACQUISITION. In November 1997, the Company acquired 71
advertising display faces located in and around Chattanooga, Tennessee from
Tagco, Inc. for approximately $2.7 million (the "Tagco Acquisition").

     The Memphis/Tunica Acquisition, the Matthew Acquisition, the February
Acquisitions, the TransAd Acquisition, the Penn Acquisition, the July
Acquisitions, the Visual Acquisition, the October Acquisitions and the Tagco
Acquisition are referred to collectively as the "Acquisitions."

     ACQUISITION OF THE COMPANY. On October 23, 1997, the Parent entered into an
Agreement and Plan of Merger with Clear Channel Communications, Inc, a Texas
corporation ("Clear Channel"), pursuant to which the Parent and the Company will
become wholly-owned subsidiaries of Clear Channel.  The Parent received
shareholder approval for the merger on February 6, 1998.

     RECENT DEVELOPMENTS.  In January 1998, the Company acquired  approximately
16 advertising display faces located in and around New York City for
approximately $8.5 million.  In February 1998, the Company acquired
approximately 2,500 advertising display faces with ad rights at airports in
Chicago, Atlanta, Dallas, Denver, Newark, Boston and Aspen for approximately
$32.5 million.

INVENTORY

     The Company operates three standard types of outdoor advertising display
faces and also has transit and mall advertising as follows:

     -  BULLETINS generally are 14 feet high and 48 feet wide (672 square feet)
and consist of panels on which advertising copy is displayed. The advertising
copy is either hand painted onto the panels at the facilities of the outdoor
advertising company in accordance with design specifications supplied by the
advertiser and attached to the outdoor advertising structure, or is printed with
the computer-generated graphics on a single sheet of vinyl that is wrapped
around the structure. On occasion, to attract more attention, some of the panels
may extend beyond the linear edges of the display face and may include
three-dimensional embellishments. Because of their greater impact and higher
cost, bulletins are usually located on major highways.

     -  30-SHEET POSTERS generally are 12 feet high by 25 feet wide (300 square
feet) and are the most common type of billboard. Advertising copy for 30-sheet
posters consists of lithographed or silk-screened paper sheets supplied by the
advertiser that are pasted and applied like wallpaper to the face of the
display, or single sheets of vinyl with computer-generated advertising copy that
are wrapped around the structure. Thirty-sheet posters are concentrated on major
traffic arteries.

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     -  JUNIOR (8-SHEET) POSTERS usually are 6 feet high by 12 feet wide (72
square feet). Displays are prepared and mounted in the same manner as 30-sheet
posters, except that vinyl sheets are not typically used on junior posters. Most
junior posters, because of their smaller size, are concentrated on city streets
and target pedestrian traffic.

     -  TRANSIT ADVERTISING generally consists of posters and frames displayed
on the sides of public buses operating on city streets.

     - MALL ADVERTISING generally consists of kiosks located in shopping malls.

     - AIRPORT ADVERTISING generally consists of posters and frames displayed in
airports.

     Billboards generally are mounted on structures owned by the outdoor
advertising company and located on sites that are either owned or leased by it
or on which it has acquired a permanent easement. Billboard structures are
durable, have long useful lives and do not require substantial maintenance. When
disassembled, they typically can be moved and relocated at new sites. The
Company's outdoor advertising structures are made of steel and other durable
materials built to withstand variable climates, including the rigors of the
midwestern climate. The Company expects its structures to last 15 years or more
without significant refurbishment.

LOCAL MARKET OPERATIONS

     In each of its principal markets, the Company maintains a complete outdoor
advertising operation including a sales office, a production, construction and
maintenance facility, a creative department equipped with advanced technology, a
real estate unit and support staff. The Company conducts its outdoor advertising
operations through these local offices, consistent with senior management's
belief that an organization with decentralized sales and operations is more
responsive to local market demand and provides greater incentives to employees.
At the same time, the Company maintains centralized accounting and financial
controls to allow it to closely monitor the operating and financial performance
of each market. Local general managers, who report directly to the Company's
President or a regional manager, are responsible for the day-to-day operations
of their respective markets and are compensated according to the financial
performance of such markets. In general, these local managers oversee market
development, production and local sales. The Company is incorporating the
operations acquired in the Acquisitions into this operational structure with
local offices handling the day-to-day operations and centralized accounting and
financial controls.

     Although site leases (for land underlying an advertising structure) are
administered from the Company's headquarters in Chicago, each local office is
responsible for locating and ultimately procuring leases for appropriate sites
in its market. Site lease contracts vary in term but typically run from 10 to
20 years with various termination and renewal provisions. Each office maintains
a leasing department, with an extensive database containing information on local
property ownership, lease contract terms, zoning ordinances and permit
requirements. The Company has been very successful in developing new advertising
display face inventory in each of its markets based on utilizing these databases
and developing an experienced staff of lease teams. Each such team's sole
responsibility is the procurement of sites for new locations in each of the
Company's markets.

                                   5

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SALES AND SERVICE

     The Company's sales strategy is to maximize revenues from local
advertisers. Accordingly, it maintains a team of sales representatives headed by
a sales manager in each of its markets. The Company devotes considerable time
and resources to recruiting, training and coordinating the activities of its
sales force. A sales representative's compensation is heavily weighted to
individual performance, and the local sales manager's compensation is tied to
the performance of his or her sales team. One sales representative, based in
Chicago, manages sales to national advertisers.  In total, as of December 31,
1997 approximately 255 of the Company's employees are significantly involved in
sales and marketing activities.

     In addition to the sales staff, the Company has established fully staffed
and equipped creative departments in each of its principal markets. Utilizing
technologically advanced computer hardware and software, the staff is able to
create original design copy for both local and national accounts which has
allowed the various creative departments to exchange work via modem or over the
Internet with each other or directly with clients or their agencies. This
ability has resulted in many fully staffed advertising agencies turning to the
Company for the creation of their outdoor campaigns. The Company believes that
its creative department's implementation of continuing technological advances
provides a significant competitive advantage in the areas of sales and service.

CUSTOMERS

     Advertisers usually contract for outdoor displays through advertising
agencies, which are responsible for the artistic design and written content of
the advertising as well as the choice of media and the planning and
implementation of the overall campaign. The Company pays commissions to the
agencies for advertising contracts that are procured by or through those
agencies. Advertising rates are based on a particular display's exposure (or
number of "impressions" delivered) in relation to the demographics of the
particular market and its location within that market. The number of
"impressions" delivered by a display is measured by the number of vehicles
passing the site during a defined period and is weighted to give effect to such
factors as its proximity to other displays, the speed and viewing angle of
approaching traffic, the national average of adults riding in vehicles and
whether the display is illuminated. The number of impressions delivered by a
display is verified by independent auditing companies.

     The size and geographic diversity of the Company's markets allow it to
attract national advertisers, often by packaging displays in several of its
markets in a single contract to allow a national advertiser to simplify its
purchasing process and present its message in several markets. National
advertisers generally seek wide exposure in major markets and therefore tend to
make larger purchases. The Company competes for national advertisers primarily
on the basis of price, location of displays, availability and service.

     The Company also focuses efforts on local sales.  Local advertisers tend to
have smaller advertising budgets and require greater assistance from the
Company's production and creative personnel to design and produce advertising
copy. In local sales, the Company often expends more sales efforts on educating
customers regarding the benefits of outdoor media and helping potential
customers develop an advertising strategy using outdoor advertising. While price
and availability are important competitive factors, service and customer
relationships are also critical components of local sales.

     Tobacco revenues have historically accounted for a significant portion of
outdoor advertising revenues. Beginning in 1993, the leading tobacco companies
substantially reduced their expenditures for

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outdoor advertising due to a declining population of smokers, societal
pressures, consolidation in the tobacco industry and price competition from
generic brands. Since tobacco advertisers often utilized some of the
industry's prime inventory, the decline in tobacco-related advertising
expenditures made this space available for other advertisers, including those
that had not traditionally utilized outdoor advertising. As a result of this
decline in tobacco-related advertising revenues and the increased use of
outdoor advertising by other advertisers, the range of the Company's
advertisers has become quite diverse.

     In 1997, the following industries generated significant revenues as a
percentage of net revenues: travel/entertainment (15.4%); retail/consumer
products (11.8%); tobacco (10.9%); and automotive and related (10.5%).

PRODUCTION

     The Company has internal production facilities and staff to perform the
full range of activities required to develop, create and install outdoor
advertising in all of its markets. Production work includes creating the
advertising copy design and layout, painting the design or coordinating its
printing and installing the designs on its displays. In addition, the Company's
substantial new development activity has allowed it to vertically integrate its
own sign fabrication ability so that new signs are fabricated and erected
in-house. The Company usually provides its full range of production services to
local advertisers and to advertisers that are not represented by advertising
agencies, since national advertisers and advertisers represented by advertising
agencies often use preprinted designs that require only installation. However,
the Company's creative and production personnel frequently are involved in
production activities even when advertisers are represented by agencies due to
the development of new designs or adaptation of copy from other media for use on
billboards. The Company's artists also assist in the development of marketing
presentations, demonstrations and strategies to attract new advertisers.

     With the increased use of vinyl and pre-printed advertising copy furnished
to the outdoor advertising company by the advertiser or its agency, outdoor
advertising companies are becoming less responsible for labor-intensive
production work since vinyl and pre-printed copy can be installed quickly. The
vinyl sheets are reusable, thereby reducing the Company's production costs, and
are easily transportable. Due to the geographic proximity of the Company's
principal markets and the transportability of vinyl sheets, the Company can
shift materials among markets to promote efficiency. The Company believes that
this trend over time will reduce operating expenses associated with production
activities.

COMPETITION

     The Company competes in each of its markets with other outdoor
advertisers as well as other media, including broadcast and cable television,
radio, print media and direct mail marketers. In addition, the Company also
competes with a wide variety of "out-of-home" media, including advertising in
shopping centers and malls, airports, stadiums, movie theaters and
supermarkets, as well as on taxis, trains, buses and subways. Advertisers
compare relative costs of available media and cost-per-thousand impressions,
particularly when delivering a message to customers with distinct demographic
characteristics. In competing with other media, outdoor advertising relies on
its low cost-per-thousand-impressions and its ability to repetitively reach a
broad segment of the population in a specific market or to target a
particular geographic area or population with a particular set of demographic
characteristics within that market.

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     The outdoor advertising industry is highly fragmented, consisting of
several large outdoor advertising and media companies with operations in
multiple markets as well as smaller and local companies operating a limited
number of structures in single or a few local markets. Although some
consolidation has occurred over the past few years, according to the OAAA there
are approximately 600 companies in the outdoor advertising industry operating
approximately 396,000 billboard displays. In several of its markets, the Company
encounters direct competition from other major outdoor media companies,
including Outdoor Systems, Inc., Eller Media, Inc. (formerly Patrick Media
Group) and 3M National Advertising Co. (a division of Minnesota Mining and
Manufacturing Company), each of which has a larger national network and greater
total resources than the Company. The Company believes that its emphasis on
local advertisers and its position as a major provider of advertising services
enable it to compete effectively with the other outdoor media operators, as well
as other media. The Company also competes with other outdoor advertising
companies for sites on which to build new structures.

GOVERNMENT REGULATION

     The outdoor advertising industry is subject to governmental regulation at
the federal, state and local level. Federal law, principally the Highway
Beautification Act of 1965, encourages states, by the threat of withholding
federal appropriations for the construction and improvement of highways within
such states, to implement legislation to restrict billboards located within 660
feet of, or visible from, interstate and primary highways except in commercial
or industrial areas. All of the states have implemented regulations at least as
restrictive as the Highway Beautification Act, including the prohibition on the
construction of new billboards adjacent to federally-aided highways and the
removal at the owner's expense and without any compensation of any illegal signs
on such highways. The Highway Beautification Act, and the various state statutes
implementing it, require the payment of just compensation whenever governmental
authorities require legally erected and maintained billboards to be removed from
federally-aided highways.

     The states and local jurisdictions have, in some cases, passed additional
and more restrictive regulations on the construction, repair, upgrading, height,
size and location of, and, in some instances, content of advertising copy being
displayed on outdoor advertising structures adjacent to federally-aided highways
and other thoroughfares. Such regulations, often in the form of municipal
building, sign or zoning ordinances, specify minimum standards for the height,
size and location of billboards. In some cases, the construction of new
billboards or relocation of existing billboards is prohibited. Some
jurisdictions also have restricted the ability to enlarge or upgrade existing
billboards, such as converting from wood to steel or from non-illuminated to
illuminated structures. From time to time governmental authorities order the
removal of billboards by the exercise of eminent domain. Thus far, the Company
has been able to obtain satisfactory compensation for any of its structures
removed at the direction of governmental authorities, although there is no
assurance that it will be able to continue to do so in the future.

