##### 



U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q/A

(Amendment No. 2)

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

COMMISSION FILE NUMBER: 0-27217

SpectraSite, Inc.

(Name of registrant as specified in its charter)


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

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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes x No o

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

Yes o No x

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

Yes xNo o

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

1



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##### 



INDEX

|                               |                                                                                                                                                                                                                                                                                                                                                                      |  |    |    | 
|------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -- | -- | 
|PART I  FINANCIAL INFORMATION |                                                                                                                                                                                                                                                                                                                                                                      |  |    |   
|                               | ITEM 1  UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS                                                                                                                                                                                                                                                                                                       |  |    |    | 
|                               | Condensed Consolidated Balance Sheets at June 30, 2003
(unaudited; Reorganized Company) and December 31, 2002
(Predecessor Company)                                                                                                                                                                                                                                  |  |    | 3  | 
|                               | Unaudited Condensed Consolidated Statements of Operations
for the three months ended June 30, 2003 (Reorganized
Company), the three months ended June 30, 2002 (Predecessor
Company), the five months ended June 30, 2003 (Reorganized
Company), the month ended January 31, 2003 (Predecessor
Company) and the six months ended June 30, 2002
(Predecessor Company) |  |    | 4  | 
|                               | Unaudited Condensed Consolidated Statements of Cash Flows
for the five months ended June 30, 2003 (Reorganized
Company), the month ended January 31, 2003 (Predecessor
Company) and the six months ended June 30, 2002
(Predecessor Company)                                                                                                                         |  |    | 5  | 
|                               | Notes to the Unaudited Condensed Consolidated Financial
Statements                                                                                                                                                                                                                                                                                                   |  |    | 6  | 
|                               | ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                                                                                                                                                                                                                                                       |  |    | 28 | 
|                               | ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK                                                                                                                                                                                                                                                                                                  |  |    | 63 | 
|                               | ITEM 4  CONTROLS AND PROCEDURES                                                                                                                                                                                                                                                                                                                                     |  |    | 63 | 
|PART II  OTHER INFORMATION    |                                                                                                                                                                                                                                                                                                                                                                      |  |    |   
|                               | ITEM 1  LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                                                                           |  |    | 64 | 
|                               | ITEM 2  CHANGES IN SECURITIES AND USE OF
PROCEEDS                                                                                                                                                                                                                                                                                                                   |  |    | 64 | 
|                               | ITEM 3  DEFAULTS UPON SENIOR SECURITIES                                                                                                                                                                                                                                                                                                                             |  |    | 64 | 
|                               | ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS                                                                                                                                                                                                                                                                                                         |  |    | 64 | 
|                               | ITEM 5  OTHER INFORMATION                                                                                                                                                                                                                                                                                                                                           |  |    | 64 | 
|                               | ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K                                                                                                                                                                                                                                                                                                                            |  |    | 64 | 
|SIGNATURES                     |                                                                                                                                                                                                                                                                                                                                                                      |  | 66 |   
|EXHIBITS                       |                                                                                                                                                                                                                                                                                                                                                                      |  |    |   

2



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED BALANCE
SHEETS


At June 30, 2003 and December 31,
2002


|                                                         |                                                                                                                                |                                                          |           |                   |           |  |           |            |           |  
|-------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------- | --------- | ----------------- | --------- |  | --------- | ---------- | --------- | -
|                                                         |                                                                                                                                | Reorganized                                              |           | Predecessor      
|                                                         |                                                                                                                                | Company                                                  |           | Company          
|                                                         |                                                                                                                                | June 30, 2003                                            |           | December 31, 2002
|                                                         |                                                                                                                                |                                                          |           |                  
|                                                         |                                                                                                                                | (unaudited)                                              |           |                  
|                                                         |                                                                                                                                |                                                         
|                                                         |                                                                                                                                | (dollars in thousands)                                  
|ASSETS                                                  
|Current assets:                                          |                                                                                                                                |                                                          |           |                   |           |  |           |           
|                                                         | Cash and cash equivalents                                                                                                      |                                                          | $         | 58,753            |           |  | $         | 80,961     |          
|                                                         | Accounts receivable, net of allowance of $8,839
    and $11,431, respectively                                                  |                                                          |           | 6,553             |           |  |           | 15,180     |          
|                                                         | Costs and estimated earnings in excess of billings                                                                             |                                                          |           | 3,194             |           |  |           | 2,169      |          
|                                                         | Inventories                                                                                                                    |                                                          |           | 7,756             |           |  |           | 7,878      |          
|                                                         | Prepaid expenses and other                                                                                                     |                                                          |           | 12,759            |           |  |           | 16,696     |          
|                                                         |                                                                                                                                |                                                          |           |                   |           |  |           |           
|                                                         |                                                                                                                                | Total current assets                                     |           |                   | 89,015    |  |           |            | 122,884   |  
|Property and equipment, net                              |                                                                                                                                |                                                          | 1,243,743 |                   |           |  | 2,292,945 |           
|Goodwill, net                                            |                                                                                                                                |                                                          |          |                   |           |  | 60,626    |           
|Other assets                                             |                                                                                                                                |                                                          | 223,427   |                   |           |  | 102,001   |           
|                                                         |                                                                                                                                |                                                          |           |                   |           |  |           |           
|                                                         |                                                                                                                                | Total assets                                             |           | $                 | 1,556,185 |  |           | $          | 2,578,456 |  
|                                                         |                                                                                                                                |                                                          |           |                   |           |  |           |           
|LIABILITIES AND STOCKHOLDERS EQUITY
    (DEFICIT)      
|Current liabilities:                                     |                                                                                                                                |                                                          |           |                   |           |  |           |           
|                                                         | Accounts payable                                                                                                               |                                                          | $         | 7,840             |           |  | $         | 13,029     |          
|                                                         | Accrued and other expenses                                                                                                     |                                                          |           | 77,390            |           |  |           | 66,280     |          
|                                                         | Current portion of liabilities under SBC agreement                                                                             |                                                          |           | 40,335            |           |  |           |           |          
|                                                         | Billings in excess of costs and estimated earnings                                                                             |                                                          |           | 748               |           |  |           | 703        |          
|                                                         | Current portion of credit facility                                                                                             |                                                          |           |                  |           |  |           | 2,244      |          
|                                                         |                                                                                                                                |                                                          |           |                   |           |  |           |           
|                                                         |                                                                                                                                | Total current liabilities                                |           |                   | 126,313   |  |           |            | 82,256    |  
|                                                         |                                                                                                                                |                                                          |           |                   |           |  |           |           
|Long-term portion of credit facility                     |                                                                                                                                |                                                          | 479,955   |                   |           |  | 780,711   |           
|Senior notes                                             |                                                                                                                                |                                                          | 200,000   |                   |           |  |          |           
|Long-term portion of liabilities under SBC
    agreement |                                                                                                                                |                                                          | 16,008    |                   |           |  |          |           
|Other long-term liabilities                              |                                                                                                                                |                                                          | 52,315    |                   |           |  | 27,330    |           
|                                                         |                                                                                                                                |                                                          |           |                   |           |  |           |           
|                                                         |                                                                                                                                | Total long-term liabilities                              |           |                   | 748,278   |  |           |            | 808,041   |  
|                                                         |                                                                                                                                |                                                          |           |                   |           |  |           |           
|Liabilities subject to compromise (Note 2)               |                                                                                                                                |                                                          |          |                   |           |  | 1,763,286 |           
|                                                         |                                                                                                                                |                                                          |           |                   |           |  |           |           
|Stockholders equity (deficit):                          |                                                                                                                                |                                                          |           |                   |           |  |           |           
|                                                         | Common stock, $0.001 par value, 300,000,000
    shares authorized, 154,013,917 issued and outstanding at
    December 31, 2002 |                                                          |           |                  |           |  |           | 154        |          
|                                                         | Common stock, $0.01 par value, 250,000,000 shares
    authorized, 47,487,030 issued and outstanding at June 30,
    2003       |                                                          |           | 475               |           |  |           |           |          
|                                                         | Additional paid-in-capital                                                                                                     |                                                          |           | 686,861           |           |  |           | 1,624,939  |          
|                                                         | Accumulated other comprehensive income (loss)                                                                                  |                                                          |           | 3,524             |           |  |           | (355       | )        
|                                                         | Accumulated deficit                                                                                                            |                                                          |           | (9,266            | )         |  |           | (1,699,865 | )        
|                                                         |                                                                                                                                |                                                          |           |                   |           |  |           |           
|                                                         |                                                                                                                                | Total stockholders equity (deficit)                     |           |                   | 681,594   |  |           |            | (75,127   | )
|                                                         |                                                                                                                                |                                                          |           |                   |           |  |           |           
|                                                         |                                                                                                                                | Total liabilities and stockholders equity
    (deficit) |           | $                 | 1,556,185 |  |           | $          | 2,578,456 |  
|                                                         |                                                                                                                                |                                                          |           |                   |           |  |           |           

See accompanying notes.

