##### 



U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

|  |  |                                                                                  
|- |  | ---------------------------------------------------------------------------------
|x |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|  |  |                                                                                  
|  |  | For the quarterly period ended June 30, 2003                                     
|  |  |                                                                                  
|o |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT                  
|  |  |                                                                                  
|  |  | For the transition period from _____________ to _______________                  

COMMISSION FILE NUMBER: 0-27217

SpectraSite, Inc.

(Name of registrant as specified in its charter)


|                               |  |                              |  |                       
|------------------------------ |  | ---------------------------- |  | ----------------------
|Delaware                       |  | 4899                         |  | 56-2027322            
|(State or jurisdiction of      |  | (Primary Standard Industrial |  | (I.R.S. Employer      
|incorporation or organization) |  | Classification Code Number)  |  | Identification Number)

SpectraSite, Inc.
400 Regency Forest Drive
Cary, North Carolina 27511
(919) 468-0112(Address and telephone number of principal executive offices and principal place of business)

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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.

Yes xNo o

As of July 31, 2003, the registrant had only one outstanding class of
common stock, of which there were 23,743,682 shares outstanding.

1



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##### 



INDEX

|                               |                                                                                                                                                                                                                                                                                                                                                                      |  |    |    | 
|------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -- | -- | 
|PART I  FINANCIAL INFORMATION |                                                                                                                                                                                                                                                                                                                                                                      |  |    |   
|                               | ITEM 1  UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS                                                                                                                                                                                                                                                                                                       |  |    |    | 
|                               | Condensed Consolidated Balance Sheets at June 30, 2003
(unaudited; Reorganized Company) and December 31, 2002
(Predecessor Company)                                                                                                                                                                                                                                  |  |    | 3  | 
|                               | Unaudited Condensed Consolidated Statements of Operations
for the three months ended June 30, 2003 (Reorganized
Company), the three months ended June 30, 2002 (Predecessor
Company), the five months ended June 30, 2003 (Reorganized
Company), the month ended January 31, 2003 (Predecessor
Company) and the six months ended June 30, 2002
(Predecessor Company) |  |    | 4  | 
|                               | Unaudited Condensed Consolidated Statements of Cash Flows
for the five months ended June 30, 2003 (Reorganized
Company), the month ended January 31, 2003 (Predecessor
Company) and the six months ended June 30, 2002
(Predecessor Company)                                                                                                                         |  |    | 5  | 
|                               | Notes to the Unaudited Condensed Consolidated Financial
Statements                                                                                                                                                                                                                                                                                                   |  |    | 6  | 
|                               | ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                                                                                                                                                                                                                                                       |  |    | 20 | 
|                               | ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK                                                                                                                                                                                                                                                                                                  |  |    | 40 | 
|                               | ITEM 4  CONTROLS AND PROCEDURES                                                                                                                                                                                                                                                                                                                                     |  |    | 40 | 
|PART II  OTHER INFORMATION    |                                                                                                                                                                                                                                                                                                                                                                      |  |    |   
|                               | ITEM 1  LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                                                                           |  |    | 41 | 
|                               | ITEM 2  CHANGES IN SECURITIES AND USE OF
PROCEEDS                                                                                                                                                                                                                                                                                                                   |  |    | 41 | 
|                               | ITEM 3  DEFAULTS UPON SENIOR SECURITIES                                                                                                                                                                                                                                                                                                                             |  |    | 41 | 
|                               | ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS                                                                                                                                                                                                                                                                                                         |  |    | 41 | 
|                               | ITEM 5  OTHER INFORMATION                                                                                                                                                                                                                                                                                                                                           |  |    | 41 | 
|                               | ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K                                                                                                                                                                                                                                                                                                                            |  |    | 41 | 
|SIGNATURES                     |                                                                                                                                                                                                                                                                                                                                                                      |  | 43 |   
|EXHIBITS                       |                                                                                                                                                                                                                                                                                                                                                                      |  |    |   

2



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

At June 30, 2003 and December 31, 2002
(dollars in thousands)


|                                                     |                                                                                                                        |                                                      |           |         |                        |  |                   |            |           |   | 
|---------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | --------- | ------- | ---------------------- |  | ----------------- | ---------- | --------- | - | 
|                                                     |                                                                                                                        |                                                      |           |         | Reorganized            |  | Predecessor      
|                                                     |                                                                                                                        |                                                      |           |         | Company                |  | Company          
|                                                     |                                                                                                                        |                                                      |           |         | June 30, 2003          |  | December 31, 2002
|                                                     |                                                                                                                        |                                                      |           |         |                        |  |                  
|                                                     |                                                                                                                        |                                                      |           |         | (unaudited)            |  |                   |            |          
|                                                     |                                                                                                                        |                                                      |           |         | (Dollars in thousands)
|ASSETS                                               |                                                                                                                        |                                                      |           |         |                        |  |                   |           
|Current assets:                                      |                                                                                                                        |                                                      |           |         |                        |  |                   |           
|                                                     | Cash and cash equivalents                                                                                              |                                                      | $         | 58,753  |                        |  | $                 | 80,961     |          
|                                                     | Accounts receivable, net of allowance of $8,839 and
$11,431, respectively                                              |                                                      |           | 6,553   |                        |  |                   | 15,180     |          
|                                                     | Costs and estimated earnings in excess of billings                                                                     |                                                      |           | 3,194   |                        |  |                   | 2,169      |          
|                                                     | Inventories                                                                                                            |                                                      |           | 7,756   |                        |  |                   | 7,878      |          
|                                                     | Prepaid expenses and other                                                                                             |                                                      |           | 12,759  |                        |  |                   | 16,696     |          
|                                                     |                                                                                                                        |                                                      |           |         |                        |  |                   |            |          
|                                                     |                                                                                                                        | Total current assets                                 |           |         | 89,015                 |  |                   |            | 122,884   |  
|Property and equipment, net                          |                                                                                                                        |                                                      | 1,243,743 |         |                        |  | 2,292,945         |           
|Goodwill, net                                        |                                                                                                                        |                                                      |          |         |                        |  | 60,626            |           
|Other assets                                         |                                                                                                                        |                                                      | 223,427   |         |                        |  | 102,001           |           
|                                                     |                                                                                                                        |                                                      |           |         |                        |  |                   |           
|                                                     |                                                                                                                        | Total assets                                         |           | $       | 1,556,185              |  |                   | $          | 2,578,456 |  
|                                                     |                                                                                                                        |                                                      |           |         |                        |  |                   |            |          
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)       |                                                                                                                        |                                                      |           |         |                        |  |                   |           
|Current liabilities:                                 |                                                                                                                        |                                                      |           |         |                        |  |                   |           
|                                                     | Accounts payable                                                                                                       |                                                      | $         | 7,840   |                        |  | $                 | 13,029     |          
|                                                     | Accrued and other expenses                                                                                             |                                                      |           | 77,390  |                        |  |                   | 66,280     |          
|                                                     | Current portion of liabilities under SBC agreement                                                                     |                                                      |           | 40,335  |                        |  |                   |           |          
|                                                     | Billings in excess of costs and estimated earnings                                                                     |                                                      |           | 748     |                        |  |                   | 703        |          
|                                                     | Current portion of credit facility                                                                                     |                                                      |           |        |                        |  |                   | 2,244      |          
|                                                     |                                                                                                                        |                                                      |           |         |                        |  |                   |            |          
|                                                     |                                                                                                                        | Total current liabilities                            |           |         | 126,313                |  |                   |            | 82,256    |  
|                                                     |                                                                                                                        |                                                      |           |         |                        |  |                   |            |          
|Long-term portion of credit facility                 |                                                                                                                        |                                                      | 479,955   |         |                        |  | 780,711           |           
|Senior notes                                         |                                                                                                                        |                                                      | 200,000   |         |                        |  |                  |           
|Long-term portion of liabilities under SBC agreement |                                                                                                                        |                                                      | 16,008    |         |                        |  |                  |           
|Other long-term liabilities                          |                                                                                                                        |                                                      | 52,315    |         |                        |  | 27,330            |           
|                                                     |                                                                                                                        |                                                      |           |         |                        |  |                   |            |          
|                                                     |                                                                                                                        | Total long-term liabilities                          |           |         | 748,278                |  |                   |            | 808,041   |  
|                                                     |                                                                                                                        |                                                      |           |         |                        |  |                   |            |          
|Liabilities subject to compromise (Note 2)           |                                                                                                                        |                                                      |          |         |                        |  | 1,763,286         |           
|                                                     |                                                                                                                        |                                                      |           |         |                        |  |                   |           
|Stockholders equity (deficit):                      |                                                                                                                        |                                                      |           |         |                        |  |                   |           
|                                                     | Common stock, $0.001 par value, 300,000,000 shares
authorized, 154,013,917 issued and outstanding at
December 31, 2002 |                                                      |           |        |                        |  |                   | 154        |          
|                                                     | Common stock, $0.01 par value, 250,000,000 shares
authorized, 23,743,515 issued and outstanding at June
30, 2003       |                                                      |           | 237     |                        |  |                   |           |          
|                                                     | Additional paid-in-capital                                                                                             |                                                      |           | 687,099 |                        |  |                   | 1,624,939  |          
|                                                     | Accumulated other comprehensive income (loss)                                                                          |                                                      |           | 3,524   |                        |  |                   | (355       | )        
|                                                     | Accumulated deficit                                                                                                    |                                                      |           | (9,266  | )                      |  |                   | (1,699,865 | )        
|                                                     |                                                                                                                        |                                                      |           |         |                        |  |                   |            |          
|                                                     |                                                                                                                        | Total stockholders equity (deficit)                 |           |         | 681,594                |  |                   |            | (75,127   | )
|                                                     |                                                                                                                        |                                                      |           |         |                        |  |                   |            |          
|                                                     |                                                                                                                        | Total liabilities and stockholders equity
(deficit) |           | $       | 1,556,185              |  |                   | $          | 2,578,456 |  
|                                                     |                                                                                                                        |                                                      |           |         |                        |  |                   |            |          

See accompanying notes.

3



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |          |        |          |  
|------------------------------------------------------------------------ | -------------------------------------------------------------------------------- | ------------------ | ---------------------------- | ------- | ---------------------------------------- | ------- | ------------- | ------- | ------------- | ------- | ---------------- | ------- | ------------- | ------- | --------- | --------- | ----- | --------- | -------- | -------- | ------ | -------- | -
|                                                                         |                                                                                  |                    |                              |         | Reorganized                              |         | Predecessor   |         | Reorganized   |         | Predecessor      |         | Predecessor  
|                                                                         |                                                                                  |                    |                              |         | Company                                  |         | Company       |         | Company       |         | Company          |         | Company      
|                                                                         |                                                                                  |                    |                              |         | Three Months                             |         | Three Months  |         | Five Months   |         | One Month        |         | Six Months   
|                                                                         |                                                                                  |                    |                              |         | Ended                                    |         | Ended         |         | Ended         |         | Ended            |         | Ended        
|                                                                         |                                                                                  |                    |                              |         | June 30, 2003                            |         | June 30, 2002 |         | June 30, 2003 |         | January 31, 2003 |         | June 30, 2002
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |              
|                                                                         |                                                                                  |                    |                              |         | (In thousands, except per share amounts)
|Revenues:                                                                |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |         
|                                                                         | Site leasing                                                                     |                    | $                            | 77,498  |                                          |         | $             | 69,633  |               |         | $                | 128,567 |               |         | $         | 25,556    |       |           | $        | 135,585  |       
|                                                                         | Broadcast services                                                               |                    |                              | 3,413   |                                          |         |               | 6,236   |               |         |                  | 6,988   |               |         |           | 1,237     |       |           |          | 12,688   |       
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |         
|                                                                         |                                                                                  |                    | Total revenues               |         |                                          | 80,911  |               |         |               | 75,869  |                  |         |               | 135,555 |           |           |       | 26,793    |          |          |        | 148,273  |  
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |         
|Operating Expenses:                                                      |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |         
|                                                                         | Costs of operations, excluding depreciation,
amortization and accretion expense: |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |          |       
|                                                                         |                                                                                  | Site leasing       |                              |         | 25,764                                   |         |               |         | 26,705        |         |                  |         | 42,824        |         |           |           | 8,840 |           |          |          | 52,210 |         
|                                                                         |                                                                                  | Broadcast services |                              |         | 3,538                                    |         |               |         | 5,005         |         |                  |         | 6,427         |         |           |           | 1,492 |           |          |          | 10,375 |         
|                                                                         | Selling, general and administrative expenses                                     |                    |                              | 12,589  |                                          |         |               | 15,456  |               |         |                  | 21,275  |               |         |           | 4,280     |       |           |          | 30,976   |       
|Depreciation, amortization and accretion
expenses                        |                                                                                  |                    | 25,626                       |         |                                          |         | 50,625        |         |               |         | 42,452           |         |               |         | 16,075    |           |       |           | 95,263   |         
|Restructuring and non-recurring charges                                  |                                                                                  |                    |                             |         |                                          |         | 28,570        |         |               |         |                 |         |               |         |          |           |       |           | 28,570   |         
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |          |       
|                                                                         |                                                                                  |                    | Total operating expenses     |         |                                          | 67,517  |               |         |               | 126,361 |                  |         |               | 112,978 |           |           |       | 30,687    |          |          |        | 217,394  |  
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |         
|Operating income (loss)                                                  |                                                                                  |                    | 13,394                       |         |                                          |         | (50,492       | )       |               |         | 22,577           |         |               |         | (3,894    | )         |       |           | (69,121  | )       
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |         
|Other income (expense):                                                  |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |         
|                                                                         | Interest income                                                                  |                    |                              | 279     |                                          |         |               | 293     |               |         |                  | 496     |               |         |           | 137       |       |           |          | 377      |       
|                                                                         | Interest expense                                                                 |                    |                              | (18,604 | )                                        |         |               | (61,795 | )             |         |                  | (27,865 | )             |         |           | (4,721    | )     |           |          | (120,492 | )     
|                                                                         | Gain on debt discharge                                                           |                    |                              |        |                                          |         |               |        |               |         |                  |        |               |         |           | 1,034,764 |       |           |          |         |       
|                                                                         | Other expense                                                                    |                    |                              | (1,841  | )                                        |         |               | (10,795 | )             |         |                  | (3,070  | )             |         |           | (493      | )     |           |          | (11,182  | )     
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |         
|                                                                         |                                                                                  |                    | Total other income (expense) |         |                                          | (20,166 | )             |         |               | (72,297 | )                |         |               | (30,439 | )         |           |       | 1,029,687 |          |          |        | (131,297 | )
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |         
|Income (loss) from continuing operations before
income taxes             |                                                                                  |                    | (6,772                       | )       |                                          |         | (122,789      | )       |               |         | (7,862           | )       |               |         | 1,025,793 |           |       |           | (200,418 | )       
|Income tax expense (benefit)                                             |                                                                                  |                    | 206                          |         |                                          |         | (18           | )       |               |         | 808              |         |               |         | 5         |           |       |           | 143      |         
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |         
|Income (loss) from continuing operations                                 |                                                                                  |                    | (6,978                       | )       |                                          |         | (122,771      | )       |               |         | (8,670           | )       |               |         | 1,025,788 |           |       |           | (200,561 | )       
|Reorganization items:                                                    |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |         
|                                                                         | Adjust accounts to fair value                                                    |                    |                              |        |                                          |         |               |        |               |         |                  |        |               |         |           | (644,688  | )     |           |          |         |       
|                                                                         | Professional and other fees                                                      |                    |                              |        |                                          |         |               |        |               |         |                  |        |               |         |           | (23,894   | )     |           |          |         |       
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |          |       
|                                                                         |                                                                                  |                    | Total reorganization items   |         |                                          |        |               |         |               |        |                  |         |               |        |           |           |       | (668,582  | )        |          |        |         |  
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |          |       
|Income (loss) before discontinued operations                             |                                                                                  |                    | (6,978                       | )       |                                          |         | (122,771      | )       |               |         | (8,670           | )       |               |         | 357,206   |           |       |           | (200,561 | )       
|Discontinued operations:                                                 |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |         
|                                                                         | Loss from operations of discontinued segment,
net of income tax expense          |                    |                              |        |                                          |         |               | (4,797  | )             |         |                  |        |               |         |           |          |       |           |          | (2,785   | )     
|                                                                         | Loss on disposal of discontinued segment                                         |                    |                              | (596    | )                                        |         |               |        |               |         |                  | (596    | )             |         |           |          |       |           |          |         |       
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |          |       
|Income (loss) before cumulative effect of
change in
accounting principle |                                                                                  |                    | (7,574                       | )       |                                          |         | (127,568      | )       |               |         | (9,266           | )       |               |         | 357,206   |           |       |           | (203,346 | )       
|Cumulative effect of change in accounting
principle                      |                                                                                  |                    |                             |         |                                          |         |              |         |               |         |                 |         |               |         | (12,236   | )         |       |           | (376,753 | )       
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |          |       
|Net income (loss)                                                        |                                                                                  | $                  | (7,574                       | )       |                                          | $       | (127,568      | )       |               | $       | (9,266           | )       |               | $       | 344,970   |           |       | $         | (580,099 | )       
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |          |       
|Basic and diluted earnings per share:                                    |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |         
|                                                                         | Income (loss) from continuing operations                                         |                    | $                            | (0.30   | )                                        |         | $             | (0.80   | )             |         | $                | (0.37   | )             |         | $         | 6.66      |       |           | $        | (1.30    | )     
|                                                                         | Reorganization items                                                             |                    |                              |        |                                          |         |               |        |               |         |                  |        |               |         |           | (4.34     | )     |           |          |         |       
|                                                                         | Discontinued operations                                                          |                    |                              | (0.02   | )                                        |         |               | (0.03   | )             |         |                  | (0.02   | )             |         |           |          |       |           |          | (0.02    | )     
|                                                                         | Cumulative effect of change in accounting
principle                              |                    |                              |        |                                          |         |               |        |               |         |                  |        |               |         |           | (0.08     | )     |           |          | (2.45    | )     
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |          |       
|                                                                         | Net income (loss)                                                                |                    | $                            | (0.32   | )                                        |         | $             | (0.83   | )             |         | $                | (0.39   | )             |         | $         | 2.24      |       |           | $        | (3.77    | )     
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |          |       
|Weighted average common shares outstanding
(basic and diluted)           |                                                                                  |                    | 23,622                       |         |                                          |         | 154,014       |         |               |         | 23,608           |         |               |         | 154,014   |           |       |           | 153,834  |         
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |                  |         |               |         |           |           |       |           |          |          |       

See accompanying notes.

4



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                         |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |         |         |         |  
|---------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ------------------------------------------------------- | ---------------------------------------------------- | ------ | -------------- | -------- | ---------------- | ---------- | ---------------- | ------- | -------- | ------- | ------- | ------- | -
|                                                                                         |                                                                   |                                                         |                                                      |        | Reorganized    |          |                  |            |                  |         |          |         |        
|                                                                                         |                                                                   |                                                         |                                                      |        | Company        |          | Predecessor      |            | Predecessor     
|                                                                                         |                                                                   |                                                         |                                                      |        | Five Months    |          | Company          |            | Company         
|                                                                                         |                                                                   |                                                         |                                                      |        | Ended          |          | One Month Ended  |            | Six Months Ended
|                                                                                         |                                                                   |                                                         |                                                      |        | June 30, 2003  |          | January 31, 2003 |            | June 30, 2002   
|                                                                                         |                                                                   |                                                         |                                                      |        |                |          |                  |            |                 
|                                                                                         |                                                                   |                                                         |                                                      |        | (In thousands)
|Operating activities                                                                     |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|Net income (loss)                                                                        |                                                                   | $                                                       | (9,266                                               | )      |                | $        | 344,970          |            |                  | $       | (580,099 | )      
|Adjustments to reconcile net income (loss) to net
cash provided by operating activities: |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|                                                                                         | Depreciation                                                      |                                                         |                                                      | 35,089 |                |          |                  | 15,609     |                  |         |          | 96,703  |        
|                                                                                         | Cumulative effect of change in accounting principle               |                                                         |                                                      |       |                |          |                  | 12,236     |                  |         |          | 376,753 |        
|                                                                                         | Amortization of intangible assets                                 |                                                         |                                                      | 6,277  |                |          |                  | 252        |                  |         |          | 1,728   |        
|                                                                                         | Amortization of debt issuance costs                               |                                                         |                                                      | 2,451  |                |          |                  | 425        |                  |         |          | 5,267   |        
|                                                                                         | Amortization of asset retirement obligation                       |                                                         |                                                      | 1,087  |                |          |                  | 214        |                  |         |          |        |        
|                                                                                         | Amortization of senior discount notes                             |                                                         |                                                      |       |                |          |                  |           |                  |         |          | 61,149  |        
|                                                                                         | Writeoff of debt issuance costs                                   |                                                         |                                                      | 8,182  |                |          |                  |           |                  |         |          |        |        
|                                                                                         | Non-cash compensation charges                                     |                                                         |                                                      |       |                |          |                  |           |                  |         |          | 580     |        
|                                                                                         | (Gain) loss on disposal of assets                                 |                                                         |                                                      | 1,676  |                |          |                  | (84        | )                |         |          | 31,426  |        
|                                                                                         | Gain on debt discharge                                            |                                                         |                                                      |       |                |          |                  | (1,034,764 | )                |         |          |        |        
|                                                                                         | Adjust accounts to fair value                                     |                                                         |                                                      |       |                |          |                  | 644,688    |                  |         |          |        |        
|                                                                                         | Equity in net loss of affiliates                                  |                                                         |                                                      |       |                |          |                  |           |                  |         |          | 102     |        
|                                                                                         | Changes in operating assets and liabilities, net
of acquisitions: |                                                         |                                                      |        |                |          |                  |            |                  |         |          |         |        
|                                                                                         |                                                                   | Accounts receivable                                     |                                                      |        | 3,582          |          |                  |            | 5,045            |         |          |         | 33,053  |        
|                                                                                         |                                                                   | Costs and estimated earnings in excess of billings, net |                                                      |        | (707           | )        |                  |            | (272             | )       |          |         | (8,305  | )      
|                                                                                         |                                                                   | Inventories                                             |                                                      |        | 124            |          |                  |            | (2               | )       |          |         | (1,751  | )      
|                                                                                         |                                                                   | Prepaid expenses and other                              |                                                      |        | (934           | )        |                  |            | (2,238           | )       |          |         | (3,879  | )      
|                                                                                         |                                                                   | Accounts payable                                        |                                                      |        | (18,751        | )        |                  |            | 13,549           |         |          |         | (23,187 | )      
|                                                                                         |                                                                   | Other liabilities                                       |                                                      |        | (260           | )        |                  |            | 6,264            |         |          |         | (5,228  | )      
|                                                                                         |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|                                                                                         |                                                                   |                                                         | Net cash provided by (used in) operating activities  |        |                | 28,550   |                  |            |                  | 5,892   |          |         |         | (15,688 | )
|                                                                                         |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|Investing activities                                                                     |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|Purchases of property and equipment                                                      |                                                                   |                                                         | (6,181                                               | )      |                |          | (2,737           | )          |                  |         | (48,530  | )      
|Acquisitions                                                                             |                                                                   |                                                         | (9,288                                               | )      |                |          |                 |            |                  |         | (10,067  | )      
|Loans to affiliates                                                                      |                                                                   |                                                         |                                                     |        |                |          |                 |            |                  |         | (750     | )      
|Proceeds from the sale of assets                                                         |                                                                   |                                                         | 81,171                                               |        |                |          |                 |            |                  |         |         |        
|                                                                                         |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|                                                                                         |                                                                   |                                                         | Net cash provided by (used in) investing activities  |        |                | 65,702   |                  |            |                  | (2,737  | )        |         |         | (59,347 | )
|                                                                                         |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|Financing activities                                                                     |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|Proceeds from issuance of common stock, net of
issuance costs                            |                                                                   |                                                         | 1,606                                                |        |                |          |                 |            |                  |         | 477      |        
|Proceeds from issuance of long-term debt                                                 |                                                                   |                                                         | 200,000                                              |        |                |          |                 |            |                  |         | 90,000   |        
|Repayments of debt                                                                       |                                                                   |                                                         | (303,275                                             | )      |                |          | (10,884          | )          |                  |         | (1,656   | )      
|Debt issuance costs                                                                      |                                                                   |                                                         | (7,062                                               | )      |                |          |                 |            |                  |         | (26      | )      
|                                                                                         |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|                                                                                         |                                                                   |                                                         | Net cash provided by (used in) financing activities  |        |                | (108,731 | )                |            |                  | (10,884 | )        |         |         | 88,795  |  
|                                                                                         |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|                                                                                         |                                                                   |                                                         | Net increase (decrease) in cash and cash equivalents |        |                | (14,479  | )                |            |                  | (7,729  | )        |         |         | 13,760  |  
|Cash and cash equivalents at beginning of period                                         |                                                                   |                                                         | 73,232                                               |        |                |          | 80,961           |            |                  |         | 31,547   |        
|                                                                                         |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|Cash and cash equivalents at end of period                                               |                                                                   | $                                                       | 58,753                                               |        |                | $        | 73,232           |            |                  | $       | 45,307   |        
|                                                                                         |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|Supplemental disclosures of cash flow information:                                       |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|Cash paid during the period for interest                                                 |                                                                   | $                                                       | 12,693                                               |        |                | $        | 4,265            |            |                  | $       | 55,828   |        
|Cash paid during the period for income taxes                                             |                                                                   |                                                         | 482                                                  |        |                |          | 5                |            |                  |         | 772      |        
|Supplemental disclosures of noncash investing
and financing activities:                  |                                                                   |                                                         |                                                      |        |                |          |                  |            |                  |         |          |        
|Common stock issued for deposits                                                         |                                                                   | $                                                       |                                                     |        |                | $        | 408              |            |                  | $       |         |        
|Common stock issued for acquisitions                                                     |                                                                   |                                                         |                                                     |        |                |          |                 |            |                  |         | 1,677    |        
|Capital lease obligations incurred for the
purchase of property and equipment            |                                                                   |                                                         | 68                                                   |        |                |          |                 |            |                  |         | 1,034    |        

See accompanying notes.

