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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 --------------
                                   FORM 10-K
 
(MARK ONE)
 
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<S>        <C>
/X/        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
           1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996.
 
/ /        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
           ACT OF 1934 FOR THE TRANSITION PERIOD FROM             TO                   .
</TABLE>
 
                       COMMISSION FILE NUMBER: 033-72810
                                 --------------
 
                            UNIVERSAL OUTDOOR, INC.
 
             (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                       <C>
               ILLINOIS                                 36-2827496
   (State or other jurisdiction of                   (I.R.S. Employer
    incorporation or organization)                 Identification No.)
</TABLE>
 
          321 NORTH CLARK STREET, SUITE 1010, CHICAGO, ILLINOIS 60601
                           TELEPHONE: (312) 644-8673
 
  (Address and telephone number of the of the registrant's principal executive
                                    office)
 
       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (312) 644-8673
 
        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 December 31, 1996, 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 December 31, 1996, the number of shares outstanding of the
registrant's Common Stock, par value $0.1 per share, was 10,000 shares.
 
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<PAGE>
                             CROSS REFERENCE SHEET
                                      AND
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                                                              PAGE NUMBER OR
                                                                                                                 REFERENCE
                                                                                                             -----------------
<C>          <S>        <C>                                                                                  <C>
     PART I
     Item 1  --         Business...........................................................................              1
     Item 2  --         Properties.........................................................................             11
     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 ofFinancial Condition and Results of                       14
                        Operations.........................................................................
     Item 8  --         Financial Statements and Supplementary Data........................................             22
     Item 9  --         Changes in and Disagreements with Accountantson Accounting and Financial                        38
                        Disclosures........................................................................
 
   PART III
    Item 10  --         Executive Officers and Directors...................................................             38
    Item 11  --         Executive Compensation.............................................................             39
    Item 12  --         Security Ownership of Certain Beneficial Owners and Management.....................             40
    Item 13  --         Certain Relationships and Related Transactions.....................................             41
 
    PART IV
    Item 14  --         Exhibits, Financial Schedules, and Reports on Form 8-K.............................             43
</TABLE>
<PAGE>
                                     PART I
 
ITEM 1 -- BUSINESS
 
GENERAL
 
    Universal Outdoor, Inc. (the "Company") is a leading outdoor advertising
company operating approximately 31,049 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), Palm Beach (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), 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 March 21, 1997 filed in
connection with Amendment No. 2 to the Company's Registration Statement on Form
S-1 filed with the Securities and Exchange Commission (File No. 333-21717).
 
INDUSTRY OVERVIEW
 
    The outdoor advertising industry has experienced increased advertiser
interest and revenue growth in recent years. Outdoor advertising generated total
revenues of approximately $2.0 billion in 1996, or approximately 1.5% of the
total advertising expenditures in the United States, and the out-of-home
advertising industry generated revenues in excess of $3.8 billion in 1996,
according to estimates by the Outdoor Advertising Association of America (the
"OAAA"), the trade association for the outdoor advertising industry. Outdoor
advertising's 1996 revenue represents growth of approximately 7.3% over
estimated total revenues for 1995, which is slightly lower than the growth of
total U.S. advertising expenditures during the same period of approximately
8.2%, which takes into an account an 11.8% increase in television advertising
expenditures attributable in part to the 1996 Olympic games.
 
    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,
 
                                       1
<PAGE>
stadiums, movie theaters and supermarkets, as well as on taxis, trains, buses,
blimps and subways. Second, while the 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 benefited 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 benefited 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.
 
    The outdoor advertising industry is composed of several large outdoor
advertising and media companies with operations in multiple markets, as well as
many smaller and local companies operating a limited number of structures in a
single or few local markets. While the industry has experienced some
consolidation within the past few years, the OAAA estimates that there are still
approximately 600 companies in the outdoor advertising industry operating
approximately 396,000 billboard displays. The Company expects the trend of
consolidation in the outdoor advertising industry to continue.
 
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
 
                                       2
<PAGE>
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 31,049 in its markets at December 31, 1996.
 
ACQUISITIONS
 
    As of December 31, 1996, the Company has acquired the assets or capital
stock of five outdoor advertising companies and entered into agreements to
purchase the assets or capital stock of two additional outdoor advertising
companies. The Company believes that these acquisitions will significantly
strengthen its market presence in the midwest and southeast regions of the
United States, create a substantial presence in the east coast region and allow
the Company to capitalize on the operating efficiencies and cross-market sales
opportunities associated with operating in closely proximate markets.
 
    THE POA ACQUISITION.  In October 1996, the Company acquired the outstanding
capital stock of Outdoor Advertising Holdings, Inc. ("OAH") for approximately
$240 million in cash pursuant to a merger of a subsidiary of the Company with
and into OAH (the "POA Acquisition"). As a result of the POA Acquisition, the
Company acquired a total of approximately 6,337 advertising display faces
consisting of bulletins and posters in five markets located in the southeast
United States, including Orlando, Ocala and Palm Beach, as well as the East
Coast and Gulf Coast areas of Florida, and Myrtle Beach and Chattanooga. The
Company believes that the POA Acquisition will substantially strengthen the
Company's operations in the southeast United States, particularly in Florida,
where the Company believes it has the largest number of outdoor advertising
display faces and the largest market share in each of its markets, except Palm
Beach.
 
    THE REVERE ACQUISITION.  In December 1996, the Company acquired the
outstanding capital stock of Revere Holding Corp. ("Revere") for approximately
$125 million in cash (the "Revere Acquisition"). As a result of the Revere
Acquisition, the Company acquired a total of approximately 8,853 advertising
display faces located in the east coast of the United States, including
Philadelphia, Washington, D.C., Salisbury and Wilmington, as well as 1,917
transit display faces located in Baltimore and 1,582 kiosk displays located in
malls throughout the United States.
 
    THE MEMPHIS/TUNICA ACQUISITION.  In September 1996, the Company agreed to
acquire a total of approximately 2,018 advertising display faces consisting of
bulletins and posters in and around Memphis, Tennessee and Tunica County,
Mississippi. The acquisition was subsequently consummated in January 1997 for a
purchase price of approximately $71 million plus 100,000 shares of Parent's
Common Stock (the "Memphis/Tunica Acquisition"). The Company believes that the
Memphis/Tunica Acquisition will complement the Chattanooga operations which were
acquired by the Company in the POA Acquisition. This gives the Company a leading
presence in two of the largest markets in Tennessee and strengthens its presence
in the southeast United States.
 
    THE MATTHEW ACQUISITION.  In December 1996, the Company agreed to purchase
certain of the assets of Matthew Outdoor Advertising Acquisition Co. L.P.
("Matthew") for approximately $40 million in cash and the assumption by the
Company of certain liabilities of Matthew (the "Matthew Acquisition"). The
Matthew Acquisition was consummated in January 1997. As a result of the Matthew
Acquisition, the Company acquired 1,035 advertising display faces consisting of
posters and bulletins in three east coast markets, including metro New York,
northern New Jersey and Hudson Valley.
 
    THE NAEGELE ACQUISITION.  In April 1996, the Company acquired the operations
of NOA Holding Company ("Naegele") in a stock purchase transaction (the "Naegele
Acquisition"). As a result of the
 
                                       3
<PAGE>
Naegele Acquisition, the Company acquired approximately 2,550 poster faces (of
which approximately 1,455 are located in the Minneapolis/St. Paul market and
approximately 1,095 are located in the Jacksonville market) and approximately
840 painted bulletin faces (of which approximately 440 are located in the
Minneapolis/St. Paul market and approximately 400 are located in the
Jacksonville market).
 
    THE ADDITIONAL ACQUISITIONS.  In September 1996, the Company purchased
certain assets of Iowa Outdoor Displays for approximately $1.8 million in cash
(the "Iowa Acquisition") and The Chase Company for approximately $5.8 million in
cash (the "Dallas Acquisition," and together with the Iowa Acquisition, the
"Additional Acquisitions"). As a result of the Additional Acquisitions, the
Company acquired approximately 160 advertising display faces consisting
primarily of posters in and around Des Moines and approximately 245 advertising
display faces consisting primarily of bulletins in and around Dallas. The
Company believes that the Additional Acquisitions will further enhance the
Company's current presence in each of its Des Moines and Dallas markets and
provide increased revenue opportunities in its Midwest market cluster.
 
    THE OTHER ACQUISITIONS.  In April 1996, the Company acquired 4 painted
bulletin faces in the Chicago market from Paramount Outdoor, Inc. in an asset
purchase transaction. In March 1996, through an asset purchase transaction with
Image Media, Inc., the Company acquired 18 painted bulletin and painted wall
faces in the Chicago market. In a transaction with Ad-Sign, Inc. in January
1996, the Company acquired approximately 160 painted bulletin faces in the
Chicago market. In April 1995, the Company acquired approximately 6 painted
bulletin faces in the Chicago market pursuant to a stock purchase transaction
with O&B Outdoor, Inc. The Company has integrated the acquired faces from these
acquisitions into its existing Chicago operations. In March 1995, the Company
completed two acquisitions in the Dallas market. In a stock purchase transaction
with Harrington Associates, Inc., the Company acquired approximately 740 junior
(8-sheet) poster faces located in the Dallas market. In a stock purchase
transaction with Best Outdoor, the Company acquired approximately 387 junior
(8-sheet) poster faces in the Dallas market.
 