3



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |          |        |          |  
|---------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ---------------------------------------- | ---------------------------- | ------------- | ----- | -------------- | -------- | ----------------- | ----- | -------------- | ------ | ------- | ----- | ------- | --------- | --------- | ----- | --------- | -------- | -------- | ------ | -------- | -
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |               
|                                                                             |                                                                                      | Reorganized                              |                              | Predecessor   |       | Reorganized    |          | Predecessor       |       | Predecessor   
|                                                                             |                                                                                      | Company                                  |                              | Company       |       | Company        |          | Company           |       | Company       
|                                                                             |                                                                                      | Three Months                             |                              | Three Months  |       | Five Months    |          | One Month         |       | Six Months    
|                                                                             |                                                                                      | Ended                                    |                              | Ended         |       | Ended June 30, |          | Ended January 31, |       | Ended June 30,
|                                                                             |                                                                                      | June 30, 2003                            |                              | June 30, 2002 |       | 2003           |          | 2003              |       | 2002          
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |               
|                                                                             |                                                                                      |                                         
|                                                                             |                                                                                      | (in thousands, except per share amounts)
|Revenues:                                                                    |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|                                                                             | Site operations                                                                      |                                          | $                            | 77,498        |       |                | $        | 69,633            |       |                | $      | 128,567 |       |         | $         | 25,556    |       |           | $        | 135,585  |       
|                                                                             | Broadcast services                                                                   |                                          |                              | 3,413         |       |                |          | 6,236             |       |                |        | 6,988   |       |         |           | 1,237     |       |           |          | 12,688   |       
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|                                                                             |                                                                                      |                                          | Total revenues               |               |       | 80,911         |          |                   |       | 75,869         |        |         |       | 135,555 |           |           |       | 26,793    |          |          |        | 148,273  |  
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|Operating expenses:                                                          |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|                                                                             | Costs of operations, excluding depreciation,
    amortization and accretion expense: |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |          |       
|                                                                             | Site operations                                                                      |                                          |                              | 25,764        |       |                |          | 26,705            |       |                |        | 42,824  |       |         |           | 8,840     |       |           |          | 52,210   |       
|                                                                             |                                                                                      | Broadcast services                       |                              |               | 3,538 |                |          |                   | 5,005 |                |        |         | 6,427 |         |           |           | 1,492 |           |          |          | 10,375 |         
|                                                                             | Selling, general and administrative expenses                                         |                                          |                              | 12,589        |       |                |          | 15,456            |       |                |        | 21,275  |       |         |           | 4,280     |       |           |          | 30,976   |       
|Depreciation, amortization and accretion expenses                            |                                                                                      |                                          | 25,626                       |               |       |                | 50,625   |                   |       |                | 42,452 |         |       |         | 16,075    |           |       |           | 95,263   |         
|Restructuring and non-recurring charges                                      |                                                                                      |                                          |                             |               |       |                | 28,570   |                   |       |                |       |         |       |         |          |           |       |           | 28,570   |         
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|                                                                             |                                                                                      |                                          | Total operating expenses     |               |       | 67,517         |          |                   |       | 126,361        |        |         |       | 112,978 |           |           |       | 30,687    |          |          |        | 217,394  |  
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|Operating income (loss)                                                      |                                                                                      |                                          | 13,394                       |               |       |                | (50,492  | )                 |       |                | 22,577 |         |       |         | (3,894    | )         |       |           | (69,121  | )       
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|Other income (expense):                                                      |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|                                                                             | Interest income                                                                      |                                          |                              | 279           |       |                |          | 293               |       |                |        | 496     |       |         |           | 137       |       |           |          | 377      |       
|                                                                             | Interest expense                                                                     |                                          |                              | (18,604       | )     |                |          | (61,795           | )     |                |        | (27,865 | )     |         |           | (4,721    | )     |           |          | (120,492 | )     
|                                                                             | Gain on debt discharge                                                               |                                          |                              |              |       |                |          |                  |       |                |        |        |       |         |           | 1,034,764 |       |           |          |         |       
|                                                                             | Other expense                                                                        |                                          |                              | (1,841        | )     |                |          | (10,795           | )     |                |        | (3,070  | )     |         |           | (493      | )     |           |          | (11,182  | )     
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|                                                                             |                                                                                      |                                          | Total other income (expense) |               |       | (20,166        | )        |                   |       | (72,297        | )      |         |       | (30,439 | )         |           |       | 1,029,687 |          |          |        | (131,297 | )
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|Income (loss) from continuing operations
    before income taxes             |                                                                                      |                                          | (6,772                       | )             |       |                | (122,789 | )                 |       |                | (7,862 | )       |       |         | 1,025,793 |           |       |           | (200,418 | )       
|Income tax expense (benefit)                                                 |                                                                                      |                                          | 206                          |               |       |                | (18      | )                 |       |                | 808    |         |       |         | 5         |           |       |           | 143      |         
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|Income (loss) from continuing operations                                     |                                                                                      |                                          | (6,978                       | )             |       |                | (122,771 | )                 |       |                | (8,670 | )       |       |         | 1,025,788 |           |       |           | (200,561 | )       
|Reorganization items:                                                        |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|                                                                             | Adjust accounts to fair value                                                        |                                          |                              |              |       |                |          |                  |       |                |        |        |       |         |           | (644,688  | )     |           |          |         |       
|                                                                             | Professional and other fees                                                          |                                          |                              |              |       |                |          |                  |       |                |        |        |       |         |           | (23,894   | )     |           |          |         |       
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|                                                                             |                                                                                      |                                          | Total reorganization items   |               |       |               |          |                   |       |               |        |         |       |        |           |           |       | (668,582  | )        |          |        |         |  
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|Income (loss) before discontinued operations                                 |                                                                                      |                                          | (6,978                       | )             |       |                | (122,771 | )                 |       |                | (8,670 | )       |       |         | 357,206   |           |       |           | (200,561 | )       
|Discontinued operations:                                                     |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|                                                                             | Loss from operations of discontinued segment, net
    of income tax expense          |                                          |                              |              |       |                |          | (4,797            | )     |                |        |        |       |         |           |          |       |           |          | (2,785   | )     
|                                                                             | Loss on disposal of discontinued segment                                             |                                          |                              | (596          | )     |                |          |                  |       |                |        | (596    | )     |         |           |          |       |           |          |         |       
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|Income (loss) before cumulative effect of
    change in accounting principle |                                                                                      |                                          | (7,574                       | )             |       |                | (127,568 | )                 |       |                | (9,266 | )       |       |         | 357,206   |           |       |           | (203,346 | )       
|Cumulative effect of change in accounting
    principle (Note 4)             |                                                                                      |                                          |                             |               |       |                |         |                   |       |                |       |         |       |         | (12,236   | )         |       |           | (376,753 | )       
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|Net income (loss)                                                            |                                                                                      | $                                        | (7,574                       | )             |       | $              | (127,568 | )                 |       | $              | (9,266 | )       |       | $       | 344,970   |           |       | $         | (580,099 | )       
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|Basic and diluted earnings per share:                                        |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|                                                                             | Income (loss) from continuing operations                                             |                                          | $                            | (0.15         | )     |                | $        | (0.80             | )     |                | $      | (0.18   | )     |         | $         | 6.66      |       |           | $        | (1.30    | )     
|                                                                             | Reorganization items                                                                 |                                          |                              |              |       |                |          |                  |       |                |        |        |       |         |           | (4.34     | )     |           |          |         |       
|                                                                             | Discontinued operations                                                              |                                          |                              | (0.01         | )     |                |          | (0.03             | )     |                |        | (0.02   | )     |         |           |          |       |           |          | (0.02    | )     
|                                                                             | Cumulative effect of change in accounting
    principle                              |                                          |                              |              |       |                |          |                  |       |                |        |        |       |         |           | (0.08     | )     |           |          | (2.45    | )     
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|                                                                             | Net income (loss)                                                                    |                                          | $                            | (0.16         | )     |                | $        | (0.83             | )     |                | $      | (0.20   | )     |         | $         | 2.24      |       |           | $        | (3.77    | )     
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         
|Weighted average common shares outstanding (basic
    and diluted)           |                                                                                      |                                          | 47,244                       |               |       |                | 154,014  |                   |       |                | 47,216 |         |       |         | 154,014   |           |       |           | 153,834  |         
|                                                                             |                                                                                      |                                          |                              |               |       |                |          |                   |       |                |        |         |       |         |           |           |       |           |          |         

See accompanying notes.

4



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS

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

See accompanying notes.

5



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS



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

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

Basis of Presentation

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

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

Use of Estimates

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

Revenue Recognition

Revenues for site operations are recognized when
earned based on lease or license agreements. Rate increases
based on fixed escalation clauses that are included in certain
lease or license agreements are recognized on a straight-line
basis over the term of the lease or license. Revenues from fees,
such as structural analysis fees and site inspection fees, are
recognized upon delivery of the related product or service.
Additionally, the Company generates revenues related to the
management of sites on rooftops. Under each site management
agreement, the Company is entitled to a fee based on a
percentage of the gross revenue derived from the rooftop site
subject to the agreement. The Company recognizes this fee as
revenue when earned. 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 long-term
construction contracts primarily related to the construction of
broadcast towers,

6



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


revenues are recognized under the
percentage-of-completion method. Design, construction and
fabrication services are provided to the customers
specifications. Costs to complete projects can be reasonably
estimated. Revenues are recognized by the percentage of contract
cost incurred to date compared to estimated total contract cost.
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.

Unbilled revenues (costs and estimated earnings
in excess of billings) become billable when, in accordance with
the terms of the contract, certain pre-determined targets are
reached. Typically these targets are reached as certain
pre-defined stages of the project are completed. In the event
that the contractual payment provisions are not triggered or a
contract is terminated, the Companys contracts typically
provide for a payment to be due based on the extent of work
performed to date.

Allowance for Uncollectible
Accounts

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

Significant Customers

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

One customer and its affiliates accounted for
$21.3 million and $23.6 million, or 28% and 29% of
revenues in the three months ended June 30, 2002 and 2003
and $43.6 million, $7.4 million and
$39.2 million, or 29%, 28% and 29% of revenues in the six
months ended June 30, 2002, the one month ended
January 31, 2003 and the five months ended June 30,
2003, respectively. This customer was a significant stockholder
of the Predecessor Companys common stock. In addition,
another customer, which is an affiliate of a former significant
stockholder of the Predecessor Companys common stock,
accounted for $14.6 million and $15.4 million, or 19%
of revenues in both the three months ended June 30, 2002
and 2003 and $28.8 million, $5.9 million and
$25.6 million, or 19%, 22% and 19% of the Companys
revenues in the six months ended June 30, 2002, the one
month ended January 31, 2003 and the five months ended
June 30, 2003, respectively. This customer also accounted
for $5.5 million and $2.5 million, or 21% and 17% of
accounts receivable at December 31, 2002 and June 30,
2003, respectively.

7



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


Property and Equipment

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

Goodwill

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

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

Customer Contracts

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

8



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


Liabilities under SBC
Agreement

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

Derivative Financial
Instruments

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

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

Restructuring and Non-recurring
Charges

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

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

9



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


|                                          |                                      |                |   |              |  |              |   |              |   |  |   |        |   |  |   |       | 
|----------------------------------------- | ------------------------------------ | -------------- | - | ------------ |  | ------------ | - | ------------ | - |  | - | ------ | - |  | - | ----- | 
|                                          |                                      |                |   | Cash         |  | Cash         |   |             
|                                          |                                      |                |   | Payments for |  | Payments for |   |             
|                                          |                                      |                |   | the One      |  | the Five     |   |             
|                                          |                                      | Liability as   |   | Month        |  | Months       |   |             
|                                          |                                      | of             |   | Ended        |  | Ended        |   | Liability as
|                                          |                                      | December 31,   |   | January 31,  |  | June 30,     |   | of June 30, 
|                                          |                                      | 2002           |   | 2003         |  | 2003         |   | 2003        
|                                          |                                      |                |   |              |  |              |   |             
|                                          |                                      |               
|                                          |                                      | (in thousands)
|Accrued restructuring liabilities:        |                                      |                |   |              |  |              |   |              |   |  |   |        |   |  |   |      
|Reduced tower acquisition and development |                                      |                |   |              |  |              |   |              |   |  |   |        |   |  |   |      
|                                          | Employee severance                   |                | $ | 1,950        |  |              | $ | (81          | ) |  | $ | (482   | ) |  | $ | 1,387 | 
|                                          | Lease termination and office closing |                |   | 1,496        |  |              |   | (12          | ) |  |   | (452   | ) |  |   | 1,032 | 
|                                          |                                      |                |   |              |  |              |   |              |   |  |   |        |   |  |   |      
|                                          | Total                                |                |   | 3,446        |  |              |   | (93          | ) |  |   | (934   | ) |  |   | 2,419 | 
|Cingular BTS termination                  |                                      |                |   |              |  |              |   |              |   |  |   |        |   |  |   |      
|                                          | Employee severance                   |                |   | 1,266        |  |              |   | (101         | ) |  |   | (350   | ) |  |   | 815   | 
|                                          | Lease termination and office closing |                |   | 2,065        |  |              |   | (410         | ) |  |   | (966   | ) |  |   | 689   | 
|                                          |                                      |                |   |              |  |              |   |              |   |  |   |        |   |  |   |      
|                                          |                                      |                |   | 3,331        |  |              |   | (511         | ) |  |   | (1,316 | ) |  |   | 1,504 | 
|                                          |                                      |                |   |              |  |              |   |              |   |  |   |        |   |  |   |      
|                                          | Total                                |                | $ | 6,777        |  |              | $ | (604         | ) |  | $ | (2,250 | ) |  | $ | 3,923 | 
|                                          |                                      |                |   |              |  |              |   |              |   |  |   |        |   |  |   |      

Income Taxes

The liability method is used in accounting for
income taxes and deferred tax assets and liabilities are
determined based on differences between the financial reporting
and tax basis of assets and liabilities. The Company assesses
the likelihood that deferred tax assets will be from future
taxable income and, to the extent that recovery is not likely,
establishes a valuation allowance against such assets. As of
June 30, 2003 and December 31, 2002, the Company has
established a 100% valuation allowance against its deferred tax
assets.

Earnings Per Share

On July 31, 2003, the Companys Board
of Directors approved a two-for-one forward stock split of
Spectrasite, Inc.s common stock, effected in the form of a
common stock dividend to stockholders of record on
August 14, 2003. The additional shares of common stock were
mailed or delivered on or about August 21, 2003, by the
Companys transfer agent. All share and per share
information for the reorganized company has been retroactively
restated to reflect the stock split.

Basic and diluted earnings (loss) per share
are calculated in accordance with Statement of Financial
Accounting Standards No. 128 Earnings per
Share. During the three and six months ended June 30,
2002 and the one month ended January 31, 2003, the Company
had potential common stock equivalents related to its
convertible notes, warrants and outstanding stock options. Upon
completion of the Companys reorganization, the convertible
notes were exchanged for shares of common stock, par value $0.01
per share (New Common Stock) and all outstanding
warrants and stock options were cancelled. These potential
common stock

10



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


equivalents were not included in diluted earnings
(loss) per share for the three and six months ended
June 30, 2002 and the one month ended January 31, 2003
because the effect would have been antidilutive. Accordingly,
basic and diluted net income (loss) per share are the same
for the three and six months ended June 30, 2002 and for
the one month ended January 31, 2003.