     In recent years, there have been movements to restrict billboard
advertising of certain products, including tobacco and alcohol. No bills have
become law at the federal level except those requiring health hazard warnings
similar to those on cigarette packages and print advertisements. The tobacco
industry has recently agreed to a proposed settlement of litigation against such
industry. Upon approval of Congress, the proposed settlement would require a
total ban of tobacco advertising on outdoor billboards and signs.  Any such ban
may have a material adverse effect on the Company's revenues at least in the
immediate period following the imposition of such ban.  Furthermore, state and
local governments have recently proposed and some, including the City of
Chicago, Illinois, have enacted regulations restricting or banning

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outdoor advertising of tobacco and alcohol in certain areas. In August 1996,
the U.S. Food and Drug Administration issued final regulations governing
certain marketing practices in the tobacco industry. Among other things, the
regulations prohibit tobacco product billboard advertisements within 1,000
feet of schools and playgrounds and require that tobacco product
advertisements on billboards be in black and white and contain only text. In
addition, one major tobacco manufacturer recently proposed federal
legislation banning 8-sheet billboard advertising and transit advertising of
tobacco products. No assurance can be given as to the effect on the Company
of existing laws and regulations or of new laws and regulations that may be
adopted in the future. A reduction in billboard advertising by the tobacco
and/or liquor industry could cause an immediate reduction in the Company's
direct revenue from such advertisers and would simultaneously increase the
available space on the existing inventory of billboards in the outdoor
advertising industry.

     Amortization of billboards has also been adopted in varying forms in
certain jurisdictions. Amortization permits the billboard owner to operate its
billboard as a non-conforming use for a specified period of time until it has
recouped its investment, after which it must remove or otherwise conform its
billboard to the applicable regulations at its own cost without any
compensation. Amortization and other regulations requiring the removal of
billboards without compensation have been subject to vigorous litigation in
state and federal courts and cases have reached differing conclusions as to the
constitutionality of these regulations. To date, regulations in the Company's
markets have not materially adversely affected its operations, except in the
Jacksonville market, where the Company has been subject to regulatory efforts
and recently agreed to city ordinances to remove a number of faces. On March 22,
1995, following litigation over an ordinance and a municipal charter amendment,
Naegele (a company acquired by the Company in 1996) entered into an agreement
with the City of Jacksonville to remove 711 billboard faces over a twenty year
period starting January 1, 1995 and ending December 31, 2014. The resolution
specifies the following removal schedule:

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CALENDAR YEARS         BULLETINS     30-SHEET       8-SHEET
                                     POSTERS        POSTERS        TOTAL
<S>                 <C>           <C>           <C>           <C>
1995-1998                73           242            167            482
1999-2004                23            87             --            110
2005-2014                23            96             --            119

                        119           425            167            711
</TABLE>

           Under the agreement, Naegele and the City of Jacksonville have
agreed on the removal of 445 pre-selected faces, including 167 (100%) of its
8-sheet faces. Management of the Company has control over the selection and
removal of an additional 155 faces. The remaining 111 faces to be removed will
be selected by the Company from a pool of faces identified by the City. While
the number of signs being taken down represents a large percentage of Naegele's
plant in the Jacksonville market, the Company believes that Jacksonville has
been overbuilt for a number of years, leading to low occupancy levels and low
advertising rates. The removal of a number of marginally profitable boards is
expected to put upward pressure on rates. Additionally, the removals are
staggered over 20 years, with management having substantial input on which signs
are removed and some rights of substitution and rebuilding of outdoor
advertising structures in the Jacksonville market.

           On February 1, 1991, Naegele entered into a consent judgment to
settle a complaint brought by the Minnesota Attorney General under Minnesota
anti-trust laws pursuant to which Naegele and its

                                     9

<PAGE>

successors are prohibited from purchasing outdoor advertising displays in the
Minneapolis/St. Paul market from other operators of outdoor advertising
displays until February 1, 2001. The consent judgment also prohibits the
Company from enforcing certain covenants not to compete and from entering
into property leases in excess of 15 years. The consent judgment does not
affect the Company's ability to continue to develop and build new advertising
displays in the Minneapolis/St. Paul market. Additionally, the Company can
purchase displays from brokers or other non-operators.

           The outdoor advertising industry is heavily regulated and at various
times and in various markets can be expected to be subject to varying degrees of
regulatory pressure affecting the operation of advertising displays.
Accordingly, although the Company's experience to date is that the regulatory
environment has not adversely impacted the Company's business, other than in the
newly acquired Jacksonville market, no assurance can be given that existing or
future laws or regulations will not materially adversely affect the Company at
some time in the future.

EMPLOYEES

           At December 31, 1997, the Company employed approximately 830 people,
of whom approximately 260 were primarily engaged in sales and marketing, 360
were engaged in painting, bill posting and construction and maintenance of
displays and the balance were employed in financial, administrative and similar
capacities. Of those employees, the following number belong to unions: Baltimore
(19), Milwaukee (12), Minneapolis/St. Paul (16), Philadelphia (43), Washington
D.C. (11) and Wilmington (14).  The Company considers its relations with the
unions and with its employees to be good.

                                 ITEM 2 -- PROPERTIES

OUTDOOR ADVERTISING SITES

           Giving effect to the Acquisitions, the Company owns or has permanent
easements on approximately 382 parcels of real property that serve as the sites
for its outdoor displays. The Company's remaining approximately 18,076
advertising display sites are leased or licensed.

           The Company's leases are for varying terms ranging from
month-to-month or year-to-year to terms of ten years or longer, and many provide
for renewal options. There is no significant concentration of displays under any
one lease or subject to negotiation with any one landlord. The Company believes
that an important part of its management activity is to manage its lease
portfolio and negotiate suitable lease renewals and extensions.

OFFICE AND PRODUCTION FACILITIES

           The Company's principal executive and administration offices are
located in Chicago, Illinois in a 14,984-square foot space leased by the
Company. In addition, after giving effect to the Acquisitions, the Company has
an office and complete production and maintenance facility in each of Addison,
Illinois (40,000 square feet); Orlando (20,500 square feet); Memphis (24,844
square feet); Chattanooga (14,580 square feet); Ocala (11,700 square feet);
Myrtle Beach (14,792 square feet); Milwaukee (18,367 square feet); Indianapolis
(23,648 square feet); Des Moines (15,320 square feet); Minneapolis/St. Paul
(82,547 square feet); Jacksonville (16,000 square feet); Evansville (16,000
square feet); Philadelphia (32,000 square feet); Washington, D.C. (15,668 square
feet); Salisbury (12,000 square feet); Wilmington (5,700 square feet);

                                         10

<PAGE>

Baltimore (30,668 square feet); Yonkers, NY (4,900 square feet); and
Kingston, NY (3,000 square feet) and a sales, real estate and administration
office in Dallas (2,000 square feet); New York (6,000 square feet); and
Orange County, CA (4,000 square feet). The Indianapolis, Addison, Orlando,
Milwaukee, Jacksonville, Myrtle Beach, Chattanooga, Ocala, Evansville,
Philadelphia, Washington, D.C., Salisbury, Wilmington, Yonkers and Kingston
facilities are owned and all other facilities are leased. The Company
considers its facilities to be well maintained and adequate for its current
and reasonably anticipated future needs.

                             ITEM 3 -- LEGAL PROCEEDINGS

           In addition, from time to time, the Company is involved in
litigation in the ordinary course of business, including disputes involving
advertising contracts, site leases, employment claims and construction matters.
The Company is also involved in routine administrative and judicial proceedings
regarding permits and fees relating to outdoor advertising structures and
compensation for condemnations. None of these proceedings, in the opinion of
management, is likely to have a material adverse effect on the Company.

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

           No matters were submitted during the fourth quarter of the fiscal
year covered by this Report to a vote of security holders, through the
solicitation of proxies or otherwise.

                                      11

<PAGE>


                                      PART II

ITEM 5 -- MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

PRICE RANGE OF COMMON STOCK

                There has been no public market for the common stock of the
Company.  As of December 31, 1997, Parent was the sole shareholder of the
Company.

DIVIDEND POLICY

           The Company has not paid dividends on its common stock and does not
anticipate paying dividends in the foreseeable future.  The Company intends to
retain any future earnings for reinvestment in the Company.  In addition, the
Credit Facility (as defined herein) and the indentures governing the Notes (as
defined herein) place limits on the Company's ability to pay dividends or make
any other distributions on its common stock.  Any future determination as to
payment of dividends will be at the discretion of the Company's Board of
Directors and will depend on the Company's results of operations, financial
condition, capital requirements and other factors deemed relevant by the Board
of Directors.


                                    12

<PAGE>

                          ITEM 6 -- SELECTED FINANCIAL DATA

           The selected financial data presented below as of and for the year
ended December 31, 1997 are derived from the Consolidated Financial Statements
of the Company.  The selected financial data as of and for the years ended
December 31, 1993, 1994, 1995, and 1996 are derived from the financial
statements of the Company.  The data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements, including
the notes thereto, appearing elsewhere in this Report.  Due to the significant
development and acquisition of additional assets, the data set forth below is
not necessary comparable on a year-to-year basis.

<TABLE>
<CAPTION>

                                                                                 Year Ended December 31,
                                                                1993        1994        1995           1996            1997
                                                                       (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                         <C>        <C>          <C>          <C>            <C>
       STATEMENT OF OPERATIONS DATA:
       Gross revenue . . . . . . . . . . . . . . . . . . . .   $28,710     $33,180      $38,101        $84,939       $230,148
       Net revenues(1) . . . . . . . . . . . . . . . . . . .    25,847      29,766       34,148         76,138        209,639
       Direct advertising expenses . . . . . . . . . . . . .    10,901      11,806       12,864         26,468         82,637
       General and administrative expenses . . . . . . . . .     3,357       3,873        4,244         10,596         18,966
       Depreciation and amortization . . . . . . . . . . . .     8,000       7,310        7,402         18,286         59,977
       Operating income. . . . . . . . . . . . . . . . . . .     3,589       6,777        9,638         20,788         48,059
       Interest expense. . . . . . . . . . . . . . . . . . .     8,965       8,314        8,627         15,730         46,280
       Other (expense) income, net . . . . . . . . . . . . .      (351)       (134)          42          1,398           (478)
       Income (loss) before taxes and extraordinary item(2)     (5,727)     (1,671)         969          3,660          2,257
       Provision for income taxes  . . . . . . . . . . . . .        --          --           --             --          6,303
       Net income (loss) . . . . . . . . . . . . . . . . . .    (8,987)     (1,671)         969        (10,788)        (4,046)
       Operating Cash Flow(3). . . . . . . . . . . . . . . .   $11,589     $14,087      $17,040        $39,074       $108,036
       Operating Cash Flow Margin(4) . . . . . . . . . . . .     44.8%       47.3%        49.9%          51.3%          51.5%
       Capital expenditures. . . . . . . . . . . . . . . . .     2,004       4,668        5,620          7,178         16,653
       OTHER DATA:
       Percentage of indebtedness to total capitalization(5)    116.1%      118.1%       115.8%          60.1%          63.5%
       Ratio of total indebtedness to Operating Cash Flow(6)      5.9x        5.2x         4.5x           NM(7)          4.8x
       Ratio of Operating Cash Flow to total interest(8) . .      1.3x        1.7x         2.0x           2.5x           2.3x
       Deficiency in coverage of earnings. . . . . . . . . .     8,987       1,671           --         10,788          4,046


                                                                                        AT DECEMBER 31,
                                                                1993        1994        1995           1996            1997

       BALANCE SHEET DATA:
       Working capital(9). . . . . . . . . . . . . . . . . .    $1,730      $2,119       $3,961        $24,432        $24,447
       Total assets. . . . . . . . . . . . . . . . . . . . .    61,816      66,190       69,133        699,390        942,225
       Total long-term debt and other obligations. . . . . .    68,054      73,304       76,079        347,941        518,774
       Redeemable preferred stock. . . . . . . . . . . . . .       --         --            --             --           --
       Common stockholders' equity (deficit) . . . . . . . .    (9,452)    (11,243)     (10,394)       230,984        297,621
                                                                                   (FOOTNOTES CONTINUED ON FOLLOWING PAGE)
</TABLE>
                                                   13

<PAGE>

(FOOTNOTES FOR PREVIOUS TABLE)

___________

 (1)       Net revenues are gross revenues less agency commissions.