5



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




|1. |  | Description of Business, Basis of Presentation and Significant Accounting
Policies
|-- |  | ----------------------------------------------------------------------------------

SpectraSite, Inc. (SpectraSite), formerly known as SpectraSite Holdings,
Inc., and its wholly owned subsidiaries (collectively referred to as the
Company) are principally engaged in providing services to companies operating
in the telecommunications and broadcast industries, including leasing and
licensing antenna sites on multi-tenant towers, the licensing of distributed
antenna systems within buildings, managing, leasing and licensing rooftop
telecommunications access on commercial real estate and designing,
constructing, modifying and maintaining broadcast towers in the United States.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of
SpectraSite and its subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.

In accordance with AICPA Statement of Position 90-7 Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code(SOP 90-7), the Company
adopted fresh start accounting as of January 31, 2003 and the Companys
emergence from chapter 11 resulted in a new reporting entity. Under fresh
start accounting, the reorganization value of the entity is allocated to the
entitys assets based on fair values, and liabilities are stated at the present
value of amounts to be paid determined using appropriate current interest
rates. The effective date is considered to be the close of business on January
31, 2003 for financial reporting purposes. The periods presented prior to
January 31, 2003 have been designated Predecessor Company and the periods
subsequent to January 31, 2003 have been designated Reorganized Company. As a
result of the implementation of fresh start accounting, the financial
statements of the Company after the effective date are not comparable to the
Companys financial statements for prior periods.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles in the United States requires management to make
estimates and assumptions that affect the amounts reported in the unaudited
condensed consolidated financial statements and accompanying notes. Actual
results could differ from those estimates. Estimates that are susceptible to
change include the Companys estimate of the allowance for uncollectible
accounts and revenues recognized using the percentage of completion method.

Revenue Recognition

Site leasing revenues are recognized when earned based on lease
agreements. Rental increases based on fixed escalation clauses that are
included in certain lease agreements are recognized on a straight-line basis
over the term of the lease. Revenues from fees, such as structural analysis
fees and site inspection fees, are recognized upon delivery of the related
product or service. Broadcast service revenues related to construction
activities are derived from service contracts with customers that provide for
billing on a time and materials or fixed price basis. For the time and
materials contracts, revenues are recognized as services are performed. For
fixed price contracts, revenues are recognized using the
percentage-of-completion method, measured by the percentage of contract costs
incurred to date compared to estimated total contract costs. Costs and
estimated earnings in excess of billings on uncompleted contracts represent
revenues recognized in excess of amounts billed. Billings in excess of costs
and estimated earnings on uncompleted contracts represent billings in excess of
revenues recognized. Provisions for estimated losses on uncompleted contracts
are made in the period in which such losses are determined.

Allowance for Uncollectible Accounts

The Company evaluates the collectibility of accounts receivable based on a
combination of factors. In circumstances where a specific customers ability to
meet its financial obligations to us is in question, the Company records a
specific allowance against amounts due to reduce the net recognized receivable
from that customer to the amount it reasonably believes will be collected. For
all other customers, the Company reserves a percentage of the remaining
outstanding accounts receivable balance based on a review of the aging of
customer balances, industry experience and the current economic environment.
The allowance for uncollectible accounts, computed based on the above
methodology, was $11.4 million and $8.8 million as of December 31, 2002 and
June 30, 2003, respectively.

6



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Significant Customers

The Companys customer base consists of businesses operating in the
wireless telecommunications and broadcast industries, primarily in the United
States. The Companys exposure to credit risk consists primarily of unsecured
accounts receivable from these customers.

One customer and its affiliates accounted for 28% and 29% of revenues in
the three months ended June 30, 2002 and 2003 and 29%, 28% and 29% of revenues
in the six months ended June 30, 2002, the one month ended January 31, 2003 and
the five months ended June 30, 2003, respectively. This customer was a
significant stockholder of the Predecessor Companys common stock. In
addition, another customer, which is an affiliate of a former significant
stockholder of the Predecessor Companys common stock, accounted for 19% of
revenues in both the three months ended June 30, 2002 and 2003 and 19%, 22% and
19% of the Companys revenues in the six months ended June 30, 2002, the one
month ended January 31, 2003 and the five months ended June 30, 2003,
respectively. This customer also accounted for 21% and 17% of accounts
receivable at December 31, 2002 and June 30, 2003, respectively.

Property and Equipment

Property and equipment built, purchased or leased under long-term
leasehold agreements are recorded at cost and depreciated over their estimated
useful lives. The Company capitalizes costs incurred in bringing property and
equipment to an operational state. Costs clearly associated with the
acquisition, development and construction of property and equipment are
capitalized as a cost of the assets. Indirect costs that relate to several
assets are capitalized and allocated to the assets to which the costs relate.
Indirect costs that do not clearly relate to projects under development or
construction are charged to expense as incurred. Depreciation on property and
equipment excluding towers is computed using the straight-line method over the
estimated useful lives of the assets ranging from three to fifteen years.
Depreciation on towers is computed using the straight-line method over the
estimated useful lives of 15 years for wireless towers and 30 years for
broadcast towers. Amortization of assets recorded under capital leases is
included in depreciation.

Goodwill

The excess of the purchase price over the fair value of net assets
acquired in purchase business combinations has been recorded as goodwill.
Goodwill is evaluated for impairment on an annual basis or as impairment
indicators are identified, in accordance with Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets(SFAS 142). On an
ongoing basis, the Company assesses the recoverability of goodwill by
determining the ability of the specific assets acquired to generate future cash
flows sufficient to recover the unamortized goodwill over the remaining useful
life. The Company estimates future cash flows based on the current performance
of the acquired assets and our business plan for those assets. Changes in
business conditions, major customers or other factors could result in changes
in those estimates. Goodwill determined to be unrecoverable based on future
cash flows is written-off in the period in which such determination is made.

On January 1, 2002, the Company performed the first of the required
impairment tests of goodwill by comparing the fair value of each of our
reporting units with its carrying value. Fair value was determined using a
discounted cash flow methodology. Based on our impairment tests, we recognized
an adjustment of $376.8 million, or $2.45 per share, to reduce the carrying
value of goodwill in our wireless services, broadcast tower, broadcast services
and building units to its implied value. In accordance with SFAS 142, the
impairment adjustment recognized at adoption of the new rules was reflected as
a cumulative effect of accounting change in our first quarter 2002 statement of
operations. In connection with the Companys adoption of fresh start accounting
on January 31, 2003, impairment tests of goodwill were performed. As a result,
the remaining $60.6 million of goodwill related to our wireless tower unit was
written off. This charge is included in Reorganization items in the
consolidated financial statements.

Customer Contracts

Upon completion of the Companys reorganization and the implementation of
fresh start accounting, the Company recorded intangible assets relating to the
fair value of customer contracts in the amount of $190.9 million as of January
31, 2003. These contracts are amortized over the lesser of the remaining life
of the lease contract or the remaining life of the related tower asset, not to
exceed 15 years for wireless towers and 30 years for broadcast towers. Customer
contracts, less accumulated amortization, were $185.7 million as of June 30,
2003 and are classified as other assets in the unaudited condensed consolidated
financial statements.

7



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Liabilities under SBC Agreement

In connection with the Plan of Reorganization and the implementation of
fresh start accounting on January 31, 2003, the Company recorded liabilities in
the amount of $60.5 million related to its obligation to complete the lease or
sublease of the remaining 600 towers under the SBC agreement as discussed in
Note 5. This amount was determined as the difference between the estimated
purchase price for the remaining 600 towers, including costs to place
the towers in service, and the estimated fair value of the
towers based on an independent valuation. At each closing, the liability is
reduced by a portion of the purchase price of each tower. In addition, the
liability is reduced by the amount of costs incurred to place the
acquired towers in service. In the six months ended June 30, 2003, $4.0
million of the purchase price of 54 towers acquired and $0.2 million of
costs were applied against the liability. As of June 30, 2003, the
remaining liability was $56.3 million.

Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance
with Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities(SFAS 133), as amended by
Statement of Financial Accounting Standards No. 138, Accounting for Certain
Instruments and Certain Hedging Activities(SFAS 138) and as further amended
by Statement of Financial Accounting Standards No. 149, Amendment of Statement
133 on Derivative Instruments and Hedging Activities. The Company records
derivative financial instruments in the consolidated financial statements at
fair value. Changes in the fair values of derivative financial instruments are
either recognized in earnings or in stockholders equity as a component of
other comprehensive income depending on whether the derivative financial
instrument qualifies for hedge accounting as defined by SFAS 133. Changes in
fair values of derivatives not qualifying for hedge accounting are reported in
earnings as they occur.

In February 2003, the Company entered into an interest rate cap agreement
in order to limit exposure to fluctuations in interest rates on its variable
rate credit facility. This transaction is designated as a fair value hedge.
Accordingly, gains and losses from the change in the fair value of this
instrument are recognized in other income and expense. As of June 30, 2003, the
carrying amount and fair value of this instrument was $0.2 million and is
included in Other Assets in the unaudited condensed consolidated financial
statements.

Restructuring and Non-recurring Charges

In May 2002, the Company announced that it would terminate its
build-to-suit programs with Cingular and other carriers and implement other
cost-cutting measures as a part of the curtailment of tower development
activities. As a result of these actions, the Company recorded restructuring
charges of $24.3 million. Of this amount, $16.4 million was related to the
write-off of work in progress related to sites in development that are to be
terminated, $3.2 million was related to the costs of closing offices and $4.7
million was related to the costs of employee severance. In addition, the
Company recorded a non-recurring impairment charge of $4.3 million to
write-down the carrying value of 21 towers that are not marketable. The charge
was based on the estimated discounted cash flows of the towers.

The following table displays activity related to the accrued restructuring
liability. Such liability is reflected in accrued and other expenses in the
accompanying condensed consolidated balance sheets.

|                                           |  |                   |       |                  |  |               |      |                 |  |   |        |   |  |   |       | 
|------------------------------------------ |  | ----------------- | ----- | ---------------- |  | ------------- | ---- | --------------- |  | - | ------ | - |  | - | ----- | 
|                                           |  |                   |       |                  |  | Cash Payments |      | Cash Payments   |  |   |        |  
|                                           |  |                   |       |                  |  | for the One   |      | for the Five    |  |   |        |  
|                                           |  | Liability as of   |       | Month Ended      |  | Months Ended  |      | Liability as of
|                                           |  | December 31, 2002 |       | January 31, 2003 |  | June 30, 2003 |      | June 30, 2003  
|                                           |  |                   |       |                  |  |               |      |                
|                                           |  | (In thousands)   
|Accrued restructuring
liabilities:         |  |                   |       |                  |  |               |      |                 |  |   |        |   |  |   |       | 
|Employee severance                         |  | $                 | 3,216 |                  |  | $             | (182 | )               |  | $ | (832   | ) |  | $ | 2,202 | 
|Lease termination and
office closing costs |  |                   | 3,561 |                  |  |               | (421 | )               |  |   | (1,419 | ) |  |   | 1,721 | 
|                                           |  |                   |       |                  |  |               |      |                 |  |   |        |   |  |   |       | 
|Total                                      |  | $                 | 6,777 |                  |  | $             | (603 | )               |  | $ | (2,251 | ) |  | $ | 3,923 | 
|                                           |  |                   |       |                  |  |               |      |                 |  |   |        |   |  |   |       | 

Income Taxes

The liability method is used in accounting for income taxes and deferred
tax assets and liabilities are determined based on differences between the
financial reporting and tax basis of assets and liabilities. The Company
assesses the likelihood that deferred tax assets will be

8



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

recovered from future taxable income and, to the extent
that recovery is not likely, establishes a valuation allowance against such
assets. As of June 30, 2003 and December 31, 2002, the Company has established
a 100% valuation allowance against its deferred tax assets.

Earnings Per Share

On July 31, 2003, the Companys Board of Directors approved a two-for-one
forward stock split of Spectrasite, Inc.s common stock, effected in the form
of a common stock dividend to shareholders of record on August 14, 2003. The
additional shares of common stock will be mailed or delivered on or about
August 21, 2003, by the Companys transfer agent. The following presentation of
pro forma earnings per share reflects the Companys earnings per share on a
post-split basis:

|                                                               |                                                     |  |               |       |               |  |        |       |  
|-------------------------------------------------------------- | --------------------------------------------------- |  | ------------- | ----- | ------------- |  | ------ | ----- | -
|                                                               |                                                     |  | Reorganized   |       | Reorganized  
|                                                               |                                                     |  | Company       |       | Company      
|                                                               |                                                     |  | Three Months  |       | Five Months  
|                                                               |                                                     |  | Ended         |       | Ended        
|                                                               |                                                     |  | June 30, 2003 |       | June 30, 2003
|                                                               |                                                     |  |               |       |              
|Basic and diluted earnings per share:                          |                                                     |  |               |       |               |  |        |      
|                                                               | Income (loss) from continuing operations            |  | $             | (0.15 | )             |  | $      | (0.18 | )
|                                                               | Reorganization items                                |  |               |      |               |  |        |      |  
|                                                               | Discontinued operations                             |  |               | (0.01 | )             |  |        | (0.02 | )
|                                                               | Cumulative effect of change in accounting principle |  |               |      |               |  |        |      |  
|                                                               |                                                     |  |               |       |               |  |        |       |  
|                                                               | Net income (loss)                                   |  | $             | (0.16 | )             |  | $      | (0.20 | )
|                                                               |                                                     |  |               |       |               |  |        |       |  
|Weighted average common shares outstanding (basic and diluted) |                                                     |  | 47,244        |       |               |  | 47,216 |      
|                                                               |                                                     |  |               |       |               |  |        |      

Pro forma earnings per share information for the Predecessor Company is
not presented above as the stock affected by the forward stock split relates
only to the Reorganized Company.

Basic and diluted earnings (loss) per share are calculated in accordance
with Statement of Financial Accounting Standards No. 128 Earnings per Share.
During the three and six months ended June 30, 2002 and the one month ended
January 31, 2003, the Company had potential common stock equivalents related to
its convertible notes, warrants and outstanding stock options. Upon completion
of the Companys reorganization, the convertible notes were exchanged for
shares of common stock, par value $0.01 per share (New Common Stock) and all
outstanding warrants and stock options were cancelled. These potential common
stock equivalents were not included in diluted earnings (loss) per share for
the three and six months ended June 30, 2002 and the one month ended January
31, 2003 because the effect would have been antidilutive. Accordingly, basic
and diluted net income (loss) per share are the same for the three and six
months ended June 30, 2002 and for the one month ended January 31, 2003.

As discussed in Note 2, under the Plan of Reorganization, the holders of
166,158,298 shares of common stock, par value $0.001 per share, outstanding as
of February 10, 2003 (the Old Common Stock) received new warrants which were
immediately exercisable into 1.25 million shares of new common stock, par value
$0.01 per share (the New Common Stock) at a price of $32.00 per share. In
addition, on February 10, 2003, the Company adopted the 2003 Equity Incentive
Plan to grant equity based incentives in New Common Stock to employees and
directors. Approximately 2.7 million options to purchase New Common Stock were
granted under this plan in March 2003. During the three and five months ended
June 30, 2003, the Company had potential common stock equivalents related to
its new warrants and outstanding stock options on New Common Stock. These
potential common stock equivalents were not included in diluted earnings (loss)
per share for the three and five months ended June 30, 2003 because the effect
would have been antidilutive. Accordingly, basic and diluted net loss per share
are the same for the three and five months ended June 30, 2003.

Comprehensive Income (Loss)

Other comprehensive income (loss) consists of foreign currency translation
adjustments and unrealized holding gains (losses) as follows (in thousands):

|                                                            |  |               |        |               |  |               |          |                     |  |               |        |   |  |   |         |   |  |   |          |  
|----------------------------------------------------------- |  | ------------- | ------ | ------------- |  | ------------- | -------- | ------------------- |  | ------------- | ------ | - |  | - | ------- | - |  | - | -------- | -
|                                                            |  | Reorganized   |        | Predecessor   |  | Reorganized   |          | Predecessor Company
|                                                            |  | Company       |        | Company       |  | Company       |          |                    
|                                                            |  | Three Months  |        | Three Months  |  | Five Months   |          | One Month           |  | Six Months   
|                                                            |  | Ended         |        | Ended         |  | Ended         |          | Ended               |  | Ended        
|                                                            |  | June 30, 2003 |        | June 30, 2002 |  | June 30, 2003 |          | January 31, 2003    |  | June 30, 2002
|                                                            |  |               |        |               |  |               |          |                     |  |              
|Reported net income (loss)                                  |  | $             | (7,574 | )             |  | $             | (127,568 | )                   |  | $             | (9,266 | ) |  | $ | 344,970 |   |  | $ | (580,099 | )
|Foreign currency translation adjustment                     |  |               | 194    |               |  |               | (130     | )                   |  |               | 189    |   |  |   | (123    | ) |  |   | (124     | )
|Unrealized holding gains (losses) arising
during the period |  |               | 3,202  |               |  |               | (5,870   | )                   |  |               | 3,335  |   |  |   | (200    | ) |  |   | (22,545  | )
|                                                            |  |               |        |               |  |               |          |                     |  |               |        |   |  |   |         |   |  |   |          |  
|Comprehensive income (loss)                                 |  | $             | (4,178 | )             |  | $             | (133,568 | )                   |  | $             | (5,742 | ) |  | $ | 344,647 |   |  | $ | (602,768 | )
|                                                            |  |               |        |               |  |               |          |                     |  |               |        |   |  |   |         |   |  |   |          |  

9



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock Options

The Company accounts for stock based employee compensation under APB
Opinion No. 25, Accounting for Stock Issued to Employeesand has not adopted
the fair value method of accounting for stock based employee compensation.
During 1997, the Company adopted a stock option plan that provided for the
purchase of common stock by key employees, directors, advisors and consultants
of the Company. In connection with the Plan of Reorganization discussed in Note
2, all options issued under this plan were cancelled on February 10, 2003. Had
compensation cost for the Companys stock options been determined based on the
fair value at the date of grant consistent with the provisions of SFAS 123, the
Companys net income (loss) and net income (loss) per share for the three
months ended June 30, 2002, the one month ended January 31, 2003 and the six
months ended June 30, 2002 would have been as follows (in thousands):

|                                                                                                             |  |               |          |                  |  |               |         |   |  |   |          |  
|------------------------------------------------------------------------------------------------------------ |  | ------------- | -------- | ---------------- |  | ------------- | ------- | - |  | - | -------- | -
|                                                                                                             |  | Predecessor   |          | Predecessor      |  | Predecessor  
|                                                                                                             |  | Company       |          | Company          |  | Company      
|                                                                                                             |  | Three Months  |          | One Month        |  | Six Months   
|                                                                                                             |  | Ended         |          | Ended            |  | Ended        
|                                                                                                             |  | June 30, 2002 |          | January 31, 2003 |  | June 30, 2002
|                                                                                                             |  |               |          |                  |  |              
|Reported net income (loss)                                                                                   |  | $             | (127,568 | )                |  | $             | 344,970 |   |  | $ | (580,099 | )
|Non-cash compensation charges included in net income
(loss)                                                  |  |               | 291      |                  |  |               |        |   |  |   | 580      |  
|Stock-based employee compensation cost that would have been
included in net loss under the fair value method |  |               | (3,410   | )                |  |               | (694    | ) |  |   | (7,323   | )
|                                                                                                             |  |               |          |                  |  |               |         |   |  |   |          |  
|Adjusted net income (loss)                                                                                   |  | $             | (130,687 | )                |  | $             | 344,276 |   |  | $ | (586,842 | )
|                                                                                                             |  |               |          |                  |  |               |         |   |  |   |          |  
|Basic and diluted income (loss) per share:                                                                   |  |               |          |                  |  |               |         |   |  |   |          |  
|Reported net income (loss)                                                                                   |  | $             | (0.83    | )                |  | $             | 2.24    |   |  | $ | (3.77    | )
|Non-cash compensation charges included in net income
(loss)                                                  |  |               |         |                  |  |               |        |   |  |   |         |  
|Stock-based employee compensation cost that would have been
included in net loss under the fair value method |  |               | (0.02    | )                |  |               |        |   |  |   | (0.04    | )
|                                                                                                             |  |               |          |                  |  |               |         |   |  |   |          |  
|Adjusted net income (loss)                                                                                   |  | $             | (0.85    | )                |  | $             | 2.24    |   |  | $ | (3.81    | )
|                                                                                                             |  |               |          |                  |  |               |         |   |  |   |          |  

Also, on February 10, 2003, the Company adopted the 2003 Equity Incentive
Plan to grant equity-based incentives in New Common Stock to employees and
directors. In March 2003, the Company granted approximately 2.7 million options
to purchase New Common Stock under this plan. Had compensation cost for the
Companys stock options to purchase New Common Stock been determined based on
the fair value at the date of grant consistent with the provisions of SFAS 123,
the Companys net loss and net loss per share for the three and five months
ended June 30, 2003 would have been as follows (in thousands):

|                                                                                                             |  |               |        |               |  |   |         |  
|------------------------------------------------------------------------------------------------------------ |  | ------------- | ------ | ------------- |  | - | ------- | -
|                                                                                                             |  | Reorganized   |        | Reorganized  
|                                                                                                             |  | Company       |        | Company      
|                                                                                                             |  | Three Months  |        | Five Months  
|                                                                                                             |  | Ended         |        | Ended        
|                                                                                                             |  | June 30, 2003 |        | June 30, 2003
|                                                                                                             |  |               |        |              
|Reported net loss                                                                                            |  | $             | (7,574 | )             |  | $ | (9,266  | )
|Stock-based employee compensation cost that would have been
included in net loss under the fair value method |  |               | (1,687 | )             |  |   | (2,030  | )
|                                                                                                             |  |               |        |               |  |   |         |  
|Adjusted net loss                                                                                            |  | $             | (9,261 | )             |  | $ | (11,296 | )
|                                                                                                             |  |               |        |               |  |   |         |  
|Basic and diluted loss per share:                                                                            |  |               |        |               |  |   |         |  
|Reported net loss                                                                                            |  | $             | (0.32  | )             |  | $ | (0.39   | )
|Stock-based employee compensation cost that would have been
included in net loss under the fair value method |  |               | (0.07  | )             |  |   | (0.09   | )
|                                                                                                             |  |               |        |               |  |   |         |  
|Adjusted net loss                                                                                            |  | $             | (0.39  | )             |  | $ | (0.48   | )
|                                                                                                             |  |               |        |               |  |   |         |  

Contingencies

The Company is involved in certain legal actions arising in the normal
course of business. In the opinion of management, based on a review of such
legal proceedings, the ultimate outcome of these actions will not have a
material effect on the consolidated financial statements.