    The POA Acquisition, the Revere Acquisition, the Memphis/Tunica Acquisition,
the Naegele Acquisition, the Matthew Acquisition and the Additional Acquisitions
are referred to collectively as the "Acquisitions."
 
    RECENT DEVELOPMENTS.  In February 1997, the Company agreed to acquire the
stock of Penn-Baltimore, Inc. ("Penn") from Lamar Advertising Company ("Lamar")
for approximately $46.5 million in cash (the "Penn Acquisition"). The Penn
Acquisition will be consummated upon the consummation of Lamar's acquisition of
Penn Advertising, Inc., the parent of Penn, and in connection therewith, the
Company will acquire approximately 1,450 advertising display faces in the
Baltimore metropolitan area.
 
                                       4
<PAGE>
MARKETS
 
    Each of the Company's markets generally possess demographic characteristics
that are attractive to national advertisers, allowing the Company to package its
displays in several of its markets in a single contract for advertisers in
national and regional campaigns. Each market also has unique local industries,
businesses, sports franchises and special events that are frequent users of
outdoor advertising. The following sets forth certain information for each of
the Company's markets as of December 31, 1996 after giving effect to the
Acquisitions:
 
<TABLE>
<CAPTION>
                                    1996             % OF 1996                                        TOTAL
                                 PRO FORMA           PRO FORMA                 30-SHEET   8-SHEET    DISPLAY
MARKET                          NET REVENUES        NET REVENUES   BULLETINS   POSTERS    POSTERS     FACES
-------------------------  ----------------------   ------------   ---------   --------   -------   ----------
                           (DOLLARS IN THOUSANDS)
<S>                        <C>                      <C>            <C>         <C>        <C>       <C>
MIDWEST:
  Chicago................         $ 17,990              10.2%          660       --        3,606     4,266
  Minneapolis/St. Paul...           17,320               9.8           453       1,356      --       1,809
  Indianapolis...........           10,533               6.0           262       1,194       102     1,995
  Milwaukee..............            4,818               2.7           261       --          325       586
  Des Moines.............            3,539               2.0            85         585         9       679
  Evansville.............            3,435               1.9           281         694      --         975
  Dallas.................            1,261               0.8           245       --        1,201     1,446
SOUTHEAST:
  Orlando................           25,145              14.2           771       1,145      --       1,916
  Jacksonville...........            8,703               4.9           349         784      --       1,133
  Ocala..................            5,240               3.0           856         198      --       1,054
  Memphis/Tunica.........           14,705               8.3           706       1,155       130     1,991
  Chattanooga............            5,470               3.1           356         649      --       1,005
  Myrtle Beach...........            9,495               5.4           729         469      --       1,198
  Atlantic Coast area
    (FL).................            5,132               2.9           707          21      --         728
  Gulf Coast area (FL)...            1,712               1.0           475       --         --         475
EAST COAST:
  Philadelphia...........           13,939               7.9           359       2,074      --       2,579
  Washington, D.C........            6,289               3.6            87         589      --         676
  Salisbury..............            3,435               1.9           401         473      --         874
  Wilmington.............            4,576               2.6           162         917        43     1,122
  Baltimore..............            2,295               1.3         --          --         --       1,917
  Mall Media.............            2,636               1.5         --          --         --       1,539
  Northern NJ............            4,256               2.4           216           5         6       227
  Metro New York.........            3,375               1.9            50         380      --         430
  Hudson Valley..........            1,312               0.7           145         257        27       429
                                  --------             -----       ---------   --------   -------   ----------
  Total..................         $176,611             100.0%        8,616      12,945     5,449    31,049(1)
                                  --------             -----       ---------   --------   -------   ----------
                                  --------             -----       ---------   --------   -------   ----------
</TABLE>
 
------------------------
 
(1) Includes 437 transit display faces located in Indianapolis, 146 bus shelters
    in Philadelphia, 1,917 transit display faces in Baltimore and 1,539 kiosk
    displays in malls throughout the United States.
 
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
 
                                       5
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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.
 
    -  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.
 
    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.
 
                                       6
<PAGE>
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,
1996 approximately 192 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, and approximately 76% of
the Company's gross revenues in 1996, after giving effect to the Acquisitions,
were generated from local advertisers. 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 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
 
                                       7
<PAGE>
by other advertisers, the range of the Company's advertisers has become quite
diverse. The following table illustrates the diversity of the Company's
advertising base giving effect to the Acquisitions:
 
                    1996 PRO FORMA NET REVENUES BY CATEGORY
 
<TABLE>
<CAPTION>
                                                                        PERCENTAGE OF
                                                                         NET REVENUES
                                                                        --------------
<S>                                                                     <C>
Retail/Consumer Products..............................................        15.4%
Travel/Entertainment..................................................        15.3%
Automotive & Related..................................................        11.0%
Tobacco...............................................................        10.8%
Restaurant............................................................         8.6%
Professional Services.................................................         5.8%
Home Developer/Real Estate............................................         5.6%
Alcohol...............................................................         4.4%
Hotels/Motels.........................................................         3.5%
Other.................................................................        19.6%
                                                                           -----
    Total.............................................................       100.0%
                                                                           -----
                                                                           -----
</TABLE>
 
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.
 
                                       8
<PAGE>
    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. It is uncertain whether
additional legislation of this type will be enacted on the national level or in
any of the Company's markets.
 
    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. A reduction in billboard advertising by the tobacco 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
 
                                       9
<PAGE>
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 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:
 
<TABLE>
<CAPTION>
                                                                           30-SHEET      8-SHEET
CALENDAR YEARS                                               BULLETINS      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 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, 1996, the Company employed approximately 786 people, of whom
approximately 192 were primarily engaged in sales and marketing, 372 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: Milwaukee
(16), Minneapolis/St. Paul (22), Philadelphia (45), Washington D.C. (12) and
Wilmington (14). The Company considers its relations with the unions and with
its employees to be good.
 
                                       10
<PAGE>
ITEM 2 -- PROPERTIES
 
OUTDOOR ADVERTISING SITES
 
    Giving effect to the Acquisitions, the Company owns or has permanent
easements on approximately 364 parcels of real property that serve as the sites
for its outdoor displays. The Company's remaining approximately 17,174
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 6,956-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); Baltimore (8,000
square feet); Yonkers, NY (4,900 square feet); and Kingston, NY (3,000 square
feet) and a sales, real estate and administration office in each of 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
 
    The Company, as a result of the POA Acquisition and the merger between OAH
and one of the Company's subsidiaries, is a defendant in a case entitled IMPACT
COMMUNICATIONS OF CENTRAL FLORIDA, INC., ET AL. VS. NATIONAL OUTDOOR
ADVERTISING, ET AL. pending in the United States District Court, Middle District
of Florida. Impact Communications has alleged that POA, among others, conspired
to restrain trade and to monopolize the market for leases for land on which
outdoor advertising structures can be erected. The case was set for trial in
January 1997 but the trial date has been postponed pending court availability.
The plaintiffs have alleged that the acts of the defendants resulted in harm to
the plaintiffs and damages of $4 to 12 million, which could be trebled under the
applicable laws. The Company intends to defend the case vigorously. There can be
no assurance, however, as to the ultimate outcome of this litigation.
 
    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, 1996, Parent was the sole shareholder of the Company. There is a
public market for the common stock of Parent. Parent's common stock is quoted on
the Nasdaq National Market under the symbol "UOUT."
 
DIVIDEND POLICY
 
    In each of the years ending December 31, 1994, 1995 and 1996, the Company
paid dividends in the aggregate amount of $120,000 to Parent, its sole
shareholder. The Company does not anticipate paying dividends in excess of
$120,000 per year in the foreseeable future. The Company intends to retain any
future earnings for reinvestment in the Company. In addition, the New 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, 1996 are derived from the Consolidated Financial Statements of the
Company. The selected financial data as of and for the years ended December 31,
1992, 1993, 1994, and 1995 are derived from the financial statements of the
Company. Certain of such financial statements were unaudited. The financial
statements of the Company for the three years in the period ended December 31,
1996 were audited by Price Waterhouse LLP, independent accountants, as indicated
in their report included elsewhere in this Form 10-K. The selected financial
data as of and for the year ended December 31, 1996 are derived from the
consolidated financial statements included herein and include all normal and
recurring adjustments necessary for a fair presentation of such data. 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
Form 10-K. 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,
                                            ----------------------------------------------------------------------
                                               1991        1992        1993        1994        1995        1996
                                            ----------  ----------  ----------  ----------  ----------  ----------
<S>                                         <C>         <C>         <C>         <C>         <C>         <C>
                                                       (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA:
Gross revenue.............................  $   21,435  $   27,896  $   28,710  $   33,180  $   38,101  $   84,939
Net revenues(1)...........................      18,835      24,681      25,847      29,766      34,148      76,138
Direct advertising expenses...............       7,638      10,383      10,901      11,806      12,864      26,468
General and administrative expenses.......       3,515       3,530       3,357       3,873       4,244      10,596
Depreciation and amortization.............       5,530       7,817       8,000       7,310       7,402      18,286
Operating income..........................       2,152       2,951       3,589       6,777       9,638      20,788
Interest expense..........................       6,599       9,591       8,965       8,314       8,627      15,730
Other (expense) income, net...............         (53)        291        (351)       (134)         42       1,398
Income (loss) before extraordinary
  item(2).................................      (4,500)     (6,349)     (5,727)     (1,671)        969       3,660
Net income (loss).........................      (4,500)     (6,349)     (8,987)     (1,671)        969     (10,788)
Operating Cash Flow(3)....................  $    7,682  $   10,768  $   11,589  $   14,087  $   17,040  $   39,074
Operating Cash Flow Margin(4).............        40.8%       43.6%       44.8%       47.3%       49.9%       51.3%
Capital expenditures......................       2,047       2,352       2,004       4,668       5,620       7,178
Deficiency in coverage of earnings........       4,500       6,349       8,987       1,671      --          10,788
 
