##### 









U.S. SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




---

Form 10-Q

|  |  |                                                                                      
|- |  | -------------------------------------------------------------------------------------
|þ |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934
| 
|  |  | For the quarterly period ended March 31,
    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



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SpectraSite, Inc.

(Name of registrant as specified in its
charter)


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

As of April 30, 2003, the registrant had
only one outstanding class of common stock, of which there were
23,587,085 shares outstanding.



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##### 



INDEX

|                                   |                                                                                                                                                                                                                                                                 |  |    |    | 
|---------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -- | -- | 
|PART I  FINANCIAL
    INFORMATION |                                                                                                                                                                                                                                                                 |  |    |   
|                                   | ITEM 1  UNAUDITED CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS                                                                                                                                                                                              |  |    |    | 
|                                   | Condensed Consolidated Balance Sheets at
    March 31, 2003 (unaudited; Reorganized Company) and
    December 31, 2002 (Predecessor Company)                                                                                                                    |  |    | 2  | 
|                                   | Unaudited Condensed Consolidated Statements of
    Operations for the two months ended March 31, 2003
    (Reorganized Company), the month ended January 31, 2003
    (Predecessor Company) and the three months ended March 31, 2002
    (Predecessor Company) |  |    | 3  | 
|                                   | Unaudited Condensed Consolidated Statements of
    Cash Flows for the two months ended March 31, 2003
    (Reorganized Company), the month ended January 31, 2003
    (Predecessor Company) and the three months ended March 31, 2002
    (Predecessor Company) |  |    | 4  | 
|                                   | Notes to the Unaudited Condensed Consolidated
    Financial Statements                                                                                                                                                                                          |  |    | 5  | 
|                                   | ITEM 2  MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS                                                                                                                                                          |  |    | 20 | 
|                                   | ITEM 3  QUANTITATIVE AND
    QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                                                                                                                                         |  |    | 28 | 
|                                   | ITEM 4  CONTROLS AND
    PROCEDURES                                                                                                                                                                                                                            |  |    | 29 | 
|PART II  OTHER
    INFORMATION    |                                                                                                                                                                                                                                                                 |  |    |   
|                                   | ITEM 1  LEGAL PROCEEDINGS                                                                                                                                                                                                                                      |  |    | 29 | 
|                                   | ITEM 2  CHANGES IN SECURITIES AND
    USE OF PROCEEDS                                                                                                                                                                                                          |  |    | 29 | 
|                                   | ITEM 3  DEFAULTS UPON SENIOR
    SECURITIES                                                                                                                                                                                                                    |  |    | 29 | 
|                                   | ITEM 4  SUBMISSION OF MATTERS TO A
    VOTE OF SECURITY HOLDERS                                                                                                                                                                                                |  |    | 29 | 
|                                   | ITEM 5  OTHER INFORMATION                                                                                                                                                                                                                                      |  |    | 30 | 
|                                   | ITEM 6  EXHIBITS AND REPORTS ON
    FORM 8-K                                                                                                                                                                                                                   |  |    | 30 | 
|SIGNATURES                         |                                                                                                                                                                                                                                                                 |  | 32 |   
|CERTIFICATIONS                     |                                                                                                                                                                                                                                                                 |  | 33 |   

1



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED BALANCE
SHEETS


At March 31, 2003 and December 31,
2002


|                                                   |                                                                                                                                 |                                                          |           |                   |           |  |           |            |           |  
|-------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | --------- | ----------------- | --------- |  | --------- | ---------- | --------- | -
|                                                   |                                                                                                                                 | Reorganized                                              |           | Predecessor      
|                                                   |                                                                                                                                 | Company                                                  |           | Company          
|                                                   |                                                                                                                                 | March 31, 2003                                           |           | December 31, 2002
|                                                   |                                                                                                                                 |                                                          |           |                  
|                                                   |                                                                                                                                 |                                                         
|                                                   |                                                                                                                                 | (Dollars in thousands)                                  
|                                                   |                                                                                                                                 | (unaudited)                                              |           |                  
|ASSETS                                            
|Current assets:                                    |                                                                                                                                 |                                                          |           |                   |           |  |           |           
|                                                   | Cash and cash equivalents                                                                                                       |                                                          | $         | 87,904            |           |  | $         | 80,961     |          
|                                                   | Accounts receivable, net of allowance of $10,109
    and $11,431, respectively                                                  |                                                          |           | 8,647             |           |  |           | 15,180     |          
|                                                   | Costs and estimated earnings in excess of billings                                                                              |                                                          |           | 3,184             |           |  |           | 2,169      |          
|                                                   | Inventories                                                                                                                     |                                                          |           | 7,696             |           |  |           | 7,878      |          
|                                                   | Prepaid expenses and other                                                                                                      |                                                          |           | 15,468            |           |  |           | 16,696     |          
|                                                   |                                                                                                                                 |                                                          |           |                   |           |  |           |           
|                                                   |                                                                                                                                 | Total current assets                                     |           |                   | 122,899   |  |           |            | 122,884   |  
|Property and equipment, net                        |                                                                                                                                 |                                                          | 1,252,260 |                   |           |  | 2,292,945 |           
|Goodwill, net                                      |                                                                                                                                 |                                                          |          |                   |           |  | 60,626    |           
|Other assets                                       |                                                                                                                                 |                                                          | 222,328   |                   |           |  | 102,001   |           
|                                                   |                                                                                                                                 |                                                          |           |                   |           |  |           |           
|                                                   |                                                                                                                                 | Total assets                                             |           | $                 | 1,597,487 |  |           | $          | 2,578,456 |  
|                                                   |                                                                                                                                 |                                                          |           |                   |           |  |           |           
|LIABILITIES AND SHAREHOLDERS EQUITY
    (DEFICIT)
|Current liabilities:                               |                                                                                                                                 |                                                          |           |                   |           |  |           |           
|                                                   | Accounts payable                                                                                                                |                                                          | $         | 20,420            |           |  | $         | 13,029     |          
|                                                   | Accrued and other expenses                                                                                                      |                                                          |           | 103,556           |           |  |           | 66,280     |          
|                                                   | Billings in excess of costs and estimated earnings                                                                              |                                                          |           | 502               |           |  |           | 703        |          
|                                                   | Current portion of credit facility                                                                                              |                                                          |           |                  |           |  |           | 2,244      |          
|                                                   |                                                                                                                                 |                                                          |           |                   |           |  |           |           
|                                                   |                                                                                                                                 | Total current liabilities                                |           |                   | 124,478   |  |           |            | 82,256    |  
|                                                   |                                                                                                                                 |                                                          |           |                   |           |  |           |           
|Long-term portion of credit facility               |                                                                                                                                 |                                                          | 706,955   |                   |           |  | 780,711   |           
|Other long-term liabilities                        |                                                                                                                                 |                                                          | 81,888    |                   |           |  | 27,330    |           
|                                                   |                                                                                                                                 |                                                          |           |                   |           |  |           |           
|                                                   |                                                                                                                                 | Total long-term liabilities                              |           |                   | 788,843   |  |           |            | 808,041   |  
|                                                   |                                                                                                                                 |                                                          |           |                   |           |  |           |           
|Liabilities subject to compromise (Note 2)         |                                                                                                                                 |                                                          |          |                   |           |  | 1,763,286 |           
|                                                   |                                                                                                                                 |                                                          |           |                   |           |  |           |           
|Shareholders 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, 23,587,085 issued and outstanding at March 31,
    2003.      |                                                          |           | 236               |           |  |           |           |          
|                                                   | Additional paid-in-capital                                                                                                      |                                                          |           | 685,494           |           |  |           | 1,624,939  |          
|                                                   | Accumulated other comprehensive income (loss)                                                                                   |                                                          |           | 128               |           |  |           | (355       | )        
|                                                   | Accumulated deficit                                                                                                             |                                                          |           | (1,692            | )         |  |           | (1,699,865 | )        
|                                                   |                                                                                                                                 |                                                          |           |                   |           |  |           |           
|                                                   |                                                                                                                                 | Total shareholders equity (deficit)                     |           |                   | 684,166   |  |           |            | (75,127   | )
|                                                   |                                                                                                                                 |                                                          |           |                   |           |  |           |           
|                                                   |                                                                                                                                 | Total liabilities and shareholders equity
    (deficit) |           | $                 | 1,597,487 |  |           | $          | 2,578,456 |  
|                                                   |                                                                                                                                 |                                                          |           |                   |           |  |           |           

See accompanying notes.