10



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Reclassifications

Certain reclassifications have been made to the 2002 condensed
consolidated financial statements to conform to the 2003 presentation. These
reclassifications had no effect on previously reported net loss or
stockholders equity (deficit).

Unaudited Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial reporting and in accordance with the instructions for
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and disclosures normally required by generally accepted
accounting principles for complete financial statements or those normally
reflected in the Companys Annual Report on Form 10-K. The financial
information included herein reflects all adjustments (consisting of normal
recurring adjustments for the Predecessor Company for the three and six months
ended June 30, 2002 and normal recurring adjustments and fresh start accounting
adjustments for the Predecessor and Reorganized Companies for the three and six
months ended June 30, 2003), which are, in the opinion of management, necessary
for a fair presentation of results for interim periods. As a result of the
implementation of fresh start accounting as of January 31, 2003, the financial
statements after that date are not comparable to the financial statements for
prior periods. Results of interim periods are not necessarily indicative of the
results to be expected for a full year.

2. Plan of Reorganization

On November 15, 2002 (the Petition Date), SpectraSite filed a voluntary
petition for relief under chapter 11 of the Bankruptcy Code (the Bankruptcy
Code) in the United States Bankruptcy Court for the Eastern District of North
Carolina, Raleigh Division (the Bankruptcy Court). On November 18, 2002,
SpectraSite filed a Proposed Plan of Reorganization and a Proposed Disclosure
Statement with the Bankruptcy Court. A plan confirmation hearing was held on
January 28, 2003 and the Proposed Plan of Reorganization, as modified on that
date (the Plan of Reorganization), was confirmed by the Bankruptcy Court. All
conditions precedent to the effectiveness of the Plan of Reorganization were
met by February 10, 2003 (the Effective Date), thereby allowing SpectraSite
to emerge from bankruptcy.

The Plan of Reorganization provided that, among other things, (i) in
exchange for their notes, the holders of the 12 1/2% Senior Notes due 2010,
the 6 3⁄4% Senior Convertible Notes due 2010, the 10 3⁄4% Senior Notes due
2010, the 11 1⁄4% Senior Discount Notes due 2009, the 12 7/8% Senior Discount
Notes due 2010 and the 12% Senior Discount Notes due 2008 received their pro
rata share of 23.75 million shares of New Common Stock; (ii) the holders of
166,158,298 shares of Old Common Stock outstanding as of the Effective Date
received warrants immediately exercisable into 1.25 million shares of New
Common Stock at a price of $32.00 per share; and (iii) all other equity
interests at the Effective Date, including outstanding warrants and options,
were cancelled.

The consolidated financial statements as of December 31, 2002 include
adjustments and reclassifications to reflect affected liabilities as
Liabilities Subject to Compromise. These liabilities were settled in
accordance with the Plan of Reorganization. The liabilities subject to
compromise as of December 31, 2002 were as follows (in thousands):

|                                                        |  |   |           | 
|------------------------------------------------------- |  | - | --------- | 
|10 3/4% Senior Notes Due 2010                           |  | $ | 200,000   | 
|12 1/2% Senior Notes Due 2010                           |  |   | 200,000   | 
|6 3/4% Senior Convertible Notes Due 2010                |  |   | 200,000   | 
|12% Senior Discount Notes Due 2008, net of discount     |  |   | 208,479   | 
|11 1/4% Senior Discount Notes Due 2009, net of discount |  |   | 502,644   | 
|12 7/8% Senior Discount Notes Due 2010, net of discount |  |   | 418,580   | 
|Accrued interest                                        |  |   | 33,583    | 
|                                                        |  |   |           | 
|Total liabilities subject to compromise                 |  | $ | 1,763,286 | 
|                                                        |  |   |           | 

SpectraSite incurred costs directly associated with the chapter 11
proceedings of $23.9 million in the one month ended January 31, 2003. These
costs are included in reorganization expense in the unaudited condensed
consolidated statement of operations.

In accordance with AICPA Statement of Position 90-7 Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code(SOP 90-7), the Company
adopted fresh start accounting as of January 31, 2003 and the Companys
emergence from bankruptcy resulted in a new reporting entity. Under fresh start
accounting, the reorganization value of the entity is allocated to the entitys
assets based on fair values, and liabilities are stated at the present value of
amounts to be paid determined at appropriate
current interest rates. The net effect of all fresh start accounting
adjustments resulted in a charge of $644.7 million, which is
reflected in the unaudited condensed consolidated statement

11



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of operations for the one month
ended January 31, 2003. The effective date is considered to be the close of
business on January 31, 2003 for financial reporting purposes. The periods
presented prior to January 31, 2003 have been designated Predecessor Company
and the periods subsequent to January 31, 2003 have been designated
Reorganized Company. As a result of the implementation of fresh start
accounting, the financial statements of the Company after January 31, 2003 are
not comparable to the Companys financial statements for prior periods.

The reorganization value used in adopting fresh start accounting was
$685.7 million based on the fair market value of the senior notes, senior
discount notes and senior convertible notes at the Effective Date, the date
these instruments were exchanged for New Common Stock and the value of warrants
issued on that date based on the Black-Scholes option pricing model. The
reorganization and the adoption of fresh start accounting resulted in the
following adjustments to the Companys Unaudited Condensed Consolidated Balance
Sheet as of January 31, 2003:

|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |         |           |  |  | 
|--------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------- | --------- | ---------- | --------- | ---------------- | ---------- | ------------------ | -------- | ---- | ---- | ---------------- | - | ----------- | --------- | ------- | --------- |  |  | 
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           | Predecessor      |            | Reorganization and |          |      |      |                  |   | Reorganized
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           | Company          |            | Fresh Start        |          |      |      |                  |   | Company    
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           | January 31, 2003 |            | Adjustments        |          | Ref. |      | January 31, 2003
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                 
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           | (In thousands)  
|ASSETS                                              |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|Current assets:                                     |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|                                                    | Cash and cash equivalents                                                                                                                                                                                                                                                |                                                      | $         | 73,442     |           |                  | $          | (210               | )        |      |      | (1               | ) |             | $         | 73,232  |          
|                                                    | Accounts receivable                                                                                                                                                                                                                                                      |                                                      |           | 10,134     |           |                  |            |                   |          |      |      |                  |   |             |           | 10,134  |          
|                                                    | Costs and estimated earnings in excess
of billings                                                                                                                                                                                                                       |                                                      |           | 2,198      |           |                  |            |                   |          |      |      |                  |   |             |           | 2,198   |          
|                                                    | Inventories                                                                                                                                                                                                                                                              |                                                      |           | 7,880      |           |                  |            |                   |          |      |      |                  |   |             |           | 7,880   |          
|                                                    | Prepaid expenses and other                                                                                                                                                                                                                                               |                                                      |           | 17,903     |           |                  |            | (531               | )        |      |      | (2               | ) |             |           | 17,372  |          
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|                                                    |                                                                                                                                                                                                                                                                          | Total current assets                                 |           |            | 111,557   |                  |            |                    | (741     | )    |      |                  |   |             |           |         | 110,816   | 
|Property and equipment, net                         |                                                                                                                                                                                                                                                                          |                                                      | 2,303,368 |            |           |                  | (957,210   | )                  |          |      | (3   | )                |   |             | 1,346,158 |        
|Goodwill, net                                       |                                                                                                                                                                                                                                                                          |                                                      | 60,626    |            |           |                  | (60,626    | )                  |          |      | (2   | )                |   |             |          |        
|Other assets                                        |                                                                                                                                                                                                                                                                          |                                                      | 102,024   |            |           |                  | 122,181    |                    |          |      | (2), | (4)              |   |             | 224,205   |        
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|                                                    |                                                                                                                                                                                                                                                                          | Total assets                                         |           | $          | 2,577,575 |                  |            | $                  | (896,396 | )    |      |                  |   |             |           | $       | 1,681,179 | 
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)      |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|Current liabilities:                                |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|                                                    | Accounts payable                                                                                                                                                                                                                                                         |                                                      | $         | 10,407     |           |                  | $          | 16,184             |          |      |      | (1               | ) |             | $         | 26,591  |          
|                                                    | Accrued and other expenses                                                                                                                                                                                                                                               |                                                      |           | 65,039     |           |                  |            | 7,796              |          |      |      | (1               | ) |             |           | 72,835  |          
|                                                    | Current portion of liabilities under SBC
contract                                                                                                                                                                                                                        |                                                      |           |           |           |                  |            | 30,251             |          |      |      | (5               | ) |             |           | 30,251  |          
|                                                    | Billings in excess of costs and
estimated earnings                                                                                                                                                                                                                       |                                                      |           | 458        |           |                  |            |                   |          |      |      |                  |   |             |           | 458     |          
|                                                    | Current portion of credit facility                                                                                                                                                                                                                                       |                                                      |           | 2,244      |           |                  |            |                   |          |      |      |                  |   |             |           | 2,244   |          
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|                                                    |                                                                                                                                                                                                                                                                          | Total current liabilities                            |           |            | 78,148    |                  |            |                    | 54,231   |      |      |                  |   |             |           |         | 132,379   | 
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|Long-term portion of credit facility                |                                                                                                                                                                                                                                                                          |                                                      | 780,711   |            |           |                  |           |                    |          |      |      |                  |   |             | 780,711   |        
|Long-term portion of liabilities under SBC
contract |                                                                                                                                                                                                                                                                          |                                                      |          |            |           |                  | 30,251     |                    |          |      | (5   | )                |   |             | 30,251    |        
|Other long-term liabilities                         |                                                                                                                                                                                                                                                                          |                                                      | 52,108    |            |           |                  |           |                    |          |      |      |                  |   |             | 52,108    |        
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|                                                    |                                                                                                                                                                                                                                                                          | Total long-term liabilities                          |           |            | 832,819   |                  |            |                    | 30,251   |      |      |                  |   |             |           |         | 863,070   | 
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|Liabilities subject to compromise                   |                                                                                                                                                                                                                                                                          |                                                      | 1,763,286 |            |           |                  | (1,763,286 | )                  |          |      | (4   | )                |   |             |          |        
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|Stockholders equity (deficit):                     |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|                                                    | Common stock, $0.001 par value,
300,000,000 shares authorized,
154,013,917 issued and outstanding
at January 31, 2003 (Predecessor
Company); $0.01 par value, 250,000,000
shares authorized, 23,587,085 issued and
outstanding at January 31, 2003
(Reorganized Company) |                                                      |           | 154        |           |                  |            | 82                 |          |      |      | (4               | ) |             |           | 236     |          
|                                                    | Additional paid-in-capital and
warrants                                                                                                                                                                                                                                  |                                                      |           | 1,624,939  |           |                  |            | (939,445           | )        |      |      | (4               | ) |             |           | 685,494 |          
|                                                    | Accumulated other comprehensive
income                                                                                                                                                                                                                                   |                                                      |           | (684       | )         |                  |            | 684                |          |      |      | (6               | ) |             |           |        |          
|                                                    | Accumulated deficit                                                                                                                                                                                                                                                      |                                                      |           | (1,721,087 | )         |                  |            | 1,721,087          |          |      |      | (6               | ) |             |           |        |          
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|                                                    |                                                                                                                                                                                                                                                                          | Total stockholders equity
(deficit)                 |           |            | (96,678   | )                |            |                    | 782,408  |      |      |                  |   |             |           |         | 685,730   | 
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        
|                                                    |                                                                                                                                                                                                                                                                          | Total liabilities and stockholders
equity (deficit) |           | $          | 2,577,575 |                  |            | $                  | (896,396 | )    |      |                  |   |             |           | $       | 1,681,179 | 
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |           |            |           |                  |            |                    |          |      |      |                  |   |             |           |        

12



---



##### 



References:



|(1) |  | To reflect cash requirements for reorganization costs paid in January
2003 and accrual for remaining reorganization costs.                                                                                                                                                    
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | To record prepaid expenses and other, goodwill, and other assets at fair
value.                                                                                                                                                                                               
|   
|(3) |  | To record property and equipment at fair value.                                                                                                                                                                                                                               
|   
|(4) |  | To reflect the discharge of the Senior Notes, Senior Discount Notes and
Senior Convertible Notes including the related debt issuance costs
included in other assets; the cancellation of Old Common Stock and
warrants; and the issuance of the New Common Stock and warrants.
|   
|(5) |  | To record liabilities related to the Companys commitment to purchase
certain assets at prices in excess of fair value.                                                                                                                                                       
|   
|(6) |  | To reflect the elimination of the accumulated other comprehensive income
and accumulated deficit as of January 31, 2003.                                                                                                                                                      

3. Property and Equipment

Property and equipment consist of the following:

|                              |  |                |           |              |  |   |           |  
|----------------------------- |  | -------------- | --------- | ------------ |  | - | --------- | -
|                              |  | Reorganized    |           | Predecessor 
|                              |  | Company        |           | Company     
|                              |  | June 30,       |           | December 31,
|                              |  | 2003           |           | 2002        
|                              |  |                |           |             
|                              |  | (In thousands)
|Towers                        |  | $              | 1,206,451 |              |  | $ | 2,548,712 |  
|Equipment                     |  |                | 20,556    |              |  |   | 39,181    |  
|Land                          |  |                | 16,200    |              |  |   | 18,081    |  
|Buildings                     |  |                | 26,914    |              |  |   | 32,219    |  
|Other                         |  |                | 6,060     |              |  |   | 38,217    |  
|                              |  |                |           |              |  |   |           |  
|                              |  |                | 1,276,181 |              |  |   | 2,676,410 |  
|Less accumulated depreciation |  |                | (35,074   | )            |  |   | (401,467  | )
|                              |  |                |           |              |  |   |           |  
|                              |  |                | 1,241,107 |              |  |   | 2,274,943 |  
|Construction in progress      |  |                | 2,636     |              |  |   | 18,002    |  
|                              |  |                |           |              |  |   |           |  
|Property and equipment, net   |  | $              | 1,243,743 |              |  | $ | 2,292,945 |  
|                              |  |                |           |              |  |   |           |  

4. Recent Accounting Pronouncements

In June 2001, FASB issued Statement of Financial Accounting Standards No.
143, Accounting for Asset Retirement Obligations(SFAS 143). SFAS 143
requires that the fair value of a liability for an asset retirement obligation
be recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made. The associated asset retirement costs are capitalized
as part of the carrying amount of the long-lived asset. The Company adopted
SFAS 143 on January 1, 2003 in connection with certain ground leases that
require removal of the tower upon expiration. Application of the new rules
resulted in an increase in net property, plant and equipment of $23.2 million,
recognition of an asset retirement obligation of $35.4 million, and a
cumulative effect of change in accounting principle of $12.2 million. This
obligation is included in other long term liabilities in the consolidated
balance sheets. The following table displays activity related to the asset
retirement obligation:

|                            |  |                 |        |           |  |                |       |               |  |           |     |   |  |   |        | 
|--------------------------- |  | --------------- | ------ | --------- |  | -------------- | ----- | ------------- |  | --------- | --- | - |  | - | ------ | 
|                            |  | Liability       |        |           |  |                |       | Revisions in  |  | Liability
|                            |  | as of           |        | Accretion |  | Estimated      |       | as of        
|                            |  | January 1, 2003 |        | Expense   |  | Cash Flows     |       | June 30, 2003
|                            |  |                 |        |           |  |                |       |              
|                            |  |                 |        |           |  | (In thousands) |       |               |  |          
|Asset retirement obligation |  | $               | 35,442 |           |  | $              | 1,301 |               |  | $         | (59 | ) |  | $ | 36,684 | 
|                            |  |                 |        |           |  |                |       |               |  |           |     |   |  |   |        | 

13



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Pro forma results of operations for the three and six months ended June
30, 2002 had we adopted SFAS 143 on January 1, 2002 are as follows:

|                                                  |  |                     |          |                     |  |   |          |  
|------------------------------------------------- |  | ------------------- | -------- | ------------------- |  | - | -------- | -
|                                                  |  | Predecessor Company |          | Predecessor Company
|                                                  |  | Three Months Ended  |          | Six Months Ended   
|                                                  |  | June 30, 2002       |          | June 30, 2002      
|                                                  |  |                     |          |                    
|                                                  |  | (In thousands,      |          | (In thousands,     
|                                                  |  | except per          |          | except per         
|                                                  |  | share amounts)      |          | share amounts)     
|Reported net loss                                 |  | $                   | (127,568 | )                   |  | $ | (580,099 | )
|Additional depreciation of property and equipment |  |                     | (466     | )                   |  |   | (928     | )
|Accretion of asset retirement obligation          |  |                     | (612     | )                   |  |   | (1,202   | )
|                                                  |  |                     |          |                     |  |   |          |  
|Adjusted net loss                                 |  | $                   | (128,646 | )                   |  | $ | (582,229 | )
|                                                  |  |                     |          |                     |  |   |          |  
|Basic and diluted earnings per share:             |  |                     |          |                     |  |   |          |  
|Reported net loss per share                       |  | $                   | (0.83    | )                   |  | $ | (3.77    | )
|Additional depreciation of property and equipment |  |                     |         |                     |  |   |         |  
|Accretion of asset retirement obligation          |  |                     | (0.01    | )                   |  |   | (0.01    | )
|                                                  |  |                     |          |                     |  |   |          |  
|Adjusted net loss per share                       |  | $                   | (0.84    | )                   |  | $ | (3.78    | )
|                                                  |  |                     |          |                     |  |   |          |  

In April 2002, the FASB issued Statement of Financial Accounting Standards
No. 145, Rescission of FASB Statement Nos. 4, 44, and 64, Amendment of FASB
Statement No. 13 and Technical Corrections(SFAS 145). SFAS 145 amends or
rescinds a number of authoritative pronouncements, including Statement of
Financial Accounting Standards No. 4, Reporting Gains and Losses from
Extinguishment of Debt(SFAS 4). SFAS 4 required that gains and losses from
extinguishment of debt included in the determination of net income or loss be
aggregated and, if material, classified as an extraordinary item, net of the
related income tax effect. Upon adoption of SFAS 145, gains and losses from
extinguishment of debt will no longer be classified as extraordinary items, but
rather will generally be classified as part of other income (expense) on the
Companys consolidated statement of operations. The Company adopted the
provisions of SFAS 145 on January 1, 2003. The adoption of this statement did
not have a material impact on the Companys consolidated financial position,
results of operations or cash flows.

In July 2002, the FASB issued Statement of Financial Accounting Standards
No. 146, Accounting For Costs Associated with Exit or Disposal Activities
(SFAS 146). The statement requires costs associated with exit or disposal
activities to be recognized when incurred rather than at the date of a
commitment to an exit or disposal plan. The requirements of SFAS 146 are
effective for exit or disposal activities initiated after January 1, 2003. The
Company adopted the provisions of SFAS 146 on January 1, 2003. The adoption of
this statement did not have a material impact on the Companys consolidated
financial position, results of operations or cash flows.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation, Transition and Disclosure(SFAS 148). SFAS 148 provides
alternative methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee compensation. SFAS 148 also
requires that disclosures of the pro forma effect of using the fair value
method of accounting for stock-based employee compensation be displayed more
prominently and in a tabular format. Additionally, SFAS 148 requires disclosure
of the pro forma effect in interim financial statements. The transition
disclosure requirements of SFAS 148 were effective for fiscal year 2002. The
interim and annual disclosure requirements are effective for the first quarter
of 2003. The adoption of SFAS 148 did not have a material effect on the
Companys consolidated financial position, results of operations or cash flows.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN 46). FIN 46 requires an investor with a
majority of the variable interests in a variable interest entity (VIE) to
consolidate the entity and also requires majority and significant variable
interest investors to provide certain disclosures. A VIE is an entity in which
the equity investors do not have a controlling interest, or the equity
investment at risk is insufficient to finance the entitys activities without
receiving additional subordinated financial support from the other parties. For
arrangements entered into with VIEs created prior to January 31, 2003, the
provisions of FIN 46 are required to be adopted at the beginning of the first
interim or annual period beginning after June 15, 2003. The Company is
currently reviewing its investments and other arrangements to determine whether
any of its investee companies are VIEs. The Company does not expect to identify
any significant VIEs that would be consolidated, but may be required to make
additional disclosures. The Companys maximum exposure related to any
investment that may be determined to be in a VIE is limited to the amount
invested. The provisions of FIN 46 are effective immediately for all
arrangements entered into with new VIEs created after January 31, 2003. The
Company has not invested in any new VIEs created after January 31, 2003.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities(SFAS 149). SFAS 149 amends and
clarifies accounting for derivative instruments, including certain derivative
instruments
embedded in other contracts, and for hedging activities under SFAS 133, as
previously amended by SFAS 138. SFAS 149 clarifies under what circumstances

14



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SPECTRASITE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

a
contract with an initial net investment meets the characteristic of a
derivative as discussed in SFAS 133. In addition, it clarifies when a
derivative contains a financing component that warrants special reporting in
the statement of cash flows. SFAS 149 amends certain other existing
pronouncements. SFAS 149 is effective for contracts entered into or modified
after June 30, 2003, with certain exceptions and for hedging relationships
designated after June 30, 2003 and should be applied prospectively. The Company
does not expect the adoption of this statement to have a material impact on its
consolidated financial position, results of operations, or cash flows.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity
(SFAS 150). SFAS 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities
and equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). SFAS 150
amends certain other existing pronouncements. SFAS 150 is effective for
financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003, except for mandatorily redeemable financial instruments of
nonpublic entities. The Company does not expect the adoption of this statement
to have a material impact on its consolidated financial position, results of
operations, or cash flows.