FINANCIAL RATIOS:
Ratio of earnings to fixed charges(5).....      --          --          --          --            1.1x        1.2x
Percentage of indebtedness to total
  capitalization(6).......................       121.4%      142.8%      116.1%      118.1%      115.8%       60.1%
Ratio of total indebtedness to Operating
  Cash Flow(7)............................        8.5x        5.5x        5.9x        5.2x        4.5x        NM(8)
Ratio of Operating Cash Flow to total
  interest(9).............................        1.2x        1.1x        1.3x        1.7x        2.0x        2.5x
 
<CAPTION>
 
                                                                   YEAR ENDED DECEMBER 31,
                                            ----------------------------------------------------------------------
                                               1991        1992        1993        1994        1995        1996
                                            ----------  ----------  ----------  ----------  ----------  ----------
<S>                                         <C>         <C>         <C>         <C>         <C>         <C>
BALANCE SHEET DATA:
Working capital(10).......................  $    2,365  $    1,326  $    1,730  $    2,119  $    3,961  $   24,432
Total assets..............................      71,682      65,754      61,816      66,190      69,133     681,027
Total long-term debt and other
  obligations.............................      65,076      59,363      68,054      73,304      76,079     347,941
 
Redeemable preferred stock................      13,442      15,055      --          --          --          --
Common stockholders' equity (deficit).....     (11,450)    (17,799)     (9,452)    (11,243)    (10,394)    230,984
</TABLE>
 
                                                   (FOOTNOTES ON FOLLOWING PAGE)
 
                                       13
<PAGE>
(FOOTNOTES FOR PRECEDING PAGE)
------------------------
 
 (1) Net revenues are gross revenues less agency commissions.
 
 (2) Extraordinary item 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 the ratio of (i) the sum of income before income taxes
    and minority interest plus interest expense less minority interest to (ii)
    interest expense.
 
 (6) Amounts represent (i) total long-term debt divided by (ii) total long-term
    debt plus common stockholders' equity (deficit).
 
 (7) Amounts represent (i) total long-term debt divided by (ii) Operating Cash
    Flow.
 
 (8) 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.
 
 (9) Amounts represent the ratio of (i) Operating Cash Flow (ii) interest
    expense on funded debt.
 
(10) Working capital is current assets less current liabilities (excluding
    current maturities of long-term debt and other obligations). Other
    obligations totaled $2,850 at December 31, 1992.
 
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, 1996 and financial condition at
December 31, 1996 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 March 21, 1997 filed in
connection with Amendment No. 2 to the Company's Registration Statement on Form
S-1 filed with the Securities and Exchange Commission (File No. 333-21717).
 
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,
1996, the Company spent in excess of $450 million to acquire additional display
faces,
 
                                       14
<PAGE>
increasing the number of its display faces from approximately 600 in 1989 to
approximately 31,049 at December 31, 1996. During this period, the Company's net
revenues increased from $10.3 million in 1989 to $76.1 million in 1996. The
following table lists the Company's acquisitions between January 1, 1989 and
December 31, 1996:
 
<TABLE>
<CAPTION>
                                                                        APPROXIMATE NUMBER AND TYPE
                                                                         OF DISPLAY FACES ACQUIRED
                                                              ------------------------------------------------
YEAR OF                                                                     30-SHEET      8-SHEET
ACQUISITION                       MARKETS                      BULLETINS     POSTERS      POSTERS      TOTAL
--------------  --------------------------------------------  -----------  -----------  -----------  ---------
<S>             <C>                                           <C>          <C>          <C>          <C>
1989..........  Milwaukee, Chicago                                   270       --           --             270
1990..........  Chicago                                               12       --           --              12
1991..........  Indianapolis, Des Moines, Evansville,                421        2,480          140       3,041
                Chicago
1994..........  Chicago, Milwaukee                                    20       --            4,151       4,171
1995..........  Chicago, Dallas                                        9       --            1,127       1,136
1996..........  Chicago, Minneapolis/St. Paul, Jacksonville,       6,195        9,181           43      15,419
                Dallas, Iowa, Southeast United States,
                Atlantic coast of Florida, Gulf coast of
                Florida,
                Northeast United States
                                                                   -----   -----------       -----   ---------
    Total...................................................       6,927       11,661        5,461      24,049
                                                                   -----   -----------       -----   ---------
                                                                   -----   -----------       -----   ---------
</TABLE>
 
    In addition, in 1996 the Company acquired 437 transit display faces in
Indianapolis, 1,539 kiosk displays in malls throughout the United States, 1,917
transit display faces in Baltimore and 146 bus shelters in Philadelphia.
 
    The Company's acquisitions have been financed through bank borrowings and
the issuance of long-term debt, as well as with internally-generated funds. The
Acquisitions were financed, in part, from the proceeds of the IPO, the October
Offerings, the December Offering and the New Credit Facility (each defined
herein). 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,
                                                                                ------------------------------------------
                                                                                  1993       1994       1995       1996
                                                                                ---------  ---------  ---------  ---------
<S>                                                                             <C>        <C>        <C>        <C>
Net revenues..................................................................      100.0%     100.0%     100.0%     100.0%
Direct advertising expenses...................................................       42.2       39.7       37.7       34.8
General and administrative expenses...........................................       13.0       13.0       12.4       13.9
                                                                                ---------  ---------  ---------  ---------
Operating Cash Flow(1)........................................................       44.8       47.3       49.9       51.3
Depreciation and amortization.................................................       30.9       24.5       21.7       24.0
                                                                                ---------  ---------  ---------  ---------
Operating income..............................................................       13.9       22.8       28.2       27.3
Other expense, primarily interest.............................................       36.1       28.4       25.4       22.5
                                                                                ---------  ---------  ---------  ---------
Net (loss) income before extraordinary item...................................      (22.2)      (5.6)       2.8        4.8
                                                                                ---------  ---------  ---------  ---------
</TABLE>
 
------------------------
 
(1) "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
 
                                       15
<PAGE>
    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.
 
    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.
 
    Net revenues represent gross revenues less commissions paid to advertising
agencies that contract for the use of advertising displays on behalf of
advertisers. Approximately 76% of the Company's gross revenues are contracted
for directly from local 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 1996, these expenses amounted to the following approximate
percentages of net revenues: lease 15.6%, production 10.5%, sales 4.9%,
maintenance 1.9% 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, 1996, the Company had net operating loss and credit carryforwards for
federal income tax purposes of approximately $65 million. Included in total net
operating loss and credit carryforwards is approximately $45 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. The
Company's acquisition of OAH and Revere also resulted in an "ownership change"
and a limitation 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, 1996 AND DECEMBER 31, 1995
 
    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 Minneapolis and
Jacksonville markets (the "Naegele Markets") which were acquired in the Naegele
Acquisition and approximately $13.0 million of revenues from the markets
acquired in the POA Acquisition. The remaining $8.8 million or 25.8% increase in
net revenues was a result of higher
 
                                       16
<PAGE>
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
Additional Acquisitions. 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
Acquisitions. 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 Markets 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 (as defined herein).
 
    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 Existing Company Notes (as defined herein).
 
    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.
 
    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
 
                                       17
<PAGE>
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.
 
COMPARISON OF YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993
 
    Net revenues increased 15.2% to $29.8 million during 1994 from $25.8 million
in 1993, reflecting higher advertising rates and occupancy levels and increased
sales to local and regional advertisers. Increases in revenue from the
advertising structures acquired in certain acquisitions, offset by declines in
revenues from the January 1994 sale of the Company's 97 bulletin display faces
in Jacksonville, accounted for approximately $700,000 of the increased revenues
in 1994. Net revenues from tobacco advertising remained constant between 1994
and 1993 at approximately $3.8 million. However, as a percentage of net
revenues, tobacco advertising sales decreased to 13.1% in 1994 and 14.8% in the
prior year. The Company offset the decline in tobacco revenues with increased
sales to local advertisers, particularly gaming companies, and to regional and
other national advertisers. There can be no assurance that the Company will be
able to replace tobacco revenues in the future.
 
    Direct advertising expenses increased to $11.8 million in 1994 from $10.9
million in 1993 as a result of higher sales during the 1994 period. As a
percentage of net revenues, however, direct advertising expenses decreased to
39.7% in 1994 as a result of economies of scale associated with increased
revenues.
 