2



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS


|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |         |        |         |  
|---------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ---------------------------------------- | ---------------------------- | ---------------- | ------ | -------------- | --------- | --------- | ----- | --------- | -------- | ------- | ------ | ------- | -
|                                                                             |                                                                                      | Reorganized                              |                              | Predecessor      |        | Predecessor   
|                                                                             |                                                                                      | Company                                  |                              | Company          |        | Company       
|                                                                             |                                                                                      | Two Months                               |                              | One Month        |        | Three Months  
|                                                                             |                                                                                      | Ended                                    |                              | Ended            |        | Ended         
|                                                                             |                                                                                      | March 31, 2003                           |                              | January 31, 2003 |        | March 31, 2002
|                                                                             |                                                                                      |                                          |                              |                  |        |               
|                                                                             |                                                                                      |                                         
|                                                                             |                                                                                      | (In thousands, except per share amounts)
|Revenues:                                                                    |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|                                                                             | Site leasing                                                                         |                                          | $                            | 51,069           |        |                | $         | 25,556    |       |           | $        | 65,952  |       
|                                                                             | Broadcast services                                                                   |                                          |                              | 3,575            |        |                |           | 1,237     |       |           |          | 6,452   |       
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|                                                                             |                                                                                      |                                          | Total revenues               |                  |        | 54,644         |           |           |       | 26,793    |          |         |        | 72,404  |  
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|Operating Expenses:                                                          |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|                                                                             | Costs of operations, excluding depreciation,
    amortization and accretion expense: |                                          |                              |                  |        |                |           |           |       |           |          |         |       
|                                                                             |                                                                                      | Site leasing                             |                              |                  | 17,060 |                |           |           | 8,840 |           |          |         | 25,505 |        
|                                                                             |                                                                                      | Broadcast services                       |                              |                  | 2,889  |                |           |           | 1,492 |           |          |         | 5,370  |        
|                                                                             | Selling, general and administrative expenses                                         |                                          |                              | 8,686            |        |                |           | 4,280     |       |           |          | 15,520  |       
|                                                                             | Depreciation, amortization and accretion expenses                                    |                                          |                              | 16,826           |        |                |           | 16,075    |       |           |          | 44,638  |       
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|                                                                             |                                                                                      |                                          | Total operating expenses     |                  |        | 45,461         |           |           |       | 30,687    |          |         |        | 91,033  |  
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|Operating income (loss)                                                      |                                                                                      |                                          | 9,183                        |                  |        |                | (3,894    | )         |       |           | (18,629  | )      
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|Other income (expense):                                                      |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|                                                                             | Interest income                                                                      |                                          |                              | 217              |        |                |           | 137       |       |           |          | 84      |       
|                                                                             | Interest expense                                                                     |                                          |                              | (9,261           | )      |                |           | (4,721    | )     |           |          | (58,697 | )     
|                                                                             | Gain on debt discharge                                                               |                                          |                              |                 |        |                |           | 1,034,764 |       |           |          |        |       
|                                                                             | Other expense                                                                        |                                          |                              | (1,229           | )      |                |           | (493      | )     |           |          | (387    | )     
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|                                                                             |                                                                                      |                                          | Total other income (expense) |                  |        | (10,273        | )         |           |       | 1,029,687 |          |         |        | (59,000 | )
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|Income (loss) from continuing operations
    before income taxes             |                                                                                      |                                          | (1,090                       | )                |        |                | 1,025,793 |           |       |           | (77,629  | )      
|Income tax expense                                                           |                                                                                      |                                          | 602                          |                  |        |                | 5         |           |       |           | 161      |        
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|Income (loss) from continuing operations                                     |                                                                                      |                                          | (1,692                       | )                |        |                | 1,025,788 |           |       |           | (77,790  | )      
|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                                 |                                                                                      |                                          | (1,692                       | )                |        |                | 357,206   |           |       |           | (77,790  | )      
|Discontinued operations:                                                     |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|                                                                             | Income from operations of discontinued segment,
    net of income tax expense        |                                          |                              |                 |        |                |           |          |       |           |          | 2,012   |       
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|Income (loss) before cumulative effect of
    change in accounting principle |                                                                                      |                                          | (1,692                       | )                |        |                | 357,206   |           |       |           | (75,778  | )      
|Cumulative effect of change in accounting
    principle                      |                                                                                      |                                          |                             |                  |        |                | (12,236   | )         |       |           | (376,753 | )      
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|Net income (loss)                                                            |                                                                                      | $                                        | (1,692                       | )                |        | $              | 344,970   |           |       | $         | (452,531 | )      
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|Basic and diluted earnings per share:                                        |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|                                                                             | Income (loss) from continuing operations                                             |                                          | $                            | (0.07            | )      |                | $         | 6.66      |       |           | $        | (0.51   | )     
|                                                                             | Reorganization items                                                                 |                                          |                              |                 |        |                |           | (4.34     | )     |           |          |        |       
|                                                                             | Discontinued operations                                                              |                                          |                              |                 |        |                |           |          |       |           |          | 0.01    |       
|                                                                             | Cumulative effect of change in accounting                                            |                                          |                              |                 |        |                |           | (0.08     | )     |           |          | (2.45   | )     
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|                                                                             | Net income (loss)                                                                    |                                          | $                            | (0.07            | )      |                | $         | 2.24      |       |           | $        | (2.95   | )     
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        
|Weighted average common shares outstanding (basic
    and diluted)           |                                                                                      |                                          | 23,587                       |                  |        |                | 154,014   |           |       |           | 153,654  |        
|                                                                             |                                                                                      |                                          |                              |                  |        |                |           |           |       |           |          |        

See accompanying notes.