As discussed in Note 2, under the Plan of
Reorganization, the holders of 166,158,298 shares of common
stock, par value $0.001 per share, outstanding as of
February 10, 2003 (the Old Common Stock)
received new warrants which were immediately exercisable into
2.5 million shares of new common stock, par value $0.01 per
share (the New Common Stock) at a price of $16.00
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 5.4 million options to purchase New Common
Stock were granted under this plan in March 2003. During the
three and five months ended June 30, 2003, the Company had
potential common stock equivalents related to its new warrants
and outstanding stock options on New Common Stock. These
potential common stock equivalents were not included in diluted
earnings (loss) per share for the three and five months
ended June 30, 2003 because the effect would have been
antidilutive. Accordingly, basic and diluted net loss per share
are the same for the three and five months ended June 30,
2003.

Comprehensive Income (Loss)

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

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

Stock Options

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

11



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


month ended January 31, 2003 and the six
months ended June 30, 2002 would have been as follows (in
thousands):

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

12



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


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 5.4 million
options to purchase New Common Stock under this plan. Had
compensation cost for the Companys stock options to
purchase New Common Stock been determined based on the fair
value at the date of grant consistent with the provisions of
SFAS 123, the Companys net loss and net loss per share for
the three and five months ended June 30, 2003 would have
been as follows (in thousands):

|                                                                                                                 |  |               |        |               |  |   |         |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------- | ------ | ------------- |  | - | ------- | -
|                                                                                                                 |  | Reorganized   |        | Reorganized  
|                                                                                                                 |  | Company       |        | Company      
|                                                                                                                 |  | Three Months  |        | Five Months  
|                                                                                                                 |  | Ended         |        | Ended        
|                                                                                                                 |  | June 30, 2003 |        | June 30, 2003
|                                                                                                                 |  |               |        |              
|Reported net loss                                                                                                |  | $             | (7,574 | )             |  | $ | (9,266  | )
|Stock-based employee compensation cost that would
    have been included in net loss under the fair value method |  |               | (1,687 | )             |  |   | (2,030  | )
|                                                                                                                 |  |               |        |               |  |   |         |  
|Adjusted net loss                                                                                                |  | $             | (9,261 | )             |  | $ | (11,296 | )
|                                                                                                                 |  |               |        |               |  |   |         |  
|Basic and diluted loss per share:                                                                                |  |               |        |               |  |   |         |  
|Reported net loss                                                                                                |  | $             | (0.16  | )             |  | $ | (0.20   | )
|Stock-based employee compensation cost that would
    have been included in net loss under the fair value method |  |               | (0.04  | )             |  |   | (0.04   | )
|                                                                                                                 |  |               |        |               |  |   |         |  
|Adjusted net loss                                                                                                |  | $             | (0.20  | )             |  | $ | (0.24   | )
|                                                                                                                 |  |               |        |               |  |   |         |  

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.

Reclassifications

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

Unaudited Interim Financial
Statements

The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
reporting and in accordance with the instructions for
Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
disclosures normally required by generally accepted accounting
principles for complete financial statements or those normally
reflected in the Companys Annual Report on Form 10-K.
The financial information included herein reflects all
adjustments (consisting of normal recurring adjustments for the
Predecessor Company for the three and six months ended
June 30, 2002 and normal recurring adjustments and fresh
start accounting adjustments for the Predecessor Company for the
one month ended January 31, 2003, and normal recurring
adjustments for the Reorganized Company for the three and five
months ended June 30, 2003), which are, in the opinion of
management, necessary for

13



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


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 because of the differences in the bases of
accounting and the capital structure for the Predecessor Company
and the Reorganized Company. Results of interim periods are not
necessarily indicative of the results to be expected for a full
year.

2.     Plan of
Reorganization

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

The Plan of Reorganization provided that, among
other things, (i) in exchange for their notes, the holders
of the 12 1/2% Senior Notes due 2010, the 6 3/4%
Senior Convertible Notes due 2010, the 10 3/4% Senior Notes
due 2010, the 11 1/4% Senior Discount Notes due 2009, the
12 7/8% Senior Discount Notes due 2010 and the 12% Senior
Discount Notes due 2008 received their pro rata share of
47.5 million shares of New Common Stock; (ii) the
holders of 166,158,298 shares of Old Common Stock outstanding as
of the Effective Date received warrants immediately exercisable
into 2.5 million shares of New Common Stock at a price of
$16.00 per share; and (iii) all other equity interests at
the Effective Date, including outstanding warrants and options,
were cancelled.

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

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

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

In accordance with AICPA Statement of
Position 90-7 Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code
(SOP 90-7), the Company adopted fresh start
accounting as of January 31, 2003 and the Companys
emergence from bankruptcy resulted in a new reporting entity.
Under fresh start accounting, the reorganization value of the
entity is

14



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


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:

|                            |                                                    |                      |           |                 |           |      |          |             |          |   |         |     |  |  |           |        |           | 
|--------------------------- | -------------------------------------------------- | -------------------- | --------- | --------------- | --------- | ---- | -------- | ----------- | -------- | - | ------- | --- |  |  | --------- | ------ | --------- | 
|                            |                                                    | Predecessor          |           |                 |           |      |          | Reorganized
|                            |                                                    | Company              |           | Reorganization  |           |      |          | Company    
|                            |                                                    | January 31,          |           | and Fresh Start |           |      |          | January 31,
|                            |                                                    | 2003                 |           | Adjustments     |           | Ref. |          | 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 | 
|                            |                                                    |                      |           |                 |           |      |          |             |          |   |         |     |  |  |           |       

15



---



##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


|                                                        |                                                                                                                                                                                                                                                                                          |                                                          |            |                 |           |      |            |             |          |   |     |     |  |  |         |        |           | 
|------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ---------- | --------------- | --------- | ---- | ---------- | ----------- | -------- | - | --- | --- |  |  | ------- | ------ | --------- | 
|                                                        |                                                                                                                                                                                                                                                                                          | Predecessor                                              |            |                 |           |      |            | Reorganized
|                                                        |                                                                                                                                                                                                                                                                                          | Company                                                  |            | Reorganization  |           |      |            | Company    
|                                                        |                                                                                                                                                                                                                                                                                          | January 31,                                              |            | and Fresh Start |           |      |            | January 31,
|                                                        |                                                                                                                                                                                                                                                                                          | 2003                                                     |            | Adjustments     |           | Ref. |            | 2003       
|                                                        |                                                                                                                                                                                                                                                                                          |                                                          |            |                 |           |      |            |            
|                                                        |                                                                                                                                                                                                                                                                                          |                                                         
|                                                        |                                                                                                                                                                                                                                                                                          | (in thousands)                                          
|LIABILITIES AND STOCKHOLDERS EQUITY
    (DEFICIT)     
|Current liabilities:                                    |                                                                                                                                                                                                                                                                                          |                                                          |            |                 |           |      |            |             |          |   |     |     |  |  |         |       
|                                                        | Accounts payable                                                                                                                                                                                                                                                                         |                                                          | $          | 10,407          |           |      | $          | 16,184      |          |   |     | (1) |  |  | $       | 26,591 |          
|                                                        | Accrued and other expenses                                                                                                                                                                                                                                                               |                                                          |            | 65,039          |           |      |            | 7,796       |          |   |     | (1) |  |  |         | 72,835 |          
|                                                        | Current portion of liabilities under SBC contract                                                                                                                                                                                                                                        |                                                          |            |                |           |      |            | 30,251      |          |   |     | (5) |  |  |         | 30,251 |          
|                                                        | Billings in excess of costs and estimated earnings                                                                                                                                                                                                                                       |                                                          |            | 458             |           |      |            |            |          |   |     |     |  |  |         | 458    |          
|                                                        | Current portion of credit facility                                                                                                                                                                                                                                                       |                                                          |            | 2,244           |           |      |            |            |          |   |     |     |  |  |         | 2,244  |          
|                                                        |                                                                                                                                                                                                                                                                                          |                                                          |            |                 |           |      |            |             |          |   |     |     |  |  |         |       
|                                                        |                                                                                                                                                                                                                                                                                          | Total current liabilities                                |            |                 | 78,148    |      |            |             | 54,231   |   |     |     |  |  |         |        | 132,379   | 
|                                                        |                                                                                                                                                                                                                                                                                          |                                                          |            |                 |           |      |            |             |          |   |     |     |  |  |         |       
|Long-term portion of credit facility                    |                                                                                                                                                                                                                                                                                          |                                                          | 780,711    |                 |           |      |           |             |          |   |     |     |  |  | 780,711 |       
|Long-term portion of liabilities under SBC
    contract |                                                                                                                                                                                                                                                                                          |                                                          |           |                 |           |      | 30,251     |             |          |   | (5) |     |  |  | 30,251  |       
|Other long-term liabilities                             |                                                                                                                                                                                                                                                                                          |                                                          | 52,108     |                 |           |      |           |             |          |   |     |     |  |  | 52,108  |       
|                                                        |                                                                                                                                                                                                                                                                                          |                                                          |            |                 |           |      |            |             |          |   |     |     |  |  |         |       
|                                                        |                                                                                                                                                                                                                                                                                          | Total long-term liabilities                              |            |                 | 832,819   |      |            |             | 30,251   |   |     |     |  |  |         |        | 863,070   | 
|                                                        |                                                                                                                                                                                                                                                                                          |                                                          |            |                 |           |      |            |             |          |   |     |     |  |  |         |       
|Liabilities subject to compromise                       |                                                                                                                                                                                                                                                                                          |                                                          | 1,763,286  |                 |           |      | (1,763,286 | )           |          |   | (4) |     |  |  |        |       
|                                                        |                                                                                                                                                                                                                                                                                          |                                                          |            |                 |           |      |            |             |          |   |     |     |  |  |         |       
|Stockholders equity (deficit):                         |                                                                                                                                                                                                                                                                                          |                                                          |            |                 |           |      |            |             |          |   |     |     |  |  |         |       
|                                                        | Common stock, $0.001 par value, 300,000,000
    shares authorized, 154,013,917 issued and outstanding at
    January 31, 2003 (Predecessor Company); $0.01 par value,
    250,000,000 shares authorized, 47,174,170 issued and outstanding
    at January 31, 2003 (Reorganized Company) |                                                          |            | 154             |           |      |            | 318         |          |   |     | (4) |  |  |         | 472    |          
|Additional paid-in-capital and warrants                 |                                                                                                                                                                                                                                                                                          |                                                          | 1,624,939  |                 |           |      | (939,681   | )           |          |   | (4) |     |  |  | 685,258 |       
|Accumulated other comprehensive income                  |                                                                                                                                                                                                                                                                                          |                                                          | (684       | )               |           |      | 684        |             |          |   | (6) |     |  |  |        |       
|Accumulated deficit                                     |                                                                                                                                                                                                                                                                                          |                                                          | (1,721,087 | )               |           |      | 1,721,087  |             |          |   | (6) |     |  |  |        |       
|                                                        |                                                                                                                                                                                                                                                                                          |                                                          |            |                 |           |      |            |             |          |   |     |     |  |  |         |       
|                                                        |                                                                                                                                                                                                                                                                                          | Total stockholders equity (deficit)                     |            |                 | (96,678   | )    |            |             | 782,408  |   |     |     |  |  |         |        | 685,730   | 
|                                                        |                                                                                                                                                                                                                                                                                          |                                                          |            |                 |           |      |            |             |          |   |     |     |  |  |         |       
|                                                        |                                                                                                                                                                                                                                                                                          | Total liabilities and stockholders equity
    (deficit) |            | $               | 2,577,575 |      |            | $           | (896,396 | ) |     |     |  |  |         | $      | 1,681,179 | 
|                                                        |                                                                                                                                                                                                                                                                                          |                                                          |            |                 |           |      |            |             |          |   |     |     |  |  |         |       

16



---



##### 



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 related to the
    Companys commitment to purchase certain assets at prices
    in excess of fair value.                                                                                                                                                               
|   
|(6) | To reflect the elimination of the accumulated
    other comprehensive income and accumulated deficit as of
    January 31, 2003.                                                                                                                                                              



|   |                       
|-- | ----------------------
|3. | Property and Equipment

Property and equipment consist of the following:

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

4.     Recent
Accounting Pronouncements

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

17



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


in other long term liabilities in the
consolidated balance sheets. The following table displays
activity related to the asset retirement obligation:

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

Had the Company adopted SFAS 143 as of
January 1, 2002 the following asset retirement obligation
would have been recorded (in thousands):

|                  |  |   |        | 
|----------------- |  | - | ------ | 
|January 1, 2002   |  | $ | 32,122 | 
|December 31, 2002 |  | $ | 35,442 | 

These pro forma amounts are measured using
information and assumptions as of the adoption date of this
statement.