 (2)       Extraordinary loss represents loss on early extinguishment of debt.

 (3)       "Operating Cash Flow" is operating income before depreciation and
           amortization and other non-cash charges. Operating Cash Flow is not
           intended to represent net cash flow provided by operating activities
           as defined by generally accepted accounting principles and should
           not be considered as an alternative to net income (loss) as an
           indicator of the Company's operating performance or to net cash
           provided by operating activities as a measure of liquidity. The
           Company believes Operating Cash Flow is a measure commonly reported
           and widely used by analysts, investors and other interested parties
           in the media industry. Accordingly this information has been
           disclosed herein to permit a more complete comparative analysis of
           the Company's operating performance relative to other companies in
           the media industry.

 (4)       "Operating Cash Flow Margin" is Operating Cash Flow stated as a
           percentage of net revenues.

 (5)       Amounts represent (i) total long-term debt divided by (ii) total
           long-term debt plus common stockholders' equity (deficit).

 (6)       Amounts represent (i) total long-term debt divided by (ii) Operating
           Cash Flow.

 (7)       Ratio of total indebtedness to Operating Cash Flow for the year
           ended December 31, 1996 is not meaningful as a result of significant
           acquisitions during 1996.

 (8)       Amounts represent the ratio of (i) Operating Cash Flow (ii) interest
           expense on funded debt.

 (9)       Working capital is current assets less current liabilities
           (excluding current maturities of long-term debt and other
           obligations).



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

           The following discussion of the consolidated results of operations
of the Company for the three years ended December 31, 1997 and financial
condition at December 31, 1997 should be read in conjunction with the
Consolidated Financial Statements of the Company and the related notes included
elsewhere in this Report.

           This Item 7 contains forward-looking statements that involve risks
and uncertainties.  When used in this Item 7, the words "anticipate", "believe",
"estimate", and "expect" and similar expressions as they relate to the Company
and its management are intended to identify such forward-looking statements.
The Company's actual results, performance, or achievements could differ
materially from the results expressed in, or implied by, such forward-looking
statements.  Factors that could affect such results, performance, or
achievements are set forth in "Risk Factors" in the Final Prospectus dated
August 15, 1997 filed in connection with the Parent's Registration Statement on
Form S-3 filed with the Securities and Exchange Commission (File No. 333-32607)

                                  14

<PAGE>


GENERAL

           The Company has grown significantly since 1989 through the
acquisition of outdoor advertising businesses and individual display faces in
specific markets, improvements in occupancy and advertising rates, and the
development of new display faces in existing markets. Between January 1, 1989
and December 31, 1997, the Company spent in excess of $714 million to acquire
additional display faces, increasing the number of its display faces from
approximately 600 in 1989 to approximately 33,994 at December 31, 1997. During
this period, the Company's net revenues increased from $10.3 million in 1989 to
$209.6 million in 1997.

           The Company's acquisitions have been financed through bank
borrowings, a contribution from the Parent and the issuance of long-term debt,
as well as with internally generated funds.  All acquisitions (including the
Acquisitions) have been accounted for using the purchase method of accounting,
and consequently, operating results from acquired operations are included from
the respective dates of those acquisitions. As a result of these acquisitions
and the effects of consolidation of operations following each acquisition, the
operating performance of certain markets and of the Company as a whole reflected
in the Company's Consolidated Financial Statements and other financial and
operating data included herein are not necessarily comparable on a year-to-year
basis.

HISTORICAL RESULTS OF OPERATIONS

           The following table presents certain operating statement items in
the Consolidated Statements of Operations as a percentage of net revenues:

<TABLE>
<CAPTION>
                                                   YEAR ENDED DECEMBER 31,
                                                1994     1995      1996    1997
<S>                                           <C>        <C>      <C>      <C>
     Net revenues. . . .                       100.0%    100.0%    100.0%  100.0%
     Direct advertising expenses                 39.7      37.7      34.8    39.4
     General and administrative expenses         13.0      12.4      13.9     9.1
                                                  ---
     Operating Cash Flow(1)                      47.3      49.9      51.3    51.5
     Depreciation and amortization               24.5      21.7      24.0    28.6
     Operating income                            22.8      28.2      27.3    22.9
     Other expense, primarily interest           28.4      25.4      22.5    21.8

     Net (loss) income before income taxes and
       extraordinary item                        (5.6)%     2.8%      4.8%    1.1%

___________


</TABLE>
(1)  As defined herein.

  Revenues are a function of both the occupancy of the Company's display faces
and the rates that the Company charges for their use. The Company focuses its
sales effort on maximizing occupancy levels while maintaining rate integrity in
its markets. Additionally, the Company believes it is important to the overall
sales effort to continually attempt to develop new inventory in growth areas of
its existing markets in order to enhance overall revenues.


                                       15

<PAGE>

  Net revenues represent gross revenues less commissions paid to advertising
agencies that contract for the use of advertising displays on behalf of
advertisers. Agency commissions on those revenues which are contracted through
agencies are typically 15% of gross revenues on local sales and 16 2/3% of gross
revenues on national sales. The Company considers agency commissions as a
reduction in gross revenues, and measures its operating performance based upon
percentages of net revenues rather than gross revenues.

  Direct advertising expenses consist of the following five categories: lease,
production, sales, maintenance and illumination. The lease expense consists
mainly of rental payments to owners of the land underlying the signs. The
production category consists of all of the costs to produce advertising copy and
install it on the display faces. Sales expense consists mainly of the cost of
staffing a sales force to sell within a specific market. The maintenance
category includes minor repair and miscellaneous maintenance of the sign
structures and the illumination category consists mainly of electricity costs to
light the display faces. The majority of these direct expenses are variable
costs (other than lease costs) that will fluctuate with the overall level of
revenues. In 1997, these expenses amounted to the following approximate
percentages of net revenues: lease 17.6%, production 10.4%, sales 7.2%,
maintenance 2.3% and illumination 1.9%.

  General and administrative expenses occur at both the market and corporate
levels. At the market level these expenses contain various items of office
overhead pertaining to both the personnel and the facility required to
administer a given market. The corporate general and administrative costs
represent staff and facility expenses for the executive offices and the
centralized accounting function. Both types of general and administrative
expenses are primarily fixed expenses in the operation of the business.

  The Company is included in the consolidated federal income tax return of
Parent and participates in a tax sharing agreement which provides the basis for
allocating taxable income and loss within the consolidated group.  At December
31, 1997, the Company had net operating loss and credit carryforwards for
federal income tax purposes of approximately $45 million.  Included in total net
operating loss and credit carryforwards is approximately $25 million of net
operating loss and credit carryforwards generated by certain acquired companies
prior to their acquisition by the Company.  The Company experienced an
"ownership change" within the meaning of Section 382 of the Internal Revenue
Code and a limit is imposed on the acquired net operating loss carryforwards.
Total carryforwards expire between 2005 and 2011.  During the current fiscal
year,  the Company did not utilize any net operating loss and credit
carryforwards.

COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996

  Net revenues increased 175.4% to $209.6 million during 1997 compared to $76.1
million in the corresponding 1996 period.  This increase was a result of
inclusion of approximately $6.9 million of revenues  from the Minneapolis (MN)
and Jacksonville (FL) markets which were acquired from NOA Holding Company in
April 1996 (the "Naegele Acquisition").  Additionally, $38.5 million is
attributable to markets acquired from Outdoor Advertising Holdings, Inc. in
October 1996 (the "POA Acquisition") and $62.1 million is attributable to
markets acquired from Revere Holdings Corp. in December 1996 (the "Revere
Acquisition") and in connection with the Matthew Acquisition, Penn Acquisition,
Allied Acquisition and Gaess Acquisition. Revenues from markets acquired in the
Memphis/Tunica Acquisition and Swaney Acquisition contributed $16.5 million.
The remaining $9.5 million or 12.5% increase in net revenues was a result of
higher advertising rates and occupancy levels on the Company's signboards and
inclusion of signboard revenues from advertising display faces  in the Des
Moines (IA), Dallas (TX), Evansville (IN), Chicago (IL) and Chattanooga (TN)
markets which were acquired during in 1996 and 1997.  Overall net revenues from
tobacco advertising increased to $22.8 million in 1997 compared to $10.0 million
in the 1996

                                     16

<PAGE>

period.  This increase was due mainly to the inclusion of tobacco revenues
from the acquired markets.  As a percentage of net revenues, tobacco
advertising sales decreased to 10.9% in 1997 compared to 13.2% in the 1996
period.

  The tobacco industry has recently engaged in negotiations to settle
litigation against such industry.  The tobacco companies have reached a proposed
settlement that, upon approval of Congress, will become final and binding.  Such
proposed settlement would require a total ban of tobacco advertising on outdoor
billboards and signs.  Any such ban may have a material adverse effect on the
Company's revenues at least in the immediate period following the imposition of
such ban while alternate sources of advertising are secured.  There can be no
assurance that the Company will immediately replace such advertising revenue
currently attributed to the tobacco industry in the event of a total ban of
tobacco advertising on outdoor billboards and signs.  Furthermore, even in the
even the advertising ban does not take place, state and local governments,
including state and local governments in areas where the Company does business,
have recently proposed and some have enacted regulations restricting or banning
outdoor advertising of tobacco in certain jurisdictions.

  Direct cost of revenues increased to $82.6 million in 1997 compared to $26.5
million in the 1996 period.  The Naegele Acquisition and the POA Acquisition
accounted for $6.3 million and $12.6 of the increase, respectively.  The Revere
Acquisition, the Matthew Acquisition, the Penn Acquisition, the Gaess
Acquisition, the Memphis/Tunica Acquisition and the Swaney Acquisition accounted
for $33.9 million.  As a percentage of net revenues, direct cost of revenues
increased to 39.4% in 1997 compared to 34.8% in the 1996 period.

  General and administrative expenses increased to $19.0 million in 1997 from
$10.6 million in the 1996 period.  As a percentage of net revenues, general and
administrative expenses decreased to 9.0% in 1997 compared to 13.9% in the 1996
period.  This percentage decrease was due to the addition of the new markets'
revenues without a significant increase in staffing or other corporate overhead
expenses.

  Depreciation and amortization expense increased to $60.0 million in 1997
compared to $18.3 million in the 1996 period.  This increase was due to
significant increases in the fixed assets and goodwill as a result of the
acquisitions.

  Total interest expense increased to $46.3 million in 1997 compared to $15.7
million in the 1996 period.  This increase resulted from increased debt
outstanding under the Company's  revolving credit facility which was incurred to
finance the Revere Acquisition, Matthew Acquisition, Memphis/Tunica Acquisition,
Penn Acquisition and Allied Acquisition and from the issuance by the Company of
$225 million 9 3/4 % Senior Subordinated Notes due 2006 in October 1996 and $100
million 9 3/4% Series B Subordinated Notes due 2006 in December 1996 (the
"Notes").

  In 1997, $6.3 million of deferred tax expense was recognized.

  The foregoing factors contributed to the Company's $4.0 million net loss in
1997 compared to net income of $10.8 million in the 1996 period.

COMPARISON OF YEARS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995

                                  17

<PAGE>

  Net revenues increased 123.2% to $76.1 million during 1996 compared to
$34.1 million in the corresponding 1995 period. This increase was a result of
inclusion of approximately $20.2 million of revenues from the Naegele
Acquisition and approximately $13.0 million of revenues from the  POA
Acquisition.  The remaining $8.8 million or 25.8% increase in net revenues was a
result of higher advertising rates and occupancy levels on the Company's
signboards and inclusion for the three quarters of signboard revenues from the
acquisitions of Image Media, Inc. and AdSign, Inc. and a full quarter of
signboard revenues from the markets in Des Moines (IA) and Dallas (TX) which
were acquired in September 1996.  Overall net revenues from tobacco advertising
increased to $10.0 million in 1996 compared to $4.5 million in the 1995 period.
This increase was due mainly to the inclusion of tobacco revenues from the
various markets acquired in 1996 and 1995.  However, as a percentage of net
revenues, tobacco advertising sales remained constant at 13.2% in 1996 and 1995.

  Direct cost of revenues increased to $26.5 million in 1996 compared to
$12.9 million in the 1995 period. The Naegele Acquisition and the POA
Acquisition accounted for $7.3 million and $3.0 million, respectively, of the
increase.  As a percentage of net revenues, however, direct cost of revenues
decreased to 34.8% in 1996 compared to 37.8% in the 1995 period as a result of
economies of scale associated with the increased revenues.