3



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS


|                                                                                             |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |         |         |         |  
|-------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- | ----------------------------------------------------------- | -------------------------------------------------------- | ---------------- | ------ | ------------------ | ------- | ---------- | ------ | ------- | -------- | ------- | ------- | ------- | -
|                                                                                             |                                                                       | Reorganized                                                 |                                                          | Predecessor      |        | Predecessor       
|                                                                                             |                                                                       | Company                                                     |                                                          | Company          |        | Company           
|                                                                                             |                                                                       | Two Months Ended                                            |                                                          | One Month Ended  |        | Three Months Ended
|                                                                                             |                                                                       | March 31, 2003                                              |                                                          | January 31, 2003 |        | March 31, 2002    
|                                                                                             |                                                                       |                                                             |                                                          |                  |        |                   
|                                                                                             |                                                                       |                                                            
|                                                                                             |                                                                       | (Dollars in thousands)                                     
|Operating activities                                                                         |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|Net income (loss)                                                                            |                                                                       | $                                                           | (1,692                                                   | )                |        | $                  | 344,970 |            |        | $       | (452,531 | )      
|Adjustments to reconcile net income
    (loss) to net cash provided by operating activities: |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|                                                                                             | Depreciation                                                          |                                                             |                                                          | 13,889           |        |                    |         | 15,609     |        |         |          | 45,559  |        
|                                                                                             | Cumulative effect of change in accounting
    principle               |                                                             |                                                          |                 |        |                    |         | 12,236     |        |         |          | 376,753 |        
|                                                                                             | Amortization of intangible assets                                     |                                                             |                                                          | 2,509            |        |                    |         | 252        |        |         |          | 516     |        
|                                                                                             | Amortization of debt issuance costs                                   |                                                             |                                                          | 790              |        |                    |         | 425        |        |         |          | 2,633   |        
|                                                                                             | Amortization of asset retirement obligation                           |                                                             |                                                          | 429              |        |                    |         | 214        |        |         |          |         |        
|                                                                                             | Amortization of senior discount notes                                 |                                                             |                                                          |                 |        |                    |         |           |        |         |          | 29,941  |        
|                                                                                             | Writeoff of debt issuance costs                                       |                                                             |                                                          | 1,614            |        |                    |         |           |        |         |          |        |        
|                                                                                             | Non-cash compensation charges                                         |                                                             |                                                          |                 |        |                    |         |           |        |         |          | 289     |        
|                                                                                             | (Gain) loss on disposal of assets                                     |                                                             |                                                          | 1,203            |        |                    |         | (84        | )      |         |          | 70      |        
|                                                                                             | Gain on debt discharge                                                |                                                             |                                                          |                 |        |                    |         | (1,034,764 | )      |         |          |        |        
|                                                                                             | Adjust accounts to fair value                                         |                                                             |                                                          |                 |        |                    |         | 644,688    |        |         |          |        |        
|                                                                                             | Equity in net loss of affiliates                                      |                                                             |                                                          |                 |        |                    |         |           |        |         |          | 459     |        
|                                                                                             | Changes in operating assets and liabilities, net
    of acquisitions: |                                                             |                                                          |                  |        |                    |         |            |        |         |          |         |        
|                                                                                             |                                                                       | Accounts receivable                                         |                                                          |                  | 1,488  |                    |         |            | 5,045  |         |          |         | 31,003  |        
|                                                                                             |                                                                       | Costs and estimated earnings in excess of
    billings, net |                                                          |                  | (944   | )                  |         |            | (272   | )       |          |         | (8,245  | )      
|                                                                                             |                                                                       | Inventories                                                 |                                                          |                  | 184    |                    |         |            | (2     | )       |          |         | (1,158  | )      
|                                                                                             |                                                                       | Prepaid expenses and other                                  |                                                          |                  | (1,003 | )                  |         |            | (2,238 | )       |          |         | (1,289  | )      
|                                                                                             |                                                                       | Accounts payable                                            |                                                          |                  | (6,170 | )                  |         |            | 13,549 |         |          |         | (15,177 | )      
|                                                                                             |                                                                       | Other liabilities                                           |                                                          |                  | (370   | )                  |         |            | 6,264  |         |          |         | (4,621  | )      
|                                                                                             |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|                                                                                             |                                                                       |                                                             | Net cash provided by operating activities                |                  |        | 11,927             |         |            |        | 5,892   |          |         |         | 4,202   |  
|                                                                                             |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|Investing activities                                                                         |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|Purchases of property and equipment                                                          |                                                                       |                                                             | (2,255                                                   | )                |        |                    | (2,737  | )          |        |         | (39,018  | )      
|Loans to affiliates                                                                          |                                                                       |                                                             |                                                         |                  |        |                    |        |            |        |         | (750     | )      
|Proceeds from the sale of assets                                                             |                                                                       |                                                             | 81,128                                                   |                  |        |                    |        |            |        |         |         |        
|                                                                                             |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|                                                                                             |                                                                       |                                                             | Net cash provided by (used in) investing
    activities  |                  |        | 78,873             |         |            |        | (2,737  | )        |         |         | (39,768 | )
|                                                                                             |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|Financing activities                                                                         |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|Proceeds from issuance of common stock, net of
    issuance costs                            |                                                                       |                                                             |                                                         |                  |        |                    |        |            |        |         | 478      |        
|Proceeds from issuance of long-term debt                                                     |                                                                       |                                                             |                                                         |                  |        |                    |        |            |        |         | 90,000   |        
|Repayments of debt                                                                           |                                                                       |                                                             | (76,128                                                  | )                |        |                    | (10,884 | )          |        |         | (867     | )      
|Debt issuance costs                                                                          |                                                                       |                                                             |                                                         |                  |        |                    |        |            |        |         | (25      | )      
|                                                                                             |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|                                                                                             |                                                                       |                                                             | Net cash provided by (used in) financing
    activities  |                  |        | (76,128            | )       |            |        | (10,884 | )        |         |         | 89,586  |  
|                                                                                             |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|                                                                                             |                                                                       |                                                             | Net increase (decrease) in cash and cash
    equivalents |                  |        | 14,672             |         |            |        | (7,729  | )        |         |         | 54,020  |  
|Cash and cash equivalents at beginning of period                                             |                                                                       |                                                             | 73,232                                                   |                  |        |                    | 80,961  |            |        |         | 31,547   |        
|                                                                                             |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|Cash and cash equivalents at end of period                                                   |                                                                       | $                                                           | 87,904                                                   |                  |        | $                  | 73,232  |            |        | $       | 85,567   |        
|                                                                                             |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|Supplemental disclosures of cash flow
    information:                                       |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|Cash paid during the period for interest                                                     |                                                                       | $                                                           | 3,263                                                    |                  |        | $                  | 4,265   |            |        | $       | 23,718   |        
|Cash paid during the period for income taxes                                                 |                                                                       |                                                             | 602                                                      |                  |        |                    | 5       |            |        |         | 685      |        
|Supplemental disclosures of noncash investing
    and financing activities:                  |                                                                       |                                                             |                                                          |                  |        |                    |         |            |        |         |          |        
|Common stock issued for deposits                                                             |                                                                       | $                                                           |                                                         |                  |        | $                  | 408     |            |        | $       |         |        
|Common stock issued for property and equipment                                               |                                                                       |                                                             |                                                         |                  |        |                    |        |            |        |         | 1,678    |        
|Capital lease obligations incurred for the
    purchase of property and equipment            |                                                                       |                                                             | 68                                                       |                  |        |                    |        |            |        |         | 4,357    |        

See accompanying notes.

4



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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 antenna sites on
multi-tenant towers, the leasing of distributed antenna systems
within buildings, managing 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 at 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.

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. 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

5



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


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 $10.1 million as of December 31, 2002 and
March 31, 2003, respectively.

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, which was a significant shareholder
of the Predecessor Companys common stock, accounted for
31%, 28% and 29% of revenues in the three months ended
March 31, 2002, the one month ended January 31, 2003
and the two months ended March 31, 2003, respectively. In
addition, another customer, which is an affiliate of a former
significant shareholder of the Predecessor Companys common
stock, accounted for 20%, 22% and 19% of the Companys
revenues in the three months ended March 31, 2002, the one
month ended January 31, 2003 and the two months ended
March 31, 2003, respectively. This customer also accounted
for 21% and 14% of accounts receivable at December 31, 2002
and March 31, 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. 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

6



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


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 $188.7 million as of March 31, 2003
and are classified as other assets in the unaudited condensed
consolidated financial statements.

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 shareholders 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 March 31, 2003, the carrying amount and fair value of
this instrument was $0.8 million and is included in Other
Assets in the unaudited condensed consolidated financial
statements.



| |                                            
| | -------------------------------------------
| | Restructuring and Non-recurring
    Charges

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 Two    |      |                
|                                           |  | Liability as of   |       | Month Ended      |  | Months Ended   |      | Liability as of
|                                           |  | December 31, 2002 |       | January 31, 2003 |  | March 31, 2003 |      | March 31, 2003 
|                                           |  |                   |       |                  |  |                |      |                
|                                           |  |                  
|                                           |  | (In thousands)   
|Accrued restructuring liabilities:         |  |                   |       |                  |  |                |      |                 |  |   |      |   |  |   |       | 
|Employee severance                         |  | $                 | 3,216 |                  |  | $              | (182 | )               |  | $ | (375 | ) |  | $ | 2,659 | 
|Lease termination and office closing costs |  |                   | 3,561 |                  |  |                | (421 | )               |  |   | (267 | ) |  |   | 2,873 | 
|                                           |  |                   |       |                  |  |                |      |                 |  |   |      |   |  |   |       | 
|Total                                      |  | $                 | 6,777 |                  |  | $              | (603 | )               |  | $ | (642 | ) |  | $ | 5,532 | 
|                                           |  |                   |       |                  |  |                |      |                 |  |   |      |   |  |   |       | 