5. Acquisition Activities

SBC transaction On August 25, 2000, the Company entered into an
agreement to acquire leasehold and sub-leasehold interests in approximately
3,900 wireless communications towers from affiliates of SBC Communications
(collectively, SBC) in exchange for $982.7 million in cash and $325.0 million
in Old Common Stock. Under the agreement, and assuming the sublease of all
3,900 towers, the stock portion of the consideration was initially
approximately 14.3 million shares valued at $22.74 per share. The stock
consideration was subject to an adjustment payment to the extent the average
closing price of the Old Common Stock during the 60-day period immediately
preceding December 14, 2003 (the third anniversary of the initial closing)
decreased from $22.74 to a floor of $12.96. The adjustment payment would be
accelerated if there were a change of control of SpectraSite or upon the
occurrence of certain specified liquidity events. In any case, the adjustment
payment was payable, at the Companys option, in the form of cash or shares of
Old Common Stock. The maximum amount potentially payable to satisfy the
adjustment payment was approximately 10.8 million shares of Old Common Stock or
$139.8 million in cash. The Company and SBC entered into a Lease and Sublease
Agreement pursuant to which the Company manages, maintains and leases available
space on the SBC towers and has the right to add tenants to the towers. The
average term of the sublease for all sites at the inception of the agreement
was approximately 27 years, assuming renewals or extensions of the underlying
ground leases for the sites. SBC is an anchor tenant on all of the towers and
pays a monthly fee per tower of $1,544, subject to an annual adjustment. In
addition, the Company had agreed to build towers for Cingular, an affiliate of
SBC, through 2005 under an exclusive build-to-suit agreement, but this
agreement was terminated on May 15, 2002.

Subject to the conditions described in the sublease, SBC also has the
right to substitute other available space on the tower for the reserved space,
and a right of first refusal as to available space that the Company intends to
sublease to a third party. For the first 300 times SBC exercises its right of
first refusal, SBC is required to pay the Company rent for the applicable space
equal to the lesser of the rent that would have been charged to the proposed
third-party and a rent that is proportional to the monthly fee under the
sublease. After the first 300 times that SBC exercises its right of first
refusal, SBC is required to pay the Company rent for the applicable space equal
to the rent that would have been charged to the third-party.

The Company will have the option to purchase the sites subject to the
sublease upon the expiration of the sublease as to those sites. The purchase
price for each site will be a fixed amount stated in the sublease for that site
plus the fair market value of certain alterations made to the related tower by
SBC. The aggregate purchase option price for the towers subleased to date was
approximately $199.4 million as of June 30, 2003 and will accrete at a rate of
10% per year to the applicable expiration of the sublease of a site. In the
event that the Company purchases such sites, SBC shall have the right to
continue to lease the reserved space for successive one year terms at a rent
equal to the lesser of the agreed upon market rate and the then current monthly
fee, which monthly fee shall be subject to an annual increase based on changes
in the consumer price index.

On November 14, 2001, the Company completed an amendment to the SBC
acquisition agreements. This amendment reduced the maximum number of towers
that the Company is committed to lease or sublease by 300 towers, from 3,900 in
the original agreement to 3,600 towers in the agreement as amended. In
addition, pursuant to the amendment, the Company receives all new revenue on
the towers remaining to be subleased after February 25, 2002. As consideration
for entering into the amendment, the Company paid SBC a fee of $35.0 million
that was expensed. On November 14, 2002, the Company completed a further
amendment to the SBC acquisition agreements. This amendment further reduced the
maximum number of towers that the Company is committed to lease or
sublease by 294 towers, from 3,600 in the amended agreement to 3,306
towers in the agreement as further amended. In addition, on February 10, 2003, in connection with the Plan of

15



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Reorganization, the
Company sold 545 SBC towers in California and Nevada to Cingular for an
aggregate purchase price of $81.0 million and paid SBC a fee of $7.5 million
related to the 294 reduction in the maximum number of towers that it is
committed to lease or sublease. This fee is included in Reorganization Items 
Professional and Other Fees in the Condensed Consolidated Financial Statements.
Because these 545 towers were adjusted to fair value as part of fresh start
accounting, no gain or loss was recognized on the sale. In the one month ended
January 31, 2003, revenues and costs of site leasing operations, excluding
depreciation, amortization and accretion expense, related to the 545 towers,
were $1.2 million and $0.5 million, respectively. In the five months ended June
30, 2003, comparable revenues and costs of site leasing operations, excluding
depreciation, amortization and accretion expense, related to the 545 towers,
were $0.4 million and $0.2 million, respectively.

As of December 31, 2002, the Company had issued approximately 9.9 million
shares of Old Common Stock to SBC pursuant to the SBC acquisition agreements.
As part of the Plan of Reorganization discussed in Note 2, on February 10, 2003
the Company issued to SBC 12.1 million shares of Old Common Stock in full
satisfaction of any obligation to issue SBC further stock or make any further
adjustment payment. Of the 12.1 million shares, the Company issued 7.5 million
shares of Old Common Stock in connection with the adjustment payment described
above and 4.7 million shares of Old Common Stock as an advance payment on the

purchase of the remaining 600 towers. All of these shares of Old Common Stock
were exchanged for new warrants under the Plan of Reorganization. As a result,
at all future closings with SBC, the stock portion of the payment for each site
has been paid in full.

From the initial closing on December 14, 2000 through a closing on
February 25, 2002, the Company leased or subleased a total of 2,706 towers
under the terms of the amended agreement. The parties agreed to complete the
lease or sublease of the remaining 600 towers during the period beginning May
2003 and ending August 2004. The total purchase price for the 600 towers is
expected to be approximately $156 million.

In connection with the Plan of Reorganization and the implementation of
fresh start accounting on January 31, 2003, the Company recorded liabilities in
the amount of $60.5 million related to its obligation to complete the lease or
sublease of the remaining 600 towers under the SBC agreement. At each closing,
a portion of the purchase price of each tower is charged against the liability.
In the six months ended June 30, 2003, the Company subleased 54 towers, for
which it paid $13.3 million in cash. Of this amount, $4.0 million was charged
against the liability and $9.3 million was capitalized as property and
equipment.

In the six months ended June 30, 2002, the Company subleased 41 towers,
for which it paid $10.1 million in cash and issued 146,569 shares of Old Common
Stock valued at $1.7 million.

6. Financing Transactions

Credit Facility

SpectraSite Communications, Inc. (Communications), a wholly-owned
subsidiary of SpectraSite, is party to an amended and restated credit facility
(the credit facility) totaling $680.0 million. The credit facility includes a
$200.0 million revolving credit facility, which may be drawn at any time,
subject to the satisfaction of certain conditions precedent. The amount
available will be reduced (and, if necessary, any amounts outstanding must be
repaid) in quarterly installments beginning on September 30, 2005 and ending on
June 30, 2007. The credit facility also includes a $204.8 million multiple draw
term loan that is fully drawn and which must be repaid in quarterly
installments beginning on March 31, 2006 and ending on June 30, 2007 and a
$275.2 million term loan that is fully drawn and which must be repaid in
quarterly installments beginning on September 30, 2007 and ending on December
31, 2007.

With the proceeds of the sale of towers to Cingular discussed in Note 5,
Communications repaid $31.4 million of the multiple draw term loan and $42.1
million of the term loan on February 11, 2003. In addition, Communications
repaid $1.1 million of the multiple draw term loan and $1.4 million of the term
loan on February 19, 2003. In connection with these repayments, Communications
wrote off $1.6 million in debt issuance costs. This charge is included in
interest expense in the unaudited condensed consolidated statement of
operations.

On May 14, 2003, Communications amended its credit facility to reduce the
unused $300 million commitment under the revolving credit facility by $100
million in exchange for moderately increasing the ratios in its leverage
covenant in future periods. In connection with this reduction, Communications
wrote off $2.0 million in debt issuance costs. This charge is included in
interest expense in the unaudited condensed consolidated statement of
operations.

With
the proceeds from the issuance of the 81⁄4% Senior Notes Due 2010
discussed below, Communications repaid $83.0 million of the multiple draw term
loan and $111.5 million of the term loan on May 21, 2003. In addition,
Communications repaid $1.1 million of the

16



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

multiple draw term loan and $1.4
million of the term loan on June 24, 2003 and $12.8 million of the multiple
draw term loan and $17.2 of the term loan on June 30, 2003. In connection with
these repayments, Communications wrote off $4.6 million in debt issuance costs.
This charge is included in interest expense in the unaudited condensed
consolidated statement of operations.

As of June 30, 2003, Communications has $480.0 million outstanding under
the credit facility. The remaining $200.0 million under the credit facility was
undrawn. Under the terms of the credit facility, the Company could borrow
approximately $193.7 million under the revolving credit facility as of June 30,
2003 while remaining in compliance with the applicable covenants.

At June 30, 2003, amounts due under the credit facility are as follows:

|      |  |                |         | 
|----- |  | -------------- | ------- | 
|      |  | Maturities    
|      |  |               
|      |  | (In thousands)
|2003  |  | $              |        | 
|2004  |  |                |        | 
|2005  |  |                |        | 
|2006  |  |                | 88,365  | 
|2007  |  |                | 391,590 | 
|      |  |                |         | 
|Total |  | $              | 479,955 | 
|      |  |                |         | 

Prior to February 10, 2003, the revolving credit loans and the multiple
draw term loan bore interest, at Communications option, at either Canadian
Imperial Bank of Commerces base rate plus an applicable margin of 2.50% per
annum or the Eurodollar rate plus an applicable margin of 3.75% per annum.
After February 10, 2003, the revolving credit loans and the multiple draw term
loans bear interest, at Communications option, at either Canadian Imperial
Bank of Commerces base rate plus an applicable margin ranging from 2.00% to
1.00% per annum or the Eurodollar rate plus an applicable margin ranging from
3.25% to 2.25% per annum, depending on Communications leverage ratio at the
end of the preceding fiscal quarter.

Prior to February 10, 2003, the term loan bore interest, at
Communications option, at either Canadian Imperial Bank of Commerces base
rate plus 3.25% per annum or the Eurodollar rate plus 4.50% per annum. After
February 10, 2003, the term loan bears interest, at Communications option, at
either Canadian Imperial Bank of Commerces base rate plus 2.75% per annum or
the Eurodollar rate plus 4.00% per annum. The weighted average interest rate on
outstanding borrowings under the credit facility as of June 30, 2003 was 4.83%.

Communications is required to pay a commitment fee of between 1.375% and
0.500% per annum in respect of the undrawn portions of the revolving credit
facility, depending on the undrawn amount. Communications may be required to
prepay the credit facility in part upon the occurrence of certain events, such
as a sale of assets, the incurrence of certain additional indebtedness, certain
changes to the SBC transaction or the generation of excess cash flow.

SpectraSite and each of Communications domestic subsidiaries have
guaranteed the obligations under the credit facility. The credit facility is
further secured by substantially all the tangible and intangible assets of
Communications and its domestic subsidiaries, a pledge of all of the capital
stock of Communications and its domestic subsidiaries and 66% of the capital
stock of Communications foreign subsidiaries. The credit facility contains a
number of covenants that, among other things, restrict Communications ability
to incur additional indebtedness; create liens on assets; make investments or
acquisitions or engage in mergers or consolidations; dispose of assets; enter
into new lines of business; engage in certain transactions with affiliates; and
pay dividends or make capital distributions. In addition, the credit facility
requires compliance with certain financial covenants, including a requirement
that Communications and its subsidiaries, on a consolidated basis, maintain a
maximum ratio of total debt to annualized EBITDA (as defined in the credit
facility), a minimum interest coverage ratio and a minimum fixed charge
coverage ratio.

81⁄4% Senior Notes Due 2010 (81⁄4% Senior Notes)

On May 21, 2003, SpectraSite issued $200.0 million aggregate principal
amount of 81⁄4% Senior Notes due 2010 for proceeds of $194.5 million, net of
debt issuance costs. Semi-annual interest payments for the 81⁄4% Senior
Notes are due on each May 15 and November 15 beginning on November 15, 2003.
The Company is required to comply with certain covenants under the terms of the
81⁄4% Senior Notes that restrict the Companys ability to incur additional
indebtedness and make certain payments, among other covenants.

17



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SPECTRASITE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. Discontinued Operations

On December 31, 2002, the Company sold its network services division.
Network services revenues for the three and six months ended June 30, 2002 were
$35.8 million and $77.6 million, respectively. Network services loss before
taxes for the three and six months ended June 30, 2002 were $4.8 million and
$2.7 million, respectively. The Company recorded a loss on disposal of the
network services division of $47.0 million in 2002. In the three months ended
June 30, 2003, the Company recorded an additional loss on disposal of the
network services division of $0.6 million related to the settlement of a
disputed item. The results of the network services divisions operations have
been reported separately as discontinued operations in the statements of
operations. Prior period financial statements have been restated to present the
operations of the division as a discontinued operation.

8. Business Segments

The Company operates in two business segments: wireless and broadcast. The
wireless segment provides for leasing and subleasing of antenna sites on
multi-tenant towers and distributed antenna systems for a diverse range of
wireless communication services. The broadcast segment offers leasing and
subleasing of antenna sites for broadcast communication services and a broad
range of broadcast development services, including broadcast tower design and
construction and antenna installation. During the last six months, we have
experienced a decline in revenues and earnings in our broadcast services
division as compared to prior periods. The Board of Directors has initiated an
effort to evaluate future business alternatives with respect to the broadcast
services division. In the event that the Board of Directors decides to
discontinue the broadcast services business, we estimate that the resulting
loss could be as much as $20.0 million, depending on the nature of the
disposition. Information regarding the broadcast leasing and broadcast
services businesses is presented below to provide further information about the
broadcast segment.

The measurement of profit or loss currently used by management to evaluate
the results of operations for the Company and its operating segments is
earnings before interest, taxes, depreciation and amortization, as adjusted
(Adjusted EBITDA). The Company defines Adjusted EBITDA as operating income
(loss) before depreciation, amortization and accretion expenses, restructuring
and non-recurring charges and non-cash compensation charges. Adjusted EBITDA
is not intended as an alternative measure of operating results or cash flow
from operations (as determined in accordance with generally accepted accounting
principles), and the Companys measure of Adjusted EBITDA may not be comparable
to similarly titled measures of other companies.

Summarized financial information concerning the reportable segments as of
and for the three months ended June 30, 2003 and 2002, the five months ended
June 30, 2003, the one month ended January 31, 2003 and the six months ended
June 30, 2002 is shown in the following table. The Other column represents
amounts excluded from specific segments, such as income taxes, corporate
general and administrative expenses and interest. In addition, Other also
includes corporate assets such as cash and cash equivalents, tangible and
intangible assets and income tax accounts that have not been allocated to a
specific segment. Virtually all reported segment revenues are generated from external
customers as intersegment revenues are not significant.

|                                                             |                       |   |                |   |         |   |          |   |           |   |        |   |  |   |         |   |       |   |         |   |  |   |           |   | 
|------------------------------------------------------------ | --------------------- | - | -------------- | - | ------- | - | -------- | - | --------- | - | ------ | - |  | - | ------- | - | ----- | - | ------- | - |  | - | --------- | - | 
|                                                             |                       |   | Wireless       |   |         |   |          |   | Broadcast |   |        |   |  |   | Other   |   | Total
|                                                             |                       |   |                |   |         |   |          |   |          
|                                                             |                       |   |                |   | Leasing |   | Services |   | Total     |   |        |   | 
|                                                             |                       |   |                |   |         |   |          |   |           |   |        |   |  |   |         |   |       |   |        
|                                                             |                       |   | (In thousands)
|Three months ended June 30, 2003                             |                       |   |                |   |         |   |          |   |           |   |        |   |  |   |         |   |       |   |         |   |  |   |           |  
|                                                             | (Reorganized Company) |   |                |   |         |   |          |   |           |   |        |   |  |   |         |   |       |   |         |   |  |   |           |   | 
|Total revenues                                               |                       | $ | 72,020         |   |         | $ | 5,478    |   |           | $ | 3,413  |   |  | $ | 8,891   |   |       | $ |        |   |  | $ | 80,911    |  
|Adjusted EBITDA                                              |                       |   | 41,285         |   |         |   | 4,460    |   |           |   | (635   | ) |  |   | 3,825   |   |       |   | (6,090  | ) |  |   | 39,020    |  
|Income (loss) from continuing
operations before income taxes |                       |   | 15,130         |   |         |   | 3,416    |   |           |   | (902   | ) |  |   | 2,514   |   |       |   | (24,416 | ) |  |   | (6,772    | )
|Assets                                                       |                       |   | 1,366,900      |   |         |   | 90,971   |   |           |   | 20,159 |   |  |   | 111,130 |   |       |   | 78,155  |   |  |   | 1,556,185 |  
|Additions to property and
equipment                          |                       |   | 2,019          |   |         |   | 1,165    |   |           |   | 278    |   |  |   | 1,443   |   |       |   | 464     |   |  |   | 3,926     |  
|Three months ended June 30, 2002                             |                       |   |                |   |         |   |          |   |           |   |        |   |  |   |         |   |       |   |         |   |  |   |           |  
|                                                             | (Predecessor Company) |   |                |   |         |   |          |   |           |   |        |   |  |   |         |   |       |   |         |   |  |   |           |   | 
|Total revenues                                               |                       | $ | 64,190         |   |         | $ | 5,443    |   |           | $ | 6,236  |   |  | $ | 11,679  |   |       | $ |        |   |  | $ | 75,869    |  
|Adjusted EBITDA                                              |                       |   | 32,181         |   |         |   | 3,753    |   |           |   | 337    |   |  |   | 4,090   |   |       |   | (7,277  | ) |  |   | 28,994    |  
|Income (loss) from continuing
operations before income taxes |                       |   | (43,062        | ) |         |   | (534     | ) |           |   | (1,170 | ) |  |   | (1,704  | ) |       |   | (78,023 | ) |  |   | (122,789  | )
|Assets                                                       |                       |   | 2,249,134      |   |         |   | 172,100  |   |           |   | 21,738 |   |  |   | 193,838 |   |       |   | 278,299 |   |  |   | 2,721,271 |  
|Goodwill                                                     |                       |   | 60,626         |   |         |   |         |   |           |   |       |   |  |   |        |   |       |   |        |   |  |   | 60,626    |  
|Additions to property and
equipment                          |                       |   | 14,055         |   |         |   | 4,374    |   |           |   | 319    |   |  |   | 4,693   |   |       |   | 1,069   |   |  |   | 19,817    |  

18



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

|                                                             |                       |   |                |   |         |   |          |  |           |   |        |   |  |   |         |   |       |   |           |   |  |   |           |   | 
|------------------------------------------------------------ | --------------------- | - | -------------- | - | ------- | - | -------- |  | --------- | - | ------ | - |  | - | ------- | - | ----- | - | --------- | - |  | - | --------- | - | 
|                                                             |                       |   | Wireless       |   |         |   |          |  | Broadcast |   |        |   |  |   | Other   |   | Total
|                                                             |                       |   |                |   |         |   |          |  |          
|                                                             |                       |   |                |   | Leasing |   | Services |  | Total     |   |        |   | 
|                                                             |                       |   |                |   |         |   |          |  |           |   |        |   |  |   |         |   |       |   |          
|                                                             |                       |   | (In thousands)
|Five months ended June 30, 2003                              |                       |   |                |   |         |   |          |  |           |   |        |   |  |   |         |   |       |   |           |   |  |   |           |  
|                                                             | (Reorganized Company) |   |                |   |         |   |          |  |           |   |        |   |  |   |         |   |       |   |           |   |  |   |           |   | 
|Total revenues                                               |                       | $ | 119,437        |   |         | $ | 9,130    |  |           | $ | 6,988  |   |  | $ | 16,118  |   |       | $ |          |   |  | $ | 135,555   |  
|Adjusted EBITDA                                              |                       |   | 68,220         |   |         |   | 7,444    |  |           |   | (405   | ) |  |   | 7,039   |   |       |   | (10,230   | ) |  |   | 65,029    |  
|Income (loss) from continuing
operations before income taxes |                       |   | 24,853         |   |         |   | 5,730    |  |           |   | (846   | ) |  |   | 4,884   |   |       |   | (37,599   | ) |  |   | (7,862    | )
|Assets                                                       |                       |   | 1,366,900      |   |         |   | 90,971   |  |           |   | 20,159 |   |  |   | 111,130 |   |       |   | 78,155    |   |  |   | 1,556,185 |  
|Additions to property and
equipment                          |                       |   | 3,264          |   |         |   | 1,526    |  |           |   | 552    |   |  |   | 2,078   |   |       |   | 907       |   |  |   | 6,249     |  
|One month ended January 31, 2003                             |                       |   |                |   |         |   |          |  |           |   |        |   |  |   |         |   |       |   |           |   |  |   |           |  
|                                                             | (Predecessor Company) |   |                |   |         |   |          |  |           |   |        |   |  |   |         |   |       |   |           |   |  |   |           |   | 
|Total revenues                                               |                       | $ | 23,843         |   |         | $ | 1,713    |  |           | $ | 1,237  |   |  | $ | 2,950   |   |       | $ |          |   |  | $ | 26,793    |  
|Adjusted EBITDA                                              |                       |   | 13,069         |   |         |   | 1,420    |  |           |   | (531   | ) |  |   | 889     |   |       |   | (1,777    | ) |  |   | 12,181    |  
|Income (loss) from continuing
operations
before income taxes |                       |   | (2,821         | ) |         |   | 887      |  |           |   | (676   | ) |  |   | 211     |   |       |   | 1,028,403 |   |  |   | 1,025,793 |  
|Assets                                                       |                       |   | 1,310,938      |   |         |   | 158,211  |  |           |   | 19,052 |   |  |   | 177,263 |   |       |   | 96,206    |   |  |   | 1,584,407 |  
|Additions to property and
equipment                          |                       |   | 257            |   |         |   | 861      |  |           |   | 9      |   |  |   | 870     |   |       |   | 1,610     |   |  |   | 2,737     |  
|Six months ended June 30, 2002                               |                       |   |                |   |         |   |          |  |           |   |        |   |  |   |         |   |       |   |           |   |  |   |           |  
|                                                             | (Predecessor Company) |   |                |   |         |   |          |  |           |   |        |   |  |   |         |   |       |   |           |   |  |   |           |   | 
|Total revenues                                               |                       | $ | 126,057        |   |         | $ | 9,528    |  |           | $ | 12,688 |   |  | $ | 22,216  |   |       | $ |          |   |  | $ | 148,273   |  
|Adjusted EBITDA                                              |                       |   | 62,296         |   |         |   | 6,427    |  |           |   | 381    |   |  |   | 6,808   |   |       |   | (13,812   | ) |  |   | 55,292    |  
|Income (loss) from continuing
operations before income taxes |                       |   | (55,525        | ) |         |   | 615      |  |           |   | (1,706 | ) |  |   | (1,091  | ) |       |   | (143,802  | ) |  |   | (200,418  | )
|Assets                                                       |                       |   | 2,249,134      |   |         |   | 172,100  |  |           |   | 21,738 |   |  |   | 193,838 |   |       |   | 278,299   |   |  |   | 2,721,271 |  
|Goodwill                                                     |                       |   | 60,626         |   |         |   |         |  |           |   |       |   |  |   |        |   |       |   |          |   |  |   | 60,626    |  
|Additions to property and
equipment                          |                       |   | 37,404         |   |         |   | 9,479    |  |           |   | 451    |   |  |   | 9,930   |   |       |   | 3,907     |   |  |   | 51,241    |  