  General and administrative expenses increased to $10.6 million in 1996 from
$4.2 million in the 1995 period. As a percentage of net revenues, general and
administrative expenses increased to 13.9% in 1996 compared to 12.3% in the 1995
period.  This percentage increase was due to an increase in staffing required in
conjunction with the significant increase in the size of the Company's
operations.

  Depreciation and amortization expense increased to $18.3 million in 1996
compared to $7.4 million in the 1995 period. This increase was due to
significant increases in the fixed assets as a result of the acquisitions
consummated in such period.

  Total interest expense increased to $15.7 million in 1996 compared to
$8.6 million in the 1995 period. The increase resulted from increased debt
outstanding under the credit facility which was incurred to finance the Naegele
Acquisition and from the issuance of the Notes.

  Other expenses increased to $1.4 million in 1996, consisting of a $1.7
million one-time charge for expenses arising out of the Naegele Acquisition.

  An extraordinary charge of $14.4 million arose out of the early retirement of
the Company's outstanding $65 million 11% Series A Senior Notes due 2003.

  The foregoing factors contributed to the Company's $10.8 million net income
in 1996 compared to $969,000 net income in the 1995 period.

COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1994

  Net revenues increased 14.7% to $34.1 million during 1995 from $29.8 million
in 1994, reflecting higher advertising rates and occupancy levels particularly
in the Chicago and Indianapolis markets.

                                    18

<PAGE>

  Direct advertising expenses increased to $12.9 million in 1995 from
$11.8 million in 1994 as a result of higher sales during the 1995 period. As a
percentage of net revenues, however, direct advertising expenses decreased to
37.7% in 1995 as a result of economies of scale associated with increased
revenues.

  General and administrative expenses in 1995 increased to $4.2 million from
$3.9 million in 1994 due to the incremental payroll costs associated with
additional employees. As a percentage of net revenues, however, general and
administrative expenses decreased to 12.4%.

  As a result of the above factors, Operating Cash Flows increased by 20.6% to
$17.0 million in 1995 from $14.1 million in 1994.

  Depreciation and amortization expenses increased slightly to $7.4 million in
1995 from $7.3 million in 1994 due to large increases in the fixed assets offset
by scheduled depreciation of the older fixed assets.

  Total interest expense increased to $8.6 million in 1995 from $8.3 million in
1994 due to a slightly greater interest expense associated with additional
borrowings.

  The foregoing factors contributed to the Company's $969,000 net income in
1995 compared to a net loss of $1.7 million in 1994.  Because the Company
incurred net losses in 1994 and 1993, it had no provision for income taxes in
those years.  Although the Company recognized net income in 1995, it had no
provision for income taxes due to the prior year's net operating loss
carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

  The Company has historically satisfied its working capital requirements with
cash from operations and revolving credit borrowings. Its acquisitions have been
financed primarily with borrowed funds and, to a lesser extent, with a
contribution from the Parent.

  In May 1997, the Company, LaSalle National Bank ("LaSalle") and Bankers Trust
Company, as co-agents ("Bankers Trust" and together with LaSalle, the
"Lenders"), agreed to amend and restate the Company's credit facility to provide
for an acquisition credit line in the amount of $212.5 million, a working
capital revolving credit line of $12.5 million, a swing line of $5.0 million and
$75 million term loan (the "Credit Facility"). No amounts have been drawn under
the working capital facility.  At December 31, 1997, the Company had
approximately $191.5 million outstanding under the Credit Facility.

  In August 1997, the Parent completed an offering of 5,912,500 shares of
Common Stock of which 2,109,105 were primary shares and 3,803,395 were secondary
shares (the "August Offering").  Proceeds to the Parent from the August Offering
totaled approximately $70.6 million.  All of the proceeds were used to reduce
outstanding indebtedness after a contribution from the Parent.

  Net cash provided by operating activities increased to $28.2 million in 1997
from $15.1 million for the 1996 period.  Net cash provided by operating
activities increased to $15.1 million in 1996 from $7.0 million in the 1995
period.  Net cash provided by operating activities reflects the Company's net
income adjusted for non-cash items and the use or source of cash for the net
change in working capital.

  The Company's net cash used in investing activities of $277.4 million in 1997
includes cash used for acquisitions of $260.8 million and other capital
expenditures of $16.7 million.  The Company's net cash used in investing
activities of $498.0 million in 1996 includes cash used for acquisitions of
$490.8 million and

                              19

<PAGE>

other capital expenditures of $7.2 million.  The Company's net cash used in
investing activities of $9.1 million for the year ended December 31, 1995
included cash used for acquisitions of $1.9 million and other capital
expenditures of $5.6 million.

  For the year ended December 31, 1997, $237.7 million was provided by
financing activities primarily due to the offering of common stock by the Parent
and increased borrowings under the Company's credit facilities.  For the 1996
period, $494.5 million was provided by financing activities primarily due to the
offering of common stock by the Parent and increased borrowings under the
Company's credit facilities.  In 1995, net cash of $2.0 million was provided by
financing activities, primarily due to borrowings under a prior credit facility.

  Capital expenditures have been made primarily to develop new structures in
each of the Company's markets.  The Company intends to continue to develop new
structures in its markets and to consider potential acquisitions in the Midwest,
Southeast and East Coast regions and contiguous markets.  Management believes
that its internally generated funds, together with available borrowings under
its credit facility, will be sufficient to satisfy its cash requirements,
including anticipated capital expenditures, for the foreseeable future.
However, in the event cash from operations, together with available funds under
the Company's credit facility are insufficient to satisfy its cash requirements,
the Company may obtain funds from additional sources of indebtedness and/or
equity offerings by Parent to finance its operations including, without
limitation, additional acquisitions.

  The Company's ability to make scheduled payments of principal of, or to pay
interest on, or to refinance its indebtedness (including the Notes) depends on
its future performance and financial results, which to a certain extent, is
subject to general economic, financial, competitive, legislative, regulatory and
other factors beyond its control. There can be no assurance that the Company's
business will generate sufficient cash flow from operations or that future
borrowings will be available in an amount sufficient to enable the Company to
service its indebtedness, including the Notes, or to make necessary capital
expenditures, or that any refinancing would be available on commercially
reasonable terms or at all.

INFLATION

  Inflation has not had a significant impact on the Company over the past three
years. The floating rate on the Credit Facility could increase in an
inflationary environment, but management believes that because a significant
portion of the Company's costs are fixed, inflation will not have a material
adverse effect on its operations. However, there can be no assurance that a high
rate of inflation in the future will not have an adverse effect on the Company's
operations.

RECENT ACCOUNTING PRONOUNCEMENTS

  In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income"
and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information."  The Statements are effective for fiscal years beginning after
December 15, 1997.  SFAS No. 130 requires the presentation of comprehensive
income and its components in a full set of financial statements.  SFAS No. 131
requires the disclosure of financial and descriptive information about
reportable operating segments.  Both SFAS No. 130 and 131 are modifications of
disclosure requirements which will have no effect on the results of operations
or financial condition of the Company.  The Company does not anticipate any
significant changes in disclosure as a result of adopting SFAS Nos. 130 and 131.


                                   20

<PAGE>

YEAR 2000 RISK

  The Company has implemented a Year 2000 Program to ensure that the Company's
computer systems and applications will function properly beyond 1999.  The
Company believes that it has allocated adequate resources for this purpose and
expects its Year 2000 Program to be successfully completed on a timely basis.
There can, however, be no assurance that this will be the case.

                          ITEM 8 -- FINANCIAL STATEMENTS AND
                                  SUPPLEMENTARY DATA


                                       21
<PAGE>




                              UNIVERSAL OUTDOOR, INC.
                           (a wholly owned subsidiary of
                         Universal Outdoor Holdings, Inc.)

                         CONSOLIDATED FINANCIAL STATEMENTS

                             DECEMBER 31, 1996 AND 1997














                                      22

<PAGE>




                           REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and
Stockholder of Universal Outdoor, Inc.


In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in common stockholder's
equity (deficit) and of cash flows present fairly, in all material respects,
the financial position of Universal Outdoor, Inc. and its subsidiaries
(collectively "the Company") at December 31, 1996 and 1997, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits.  We conducted our audits of
these statements in accordance with generally accepted auditing standards
which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation.  We believe that
our audits provide a reasonable basis for the opinion expressed above.



PRICE WATERHOUSE LLP

Chicago, Illinois
March 6, 1998




                                      23

<PAGE>


                               UNIVERSAL OUTDOOR, INC.
          (a wholly owned subsidiary of Universal Outdoor Holdings, Inc.)

                            CONSOLIDATED BALANCE SHEETS
                               (Dollars in thousands)

<TABLE>
<CAPTION>
                                                   December 31,  December 31,
                                                       1996          1997
                                                   ------------  ------------
<S>                                                <C>           <C>

                                       ASSETS
Current assets:
  Cash and equivalents                              $ 11,631      $      89
  Cash held in escrow                                  9,455             -
  Accounts receivable, less allowance
    for doubtful accounts of $2,849 and $2,476        20,927         35,876
  Accounts receivable - Parent                         2,708          3,270
  Other receivables                                    1,445          1,761
  Prepaid land leases                                  4,010          9,520
  Prepaid insurance and other                          4,173          3,521
                                                   ---------       --------
      Total current assets                            54,349         54,037
                                                   ---------       --------
Property and equipment, net                          382,555        622,179
Goodwill and intangible assets, net                  237,372        247,592
Other assets, net                                     25,114         18,417
                                                   ---------       --------
Total assets                                        $699,390       $942,225
                                                   =========       ========


                   LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
  Accrued expenses                                   $26,544      $  24,078
  Current maturities of long-term debt                   -           12,374
  Accounts payable                                     3,373          5,512
                                                   ---------       --------
      Total current liabilities                       29,917         41,964
                                                   ---------       --------
Long-term debt and other-obligations                 347,941        506,400
Other long-term liabilities                              485           -
Long-term deferred income tax liabilities             90,063         96,240

Commitments and contingencies (Notes 10 and 12)          -             -

Stockholder's equity:
  Common stock, $.01 par value, 1,000,000
   shares authorized; 10,000 shares issued
   and outstanding                                       -             -
  Additional paid in capital                         274,821        345,504
  Accumulated deficit                                (43,837)       (47,883)
                                                   ---------       --------
      Total stockholder's equity                     230,984        297,621
                                                   ---------       --------
Total liabilities and stockholder's equity          $699,390       $942,225
                                                   =========       ========
</TABLE>
       See accompanying notes to consolidated financial statements.

                                      24

<PAGE>

                              UNIVERSAL OUTDOOR, INC.
          (a wholly owned subsidiary of Universal Outdoor Holdings, Inc.)

                       CONSOLIDATED STATEMENTS OF OPERATIONS
                               (Dollars in thousands)

                          FOR THE YEARS ENDED DECEMBER 31,

<TABLE>
<CAPTION>
                                                         1995         1996        1997
                                                        ------       ------      -------
<S>                                                    <C>          <C>          <C>
Revenues                                               $38,101      $84,939     $230,148
Less agency commissions                                  3,953        8,801       20,509
                                                        ------       ------      -------
   Net revenues                                         34,148       76,138      209,639
                                                        ------       ------      -------
Operating expenses:
   Direct advertising expenses                          12,864       26,468       82,637
   General and administrative expenses                   4,244       10,596       18,966
   Depreciation and amortization                         7,402       18,286       59,977
                                                        ------       ------      -------
                                                        24,510       55,350      161,580
                                                        ------       ------      -------
Operating income                                         9,638       20,788       48,059
                                                        ------       ------      -------
Other expense:
   Interest expense, including amortization
    of bond discount of $63, $731 and $9                 8,627       15,730       46,280
   Other expenses (income)                                  42        1,398         (478)
                                                        ------       ------      -------
        Total other expense                              8,669       17,128       45,802
                                                        ------       ------      -------
Income before income taxes and extraordinary item          969        3,660        2,257
Provision for income taxes                                -            -           6,303
                                                        ------       ------      -------

Income before extraordinary item                           969         3660       (4,046)
Extraordinary loss on early extinguishment of debt        -         (14,448)        -
                                                        ------       ------      -------
Net income (loss)                                     $    969     $(10,788)   $(  4,046)
                                                        ======       ======      =======
</TABLE>
            See accompanying notes to consolidated financial statements.

                                       25

<PAGE>


                              UNIVERSAL OUTDOOR, INC.
          (a wholly owned subsidiary of Universal Outdoor Holdings, Inc.)