    General and administrative expenses in 1994 increased to $3.9 million from
$3.4 million in 1993 due to the incremental payroll costs associated with
additional employees. As a percentage of net revenues, however, general and
administrative expenses remained flat at 13.0%.
 
    As a result of the above factors, Operating Cash Flow increased by 21.6% to
$14.1 million in 1994 from $11.6 million in 1993.
 
    Depreciation and amortization expenses decreased to $7.3 million (24.5% of
net revenues) in 1994 from $8.0 million (31.0% of the net revenues) in 1993 due
to scheduled depreciation of the fixed assets.
 
    Total interest expense decreased to $8.3 million in 1994 from $9.0 million
in 1993 due to the elimination of the accretion of dividends on redeemable
preferred stock (such stock was redeemed in June 1994), which was partially
offset by interest associated with additional borrowings.
 
    The foregoing factors contributed to the Company's $1.7 million net loss in
1994 compared to a net loss of $9.0 million in 1993 (which included a $3.3
million extraordinary charge recorded in the fourth quarter of 1993). Because
the Company incurred net losses in 1994 and 1993, it had no provision for income
taxes in those years.
 
                                       18
<PAGE>
QUARTERLY COMPARISONS
 
    The following table sets forth certain quarterly financial information of
the Company for each quarter of 1994, 1995 and 1996. The information has been
derived from the quarterly financial statements of the Company which are
unaudited but which, in the opinion of management, have been prepared on the
same basis as the financial statements included herein and include all
adjustments (consisting only of normal recurring items) necessary for a fair
presentation of the financial result for such periods. This information should
be read in conjunction with the Consolidated Financial Statements and the Notes
thereto and the other financial information appearing elsewhere in this
Prospectus. The operating results for any quarter are not necessarily indicative
of results for any future period.
<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                      -----------------------------------------------------------------------------------------------------
                      MARCH 31,   JUNE 30,   SEPT. 30,   DEC. 31,   MARCH 31,   JUNE 30,   SEPT. 30,   DEC. 31,   MARCH 31,
                        1994        1994       1994        1994       1995        1995       1995        1995       1996
                      ---------   --------   ---------   --------   ---------   --------   ---------   --------   ---------
                                                             (DOLLARS IN THOUSANDS)
<S>                   <C>         <C>        <C>         <C>        <C>         <C>        <C>         <C>        <C>
STATEMENT OF
  OPERATIONS DATA:
Net revenues........  $ 6,102     $7,803     $ 7,973     $7,888     $7,236      $9,175     $8,940      $8,797     $8,427
Operating income....      924      2,333       2,002      1,518      1,348       3,109      2,674       2,507      1,670
Net income (loss)...   (1,276)       294        (141)      (548)      (747)        903        509         304       (757)
PERCENTAGE OF NET
  REVENUES:
Operating income....     15.1%      29.9%       25.1%      19.2%      18.6%       33.9%      29.9%       28.5%      19.8%
Net income (loss)...    (20.9)%      3.8%       (1.8)%     (6.9)%    (10.3)%       9.8%       5.7%        3.5%      (9.0)%
OTHER DATA:
Operating Cash
  Flow(1)...........  $ 2,709     $3,998     $ 3,885     $3,495     $3,085      $4,910     $4,524      $4,521     $3,702
Operating Cash Flow
  Margin(2).........     44.4%      51.2%       48.7%      44.3%      42.6%       53.5%      50.6%       51.4%      43.9%
 
<CAPTION>
 
                      JUNE 30,    SEPT. 30,   DEC. 31,
                        1996        1996        1996
                      ---------   ---------   ---------
 
<S>                   <C>         <C>         <C>
STATEMENT OF
  OPERATIONS DATA:
Net revenues........  $17,812     $18,643     $31,256
Operating income....    7,299       5,890       5,929
Net income (loss)...    1,966       3,077     (15,074)
PERCENTAGE OF NET
  REVENUES:
Operating income....     41.0%       31.6%       19.0%
Net income (loss)...     11.0%       16.5%      (48.2)%
OTHER DATA:
Operating Cash
  Flow(1)...........  $ 9,941     $10,422     $15,009
Operating Cash Flow
  Margin(2).........     55.8%       55.9%       48.0%
</TABLE>
 
------------------------------
 
(1) Operating Cash Flow is operating income before depreciation and
    amortization. Operating Cash Flow is not intended to represent net cash
    provided by operating activities as defined by generally accepted accounting
    principles and should not be considered as an alternative to net income
    (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.
 
(2) Operating Cash Flow Margin is Operating Cash Flow stated as a percentage of
    net revenues.
 
                                       19
<PAGE>
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 stock.
 
    In April 1996, the Company, LaSalle National Bank ("LaSalle"), and Bankers
Trust Company ("Bankers Trust"; together with LaSalle, the "Lenders"), agreed to
(i) refinance the Company's existing credit facility with a revolving credit
facility (the "Existing Revolving Credit Facility") and (ii) provide an
additional extension of credit for purposes of acquisition financing (the
"Existing Acquisition Credit Facility", and together with the Existing Revolving
Credit Facility, the "Existing Credit Facilities") and, specifically, the
financing, in part, of the Naegele Acquisition. The Lenders extended an
acquisition term loan in the amount of $75 million and an acquisition revolving
credit line in the amount of $12.5 million for a total commitment of $87.5
million, of which $84.5 million was drawn at the closing of the Naegele
Acquisition. In addition, the Lenders extended a working capital revolving
credit line in the amount of $12.5 million, of which no amount has been drawn.
In addition to the amounts drawn under the Existing Acquisition Credit Facility,
Parent sold a minority portion of its capital stock for $30 million in cash
proceeds which was used to finance the remaining amount of the Naegele
Acquisition and to refinance existing indebtedness. In October 1996, the Company
and the Lenders amended and restated the Existing Credit Facilities which then
became the "New Credit Facility." The New Credit Facility provided for a total
loan commitment of $300 million. Such commitment was subsequently reduced to
$225 million.
 
    Parent completed its initial public offering ("IPO") of 4,630,000 shares of
its Common Stock (including 930,000 shares sold pursuant to exercise of the
Underwriters' over-allotment option) on July 26, 1996 (the "IPO"), resulting in
proceeds to Parent of $60.4 million. Parent used a portion of the net proceeds
to redeem approximately $9.5 million of Parent's outstanding $50 million 14%
Series A Senior Secured Discount Notes due 2004 (the "Existing Parent Notes")
and repaid a portion of the amounts outstanding under the Existing Acquisition
Credit Facility.
 
    In October 1996, the Company and Parent completed the October Offerings with
net proceeds of $425.7 million. The term "October Offerings" refers to the
offering by the Company of $225 million of its 9 3/4% Senior Subordinated Notes
due 2006 (the "October Notes") and the offering by Parent of 6,500,000 shares of
its common stock. Additionally, in October 1996, Parent completed a tender offer
for 100% of the outstanding Existing Parent Notes and the Company completed a
tender offer for 100% of its outstanding $65 million 11% Series A Senior Notes
due 2003 (the "Existing Company Notes").
 
    In December 1996, the Company completed an offering (the "December
Offering") of $100 million of its 9 3/4% Series B Senior Subordinated Notes due
2006 (the "December Notes", and together with the October Notes, the "Notes").
 
    Net cash provided by operating activities increased to $15.1 million in 1996
from $7.0 million in 1995 period. Net cash provided by operating activities
increased to $7.0 million in 1995 from $5.8 million in 1994. Net cash provided
by operating activities reflects the Company's net loss 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 $498.0 million in
1996 includes cash used for acquisitions of $490.8 million and 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 includes cash
used for acquisitions of $1.9 million and other capital expenditures of $5.6
million. Capital expenditures have been made primarily to develop new structures
in each of its markets. The Company intends to continue to develop new
structures in its markets and to consider other potential acquisitions.
Management established the New Credit Facility for the purpose of financing
acquisitions and capital expenditures relating to the development and
improvement of advertising structures. The Company believes that its cash from
operations, together with available borrowings under the New 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 New Credit Facility are
insufficient to
 
                                       20
<PAGE>
satisfy its cash requirements, the Company may incur additional indebtedness to
finance its operations including, without limitation, additional acquisitions.
 
    For the year ended December 31, 1996, $494.5 million was provided by
financing activities primarily due to the issuance of senior subordinated debt,
increased borrowings under the Existing Credit Facilities and the sale of
capital stock. In 1995, net cash of $2.0 million was provided by financing
activities, primarily due to borrowings under the prior credit facility. For the
years ended December 31, 1995 and 1994, $2.0 million and $2.4 million,
respectively, was provided by financing activities, primarily as a result of
additional borrowings under the prior credit facility.
 
    The Company expects to fund its capital expenditures primarily with cash
from operations and expects its capital expenditures to be primarily for
development of additional structures. The Company intends to utilize its cash
from operations to continue to develop new advertising structures in each of its
markets, and, as appropriate opportunities arise, to acquire additional outdoor
advertising operations in its existing markets, in geographically proximate
markets and in contiguous markets. The Company is also exploring the development
of other forms of out-of-home media, such as bus shelter advertising and transit
advertising that management believes would complement the Company's existing
outdoor operations. The restrictions imposed by the New Credit Facility and the
indentures governing the Notes may limit the Company's use of cash from
operations for these purposes.
 