7



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)




| |             
| | ------------
| | 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.



| |                   
| | ------------------
| | Earnings Per Share

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 months ended March 31, 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 months ended March 31, 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 months ended
March 31, 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 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 two
months ended March 31, 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 two months ended March 31, 2003
because the effect would have been antidilutive. Accordingly,
basic and diluted net loss per share are the same for the two
months ended March 31, 2003.



| |                            
| | ---------------------------
| | Comprehensive Income (Loss)

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

|                                                                |  |                |        |                     |  |                |          |   |  |   |          |  
|--------------------------------------------------------------- |  | -------------- | ------ | ------------------- |  | -------------- | -------- | - |  | - | -------- | -
|                                                                |  | Reorganized    |        |                    
|                                                                |  | Company        |        | Predecessor Company
|                                                                |  |                |        |                    
|                                                                |  | Two Months     |        | One Month           |  | Three Months  
|                                                                |  | Ended          |        | Ended               |  | Ended         
|                                                                |  | March 31, 2003 |        | January 31, 2003    |  | March 31, 2002
|                                                                |  |                |        |                     |  |               
|Reported net income (loss)                                      |  | $              | (1,692 | )                   |  | $              | 344,970  |   |  | $ | (452,531 | )
|Foreign currency translation adjustment                         |  |                | (5     | )                   |  |                | (129     | ) |  |   | 6        |  
|Unrealized holding gains (losses) arising
    during the period |  |                | 133    |                     |  |                | (200     | ) |  |   | (16,675  | )
|                                                                |  |                |        |                     |  |                |          |   |  |   |          |  
|Comprehensive income (loss)                                     |  | $              | (1,564 | )                   |  | $              | (344,641 | ) |  | $ | (469,200 | )
|                                                                |  |                |        |                     |  |                |          |   |  |   |          |  



| |              
| | -------------
| | 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.

8



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)




| |                  
| | -----------------
| | 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 shareholders 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 months ended March 31,
2002 and normal recurring adjustments and fresh start accounting
adjustments for the Predecessor and Reorganized Companies for
the three months ended March 31, 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), was confirmed by the Bankruptcy Court. All
conditions precedent to the effectiveness of the Plan were met
by February 10, 2003 (the Effective Date),
thereby allowing SpectraSite to emerge from bankruptcy.

The Plan 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 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 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.

9



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


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. 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 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:

10



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


|                                                   |                                                                                                                                                                                                                                                                                                    |                                                          |           |                |           |     |            |                  |          |   |         |     |  |  |           |         |           | 
|-------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | --------- | -------------- | --------- | --- | ---------- | ---------------- | -------- | - | ------- | --- |  |  | --------- | ------- | --------- | 
|                                                   |                                                                                                                                                                                                                                                                                                    |                                                          |           | Reorganization |           |     |            |                 
|                                                   |                                                                                                                                                                                                                                                                                                    | Predecessor                                              |           | 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 SHAREHOLDERS EQUITY
    (DEFICIT)
|Current liabilities:                               |                                                                                                                                                                                                                                                                                                    |                                                          |           |                |           |     |            |                  |          |   |         |     |  |  |           |        
|                                                   | Accounts payable                                                                                                                                                                                                                                                                                   |                                                          | $         | 10,407         |           |     | $          | 16,184           |          |   |         | (1) |  |  | $         | 26,591  |          
|                                                   | Accrued and other expenses                                                                                                                                                                                                                                                                         |                                                          |           | 65,039         |           |     |            | 38,047           |          |   |         | (5) |  |  |           | 103,086 |          
|                                                   | 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   |        
|Other long-term liabilities                        |                                                                                                                                                                                                                                                                                                    |                                                          | 52,108    |                |           |     | 30,251     |                  |          |   | (5)     |     |  |  | 82,359    |        
|                                                   |                                                                                                                                                                                                                                                                                                    |                                                          |           |                |           |     |            |                  |          |   |         |     |  |  |           |        
|                                                   |                                                                                                                                                                                                                                                                                                    | Total long-term liabilities                              |           |                | 832,819   |     |            |                  | 30,251   |   |         |     |  |  |           |         | 863,070   | 
|                                                   |                                                                                                                                                                                                                                                                                                    |                                                          |           |                |           |     |            |                  |          |   |         |     |  |  |           |        
|Liabilities subject to compromise                  |                                                                                                                                                                                                                                                                                                    |                                                          | 1,763,286 |                |           |     | (1,763,286 | )                |          |   | (4)     |     |  |  |          |        
|                                                   |                                                                                                                                                                                                                                                                                                    |                                                          |           |                |           |     |            |                  |          |   |         |     |  |  |           |        
|Shareholders equity (deficit):                    |                                                                                                                                                                                                                                                                                                    |                                                          |           |                |           |     |            |                  |          |   |         |     |  |  |           |        
|                                                   | Common stock, $0.001 par value,
    300,000,000 shares authorized 154,013,917 issued and
    outstanding actual 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 shareholders equity (deficit)                     |           |                | (96,678   | )   |            |                  | 782,408  |   |         |     |  |  |           |         | 685,730   | 
|                                                   |                                                                                                                                                                                                                                                                                                    |                                                          |           |                |           |     |            |                  |          |   |         |     |  |  |           |        
|                                                   |                                                                                                                                                                                                                                                                                                    | Total liabilities and shareholders equity
    (deficit) |           | $              | 2,577,575 |     |            | $                | (896,396 | ) |         |     |  |  |           | $       | 1,681,179 | 
|                                                   |                                                                                                                                                                                                                                                                                                    |                                                          |           |                |           |     |            |                  |          |   |         |     |  |  |           |        

11



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


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 associated with unfavorable
    contracts at 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     
|                              |  | March 31,      |           | December 31,
|                              |  | 2003           |           | 2002        
|                              |  |                |           |             
|                              |  |               
|                              |  | (In thousands)
|Towers                        |  | $              | 1,195,977 |              |  | $ | 2,548,712 |  
|Equipment                     |  |                | 15,027    |              |  |   | 39,181    |  
|Land                          |  |                | 16,200    |              |  |   | 18,081    |  
|Buildings                     |  |                | 26,914    |              |  |   | 32,219    |  
|Other                         |  |                | 4,625     |              |  |   | 38,217    |  
|                              |  |                |           |              |  |   |           |  
|                              |  |                | 1,258,743 |              |  |   | 2,676,410 |  
|Less accumulated depreciation |  |                | (13,880   | )            |  |   | (401,467  | )
|                              |  |                |           |              |  |   |           |  
|                              |  |                | 1,244,863 |              |  |   | 2,274,943 |  
|Construction in progress      |  |                | 7,397     |              |  |   | 18,002    |  
|                              |  |                |           |              |  |   |           |  
|Property and equipment, net   |  | $              | 1,252,260 |              |  | $ | 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
which 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.
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   |     | March 31, 2003
|                            |  |                 |        |           |  |              |     |               
|                            |  |                
|                            |  | (In thousands) 
|Asset retirement obligation |  | $               | 35,442 |           |  | $            | 643 |                |  | $ | (8 | ) |  | $ | 36,077 | 
|                            |  |                 |        |           |  |              |     |                |  |   |    |   |  |   |        | 

12



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


Pro forma results of operations for the three
months ended March 31, 2002 had we adopted SFAS 143 on
January 1, 2002 are as follows:

|                                                  |  |                     |          |  
|------------------------------------------------- |  | ------------------- | -------- | -
|                                                  |  | Predecessor Company
|                                                  |  | Three Months Ended 
|                                                  |  | March 31, 2002     
|                                                  |  |                    
|                                                  |  | (In thousands,     
|                                                  |  | except per         
|                                                  |  | share amounts)     
|Reported net loss                                 |  | $                   | (452,531 | )
|Additional depreciation of property and equipment |  |                     | (462     | )
|Accretion of asset retirement obligation          |  |                     | (590     | )
|                                                  |  |                     |          |  
|Adjusted net loss                                 |  | $                   | (453,583 | )
|                                                  |  |                     |          |  
|Basic and diluted earnings per share:             |  |                     |          |  
|Reported net loss per share                       |  | $                   | (2.95    | )
|Additional depreciation of property and equipment |  |                     |         |  
|Accretion of asset retirement obligation          |  |                     |         |  
|                                                  |  |                     |          |  
|Adjusted net loss per share                       |  | $                   | (2.95    | )
|                                                  |  |                     |          |  

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 financial condition, results of operations or
cash flows.