                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (Dollars in thousands)

                          FOR THE YEARS ENDED DECEMBER 31,

<TABLE>
<CAPTION>

                                                                      1995        1996       1997
                                                                     ------      ------     ------
<S>                                                                 <C>        <C>          <C>
Cash flows from operating activities:
   Net income (loss)                                                $   969    $( 10,788)   $(  4,046)
   Depreciation                                                       6,207       13,309       42,347
   Amortization                                                       1,690        4,977       17,630
   Extraordinary loss                                                  -          14,448         -
   Changes in assets and liabilities, net of effects
     from acquisitions:
     Accounts receivable and other receivables                         (762)      (1,200)     (14,137)
     Accounts receivable - Parent                                      -          (2,708)      (3,468)
     Prepaid land leases, insurance and other                          (391)         435       (1,919)
     Accounts payable and accrued expenses                             (187)      (3,124)      (8,179)
     Accounts payable - Parent                                         (488)        (234)        -
                                                                     ------       ------       ------
      Net cash from operating activities                              7,038       15,115       28,228
                                                                     ------       ------       ------
Cash flows used in investing activities:
   Capital expenditures                                              (5,620)     (7,178)      (16,653)
   Payments for acquisitions, net of cash acquired                   (1,925)   (490,813)     (260,780)
   Payment for consulting agreement                                  (1,400)       -            -
   Other payments                                                      (124)         13         -
                                                                     ------       ------       ------
      Net cash used in investing activities                          (9,069)   (497,978)     (277,433)
                                                                     ------       ------       ------
Cash flows from (used in) financing activities:
   Proceeds from long-term debt offerings                              -        325,255         -
   Long-term debt repayments                                           (262)    (74,987)      (2,769)
   Deferred financing costs                                            (250)    (18,298)      (1,751)
   Net borrowings under credit agreements                             2,671     486,052      274,480
   Repayment of credit facilities                                      -       (475,713)    (102,980)
   Capital contributions from Parent                                   -        252,286       70,683
   Dividends paid to Parent                                            (120)       (120)        -
                                                                     ------       ------       ------
      Net cash from financing activities                              2,039     494,475      237,663
                                                                     ------       ------       ------

Net increase (decrease) in cash and equivalents                           8      11,612      (11,542)
Cash and equivalents, at beginning of period                             11          19       11,631
                                                                     ------       ------       ------
Cash and equivalents, at end of period                             $     19    $ 11,631  $        89
                                                                     ======       ======       ======
Supplemental cash flow information:
   Interest paid during the period                                   $8,076     $10,910      $43,501
                                                                     ======       ======       ======
</TABLE>

            See accompanying notes to consolidated financial statements.

                                      26

<PAGE>

                              UNIVERSAL OUTDOOR, INC.
          (a wholly owned subsidiary of Universal Outdoor Holdings, Inc.)

       CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S  EQUITY (DEFICIT)
                    (Dollars in thousands, except share amounts)

<TABLE>
<CAPTION>

                                                 Universal
                                               Outdoor, Inc.    Additional                        Stockholder's
                                              Common Stock       Paid in         Accumulated         Equity
                                                 Shares           Capital           Deficit         (Deficit)
                                              --------------    -----------      -----------      -----------
<S>                                              <C>            <C>                <C>
Balance at December 31, 1994                     10,000         $ 20,535          $(33,778)       $( 11,243)

Dividends declared and paid to Parent                                                 (120)            (120)
Net income                                                                             969              969
                                                --------        --------           -------          -------
Balance at December 31, 1995                     10,000           20,535           (32,929)         (10,394)
Capital contributions from Parent                                252,286                            252,286
Dividends declared and paid to Parent                                                 (120)            (120)
Net loss                                                                           (10,788)         (10,788)
                                                --------        --------           -------          -------
Balance at December 31, 1996                     10,000          274,821           (43,837)         230,984
Capital contributions from Parent                                 70,683                             70,683
Net loss                                                                            (4,046)          (4,046)
                                                --------        --------           -------          -------

Balance at December 31, 1997                     10,000         $345,504         $(47,883)        $297,621
                                                 ======          =======            ======          =======
</TABLE>


        See accompanying notes to consolidated financial statements.

                                      27

<PAGE>

                            UNIVERSAL OUTDOOR, INC.
          (a wholly owned subsidiary of Universal Outdoor Holdings, Inc.)

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               (Dollars in thousands)


NOTE 1 - BASIS OF PRESENTATION AND DESCRIPTION OF THE BUSINESS:

Universal Outdoor, Inc. ("Universal"), a wholly-owned subsidiary of Universal
Outdoor Holdings, Inc. (the "Parent Company"), was incorporated on June 12,
1975, and is engaged principally in the rental of advertising space on
outdoor advertising structures.  Universal operates in three distinct
regions: the Midwest (Chicago, Minneapolis/St. Paul, Indianapolis, Milwaukee,
Des Moines, Evansville, IN and Dallas), the Southeast (Orlando, Jacksonville,
Ocala and the Atlantic Coast, including Myrtle Beach and the Gulf Coast areas
of Florida, Memphis/Tunica and Chattanooga), and the East Coast (New York,
Baltimore, Washington D.C., Philadelphia, Northern New Jersey, Wilmington,
Salisbury and Hudson Valley, NY).

Historically, manufacturers of tobacco products, principally cigarettes, have
been major users of outdoor advertising displays, including displays operated
by Universal.  The following industries generated significant revenues as a
percentage of Universal's total net revenues in 1997: tobacco (10.9%);
automotive (10.5%); retail (11.8%); and entertainment (15.4%).

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:

The summary of significant accounting policies is presented to assist the
reader in understanding and evaluating Universal's consolidated financial
statements. These policies are in conformity with generally accepted
accounting principles consistently applied in all material respects.

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of Universal and
its subsidiaries.  All material intercompany balances, transactions and
profits have been eliminated.

REVENUE RECOGNITION

Universal's revenues are generated from contracts with advertisers generally
covering periods of one to twelve months.  Universal recognizes revenues
monthly over the period in which advertisement displays are posted on the
advertising structures.  A full month's revenue is recognized in the first
month of posting. Costs incurred for the production of outdoor advertising
displays are recognized in the initial month of the contract or as incurred
during the contract period.  Payments received in advance of billings are
recorded as deferred revenues.

                                      28

<PAGE>

CASH AND EQUIVALENTS

Universal considers all highly-liquid investments with original maturities of
three months or less to be cash equivalents.

Cash held in escrow in 1996 represents a deposit made by Revere Holding Corp.
under an agreement relating to a contemplated acquisition of property.  The
property was subsequently not acquired and therefore the funds were returned
to cash and cash equivalents.

PREPAID LAND LEASES

Most of  Universal's advertising structures are located on leased land.  Land
rents are typically paid in advance for periods ranging from one to twelve
months.  Prepaid land leases are expensed ratably over the related rental
term.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost.  Normal maintenance and repair
costs are expensed. Depreciation is computed principally using a
straight-line method over the estimated useful lives of the assets:

<TABLE>
<CAPTION>
<S>                                                    <C>
                    Buildings                          39  years
                    Advertising structures             15  years
                    Vehicles and equipment             5-7 years
</TABLE>

GOODWILL AND INTANGIBLE ASSETS

Non-compete agreements, deferred financing and acquisition costs are
amortized over their estimated economic lives, ranging from three to ten
years.  Goodwill is amortized over fifteen years on a straight-line basis.
Universal reviews the carrying value of intangibles and other long-lived
assets for impairment when events or changes in circumstances indicate that
the carrying amount of the asset may not be recoverable.  This review is
performed by comparing estimated undiscounted future cash flows from the use
of the asset to the recorded value of the asset.

OTHER ASSETS

Loan costs incurred in connection with obtaining financing have been deferred
and are being amortized on a straight line basis over the life of the loans.
Acquisition costs are amortized over their estimated economic life,
principally five years.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of cash and equivalents, accounts receivable and accounts
payable approximates the carrying value of the immediate or short-term
maturity of these financial instruments.  The fair value of Universal's other
financial instruments approximates the carrying value.

                                      29

<PAGE>

EARNINGS PER SHARE

An earnings per share calculation has not been presented because Universal is
a wholly-owned subsidiary of the Parent Company and, accordingly, earnings
per share is not required or meaningful.

USE OF ESTIMATES

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

RECLASSIFICATIONS

Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform with the current year presentation and to
reflect the finalization of purchase accounting for 1996 acquisitions.  These
reclassifications were not significant and had no effect on previously
reported net earnings.

NOTE 3 - EQUITY OFFERINGS AND DEBT REFINANCINGS:


<TABLE>
<CAPTION>
                                                          1996        1997
                                                          ------      ------
<S>                                                       <C>         <C>
Capital contributions from Parent                        $252,286    $70,683
                                                          -------     ------

Proceeds from long-term debt offerings:
    9 3/4% Senoir Subordinated Debt                       223,587
    9 3/4% Series B Senior Subordinated Debt              101,500
    Paramount note                                            168
                                                          -------
                                                          325,255
                                                          -------
Proceeds from credit facilities                           486,052    274,480
                                                        ---------    -------
    Total proceeds from financings                      1,063,593    345,163
                                                        ---------    -------
</TABLE>

                                      30


<PAGE>

Proceeds from financings used for:
    11% Senior Notes repayment                             65,000
    Penalty on the early retirement of 11% Senior Notes     8,314
    Mortgage and other                                      1,673      2,769
                                                        ---------    -------
                                                           74,987      2,769
Repayment of credit facilities                            475,713    102,980
Dividend to Parent                                            120
Financing costs                                            18,298      1,751
                                                        ---------    -------
                                                          569,118    107,500
                                                        ---------    -------
Net financing proceeds                                $   494,475   $237,663
                                                        =========    =======

During 1997, the Parent Company contributed capital to Universal in the
amount of  $70,683.   The funds were generated from proceeds of a Parent
Company equity offering.

During 1996, the Parent Company contributed capital to Universal in the
amount of $252,286.  The funds were generated from proceeds from equity
offerings and private investors netted agains repayments of the 14% Senior
Secured Discount Notes.

At December 31, 1997 Universal's credit facility provides for a total loan
commitment of $305.0 million with (i) a revolving line of credit facility
providing for borrowings of up to $12.5 million, (ii) an acquisition credit
line in the amount of  $212.5 million which is available under a
revolving/term loan facility, (iii) a swing line in the amount of $5.0
million and (iv) a term loan agreement totaling $75.0 million.   In 1997,
proceeds from credit facilities totaled $274,480, while repayments totaled
$102,980.

Universal completed a public offering of $225 million 9 3/4% Senior
Subordinated Notes due 2006 for net proceeds of $223,587 in October 1996 and
a private offering of $100 million 9 3/4% Series B Senior Subordinated Notes
due 2006 for net proceeds of $101,500 in December 1996 (collectively, "the
Notes Offerings").

In 1996, the net proceeds of the capital contributions and Notes Offerings
together with the proceeds under the available credit facilities were used to
redeem all of the outstanding 11% Senior Notes due 2003 for $65,000, pay the
$8,314 related penalty, repay approximately $285 million of the then
outstanding credit facility and pay the purchase price of $25 million
relating to certain acquisitions which occurred in 1996.  The redemptions
during the year resulted in an extraordinary loss of $14,448.

NOTE 4 - ACQUISITIONS:

Universal completed the following significant acquisitions for primarily cash
during 1996 and 1997:


<TABLE>
<CAPTION>

                                                                  PURCHASE PRICE
                                                                 STOCK           ASSET
                                            ACQUIRED          ACQUISITION     ACQUISITION
<S>                                        <C>                <C>             <C>

Ad-Sign, Inc.                              January 1996                        $12,500
NOA Holding Corporation                      April 1996       $ 83,295
Iowa Outdoor Displays                    September 1996                          1,794

                                      31

<PAGE>

The Chase Company                        September 1996                          5,800
Trans-Ad, Inc.                             October 1996        239,064
Revere Holding Corporation                December 1996        123,794
Tanner-Peck LLC                           January, 1997                         71,659
Matthew Outdoor Advertising               January, 1997                         40,931
Ad-Craft, Inc.                           February, 1997                          5,507
David Klein Outdoor Advertising, Inc.    February, 1997                          5,258
Trans-Ad, Inc.                              March, 1997                          7,980
Penn Advertising of Baltimore, Inc.          June, 1997         46,500
Swaney Outdoor Advertising LLC               July, 1997                          2,532
Allied Outdoor Advertising, Inc.             July, 1997                         50,938
Visual Outdoor Advertising, Inc.           August, 1997          2,398
Gaess Outdoor, Inc.                       October, 1997                         15,827
Royal Outdoor Advertising                 October, 1997                          4,034
Paxson Communications Corporation         October, 1997                          4,418
TagCo, Inc.                              November, 1997                          2,733
</TABLE>

The aggregate purchase price of the Tanner-Peck, Inc. acquisition also
included 100,000 shares of the Parent Company's common stock issued on
January 2, 1997 at market value which approximated $2,306 in total.