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

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

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

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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


material impact on the Companys
consolidated financial position, results of operations or cash
flows.

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

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

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

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

19



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


adoption of this statement to have a material
impact on its consolidated financial position, results of
operations, or cash flows.

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

5.     Acquisition
Activities

SBC Transaction

On August 25, 2000, the Company entered into
an agreement to acquire leasehold and sub-leasehold interests in
approximately 3,900 wireless communications towers from
affiliates of SBC Communications (collectively, SBC)
in exchange for $982.7 million in cash and
$325.0 million in Old Common Stock. Under the agreement,
and assuming the lease or sublease of all 3,900 towers, the
stock portion of the consideration was initially approximately
14.3 million shares valued at $22.74 per share. The stock
consideration was subject to an adjustment payment to the extent
the average closing price of the Old Common Stock during the
60-day period immediately preceding December 14, 2003 (the
third anniversary of the initial closing) decreased from $22.74
to a floor of $12.96. The adjustment payment would be
accelerated if there were a change of control of SpectraSite or
upon the occurrence of certain specified liquidity events. In
any case, the adjustment payment was payable, at the
Companys option, in the form of cash or shares of Old
Common Stock. The maximum amount potentially payable to satisfy
the adjustment payment was approximately 10.8 million
shares of Old Common Stock or $139.8 million in cash. The
Company and SBC entered into a Lease and Sublease Agreement
pursuant to which the Company manages, maintains and leases
available space on the SBC towers and has the right to add
customers to the towers. The average term of the lease or
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
customer 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 Lease
and Sublease Agreement, 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 a recurring fee for the applicable space equal to
the lesser of the fee that would have been charged to the
proposed third-party and a fee 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 a recurring fee for the applicable space equal to
the recurring fee that would have been charged to the third
party.

20



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


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

On November 14, 2001, the Company completed
an amendment to the SBC acquisition agreements. This amendment
reduced the maximum number of towers that the Company is
committed to lease or sublease by 300 towers, from 3,900 in the
original agreement to 3,600 towers in the agreement as amended.
In addition, pursuant to the amendment, the Company receives all
new revenue on the towers remaining to be leased or 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 its rights to 545 SBC towers in California and Nevada to
Cingular for an aggregate purchase price of $81.0 million
and paid SBC a fee of $7.5 million related to the 294
reduction in the maximum number of towers that it is committed
to lease or sublease. This fee is included in Reorganization
Items  Professional and Other Fees in the Condensed
Consolidated Financial Statements. Because these 545 towers were
adjusted to fair value as part of fresh start accounting, no
gain or loss was recognized on the sale. In the one month ended
January 31, 2003, revenues and costs of site leasing
operations, excluding depreciation, amortization and accretion
expense, related to the 545 towers, were $1.2 million and
$0.5 million, respectively. In the five months ended
June 30, 2003, comparable revenues and costs of site
leasing operations, excluding depreciation, amortization and
accretion expense, related to the 545 towers, were
$0.4 million and $0.2 million, respectively.

As of December 31, 2002, the Company had
issued approximately 9.9 million shares of Old Common Stock
to SBC pursuant to the SBC acquisition agreements. As part of
the Plan of Reorganization discussed in Note 2, on
February 10, 2003 the Company issued to SBC
12.1 million shares of Old Common Stock in full
satisfaction of any obligation to issue SBC further stock or
make any further adjustment payment. Of the 12.1 million
shares, the Company issued 7.5 million shares of Old Common
Stock in connection with the adjustment payment described above
and 4.7 million shares of Old Common Stock as an advance
payment on the purchase of the remaining 600 towers. All of
these shares of Old Common Stock were exchanged for new warrants
under the Plan of Reorganization. As a result, at all future
closings with SBC, the stock portion of the payment for each
site has been paid in full.

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

21



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


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

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

6.     Financing
Transactions

Credit Facility

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

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

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

With the proceeds from the issuance of the
8 1/4% Senior Notes Due 2010 discussed below,
Communications repaid $83.0 million of the multiple draw
term loan and $111.5 million of the term loan on
May 21, 2003. In addition, Communications repaid
$1.1 million of the multiple draw term loan and $1.4
million of the term loan on June 24, 2003 and
$12.8 million of the multiple draw term loan and $17.2 of
the term loan on June 30, 2003. In connection with these
repayments, Communications wrote off $4.6 million in debt
issuance costs. This charge is included in interest expense in
the unaudited condensed consolidated statement of operations.

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

22



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


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

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

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

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

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

SpectraSite and each of Communications
domestic subsidiaries have guaranteed the obligations under the
restated credit facility. The restated 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 restated 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
restated 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.

23



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


8 1/4% Senior Notes Due 2010
(8 1/4% Senior Notes)

On May 21, 2003, SpectraSite issued
$200.0 million aggregate principal amount of 8 1/4%
Senior Notes due 2010 for proceeds of $194.5 million, net
of debt issuance costs. Semi-annual interest payments for the
8 1/4% Senior Notes are due on each May 15 and
November 15 beginning on November 15, 2003. The
Company is required to comply with certain covenants under the
terms of the 8 1/4% Senior Notes that restrict the
Companys ability to incur additional indebtedness and make
certain payments, among other covenants.

7.     Discontinued
Operations

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

8.     Business
Segments

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

The measurement of profit or loss currently used
by management to evaluate the results of operations of the
Company and its operating segments is Adjusted EBITDA. For the
periods prior to January 31, 2003, Adjusted EBITDA consists of net
income (loss) before depreciation, amortization and accretion
expenses, interest, gain on debt discharge, income tax expense
(benefit), reorganization items, discontinued operations,
cumulative effect of change in accounting principle and
writeoffs of investments in and loans to affiliates. For the
periods subsequent to January 31, 2003, Adjusted EBITDA
consists of net income (loss) before depreciation, amortization
and accretion, interest, income tax expense (benefit) and, if
applicable, before discontinued operations and cumulative effect of
change in accounting principle. The Company uses a
different definition of Adjusted EBITDA for the fiscal periods
prior to its reorganization to enable investors to view its
operating performance on a consistent basis before the impact of the
items discussed above on the predecessor company. Each of these historical

24



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


items was incurred prior to, or in connection
with, its bankruptcy. The Company more fully discusses Adjusted
EBITDA and the limitations of this financial measure under
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Non-GAAP
Financial Measures  Adjusted EBITDA. Adjusted
EBITDA, as defined above, may not be comparable to a similarly
titled measure employed by other companies and is not a measure
of performance calculated in accordance with GAAP.

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

|                                     |                       |                |           |           |  |          |         |       |  |   |        |   |  |   |         |  |  |   |         |   |  |   |           |   | 
|------------------------------------ | --------------------- | -------------- | --------- | --------- |  | -------- | ------- | ----- |  | - | ------ | - |  | - | ------- |  |  | - | ------- | - |  | - | --------- | - | 
|                                     |                       |                |           |           |  |          |         |      
|                                     |                       | Wireless       |           | Broadcast |  | Other    |         | Total
|                                     |                       |                |           |           |  |          |         |      
|                                     |                       |                |           | Leasing   |  | Services |         | Total |  |   |        |  
|                                     |                       |                |           |           |  |          |         |       |  |   |        |  
|                                     |                       |               
|                                     |                       | (in thousands)
|Three months ended June 30,
    2003 |                       |                |           |           |  |          |         |       |  |   |        |   |  |   |         |  |  |   |         |   |  |   |           |  
|                                     | (Reorganized Company) |                |           |           |  |          |         |       |  |   |        |   |  |   |         |  |  |   |         |   |  |   |           |   | 
|Total revenues                       |                       | $              | 72,020    |           |  | $        | 5,478   |       |  | $ | 3,413  |   |  | $ | 8,891   |  |  | $ |        |   |  | $ | 80,911    |  
|Adjusted EBITDA                      |                       |                | 39,444    |           |  |          | 4,460   |       |  |   | (635   | ) |  |   | 3,825   |  |  |   | (6,090  | ) |  |   | 37,179    |  
|Assets                               |                       |                | 1,366,900 |           |  |          | 90,971  |       |  |   | 20,159 |   |  |   | 111,130 |  |  |   | 78,155  |   |  |   | 1,556,185 |  
|Additions to property and equipment  |                       |                | 2,019     |           |  |          | 1,165   |       |  |   | 278    |   |  |   | 1,443   |  |  |   | 464     |   |  |   | 3,926     |  
|Three months ended June 30,
    2002 |                       |                |           |           |  |          |         |       |  |   |        |   |  |   |         |  |  |   |         |   |  |   |           |  
|                                     | (Predecessor Company) |                |           |           |  |          |         |       |  |   |        |   |  |   |         |  |  |   |         |   |  |   |           |   | 
|Total revenues                       |                       | $              | 64,190    |           |  | $        | 5,443   |       |  | $ | 6,236  |   |  | $ | 11,679  |  |  | $ |        |   |  | $ | 75,869    |  
|Adjusted EBITDA                      |                       |                | 5,657     |           |  |          | 1,001   |       |  |   | (720   | ) |  |   | 281     |  |  |   | (16,600 | ) |  |   | (10,662   | )
|Assets                               |                       |                | 2,249,134 |           |  |          | 172,100 |       |  |   | 21,738 |   |  |   | 193,838 |  |  |   | 278,299 |   |  |   | 2,721,271 |  
|Goodwill                             |                       |                | 60,626    |           |  |          |        |       |  |   |       |   |  |   |        |  |  |   |        |   |  |   | 60,626    |  
|Additions to property and equipment  |                       |                | 14,055    |           |  |          | 4,374   |       |  |   | 319    |   |  |   | 4,693   |  |  |   | 1,069   |   |  |   | 19,817    |  
|Five months ended June 30, 2003      |                       |                |           |           |  |          |         |       |  |   |        |   |  |   |         |  |  |   |         |   |  |   |           |  
|                                     | (Reorganized Company) |                |           |           |  |          |         |       |  |   |        |   |  |   |         |  |  |   |         |   |  |   |           |   | 
|Total revenues                       |                       | $              | 119,437   |           |  | $        | 9,130   |       |  | $ | 6,988  |   |  | $ | 16,118  |  |  | $ |        |   |  | $ | 135,555   |  
|Adjusted EBITDA                      |                       |                | 65,150    |           |  |          | 7,444   |       |  |   | (405   | ) |  |   | 7,039   |  |  |   | (10,230 | ) |  |   | 61,959    |  
|Assets                               |                       |                | 1,366,900 |           |  |          | 90,971  |       |  |   | 20,159 |   |  |   | 111,130 |  |  |   | 78,155  |   |  |   | 1,556,185 |  
|Additions to property and equipment  |                       |                | 3,264     |           |  |          | 1,526   |       |  |   | 552    |   |  |   | 2,078   |  |  |   | 907     |   |  |   | 6,249     |  
|One month ended January 31,
    2003 |                       |                |           |           |  |          |         |       |  |   |        |   |  |   |         |  |  |   |         |   |  |   |           |  
|                                     | (Predecessor Company) |                |           |           |  |          |         |       |  |   |        |   |  |   |         |  |  |   |         |   |  |   |           |   | 
|Total revenues                       |                       | $              | 23,843    |           |  | $        | 1,713   |       |  | $ | 1,237  |   |  | $ | 2,950   |  |  | $ |        |   |  | $ | 26,793    |  
|Adjusted EBITDA                      |                       |                | 12,576    |           |  |          | 1,420   |       |  |   | (531   | ) |  |   | 889     |  |  |   | (1,777  | ) |  |   | 11,688    |  
|Assets                               |                       |                | 1,310,938 |           |  |          | 158,211 |       |  |   | 19,052 |   |  |   | 177,263 |  |  |   | 96,206  |   |  |   | 1,584,407 |  
|Additions to property and equipment  |                       |                | 257       |           |  |          | 861     |       |  |   | 9      |   |  |   | 870     |  |  |   | 1,610   |   |  |   | 2,737     |  