A reconciliation of income (loss) from continuing operations before income
taxes to adjusted EBITDA is as follows:

|                                                             |  |               |        |               |  |               |          |                  |  |               |        |   |  |   |            |   |  |   |          |  
|------------------------------------------------------------ |  | ------------- | ------ | ------------- |  | ------------- | -------- | ---------------- |  | ------------- | ------ | - |  | - | ---------- | - |  | - | -------- | -
|                                                             |  | Reorganized   |        | Predecessor   |  | Reorganized   |          | Predecessor      |  | Predecessor  
|                                                             |  | Company       |        | Company       |  | Company       |          | Company          |  | Company      
|                                                             |  | Three Months  |        | Three Months  |  | Five Months   |          | One Month        |  | Six Months   
|                                                             |  | Ended         |        | Ended         |  | Ended         |          | Ended            |  | Ended        
|                                                             |  | June 30, 2003 |        | June 30, 2002 |  | June 30, 2003 |          | January 31, 2003 |  | June 30, 2002
|                                                             |  |               |        |               |  |               |          |                  |  |              
|Income (loss) from continuing
operations before income taxes |  | $             | (6,772 | )             |  | $             | (122,789 | )                |  | $             | (7,862 | ) |  | $ | 1,025,793  |   |  | $ | (200,418 | )
|Add: Depreciation, amortization
and accretion expenses       |  |               | 25,626 |               |  |               | 50,625   |                  |  |               | 42,452 |   |  |   | 16,075     |   |  |   | 95,263   |  
|Add: Non-cash compensation charges                           |  |               |       |               |  |               | 291      |                  |  |               |       |   |  |   |           |   |  |   | 580      |  
|Add: Restructuring and
non-recurring charges                 |  |               |       |               |  |               | 28,570   |                  |  |               |       |   |  |   |           |   |  |   | 28,570   |  
|Less: Interest income                                        |  |               | (279   | )             |  |               | (293     | )                |  |               | (496   | ) |  |   | (137       | ) |  |   | (377     | )
|Add: Interest expense                                        |  |               | 18,604 |               |  |               | 61,795   |                  |  |               | 27,865 |   |  |   | 4,721      |   |  |   | 120,492  |  
|Less: Gain on debt discharge                                 |  |               |       |               |  |               |         |                  |  |               |       |   |  |   | (1,034,764 | ) |  |   |         |  
|Add: Other expense                                           |  |               | 1,841  |               |  |               | 10,795   |                  |  |               | 3,070  |   |  |   | 493        |   |  |   | 11,182   |  
|                                                             |  |               |        |               |  |               |          |                  |  |               |        |   |  |   |            |   |  |   |          |  
|Adjusted EBITDA                                              |  | $             | 39,020 |               |  | $             | 28,994   |                  |  | $             | 65,029 |   |  | $ | 12,181     |   |  | $ | 55,292   |  
|                                                             |  |               |        |               |  |               |          |                  |  |               |        |   |  |   |            |   |  |   |          |  

19



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##### 



ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Business Overview

We are one of the largest wireless tower operators in the United States.
We also operate broadcast towers and are a leading provider of construction
services to the broadcast industry in the United States. Our businesses include
the ownership and leasing of antenna sites on wireless and broadcast towers,
the ownership and licensing of distributed antenna systems within buildings,
managing rooftop telecommunications access on commercial real estate and
designing, constructing, modifying and maintaining broadcast towers. After the
sale of 545 towers to Cingular, we owned or operated 7,539 towers as of June
30, 2003 as compared to 8,036 towers at December 31, 2002.

During the last six months, we have experienced a decline in revenues and
earnings in our broadcast services division as compared to prior periods. This
decline is attributable to reduced demand from our primary customers in the
radio and television broadcast industries. The adjusted EBITDA losses for the
broadcast services division for the three and six months ended June 30, 2003
were $0.6 million and $0.9 million compared to adjusted EBITDA of $0.3 million
and $0.4 million for the three and six months ended June 30, 2002. Certain of
our competitors in this industry have experienced similar business declines and
one competitor has recently discontinued its broadcast services division. The
Board of Directors has initiated an effort to evaluate whether similar actions
may be required. In the event that the Board of Directors decides to
discontinue the broadcast services business, we estimate that the resulting
loss could be as much as $20.0 million, depending on the nature of the
disposition.

On December 31, 2002, we completed the sale of our network services
division. Network services revenues for the three and six months ended June
30, 2002 were $35.8 million and $77.6 million, respectively. The results of
network services operations have been reported separately as discontinued
operations in the statements of operations. Prior period financial statements
have been restated to present the operations of the division as a discontinued
operation.

On November 15, 2002 (the Petition Date), SpectraSite filed a voluntary
petition for relief under chapter 11 of the Bankruptcy Code (the Bankruptcy
Code) in the United States Bankruptcy Court for the Eastern District of North
Carolina, Raleigh Division (the Bankruptcy Court). On November 18, 2002,
SpectraSite filed a Proposed Plan of Reorganization and a Proposed Disclosure
Statement with the Bankruptcy Court. A plan confirmation hearing was held on
January 28, 2003 and the Proposed Plan of Reorganization, as modified on that
date (the Plan of Reorganization), was confirmed by the Bankruptcy Court. All
conditions precedent to the effectiveness of the Plan of Reorganization were
met by February 10, 2003 (the Effective Date), thereby allowing SpectraSite
to emerge from bankruptcy.

The Plan of Reorganization provided that, among other things, (i) in
exchange for their notes, the holders of the 121⁄2% Senior Notes due 2010, the
63⁄4% Senior Convertible Notes due 2010, the 103⁄4% Senior Notes due 2010,
the 111⁄4% Senior Discount Notes due 2009, the 12 7/8% Senior Discount Notes
due 2010 and the 12% Senior Discount Notes due 2008 (Liabilities Subject to
Compromise) received their pro rata share of 23.75 million shares of common
stock, par value $0.01 per share (New Common Stock); (ii) the holders of
166,158,298 shares of common stock, par value $0.001 per share, outstanding as
of the Effective Date (the Old Common Stock) received their pro rata share of
1.25 million warrants, each of which is immediately exercisable into one share
of New Common Stock at a price of $32.00 per share; and (iii) all other equity
interests at the Effective Date, including outstanding warrants and options,
were cancelled.

Note Regarding Forward-Looking Statements

This discussion contains forward-looking statements, including statements
concerning possible or assumed future results of operations and liquidity. Our
representatives may also make oral forward-looking statements from time to
time. You should understand that the factors described below, in addition to
those discussed elsewhere in this report, could affect our future results and
could cause those results to differ materially from those expressed in such
forward-looking statements. These factors include:



| |  |  | substantial debt and capital requirements;                           
| | - |  | ---------------------------------------------------------------------
|
| |  |  | dependence on demand for wireless communications;                    
|
| |  |  | our ability to generate additional revenues from our existing towers;

20



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##### 





| |  |  | material adverse changes in economic conditions in the markets we
serve;                                                                              
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | future regulatory actions and conditions in our operating areas;                                                                                      
|
| |  |  | competition from others in the communications tower industry and
technological innovation;                                                            
|
| |  |  | the integration of our operations with those of businesses we have
acquired or may acquire in the future and the realization of the
expected benefits;
|
| |  |  | disputes with customers, suppliers and lessors;                                                                                                       
|
| |  |  | the need for additional financing to provide operating and growth
capital; and                                                                        
|
| |  |  | other risks and uncertainties as may be detailed from time to time in
our public announcements and SEC filings.                                       

Acquisition Activity

2003 Acquisitions

SBC On August 25, 2000, we entered into an agreement to acquire
leasehold and sub-leasehold interests in approximately 3,900 wireless
communications towers from affiliates of SBC Communications (collectively,
SBC) in exchange for $982.7 million in cash and $325.0 million in Old Common
Stock. Under the agreement, and assuming the sublease of all 3,900 towers, the
stock portion of the consideration was initially approximately 14.3 million
shares of Old Common Stock valued at $22.74 per share. The stock consideration
was subject to an adjustment payment to the extent the average closing price of
the Old Common Stock during the 60-day period immediately preceding December
14, 2003 (the third anniversary of the initial closing) decreases from $22.74
to a floor of $12.96. We and SBC entered into a Lease and Sublease Agreement
pursuant to which we manage, maintain and lease available space on the SBC
towers and have the right to add tenants to the towers. SBC is an anchor tenant
on all of the towers and pays a monthly fee per tower of $1,544, subject to an
annual adjustment. In addition, we had agreed to build towers for Cingular, an
affiliate of SBC, through 2005, under an exclusive build-to-suit agreement. The
build-to-suit agreement was terminated on May 15, 2002.

On November 14, 2001, we completed an amendment to the SBC agreements.
This amendment reduced the maximum number of towers that we will lease or
sublease by 300 towers, from 3,900 in the original agreement to 3,600 towers in
the agreement as amended. In addition, pursuant to the amendment, we will
receive all new revenue on the towers remaining to be subleased after February
25, 2002.

On November 14, 2002, we completed a further amendment to the SBC
agreements. This amendment further reduced the maximum number of towers that we
will lease or sublease by 294 towers, from 3,600 in the amended agreement to
3,306 towers in the agreement as further amended. In addition, on February 10,
2003, in connection with the Plan of Reorganization, we sold 545 SBC towers in
California and Nevada to Cingular for an aggregate purchase price of $81.0
million and paid SBC a fee of $7.5 million related to the 294 reduction in the
maximum number of towers that we will lease or sublease. The following table
shows the effects of the sale of the 545 SBC towers on operations for the first
six months of 2003 and 2002:

|                      |                                   |                                                                                             |  |                |        |             |  |             |        |   |  |                  |        | 
|--------------------- | --------------------------------- | ------------------------------------------------------------------------------------------- |  | -------------- | ------ | ----------- |  | ----------- | ------ | - |  | ---------------- | ------ | 
|                      |                                   |                                                                                             |  |                |        |             |  |             |        |   |  | Amounts Adjusted
|                      |                                   |                                                                                             |  | Actual         |        | 545 SBC     |  | for 545 SBC
|                      |                                   |                                                                                             |  | Amounts        |        | Towers Sold |  | Towers Sold
|                      |                                   |                                                                                             |  |                |        |             |  |            
|                      |                                   |                                                                                             |  | (In thousands)
|Predecessor Company  |                                   |                                                                                             |  |                |        |             |  |             |        |   |  |                 
|                      | One month ended January 31, 2003: |                                                                                             |  |                |        |             |  |             |        |   |  |                  |       
|                      |                                   | Site leasing revenues                                                                       |  | $              | 25,556 |             |  | $           | (1,202 | ) |  | $                | 24,354 | 
|                      |                                   | Cost of site leasing operations,
excluding depreciation, amortization
and accretion expense |  |                | 8,840  |             |  |             | (465   | ) |  |                  | 8,375  | 
|                      |                                   |                                                                                             |  |                |        |             |  |             |        |   |  |                 
|                      |                                   | Tower cash flow                                                                             |  | $              | 16,716 |             |  | $           | (737   | ) |  | $                | 15,979 | 
|                      |                                   |                                                                                             |  |                |        |             |  |             |        |   |  |                  |        | 

21



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##### 



|                                                                               |                                   |                                                                                             |  |                |         |             |  |             |        |   |  |                  |         | 
|------------------------------------------------------------------------------ | --------------------------------- | ------------------------------------------------------------------------------------------- |  | -------------- | ------- | ----------- |  | ----------- | ------ | - |  | ---------------- | ------- | 
|                                                                               |                                   |                                                                                             |  |                |         |             |  |             |        |   |  | Amounts Adjusted
|                                                                               |                                   |                                                                                             |  | Actual         |         | 545 SBC     |  | for 545 SBC
|                                                                               |                                   |                                                                                             |  | Amounts        |         | Towers Sold |  | Towers Sold
|                                                                               |                                   |                                                                                             |  |                |         |             |  |            
|                                                                               |                                   |                                                                                             |  | (In thousands)
|Reorganized Company                                                           |                                   |                                                                                             |  |                |         |             |  |             |        |   |  |                 
|                                                                               | Five months ended June 30, 2003:  |                                                                                             |  |                |         |             |  |             |        |   |  |                  |        
|                                                                               |                                   | Site leasing revenues                                                                       |  |                | 128,567 |             |  |             | (368   | ) |  |                  | 128,199 | 
|                                                                               |                                   | Cost of site leasing operations,
excluding depreciation, amortization
and accretion expense |  |                | 42,824  |             |  |             | (195   | ) |  |                  | 42,629  | 
|                                                                               |                                   |                                                                                             |  |                |         |             |  |             |        |   |  |                 
|                                                                               |                                   | Tower cash flow                                                                             |  | $              | 85,743  |             |  | $           | (173   | ) |  | $                | 85,570  | 
|                                                                               |                                   |                                                                                             |  |                |         |             |  |             |        |   |  |                  |         | 
|Combined Predecessor and Reorganized
Company  Six months ended June 30, 2003: |                                   |                                                                                             |  |                |         |             |  |             |        |   |  |                 
|                                                                               |                                   | Site leasing revenues                                                                       |  |                | 154,123 |             |  |             | (1,570 | ) |  |                  | 152,553 | 
|                                                                               |                                   | Cost of site leasing operations,
excluding depreciation, amortization
and accretion expense |  |                | 51,664  |             |  |             | (660   | ) |  |                  | 51,004  | 
|                                                                               |                                   |                                                                                             |  |                |         |             |  |             |        |   |  |                 
|                                                                               |                                   | Tower cash flow                                                                             |  | $              | 102,459 |             |  | $           | (910   | ) |  | $                | 101,549 | 
|                                                                               |                                   |                                                                                             |  |                |         |             |  |             |        |   |  |                  |         | 
|Predecessor Company                                                           |                                   |                                                                                             |  |                |         |             |  |             |        |   |  |                 
|                                                                               | Three months ended June 30, 2002: |                                                                                             |  |                |         |             |  |             |        |   |  |                  |        
|                                                                               |                                   | Site leasing revenues                                                                       |  | $              | 69,633  |             |  | $           | (2,707 | ) |  | $                | 66,926  | 
|                                                                               |                                   | Cost of site leasing operations,
excluding depreciation, amortization
and accretion expense |  |                | 26,705  |             |  |             | (1,410 | ) |  |                  | 25,295  | 
|                                                                               |                                   |                                                                                             |  |                |         |             |  |             |        |   |  |                 
|                                                                               |                                   | Tower cash flow                                                                             |  | $              | 42,928  |             |  | $           | (1,297 | ) |  | $                | 41,631  | 
|                                                                               |                                   |                                                                                             |  |                |         |             |  |             |        |   |  |                  |         | 
|Predecessor Company                                                           |                                   |                                                                                             |  |                |         |             |  |             |        |   |  |                 
|                                                                               | Six months ended June 30, 2002:   |                                                                                             |  |                |         |             |  |             |        |   |  |                  |        
|                                                                               |                                   | Site leasing revenues                                                                       |  | $              | 135,585 |             |  | $           | (5,353 | ) |  | $                | 130,232 | 
|                                                                               |                                   | Cost of site leasing operations,
excluding depreciation, amortization
and accretion expense |  |                | 52,210  |             |  |             | (2,905 | ) |  |                  | 49,305  | 
|                                                                               |                                   |                                                                                             |  |                |         |             |  |             |        |   |  |                 
|                                                                               |                                   | Tower cash flow                                                                             |  | $              | 83,375  |             |  | $           | (2,448 | ) |  | $                | 80,927  | 
|                                                                               |                                   |                                                                                             |  |                |         |             |  |             |        |   |  |                  |         | 

As of December 31, 2002, we had issued approximately 9.9 million shares of
Old Common Stock to SBC pursuant to the SBC agreements. As part of the Plan of
Reorganization, on February 10, 2003 we issued SBC 12.1 million shares of Old
Common Stock in full satisfaction of any obligation to issue SBC further stock
or make any further adjustment payment. Of the 12.1 million shares, we issued
7.5 million shares of Old Common Stock in connection with the adjustment
payment described above on shares issued through December 31, 2002 and 4.7
million shares of Old Common Stock as an advance payment on the purchase of the
remaining 600 towers. All of these shares of Old Common Stock were exchanged
for new warrants under the Plan of Reorganization. As a result, at all future
closings with SBC, the stock portion of the payment for each site has been paid
in full.

From the initial closing on December 14, 2000 through a closing on
February 25, 2002, we leased or subleased a total of 2,706 towers, including
the 545 towers sold to Cingular in February 2003. Under the terms of the
amended agreement, SBC and the Company agreed to complete the lease or sublease
of the remaining 600 towers during the period beginning May 2003 and ending
August 2004 for an aggregate purchase price of approximately $156 million.

In connection with the Plan of Reorganization and the implementation of
fresh start accounting on January 31, 2003, we recorded liabilities in the
amount of $60.5 million related to our obligation to complete the lease or
sublease of the remaining 600 towers under the SBC agreement. At each closing,
a portion of the purchase price of each tower is charged against the liability.
In the six months ended June 30, 2003, we subleased 54 towers, for which we
paid $13.3 million in cash. Of this amount, $4.0 million was charged against
the liability and $9.3 million was capitalized as property and equipment.

Results of Operations

Three months ended June 30, 2003 compared to the results for the three months
ended June 30, 2002.

On January 28, 2003, the Companys Plan of Reorganization was confirmed by
the Bankruptcy Court and the Company emerged from Bankruptcy on February 10,
2003. As a result of the implementation of fresh start accounting as of January
31, 2003, the Companys results of operations after that date are not
comparable to results reported in prior periods because of differences in the
bases of accounting and the capital structure for the Predecessor Company and
the Reorganized Company. See Note 2 for additional information on the
consummation of the Plan of Reorganization and implementation of fresh start
accounting.

22



---



##### 



Consolidated revenues for the three months ended June 30, 2003 were $80.9
million, an increase of $5.0 million from the three months ended June 30, 2002.
Revenues from site leasing increased to $77.5 million for the three months
ended June 30, 2003 from $69.6 million for the three months ended June 30,
2002. The increase was primarily as a result of incremental revenue in 2003
from new tenants on towers that were part of our portfolio on June 30, 2002,
revenues derived from towers acquired or built subsequent to June 30, 2002 and
increases in fee revenues, offset by reductions in revenues relating to the 545
SBC towers sold in February 2003. Based on trailing twelve-months revenue on
the towers that we owned or operated as of June 30, 2002 and June 30, 2003,
same tower revenue growth was 15% and same tower cash flow increased 21%. After
the sale of 545 towers to Cingular, we owned or operated 7,539 towers and
in-building sites at June 30, 2003, as compared to 7,994 towers and in-building
sites at June 30, 2002.

Revenues from broadcast services decreased to $3.4 million for the three
months ended June 30, 2003 compared to $6.2 million in the three months ended
June 30, 2002. The decrease was primarily due to decreased demand for broadcast
services.

Costs of operations decreased to $29.3 million for the three months ended
June 30, 2003 from $31.7 million for the three months ended June 30, 2002.
Costs of operations for site leasing decreased to $25.8 million for
the three months ended June 30, 2003 from $26.7 million for the
three months ended June 30, 2002. Costs of operations for site leasing as a percentage of site leasing revenues
decreased to 33.2% for the three months ended June 30, 2003 from 38.4% for the
three months ended June 30, 2002. The decrease was primarily due to increased
revenues generated from new tenants on existing towers. As our site leasing
operations mature we expect that additional tenants on towers will generate
increases in our margins for site leasing and in cash flow because a
significant percentage of tower operating costs are fixed and do not increase
with additional tenants.

Costs of operations for
broadcast services decreased to $3.5 million for
the three months ended June 30, 2003 from $5.0 million for the
three months ended June 30, 2002. Costs of operations for broadcast services as a percentage of broadcast
services revenues increased to 103.7% for the three months ended June 30, 2003
from 80.3% for the three months ended June 30, 2002, primarily due to lower
revenue volumes in 2003.

Selling, general and administrative expenses decreased to $12.6 million
for the three months ended June 30, 2003 from $15.5 million for the three
months ended June 30, 2002. Selling, general and administrative expenses for
site leasing decreased to $12.1 million for the three months ended June 30,
2003 from $14.6 million for the three months ended June 30, 2002. Selling,
general and administrative expenses for site leasing as a percentage of site
leasing revenues decreased to 15.6% for the three months ended June 30, 2003
from 20.9% for the three months ended June 30, 2002. Selling, general and
administrative expenses for site leasing decreased in amount and as a
percentage of site leasing revenues as a result of significant cost cutting
measures implemented in the second half of 2002.

Selling, general and administrative expenses for broadcast services
decreased to $0.5 million for the three months ended June 30, 2003 from $0.9
million for the three months ended June 30, 2002. Selling, general and
administrative expenses for broadcast services as a percentage of broadcast
services revenues increased to 14.9% for the three months ended June 30, 2003
from 14.3% for the three months ended June 30, 2002, primarily due to lower
revenue volumes in 2003.

Depreciation, amortization and accretion expenses decreased to $25.6
million for the three months ended June 30, 2003 from $50.6 million for the
three months ended June 30, 2002. The decrease was primarily the result of the
implementation of fresh start accounting which reduced the depreciable bases of
property and equipment by $957.2 million, resulting in decreased depreciation
expense, offset by an increase in amortization expense relating to customer
contracts and an increase in accretion of the asset retirement obligation.

In May 2002, we announced that we would terminate our build-to-suit
programs with Cingular and other carriers and implement other cost-cutting
measures as a part of the curtailment of tower development activities. As a
result of these actions, we recorded restructuring charges of $24.3 million. Of
this amount, $16.4 million was related to the write-off of work in progress
related to sites in development that are to be terminated, $3.2 million was
related to the costs of closing offices and $4.7 million was related to the
costs of employee severance. In addition, we recorded a non-recurring
impairment charge of $4.3 million to write-down the carrying value of 21 towers
that are not marketable. The charge was based on the estimated discounted cash
flows of the towers.

Interest income was $0.3 million for the three months ended June 30, 2003
and $0.3 million in the three months ended June 30, 2002. Interest expense
decreased to $18.6 million during the three months ended June 30, 2003 from
$61.8 million for the three months ended June 30, 2002. The decrease was due to
the extinguishment of the Liabilities Subject to Compromise and a reduction of
amounts outstanding under our credit facility, offset by increases in interest
expense as a result of the issuance of the 81⁄4% Senior Notes due 2010 and
writeoffs of $6.6 million of debt issuance costs resulting from prepayments of
amounts outstanding under our credit facility.

Other income (expense) was a net expense of $1.8 million in the three
months ended June 30, 2003, consisting primarily of $0.5 million of loss on
sale of assets and $0.6 million related to the writedown of our interest rate
cap to fair value. Other income (expense) was a net expense of $10.8 million in
the three months ended June 30, 2002. Of this amount, $9.3 million was related
to expenses associated with the proposed debt tender and exchange offers, $0.4
million related to gains from investments in affiliates accounted for under the equity method

23



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##### 



and $1.9 million was related to losses on sale
of assets.

Loss on disposal of discontinued segment was $0.6 million in the three
months ended June 30, 2003. This amount consisted of the settlement of a
disputed item related to the disposal of our network services business. This
segment was sold on December 31, 2002.