    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. Based upon the current level of operations and
anticipated growth, management of the Company believes that available cash flow,
together with available borrowings under the New Credit Facility and other
sources of liquidity, will be adequate to meet the Company's anticipated future
requirements for working capital, capital expenditures and scheduled payments of
principal of, and interest on the Notes. However, 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 New 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.
 
                                       21
<PAGE>
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                         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 stockholder's equity
(deficit) and of cash flows present fairly, in all material respects, the
financial position of Universal Outdoor, Inc. and its subsidiaries ("the
Company") at December 31, 1995 and 1996, and the results of their operations and
their cash flows for each of the three years in the period ended December 31,
1996, 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
 
February 28, 1997
 
                                       22
<PAGE>
                            UNIVERSAL OUTDOOR, INC.
        (A WHOLLY OWNED SUBSIDIARY OF UNIVERSAL OUTDOOR HOLDINGS, INC.)
 
                          CONSOLIDATED BALANCE SHEETS
 
                             (DOLLARS IN THOUSANDS)
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,  DECEMBER 31,
                                                                                           1995          1996
                                                                                       ------------  ------------
<S>                                                                                    <C>           <C>
Current assets:
  Cash and equivalents...............................................................   $       19    $   11,631
  Cash held in escrow................................................................       --             9,455
  Accounts receivable, less allowance for doubtful accounts of $106 and $2,849.......        5,059        20,927
  Accounts receivable -- Parent......................................................       --             2,708
  Other receivables..................................................................          201         1,445
  Prepaid land leases................................................................        1,043         4,010
  Prepaid insurance and other........................................................        1,029         4,173
                                                                                       ------------  ------------
    Total current assets.............................................................        7,351        54,349
                                                                                       ------------  ------------
Property and equipment, net (Note 5).................................................       55,346       382,555
Goodwill and intangible assets, net (Note 6).........................................        2,695       219,009
Other assets, net (Note 7)...........................................................        3,741        25,114
                                                                                       ------------  ------------
Total assets.........................................................................   $   69,133    $  681,027
                                                                                       ------------  ------------
                                                                                       ------------  ------------
 
                                 LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
  Current liabilities:
  Current maturities of long-term debt...............................................   $       58    $   --
  Accounts payable...................................................................        1,225         3,373
  Accounts payable -- Parent.........................................................          234        --
  Accrued expenses (Note 8)..........................................................        1,931        26,544
                                                                                       ------------  ------------
    Total current liabilities........................................................        3,448        29,917
                                                                                       ------------  ------------
Long-term debt and other-obligations (Note 9)........................................       76,079       347,941
Other long-term liabilities..........................................................       --               485
Long-term deferred income tax liabilities (Note 11)..................................       --            71,700
Commitments and contingencies (Notes 10 and 12)......................................       --            --
Stockholder's equity (deficit):
  Common stock, $.01 par value, 1,000,000 shares authorized; 10,000 shares issued and
    outstanding......................................................................       --            --
  Additional paid in capital.........................................................       22,535       274,821
  Accumulated deficit................................................................      (32,929)      (43,837)
                                                                                       ------------  ------------
    Total stockholder's equity (deficit).............................................      (10,394)      230,984
                                                                                       ------------  ------------
    Total liabilities and stockholder's equity (deficit).............................   $   69,133    $  681,027
                                                                                       ------------  ------------
                                                                                       ------------  ------------
</TABLE>
 
          See accompanying notes to consolidated financial statements
 
                                       23
<PAGE>
                            UNIVERSAL OUTDOOR, INC.
        (A WHOLLY OWNED SUBSIDIARY OF UNIVERSAL OUTDOOR HOLDINGS, INC.)
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                  FOR THE YEARS ENDED DECEMBER 31,
                                                                                  --------------------------------
                                                                                    1994       1995        1996
                                                                                  ---------  ---------  ----------
<S>                                                                               <C>        <C>        <C>
Revenues........................................................................  $  33,180  $  38,101  $   84,939
Less agency commissions.........................................................      3,414      3,953       8,801
                                                                                  ---------  ---------  ----------
  Net revenues..................................................................     29,766     34,148      76,138
                                                                                  ---------  ---------  ----------
Operating expenses:
  Direct advertising expenses...................................................     11,806     12,864      26,468
  General and administrative expenses...........................................      3,873      4,244      10,596
  Depreciation and amortization.................................................      7,310      7,402      18,286
                                                                                  ---------  ---------  ----------
                                                                                     22,989     24,510      55,350
                                                                                  ---------  ---------  ----------
Operating income................................................................      6,777      9,638      20,788
                                                                                  ---------  ---------  ----------
Other expense:
  Interest expense, including amortization of bond discount of $61, $63 and
    $731........................................................................      8,314      8,627      15,730
  Other expenses................................................................        134         42       1,398
                                                                                  ---------  ---------  ----------
    Total other expense.........................................................      8,448      8,669      17,128
                                                                                  ---------  ---------  ----------
Income (loss) before extraordinary item.........................................     (1,671)       969       3,660
Extraordinary loss on early extinguishment of debt..............................     --         --         (14,448)
                                                                                  ---------  ---------  ----------
Net income (loss)...............................................................  $  (1,671) $     969  $  (10,788)
                                                                                  ---------  ---------  ----------
                                                                                  ---------  ---------  ----------
</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 CASH FLOWS
 
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                  FOR THE YEARS ENDED DECEMBER 31,
                                                                                  ---------------------------------
                                                                                    1994       1995        1996
                                                                                  ---------  ---------  -----------
<S>                                                                               <C>        <C>        <C>
Cash flows from operating activities:
  Net income (loss).............................................................  $  (1,671) $     969  $   (10,788)
  Depreciation..................................................................      5,600      6,207       13,309
  Amortization..................................................................      2,126      1,690        4,977
  Extraordinary loss............................................................     --         --           14,448
  Loss on sale of property and equipment........................................         90     --          --
  Changes in assets and liabilities, net of effects from acquisitions:
    Accounts receivable and other receivables...................................     (1,278)      (762)      (1,200)
    Accounts receivable -- Parent...............................................     --         --           (2,708)
    Prepaid land leases, insurance and other....................................       (223)      (391)         435
    Accounts payable and accrued expenses.......................................        384       (187)      (3,124)
    Accounts payable -- Parent..................................................        722       (488)        (234)
                                                                                  ---------  ---------  -----------
      Net cash from operating activities........................................      5,750      7,038       15,115
                                                                                  ---------  ---------  -----------
Cash flows used in investing activities:
  Capital expenditures..........................................................     (5,671)    (5,620)      (7,178)
  Payments for acquisitions, net of cash acquired...............................     (3,355)    (1,925)    (490,813)
  Proceeds from sale of property and equipment..................................      1,003     --          --
  Payment for consulting agreement..............................................     --         (1,400)     --
  Other payments................................................................       (160)      (124)          13
                                                                                  ---------  ---------  -----------
      Net cash used in investing activities.....................................     (8,183)    (9,069)    (497,978)
                                                                                  ---------  ---------  -----------
Cash flows from (used in) financing activities:
  Proceeds from long-term debt offerings........................................     --         --          325,255
  Long-term debt repayments.....................................................       (272)      (262)     (74,987)
  Deferred financing costs......................................................       (221)      (250)     (18,298)
  Net borrowings under credit agreements........................................      3,040      2,671      486,052
  Repayment of credit facilities................................................     --         --         (475,713)
  Capital contributions from Parent.............................................     --         --          252,286
  Dividends paid to Parent......................................................       (120)      (120)        (120)
                                                                                  ---------  ---------  -----------
      Net cash from financing activities........................................      2,427      2,039      494,475
                                                                                  ---------  ---------  -----------
Net increase (decrease) in cash and equivalents.................................         (6)         8       11,612
Cash and equivalents, at beginning of period....................................         17         11           19
                                                                                  ---------  ---------  -----------
Cash and equivalents, at end of period..........................................  $      11  $      19  $    11,631
                                                                                  ---------  ---------  -----------
                                                                                  ---------  ---------  -----------
Supplemental cash flow information:
    Interest paid during the period.............................................  $   7,765  $   8,076  $    10,910
                                                                                  ---------  ---------  -----------
                                                                                  ---------  ---------  -----------
</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 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>           <C>
Balance at December 31, 1993.............................        10,000    $   22,135   $  (31,987)   $   (9,852)
Reclassification of redeemable common stock..............                         400                        400
Dividends declared and paid to Parent....................                                     (120)         (120)
Net loss.................................................                                   (1,671)       (1,671)
                                                                -------    ----------  ------------  ------------
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        22,535      (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
                                                                -------    ----------  ------------  ------------
                                                                -------    ----------  ------------  ------------
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       26
<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, Palm
Beach, 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,
Washington D.C., Philadelphia, Northern New Jersey, Wilmington, Salisbury and
Hudson Valley, NY).
 
    Universal sells outdoor advertising space to national, regional and local
advertisers. 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 net revenues in 1996: tobacco (13.2%);
automotive (10.9%); retail (14.6%); and entertainment (11.2%).
 