25



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


|                                    |                       |                |           |           |  |          |         |       |  |   |        |   |  |   |         |  |  |   |         |   |  |   |           |  | 
|----------------------------------- | --------------------- | -------------- | --------- | --------- |  | -------- | ------- | ----- |  | - | ------ | - |  | - | ------- |  |  | - | ------- | - |  | - | --------- |  | 
|                                    |                       |                |           |           |  |          |         |      
|                                    |                       | Wireless       |           | Broadcast |  | Other    |         | Total
|                                    |                       |                |           |           |  |          |         |      
|                                    |                       |                |           | Leasing   |  | Services |         | Total |  |   |        |  
|                                    |                       |                |           |           |  |          |         |       |  |   |        |  
|                                    |                       |               
|                                    |                       | (in thousands)
|Six months ended June 30, 2002      |                       |                |           |           |  |          |         |       |  |   |        |   |  |   |         |  |  |   |         |   |  |   |           | 
|                                    | (Predecessor Company) |                |           |           |  |          |         |       |  |   |        |   |  |   |         |  |  |   |         |   |  |   |           |  | 
|Total revenues                      |                       | $              | 126,057   |           |  | $        | 9,528   |       |  | $ | 12,688 |   |  | $ | 22,216  |  |  | $ |        |   |  | $ | 148,273   | 
|Adjusted EBITDA                     |                       |                | 35,840    |           |  |          | 3,674   |       |  |   | (785   | ) |  |   | 2,889   |  |  |   | (23,769 | ) |  |   | 14,960    | 
|Assets                              |                       |                | 2,249,134 |           |  |          | 172,100 |       |  |   | 21,738 |   |  |   | 193,838 |  |  |   | 278,299 |   |  |   | 2,721,271 | 
|Goodwill                            |                       |                | 60,626    |           |  |          |        |       |  |   |       |   |  |   |        |  |  |   |        |   |  |   | 60,626    | 
|Additions to property and equipment |                       |                | 37,404    |           |  |          | 9,479   |       |  |   | 451    |   |  |   | 9,930   |  |  |   | 3,907   |   |  |   | 51,241    | 

The following table shows a breakdown of the
significant components included in the other column
in the segment disclosure above (in thousands):

|                                          |                                                                                                               |                       |     |               |        |               |       |                  |         |               |     |        |        |   |       |        |        |   |       |        |         | 
|----------------------------------------- | ------------------------------------------------------------------------------------------------------------- | --------------------- | --- | ------------- | ------ | ------------- | ----- | ---------------- | ------- | ------------- | --- | ------ | ------ | - | ----- | ------ | ------ | - | ----- | ------ | ------- | 
|                                          |                                                                                                               | Reorganized           |     | Predecessor   |        | Reorganized   |       | Predecessor      |         | Predecessor  
|                                          |                                                                                                               | Company               |     | Company       |        | Company       |       | Company          |         | Company      
|                                          |                                                                                                               | Three Months          |     | Three Months  |        | Five Months   |       | One Month        |         | Six Months   
|                                          |                                                                                                               | Ended                 |     | Ended         |        | Ended         |       | Ended            |         | Ended        
|                                          |                                                                                                               | June 30, 2003         |     | June 30, 2002 |        | June 30, 2003 |       | January 31, 2003 |         | June 30, 2002
|                                          |                                                                                                               |                       |     |               |        |               |       |                  |         |              
|Adjusted EBITDA:                          |                                                                                                               |                       |     |               |        |               |       |                  |         |               |     |        |        |   |       |        |        |   |       |       
|                                          | Corporate selling, general and administrative
    expenses, excluding corporate non-cash compensation charges |                       | $   | 6,090         |        |               | $     | 7,277            |         |               | $   | 10,230 |        |   | $     | 1,777  |        |   | $     | 13,812 |        
|                                          | Corporate non-cash compensation charges                                                                       |                       |     |              |        |               |       | 291              |         |               |     |       |        |   |       |       |        |   |       | 580    |        
|                                          | Corporate other expense                                                                                       |                       |     |              |        |               |       | 9,032            |         |               |     |       |        |   |       |       |        |   |       | 9,377  |        
|                                          |                                                                                                               |                       |     |               |        |               |       |                  |         |               |     |        |        |   |       |        |        |   |       |       
|                                          |                                                                                                               | Total Adjusted EBITDA |     | $             | 6,090  |               |       | $                | 16,600  |               |     | $      | 10,230 |   |       | $      | 1,777  |   |       | $      | 23,769  | 
|                                          |                                                                                                               |                       |     |               |        |               |       |                  |         |               |     |        |        |   |       |        |        |   |       |       
|Assets:                                   |                                                                                                               |                       |     |               |        |               |       |                  |         |               |     |        |        |   |       |        |        |   |       |       
|                                          | Cash and cash equivalents                                                                                     |                       | $   | 58,753        |        |               | $     | 45,307           |         |               | $   | 58,753 |        |   | $     | 73,232 |        |   | $     | 45,307 |        
|                                          | Debt issuance costs                                                                                           |                       |     | 19,402        |        |               |       | 72,625           |         |               |     | 19,402 |        |   |       | 22,974 |        |   |       | 72,625 |        
|                                          | Goodwill                                                                                                      |                       |     |              |        |               |       | 60,626           |         |               |     |       |        |   |       |       |        |   |       | 60,626 |        
|                                          | Investments                                                                                                   |                       |     |              |        |               |       | 4,403            |         |               |     |       |        |   |       |       |        |   |       | 4,403  |        
|                                          | Assets held for sale                                                                                          |                       |     |              |        |               |       | 95,116           |         |               |     |       |        |   |       |       |        |   |       | 95,116 |        
|                                          | Corporate other receivables                                                                                   |                       |     |              |        |               |       | 222              |         |               |     |       |        |   |       |       |        |   |       | 222    |        
|                                          |                                                                                                               |                       |     |               |        |               |       |                  |         |               |     |        |        |   |       |        |        |   |       |       
|                                          |                                                                                                               | Total assets          |     | $             | 78,155 |               |       | $                | 278,299 |               |     | $      | 78,155 |   |       | $      | 96,206 |   |       | $      | 278,299 | 
|                                          |                                                                                                               |                       |     |               |        |               |       |                  |         |               |     |        |        |   |       |        |        |   |       |       
|Additions to property and equipment:      |                                                                                                               |                       |     |               |        |               |       |                  |         |               |     |        |        |   |       |        |        |   |       |       
|                                          | Corporate additions to property and equipment                                                                 |                       | $   | 464           |        |               | $     | 1,069            |         |               | $   | 907    |        |   | $     | 1,610  |        |   | $     | 3,907  |        
|                                          |                                                                                                               |                       |     |               |        |               |       |                  |         |               |     |        |        |   |       |        |        |   |       |       
|Total additions to property and equipment |                                                                                                               | $                     | 464 |               |        | $             | 1,069 |                  |         | $             | 907 |        |        | $ | 1,610 |        |        | $ | 3,907 |       
|                                          |                                                                                                               |                       |     |               |        |               |       |                  |         |               |     |        |        |   |       |        |        |   |       |       

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SPECTRASITE, INC. AND SUBSIDIARIES


NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED

FINANCIAL
STATEMENTS  (Continued)


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

|                                                                 |  |               |        |               |  |               |          |                  |  |               |        |   |  |   |            |   |  |   |          |  
|---------------------------------------------------------------- |  | ------------- | ------ | ------------- |  | ------------- | -------- | ---------------- |  | ------------- | ------ | - |  | - | ---------- | - |  | - | -------- | -
|                                                                 |  | Reorganized   |        | Predecessor   |  | Reorganized   |          | Predecessor      |  | Predecessor  
|                                                                 |  | Company       |        | Company       |  | Company       |          | Company          |  | Company      
|                                                                 |  | Three Months  |        | Three Months  |  | Five Months   |          | One Month        |  | Six Months   
|                                                                 |  | Ended         |        | Ended         |  | Ended         |          | Ended            |  | Ended        
|                                                                 |  | June 30, 2003 |        | June 30, 2002 |  | June 30, 2003 |          | January 31, 2003 |  | June 30, 2002
|                                                                 |  |               |        |               |  |               |          |                  |  |              
|Income (loss) from continuing operations before
    income taxes |  | $             | (6,772 | )             |  | $             | (122,789 | )                |  | $             | (7,862 | ) |  | $ | 1,025,793  |   |  | $ | (200,418 | )
|Add: Depreciation, amortization and accretion
    expenses       |  |               | 25,626 |               |  |               | 50,625   |                  |  |               | 42,452 |   |  |   | 16,075     |   |  |   | 95,263   |  
|Less: Interest income                                            |  |               | (279   | )             |  |               | (293     | )                |  |               | (496   | ) |  |   | (137       | ) |  |   | (377     | )
|Add: Interest expense                                            |  |               | 18,604 |               |  |               | 61,795   |                  |  |               | 27,865 |   |  |   | 4,721      |   |  |   | 120,492  |  
|Less: Gain on debt discharge                                     |  |               |       |               |  |               |         |                  |  |               |       |   |  |   | (1,034,764 | ) |  |   |         |  
|                                                                 |  |               |        |               |  |               |          |                  |  |               |        |   |  |   |            |   |  |   |          |  
|Adjusted EBITDA                                                  |  | $             | 37,179 |               |  | $             | (10,662  | )                |  | $             | 61,959 |   |  | $ | 11,688     |   |  | $ | 14,960   |  
|                                                                 |  |               |        |               |  |               |          |                  |  |               |        |   |  |   |            |   |  |   |          |  

27



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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, in terms of number of
towers, and fastest growing, in terms of revenue growth,
wireless tower operators in the United States. Our primary
business is owning, leasing and licensing antenna sites on
wireless and broadcast towers, owning and licensing in-building
shared infrastructure systems and managing rooftop
telecommunications access on commercial real estate. We also
provide design, construction, modification and maintenance
services for the broadcast tower industry. After the sale of 545
towers to Cingular, we owned or operated 7,539 towers and
in-building systems as of June 30, 2003, located primarily
in the top 100 basic trading area markets in the United States.

On December 31, 2002, we completed the sale
of our network services division. Network services
revenues for the years ended December 31, 2001 and 2002
were $213.1 million and $136.2 million, respectively,
and $77.6 million for the six months ended June 30,
2002. In conjunction with the sale, we recorded a loss on
disposal of the network services division of $47.0 million.
The results of the 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.

For the five months ended June 30, 2003,
approximately 95% of our revenues came from our site operations
business and approximately 5% of our revenues came from our
broadcast services division. Factors affecting the growth in our
site operations revenues include, among other things, the rate
at which wireless carriers choose to deploy capital to improve
and expand their wireless networks and contractual escalation
clauses associated with existing site leasing and licensing
agreements. We expect our broadcast service revenues to continue
to approximate 5% of our revenues in the immediate future.

During the last six months, we have experienced a
decline in revenues in our broadcast services
division as compared to prior periods. This decline is
attributable to reduced demand from our primary customers in the
radio and television broadcast industries. In addition to lower
revenues, Adjusted EBITDA for the broadcast services division for the
three and five months ended June 30, 2003 and the one month ended
January 31, 2003 were ($0.6) million, ($0.4) million
and ($0.5) million, respectively, compared to Adjusted EBITDA
losses of ($0.7) million and ($0.8) million for the three
months and six months ended June 30, 2002, respectively.
Certain of our competitors in this industry have experienced
similar business declines and one competitor has recently
discontinued its broadcast services operation. Our Board of
Directors has initiated an effort to evaluate whether similar
actions may be required. In the event that our Board of
Directors decides to discontinue our broadcast services
business, we estimate that the resulting loss could be as much
as $20.0 million, depending on the nature of the
disposition.