Loss from operations of discontinued segment was $4.8 million in the three
months ended June 30, 2002. This segment was sold on December 31, 2002.

Six months ended June 30, 2003 compared to the results for the six months ended
June 30, 2002.

On January 28, 2003, the Companys Plan of Reorganization was confirmed by
the Bankruptcy Court and the Company emerged from Bankruptcy on February 10,
2003. As a result of the implementation of fresh start accounting as of January
31, 2003, the Companys results of operations after that date are not
comparable to results reported in prior periods because of differences in the
bases of accounting and the capital structure for the Predecessor Company and
the Reorganized Company. To facilitate comparisons to prior periods, the
results of operations for the six months ended June 30, 2003, discussed below,
includes the one month period ended January 31, 2003 for the Predecessor
Company and the five months ended June 30, 2003 for the Reorganized Company.
See Note 2 for additional information on the consummation of the Plan of
Reorganization and implementation of fresh start accounting.

Consolidated revenues for the six months ended June 30, 2003 were $162.3
million, an increase of $14.1 million from the six months ended June 30, 2002.
Revenues from site leasing increased to $154.1 million for the six months ended
June 30, 2003 from $135.6 million for the six months ended June 30, 2002. The
increase was primarily a result of incremental revenue in 2003 from new tenants
on towers that were part of our portfolio on June 30, 2002, revenues derived
from towers acquired or built subsequent to June 30, 2002 and increases in fee
revenues, offset by reductions in revenues relating to the 545 SBC towers sold
in February 2003. Based on trailing twelve-months revenue on the towers that we
owned or operated as of June 30, 2002 and June 30, 2003, same tower revenue
growth was 15% and same tower cash flow increased 21%. After the sale of 545
towers to Cingular, we owned or operated 7,539 towers and in-building sites at
June 30, 2003, as compared to 7,994 towers and in-building sites at June 30,
2002.

Revenues from broadcast services decreased to $8.2 million for the six
months ended June 30, 2003 compared to $12.7 million in the six months ended
June 30, 2002. The decrease was primarily due to decreased demand for broadcast
services.

Costs
of operations decreased to $59.6 million for the six months ended
June 30, 2003 from $62.6 million for the six months ended
June 30, 2002. Costs of operations for site leasing decreased to
$51.7 million for the six months ended June 30, 2003 from $52.2
million for the six months ended June 30, 2002. Costs
of operations for site leasing as a percentage of site leasing revenues
decreased to 33.5% for the six months ended June 30, 2003 from 38.5% for the
six months ended June 30, 2002. The decrease was primarily due to increased
revenues generated from new tenants on existing towers. As our site leasing
operations mature we expect that additional tenants on towers will generate
increases in our margins for site leasing and in cash flow because a
significant percentage of tower operating costs are fixed and do not increase
with additional tenants.

Costs of operations for
broadcast services decreased to $7.9 million for
the six months ended June 30, 2003 from $10.4 million for the
six months ended June 30, 2002. Costs of operations for broadcast services as a percentage of broadcast
services revenues increased to 96.3% for the six months ended June 30, 2003
from 81.8% for the six months ended June 30, 2002, primarily due to lower
revenue volumes in 2003.

Selling, general and administrative expenses decreased to $25.6 million
for the six months ended June 30, 2003 from $31.0 million for the six months
ended June 30, 2002. Selling, general and administrative expenses for site
leasing decreased to $24.3 million for the six months ended June 30, 2003 from
$29.1 million for the six months ended June 30, 2002. Selling, general and
administrative expenses for site leasing as a percentage of site leasing
revenues decreased to 15.8% for the six months ended June 30, 2003 from 21.4%
for the six months ended June 30, 2002. Selling, general and administrative
expenses for site leasing decreased in amount and as a percentage of site
leasing revenues as a result of significant cost cutting measures implemented
in the second half of 2002.

Selling, general and administrative expenses for broadcast services
decreased to $1.3 million for the six months ended June 30, 2003 from $1.9
million for the six months ended June 30, 2002. Selling, general and
administrative expenses for broadcast services as a percentage of broadcast
services revenues were 15.1% for both the six months ended June 30, 2003 and
the six months ended June 30, 2002.

Depreciation, amortization and accretion expenses decreased to $58.5
million for the six months ended June 30, 2003 from $95.3 million for the six
months ended June 30, 2002. The decrease was primarily the result of the
implementation of fresh start accounting which reduced the depreciable bases of
property and equipment by $957.2 million, resulting in decreased depreciation
expense, offset by an increase in

24



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##### 



amortization expense relating to customer contracts and
an increase in accretion of the asset retirement obligation.

In May 2002, we announced that we would terminate our build-to-suit
programs with Cingular and other carriers and implement other cost-cutting
measures as a part of the curtailment of tower development activities. As a
result of these actions, we recorded restructuring charges of $24.3 million. Of
this amount, $16.4 million was related to the write-off of work in progress
related to sites in development that are to be terminated, $3.2 million was
related to the costs of closing offices and $4.7 million was related to the
costs of employee severance. In addition, we recorded a non-recurring
impairment charge of $4.3 million to write-down the carrying value of 21 towers
that are not marketable. The charge was based on the estimated discounted cash
flows of the towers.

Interest income increased to $0.6 million for the six months ended June
30, 2003 from $0.4 million in the six months ended June 30, 2002 due to higher
cash balances on hand. Interest expense decreased to $32.6 million during the
six months ended June 30, 2003 from $120.5 million for the six months ended
June 30, 2002. The decrease was due to the extinguishment of the Liabilities
Subject to Compromise and a reduction of amounts outstanding under our credit
facility, offset by increases in interest expense as a result of the issuance
of the 81⁄4% Senior Notes due 2010 and writeoffs of $8.2 million of debt
issuance costs resulting from prepayments of amounts outstanding under our
credit facility.

On February 10, 2003, we emerged from bankruptcy and the holders of the
Liabilities Subject to Compromise received their pro rata share of 23.75
million shares of New Common Stock in exchange for their notes. The excess of
the carrying value of the Liabilities Subject to Compromise, net of the related
debt issuance costs, over the reorganization value used in adopting fresh start
accounting was recorded as a gain on debt discharge of $1.03 billion.

Other income (expense) was a net expense of $3.6 million in the six months
ended June 30, 2003. This amount consisted primarily of $1.6 million of loss on
sale of assets, $0.6 million related to losses from investments in affiliates
accounted for under the equity method, and $0.6 million related to the
writedown of our interest rate cap to fair value. Other income (expense) was a
net expense of $11.2 million in the six months ended June 30, 2002. Of this
amount, $9.3 million was related to expenses associated with the proposed debt
tender and exchange offers, $0.1 million related to losses from investments in
affiliates accounted for under the equity method and $1.8 million was related
to losses on sale of assets.

Loss on disposal of discontinued segment was $0.6 million in the six
months ended June 30, 2003. This amount consisted of the settlement of a
disputed item related to the disposal of our network services business. This
segment was sold on December 31, 2002.

Loss from operations of discontinued segment was $2.8 million in the six
months ended June 30, 2002. This segment was sold on December 31, 2002.

Liquidity and Capital Resources

SpectraSite, Inc. is a holding company whose only significant asset is the
outstanding capital stock of its subsidiary, SpectraSite Communications.
SpectraSites only source of cash to pay interest on and principal of our
indebtedness is distributions from SpectraSite Communications.

Cash Flows

For the six months ended June 30, 2003, cash provided by operating
activities was $34.4 million compared to cash used in operating activities of
$15.7 million in the six months ended June 30, 2002. The change is primarily
attributable to decreased interest payments, decreased depreciation expense,
decreased accounts receivable and increased accounts payable.

For the six months ended June 30, 2003, cash provided by investing
activities was $63.0 million compared to cash used in investing activities of
$59.3 million for the six months ended June 30, 2002. Investing activities for
the six months ended June 30, 2003 consisted primarily of proceeds received
from the sale of the 545 SBC towers of $81.0 million. In addition, we invested
$18.2 million and $58.6 million in purchases of property and equipment and
acquisitions, primarily related to the acquisition and construction of
communications towers, in the six months ended June 30, 2003 and 2002,
respectively.

In the six months ended June 30, 2003, cash used in financing activities
was $119.6 million compared to cash provided by financing activities of $88.8
million in the six months ended June 30, 2002. Cash used in financing
activities for the six months ended June 30, 2003 consisted primarily of $200.0
million in proceeds from the issuance of our 81⁄4% Senior Notes Due 2010 and
$1.6 million in proceeds from the issuance of common stock, offset by $303.0
million of payments on our credit facility, payments on capital leases of $11.2 million,

25



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which includes the prepayment of a
capital lease in connection with the exercise of our purchase option on our
corporate headquarters, and $7.0 million in debt issuance costs related to the
Senior Notes. The cash provided by financing activities in the six months ended
June 30, 2002 was primarily attributable to $90.0 million of draws on our
credit facility.

Financing Transactions

On May 21, 2003, we issued $200.0 million aggregate principal amount of
81⁄4% Senior Notes due 2010 for proceeds of $194.5 million, net of debt
issuance costs. Semi-annual interest payments for the 81⁄4% Senior Notes are
due on each May 15 and November 15 beginning on November 15, 2003. We are
required to comply with certain covenants under the terms of the 81⁄4% Senior
Notes that restrict our ability to incur additional indebtedness and make
certain payments, among other covenants.

Communications is party to an amended and restated credit facility
totaling $680.0 million. The credit facility includes a $200.0 million
revolving credit facility, which may be drawn at any time, subject to the
satisfaction of certain conditions precedent. The amount available will be
reduced (and, if necessary, any amounts outstanding must be repaid) in
quarterly installments beginning on September 30, 2005 and ending on June 30,
2007. The credit facility also includes a $204.8 million multiple draw term
loan that is fully drawn and which must be repaid in quarterly installments
beginning on March 31, 2006 and ending on June 30, 2007 and a $275.2 million
term loan that is fully drawn and which must be repaid in quarterly
installments beginning on September 30, 2007 and ending on December 31, 2007.

With the proceeds of the sale of 545 towers to Cingular, Communications
repaid $31.4 million of the multiple draw term loan and $42.1 million of the
term loan on February 11, 2003. In addition, Communications repaid $1.1 million
of the multiple draw term loan and $1.4 million of the term loan on February
19, 2003. In connection with these repayments, Communications wrote off $1.6
million in debt issuance costs. This charge is included in interest expense in
the unaudited condensed consolidated statement of operations.

On May 14, 2003, Communications amended its credit facility to reduce the
unused $300.0 million commitment under the revolving credit facility by $100.0
million in exchange for moderately increasing the ratios in its leverage
covenant in future periods. In connection with this reduction, Communications
wrote off $2.0 million in debt issuance costs. This charge is included in
interest expense in the unaudited condensed consolidated statement of
operations.

With the proceeds from the issuance of the 81⁄4% Senior Notes Due 2010,
Communications repaid $83.0 million of the multiple draw term loan and $111.5
million of the term loan on May 21, 2003. In addition, Communications repaid
$1.1 million of the multiple draw term loan and $1.4 million of the term loan
on June 24, 2003 and $12.8 million of the multiple draw term loan and $17.2
million of the term loan on June 30, 2003. In connection with these
repayments, Communications wrote off $4.6 million in debt issuance costs. This
charge is included in interest expense in the unaudited condensed consolidated
statement of operations.

As of June 30, 2003, Communications has $480.0 million outstanding under
the credit facility. The remaining $200.0 million under the credit facility was
undrawn. Under the terms of the credit facility, the Company could borrow
approximately $193.7 million under the revolving credit facility as of June 30,
2003 while remaining in compliance with the applicable covenants.

Prior to February 10, 2003, the revolving credit loans and the multiple
draw term loan bore interest, at Communications option, at either Canadian
Imperial Bank of Commerces base rate plus an applicable margin of 2.50% per
annum or the Eurodollar rate plus an applicable margin of 3.75% per annum.
After February 10, 2003, the revolving credit loans and the multiple draw term
loans bear interest, at Communications option, at either Canadian Imperial
Bank of Commerces base rate plus an applicable margin ranging from 2.00% to
1.00% per annum or the Eurodollar rate plus an applicable margin ranging from
3.25% to 2.25% per annum, depending on Communications leverage ratio at the
end of the preceding fiscal quarter.

Prior to February 10, 2003, the term loan bore interest, at
Communications option, at either Canadian Imperial Bank of Commerces base
rate plus 3.25% per annum or the Eurodollar rate plus 4.50% per annum. After
February 10, 2003, the term loan bears interest, at Communications option, at
either Canadian Imperial Bank of Commerces base rate plus 2.75% per annum or
the Eurodollar rate plus 4.00% per annum.

Communications is required to pay a commitment fee of between 1.375% and
0.500% per annum in respect of the undrawn portions of the revolving credit
facility, depending on the undrawn amount. Communications may be required to
prepay the credit facility in part upon the occurrence of certain events, such
as a sale of assets, the incurrence of certain additional indebtedness, certain
changes to the SBC transaction or the generation of excess cash flow.

26



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SpectraSite and each of Communications domestic subsidiaries have
guaranteed the obligations under the credit facility. The credit facility is
further secured by substantially all the tangible and intangible assets of
Communications and its domestic subsidiaries, a pledge of all of the capital
stock of Communications and its domestic subsidiaries and 66% of the capital
stock of Communications foreign subsidiaries. The credit facility contains a
number of covenants that, among other things, restrict Communications ability
to incur additional indebtedness; create liens on assets; make investments or
acquisitions or engage in mergers or consolidations; dispose of assets; enter
into new lines of business; engage in certain transactions with affiliates; and
pay dividends or make capital distributions. In addition, the credit facility
requires compliance with certain financial covenants, including a requirement
that Communications and its subsidiaries, on a consolidated basis, maintain a
maximum ratio of total debt to annualized EBITDA (as defined in the credit
facility), a minimum interest coverage ratio and a minimum fixed charge
coverage ratio.

In February 2003, we entered into an interest rate cap agreement in order
to limit exposure to fluctuations in interest rates on our variable rate credit
facility. This transaction is designated as a fair value hedge. Accordingly,
gains and losses from the change in the fair value of this instrument are
recognized in other income and expense. As of June 30, 2003, the carrying
amount and fair value of this instrument was $0.2 million and is included in
Other Assets in the unaudited condensed consolidated financial statements.

Liquidity and Commitments

We had cash and cash equivalents of $58.8 million at June 30, 2003. We
also had $480.0 million outstanding under our credit facility at that date. The
remaining $200.0 million under the credit facility was undrawn. The weighted
average interest rate on outstanding borrowings under the credit facility as of
June 30, 2003 was 4.83%. Our ability to borrow under the credit facility is
limited by the financial covenants regarding the total debt to annualized
EBITDA (as defined in the credit facility) and interest and fixed charge
coverage ratios of SpectraSite Communications and its subsidiaries. Under the
terms of the credit facility, we could borrow approximately $193.7 million
under the revolving credit facility as of June 30, 2003 while remaining in
compliance with these covenants. Our ability to borrow and use cash under the
credit facility financial covenants will increase or decrease as our annualized
EBITDA increases or decreases.

Our ability to fund capital expenditures, make scheduled payments of
principal or pay interest on our debt obligations and our ability to refinance
any such debt obligations will depend on our future performance, including our
ability to generate cash flow from operations, which, to a certain extent,
depends on the demand for wireless services, developments in competing
technologies and our ability to add new tenants, as well as general economic,
financial, competitive, legislative, regulatory and other factors, many of
which are beyond our control. While we have taken steps to reduce our capital
commitments, we are contractually obligated to purchase 600 towers from SBC
from May 2003 through August 2004. These commitments will require approximately
$78 million in each of 2003 and 2004. In addition, we will continue to make
capital expenditures to improve our existing towers and to install new
in-building neutral host distributed antenna systems. We believe that cash flow
from operations, available cash on hand and anticipated borrowings under our
credit facility will be sufficient to fund our capital expenditures and other
currently anticipated cash needs for the foreseeable future. However, if we
make additional acquisitions or pursue other opportunities or if our estimates
prove inaccurate, we may seek additional sources of debt or equity capital or
reduce the scope of tower construction and acquisition activity. We currently
anticipate that in order to pay the principal of our outstanding credit
facility and senior notes upon a change of control, as defined, we will be
required to adopt one or more alternatives, such as refinancing our
indebtedness or selling our equity securities or the equity securities or
assets of our subsidiaries. We cannot assure you that we will generate
sufficient cash flow from operations or that future borrowings or equity or
debt financings will be available on terms acceptable to us, in amounts
sufficient to service our indebtedness and make anticipated capital
expenditures.

The following table provides a summary of our material debt, lease and
other contractual commitments as of June 30, 2003.

|                                   |  |                        |           |        |  |           |         |           |  |               |         |  |  |   |         |  |  |   |         | 
|---------------------------------- |  | ---------------------- | --------- | ------ |  | --------- | ------- | --------- |  | ------------- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                   |  | Payments Due by Period
|                                   |  |                       
|                                   |  |                        |           |        |  | Less than |         |           |  |               |         |  |  |   |         |  |  |  
|Contractual Obligations            |  | Total                  |           | 1 year |  | 1-3 years |         | 4-5 years |  | After 5 years
|                                   |  |                        |           |        |  |           |         |           |  |              
|                                   |  | (In thousands)        
|Credit Facility                    |  | $                      | 479,955   |        |  | $         |        |           |  | $             | 30,137  |  |  | $ | 449,818 |  |  | $ |        | 
|Senior Notes                       |  |                        | 200,000   |        |  |           |        |           |  |               |        |  |  |   |        |  |  |   | 200,000 | 
|Capital Lease Payments             |  |                        | 931       |        |  |           | 704     |           |  |               | 227     |  |  |   |        |  |  |   |        | 
|Operating Leases Payments          |  |                        | 297,891   |        |  |           | 63,369  |           |  |               | 97,210  |  |  |   | 49,326  |  |  |   | 87,986  | 
|SBC Tower Purchase Commitment(1)   |  |                        | 141,960   |        |  |           | 104,000 |           |  |               | 37,960  |  |  |   |        |  |  |   |        | 
|                                   |  |                        |           |        |  |           |         |           |  |               |         |  |  |   |         |  |  |   |         | 
|Total Contractual Cash Obligations |  | $                      | 1,120,737 |        |  | $         | 168,073 |           |  | $             | 165,534 |  |  | $ | 499,144 |  |  | $ | 287,986 | 
|                                   |  |                        |           |        |  |           |         |           |  |               |         |  |  |   |         |  |  |   |         | 



---

|(1) |  | Based on the estimated average purchase price of towers to be
acquired from SBC.
|--- |  | --------------------------------------------------------------------------------

27



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In addition, we had standby letters of credit of $6.3 million and
performance bonds of $5.5 million outstanding at June 30, 2003, most of which
expire within one year.

Non-GAAP Financial Measures

EBITDA is provided because it is a measure commonly used in the
communications site industry as a measure of a companys operating performance.
We use EBITDA to compare our operating performance with that of our
competitors. EBITDA is not a measurement of financial performance under
generally accepted accounting principles and should not be considered an
alternative to net income as a measure of performance or to cash flow as a
measure of liquidity. Although EBITDA is not necessarily comparable with
similarly titled measures for other companies, we believe that EBITDA can
assist in comparing company performance on a consistent basis without regard to
non-cash compensation charges and depreciation, amortization and accretion
expenses, which may vary significantly depending on accounting methods where
acquisitions are involved or non-operating factors such as historical cost
bases. When evaluating EBITDA, investors should consider, among other factors:



| |  |  | increasing or decreasing trends in EBITDA,                     
| | - |  | ---------------------------------------------------------------
|
| |  |  | whether EBITDA has remained at positive levels historically and
|
| |  |  | how EBITDA compares to levels of debt and interest expense.    



| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | EBITDA for the three and six months ended June 30, 2003 and 2002 was
calculated as follows (in thousands):

|          |                                                                         |                               |        |                |   |               |          |               |   |               |         |            |         |   |          |         |   | 
|--------- | ----------------------------------------------------------------------- | ----------------------------- | ------ | -------------- | - | ------------- | -------- | ------------- | - | ------------- | ------- | ---------- | ------- | - | -------- | ------- | - | 
|          |                                                                         |                               |        | Three Months   |   | Three Months  |          | Six Months    |   | Six Months   
|          |                                                                         |                               |        | Ended          |   | Ended         |          | Ended         |   | Ended        
|          |                                                                         |                               |        | June 30, 2003  |   | June 30, 2002 |          | June 30, 2003 |   | June 30, 2002
|          |                                                                         |                               |        |                |   |               |          |               |   |              
|          |                                                                         |                               |        | (In
thousands)
|Net
loss  |                                                                         | $                             | (7,574 | )              |   | $             | (127,568 | )             |   | $             | 335,704 |            |         | $ | (580,099 | )      
|Add/Less: |                                                                         |                               |        |                |   |               |          |               |   |               |         |            |         |   |          |        
|          | Depreciation, amortization
and accretion expenses                       |                               |        | 25,626         |   |               |          | 50,625        |   |               |         | 58,527     |         |   |          | 95,263  |  
|          | Non-cash compensation charges                                           |                               |        |               |   |               |          | 291           |   |               |         |           |         |   |          | 580     |  
|          | Interest
income                                                         |                               |        | (279           | ) |               |          | (293          | ) |               |         | (633       | )       |   |          | (377    | )
|          | Interest
expense                                                        |                               |        | 18,604         |   |               |          | 61,795        |   |               |         | 32,586     |         |   |          | 120,492 |  
|          | Gain
on debt discharge                                                  |                               |        |               |   |               |          |              |   |               |         | (1,034,764 | )       |   |          |        |  
|          | Other
expense                                                           |                               |        | 1,841          |   |               |          | 10,795        |   |               |         | 3,563      |         |   |          | 11,182  |  
|          | Income
tax expense (benefit)                                            |                               |        | 206            |   |               |          | (18           | ) |               |         | 813        |         |   |          | 143     |  
|          | Reorganization
items:                                                   |                               |        |                |   |               |          |               |   |               |         |            |         |   |          |         |  
|          |                                                                         | Adjust
accounts to fair value |        |                |  |               |          |               |  |               |         |            | 644,688 |   |          |         |  | 
|          |                                                                         | Professional
and other fees   |        |                |  |               |          |               |  |               |         |            | 23,894  |   |          |         |  | 
|          | Loss
from operations of discontinued segment, net of income tax expense |                               |        |               |   |               |          | 4,797         |   |               |         |           |         |   |          | 2,785   |  
|          | Loss
on disposal of discontinued segment                                |                               |        | 596            |   |               |          |              |   |               |         | 596        |         |   |          |        |  
|          | Cumulative
effect of change in accounting principle                     |                               |        |               |   |               |          |              |   |               |         | 12,236     |         |   |          | 376,753 |  
|          |                                                                         |                               |        |                |   |               |          |               |   |               |         |            |         |   |          |         |  
|EBITDA    |                                                                         | $                             | 39,020 |                |   | $             | 424      |               |   | $             | 77,210  |            |         | $ | 26,722   |        
|          |                                                                         |                               |        |                |   |               |          |               |   |               |         |            |         |   |          |         |  