13



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


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 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 condition, 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
SpectraSites Old Common Stock during the 60-day period
immediately preceding December 14, 2003 (the third
anniversary of the initial closing) decreased from $22.74 down
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 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 co-locate
tenants on 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 $190.1 million as of
March 31, 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.

14



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


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 co-location 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 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 two months ended March 31, 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.

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 the quarter ended March 31, 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. The Company did not
sublease any towers in the quarter ended March 31, 2003.

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.

6. Financing Transactions



| |                
| | ---------------
| | Credit Facility

SpectraSite Communications, Inc.
(Communications), a wholly-owned subsidiary of
SpectraSite, is party to an amended and restated credit facility
totaling $1.0 billion. The credit facility includes a
$300.0 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, the amounts outstanding must be repaid) in
quarterly installments beginning on June 30, 2004 and
ending on June 30, 2007. The credit facility also includes
a $301.7 million multiple draw term loan that is fully
drawn and which must be repaid in quarterly installments
beginning on June 30, 2005 and ending on June 30, 2007
and a $405.3 million term

15



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


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. As of
March 31, 2003, Communications has $707.0 million
outstanding under the credit facility. The remaining
$300.0 million under the credit facility was undrawn. Under
the terms of the credit facility, the Company could borrow
approximately $191 million under the revolving credit
facility as of March 31, 2003 while remaining in compliance
with the applicable covenants.

At March 31, 2003, amounts due under the
credit facility are as follows:

|      |  |                |         | 
|----- |  | -------------- | ------- | 
|      |  | Maturities    
|      |  |               
|      |  | (In thousands)
|2003  |  | $              |        | 
|2004  |  |                |        | 
|2005  |  |                | 53,010  | 
|2006  |  |                | 124,342 | 
|2007  |  |                | 529,603 | 
|      |  |                |         | 
|Total |  | $              | 706,955 | 
|      |  |                |         | 

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.

The weighted average interest rate on outstanding
borrowings under the credit facility as of December 31,
2002 was 5.94%. 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.

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

16



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


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.

The agent banks under the Companys credit
facility have advised the Company that they have approved a
proposed amendment to the facility that will, among other
things, reduce our unused $300 million commitment under our
revolving credit facility by $100 million in exchange for
increasing the ratios in our leverage covenant in certain future
periods.

7. 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 one month ended
January 31, 2003 and the three months ended March 31,
2002 would have been as follows (in thousands):

|                                                                                                                 |  |                     |         |                |  |   |          |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------- | -------------- |  | - | -------- | -
|                                                                                                                 |  |                    
|                                                                                                                 |  | Predecessor Company
|                                                                                                                 |  | One Month           |         | Three Months  
|                                                                                                                 |  | Ended               |         | Ended         
|                                                                                                                 |  | January 31, 2003    |         | March 31, 2002
|                                                                                                                 |  |                     |         |               
|Reported net income (loss)                                                                                       |  | $                   | 344,970 |                |  | $ | (452,531 | )
|Non-cash compensation charges included in net
    income (loss)                                                  |  |                     |        |                |  |   | 289      |  
|Stock-based employee compensation cost that would
    have been included in net loss under the fair value method |  |                     | (694    | )              |  |   | (3,913   | )
|                                                                                                                 |  |                     |         |                |  |   |          |  
|Adjusted net income (loss)                                                                                       |  | $                   | 344,276 |                |  | $ | (456,155 | )
|                                                                                                                 |  |                     |         |                |  |   |          |  
|Basic and diluted income (loss) per share:                                                                       |  |                     |         |                |  |   |          |  
|Reported net income (loss)                                                                                       |  | $                   | 2.24    |                |  | $ | (2.95    | )
|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    | )
|                                                                                                                 |  |                     |         |                |  |   |          |  
|Adjusted net income (loss)                                                                                       |  | $                   | 2.24    |                |  | $ | (2.97    | )
|                                                                                                                 |  |                     |         |                |  |   |          |  

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

17



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


the date of grant consistent with the provisions
of SFAS 123, the Companys net loss and net loss per
share for the two months ended March 31, 2003 would have
been as follows (in thousands):

|                                                                                                                 |  |                |        |  
|---------------------------------------------------------------------------------------------------------------- |  | -------------- | ------ | -
|                                                                                                                 |  | Reorganized   
|                                                                                                                 |  | Company       
|                                                                                                                 |  | Two Months    
|                                                                                                                 |  | Ended         
|                                                                                                                 |  | March 31, 2003
|                                                                                                                 |  |               
|Reported net loss                                                                                                |  | $              | (1,692 | )
|Stock-based employee compensation cost that would
    have been included in net loss under the fair value method |  |                | (343   | )
|                                                                                                                 |  |                |        |  
|Adjusted net loss                                                                                                |  | $              | (2,035 | )
|                                                                                                                 |  |                |        |  
|Basic and diluted loss per share:                                                                                |  |                |        |  
|Reported net loss                                                                                                |  | $              | (0.07  | )
|Stock-based employee compensation cost that would
    have been included in net loss under the fair value method |  |                | (0.02  | )
|                                                                                                                 |  |                |        |  
|Adjusted net loss                                                                                                |  | $              | (0.09  | )
|                                                                                                                 |  |                |        |  

8. Discontinued Operations

On December 31, 2002, the Company sold its
network services division. Network services revenues for the
three months ended March 31, 2002 were $41.8 million.
Network services income before taxes for the three months ended
March 31, 2002 was $2.1 million. The Company recorded a
loss on disposal of the network services division of
$47.0 million in 2002. 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.

9. 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.

Summarized financial information concerning the
reportable segments as of and for the two months ended
March 31, 2003, the one month ended January 31, 2003
and the three months ended March 31, 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, depreciation and
amortization, restructuring and other non-recurring charges 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

18



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL STATEMENTS (Continued)


allocated to a specific segment. All reported
segment revenues are generated from external customers as
intersegment revenues are not significant.

|                                                                 |  |                |           |           |  |       |         |       |  |   |           |   |  |   |           |  
|---------------------------------------------------------------- |  | -------------- | --------- | --------- |  | ----- | ------- | ----- |  | - | --------- | - |  | - | --------- | -
|                                                                 |  | Wireless       |           | Broadcast |  | Other |         | Total
|                                                                 |  |                |           |           |  |       |         |      
|                                                                 |  |               
|                                                                 |  | (In thousands)
|Two months ended March 31, 2003
    (Reorganized Company)        |  |                |           |           |  |       |         |       |  |   |           |   |  |   |           |  
|Revenues                                                         |  | $              | 47,417    |           |  | $     | 7,227   |       |  | $ |          |   |  | $ | 54,644    |  
|Income (loss) from continuing operations
    before income taxes |  |                | 25,860    |           |  |       | 3,213   |       |  |   | (30,163   | ) |  |   | (1,090    | )
|Assets                                                           |  |                | 1,400,737 |           |  |       | 88,219  |       |  |   | 108,531   |   |  |   | 1,597,487 |  
|Additions to property and equipment                              |  |                | 972       |           |  |       | 908     |       |  |   | 443       |   |  |   | 2,323     |  
|One month ended January 31, 2003
    (Predecessor Company)       |  |                |           |           |  |       |         |       |  |   |           |   |  |   |           |  
|Revenues                                                         |  | $              | 23,843    |           |  | $     | 2,950   |       |  | $ |          |   |  | $ | 26,793    |  
|Income from continuing operations before income
    taxes        |  |                | 13,069    |           |  |       | 892     |       |  |   | 1,011,832 |   |  |   | 1,025,793 |  
|Assets                                                           |  |                | 1,354,877 |           |  |       | 133,324 |       |  |   | 96,206    |   |  |   | 1,584,407 |  
|Additions to property and equipment                              |  |                | 124       |           |  |       | 1,003   |       |  |   | 1,610     |   |  |   | 2,737     |  
|Three months ended March 31, 2002
    (Predecessor Company)      |  |                |           |           |  |       |         |       |  |   |           |   |  |   |           |  
|Revenues                                                         |  | $              | 61,867    |           |  | $     | 10,537  |       |  | $ |          |   |  | $ | 72,404    |  
|Income (loss) from continuing operations
    before income taxes |  |                | 30,115    |           |  |       | 2,718   |       |  |   | (110,462  | ) |  |   | (77,629   | )
|Assets                                                           |  |                | 2,320,724 |           |  |       | 177,089 |       |  |   | 336,219   |   |  |   | 2,834,032 |  
|Goodwill                                                         |  |                | 60,626    |           |  |       |        |       |  |   |          |   |  |   | 60,626    |  
|Additions to property and equipment                              |  |                | 37,313    |           |  |       | 4,983   |       |  |   | 2,757     |   |  |   | 45,053    |  