We generate site operations revenues primarily
from wireless communication and broadcast companies by leasing
and licensing space on our towers and access to our in-building
neutral host distributed antenna systems. Our site operations
business consists of our wireless segment and the broadcast leasing
component of our broadcast segment. Typically, our site
leasing and licensing agreements are specific to each site and
are for the initial term of five to ten years, renewable for
additional pre-determined periods at the option of the customer.
Payments under leasing and licensing agreements are generally
paid on a monthly basis, and revenue from each agreement is
recorded

28



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##### 



monthly. Rate increases based on fixed escalation
clauses included in certain lease and licensing agreements are
recognized on a straight-line basis over the terms of the
agreement. We also generate revenue by providing engineering and
site inspection services to our customers for a fee. Revenues
from fees originate at the time the customer applies for space
on our towers or we provide certain services required in order
to process the customers application. Additionally, we
generate revenues related to the management of sites on
rooftops. Under each site management agreement, we are entitled
to a fee based on a percentage of the gross revenue derived from
the rooftop site subject to the agreement. We recognize this fee
as revenue when earned.


Broadcast services revenues consist of fees from
construction contracts that are either fixed priced or on a time
and materials basis. For the time and material contracts,
revenues are recognized as services are performed. For long-term
construction contracts primarily related to the construction of
broadcast towers, revenues are recognized under the
percentage-of-completion method. Design, construction and
fabrication services are provided to the customers
specifications. Costs to complete projects can be reasonably
estimated. Revenues are recognized by the percentage of contract
cost incurred to date compared to estimated total contract cost.

Costs of operations related to site operations
revenues consist primarily of ground rent, maintenance,
utilities and taxes. Because our tower operating expenses
generally do not increase significantly as we add additional
customers, once a tower is built for an anchor customer,
additional customers provide high incremental cash flow.
Fluctuations in our profit margin are therefore directly related
to the incremental number of customers on each site and the
amount of fees generated in a particular period.

Costs of operations related to broadcast services
revenue include the direct costs of the fabrication,
construction, modification and maintenance services that we
provide. These costs include labor, subcontractors, materials,
equipment rental and engineering services. The profit margins
for broadcast services are highly susceptible to changes in
service mix and demand. A substantial decline in capital
expenditures by our broadcast customers in 2003 has adversely
affected our broadcast services profit margins. Our declining
profit margin in the broadcast services sector is primarily due
to uncertainties regarding the requirements and timing for
multicasting of digital television. These uncertainties have
caused broadcasters to delay their capital expenditures for new
construction and make minimum modifications to their towers.

Selling, general and administrative expenses have
three major components. The first component consists of expenses
necessary to support our site leasing and licensing operations
such as sales, marketing, and property management functions. The
second component includes expenses incurred to support broadcast
services activity, which include sales, legal and administrative
support. The final component includes expenses that are incurred
to support all of our business segments, such as legal, finance,
human resources and other administrative support.

The financial difficulties experienced by the
telecommunications and broadcast industries in recent years have
severely impacted capital availability within the wireless
telecommunications and broadcast sectors. Many of our customers
were forced to reduce capital expenditures, which in
turn impeded our revenue and earnings growth and, therefore, our
ability to service our long-term debt. We incurred net losses of
approximately $157.6 million in 2000, $654.8 million
in 2001 and $775.0 million in 2002. After a review of our
business and our prospects, we concluded that recoveries to
creditors and equity holders would be maximized by a consensual
restructuring.

On November 15, 2002, we filed a voluntary
petition for relief under chapter 11 of the Bankruptcy Code
in the United States Bankruptcy Court for the Eastern District
of North Carolina, Raleigh Division. On November 18, 2002,
we filed a Proposed Plan of Reorganization with the Bankruptcy
Court. A plan confirmation hearing was held on January 28,
2003, and the

29



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##### 



Proposed Plan of Reorganization, as modified on
that date (the Plan of Reorganization), was
confirmed by the Bankruptcy Court. All conditions precedent to
the effectiveness of the Plan of Reorganization were met by
February 10, 2003, thereby allowing us to emerge from
bankruptcy. Our emergence from bankruptcy and adoption of fresh
start accounting resulted in the extinguishment of
$1.76 billion of indebtedness and significantly reduced our
interest expense and our depreciation, amortization, and
accretion expense. In addition to our reorganization, we have
taken a number of other measures to minimize the potential net
losses in the future, including the sale of non-performing
assets and the reduction of overhead and capital
expenditures.


As a result of our reorganization, we expect to
achieve profitability sooner than if we had not filed a
voluntary petition for bankruptcy. We expect the portion of our
significant customers capital expenditures related to
network improvements and coverage enhancements to remain at
current levels for the foreseeable future. As customers continue
to add antenna sites to our towers, we expect revenues
associated with our tower assets to increase. Because a
significant percentage of tower operating costs are fixed and do
not increase with additional customers, we expect that our
earnings will increase as we add additional customers on towers.

Our Plan of Reorganization provides for the
distribution of 47.5 million shares of our common stock to
our general unsecured creditors, including former noteholders,
and new warrants to purchase an aggregate of 2.5 million
shares of common stock at an exercise price of $16.00 per share
to the holders of our old common stock, par value $0.001 per
share (the Old Common Stock). These warrants expire
on February 10, 2010. In addition, pursuant to the Plan of
Reorganization, all outstanding shares of Old Common Stock and
all outstanding options and warrants to purchase Old Common
Stock that were outstanding on February 10, 2003 were
cancelled. New options representing an aggregate of 10.0% of our
fully diluted common stock were issued to our management.

Tower Acquisitions and Dispositions

Our portfolio has grown from 106 towers as of
December 31, 1998, to 7,539 towers and in-building
systems as of June 30, 2003. We have accomplished this
growth through acquisitions or new construction (principally
pursuant to build-to-suit arrangements). The majority of our
towers were acquired from (or built under agreements with)
affiliates of SBC Communications and Nextel.

Our original agreement with SBC called for us to
acquire leasehold and subleasehold interests in approximately
3,900 towers over approximately two years and to commit to build
towers for Cingular, an affiliate of SBC. Subsequent amendments
to these agreements have resulted in a reduction in the number
of towers to be leased or subleased to approximately 3,306
towers and in the termination of the build-to-suit arrangement.
See Note 5 to our unaudited consolidated financial
statements, Acquisition Activities  SBC
Transaction. We reduced our acquisition program and
terminated our build-to-suit program in order to limit our
required capital expenditures and to achieve additional
financial flexibility. In November 2001, we paid a fee of
$35 million in connection with the first of these
amendments. On February 10, 2003, we sold our interest in
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 last of the reductions in the
maximum number of towers that we will lease or sublease. In
connection with these transactions, we received a net cash
payment of $73.5 million, which we used to repay a portion
of the indebtedness outstanding under our credit facility,
significantly reduced our capital expenditure commitments,
extended the timeline to meet our remaining commitments and
maintained a mutually profitable commercial relationship with a
significant customer. The 545 towers sold represented
approximately 7% of our owned and operated tower portfolio at
December 31, 2002 and generally were characterized by lower
revenues per tower than other towers in our portfolio. We do not
expect the sale of our interest in the 545 towers to
materially impact our future operating performance.

For the one month
ended January 31, 2003, these towers
represented $1.2 million of a total of
$25.6 million of site operations revenues and
$0.5 million of a total of $8.8 million of costs

30



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of site operations, excluding depreciation,
amortization and accretion expense. For the five months ended June 30,
2003, these towers represented $0.4 million of a total of
$128.6 million of site operations revenues and
$0.2 million of a total of $42.8 million in costs
of site operations, excluding depreciation, amortization and
accretion expense. For the six months ended June 30,
2002 the same towers represented $5.4 million of a
total of $135.6 million of site operations revenues and
$2.9 million of a total of $52.2 million in costs
of site operations, excluding depreciation, amortization and
accretion expense.


We remain contractually obligated to purchase an
additional 600 towers from SBC from May 2003 through August 2004
for an aggregate purchase price of approximately
$156 million. These commitments will require approximately
$78 million in each of 2003 and 2004.

Note Regarding Forward-Looking Statements

This discussion contains forward-looking
statements within the meaning of Section 27A of the
Securities Act, Section 21E of the Securities Exchange Act
of 1934, as amended, and the Private Securities Litigation
Reform Act of 1995 that are subject to risks and uncertainties.
You should not place undue reliance on those statements because
they are subject to numerous uncertainties and factors relating
to our operations and business environment, all of which are
difficult to predict and many of which are beyond our control.
Forward-looking statements include information concerning our
possible or assumed future results of operations, including
descriptions of our business strategy. These statements often
include words such as may, believe,
expect, anticipate, intend,
plan, estimate or similar expressions.
These statements are based on assumptions that we have made in
light of our industry experience as well as our perceptions of
historical trends, current conditions, expected future
developments and other factors we believe are appropriate under
the circumstances. As you read and consider this prospectus, you
should understand that these statements are not guarantees of
performance or results. They involve risks, uncertainties and
assumptions. Although we believe that these forward-looking
statements are based on reasonable assumptions, you should be
aware that many factors could affect our actual financial
results or results of operations and could cause actual results
to differ materially from those in the forward-looking
statements. These factors include but are not limited to:



| |   |                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | substantial leverage and capital requirements,
    even after our emergence from chapter 11;                                                                            
|
| |  | market conditions;                                                                                                                                                      
|
| |  | dependence on demand for wireless communications
and related infrastructure;                                                                                            
|
| |  | our ability to add customers 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 including the impact of technological developments;                                                    
|
| |  | technological innovation;                                                                                                                                               
|
| |  | the integration of our operations with those of
    towers or businesses we have acquired or may acquire in the
    future and the realization of the expected benefits;
|
| |  | dependence upon a small number of significant
    customers;                                                                                                            
|
| |  | disputes with our current and prospective
    customers and lessors;                                                                                                    
|
| |  | the need for additional financing to provide
    operating and growth capital; and                                                                                      
|
| |  | other risks and uncertainties as may be detailed
    from time to time in our public announcements and SEC filings.                                                     

You should keep in mind that any forward-looking
statement made by us in this report, or elsewhere, speaks
only as of the date on which we make it. New risks and
uncertainties come up from time to time, and it is impossible
for us to predict these events or how they may affect us. We
have no duty to, and do not intend to, update or revise the
forward-looking statements in this prospectus after the date of
this prospectus. In light of these risks and uncertainties, you
should keep in mind that any forward-looking statement made in
this prospectus or elsewhere might not occur.

31



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Results of Operations

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

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

Consolidated revenues increased to
$80.9 million for the three months ended June 30, 2003
from $75.9 million for the three months ended June 30,
2002. Site operations revenues increased to $77.5 million for
the three months ended June 30, 2003 from $69.6 million for
the three months ended June 30, 2002. Revenues from wireless operations increased to
$72.0 million for the three months ended June 30, 2003
from $64.2 million for the three months ended June 30, 2002. Revenues from broadcast leasing increased to
$5.5 million for the three months ended June 30, 2003
from $5.4 million for the three months ended June 30,
2002. Increased revenues in 2003 were primarily a result of incremental revenue
in 2003 from new customers on towers that were part of our
portfolio on June 30, 2002,  revenues derived from
towers acquired in 2002 and 2003 and increases in fee revenue offset
by reductions of revenues relating to the 545 SBC towers sold in
February 2003. Based on trailing
twelve-months revenue on the towers that we owned or operated as
of June 30, 2002, same tower revenue growth was 15%. We owned or
operated 7,539
towers at June 30, 2003, as compared to 7,994 towers at
June 30, 2002.

Revenues from broadcast services decreased to
$3.4 million for the three months ended June 30, 2003
compared to $6.2 million for the three months ended
June 30, 2002. Our declining revenues in the
broadcast services sector is primarily due to uncertainties
regarding the requirements and timing for multicasting of
digital television. These uncertainties have caused broadcasters
to delay their capital expenditures for new construction and
make minimum modifications to their towers.

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Consolidated costs of operations, excluding
depreciation, amortization and accretion expenses, decreased to
$29.3 million for the three months ended June 30, 2003
from $31.7 million for the three months ended June 30,
2002. The decrease was primarily due to reductions in costs of
operations, excluding
depreciation, amortization and accretion expenses, related to the 545 SBC Towers sold in February 2003.