In March 1997, Universal acquired $600 of outdoor advertising properties in
exchange for 20,000 shares of the Parent Company's common stock.

The purchase price for accounting purposes was allocated as follows to the
assets purchased and the liabilities assumed based upon the estimated fair
values on the dates of acquisition.  It is expected that revisions to the
assets purchased and liabilities assumed will be made during 1998 for
acquisitions made in 1997, however, it is not expected that such revisions
will have any material effect.


<TABLE>
<CAPTION>
                                                         1996           1997
<S>                                                    <C>           <C>
Current assets, other than cash                         22,567       $  2,278
Property and equipment                                 323,624        249,160
Goodwill and other intangibles                         219,406         33,773
Other assets                                             4,847            229
Current liabilities                                    (32,497)       (13,072)
Net deferred taxes                                     (71,700)        (8,200)
Long-term debt                                            -              (547)
                                                     ---------      ----------
                                                      $466,247       $263,621
                                                     =========      ==========
</TABLE>

All acquisitions have been accounted for under the purchase method of accounting
and, accordingly, the operating results of the acquired businesses are included
in the Universal's consolidated financial statements from the respective dates
of acquisition.  Where required, net deferred taxes were recorded representing
the temporary difference between the tax attributes assumed and the recorded
fair value as of the date of acquisition.   Since it is not deductible for tax
purposes, no deferred taxes are required to be recorded for amounts allocated to
goodwill.

                                      32

<PAGE>

In conjunction with the 1996 and 1997 acquisitions, Universal recorded
reserves of approximately $15.1 million to cover anticipated costs of
combining its existing business with the acquired outdoor advertising
businesses.  The reserves relate to liabilities incurred for facility charges
($6.3 million), professional fees ($3.2 million), relocation ($2.3 million),
severance ($1.9 million)  and other related expenditures ($1.4 million).  At
December 31, 1997 recorded reserves were approximately $3.3 million.

The following unaudited pro forma financial information combines the results
of operations of the 1996 and 1997 acquisitions as if the transactions had
been consummated as of the beginning of the periods presented and included
the impact of certain adjustments such as depreciation of advertising
structures, amortization of goodwill and other intangibles, reduction of
corporate expenses and interest expense on debt assumed to have been incurred
to complete the transactions.


<TABLE>
<CAPTION>

                                                        1996            1997
                                                     -------          ---------
                                                   (unaudited)      (unaudited)
<S>                                                 <C>              <C>
     Net revenues                                   $189,915          $212,929
     Depreciation and amortization                    56,228            61,830
     Operating income                                 35,916            47,896
     Interest                                         50,514            48,256
     Income (loss) before income taxes and
       extraordinary item                           $(15,996)         $    118
</TABLE>


These unaudited  pro forma results are not necessarily indicative of what
actually would have occurred if the acquisitions had been in effect for the
entire periods presented and are not intended to project future results.

NOTE 5 - PROPERTY AND EQUIPMENT:

Property and equipment consist of the following at December 31:

<TABLE>
<CAPTION>
                                                      1996           1997
<S>                                                 <C>            <C>
     Outdoor advertising structures                 $390,963       $657,928
     Land and capitalized land lease costs            12,130         14,317
     Vehicles and equipment                           12,744         18,462
     Building and leasehold improvements              11,087         14,123
     Display faces under construction                    748          2,831
                                                     -------        -------
                                                     427,672        707,661
     Less accumulated depreciation                    45,117         85,482
                                                     -------        -------
                                                    $382,555       $622,179
                                                     =======        =======

</TABLE>


NOTE 6 - GOODWILL AND INTANGIBLE ASSETS:

Goodwill and intangible assets consist of the following at December 31:

<TABLE>
<CAPTION>
                                                     1996             1997
<S>                                              <C>             <C>
     Non-compete agreements                      $     6,642     $    9,084
     Goodwill                                        240,272        258,611
                                                     -------        -------


                                      33

<PAGE>
                                                     246,914        267,695
     Less accumulated amortization                     9,542         20,103
                                                   ---------       --------
                                                   $ 237,372       $247,592
                                                   =========       ========
</TABLE>


NOTE 7 - OTHER ASSETS:

Other assets consist of the following at December 31:

<TABLE>
<CAPTION>
                                                     1996             1997
                                                   ---------       --------
<S>                                                <C>             <C>
     Financing costs                               $  22,727       $ 17,722
     Deposits                                          5,073            457
     Other                                             4,815          6,987
                                                   ---------       --------
                                                      32,615         25,166
     Less accumulated amortization                     7,501          6,749
                                                   ---------       --------
                                                     $25,114        $18,417
                                                   =========       ========
</TABLE>


NOTE 8 - ACCRUED EXPENSES:

Accrued expenses consist of the following at December 31:

<TABLE>
<CAPTION>
                                                     1996             1997
                                                   ---------       --------
<S>                                                <C>             <C>

     Interest                                       $  5,667       $  6,641
     State and other taxes payable                     4,070          4,216
     Employee compensation and related taxes           2,479          2,582
     Deferred revenue                                  2,114          2,366
     Accrued lease                                     1,599          2,640
     Severance and relocation                          2,121           -
     Professional services                             1,935           -
     Lease and maintenance                             2,392          2,317
     Other                                             4,167          3,316
                                                   ---------       --------
                                                     $26,544        $24,078
                                                   =========       ========
</TABLE>

NOTE 9 - LONG-TERM DEBT AND OTHER OBLIGATIONS:

Long-term debt and other obligations consist of the following at December 31:

<TABLE>
<CAPTION>
                                                     1996             1997
                                                   ---------       --------
<S>                                                <C>             <C>

     9 3/4% Senior Subordinated Notes due 2006,
      net of discount of $1,389 and $1,248          $223,611       $223,752
     9 3/4% Series B Senior Subordinated Notes
      due 2006, net of premium of $1,487
      and $1,337                                     101,487        101,337
     Revolving Credit Loan                              -           122,500
     Acquisition Term Loan                            20,000         69,000
     Other obligations                                 2,843          2,185
                                                   ---------       --------

                                      34

<PAGE>


                                                     347,941        518,774
     Less current maturities                            -            12,374
                                                   ---------       --------
                                                    $347,941       $506,400
                                                   =========       ========

</TABLE>

9 3/4% SENIOR SUBORDINATED NOTES

The Senior Notes mature on October 15, 2006 and bear interest at 9 3/4%
payable semiannually on April 15 and October 15, beginning on April 15, 1997.
 Universal is required to meet certain financial tests which include those
relating to the maintenance of a minimum fixed charge ratio, minimum adjusted
EBITDA (earnings before interest, taxes, depreciation and amortization) and a
senior leverage ratio.

The Senior Notes are general unsecured obligations of Universal and are
subordinated to all existing and future Senior Debt, including the
indebtedness under the credit facilities.  The indenture governing the Senior
Notes contains certain restrictive covenants including, among others,
limitations on additional debt incurrence, restrictions on distributions to
shareholders, the creation of liens, the merger or sale of substantially all
of the assets and engaging in transactions with affiliates.

9 3/4% SERIES B SENIOR SUBORDINATED NOTES

The Series B Senior Notes mature on October 15, 2006 and bear interest at 9
3/4% payable semiannually on April 15 and October 15, beginning on April 15,
1997. Universal is required to meet certain financial tests which include
those relating to the maintenance of a minimum fixed charge ratio and minimum
adjusted EBITDA.

The Series B Senior Notes are general unsecured obligations of Universal and
are subordinated to all existing and future Senior Debt, including
indebtedness under the credit facilities.  The indenture governing the Series
B Senior Notes contains certain restrictive covenants including, among
others, limitations on additional debt incurrence, restrictions on
distributions to shareholders, the creation of liens, the merger or sale of
substantially all assets and engaging in certain transactions with affiliates.

CREDIT FACILITIES

In October 1996, Universal amended and restated its existing credit
facilities to provide for a total loan commitment of $230 million with (i) a
revolving line of credit facility providing for borrowings of up to $12.5
million, (ii) an acquisition credit line in the amount of $212.5 million
which is available under a revolving/term loan facility and (iii) a swing
line of credit in the amount of $5 million.  In May 1997, Universal entered
into a term loan agreement totaling $75 million, increasing the total loan
commitment to $305 million.  $3 million of the term loan matures every
quarter through September 30, 2003. Approximately $212.5 million of in the
credit facility matures on September 30, 2003 with the remaining amount
maturing on September 30, 2004.  As of December 31, 1997, Universal had drawn
down $122.5 million under the acquisition credit facility, $69 million under
the term loan and had no borrowings under the revolving credit facility or
the swing line of credit.

The loans under the revolving credit facility and acquisition term loan bear
interest at the rate per annum equal to the prime rate or the euro dollar
rate, plus an additional 0% to 2.75% depending on the leverage ratio of
Universal as defined the credit facility agreement.  The interest rate in
effect during 1997 ranged

                                      35

<PAGE>


from 7.5% to 10%.  Interest on the credit facility is payable upon the date
of maturity.

Each of the revolving credit facility and the acquisition credit facility are
secured by a first priority lien on the assets of Universal and, upon the
existence of certain conditions, a pledge of the common stock of Universal
held by certain management shareholders, as well as the pledge of the Parent
Company's stock.  Borrowings under the new credit facility are subject to
certain restrictive covenants including, among others, a minimum fixed charge
ratio, a minimum adjusted EBITDA and maximum senior leverage ratio. The new
credit facility contains certain restrictive covenants including, among
others, limitations on additional debt incurrence, restrictions on
distributions to shareholders, the creation of liens, the merger or sale of
substantially all assets and engaging in certain transactions with affiliates.

Commitment fees are 1/2 percent on the unused portion of the revolving line
of credit and the acquisition credit facility.

Net debt issuance costs of $14,100 were capitalized in 1996 and are being
amortized on a straight-line basis over the term of the debt.

Future maturities of long-term debt and other obligations as of December 31,
1997 are as follows:

<TABLE>
<CAPTION>

<S>                                       <C>
          1998                            $ 12,374
          1999                             179,809
          2000                                 364
          2001                                 201
          2002                                 157
          2003 and thereafter              325,869
                                          --------
               Total                      $518,774
                                          ========
</TABLE>


NOTE 10 - LEASE COMMITMENTS:

Rent expense totaled $4,600, $13,002 and $36,660 in 1995, 1996 and 1997,
respectively.  Minimum annual rentals under the terms of capital and
noncancellable operating leases with terms in excess of one year in effect at
December 31, 1997 are payable as follows:

<TABLE>
<CAPTION>

                                                       CAPITAL    OPERATING
          YEAR                                         LEASES       LEASES
          ----                                         -------    ---------
<S>                                                    <C>        <C>
          1998                                          $ 59      $  620
          1999                                           118         613
          2000                                           159         542
          2001                                            -          359
          2002 and after                                  -          733
                                                        ----      ======
          Total minimum lease payments                   336      $2,867
          Less current portion                            59      ======
                                                        ----
          Long-term capitalized lease obligations       $277
                                                        ====
</TABLE>

                                      36


<PAGE>

NOTE 11 - INCOME TAXES:

In accordance with a tax sharing agreement between Universal and the Parent
Company, for each taxable year for which Universal is included in a
consolidated federal income tax return with the Company, Universal will pay
to the Parent Company an amount equal to the lesser of (i) the consolidated
federal income tax liability of the consolidated group of which the Parent
Company is the common parent or (ii) the federal income tax liability of the
Parent Company, computed as if Universal had filed a separate federal income
tax return.  Furthermore, Universal may utilize the losses incurred by the
Parent Company prior to the Refinancing Plan.  Accordingly, Universal has
included the tax benefits of the Company's net operating loss carryforwards
generated prior to consummation of the Refinancing Plan in its deferred tax
computation.  Tax benefits from losses generated by the Parent Company
subsequent to June 30, 1994 are not available to Universal however, such
benefits may be transferred through either an intercompany transfer or a
capital transaction.