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.
 
    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 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.
 
                                       27
<PAGE>
                            UNIVERSAL OUTDOOR, INC.
        (A WHOLLY OWNED SUBSIDIARY OF UNIVERSAL OUTDOOR HOLDINGS, INC.)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                             (DOLLARS IN THOUSANDS)
 
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
    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>
<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 approximate 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.
 
    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. These
reclassifications had no effect on previously reported net earnings.
 
                                       28
<PAGE>
                            UNIVERSAL OUTDOOR, INC.
        (A WHOLLY OWNED SUBSIDIARY OF UNIVERSAL OUTDOOR HOLDINGS, INC.)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                             (DOLLARS IN THOUSANDS)
 
NOTE 3 -- EQUITY OFFERINGS AND DEBT REFINANCINGS:
 
<TABLE>
<S>                                                               <C>
Capital contributions from Parent...............................  $ 252,286
Proceeds from long-term debt offerings:
  9 3/4% Senior 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
                                                                  ---------
  Total proceeds from financings................................  1,063,593
                                                                  ---------
 
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 repayment..................................      1,673
                                                                  ---------
                                                                     74,987
  Credit facility repayment.....................................    475,713
  Dividend to Parent............................................        120
  Financing costs...............................................     18,298
                                                                  ---------
                                                                    569,118
                                                                  ---------
  Net financing proceeds........................................  $ 494,475
                                                                  ---------
                                                                  ---------
</TABLE>
 
    During 1996, the Parent Company contributed capital to Universal in the
amount of $252,286. The funds were generated from proceeds from the equity
offerings and private investors netted against repayments of the 14% Senior
Secured Discount Notes.
 
    At December 31, 1996 Universal's credit facility provides 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 in the amount of $5 million. In 1996, proceeds
from credit facilities totaled $486,052, while repayments totaled $475,713.
 
    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").
 
    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.
 
                                       29
<PAGE>
                            UNIVERSAL OUTDOOR, INC.
        (A WHOLLY OWNED SUBSIDIARY OF UNIVERSAL OUTDOOR HOLDINGS, INC.)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                             (DOLLARS IN THOUSANDS)
 
NOTE 4 -- ACQUISITIONS:
 
    Universal completed the following significant acquisitions for cash during
1996:
 
<TABLE>
<CAPTION>
                                                                                                PURCHASE PRICE
                                                                                           ------------------------
                                                                                              STOCK        ASSET
                                                                           ACQUIRED        ACQUISITION  ACQUISITION
                                                                      -------------------  -----------  -----------
<S>                                                                   <C>                  <C>          <C>
Ad-Sign, Inc........................................................        January, 1996                $  12,500
NOA Holding Corp....................................................          April, 1996   $  83,295
Iowa Outdoor Displays...............................................      September, 1996                    1,794
The Chase Company...................................................      September, 1996                    5,800
Outdoor Advertising Holdings, Inc...................................        October, 1996     239,064
Revere Holding Corp.................................................       December, 1996     123,794
</TABLE>
 
    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 1997, however, it is not
expected that such revisions will have any material effect.
 
<TABLE>
<CAPTION>
                                                                                       1996
                                                                                    ----------
<S>                                                                                 <C>
Current assets, other than cash...................................................  $   22,567
Property and equipment............................................................     323,624
Goodwill..........................................................................     219,406
Other assets......................................................................       4,847
Current liabilities...............................................................     (32,497)
Deferred income tax liabilities...................................................     (71,700)
                                                                                    ----------
Purchase price, net of cash received..............................................  $  466,247
                                                                                    ----------
                                                                                    ----------
</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 Company'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.
 
    In conjunction with the acquisitions, the Company recorded reserves of
approximately $5.0 million to cover anticipated costs of combining its existing
business with the acquired outdoor advertising businesses. The reserves relate
to liabilities incurred for relocation ($1.6 million), severance ($1.4 million),
facility charges ($1.3 million) and other related expenditures ($0.7 million).
Approximately $1.3 million was charged against this reserve during 1996.
 
    The following unaudited pro forma financial information combines the results
of operations of the 1996 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
 
                                       30
<PAGE>
                            UNIVERSAL OUTDOOR, INC.
        (A WHOLLY OWNED SUBSIDIARY OF UNIVERSAL OUTDOOR HOLDINGS, INC.)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                             (DOLLARS IN THOUSANDS)
 
NOTE 4 -- ACQUISITIONS: (CONTINUED)
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>
                                                           1995         1996
                                                        -----------  -----------
                                                        (UNAUDITED)  (UNAUDITED)
<S>                                                     <C>          <C>
Net revenues..........................................   $ 162,758    $ 176,611
Depreciation and amortization.........................      50,818       50,818
Operating income......................................      25,237       35,009
Interest..............................................      40,670       44,235
Loss before income taxes and extraordinary loss.......     (15,557)     (11,037)
Loss before income taxes..............................   $ (15,557)   $ (25,485)
</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>
                                                                           1995        1996
                                                                         ---------  ----------
<S>                                                                      <C>        <C>
Outdoor advertising structures.........................................  $  76,340  $  390,963
Land and capitalized land lease costs..................................      2,232      12,130
Vehicles and equipment.................................................      4,712      12,744
Building and leasehold improvements....................................      3,150      11,087
Display faces under construction.......................................      1,344         748
                                                                         ---------  ----------
                                                                            87,778     427,672
Less accumulated depreciation..........................................     32,432      45,117
                                                                         ---------  ----------
                                                                         $  55,346  $  382,555
                                                                         ---------  ----------
                                                                         ---------  ----------
</TABLE>
 
NOTE 6 -- GOODWILL AND INTANGIBLE ASSETS:
 
    Goodwill and intangible assets consist of the following at December 31:
 
<TABLE>
<CAPTION>
                                                                            1995        1996
                                                                          ---------  ----------
<S>                                                                       <C>        <C>
Non-compete agreements..................................................  $   6,500  $    6,642
Goodwill................................................................        930     221,909
                                                                          ---------  ----------
                                                                              7,430     228,551
Less accumulated amortization...........................................      4,735       9,542
                                                                          ---------  ----------
                                                                          $   2,695  $  219,009
                                                                          ---------  ----------
                                                                          ---------  ----------
</TABLE>
 
                                       31
<PAGE>
                            UNIVERSAL OUTDOOR, INC.
        (A WHOLLY OWNED SUBSIDIARY OF UNIVERSAL OUTDOOR HOLDINGS, INC.)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                             (DOLLARS IN THOUSANDS)
 
NOTE 7 -- OTHER ASSETS:
 
    Other assets consist of the following at December 31:
 
<TABLE>
<CAPTION>
                                                                             1995       1996
                                                                           ---------  ---------
<S>                                                                        <C>        <C>
Financing costs..........................................................  $   4,031  $  22,727
Deposits.................................................................         20      5,073
Other....................................................................      1,211      4,815
                                                                           ---------  ---------
                                                                               5,262     32,615
Less accumulated amortization............................................      1,521      7,501
                                                                           ---------  ---------
                                                                           $   3,741  $  25,114
                                                                           ---------  ---------
                                                                           ---------  ---------
</TABLE>
 
NOTE 8 -- ACCRUED EXPENSES:
 
    Accrued expenses consist of the following at December 31:
 
<TABLE>
<CAPTION>
                                                                             1995       1996
                                                                           ---------  ---------
<S>                                                                        <C>        <C>
Interest.................................................................  $   1,054  $   5,667
State and other taxes payable............................................     --          4,070
Employee compensation and related taxes..................................        184      2,479
Deferred revenue.........................................................        468      2,114
Accrued lease............................................................     --          1,599
Severance and relocation.................................................     --          2,121
Professional services....................................................     --          1,935
Lease and maintenance....................................................     --          2,392
Other....................................................................        225      4,167
                                                                           ---------  ---------
                                                                           $   1,931  $  26,544
                                                                           ---------  ---------
                                                                           ---------  ---------
</TABLE>
 
NOTE 9 -- LONG-TERM DEBT AND OTHER OBLIGATIONS:
 
    Long-term debt and other obligations consist of the following at December
31:
 
<TABLE>
<CAPTION>
                                                                           1995        1996
                                                                         ---------  ----------
<S>                                                                      <C>        <C>
9 3/4% Senior Subordinated Notes due 2006, net of discount of $1,389...  $  --      $  223,611
9 3/4% Series B Senior Subordinated Notes due 2006, net of premium of
  $1,487...............................................................     --         101,487
Revolving Credit Loan..................................................      3,286      --
Acquisition Credit Loan................................................      6,375      --
Acquisition Term Loan..................................................     --          20,000
11% Senior Notes due 2003, net of discount of $839.....................     64,161      --
Other obligations......................................................      2,315       2,843
                                                                         ---------  ----------
                                                                            76,137     347,941
Less current maturities................................................         58      --
                                                                         ---------  ----------
                                                                         $  76,079  $  347,941
                                                                         ---------  ----------
                                                                         ---------  ----------
</TABLE>
 
                                       32
<PAGE>
                            UNIVERSAL OUTDOOR, INC.
        (A WHOLLY OWNED SUBSIDIARY OF UNIVERSAL OUTDOOR HOLDINGS, INC.)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                             (DOLLARS IN THOUSANDS)
 