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 leasing 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 SBC, we owned or
operated 7,488 towers as of March 31, 2003 as compared to
8,036 towers at December 31, 2002.

On December 31, 2002, we completed the sale
of our network services division. Network services
revenues for the three months ended March 31, 2002 were
$41.8 million. 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), was confirmed by the Bankruptcy Court. All
conditions precedent to the effectiveness of the Plan were met
by February 10, 2003 (the Effective Date),
thereby allowing SpectraSite to emerge from bankruptcy.

The Plan 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 (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 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.

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 in our report on Form 10-K for
the year ended December 31, 2002 under Item 1a.
Risk Factors, 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 leverage and capital requirements,
    even after implementation of the restructuring plan;                                                           
|
| |  | dependence on demand for wireless communications;                                                                                                                 
|
| |  | the success of our tower construction program;                                                                                                                    
|
| |  | our ability to co-locate additional tenants on
    our towers;                                                                                                    
|
| |  | 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; and

20



---



##### 





| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | 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 SpectraSites common stock during the
60-day period immediately preceding December 14, 2003 (the
third anniversary of the initial closing) decreases from $22.74
down 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
co-locate tenants on 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 co-location 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 quarter of 2003:

|                      |                                   |                                                                                                 |  |             |        |                  |  |   |        |   |  |   |        | 
|--------------------- | --------------------------------- | ----------------------------------------------------------------------------------------------- |  | ----------- | ------ | ---------------- |  | - | ------ | - |  | - | ------ | 
|                      |                                   |                                                                                                 |  |             |        | 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 | 
|                      |                                   |                                                                                                 |  |             |        |                  |  |   |        |   |  |  
|Reorganized Company  |                                   |                                                                                                 |  |             |        |                  |  |   |        |   |  |  
|                      | Two months ended March 31, 2003:  |                                                                                                 |  |             |        |                  |  |   |        |   |  |   |       
|                      |                                   | Site leasing revenues                                                                           |  |             | 51,069 |                  |  |   | (368   | ) |  |   | 50,701 | 
|                      |                                   | Cost of site leasing operations, excluding
    depreciation, amortization and accretion expense |  |             | 17,060 |                  |  |   | (195   | ) |  |   | 16,865 | 
|                      |                                   |                                                                                                 |  |             |        |                  |  |   |        |   |  |  
|                      |                                   | Tower cash flow                                                                                 |  | $           | 34,009 |                  |  | $ | (173   | ) |  | $ | 33,836 | 
|                      |                                   |                                                                                                 |  |             |        |                  |  |   |        |   |  |  

21



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##### 



|                                                   |                                    |                                                                                                 |  |             |        |                  |  |   |        |   |  |   |        | 
|-------------------------------------------------- | ---------------------------------- | ----------------------------------------------------------------------------------------------- |  | ----------- | ------ | ---------------- |  | - | ------ | - |  | - | ------ | 
|                                                   |                                    |                                                                                                 |  |             |        | Amounts Adjusted
|                                                   |                                    | Actual                                                                                          |  | 545 SBC     |        | For 545 SBC     
|                                                   |                                    | Amounts                                                                                         |  | Towers Sold |        | Towers Sold     
|                                                   |                                    |                                                                                                 |  |             |        |                 
|                                                   |                                    |                                                                                                
|                                                   |                                    | (In thousands)                                                                                 
|Combined Predecessor and Reorganized
    Company  |                                    |                                                                                                 |  |             |        |                  |  |   |        |   |  |  
|                                                   | Three months ended March 31, 2003: |                                                                                                 |  |             |        |                  |  |   |        |   |  |   |       
|                                                   |                                    | Site leasing revenues                                                                           |  |             | 76,625 |                  |  |   | (1,570 | ) |  |   | 75,055 | 
|                                                   |                                    | Cost of site leasing operations, excluding
    depreciation, amortization and accretion expense |  |             | 25,900 |                  |  |   | (660   | ) |  |   | 25,240 | 
|                                                   |                                    |                                                                                                 |  |             |        |                  |  |   |        |   |  |  
|                                                   |                                    | Tower cash flow                                                                                 |  | $           | 50,725 |                  |  | $ | (910   | ) |  | $ | 49,815 | 
|                                                   |                                    |                                                                                                 |  |             |        |                  |  |   |        |   |  |  

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. 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.

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.

Results of Operations



| |                                                                                                             
| | ------------------------------------------------------------------------------------------------------------
| | Three months ended March 31, 2003
    compared to the results for the three months ended
    March 31, 2002.

On January 28, 2003, the Companys Plan
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 three months ended March 31, 2003,
discussed below, includes the one month period ended
January 31, 2003 for the Predecessor Company and the two
months ended March 31, 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 three months ended
March 31, 2003 were $81.4 million, an increase of
$9.0 million from the three months ended March 31,
2002. Revenues from site leasing increased to $76.6 million
for the three months ended March 31, 2003 from
$66.0 million for the three months ended March 31, 2002.
The increase was primarily as a result of incremental revenue in
2003 from new co-location tenants on towers that were part of
our portfolio on March 31, 2002 and revenues derived from
towers acquired or built subsequent to March 31, 2002,
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 March 31,
2002, same tower revenue growth was 16% and same tower cash flow
increased 22%. After the sale of 545 towers to Cingular, we
owned or operated 7,488 towers at March 31, 2003, as
compared to 8,015 towers at March 31, 2002.

Revenues from broadcast services decreased to
$4.8 million for the three months ended March 31, 2003
compared to $6.5 million in the three months ended
March 31, 2002. The decrease was primarily due to a

22



---



##### 



change in the service mix from large broadcast
tower installations to smaller broadcast tower modifications
resulting in lower tower fabrication revenues.


Costs of operations decreased to
$30.3 million for the three months ended March 31,
2003 from $30.9 million for the three months ended
March 31, 2002. Costs of operations for site leasing as a
percentage of site leasing revenues decreased to 33.8% for the
three months ended March 31, 2003 from 38.7% for the three
months ended March 31, 2002. The decrease was primarily due
to increased revenues generated from new co-location 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 as a percentage of broadcast services
revenues increased to 91.0% for the three months ended
March 31, 2003 from 83.2% for the three months ended
March 31, 2002, primarily due to lower revenue volumes in
2003.

Selling, general and administrative expenses
decreased to $13.0 million for the three months ended
March 31, 2003 from $15.5 million for the three months
ended March 31, 2002. Selling, general and administrative
expenses as a percentage of revenues decreased to 15.9% for the
three months ended March 31, 2003 from 21.4% for the three
months ended March 31, 2002. Selling, general and
administrative expenses decreased in amount and as a percentage
of revenues as a result of significant cost cutting measures
implemented in the second half of 2002.