Universal incurred a net operating loss in 1995 and 1996; therefore, no
provision for income taxes was required.  In 1997, $6.3 million of deferred
tax expense was recognized.  In 1997, Universal recognized a deferred income
tax provision of $6,303.

Deferred tax assets (liabilities) consist of the following at December 31:

<TABLE>
<CAPTION>

                                                        1996         1997
                                                       ------       -------
<S>                                                    <C>           <C>
   Deferred tax liabilities:
   Property and equipment                              ($99,212)     ($101,820)
                                                       --------       --------
      Total deferred tax liabilities                    (99,212)      (101,820)
                                                       --------       --------

   Deferred tax assets:
   Bad debts                                                897          1,153
   Non-deductible accrued expenses                        2,140            486
   Goodwill and intangibles                               6,112          3,941
   Operating loss and credit carryforwards                7,888          7,888
                                                       --------       --------
      Total deferred tax assets                          17,037         13,468
                                                       --------       --------
   Valuation allowance                                   (7,888)        (7,888)
                                                       --------       --------
      Net deferred tax liabilities                     ($90,063)      ($96,240)
                                                       ========       ========
</TABLE>

Universal has established a valuation allowance against its deferred tax
assets following an assessment of the likelihood of realizing such amounts.
In arriving at the determination as to the amount of the valuation allowance
required, Universal considered its past operating history as well as the
costs of integrating significant acquisitions made in 1996 and 1997,
statutory restrictions on the use of operating losses from acquisitions
acquired during the year, available tax planning strategies and its
expectation of the level of timing of future taxable income.

At December 31, 1997, Universal had net operating loss and credit
carryforwards for federal income tax purposes of approximately $45 million.
Included in total net operating loss and credit carryforwards is
approximately $25 million of operating loss and credit carryforwards
generated by certain acquired companies prior to their acquisition by
Universal.  Total carryforwards expire between 2005 and 2011.

                                      37

<PAGE>

During the current fiscal year, Universal did not utilize any net operating
loss and credit carryforwards.

Universal experienced an "ownership change"  within the meaning of Section
382 of the Internal Revenue Code.  Universal's acquisition of Outdoor
Advertising Holdings, Inc. and Revere Holdings Corporation resulted in an
"ownership change" and a limitation is imposed on the acquired net operating
loss carryforwards.

NOTE 12 - CONTINGENCIES:

Universal is subject to various claims and routine litigation arising in the
ordinary course of business.  Based on the advice of counsel, management does
not believe that the result of such other claims and litigation, individually
or in the aggregate, will have a material effect on Universal's business or
its results of operations, cash flows or financial position.

NOTE 13 - DEFINED CONTRIBUTION PLAN:

The Company sponsors a qualified 401(k) plan available to substantially all
full-time employees.  Participants may contribute up to 15% of their annual
salary to the plan.  The Company matches 50% of the first $2,000 contributed
by the participant at the end of the plan year.

NOTE 14 - QUARTERLY FINANCIAL DATA (UNAUDITED):

Summarized quarterly financial data for 1997 is as follows:

<TABLE>
<CAPTION>

(In thousands, except per share data)             FIRST      SECOND        THIRD      FOURTH
                                                  -----      ------        -----      ------
<S>                                             <C>        <C>           <C>         <C>
    1997
    ----
    Net revenues                                $44,008     $53,105      $55,635     $56,891
    Operating income                              8,303      14,069       13,649      12,038
    Income (loss) before extraordinary item      (2,220)      3,208        1,219      (6,253)
    Net income (loss)                            (2,220)      3,208        1,219      (6,253)
</TABLE>

                                      38

<PAGE>


Summarized quarterly financial data for 1996 is as follows:

<TABLE>
<CAPTION>

(In thousands, except per share data)             FIRST      SECOND        THIRD      FOURTH
                                                  -----      ------        -----      ------
<S>                                               <C>        <C>           <C>        <C>
    1996
    ----
    Net revenues                                 $8,427     $17,812      $18,643     $31,256
    Operating income                              1,670       7,299        5,890       5,929
    Loss before extraordinary item                 (757)      1,966        3,077        (626)
    Net loss                                       (757)      1,966        3,077     (15,074)
</TABLE>

In the fourth quarter of 1996, Universal recorded an extraordinary loss of
$14,448 related to the early retirement of the 11% Senior Notes.

NOTE 15 - SUBSEQUENT EVENTS:

In January 1998, Universal acquired a total of approximately 16 advertising
display faces located in and around New York City, New York.  The purchase
price was approximately $8.5 million in cash.

In February 1998, Universal acquired a total of approximately 2,500 display
faces for $32.5 million in cash with ad rights at airports in Chicago,
Atlanta, Dallas, Denver, Newark, Boston and Aspen.

In October 1997, the Parent Company announced an agreement to merge with
Clear Channel Communications, Inc., a San Antonio based diversified media
company. The Parent Company received shareholder approval for the merger on
February 6, 1998.  The merger is expected to be completed in the first
quarter of 1998.

                                      39

<PAGE>

               ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                       ON ACCOUNTING AND FINANCIAL DISCLOSURES

Not applicable.


                                      40
<PAGE>

                                       PART III

                     ITEM 10 -- EXECUTIVE OFFICERS AND DIRECTORS

     The table below sets forth certain information with respect to the
directors and executive officers of the Company.

<TABLE>
<CAPTION>

NAME                AGE       POSITION                                                YEARS WITH THE
                                                                                         COMPANY
<S>              <C>       <C>                                                       <C>
Daniel L. Simon*    46        Chief Executive Officer, President and Director              24
Brian T. Clingen    38        Vice President, Chief Financial Officer and Director          9
Paul G. Simon*      44        Vice President, Secretary and General Counsel                 7
Michael J. Roche    46        Director                                                      3
Frank K. Bynum, Jr. 34        Director                                                     **

</TABLE>
___________


 *   Daniel L. and Paul G. Simon are brothers.

**   Became a director in 1996.

     Mr. Daniel Simon, a founder and a principal beneficial stockholder of the
Company, has been the President of the Company since 1989 and a director since
its formation. Mr. Simon has 24 years of experience in the outdoor advertising
industry and serves on the executive and legislative committees of the Outdoor
Advertising Association of America. Mr. Simon is a director of Parent.

     Mr. Clingen has served as Vice President and Chief Financial Officer of the
Company since December 1987 and as a director since 1990. From 1983 to 1987,
Mr. Clingen worked for Elmore Group ("Elmore"), a diversified property and
service company, and served as Chief Financial Officer of an Elmore subsidiary.
Mr. Clingen is a certified public accountant. Mr. Clingen is a director of
Parent.

     Mr. Paul Simon has been Vice President and General Counsel of the Company
since 1989 and has served as Secretary of the Company since July 1991. Mr. Simon
was in the private practice of law in Illinois from 1978 to 1989, specializing
in commercial litigation, general corporate matters, real estate and mergers and
acquisitions. Mr. Simon represented the Company as outside counsel from 1981 to
1989.

     Mr. Roche has been National Marketing Manager (Licensed Businesses) for
Sears, Roebuck and Co. since 1985. Prior thereto, he was an Assistant Marketing
Manager from 1984 to 1985 and a National Sales Promotion Manager from 1980 to
1984 for Sears, Roebuck and Co. Mr. Roche has been a director of the Company
since November 1993. Mr. Roche is a director of Parent.

     Mr. Bynum has been a director of the Company since July, 1996. Mr. Bynum
has been a Vice President of Kelso & Company, L.P. since July 1991, and was an
Associate of Kelso & Company, L.P. from October 1987 to July 1991. He is a
director of Hosiery Corporation of America, Inc., IXL Holdings, Inc., United
Refrigerated Services, Inc. and Parent.

                                      41

<PAGE>

     Executive officers of the Company are elected by the Board of Directors
on an annual basis and serve at the discretion of the Board of Directors.
All directors serve terms of one year or until the election of their
respective successors.

     On December 23, 1992, Kelso & Companies, Inc., the general partner of
Kelso & Company, L.P., and its chief executive officer, without admitting or
denying the findings contained therein, consented to an administrative order in
respect of an inquiry by the SEC relating to the 1990 acquisition of a portfolio
company by an affiliate of Kelso & Companies, Inc. The order found that the
tender offer filing by Kelso & Companies, Inc. in connection with the
acquisition did not comply fully with the SEC's tender offer reporting
requirements, and required Kelso & Companies, Inc. and its chief executive
officer to comply with these requirements in the future.

     Pursuant to the Articles of Incorporation of the Company, the Board of
Directors of the Company shall have the same members as the Board of Directors
of Parent. Parent has an agreement with Kelso & Company, L.P. that permits
Kelso & Company, L.P. to nominate two persons for the Board of Directors to be
voted upon by the shareholders. Mr. Bynum has been retained as a director of
Parent as a result of such agreement. The agreement also provides that at least
one of such nominees, if elected to the Board of Directors, will also serve on
Parent's compensation committee.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     The Company has only one shareholder, the Parent, and therefore no Forms 3,
4 or 5 were required to be filed under Section 16(a) of the Securities Exchange
Act of 1934, as amended, for the period ended December 31, 1997.

                                      42

<PAGE>

                          ITEM 11 -- EXECUTIVE COMPENSATION


     The following table sets forth certain information regarding the
compensation paid during 1995, 1996 and 1997 to the Company's
Chief Executive Officer and each other executive officer whose total
annual salary and bonus that year exceeded $100,000.

                                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                       LONG TERM
                                                  ANNUAL COMPENSATION                 COMPENSATION
                                         -----------------------------------------       AWARDS
                                                                            ALL       ------------
     NAME AND                                         SALARY    BONUS      OTHER       RESTRICTED
     PRINCIPAL POSITION                   YEAR         ($)       ($)   COMPENSATION    STOCK AWARD

<S>                                       <C>        <C>       <C>     <C>             <C>
   Daniel L. Simon . . . . . . . . . .     1997      $272,918   $0      $1,000
       President and Chief                 1996       224,379    0       1,000
       Executive Officer                   1995       224,379    0       1,000

   Brian T. Clingen. . . . . . . . . .     1997      197,918     0       1,000
       Chief Financial Officer and         1996      145,128     0       1,000
       Vice President                      1995      145,128     0       1,000

   Paul G. Simon . . . . . . . . . . .     1997      192,405     0       1,000           2,375,000
       Vice President, Secretary           1996      158,176     0       1,000
       and General Counsel                 1995      158,176     0       1,000

   Cindy Ogle. . . . . . . . . . . . .     1997      189,496     0       1,000           1,596,903
       Vice President, Operations          1996      140,005     0       1,000
                                           1995      105,207     0       1,000
</TABLE>
___________


(1)    Represents contributions made by the Company on behalf of the named
       executive officers to a 401(k) plan.

   Parent currently maintains two life insurance policies covering Daniel L.
Simon, each in the amount of $2.5 million. Parent is the sole beneficiary under
each policy. Pursuant to a buy-sell agreement between Parent and Mr. Simon,
Parent has agreed to use up to $3.5 million of the proceeds from these policies
to purchase a portion of Mr. Simon's shares of common stock of Parent from his
estate.

   For their services as directors, the members of the Board of Directors who
are not employees of the Company or affiliates of Kelso & Company, L.P. are paid
an aggregate of $10,000 annually. All directors are reimbursed for reasonable
expenses associated with their attendance at meetings of the respective Boards
of Directors.


                                      43

<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

   The Company has no Compensation Committee.

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

   Parent owns 100% of the issued and outstanding capital stock of the Company.
The table below sets forth the number and percentage of outstanding shares of
Parent's common stock that will be beneficially owned by (i) each director of
the Company, (ii) each executive officer identified in Item 11 of this Report,
(iii) all directors and executive officers of the Company as a group and
(iv) each person known by the Company to own beneficially more than 5% of
Parent's common stock. The Company believes that each individual or entity named
has sole investment and voting power with respect to shares of Parent's common
stock indicated as beneficially owned by them, except as otherwise noted.