As
discussed in note 8 to our unaudited condensed consolidated financial
statements, the measurement of profit or loss currently used by management to evaluate
our results of operations and our operating segments is earnings before
interest, taxes, depreciation and amortization, as adjusted (Adjusted
EBITDA). We define Adjusted EBITDA as operating income (loss) before
depreciation, amortization and accretion expenses, restructuring and
non-recurring charges and non-cash compensation charges. Adjusted EBITDA is
not intended as an alternative measure of operating results or cash flow from
operations (as determined in accordance with generally accepted accounting
principles), and our measure of Adjusted EBITDA may not be comparable to
similarly titled measures of other companies. A reconciliation of Adjusted
EBITDA to income (loss) from continuing operations before income taxes for the
broadcast services division for the three and six months ended June 30, 2003
and 2002 is as follows (in thousands):

|                                                             |  |               |      |               |  |               |        |               |  |   |        |   |  |   |        |  
|------------------------------------------------------------ |  | ------------- | ---- | ------------- |  | ------------- | ------ | ------------- |  | - | ------ | - |  | - | ------ | -
|                                                             |  | Reorganized   |      | Predecessor   |  | Reorganized   |        | Predecessor  
|                                                             |  | Company       |      | Company       |  | Company       |        | Company      
|                                                             |  | Three Months  |      | Three Months  |  | Six Months    |        | Six Months   
|                                                             |  | Ended         |      | Ended         |  | Ended         |        | Ended        
|                                                             |  | June 30, 2003 |      | June 30, 2002 |  | June 30, 2003 |        | June 30, 2002
|                                                             |  |               |      |               |  |               |        |              
|Income (loss) from continuing operations before
income taxes |  | $             | (902 | )             |  | $             | (1,170 | )             |  | $ | (1,521 | ) |  | $ | (1,706 | )
|Add: Depreciation, amortization and accretion expenses       |  |               | 267  |               |  |               | 440    |               |  |   | 586    |   |  |   | 911    |  
|Add: Restructuring and non-recurring charges                 |  |               |     |               |  |               | 1,176  |               |  |   |       |   |  |   | 1,176  |  
|Less: Other income                                           |  |               |     |               |  |               | (109   | )             |  |   |       |   |  |   |       |  
|                                                             |  |               |      |               |  |               |        |               |  |   |        |   |  |   |        |  
|Adjusted EBITDA                                              |  | $             | (635 | )             |  | $             | 337    |               |  | $ | (935   | ) |  | $ | 381    |  
|                                                             |  |               |      |               |  |               |        |               |  |   |        |   |  |   |        |  

Free cash flow (deficit) consists of net cash provided by operating
activities less purchases of property and equipment. Free cash flow (deficit)
is provided because it is a measure commonly used in the communications site
industry as a measure of a companys ability to generate cash from operations.
Free cash flow (deficit) is not a measurement of financial performance under
generally accepted accounting principles and should not be considered an
alternative to net income or cash flows provided by (used in) operating
activities as a measure of performance, cash flows or liquidity.
Although free cash flow
(deficit) is not necessarily comparable with similarly titled measures for other

28



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companies, we believe that free cash
flow (deficit) can assist in comparing company performance on a consistent
basis. Free cash flow (deficit) for the three and six months ended June 30,
2003 and 2002 was calculated as follows:

|                                                     |  |               |        |               |  |                |         |               |  |   |        |   |  |   |         |  
|---------------------------------------------------- |  | ------------- | ------ | ------------- |  | -------------- | ------- | ------------- |  | - | ------ | - |  | - | ------- | -
|                                                     |  | Three Months  |        | Three Months  |  | Six Months     |         | Six Months   
|                                                     |  | Ended         |        | Ended         |  | Ended          |         | Ended        
|                                                     |  | June 30, 2003 |        | June 30, 2002 |  | June 30, 2003  |         | June 30, 2002
|                                                     |  |               |        |               |  |                |         |              
|                                                     |  |               |        |               |  | (In thousands)
|Net cash provided by (used in ) operating activities |  | $             | 16,623 |               |  | $              | (19,890 | )             |  | $ | 34,442 |   |  | $ | (15,688 | )
|Less: Purchases of property and equipment            |  |               | (3,926 | )             |  |                | (19,579 | )             |  |   | (8,918 | ) |  |   | (48,530 | )
|                                                     |  |               |        |               |  |                |         |               |  |   |        |   |  |   |         |  
|Free cash flow (deficit)                             |  | $             | 12,697 |               |  | $              | (39,469 | )             |  | $ | 25,524 |   |  | $ | (64,218 | )
|                                                     |  |               |        |               |  |                |         |               |  |   |        |   |  |   |         |  

Same tower revenue and same tower cash flow are based on trailing
twelve-months site leasing revenue (exclusive of fee revenue) and site leasing
costs of operations, excluding depreciation, amortization and accretion
expenses on the towers that we owned or operated as of June 30, 2002 and 2003.
Same tower revenue and same tower cash flow are provided because they are
measures commonly used in the communications site industry as a measure of a
companys operating performance. Same tower revenue and same tower cash flow
are not measurements of financial performance under generally accepted
accounting principles and should not be considered alternatives to net income
or cash flows provided by (used in) operating activities as a measure of
performance, cash flows or liquidity. Although same tower revenue and same tower cash
flow are not necessarily comparable with similarly titled measures for other
companies, we believe that same tower revenue and same tower cash flow can
assist in comparing company performance on a consistent basis. Same tower
revenue and same tower cash flow on the 7,420 towers that we owned or operated
as of June 30, 2002 and 2003 for the three months ended June 30, 2003 and 2002
were calculated as follows:

|                                                                                                                         |  |                    |        |                    |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------ |  | ------------------ | ------ | ------------------ |  | - | ------ | -
|                                                                                                                         |  | Three Months Ended |        | Three Months Ended
|                                                                                                                         |  | June 30, 2003      |        | June 30, 2002     
|                                                                                                                         |  |                    |        |                   
|                                                                                                                         |  | (In thousands)    
|Site leasing revenues                                                                                                    |  | $                  | 77,498 |                    |  | $ | 69,633 |  
|Less: Fee revenues included in site leasing revenues                                                                     |  |                    | (1,885 | )                  |  |   | (896   | )
|Less: Revenue from towers not owned as of June 30,
2002 and 2003 and managed or marketed towers                          |  |                    | (3,767 | )                  |  |   | (6,257 | )
|                                                                                                                         |  |                    |        |                    |  |   |        |  
|Same tower site leasing revenues on 7,420 towers                                                                         |  | $                  | 71,846 |                    |  | $ | 62,480 |  
|                                                                                                                         |  |                    |        |                    |  |   |        |  
|Site leasing costs of operations, excluding
depreciation, amortization and accretion expenses                            |  | $                  | 25,764 |                    |  | $ | 26,705 |  
|Less: Site leasing costs of operations for towers
not owned as of June 30, 2002 and 2003 and managed
or marketed towers  |  |                    | (461   | )                  |  |   | (2,549 | )
|                                                                                                                         |  |                    |        |                    |  |   |        |  
|Same tower site leasing costs of operations,
excluding depreciation, amortization and accretion
expenses on 7,420 towers |  |                    | 25,303 |                    |  |   | 24,156 |  
|                                                                                                                         |  |                    |        |                    |  |   |        |  
|Same tower cash flow on 7,420 towers                                                                                     |  | $                  | 46,543 |                    |  | $ | 38,324 |  
|                                                                                                                         |  |                    |        |                    |  |   |        |  

Description of Critical Accounting Policies

The preparation of our financial statements in conformity with accounting
principles generally accepted in the United States requires us to make
estimates and judgments that affect our reported amounts of assets and
liabilities, revenues and expenses. We have identified the following critical
accounting policies that affect the more significant estimates and judgments
used in the preparation of our consolidated financial statements. On an
on-going basis, we evaluate our estimates, including those related to the
matters described below. These estimates are based on the information that is
currently available to us and on various other assumptions that we believe to
be reasonable under the circumstances. Actual results could vary from those
estimates under different assumptions or conditions.

Revenue Recognition

Site leasing revenues are recognized when earned based on lease
agreements. Rental increases based on fixed escalation clauses that are
included in certain lease agreements are recognized on a straight-line basis
over the term of the lease. Revenues from fees, such as structural analysis
fees and site inspection fees, are recognized upon delivery of the related
product or service.

Broadcast services revenues related to construction activities are derived
from service contracts with customers that provide for billing on a time and
materials or fixed price basis. For time and material contracts, revenues are
recognized as services are performed.

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For fixed price contracts, we recognize revenue and profit as work
progresses using the percentage-of-completion method of accounting, which
relies on estimates of total expected contract revenues and costs. We follow
this method because reasonably dependable estimates of the revenue and costs
applicable to various stages of a contract can be made. Because the financial
reporting of these contracts depends on estimates, which are assessed
continually during the term of the contract, recognized revenues and profit are
subject to revisions as the contract progresses to completion. Revisions in
profit estimates are reflected in the period in which the facts that give rise
to the revision become known. Accordingly, favorable changes in estimates
result in additional revenue and profit recognition, and unfavorable changes in
estimates result in the reversal of previously recognized revenue and profits.
Provisions for estimated losses on uncompleted contracts are made in the period
in which such losses are determined.

Allowance for Uncollectible Accounts

We evaluate the collectibility of our accounts receivable based on a
combination of factors. In circumstances where we are aware that a specific
customers ability to meet its financial obligations to us is in question
(e.g., bankruptcy filings, substantial down-grading of credit ratings), we
record a specific allowance against amounts due to reduce the net recognized
receivable from that customer to the amount we reasonably believe will be
collected. For all other customers, we reserve a percentage of the remaining
outstanding accounts receivable balance based on a review of the aging of
customer balances, industry experience and the current economic environment. If
circumstances change (e.g., higher than expected defaults or an unexpected
material adverse change in one or more significant customers ability to meet
its financial obligations to us), our estimates of the recoverability of
amounts due us could be reduced by a material amount.

Property and Equipment

Property and equipment built, purchased or leased under long-term
leasehold agreements are recorded at cost and depreciated over their estimated
useful lives. We capitalize costs incurred in bringing property and equipment
to an operational state. Costs clearly associated with the acquisition,
development and construction of property and equipment are capitalized as a
cost of the assets. Indirect costs that relate to several assets are
capitalized and allocated to the assets to which the costs relate. Indirect
costs that do not clearly relate to projects under development or construction
are charged to expense as incurred. Estimates and cost allocations are reviewed
at the end of each financial reporting period. Costs are revised and
reallocated as necessary for material changes on the basis of current
estimates. Depreciation on property and equipment excluding towers is computed
using the straight-line method over the estimated useful lives of the assets
ranging from three to fifteen years. Depreciation on towers is computed using
the straight-line method over the estimated useful lives of 15 years for
wireless towers and 30 years for broadcast towers. Amortization of assets
recorded under capital leases is included in depreciation.

Goodwill

The excess of the purchase price over the fair value of net assets
acquired in purchase business combinations has been recorded as goodwill.
Goodwill is evaluated for impairment on an annual basis or as impairment
indicators are identified, in accordance with Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets. On an ongoing basis,
we assess the recoverability of goodwill by determining the ability of the
specific assets acquired to generate future cash flows sufficient to recover
the unamortized goodwill over the remaining useful life. We estimate future
cash flows based on the current performance of the acquired assets and our
business plan for those assets. Changes in business conditions, major customers
or other factors could result in changes in those estimates. Goodwill
determined to be unrecoverable based on future cash flows is written-off in the
period in which such determination is made.

Impairment of Long-lived Assets

We evaluate long-lived assets, such as property and equipment, goodwill
and purchased intangible assets, for impairment whenever events or changes in
circumstances indicate the carrying value of an asset may not be recoverable.
An impairment loss is recognized when estimated undiscounted future cash flows
expected to result from the use of the asset plus net proceeds expected from
disposition of the asset (if any) are less than the carrying value of the
asset. When an impairment is identified, the carrying amount of the asset is
reduced to its estimated fair value. Effective January 1, 2002, potential
impairment of long-lived assets other than goodwill and purchased intangible
assets with indefinite useful lives is evaluated using the guidance provided by
Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-lived Assets.

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Derivative Financial Instruments

Derivative financial instruments are accounted for in accordance with
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities(SFAS 133), as amended by Statement of
Financial Accounting Standards No. 138, Accounting for Certain Instruments and
Certain Hedging Activities(SFAS 138) and as further amended by Statement of
Financial Accounting Standards No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. All derivative financial
instruments are recorded in the consolidated financial statements at fair
value. Changes in the fair values of derivative financial instruments are
either recognized in earnings or in stockholders equity as a component of
other comprehensive income depending on whether the derivative financial
instrument qualifies for hedge accounting as defined by SFAS 133. Changes in
fair values of derivatives not qualifying for hedge accounting are reported in
earnings as they occur.

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Risk Factors

The following risk factors should be read carefully in connection with
evaluating our business and the forward-looking statements contained in this
report and other statements we make or our representatives make from time to
time. Any of the following risks could materially adversely affect our
business, our operating results, our financial condition and the actual outcome
of matters as to which forward-looking statements are made in this report.

Risks Relating to Our Business



| |  | We recently emerged from a chapter 11 bankruptcy reorganization and have a
history of losses.
| |  | ---------------------------------------------------------------------------------------------

On November 15, 2002, we filed a voluntary petition for relief under
chapter 11 of the Bankruptcy Code. We emerged from bankruptcy on February 10,
2003. We incurred net losses of approximately $157.6 million in 2000, $654.8
million in 2001 and $775.0 million in 2002. We adopted fresh start accounting
as of January 31, 2003 and our emergence from chapter 11 resulted in a new
reporting entity. The net effect of all fresh start accounting adjustments
resulted in a charge of $644.7 million, which is reflected in the statement of
operations for the one month ended January 31, 2003. We cannot assure you that
we will grow or achieve profitability in the near future, or at all.



| |  | Our historical financial information is not comparable to our current
financial condition and results of operations.
| |  | --------------------------------------------------------------------------------------------------------------------

As a result of our emergence from bankruptcy, we are operating our
business with a new capital structure. We also are subject to the fresh start
accounting prescribed by generally accepted accounting principles, and our
balance sheet as of January 31, 2003 reflects the application of these rules.
Accordingly, our financial condition and results of operations will not be
comparable to the financial condition and results of operations reflected in
our historical financial statements, which may make it difficult for you to
assess our future prospects based on our historical performance.



| |  | The financial and operating difficulties in the wireless telecommunications
sector may negatively affect our customers and our company.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------

Recently, the wireless telecommunications sector has been facing
significant challenges resulting from intense competition and financial
difficulties. As a result, some of our customers face uncertain financial
circumstances. The impact to us could include a reduced demand for
communications sites, higher bad debt expense, lower pricing on new customer
contracts and possible consolidation among our customers. In addition, because
we are considered to operate in the wireless telecommunications sector, we may
also be negatively impacted by limited access to debt and equity capital.



| |  | Our business depends on demand for wireless communications sites and our
ability to secure additional tenants.
| |  | --------------------------------------------------------------------------------------------------------------

Our business depends on demand for communications sites from wireless
service providers, which, in turn, depends on consumer demand for wireless
services. A reduction in demand for communications sites or increased
competition for additional tenants could have a material adverse effect on our
business, financial condition or results of operations. The extent to which
wireless service providers lease communications sites on our towers depends on,
among other things, the level of demand by consumers for wireless services, the
financial condition and access to capital of those providers, the strategy of
providers with respect to owning, leasing or sharing communications sites,
available spectrum and related infrastructure, consolidation among our
customers and potential customers, government regulation of communications
licenses, changes in telecommunications regulations, the characteristics of
each companys technology, and geographic terrain. The demand for
communications sites may decrease significantly or fail to grow from current
levels, which could have a material adverse effect on our business, financial
condition or results of operations.



| |  | Consolidation in the wireless industry could have a negative impact on the
demand for our services.
| |  | ---------------------------------------------------------------------------------------------------

Various wireless service providers, which are our primary existing and
potential customers, could enter into mergers, acquisitions or joint ventures
with each other over time. Consolidation in the wireless industry could have a
negative impact on the demand for our services. Recent regulatory developments
have made consolidation in the wireless industry easier and more likely. Until
recently, cellular and PCS providers were subject to a spectrum aggregation cap
of 45 MHz in any urban geographic area. This rule limited the ability of
wireless carriers to consolidate. In November 2001, the Federal Communications
Commission, or FCC, raised this limit to 55 MHz. On January 1, 2003,

32



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the spectrum cap was eliminated completely in
favor of a case-by-case review of spectrum transactions. The FCC also lifted,
for major metropolitan areas, a previous rule limiting the ownership by a
single entity of interests in both cellular carriers in an overlapping cellular
service area. In addition, in May 2003, the FCC adopted new rules authorizing
spectrum leasing for a variety of wireless radio services. It is possible that
at least some wireless service providers may take advantage of this relaxation
of spectrum and ownership limitations and consolidate their businesses.
Industry consolidation could have a material adverse impact on our business,
financial condition or results of operations.



| |  | The increase in the spectrum available for wireless services may impact
the demand for our communication towers.
| |  | ----------------------------------------------------------------------------------------------------------------

It is expected that additional spectrum for the provision of wireless
services will be made available over the next few years. For example, the FCC
is required to make available for commercial use a portion of the frequency
spectrum currently reserved for government use. Some portion of this spectrum
may be used to create new land mobile services or to expand existing offerings.
Further, the FCC has auctioned or announced plans to auction large blocks of
spectrum that will in the future be used to expand existing wireless networks
and create new or advanced wireless services. This additional spectrum could be
used to replace existing spectrum, and could be deployed in a manner that
reduces the need for communications towers to transmit signals over existing
spectrum. Any increased spectrum could have a material adverse impact on our
business, financial condition or results of operations.



| |  | A significant portion of our revenues depends on Nextel and Cingular.
| |  | ---------------------------------------------------------------------

Nextel (including its affiliates) and Cingular account for a significant
portion of our total revenues. Nextel and Cingular represented approximately
28% and 20%, respectively, of our revenues for 2002 and 29% and 19%,
respectively, of our revenues for the six months ended June 30, 2003. If
Nextel, Cingular or any of the other major wireless carriers were to suffer
financial difficulties or were unwilling or unable to perform their obligations
under their arrangements with us, our business, financial condition or results
of operations could be materially and adversely affected.



| |  | We face significant competition from a variety of sources.
| |  | ----------------------------------------------------------

If we are unable to successfully compete, our business will suffer. We
believe that tower location and capacity, price, quality of service and density
within a geographic market historically have been, and will continue to be, the
most significant competitive factors affecting the site leasing business. We
compete for site leasing tenants with:



| |  |  | wireless service providers that own and operate their own towers and
lease, or may in the future decide to lease, antenna space to other
providers;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | other independent tower operators; and                                                                                                             
|
| |  |  | owners of non-tower antenna sites, including rooftops, water towers and other alternate structures.                                                



| |  | Competing technologies and other service options offer alternatives to
ground-based antenna systems and allow our customers to increase wireless
capacity without increased use of ground-based facilities, both of which could
reduce the demand for our services.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Most types of wireless and broadcast services currently require
ground-based network facilities, including communications sites for
transmission and reception. The development and growth of communications
technologies that do not require ground-based sites could reduce the demand for
space on our towers, as could certain other alternatives.

In particular, the emergence of new technologies that do not require
ground-based antenna sites could have a negative impact on our operations. For
example, the growth in delivery of video, voice and data services by
satellites, which allow communication directly to users terminals without the
use of ground-based facilities, could lessen demand for our services. Low earth
orbit satellite systems provide mobile voice and data services to consumers, as
well as to government and defense industry customers. Other geostationary orbit
satellite systems provide television and Internet access services directly to
home and small office users.

Moreover, the FCC has issued licenses for several additional satellite
systems (including low earth orbit systems) that are intended to provide more
advanced, high-speed data services directly to consumers. Although these
satellite systems are highly capital-intensive,

33



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they compete with land-based wireless communications
systems, thereby reducing the demand for the services that we provide.

Technological developments are also making it possible for carriers to
expand their use of existing facilities to provide service without additional
tower facilities. The increased use by carriers of signal combining and related
technologies, which allow two or more carriers to provide services on different
transmission frequencies using the communications antenna and other facilities
normally used by only one carrier, could reduce the demand for tower-based
broadcast transmissions and antenna space. In addition to sharing transmitters,
carriers are, through joint ventures and other arrangements (such as Cingulars
infrastructure joint ventures with T-Mobile and AT&T Wireless), sharing (or
considering the sharing of) telecommunications infrastructure in ways that
might adversely impact the growth of our business.

In addition, wireless service providers frequently enter into agreements
with competitors allowing them to utilize one anothers wireless communications
facilities to accommodate customers who are out of range of their home
providers services. These roaming agreements may be viewed by wireless service
providers as a superior alternative to leasing space for their own antennas on
communications sites we own.

Any of the conditions and developments described above could reduce demand
for ground-based antenna sites and have a material adverse effect on our
business, financial condition or results of operations.



| |  | We may be unable to modify towers and add new customers as contemplated by
our business plan.
| |  | ---------------------------------------------------------------------------------------------

Our business depends on our ability to modify towers and add new customers
as they expand their tower network infrastructure. Regulatory and other
barriers could adversely affect our ability to modify towers in accordance with
the requirements of our customers, and, as a result, we may not be able to meet
our customers requirements. Our ability to modify towers and add new customers
to towers may be affected by a number of factors beyond our control, including
zoning and local permitting requirements, Federal Aviation Administration, or
FAA, considerations, FCC tower registration procedures, availability of tower
components and construction equipment, availability of skilled construction
personnel, weather conditions and environmental compliance issues. In addition,
because the concern over tower proliferation has grown in recent years, many
communities now restrict tower modifications or delay granting permits required
for adding new tenants.

We may not be able to overcome the barriers to modification or
installation of new customers. Our failure to complete the necessary
modifications could have a material adverse effect on our business, financial
condition or results of operations.



| |  | We may encounter difficulties in integrating acquisitions with our operations,
which could limit our revenue growth and our ability to achieve or sustain
profitability.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We have agreed to complete the sublease of 600 towers from SBC between May
2003 and August 2004. The process of integrating acquired operations into our
existing operations may result in unforeseen operating difficulties, divert
managerial attention or require significant financial resources. These
subleases and other future acquisitions will require us to incur additional
indebtedness and contingent liabilities, which could have a material adverse
effect on our business, financial condition or results of operations.



| |  | A small number of stockholders beneficially own a substantial amount of our
common stock and could significantly affect matters requiring a stockholder
vote.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

As of June 30, 2003, affiliates of Apollo Management V, L.P. owned
approximately 5.6 million shares, or 23.5%, of our common stock and certain
funds managed by Oaktree Capital Management, LLC owned approximately 4.8
million shares, or 20.4%, of our common stock. In addition, each of Apollo and
Oaktree has a representative on our board of directors. As a result, Apollo and
Oaktree are able to exert significant influence over the management and
policies of SpectraSite and may have interests that are different from yours.



| |  | Our business depends on our key personnel.
| |  | ------------------------------------------

Our future success depends to a significant extent on the continued
services of our Chief Executive Officer, Stephen H. Clark, our Chief Operating
Officer, Timothy G. Biltz, and our Chief Financial Officer, David P. Tomick.
Although each of these officers has an employment agreement with SpectraSite,
the loss of any of these key employees would likely have a significantly
detrimental effect on our business.