Depreciation, amortization and accretion expenses
decreased to $32.9 million for the three months ended
March 31, 2003 from $44.6 million for the three months
ended March 31, 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.

Interest income increased to $0.4 million
for the three months ended March 31, 2003 from
$0.1 million in the three months ended March 31, 2002
due to higher cash balances on hand. Interest expense decreased
to $14.0 million during the three months ended
March 31, 2003 from $58.7 million for the three months
ended March 31, 2002. The decrease was due to the
extinguishment of the Liabilities Subject to Compromise and a
reduction 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
$1.7 million in the three months ended March 31, 2003.
Of this amount, $1.1 million was related to the loss on
sale of assets and $0.6 million related to losses from
investments in affiliates accounted for under the equity method.
Other income (expense) was a net expense of
$0.4 million in the three months ended March 31, 2002.
Of this amount, $0.5 million related to losses from
investments in affiliates accounted for under the equity method
and $0.1 million was related to the gain on sale of assets.

Income from operations of discontinued segment
was $2.0 million in the three months ended March 31,
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.

23



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##### 





| |           
| | ----------
| | Cash Flows

For the three months ended March 31, 2003,
cash flows provided by operating activities were
$17.8 million as compared to $4.2 million in the three
months ended March 31, 2002. The change is primarily
attributable to decreased interest payments, decreased accounts
receivable, increased accounts payable and increased favorable
cash flow generated from operating income (loss) before
non-cash compensation charges, depreciation, amortization and
accretion (EBITDA). EBITDA was $38.2 million in
the three months ended March 31, 2003 compared to
$26.3 million in the three months ended March 31,
2002. A reconciliation of operating income (loss) to EBITDA
is as follows:

|                        |                                          |                |        |                |  |   |         |        | 
|----------------------- | ---------------------------------------- | -------------- | ------ | -------------- |  | - | ------- | ------ | 
|                        |                                          | Three Months   |        | Three Months  
|                        |                                          | Ended          |        | Ended         
|                        |                                          | March 31, 2003 |        | March 31, 2002
|                        |                                          |                |        |               
|Operating income (loss) |                                          | $              | 5,289  |                |  | $ | (18,629 | )     
|Add:                    |                                          |                |        |                |  |   |         |       
|                        | Depreciation, amortization and accretion |                |        | 32,901         |  |   |         | 44,638 | 
|                        | Non-cash compensation charges            |                |        |               |  |   |         | 289    | 
|                        |                                          |                |        |                |  |   |         |       
|EBITDA                  |                                          | $              | 38,190 |                |  | $ | 26,298  |       
|                        |                                          |                |        |                |  |   |         |       

For the three months ended March 31, 2003,
cash flows provided by investing activities were
$76.1 million compared to cash flows used in investing
activities of $39.8 million for the three months ended
March 31, 2002. Investing activities for the three months
ended March 31, 2003 consisted primarily of proceeds
received from the sale of the 545 SBC towers of $81.0 million.
In addition, we invested $5.0 million and
$39.0 million in purchases of property and equipment,
primarily related to the acquisition and construction of
communications towers, in the three months ended March 31,
2003 and 2002, respectively.

In the three months ended March 31, 2003,
cash flows used in financing activities were $87.0 million,
as compared to cash flows provided by financing activities of
$89.6 million in the three months ended March 31,
2002. Cash used in financing activities for the three months
ended March 31, 2003 consisted primarily of
$76.0 million of payments on our credit facility and
payments on capital leases of $11.0 million, which includes
the prepayment of a capital lease in connection with the
exercise of our purchase option on our corporate headquarters.
The cash provided by financing activities in the three months
ended March 31, 2002 was primarily attributable to
$90.0 million of draws on our credit facility.

Free cash flow (deficit) consists of net cash
provided by operating activities less capital expenditures. 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. Free cash flow (deficit)
is not necessary comparable with similarly titled measures for
other 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 months ended
March 31, 2003 and 2002 was calculated as follows.

|                                          |  |                |        |      |  |   |         |  
|----------------------------------------- |  | -------------- | ------ | ---- |  | - | ------- | -
|                                          |  | 2003           |        | 2002
|                                          |  |                |        |     
|                                          |  |               
|                                          |  | (In thousands)
|Net cash provided by operating activities |  | $              | 17,819 |      |  | $ | 4,202   |  
|Less: Capital expenditures                |  |                | (4,992 | )    |  |   | (39,018 | )
|                                          |  |                |        |      |  |   |         |  
|Free cash flow (deficit)                  |  | $              | 12,827 |      |  | $ | (34,816 | )
|                                          |  |                |        |      |  |   |         |  



| |                       
| | ----------------------
| | Financing Transactions

Communications is party to an amended and
restated credit facility totaling $1.0 billion. The credit
facility includes a $300.0 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, the

24



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##### 



amounts outstanding must be repaid) in quarterly
installments beginning on June 30, 2004 and ending on
June 30, 2007. The credit facility also includes a
$301.7 million multiple draw term loan that is fully drawn
and which must be repaid in quarterly installments beginning on
June 30, 2005 and ending on June 30, 2007 and a
$405.3 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. As of March 31, 2003,
Communications has $707.0 million outstanding under the
credit facility. The remaining $300.0 million under the
credit facility was undrawn. Under the terms of the credit
facility, the Company could borrow approximately
$191 million under the revolving credit facility as of
March 31, 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.

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, a minimum interest coverage ratio and a
minimum fixed charge coverage ratio.

The agent banks under our credit facility have
advised us that they have approved a proposed amendment to the
facility that will, among other things, reduce our unused
$300 million commitment under our revolving credit facility
by $100 million in exchange for increasing the ratios in
our leverage covenants in future periods.

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

25



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##### 



other income and expense. As of March 31,
2003, the carrying amount and fair value of this instrument was
$0.8 million and is included in Other Assets in the
unaudited condensed consolidated financial statements.




| |                          
| | -------------------------
| | Liquidity and Commitments

We had cash and cash equivalents of
$87.9 million at March 31, 2003. We also had
$707.0 million outstanding under our credit facility at
that date. The remaining $300.0 million under the credit
facility was undrawn. The weighted average interest rate on
outstanding borrowings under the credit facility as of
March 31, 2003 was 5.17%. Our ability to borrow under the
credit facility is limited by the financial covenants regarding
the total debt to annualized EBITDA and interest and fixed
charge coverage ratios of SpectraSite Communications and its
subsidiaries. Under the terms of the credit facility, we could
borrow approximately $191 million under the revolving
credit facility as of March 31, 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 (as defined in the credit
facility) 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
co-locate 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 upon a
change of control, as defined, we will be required to adopt one
or more alternatives, such as refinancing our credit facility 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
March 31, 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                    |  | $                      | 706,955   |           |  | $         |        |           |  | $             | 84,095  |  |  | $ | 622,860 |  |  | $ |       | 
|Capital Lease Payments             |  |                        | 1,109     |           |  |           | 771     |           |  |               | 338     |  |  |   |        |  |  |   |       | 
|Operating Leases Payments          |  |                        | 304,209   |           |  |           | 63,142  |           |  |               | 100,620 |  |  |   | 50,655  |  |  |   | 89,792 | 
|SBC Tower Purchase Commitment(1)   |  |                        | 156,000   |           |  |           | 104,000 |           |  |               | 52,000  |  |  |   |        |  |  |   |       | 
|                                   |  |                        |           |           |  |           |         |           |  |               |         |  |  |   |         |  |  |   |        | 
|Total Contractual Cash Obligations |  | $                      | 1,168,273 |           |  | $         | 167,913 |           |  | $             | 237,053 |  |  | $ | 673,515 |  |  | $ | 89,792 | 
|                                   |  |                        |           |           |  |           |         |           |  |               |         |  |  |   |         |  |  |   |        | 





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

In addition, we had standby letters of credit of
$6.3 million and performance bonds of $14.6 million
outstanding at March 31, 2003, most of which expire within
one year.