Costs of operations, excluding
depreciation, amortization and accretion expenses, for wireless operations
decreased to $25.2 million for the three months ended
June 30, 2003 from $25.5 million for the three months ended
June 30, 2002. Costs of operations, excluding
depreciation, amortization and accretion expenses, for wireless
operations as a percentage of wireless revenues decreased to 35%
for the three months ended June 30, 2003 from 40% for the three
months ended June 30, 2002. Costs of operations, excluding
depreciation, amortization and accretion expenses, for broadcast
leasing decreased to $0.6 million for the three months ended
June 30, 2003 from $1.2 million for the three months ended
June 30, 2002. Costs of operations, excluding
depreciation, amortization and accretion expenses, for broadcast
leasing as a percentage of broadcast leasing revenues decreased
to 10% for the three months ended
June 30, 2003 from 22% for
the three months ended June 30, 2002. Overall, costs of
operations, excluding
depreciation, amortization and accretion expenses, for site operations as a percentage of site
operations revenues decreased to 33% for the three months ended
June 30, 2003 from 38% for the three months ended
June 30, 2002. The decrease was primarily due to
increased revenues generated from new customers on existing
towers and additional Fee Revenue.

Costs of operations, excluding
depreciation, amortization and accretion expenses, for broadcast services
decreased to $3.5 million for the three months ended
June 30, 2003 from $5.0 million for the three months
ended June 30, 2002. Costs of operations, excluding
depreciation, amortization and accretion expenses, for broadcast
services as a percentage of broadcast services revenues
increased to 104% for the three months ended June 30, 2003 from
80% for the three months ended June 30, 2002, primarily due to
lower revenue volumes in 2003.

Selling, general and administrative expenses
decreased to $12.6 million for the three months ended
June 30, 2003 from $15.5 million for the three months
ended June 30, 2002. Selling, general and
administrative expenses as a percentage of revenues decreased to
16% for the three months ended June 30, 2003 from 20% for the
three months ended June 30, 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.

33



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Site operations selling, general and administrative
expenses decreased to $6.1 million for the three months ended
June 30, 2003 from $7.1 million for the three months ended
June 30, 2002. Site operations selling, general and
administrative expenses as a percentage of site operations revenues
decreased to 8% in the three months ended June 30, 2003 from
10% for the three months ended June 30, 2002. Selling, general and administrative expenses for
wireless operations decreased to $5.6 million for the three
months
ended June 30, 2003 from $6.6 million for the
three months ended June 30, 2002. Selling, general and
administrative expenses for wireless operations as a percentage
of wireless revenues decreased to 8% for the three months ended
June 30, 2003 from 10% for the three months ended
June 30, 2002.

Selling, general and administrative expenses for
broadcast leasing remained at $0.5 million for both the three months
ended June 30, 2003 and 2002. Selling, general and
administrative expenses for broadcast leasing as a percentage of
broadcast leasing revenues decreased to 9% for the three months ended
June 30, 2003 from 10% for the three months ended
June 30, 2002.

Selling, general and administrative expenses for
broadcast services decreased to $0.5 million for the three months
ended June 30, 2003 from $0.9 million for the three months
ended June 30, 2002. Selling, general and
administrative expenses for broadcast services as a percentage
of broadcast services revenues increased to 15% for the three months
ended June 30, 2003 from 14% for the ended
June 30, 2002.

Selling, general and administrative expenses not
specific to the above business segments decreased to
$6.0 million for the three months ended June 30, 2003
from $7.5 million for the three months ended June 30,
2002. Selling, general and administrative expenses not specific
to the above business segments as a percentage of total revenues
decreased to 7% for the three months ended June 30, 2003 from
10% for the three months ended June 30, 2002.

In May 2002, we announced that we would terminate our
build-to-suit programs with Cingular and other carriers and
implement other cost-cutting measures as a part of the curtailment of
tower development activities. As a result of these actions, we
recorded restructuring charges of $24.3 million in the three
months ended June 30, 2002. Site operations restructuring charges were
$23.1 million, consisting of $20.3 million in our wireless
segment and $2.8 million in the broadcast leasing component of
our broadcast segment. The restructuring charge for our wireless
segment consisted of $13.6 million related to the write-off of
work in progress related to wireless sites in development that were
terminated, $3.2 million related to the costs of closing offices
and $3.5 million related to the costs of employee severance. The
restructuring charge for the broadcast leasing component of our
broadcast segment related to the write-off of work in progress
related to broadcast sites in development that were terminated. The
restructuring charges for the broadcast services component of our
broadcast segment were $1.2 million related to costs of employee
severance.

In addition, we recorded a non-recurring impairment
charge in the wireless segment of our site leasing business of
$4.3 million in the three months ended June 30, 2002 to
write-down the carrying value of 21 towers that were not
marketable. The charge was based on the difference between the
carrying value and the estimated discounted cash flows of the towers.

Other income (expense) was a net expense of
$1.8 million in the three months ended June 30, 2003. All
of this expense was recorded in the wireless segment of our site
operations business. This amount consisted primarily of
$0.5 million of loss on sale of assets and $0.6 million
related to the writedown of our interest rate cap to fair value.

Other income (expense) was a net expense of
$10.8 million in the three months ended June 30, 2002. Of
this amount, other expense related to the wireless segment of our
site operations business was $1.5 million for the three months
ended June 30, 2002, consisting of $0.4 million related to
gains from investments in affiliates accounted for under the equity
method and $1.9 million related to losses on sales of assets.
Other expense not specific to any business segment for the three
months ended June 30, 2002 was $9.3 million and was related
to expenses associated with our proposed debt tender and exchange
offers.

As a result of the factors discussed above,
Adjusted EBITDA increased to $37.2 million for the three months ended
June 30, 2003 from ($10.7) million for the
three months ended June 30, 2002. Wireless Adjusted EBITDA increased to
$41.2 million for the three months ended June 30, 2003
from $32.1 million for the three months ended 2002. Adjusted EBITDA
for broadcast leasing increased to $4.4 million for
the three months ended June 30, 2003 from $3.7 million for
the three months ended June 30, 2002. Adjusted EBITDA for broadcast
services was ($0.7) million for the three months ended
June 30, 2003 compared to $0.3 million for the three months ended
June 30, 2002.

Depreciation, amortization and accretion expenses
decreased to $25.6 million for the three months ended
June 30, 2003 from $50.6 million for the three months ended
June 30, 2002. Site operations depreciation, amortization and
accretion expenses decreased to $25.4 million for the three
months ended June 30, 2003 from $50.3 million for the
three months ended June 30, 2002. Depreciation, amortization and
accretion expenses for our wireless segment decreased to
$24.3 million for the three months ended June 30, 2003 from
$48.7 million for the three months ended June 30, 2002.
Depreciation, amortization and accretion expenses for the broadcast
leasing component of our broadcast segment decreased to
$1.1 million for the three months ended June 30, 2003 from
$1.6 million for the three months ended June 30, 2002.
Depreciation, amortization and accretion expenses for the broadcast
services component of our broadcast segment decreased to $0.2 million for the three months ended June 30, 2003 from
$0.3 million for the three months ended June 30, 2002. These decreases were 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.

34



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Interest income was $0.3 million for both the three
months ended June 30, 2003 and 2002. Interest expense decreased to
$18.6 million during the three months ended June 30, 2003
from $61.8 million for the three months ended June 30,
2002. The decrease was due to the extinguishment of the Liabilities
Subject to Compromise and a reduction of amounts outstanding under
our credit facility, offset by increases in interest expense as a
result of the issuance of the 8 1/4% Senior Notes due 2010 and
writeoffs of $6.6 million of debt issuance costs resulting from
prepayments of amounts outstanding under our credit facility.

As a result of the factors discussed above, our
operating income was $13.4 million for the three months ended
June 30, 2003, compared to a loss of
$(50.5) million for the three months ended June 30, 2002.

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

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

As a result of the factors discussed above, net
loss was $7.6 million for the three months ended
June 30, 2003, compared to a net loss of
$127.6 million for the three months ended June 30, 2002.

35



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Five Months Ended June 30, 2003, One
Month Ended January 31, 2003 and the Six Months Ended
June 30, 2002

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

Consolidated revenues for the five months ended
June 30, 2003 and the one month ended January 31, 2003
were $135.6 million and $26.8 million, respectively.
Consolidated revenues for the six months ended June 30,
2002 were $148.3 million. Site operations revenues were
$128.6 million and $25.6 million for the five months ended
June 30, 2003 and the one month ended January 31, 2003,
respectively. Site operations revenues were $135.6 million for
the six months ended June 30, 2002. Site operations revenues
were $128.6 million and $25.6 million for the five months
ended June 30, 2003 and the one month ended January 31,
2003 respectively. Site operations revenues were $135.6 million
for the six months ended June 30, 2002. Wireless revenues were
$119.4 million and $23.8 million for the five months
ended June 30, 2003 and the one month ended
January 31, 2003, respectively. Wireless revenues were
$126.1 million for the six months ended June 30, 2002.
Revenues from broadcast leasing were $9.2 million and
$1.8 million for the five months ended June 30, 2003
and the one month ended January 31, 2003, respectively.
Revenues from broadcast leasing were $9.5 million for the
six months ended June 30, 2002. Revenues in 2003 were
primarily affected by incremental revenue in 2003 from new
customers on towers that were part of our portfolio on
June 30, 2002, revenues derived from towers acquired or
built subsequent to June 30, 2002 and increases in fee
revenues, offset by reductions in revenues relating to the 545
SBC towers sold in February 2003. Based on trailing
twelve-months revenue on the towers that we owned or operated as
of June 30, 2002 and June 30, 2003, same tower revenue
growth was 15%. After the sale of 545 towers to Cingular,
we owned or operated 7,539 towers and in-building systems
at June 30, 2003, as compared to 7,994 towers and
in-building systems at June 30, 2002.

Revenues from broadcast services were
$7.0 million and $1.2 million for the five months
ended June 30, 2003 and the one month ended
January 31, 2003, respectively. Revenues from broadcast
services were $12.7 million in the six months ended
June 30, 2002. Our declining profit margin in the broadcast
services sector is primarily due to uncertainties regarding the
requirements and timing for multicasting of digital television.
These uncertainties have caused broadcasters to delay their
capital expenditures for new construction and make minimum
modifications to their towers.

Costs of operations, excluding depreciation,
amortization and accretion expenses, were $49.3 million and
$10.3 million for the five months ended June 30, 2003
and the one month ended January 31, 2003, respectively.
Costs of operations, excluding depreciation, amortization and
accretion expenses, were $62.6 million for the six months
ended June 30, 2002. Costs of operations, excluding appreciation,
amortization and accretion expenses, for site operations
were $42.8 million and $8.8 million for the five months
ended June 30, 2003 and the one month ended January 31,
2003, respectively. Costs of operations, excluding depreciation,
amortization and accretion expenses, for site operations were
$52.2 million for the six months ended June 30, 2002. Costs
of operations, excluding depreciation, amortization and accretion
expenses, for the wireless
segment were $41.8 million and $8.7 million for the
five months ended June 30, 2003 and the one month ended
January 31, 2003, respectively. Costs of operations, excluding depreciation, amortization and accretion
expenses, for the
wireless segment were $50.0 million for the six months
ended June 30, 2002. Costs of operations, excluding depreciation, amortization and accretion
expenses, for the wireless

36



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##### 



segment as a percentage of wireless segment
revenues were 35.0% for the five months ended June 30, 2003,
36.3% for the one month ended January 31, 2003 and 39.6%
for the six months ended June 30, 2002. Broadcast leasing
costs of operations, excluding depreciation, amortization and
accretion expenses, were $1.0 million and $0.1 million
for the five months ended June 30, 2003 and the one month
ended January 31, 2003, respectively. Broadcast leasing
costs of operations, excluding depreciation, amortization and
accretion expenses, were $2.2 million for the six months
ended June 30, 2002. Broadcast leasing costs of operations,
excluding depreciation, amortization and accretion expenses, as a percentage of broadcast leasing revenues were 10.9%, 10.6%
and 23.6% for the five months ended June 30, 2003, the one
month ended January 31, 2003 and the six months ended
June 30, 2002, respectively. Costs of operations, excluding
depreciation, amortization and accretion expenses, for the
wireless and broadcast leasing segments in 2003 were primarily
affected by increased revenues generated from new customers on
existing towers. As our wireless and broadcast leasing
operations mature, we expect that additional customers on towers
will generate increases in our margins for wireless and
broadcast leasing operations and in cash flow because a
significant percentage of tower operating costs are fixed and do
not increase with additional customers.