34



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| |  | Our operations require compliance with and approval from federal, state
and local regulatory authorities.
| |  | ---------------------------------------------------------------------------------------------------------

We are subject to a variety of regulations, including those at the
federal, state and local levels. Both the FCC and the FAA regulate towers and
other sites used for wireless communications transmitters and receivers. These
regulations control the siting, marking, and lighting of towers and generally,
based on the characteristics of the tower, require registration of tower
facilities with the FCC. Wireless and broadcast communications antennas
operating on towers are separately regulated and independently authorized by
the FCC based upon the particular frequency used and the services provided. Any
proposals to construct new communications sites or modify existing
communications sites that could affect air traffic must be filed with and
reviewed by the FAA to ensure that the proposals will not present a hazard to
aviation. Tower owners may have an obligation to mark their towers or install
lighting to conform to FCC and FAA standards and to maintain such marking or
lighting. Tower owners also bear the responsibility for notifying the FAA of
any tower lighting failure. We generally outsource the monitoring of the
lighting of our towers to contractors that specialize in those services.
However, under the FCCs rules, we remain fully liable for the acts or
omissions of our contractors. We generally indemnify our customers against any
failure by us to comply with applicable standards. Failure to comply with
applicable requirements (including as a result of acts or omissions of our
contractors, which may be beyond our control) may lead to monetary forfeitures
or other enforcement actions, as well as civil penalties, contractual liability
and/or tort liability, any of which could have an adverse impact on our
business.

Local regulations and restrictions include building codes and other local
ordinances, zoning restrictions and restrictive covenants imposed by community
developers. These regulations and restrictions vary greatly, but typically
require tower owners to obtain a permit or other approval from local officials
or community standards organizations prior to tower construction and prior to
modifications of towers, including installation of equipment for new customers.
Local regulations can delay or prevent new tower construction or modifications,
thereby limiting our ability to respond to customers demands. In addition,
these regulations increase the costs associated with new tower construction and
modifications. Existing regulatory policies may adversely affect the timing or
cost of new tower construction and modification, and additional regulations may
be adopted that will increase these delays or result in additional costs to us.
These factors could have a material adverse effect on our business, financial
condition or results of operations and on our ability to implement or achieve
our business objectives.

In October 2000, the FCC adopted rules and policies related to
telecommunications service providers access to rooftops, other rights-of-way
and conduits in multi-tenant buildings. The FCC prohibited telecommunications
carriers in commercial settings from entering into new exclusive contracts with
building owners, required utilities, including local exchange carriers, to
afford telecommunications carriers and cable service providers reasonable and
nondiscriminatory access to utility-owned conduits and rights-of-way in
customer buildings, and gave building tenants the same ability to place on
their leased or owned property small satellite dishes for receiving
telecommunications signals that they currently have for receiving video
services.

In June 2003, the FCC issued a Notice of Proposed Rulemaking seeking
comment on a draft agreement between the FCC, the Advisory Council on Historic
Preservation and the National Conference of State Historic Preservation
Officers that would tailor and streamline procedures for review of towers and
other FCC licensed communications facilities under the National Historic
Preservation Act of 1966, or NHPA, and on related revisions to the FCCs
rules. The FCC has indicated that the intent of the agreement and the proposed
rule revisions is to improve compliance with the NHPA and streamline the review
process for construction of towers and FCC licensed communications facilities.
We cannot predict with certainty whether, and if so when, the FCCs proposals
will be adopted, and, if they are, the effect they will have on our business.



| |  | We generally lease or sublease the land under our towers and may not be
able to maintain these leases.
| |  | ------------------------------------------------------------------------------------------------------

Our real property interests relating to towers primarily consist of
leasehold and sub-leasehold interests, private easements and licenses and
easements and rights-of-way granted by governmental entities. A loss of these
interests for any reason, including losses arising from the bankruptcy of a
significant number of our lessors, from the default by a significant number of
our lessors under their mortgage financing or from a challenge to our ownership
interest, would interfere with our ability to conduct our business and generate
revenues. Our ability to protect our rights against persons claiming superior
rights in towers depends on our ability to:



| |  |  | recover under title policies, the policy limits of which may be less
than the purchase price of a particular tower;                                                                                         
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | in the absence of title insurance coverage, recover under title
warranties given by tower sellers, which warranties often terminate
after the expiration of a specific period, typically one to three years;

35



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##### 





| |  |  | recover from landlords under title covenants contained in lease agreements; and                                 
| | - |  | ----------------------------------------------------------------------------------------------------------------
|
| |  |  | obtain so-called non-disturbance agreements from mortgagees and superior lessors of the land under our towers.

Our inability to protect our rights to the land under our towers could
have a material adverse affect on our business, financial condition and results
of operations.



| |  | We are subject to environmental laws that impose liability without regard
to fault.
| |  | -----------------------------------------------------------------------------------

Owners and operators of communications towers are subject to environmental
laws and regulations. These regulations place responsibility on each applicant
to investigate potential environmental and other effects of operations and to
disclose any significant effects in an environmental assessment prior to
constructing a tower or adding a new tenant on a tower. If the FCC determines
that a proposed tower would have a significant environmental impact, then the
FCC would be required to prepare an environmental impact statement. This
regulatory process could be costly and could significantly delay the
registration of a particular tower. In addition, we are subject to
environmental laws that may require investigation and clean up of any
contamination at facilities we own or operate or at third-party waste disposal
sites. These laws could impose liability even if we did not know of, or were
not responsible for, the contamination. Although we believe that we currently
have no material liability under applicable environmental laws, the costs of
complying with existing or future environmental laws, responding to petitions
filed by environmental protection groups, investigating and remediating any
contaminated real property and resolving any related liability could have a
material adverse effect on our business, financial condition or results of
operations.



| |  | Our towers may be damaged by disasters.
| |  | ---------------------------------------

Our towers are subject to risks associated with natural disasters such as
ice and wind storms, tornadoes, hurricanes and earthquakes as well as other
unforeseen damage. We self-insure almost all of our towers against such risks.
A tower accident for which we do not have adequate self-insurance reserves or
are underinsured, or damage to a tower or group of towers, could have a
material adverse effect on our business, financial condition or results of
operations.



| |  | Perceived health risks of radio frequency emissions could impact our
business.
| |  | ------------------------------------------------------------------------------

The wireless service providers that utilize our sites are subject to FCC
requirements and other guidelines relating to radio frequency emissions. FCC
safety guidelines apply to all cellular and personal communications service
hand-held telephones that were authorized by the FCC after August 1, 1996. The
safety guidelines for radio frequency emissions from our sites require us to
undertake safety measures to protect workers whose activities bring them into
proximity with the emitters and to restrict access to our sites by others. If
radio frequency emissions were found harmful, our tenants and possibly we could
face lawsuits claiming damages from such emissions, and demand for wireless
services and new towers, and thus our business, financial condition and results
of operations could be adversely affected. Although we have not been subject to
any claims relating to radio frequency emissions, we cannot assure you that
these claims will not arise in the future.



| |  | Our substantial indebtedness could impair our financial condition.
| |  | ------------------------------------------------------------------

Even after our recent restructuring, we are, and will continue to be,
highly leveraged. As of June 30, 2003, we had $680.2 million of consolidated
debt. Our high level of indebtedness could have important consequences to us.
For example, it could:



| |  |  | increase our vulnerability to general adverse economic and industry conditions;                                                                    
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | limit our ability to obtain additional financing;                                                                                                  
|
| |  |  | require the dedication of a substantial portion of our cash flow from
operations to the payment of principal of, and interest on, our
indebtedness;
|
| |  |  | limit our flexibility in planning for, or reacting to, changes in our business and the industry; and                                               
|
| |  |  | place us at a competitive disadvantage relative to less leveraged competitors.                                                                     

36



---



##### 



Our ability to generate sufficient cash flow from operations to pay the
principal of, and interest on, our indebtedness is uncertain. In particular, we
may not meet our anticipated revenue growth and operating expense targets, and,
as a result, our future debt service obligations, including our obligations on
our senior notes, could exceed cash available to us. Further, we may not be
able to refinance any of our indebtedness on commercially reasonable terms or
at all.

In addition, we may be able to incur significant additional indebtedness
in the future. To the extent new debt is added to our current debt levels, the
substantial leverage risks described above would increase, which could have a
material adverse effect on our business, financial condition or results of
operations.



| |  | Repayment of the principal of our outstanding indebtedness may require
additional financing. We are not certain of the source or availability of any
such financing at this time.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our ability to generate sufficient cash flow from operations to make
scheduled payments on our debt obligations will depend on our future financial
performance, which will be affected by a range of economic, competitive,
regulatory, legislative and business factors, many of which are beyond our
control. In addition, we currently anticipate that, in order to pay the
principal of our outstanding indebtedness or to repay such indebtedness upon a
change of control as defined in the instruments governing our indebtedness, we
may be required to adopt one or more alternatives, such as refinancing our
indebtedness or selling our equity securities or the equity securities or
assets of our subsidiaries. We cannot assure you that we could effect any of
the foregoing alternatives on terms satisfactory to us, that any of the
foregoing alternatives would enable us to pay the interest or principal of our
indebtedness or that any of such alternatives would be permitted by the terms
of our indebtedness then in effect.



| |  | The terms of our credit facility and the indenture relating to our senior
notes may restrict our current and future operations, particularly our ability
to respond to changes in our business or to take certain actions.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our credit facility and the indenture relating to our senior notes
contain, and any future indebtedness of ours would likely contain, a number of
restrictive covenants that impose significant operating and financial
restrictions on us, including restrictions on our ability to, among other
things:



| |  |  | incur additional debt;                                                                                 
| | - |  | -------------------------------------------------------------------------------------------------------
|
| |  |  | pay dividends and make other restricted payments;                                                      
|
| |  |  | create liens;                                                                                          
|
| |  |  | make investments;                                                                                      
|
| |  |  | engage in sales of assets and subsidiary stock;                                                        
|
| |  |  | enter into sale-leaseback transactions;                                                                
|
| |  |  | enter into transactions with affiliates;                                                               
|
| |  |  | transfer all or substantially all of our assets or enter into merger or consolidation transactions; and
|
| |  |  | make capital expenditures.                                                                             

The credit facility also requires us to maintain certain financial ratios.
A failure by us to comply with the covenants or financial ratios contained in
the credit facility could result in an event of default under the facility
which could materially and adversely affect our operating results and our
financial condition. In the event of any default under our credit facility, the
lenders under our credit facility will not be required to lend any additional
amounts to us. The lenders also could elect to declare all borrowings
outstanding, together with accrued and unpaid interest and fees, to be due and
payable, require us to apply all of our available cash to repay these
borrowings or prevent us from making debt service payments on our senior notes,
any of which could result in an event of default under our senior notes. If the
indebtedness under our credit facility or our senior notes were to be
accelerated, there can be no assurance that our assets would be sufficient to
repay this indebtedness in full.

37



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##### 





| |  | We do not intend to pay dividends in the foreseeable future and, because we
are a holding company, we may be unable to pay dividends.
| |  | -------------------------------------------------------------------------------------------------------------------------------------

We have never declared or paid any cash dividends on our common stock.
For the foreseeable future, we intend to retain any earnings to finance the
development and expansion of our business, and we do not anticipate paying any
cash dividends on our common stock. In addition, our credit facility and the
indenture governing our senior notes restrict our ability to pay dividends.
Any future determination to pay dividends will be at the discretion of our
Board of Directors and will be dependent upon then existing conditions,
including our financial condition and results of operations, capital
requirements, contractual restrictions, business prospects and other factors
that the board of directors considers relevant. Furthermore, because we are a
holding company, we depend on the cash flow of our subsidiaries, and
Communications credit facility imposes restrictions on our subsidiaries
ability to distribute cash to us.



| |  | Our stock price may be volatile and your stock may be difficult to sell.
| |  | ------------------------------------------------------------------------

There is a limited public market for our common stock. Shares of our
common stock currently trade on the OTC Bulletin Board. The market price of
our common stock could be subject to wide fluctuations as a result of many
factors, including those listed in this Risk Factors section. As a result of
these factors, it may be difficult to sell any shares of our common stock.

In recent years, the stock market has experienced significant price and
volume fluctuations that are often unrelated to the operating performance of
specific companies. Our market price may fluctuate based on a number of
factors, including:



| |  |  | quarterly variations in our operating results;                                                                                               
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | operating results that vary from the expectations of securities analysts and investors;                                                      
|
| |  |  | changes in expectations as to our future financial performance,
including financial estimates by securities analysts and investors;          
|
| |  |  | announcements of technological innovations or new services by us or
our competitors;                                                         
|
| |  |  | announcements of significant contracts, acquisitions, strategic
partnerships, joint ventures or capital commitments by us or our
competitors;
|
| |  |  | additions or departures of key personnel;                                                                                                    
|
| |  |  | future sales of our common stock;
and                                                                                                        
|
| |  |  | stock market price and volume fluctuations.                                                                                                  

The fluctuations in the market price of our common stock may adversely affect
the trading of our common stock, regardless of our actual operating
performance.



| |  | Substantial sales of our common stock could adversely affect our stock
price.
| |  | -----------------------------------------------------------------------------

Sales of a substantial number of shares of our common stock into the
public market, or the perception that these sales could occur, could adversely
affect our stock price. As of June 30, 2003, we have 23,743,515 shares of
common stock outstanding. We have reserved an additional 67,933 shares of
common stock issuable in connection with further distributions pursuant to our
Plan of Reorganization. As of June 30, 2003, we have also reserved an
additional 2,938,582 shares of common stock for issuance under our stock option
plan and 1,249,970 shares of common stock for issuance upon the exercise of
warrants. All of our outstanding shares of common stock, as well as the shares
of common stock issuable in connection with our emergence from bankruptcy and
upon exercise of outstanding stock options and warrants, are or will be freely
tradable without restriction or further registration under the federal
securities laws, except to the extent they are held by one or our affiliates,
as that term is defined in Rule 144 under the Securities Act of 1933, as
amended. As of June 30, 2003, certain of our stockholders have proposed to
sell 4,500,000 shares of our outstanding common stock in an underwritten public
offering (and an additional 675,000 shares of our common stock if the
underwriters exercise their overallotment option).

38



---



##### 



After
giving effect to the sale of common stock in the proposed offering
(and assuming that the underwriters do
not exercise their over-allotment option), three stockholders holding an
aggregate of approximately 58% of our common stock (including
shares issuable upon the exercise of outstanding options) have the right
(subject to limited conditions) to require us to file registration statements
covering their shares or to include their shares in registration statements
that we may file for ourself or other stockholders. Sales by these
stockholders in a registered public offering would not be subject to the
limitations of Rule 144 under the Securities Act. By exercising their
registration rights and selling a large number of shares, these holders could
cause the price of our common stock to decline.

39



---



##### 



ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We use financial instruments, including fixed and variable rate debt, to
finance our operations. The information below summarizes our market risks
associated with debt obligations outstanding as of June 30, 2003. The following
table presents principal cash flows and related weighted average interest rates
by fiscal year of maturity of our fixed rate debt.

|                       |                       |  |                        |   |      |  |      |   |      |  |      |   |            |  |       |   |  |  |   |   |  |  |   |         |   |  |   |         |  
|---------------------- | --------------------- |  | ---------------------- | - | ---- |  | ---- | - | ---- |  | ---- | - | ---------- |  | ----- | - |  |  | - | - |  |  | - | ------- | - |  | - | ------- | -
|                       |                       |  | Expected Maturity Date
|                       |                       |  |                       
|                       |                       |  | 2003                   |   | 2004 |  | 2005 |   | 2006 |  | 2007 |   | Thereafter |  | Total
|                       |                       |  |                        |   |      |  |      |   |      |  |      |   |            |  |      
|                       |                       |  | (dollars in thousands)
|Longterm obligations: |                       |  |                        |   |      |  |      |   |      |  |      |   |            |  |       |   |  |  |   |   |  |  |   |         |   |  |   |        
|                       | Fixed rate            |  | $                      |  |      |  | $    |  |      |  | $    |  |            |  | $     |  |  |  | $ |  |  |  | $ | 200,000 |   |  | $ | 200,000 |  
|                       | Average interest rate |  |                        |  |      |  |      |  |      |  |      |  |            |  |       |  |  |  |   |  |  |  |   | 8.25    | % |  |   | 8.25    | %

In addition, as of June 30, 2003, we had $480.0 million of variable rate
debt outstanding under our credit facility at a weighted average interest rate
of 4.83%. A 1% increase in the interest rate on our variable rate debt would
have increased interest expense by approximately $1.6 million and $3.4 million
in the three and six months ended June 30, 2003, respectively.

In addition, we have an interest rate cap on $375.0 million of the
variable rate debt outstanding under our credit facility, which caps LIBOR at
7.0% for the next three years. As of June 30, 2003, the carrying amount and
fair value of this instrument was $0.2 million.

ITEM 4  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

We have conducted an evaluation, under the supervision of and
participation by our management, including our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, as amended). Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures were adequate and effective to ensure that
material information relating to SpectraSite, Inc. and its consolidated
subsidiaries would be made known to them by others within those entities,
particularly during the period in which this quarterly report on Form 10-Q was
being prepared.

Changes in Internal Controls.

None.

40



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##### 



PART II  OTHER INFORMATION

Item 1.Legal Proceedings

None.

Item 2.Changes in Securities and Use of Proceeds

None.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Submission of Matters to a Vote of Security Holders

None.

Item 5.Other Information

None.

Item 6.Exhibits and Reports on Form 8-K

(a) Exhibits

|        |  |                                                                                                                                                                                                                                                                                                                       
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                       
|Number  |  | Description                                                                                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                       
|2.1     |  | Agreement to Sublease, dated as of August 25, 2000, by and
among SBC Wireless, Inc. and certain of its affiliates, the
Registrant, and Southern Towers, Inc. (the SBC Agreement).
Incorporated by reference to exhibit no. 10.1 to the
Registrants Form 8-K dated August 25, 2000 and filed August
31, 2000.       
|        |  |                                                                                                                                                                                                                                                                                                                       
|2.2     |  | Amendment No. 1 to the SBC Agreement, dated December 14,
2000. Incorporated by reference to exhibit no. 2.8 to the
registration statement on Form S-3 of the Registrant, file
no. 333-45728.                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                       
|2.3     |  | Amendment No. 2 to the SBC Agreement, dated November 14,
2001. Incorporated by reference to exhibit no. 2.5 to the
Registrants Form 10-K for the year ended December 31, 2001.                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                       
|2.4     |  | Amendment No. 3 to the SBC Agreement, dated January 31,
2002. Incorporated by reference to exhibit no. 2.6 to the
Registrants Form 10-K for the year ended December 31, 2001.                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                       
|2.5     |  | Amendment No. 4 to the SBC Agreement, dated February 25,
2002. Incorporated by reference to exhibit no. 2.7 to the
Registrants Form 10-K for the year ended December 31, 2001.                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                       
|2.6     |  | SpectraSite Newco Purchase Agreement, dated as of May 15,
2002, by and among Cingular Wireless LLC (Cingular), the
Registrant, Southern Towers, Inc., SpectraSite
Communications, Inc. and CA/NV Tower Holdings, LLC.
Incorporated by reference to exhibit no. 10.6 to the
Registrants Form 8-K dated May 22, 2002.
|        |  |                                                                                                                                                                                                                                                                                                                       
|2.7     |  | November Agreement, dated as of November 14, 2002, by and
among Cingular Wireless LLC (Cingular), the Registrant,
Southern Towers, Inc. and CA/NV Tower Holdings, LLC.
Incorporated by reference to exhibit no. 10.1 to the
Registrants Form 8-K dated November 19, 2002.                                          

41



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##### 



|        |  |                                                                                                                                                                                                                                                                                                                                                              
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                              
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|2.8     |  | Amended and Restated Consent and Modification, dated as of
November 14, 2002, by and among Southern Towers, Inc., CA/NV
Tower Holdings, LLC, SBC Tower Holdings LLC, the Registrant
and SBC Wireless LLC. Incorporated by reference to exhibit
no. 10.2 to the Registrants Form 8-K dated November 19,
2002.                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|2.9     |  | Amended and Restated Unwind Side Letter, dated as of
November 14, 2002, by and among Cingular, SBC Wireless LLC,
SBC Tower Holdings LLC, the Registrant, Southern Towers,
Inc. and SpectraSite Communications, Inc. Incorporated by
reference to exhibit no. 10.3 to the Registrants Form 8-K
dated November 19, 2002.                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|2.10    |  | Proposed Plan of Reorganization of the Registrant under
chapter 11 of the Bankruptcy Code. Incorporated by reference
to exhibit no. 2.1 to the Registrants Form 8-K dated
November 19, 2002.                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|3.1     |  | Third Amended and Restated Certificate of Incorporation of
the Registrant. Incorporated by reference to exhibit no. 2.1
to the Registrants Form 8-K dated February 11, 2003.                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|3.2     |  | Second Amended Bylaws of the Registrant. Incorporated by
reference to exhibit no. 2.2 to the Registrants Form 8-K
dated February 11, 2003.                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|4.1     |  | Indenture, dated as of May 21, 2003, by and between the Registrant
and The Bank of New York, as trustee. Incorporated by reference to
exhibit no. 4.1 to the Registrants Form S-4, file no. 333-106118.                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|4.2     |  | Registration Rights Agreement, dated as of May 21, 2003, by and
among the Registrant, Lehman Brothers, Inc., Citigroup Global
Markets, Inc., CIBC World Markets Corp., BMO Nesbitt Burns Corp.,
Credit Suisse First Boston LLC, and TD Securities (USA) Inc.
Incorporated by reference to exhibit no. 4.2 to the Registrants
Form S-4 , file no. 333-106118.
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|10.1    |  | Amendment No. 3 to the Credit Agreement, dated May 15, 2003, by and
among SpectraSite Communications, Inc., as Borrower, and certain
other parties thereto. Incorporated by reference to exhibit no.
10.1 to the Registrants Form 8-K dated May 21, 2003 and filed May
22, 2003.                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|31.1*   |  | Certification of Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities and Exchange Act of 1934, as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|31.2*   |  | Certification of Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities and Exchange Act of 1934, as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|32.1*   |  | Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|32.2*   |  | Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                           



---



|* | Filed herewith
|- | --------------

(b) Reports on Form 8-K

On May 9, 2003, the Registrant filed a current report on Form 8-K related
to a press release announcing the Registrants financial results for the
quarter ended March 31, 2003.

On May 13, 2003, the Registrant filed a current report on Form 8-K related
to a press release announcing the Registrants plans to offer senior notes in a
private offering.

On May 22, 2003, the Registrant filed a current report on Form 8-K related
to a press release announcing the Registrants completion of (i) the sale of
$200 million of senior notes in a private offering and (ii) an amendment to
SpectraSite Communications, Inc.s senior credit facility reducing the
revolving credit facility to $200 million, among other changes.

42



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##### 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of the 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

| |                  
| | -----------------
| | SPECTRASITE, INC.
| | (Registrant)     

| |  |                                                  
| |  | -------------------------------------------------
| |  | /s/ DAVID P. TOMICK                              
| |  |                                                  
| |  | David P. Tomick                                  
| |  | Executive Vice President, Chief Financial Officer
| |  | and Assistant Secretary                          
| |  |                                                  
| |  | /s/ GABRIELA GONZALEZ                            
| |  |                                                  
| |  | Gabriela Gonzalez                                
| |  | Senior Vice President and Corporate Controller,  
| |  | Principal Accounting Officer                     

Date: August 11, 2003

































43