NOTE 9 -- LONG-TERM DEBT AND OTHER OBLIGATIONS: (CONTINUED)
    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. Upon the failure of certain events to occur
prior to October 1997, a total of $100 million under the $212.5 million
revolving/ term loan facility may be converted to a term facility which may not
be reborrowed. Approximately $212.5 million of the credit facility matures on
September 30, 2003 with the remaining amount maturing on September 30, 2004. As
of December 31, 1996, Universal had drawn down $20 million under the acquisition
credit facility 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 in the credit facility agreement. The interest rate in effect during
1996 ranged from 7.875% 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
 
                                       33
<PAGE>
                            UNIVERSAL OUTDOOR, INC.
        (A WHOLLY OWNED SUBSIDIARY OF UNIVERSAL OUTDOOR HOLDINGS, INC.)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                             (DOLLARS IN THOUSANDS)
 
NOTE 9 -- LONG-TERM DEBT AND OTHER OBLIGATIONS: (CONTINUED)
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,
1996 are as follows:
 
<TABLE>
<S>                                                                 <C>
1997..............................................................  $  --
1998..............................................................     20,352
1999..............................................................      1,991
2000..............................................................     --
2001..............................................................        500
2002 and thereafter...............................................    325,098
                                                                    ---------
    Total.........................................................  $ 347,941
                                                                    ---------
                                                                    ---------
</TABLE>
 
NOTE 10 -- LEASE COMMITMENTS:
 
    Rent expense totaled $4,600, $4,600 and $13,002 in 1994, 1995 and 1996,
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, 1996 are payable as follows:
 
<TABLE>
<CAPTION>
                                                                             CAPITAL     OPERATING
YEAR                                                                         LEASES       LEASES
-------------------------------------------------------------------------  -----------  -----------
<S>                                                                        <C>          <C>
1997.....................................................................   $     275    $     448
1998.....................................................................         233          277
1999.....................................................................         117          172
2000.....................................................................          26          126
2001 and after...........................................................      --               18
                                                                                -----   -----------
    Total minimum lease payments.........................................         651    $   1,041
                                                                                        -----------
                                                                                        -----------
 
Less amount representing interest........................................         (71)
                                                                                -----
Present value of minimum lease payments..................................         580
Less current portion.....................................................         235
                                                                                -----
Long-term capitalized lease obligations..................................   $     345
                                                                                -----
                                                                                -----
</TABLE>
 
                                       34
<PAGE>
                            UNIVERSAL OUTDOOR, INC.
        (A WHOLLY OWNED SUBSIDIARY OF UNIVERSAL OUTDOOR HOLDINGS, INC.)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                             (DOLLARS IN THOUSANDS)
 
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 1994, 1995 and 1996; therefore,
no provision for income taxes was required.
 
    Deferred tax assets (liabilities) consist of the following at December 31:
 
<TABLE>
<CAPTION>
                                                                            1995        1996
                                                                          ---------  ----------
<S>                                                                       <C>        <C>
Deferred tax liabilities:
Property and equipment..................................................  $  --      $  (99,212)
                                                                          ---------  ----------
    Total deferred tax liabilities......................................     --         (99,212)
                                                                          ---------  ----------
Deferred tax assets:
Bad debts...............................................................         42         897
Non-deductible accrued expenses.........................................         53       2,140
Property and equipment..................................................        523      --
Goodwill and intangibles................................................     --           6,112
Operating loss and credit carryforwards.................................      5,841      26,251
                                                                          ---------  ----------
Total deferred tax assets...............................................      6,459      35,400
                                                                          ---------  ----------
Valuation allowance.....................................................     (6,459)     (7,888)
                                                                          ---------  ----------
Net deferred tax liabilities............................................  $  --      $  (71,700)
                                                                          ---------  ----------
                                                                          ---------  ----------
</TABLE>
 
    Universal has established a valuation allowance against a portion of 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
significant acquisitions made in 1996, 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, 1996, Universal had net operating losses and credit
carryforwards for federal income tax purposes of approximately $65 million.
Included in total net operating loss and credit carryforwards is approximately
$45 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. During the current fiscal year, Universal did not
utilize any net operating loss and credit carryforwards.
 
                                       35
<PAGE>
                            UNIVERSAL OUTDOOR, INC.
        (A WHOLLY OWNED SUBSIDIARY OF UNIVERSAL OUTDOOR HOLDINGS, INC.)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                             (DOLLARS IN THOUSANDS)
 
NOTE 11 -- INCOME TAXES: (CONTINUED)
    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, as the successor to Outdoor Advertising Holdings, Inc. and POA
Acquisition Company ("POA"), is a defendant in a case pending in the United
States District Court, Middle District of Florida. The plaintiffs alleged that
POA, among others, conspired to restrain trade and to monopolize the market for
leases for land on which outdoor advertising structures can be erected. The case
was set for trial in January 1997 and has been continued pending court
availability. The plaintiffs have alleged that the acts of the defendants
resulted in harm to the plaintiffs and damages of $4 to $12 million, which could
be trebled under the applicable laws. Universal intends to defend the case
vigorously. There can be no assurance as to the ultimate outcome of this
litigation although management does not presently believe it will have a
material adverse effect on its results of operations or financial condition.
 
    Universal is subject to various other 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 -- QUARTERLY FINANCIAL DATA (UNAUDITED):
 
    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
Income (loss) before extraordinary item...........       (757)     1,966      3,077        (626)
Net income (loss).................................       (757)     1,966      3,077     (15,074)
</TABLE>
 
    In the fourth quarter of 1996, Universal recorded an extraordinary loss of
$14,448 related the early retirement of the 11% Senior Notes.
 
    Summarized quarterly financial data for 1995 is as follows:
 
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)           FIRST     SECOND      THIRD     FOURTH
                                              ---------  ---------  ---------  ---------
<S>                                           <C>        <C>        <C>        <C>
1995
Net revenues................................  $   7,236  $   9,175  $   8,940  $   8,797
Operating income............................      1,348      3,109      2,674      2,507
Income (loss) before extraordinary item.....       (747)       903        509        304
Net income (loss)...........................       (747)       903        509        304
</TABLE>
 
                                       36
<PAGE>
                            UNIVERSAL OUTDOOR, INC.
        (A WHOLLY OWNED SUBSIDIARY OF UNIVERSAL OUTDOOR HOLDINGS, INC.)
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                             (DOLLARS IN THOUSANDS)
 
NOTE 14 -- RELATED-PARTY TRANSACTIONS:
 
    During 1996 Universal paid management fees of approximately $1,250 to a
private investor which has been included in other expense on the Consolidated
Statement of Operations.
 
NOTE 15 -- SUBSEQUENT EVENTS:
 
    In January 1997, Universal acquired a total of approximately 2,018
advertising display faces located in and around Memphis, Tennessee. The purchase
price was approximately $71 million plus 100,000 shares of common stock of the
Parent Company.
 
    In January 1997, Universal acquired a total of approximately 1,035
advertising display faces located in three markets in the east coast of the
United States, including Metro New York, Northern New Jersey and Hudson Valley,
for approximately $40 million in cash.
 
    In February 1997, Universal acquired a total of approximately 135
advertising display faces located in and around Evansville, Indiana for
approximately $5.5 million in cash. Universal also acquired 12 existing
advertising display faces and 35 in process display faces in New Jersey for
approximately $5.3 million in cash.
 
    In February 1997, Universal agreed to acquire approximately 1,450
advertising display faces in the Baltimore metropolitan area for $46.5 million
in cash.
 
                                       37
<PAGE>
ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURES
 
    Not applicable.
 
                                    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>
                                                                                                            YEARS WITH THE
NAME                               AGE      POSITION                                                            COMPANY
-----------------------------      ---      -------------------------------------------------------------  -----------------
<S>                            <C>          <C>                                                            <C>
Daniel L. Simon*.............          45   Chief Executive Officer, President and Director                           23
Brian T. Clingen.............          37   Vice President, Chief Financial Officer and Director                       8
Paul G. Simon*...............          43   Vice President, Secretary and General Counsel                              6
Michael J. Roche.............          45   Director                                                                   2
Michael B. Goldberg..........          49   Director                                                              **
Frank K. Bynum, Jr...........          33   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 23 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. Goldberg has been a director of the Company since April 5, 1996. Mr.
Goldberg has been a Managing Director of Kelso & Company, L.P. since October
1991. Mr. Goldberg served as a Managing Director and jointly managed the merger
and acquisitions department at The First Boston Corporation from 1989 to May
1991. Mr. Goldberg was a partner at the law firm of Skadden, Arps, Slate,
Meagher & Flom from 1980 to 1989. Mr. Goldberg is a director of General Medical
Corporation, Hosiery Corporation of America, Inc., United Refrigerated Services,
Inc. and 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.
 
    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.
 
                                       38
<PAGE>
    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. Messrs. Goldberg and Bynum have been retained as
directors 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
 
    Based solely on the Company's review of the copies of Forms 3, 4 and 5 and
the amendments thereto received by it for the period ended December 31, 1996, or
written representations from certain reporting persons that no Forms 5 were
required to be filed by those persons, the Company believes that during the
period ended December 31, 1996, no transactions were reported late.
 