<TABLE>
<CAPTION>
                                              BENEFICIAL OWNERSHIP OF COMMON STOCK
                                              ------------------------------------
                                                 NUMBER OF               PERCENT OF
NAME OF BENEFICIAL OWNER                          SHARES                   CLASS
------------------------                         ---------               ----------
<S>                                           <C>                     <C>
     Daniel L. Simon . . . . . . . . . . . .      7,583,391(1)             26.3%
     311 S. Wacker Drive, Suite 6400
     Chicago, Illinois 60606

     Brian T. Clingen. . . . . . . . . . . .      1,116,413 (2)            3.9%

     Paul G. Simon . . . . . . . . . . . . .         88,627 (3)             (5)

     Cindy Ogle  . . . . . . . . . . . . . .         38,599 (4)             (5)

     Michael J. Roche. . . . . . . . . . . .          2,000                 (5)


     Frank K. Bynum, Jr. . . . . . . . . . .         30,000                 (5)

     All directors and executive
       officers as a group (6 persons) . . .      7,902,625                27.5%

</TABLE>

_______

(1)  Daniel L. Simon's beneficial ownership includes 4,658,940 shares that he
owns directly, 32,520 shares held by The Simon Family Foundation of which he is
a director, 88,000 shares held by The Simon Family Limited Partnership of which
he is a general partner, 1,847,526 shares issuable to him upon exercise of the
warrants issued pursuant to the Amended and Restated 1996 Warrant Plan (the
"Management Warrants"), 630,352 shares over which he has voting control pursuant
to certain voting trust agreements with Brian T. Clingen and 326,053 issuable to
Brian T. Clingen upon exercise of  the Management Warrants over which Daniel L.
Simon has voting control pursuant to certain voting trust agreements.

(2)  Brian T. Clingen owns 630,352 shares directly, 35,000 shares held by The
Clingen Family Foundation of which he is a director, 326,053 shares issuable to
him upon exercise of the Management Warrants, and 125,008 shares held by The
Clingen Family Limited Partnership of which he is a general partner. The voting
rights for shares directly held by Mr. Clingen and shares issuable to him upon
exercise of The Management Warrants have been granted to Daniel L. Simon
pursuant to a voting trust agreement.

                                      44

<PAGE>

(3)  Paul G. Simon owns 88,627 shares directly including 33,775 shares issued to
him pursuant to the 1997 Equity Plan.

(4)  Cindy Ogle owns 38,599 shares directly, including 33,774 issued to her on
December 10, 1997 and 4,825 shares to be issued to her on January 5, 1998, in
each case pursuant to the 1997 Equity Incentive Plan.

(5)  Represents less than 1% of Parent's common stock.

ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  On April 5, 1996, Parent issued to Kelso Investment Associates V, L.P. ("KIA
V") and Kelso Equity Partners V, L.P. ("KEP V") and certain individuals
designated by Kelso & Company, L.P. (the "Kelso Designees") 186,500 shares of
Parent's Class B Common Stock and 188,500 shares of Parent's Class C Common
Stock (prior to a subsequent 16 for 1 stock split) in exchange for $30,000,000.
At such time, Parent also agreed to pay a one-time fee of $1,250,000 in cash and
an annual fee of $150,000 to Kelso & Company, L.P., an affiliate of KIA V and
KEP V, for consulting and advisory services to Parent.  Mr Bynum, a director of
the Company, is Managing Director and Vice President, respectively, of Kelso &
Company, L.P., limited partners of the general partner of KIA V and limited
partners of KEP V.

  In July 1996, Parent entered into agreements with KIA V, KEP V and certain
individual shareholders relating to certain rights of KIA V, KEP V and such
individual shareholders as holders of Class B Common Stock and Class C Common
Stock of Parent.  Pursuant to such agreements, Parent agreed to reclassify the
shares of Class B Common Stock and Class C Common Stock into a total of
6,000,000 shares of Parent's common stock, of which 2,500,000 were sold in the
IPO.   Pursuant to such agreements, the annual consulting and advisory fee of
$150,000 payable to Kelso & Company, L.P. was terminated but Kelso & Company,
L.P.'s reimbursement of expenses and indemnification rights in connection
therewith remained in effect. In connection with the IPO, Kelso & Company, L.P.
received a one-time fee of $650,000. In addition, as a result of the
reclassification, KIA V, KEP V and such individual shareholders have the same
rights as holders of the Parent's common stock. In connection with the
reclassification, KIA V, KEPV and such individual shareholders were granted four
demand registration rights, were granted "piggy-back" registrations rights and
KIA V was granted the right to nominate two persons for seats on the Board of
Directors of Parent, and consequently of the Company, to be voted upon by the
stockholders, with one of such directors, if elected, to be a member of the
Compensation Committee of the Board of Directors of Parent.

  In April 1996, the Company acquired four painted bulletin faces in Chicago
from Paramount Outdoor, Inc. ("Paramount") in an asset purchase transaction.
David L. Quas and Jay Sauber, who are General Managers and Sales Managers for
the Company, are the owners of Paramount. In exchange for the four painted
bulletin faces, the Company agreed to pay $500,000 in cash at the time of
purchase, $1,400 monthly for the next 24 months and an additional $168,000
payable two years after such purchase date, provided, the gross revenues
received by the Company from the purchased assets equal or exceed $333,600. In
1993, Paramount had purchased the Chicago sites (including the lease rights,
permits and structures) from a joint venture between the Company and HMS, Inc.,
an unaffiliated entity, for $100,000, which the Company believes represented
market price.

  All of the transactions described above were approved by the Company's
independent outside directors. The Company will not engage in transactions with
its affiliates in the future unless the terms of such

                                       45

<PAGE>

transactions are approved by a majority of its independent outside directors.
In addition, the Credit Facility and indentures governing the Notes impose
limitations on the Company's ability to engage in such transactions.

                                      46

<PAGE>
                                       PART IV

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

(a)

     (1)  Audited consolidated balance sheets and related consolidated
          statements of cash flows and changes in stockholder's equity at
          December 31, 1996 and 1997 and consolidated results of operations each
          of the three years in the period ended December 31, 1997.

     (2)  None

     (3)  Exhibits required by Item 601 of Regulation S-K.


                                   LIST OF EXHIBITS

<TABLE>
<CAPTION>


EXHIBIT
NUMBER
                                                        DESCRIPTION
<S>      <C>

2.1        Plan and Agreement of Merger, dated November 18, 1993, between the
           Company and Universal Outdoor II, Inc. (filed as Exhibit 2 to the
           Company's Registration Statement on Form S-1 (Commission File No.
           33-72710) and incorporated herein by reference)

2.2        Agreement and Plan of Merger between the Company, Universal
           Acquisition Corp. and Outdoor Advertising Holdings, Inc. dated
           August 27, 1996 (filed as Exhibit 2.5 to Amendment No. 2 to Parent's
           Registration Statement (File No. 333-12457) on Form S-1 the "Parent
           Registration Statement")and incorporated herein by reference)

2.3        Option and Asset Purchase Agreement between the Company and the
           Memphis/Tunica Sellers dated September 12, 1996 (filed as Exhibit
           2.6 to Parent Registration Statement and incorporated herein by
           reference)

2.4        Asset Purchase Agreement among Mountain Media, Inc., d/b/a Iowa
           Outdoor Displays, Robert H. Lambert and the Company dated September
           12, 1996 (filed as Exhibit  2.4 the Company's Registration Statement
           on Form S-1 (File No. 333-21717) (the "Registration Statement") and
           incorporated herein by reference)

2.5        Asset Purchase Agreement between the Company and The Chase Company
           dated September 11, 1996 (filed as Exhibit 2.8 to Parent
           Registration Statement and incorporated herein by reference)

2.6        Stock Purchase Agreement, dated as of November 22, 1996, among
           Revere, the Company and the stockholders of Revere (filed as Exhibit
           2.6 to the Registration Statement and incorporated herein by
           reference)

                                      47
</TABLE>

<PAGE>

<TABLE>
<CAPTION>


<S>     <C>
2.7        Asset Purchase Agreement, dated as of December 10, 1996, among
           Matthew, Matthew Acquisition Corp. and the Company (filed as Exhibit
           2.7 to the Registration Statement and incorporated herein by
           reference)

2.8        Stock Purchase Agreement dated as of June 3, 1997 among Florida
           Logos, Inc., The Lamar Corporation, Lamar Advertising Company and
           the Company (filed as Exhibit 2.1 to the Company's Report on Form
           10-Q for the quarter ended June 30, 1997 and incorporated herein by
           reference)

2.9        Agreement to purchase certain assets, dated as of June 30, 1997
           among Amelia Newman, Marilyn Cole, Universal Outdoor (N.Y.)
           Advertising Acquisition Corporation, the Company and Allied Outdoor
           Advertising, Inc. (filed as Exhibit 2.2 to the Company's Report on
           Form 10-Q for the quarter ended June 30, 1997 and incorporated
           herein by reference)

3.1        Third Amended and Restated Certificate of Incorporation (filed as
           Exhibit 3.1 to Amendment No. 2 to the Company's Registration
           Statement (File No. 333-12427) on Form S-1 and incorporated herein
           by reference)

3.2        Second Amended and Restated Bylaws (filed as Exhibit 3.2 to
           Amendment No. 2 to the Company's Registration Statement (File No.
           333-12427) on Form S-1 and incorporated herein by reference)

4.1        Indenture of Trust between United States Trust Company of New York
           as trustee, and the Company, dated as of October 16, 1996, relating
           to the $225 million 9 3/4% Senior Subordinated Notes due 2006 (the
           "October Notes") (filed as Exhibit 4.1 to Amendment No. 2 to the
           Company's Registration Statement on Form S-1 (File No. 333-12427)
           and incorporated herein by reference)

4.2        Indenture of Trust between United States Trust Company of New York,
           as trustee, and the Company, dated as of December 16, 1996, relating
           to the $100 million 9 3/4% Series B Senior Subordinated Notes due
           2006 (the "December Notes") (filed as Exhibit 4.1 to the
           Registration Statement and incorporated herein by reference)

4.3        Specimen of October Note (included in Exhibit 4.1)

4.4        Specimen of December Note (included in Exhibit 4.2)

4.5        Registration Rights Agreement, dated as of December 16, 1996, among
           the Company and the Initial Purchasers of the December Notes (filed
           as Exhibit 4.4 to the Registration Statement and incorporated herein
           by reference)

10.1       Term Loan Agreement among the Company, various lending institutions,
           LaSalle National Bank as Co-Agent and Bankers Trust Company as
           Agent, dated as of May 21, 1997 (filed as Exhibit 10.7 to
           Post-Effective Amendment No. 5 to the Parent's Registration Statement
           on Form S-1 (File No. 33-93852) and incorporated herein by reference)

10.2       Agreement Regarding Tax Liabilities and Payments dated as of

</TABLE>
                                      48

<PAGE>

<TABLE>
<CAPTION>

<S>    <C>
           November 18, 1993 by and between Parent and the Company (filed as
           Exhibit 10(f) to the Company's Form S-1 Registration Statement (File
           No. 33-72710) and incorporated herein by reference)

10.3       Registration Rights Agreement among the Company, KIA V, KEP V,
           Daniel L. Simon, Brian T. Clingen and Paul G. Simon (filed as
           Exhibit 10.10 to Amendment No. 2 to the Company's Registration
           Statement on Form S-1 (File No. 333-12457) and incorporated herein
           by reference)

10.4       Amended and Restated Credit Agreement among the Company, various
           lending institutions, LaSalle National Bank as Co-Agent and Bankers
           Trust Company as Agent, dated as of May 21, 1997 (filed as Exhibit
           10.8 to Post-Effective Amendment No. 5 to the Parent's Registration
           Statement on Form S-1 (File No. 33-93852) and incorporated herein by
           reference)

21.1       Subsidiaries of the Registrant

27         Financial Data Schedule

</TABLE>





(b)        Reports on Form 8-K that have been filed during the last quarter of
           the period covered by this Report:

                                         None


                                      49
<PAGE>

                                      SIGNATURES

           Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                    UNIVERSAL OUTDOOR, INC.

                                    By:   /s/ Daniel L. Simon
                                         -------------------------------------
                                              Daniel L. Simon
                                         PRESIDENT AND CHIEF EXECUTIVE OFFICER

Date: March 27, 1998

           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 and on the date indicated.

<TABLE>
<CAPTION>

                Signature                Title                                  Date
<S>                            <C>                                   <C>

 /s/ Daniel L. Simon               President and Chief Executive            March 27, 1998
-----------------------------         Officer (Principal Executive
Daniel L. Simon                       Officer) and Director

/s/ Brian T. Clingen               Vice President and Chief Financial       March 27, 1998
----------------------------          Officer (Principal Financial and
Brian T. Clingen                      Accounting Officer) and Director

----------------------------        Director                                March   , 1998
Michael J. Roche

/s/ Frank K. Bynum, Jr.             Director                                March 27,1998
--------------------------
Frank K. Bynum, Jr.


</TABLE>
                                      50