26



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##### 



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.

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. 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

27



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##### 



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

Long-lived assets, such as property and
equipment, goodwill and purchased intangible assets, are
evaluated 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.



| |                                 
| | --------------------------------
| | 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 shareholders 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.



|        |                                                               
|------- | --------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures
    About Market Risk

We use financial instruments, including variable
rate debt, to finance our operations. As of March 31, 2003,
we had $707.0 million of variable rate debt outstanding
under our credit facility at a weighted average interest rate of
5.17%. A 1% increase in the interest rate on our variable rate
debt would have increased interest expense by approximately
$1.9 million in the three months ended March 31, 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.

28



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##### 





|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

Evaluation of Disclosure Controls and
Procedures.

Our Chief Executive Officer and Chief Financial
Officer, after evaluating the effectiveness of our disclosure
controls and procedures (as defined in the Securities Exchange
Act of 1934 Rules 13a-14(c) and 15d-14(c) as of a date
within 90 days of the filing date of this quarterly report
on Form 10-Q (the Evaluation Date)), have
concluded that as of the Evaluation Date, 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.

PART II  OTHER
INFORMATION



|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings

As described in Item 3 of the Companys
Annual Report on Form 10-K for the year ended
December 31, 2002, in June 2002, certain holders of
SpectraSites outstanding Senior Notes and Senior Discount
Notes (collectively, the Notes) commenced an action
in the United States District Court for the District of Delaware
seeking, among other things to enjoin SpectraSite from
consummating its cash tender offers to purchase a portion of the
outstanding Notes. The complaint alleged that the tender offers
and the transactions contemplated in connection with the tender
offers, including the funding of new term notes by affiliates of
Welsh, Carson, Anderson & Stowe (WCAS) to
finance the tender offers, violated the indentures governing the
Notes as well as the Trust Indenture Act and other securities
laws and breached fiduciary duties owed by the Company, its
Board of Directors and WCAS to holders of the Notes. The
complaint demanded declaratory and monetary relief.

In May 2003, the complaint was dismissed with
prejudice as it relates to the Company, its subsidiaries and all
other defendants other than WCAS and the former WCAS designated
directors (who are no longer members of SpectraSites Board
of Directors). In addition, an agreement in principle has been
reached between the plaintiffs, WCAS and the former WCAS
designated directors to settle the claims and dismiss the
noteholder action.



|        |                                              
|------- | ---------------------------------------------
|Item 2. | Changes in Securities and Use of
    Proceeds

On February 10, 2003, the Company
consummated the Plan. In connection with the Plan, the Company
cancelled its former notes, common stock, restricted stock,
stock warrants and stock options. The Companys Third
Amended and Restated Certificate of Incorporation authorizes
250,000,000 shares of New Common Stock. Of such authorized
shares, 23,587,085 shares have been distributed to the holders
of the Companys former notes.

The securities issued pursuant to the Plan
consist of approximately 23.75 million shares of New Common
Stock and 1.25 million Warrants. All of these securities,
along with any shares of New Common Stock issuable upon exercise
of the Warrants, were or will be issued pursuant to the Plan in
exchange for previously issued securities without registration
under the Securities Act of 1933 in reliance on the provisions
of Section 1145 of the United States Bankruptcy Code (the
Code). For further information concerning the new
securities, reference is made to Note 2 to the Unaudited
Condensed Consolidated Financial Statements above and the
Companys Annual Report on Form 10-K for the year
ended December 31, 2002.

29



---



##### 





|        |                                    
|------- | -----------------------------------
|Item 3. | Defaults Upon Senior
    Securities

None.



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

The Company solicited votes for the acceptance or
rejection of the Plan under chapter 11 of the Code during the
period commencing on or about November 27, 2002, and
continuing through January 21, 2003. In accordance with the
provisions of the Code and the Plan, votes were solicited from
beneficial holders of the following classes of claims and equity
interests in the Company: Class 6  General
Unsecured Claims, including the Companys 12% Senior
Discount Notes due 2008, 11 1/4% Senior Discount Notes due
2009, 12 7/8% Senior Discount Notes due 2010, 10 3/4%
Senior Notes due 2010, 6 3/4% Senior Convertible Notes due
2010 and 12 1/2% Senior Notes due 2010; and
Class 7  the Companys Old Common Stock.
Set forth below is a tabulation of the votes:

|        |  |                     |                   |                     |  |                     |                   |                     |  |  |          |  |  |  |         | 
|------- |  | ------------------- | ----------------- | ------------------- |  | ------------------- | ----------------- | ------------------- |  |  | -------- |  |  |  | ------- | 
|        |  | Amount Accepting    |                   | Amount Rejecting    |  | Number Accepting    |                   | Number Rejecting   
|        |  | (% of Amount Voted) |                   | (% of Amount Voted) |  | (% of Amount Voted) |                   | (% of Amount Voted)
|        |  |                     |                   |                     |  |                     |                   |                    
|Class 6 |  |                     | $1,791,371,300    |                     |  |                     | 6,000,000         |                     |  |  | 165      |  |  |  | 1       | 
|        |  |                     | (99.67)%          |                     |  |                     | (0.33)%           |                     |  |  | (99.40)% |  |  |  | (0.60)% | 
|Class 7 |  |                     | 21,291,935 shares |                     |  |                     | 13,784,125 shares |                     |  |  | N/A      |  |  |  | N/A     | 
|        |  |                     | (60.70)%          |                     |  |                     | (39.30)%          |                     |  |  |          |  |  |  |         | 



|        |                  
|------- | -----------------
|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.                                              
|        | 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.         

30



---



##### 



|        |       |             |  |                                                                                                                                                                                                                                                                                                                                            
|------- | ----- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 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.                                                                                                                                                                                        
|        | 99.1* |             |  | 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.                                                                                                                                                                                 
|        | 99.2* |             |  | 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 January 30, 2003, the Registrant filed a
Current Report on Form 8-K related to a press release it
issued announcing an order confirming the Registrants Plan
of Reorganization.

On February 11, 2003, the Registrant filed a
Current Report on Form 8-K related to a press release it
issued announcing the effectiveness of the Registrants
Plan of Reorganization.

31



---



##### 



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 Secretary                                        
|
| | /s/ GABRIELA GONZALEZ                                
| |                                                      
| | Gabriela Gonzalez                                    
| | Senior Vice President and Corporate
    Controller,  
| | Principal Accounting Officer                         

Date: May 8, 2003

32



---



##### 



CERTIFICATIONS

I, Stephen H. Clark, as Chief Executive
Officer, certify that:

1. I have reviewed this quarterly report on
Form 10-Q of SpectraSite, Inc.;

2. Based on my knowledge, this quarterly
report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial
statements, and other financial information included in this
quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;

4. The registrants other certifying
officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared;
|
| | (b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | (c) presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

5. The registrants other certifying
officers and I have disclosed, based on our most recent
evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons
performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

6. The registrants other certifying
officers and I have indicated in this quarterly report whether
there were significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies
and material weaknesses.



| |                        
| | -----------------------
| | /s/ STEPHEN H. CLARK   
| |                        
| | Stephen H. Clark       
| | Chief Executive Officer

May 8, 2003

33



---



##### 



I, David P. Tomick, as Chief Financial Officer,
certify that:

1. I have reviewed this quarterly report on
Form 10-Q of SpectraSite, Inc.;

2. Based on my knowledge, this quarterly
report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial
statements, and other financial information included in this
quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;

4. The registrants other certifying
officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared;
|
| | (b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | (c) presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

5. The registrants other certifying
officers and I have disclosed, based on our most recent
evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons
performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

6. The registrants other certifying
officers and I have indicated in this quarterly report whether
there were significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies
and material weaknesses.



| |                                                      
| | -----------------------------------------------------
| | /s/ DAVID P. TOMICK                                  
| |                                                      
| | David P. Tomick                                      
| | Executive Vice President, Chief Financial
    Officer

May 8, 2003

34