ITEM 11 -- EXECUTIVE COMPENSATION
 
    The following table sets forth certain information regarding the
compensation paid during 1994, 1995 and 1996 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>
                                                                                                      ANNUAL COMPENSATION
                                                                                            ---------------------------------------
                                                                                                   SALARY   BONUS      ALL OTHER
NAME AND PRINCIPAL POSITION                                                                 YEAR    ($)      ($)    COMPENSATION(1)
------------------------------------------------------------------------------------------  ----  --------  -----   ---------------
<S>                                                                                         <C>   <C>       <C>     <C>
Daniel L. Simon...........................................................................  1996  $224,379   $0         $1,000
President and Chief                                                                         1995   224,379    0          1,000
  Executive Officer                                                                         1994   249,250    0            500
Brian T. Clingen..........................................................................  1996   145,128    0          1,000
Chief Financial Officer and                                                                 1995   145,128    0          1,000
  Vice President                                                                            1994   145,852    0            500
Paul G. Simon.............................................................................  1996   158,176    0          1,000
Vice President, Secretary                                                                   1995   158,176    0          1,000
  and General Counsel                                                                       1994   158,968    0            500
</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.
 
                                       39
<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 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................................................................................  8,584,008(1)            32.4%
321 North Clark Street
Chicago, Illinois 60610
 
Brian T. Clingen...............................................................................           (2)          --
321 North Clark Street
Chicago, Illinois 60610
 
Paul G. Simon..................................................................................           (3)          --
321 North Clark Street
Chicago, Illinois 60610
 
Michael J. Roche...............................................................................      2,000                 (4)
333 Beverly Road, E5-312A
Hoffman Estates, Illinois 60179
 
Michael B. Goldberg(8).........................................................................     55,460                 (4)
Director
Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
 
Frank K. Bynum, Jr.(5).........................................................................     30,688                 (4)
Director
Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022
 
Kelso Investment Associates V, L.P.(6)(7)......................................................  2,847,871               11.9
 
Kelso Equity Partners V, L.P.(6)(7)............................................................    151,779                 (4)
 
Joseph N. Schuchert(6)(8)......................................................................  2,999,650               12.5
 
Frank T. Nickell(6)(8).........................................................................  3,134,879               13.1
 
George E. Matelich(6)(8).......................................................................  3,063,293               12.8
 
Thomas R. Wall, IV(6)(8).......................................................................  3,080,072               12.8
 
All directors and executive officers as a group (6 persons)....................................  8,672,156               32.8
</TABLE>
 
------------------------
 
(1) Daniel L. Simon's beneficial ownership includes 5,096,540 shares that he
    owns directly, 88,000 shares held by The Simon Family Limited Partnership of
    which he is a general partner, 1,995,000 shares
 
                                       40
<PAGE>
    issuable to him upon exercise of the warrants issued pursuant to the Amended
    and Restated 1996 Warrant Plan (the "Management Warrants"), 928,860 shares
    over which he has voting control pursuant to certain voting trust agreements
    with Brian T. Clingen and Paul G. Simon, and 475,608 shares issuable to
    Brian T. Clingen and Paul G. Simon 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 802,852 shares directly, 352,078 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, which
    represent 5.3% of the common stock of Parent. The voting rights for such
    shares have been granted to Daniel L. Simon pursuant to a voting trust
    agreement.
 
(3) Paul G. Simon owns 1,000 shares directly and 123,530 shares issuable to him
    upon exercise of the Management Warrants which represent less than 1% of
    Parent's common stock, the voting rights of which have been granted to
    Daniel L. Simon pursuant to a voting trust agreement.
 
(4) Represents less than 1% of Parent's common stock.
 
(5) Mr. Bynum may be deemed to share beneficial ownership of shares of Parent's
    common stock owned of record by KIA V by virtue of his status as a limited
    partner of the general partner of KIA V and as a limited partner of KEP V.
    Mr. Bynum disclaims beneficial ownership of such securities. Mr. Bynum
    became a director of Parent following consummation of the IPO.
 
(6) The business address for such person(s) is c/o Kelso & Company, 320 Park
    Avenue, 24th Floor, New York, New York 10022.
 
(7) KIA V and KEP V due to their common control, could be deemed to beneficially
    own each others shares, but each disclaims such beneficial ownership.
 
(8) Messrs. Schuchert, Nickell, Matelich, Goldberg and Wall may be deemed to
    share beneficial ownership of shares of Parent's common stock owned of
    record by KIA V and KEP V, by virtue of their status as general partners of
    the general partner of KIA V and as general partners of KEP V. Messrs.
    Schuchert, Nickell, Matelich, Goldberg and Wall share investment and voting
    power with respect to securities owned by KIA V and KEP V, but disclaim
    beneficial ownership of such securities. Mr. Goldberg has been a director of
    Parent since April 1996.
 
ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    On April 5, 1996, Parent issued to Kelso Investment Associates V, L.P. ("KIA
V"), 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. Messrs. Goldberg and Bynum,
directors of the Company, are 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, KEP V and
 
                                       41
<PAGE>
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.
 
    As a component of its growth strategy, in July 1995, the Company entered
into a consulting agreement with Urban Development, L.L.C. ("Urban") whereby
Urban shall consult with, and develop new sign locations in the Milwaukee and
Chicago markets for the Company. Urban agreed to provide consulting services to
the Company over a period of 10 years in consideration of $1,400,000 which was
paid on such date. The managing member of Urban is Lawrence J. Simon, a former
officer and director of the Company and the brother of Daniel L. Simon and Paul
G. Simon. Lawrence J. Simon resigned as a director and an executive vice
president of the Company on October 4, 1995.
 
    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 transactions are approved
by a majority of its independent outside directors. In addition, the New Credit
Facility and indentures governing the Notes impose limitations on the Company's
ability to engage in such transactions.
 
                                       42
<PAGE>
                                    PART IV
 
ITEM 14 -- EXHIBITS, FINANCIAL SCHEDULES, AND REPORTS ON FORM 8-K
 
(a) (1)  Consolidated Financial Statements of Universal Outdoor, Inc. for the
    year ended December 31, 1996
 
(2) NONE
 
(3) Exhibits required by Item 601 of Regulation S-K.
 
                                LIST OF EXHIBITS
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                                  DESCRIPTION
---------  --------------------------------------------------------------------------------------------------------
<C>        <S>
      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 UOI, 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 UOI 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, dated February 13, 1997 (File No. 333-21717) (the "Registration Statement") and incorporated herein
           by reference)
 
      2.5  Asset Purchase Agreement between UOI 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, UOI and the stockholders of
           Revere (filed as Exhibit 2.6 to the Registration Statement and incorporated herein by reference)
 
      2.7  Asset Purchase Agreement, dated as of December 10, 1996, among Matthew, Matthew Acquisition Corp. and
           UOI (filed as Exhibit 2.7 to the Registration Statement 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 October Notes (filed as Exhibit 10.3 to the Registration Statement
           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 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)
</TABLE>
 
                                       43
<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                                  DESCRIPTION
---------  --------------------------------------------------------------------------------------------------------
<C>        <S>
      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  Consolidated Credit Agreement dated October 31, 1996, among the Company, the various lending
           institutions from time to time parties thereto, LaSalle National Bank, as Co-Agent and Bankers Trust
           Company, as Agent (filed as Exhibit 10.1 to the Registration Statement and incorporated herein by
           reference)
 
     10.2  Agreement Regarding Tax Liabilities and Payments dated as of 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)
 
     12.1  Statement regarding computation of ratios
 
     21.1  Subsidiaries of the Registrant (filed as Exhibit 21.1 to the Registration Statement and incorporated
           herein by reference)
 
       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:
 
        Form 8-K, dated October 8, 1996, reported the POA Acquisition and
        included balance sheets of the acquired company and the related
        statements of operations, shareholder's equity and cash flows.
 
        Form 8-K, dated December 24, 1996, reported that the Company had entered
        into an agreement in connection with the Matthew Acquisition and that
        the Company had consummated the Revere Acquisition (included therein
        were the consolidated balance sheets of Revere and its subsidiaries and
        the related consolidated statements of operations, stockholder's equity
        and cash flows).
 
                                       44
<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, 1997
 
    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.
 
          SIGNATURE                        TITLE                    DATE
------------------------------  ---------------------------  -------------------
 
                                President and Chief
     /s/ DANIEL L. SIMON          Executive Officer
------------------------------    (Principal Executive         March 27, 1997
       Daniel L. Simon            Officer) and Director
 
                                Vice President and Chief
     /s/ BRIAN T. CLINGEN         Financial Officer
------------------------------    (Principal Financial and     March 27, 1997
       Brian T. Clingen           Accounting Officer) and
                                  Director
 
     /s/ MICHAEL J. ROCHE
------------------------------  Director                       March 27, 1997
       Michael J. Roche
 
   /s/ MICHAEL B. GOLDBERG
------------------------------  Director                       March 27, 1997
     Michael B. Goldberg
 
   /s/ FRANK K. BYNUM, JR.
------------------------------  Director                       March 27, 1997
     Frank K. Bynum, Jr.
 
                                       45