Costs of operations, excluding
depreciation, amortization and accretion expenses, for broadcast services were
$6.4 million and $1.5 million for the five months
ended June 30, 2003 and the one month ended
January 31, 2003, respectively. Costs of operations, excluding
depreciation, amortization and accretion expenses, for
broadcast services were $10.4 million for the six months
ended June 30, 2002. Costs of operations, excluding
depreciation, amortization and accretion expenses, for broadcast
services as a percentage of broadcast services revenues were
92.0% for the five months ended June 30, 2003, 120.6% for
the one month ended January 31, 2003 and 81.8% for the six
months ended June 30, 2002. Cost of operations excluding
depreciation, amortization and accretion expenses, for
broadcast services in 2003 was primarily affected by lower
revenue volumes in 2003.

Selling, general and administrative expenses were
$21.3 million and $4.3 million for the five months ended
June 30, 2003 and the one-month ended January 31,
2003, respectively. Selling, general and administrative expenses
were $31.0 for the six months ended June 30, 2002. Selling,
general and administrative expenses were 15.7% and 16.0% of
total revenues for the five months ended June 30, 2003 and
the one-month ended January 31, 2003, respectively.
Selling, general and administrative expenses were 20.9% of total
revenues for the six months ended June 30, 2002. Selling,
general and administrative expenses were primarily affected in
amount and as a percentage of revenues as a result of cost
cutting measures that were implemented late in 2002 across all
segments of the business.

Site operations selling, general and administrative
expenses were $10.1 million and $2.2 million for the five
months ended June 30, 2003 and one month ended January 31,
2003, respectively. Site operations selling, general and
administrative expenses were $14.7 million for the six months
ended June 30, 2002. Selling, general and administrative expenses for
our wireless segment were $9.4 million and
$2.1 million for the five months ended June 30, 2003
and the one-month ended January 31, 2003, respectively.
Selling, general and administrative expenses for this segment
were $13.8 million for the six months ended June 30,
2002. Selling, general and administrative expenses for our
wireless segment were 7.9% and 8.9% of wireless revenues for the
five months ended June 30, 2003 and the one-month ended
January 31, 2003, respectively. Selling, general and
administrative expenses for this segment were 10.9% of wireless
revenues for the six months ended June 30, 2002. Selling, general and administrative expenses for
the broadcast leasing component of our broadcast segment were $0.7 million and
$0.1 million for the five months ended June 30, 2003
and the one month ended January 31, 2003, respectively.
Selling, general and administrative expenses for this component
were $0.9 million for the six months ended June 30,
2002. Selling, general and administrative expenses for our
broadcast leasing component of our broadcast segment as a percentage of broadcast leasing
revenues were 9.0% and 6.2% for the five months ended
June 30, 2003 and the one-month ended January 31,
2003, respectively. Selling, general and administrative expenses
for this component as a percentage of broadcast leasing revenues
were 9.1% for the six months ended June 30, 2002.

Selling, general and administrative expenses for
the broadcast services component of our broadcast segment were $1.0 million and
$0.3 million for the five months ended June 30, 2003
and the one month ended January 31, 2003, respectively.
Selling, general and administrative expenses for this component
were $1.9 million for the six months ended June 30,
2002. Selling, general and administrative

37



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##### 



expenses for the broadcast services component of our
broadcast segment were
13.8% and 22.4% of broadcast services revenues for the five
months ended June 30, 2003 and the one-month ended
January 31, 2003, respectively. Selling, general and
administrative expenses for this component were 15.2% of broadcast
services revenues for the six months ended June 30, 2002.


Selling, general and administrative expenses not
specific to the above business segments were $10.2 million
and $1.8 million for the five months ended June 30,
2003 and the one month ended January 31, 2003,
respectively. Selling, general and administrative expenses not
specific to the above business sectors were $14.4 million
for the six months ended June 30, 2002. Selling, general
and administrative expenses not specific to the above business
sectors were 7.5% and 6.6% of total revenues for the five months
ended June 30, 2003 and the one-month ended
January 31, 2003, respectively. Selling, general and
administrative expenses not specific to the above business
sectors were 9.7% of total revenues for the six months ended
June 30, 2002.

In May 2002, we announced that we would terminate
our build-to-suit programs with Cingular and other carriers and
implement other cost-cutting measures as a part of the
curtailment of tower development activities. As a result of
these actions, we recorded restructuring charges of
$24.3 million in the six months ended June 30, 2002.
Site operations restructuring charges were $23.1 million,
consisting of $20.3 million in our wireless segment and
$2.8 million in the broadcast leasing component of our
broadcast segment. The restructuring charge for our wireless
segment consisted of $13.6 million related to the write-off
of work in progress related to wireless sites in development
that were terminated, $3.2 million related to the costs of
closing offices and $3.5 million related to the costs of
employee severance. The restructuring charge for the broadcast
leasing component of our broadcast segment related to the
write-off of work in progress related to broadcast sites in
development that were terminated. The restructuring charges for
the broadcast services component of our broadcast segment were
$1.2 million related to costs of employee severance.

In addition, we recorded a non-recurring
impairment charge in the wireless segment of our site leasing
business of $4.3 million in the six months ended
June 30, 2002 to write-down the carrying value of 21 towers
that were not marketable. The charge was based on the difference
between the carrying value and the estimated discounted cash
flows of the towers.

Other income (expense) was a net expense of
$3.1 million and $0.5 million in the five months ended
June 30, 2003 and the one month ended January 31,
2003, respectively. All of this expense was recorded in the
wireless segment of our site operations business. In the five
months ended June 30, 2003, this amount consisted primarily
of $1.7 million of loss on sale of assets and
$0.6 million related to the write-down of our interest rate
cap to fair value. For the one month ended January 31,
2003, this amount consisted of $0.6 million related to
losses from investments in affiliates accounted for under the
equity method offset by a gain on sale of assets of
$0.1 million.

Other income (expense) was a net expense of
$11.2 million in the six months ended June 30, 2002.
Of this amount, other expense related to the wireless segment of
our site operations business was $1.9 million for the six
months ended June 30, 2002, consisting of $0.1 million
related to losses from investments in affiliates accounted for
under the equity method and $1.8 million related to losses on
sales of assets. Other expense not specific to any business
segment for the six months ended June 30, 2002 was
$9.3 million and was related to expenses associated with
our proposed debt tender and exchange offers.

As a result of the factors discussed above,
Adjusted EBITDA was $62.0 million and $11.7 million
for the five months ended June 30, 2003 and the one month
ended January 31, 2003, respectively. Adjusted EBITDA was
$15.0 million for the six months ended June 30, 2002.

Adjusted EBITDA for site operations was
$72.6 million and $14.0 million for the five months ended
June 30, 2003 and the one month ended January 31, 2003,
respectively. Adjusted EBITDA for site operations was
$39.5 million for the six months ended June 30, 2002. Adjusted EBITDA for our wireless segment was $65.2 million
and $12.6 million for the five months ended June 30,
2003 and the one month ended January 31, 2003,
respectively. Adjusted EBITDA for this segment was
$35.8 million for the six months ended June 30, 2002. Adjusted EBITDA for the broadcast leasing component of our broadcast segment was
$7.4 million and $1.4 million for the five months
ended June 30, 2003 and the one month ended
January 31, 2003, respectively. EBITDA for this component was
$3.7 million for the six months ended June 30, 2002.

Adjusted EBITDA for the broadcast services component
of our broadcast segment were
($0.4) million and ($0.5) million for the five months
ended June 30, 2003 and the one month ended
January 31, 2003, respectively. Adjusted EBITDA for this
component was ($0.8) million for the six months ended
June 30, 2002.

Depreciation, amortization and accretion expenses
were $42.5 million and $16.1 million for the five
months ended June 30, 2003 and the one month ended
January 31, 2003, respectively. Depreciation, amortization
and accretion expenses were $95.3 million for the six
months ended June 30, 2002. Site operations depreciation, amortization and accretion
expenses were $42.0 million and $15.9 million for the five
months ended June 30, 2003 and the one month ended
January 31, 2003, respectively. Site operations depreciation,
amortization and accretion expenses were $94.4 million for the six months ended
June 30, 2002. Depreciation, amortization and accretion
expenses for our wireless segment were $40.3 million and
$15.4 million for the five months ended June 30, 2003
and the one month ended January 31, 2003, respectively.
Depreciation, amortization and accretion expenses for this
segment were $91.4 million for the six months ended
June 30, 2002. Depreciation, amortization and accretion
expenses for the broadcast leasing component of our broadcast
segment were $1.7 million and $0.5 million for the
five months ended June 30, 2003 and the one month ended
January 31, 2003, respectively. Depreciation, amortization
and accretion expenses for this component were $3.0 million
for the six months ended June 30, 2002. Depreciation,
amortization and accretion expenses for the broadcast services
component of our broadcast segment were $0.5 million and
$0.2 million for the five months ended June 30, 2003
and the one month ended January 31, 2003, respectively.
Depreciation, amortization and accretion expenses for this
component were $0.9 million for the six months ended
June 30, 2002. Depreciation, amortization and
accretion expenses for 2003 were affected primarily by 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 was $0.5 million and
$0.1 million for the five months ended June 30, 2003
and the one month ended January 31, 2003, respectively.
Interest income was $0.4 million in the six months ended
June 30, 2002. Interest income for 2003 was affected by
higher cash balances

38



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on hand and lower interest rates. Interest
expense was $27.9 million and $4.7 million for the
five months ended June 30, 2003 and the one month ended
January 31, 2003, respectively. Interest expense was
$120.5 million for the six months ended June 30, 2002.
Interest expense in 2003 was affected by the extinguishment of
indebtedness pursuant to our Plan of Reorganization and a
reduction of amounts outstanding under our credit facility,
offset by increases in interest expense as a result of the
issuance of the 8 1/4% Senior Notes due 2010 and writeoffs
of $8.2 million of debt issuance costs resulting from
prepayments of amounts outstanding under our credit facility.


On February 10, 2003, we emerged from
bankruptcy and the holders of the indebtedness extinguished
pursuant to our Plan of Reorganization received their pro rata
share of 47.5 million shares of common stock in exchange
for their notes. The excess of the carrying value of the
extinguished indebtedness, 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 in the one month ended January 31, 2003.

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 recorded
in the one month ended January 31, 2003. In addition, we
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 items in the unaudited condensed consolidated
statement of operations.

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

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

As a result of the factors discussed above, net
loss for the five months ended June 30, 2003 was
$9.3 million, and net income for the one month ended
January 31, 2003 was $345.0 million. Net loss for the
six months ended June 30, 2002 was $580.1 million.

39



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Liquidity and Capital Resources

We are a holding company whose only significant
asset is the outstanding capital stock of its subsidiary,
Communications. Our only source of cash to pay our obligations
is distributions from Communications.

As a result of the reorganization and
implementation of fresh start accounting, our results of
operations after January 31, 2003 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.

Cash Flows

Cash provided by operating activities was
$28.6 million for the five months ended June 30, 2003
and $5.9 million for the one month ended January 31,
2003. Cash used in operating activities was $15.7 million
for the six months ended June 30, 2002. The increase in
cash provided by operating activities in 2003 is primarily
attributable to decreased interest payments and decreased
depreciation expense following our reorganization, decreased
accounts receivable and increased accounts payable.

40



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Cash provided by investing activities was
$65.7 million for the five months ended June 30, 2003.
Cash used in investing activities was $2.7 million for the
one month ended January 31, 2003 and $59.3 million for
the six months ended June 30, 2002. Investing activities
for the five months ended June 30, 2003 consisted primarily
of proceeds received from the sale of the 545 SBC towers of
$81.0 million. In addition, we invested $15.5 million,
$2.7 million and $58.6 million in purchases of
property and equipment and acquisitions, primarily related to
the acquisition and construction of communications towers, in
the five months ended June 30, 2003, the one month ended
January 31, 2003 and the six months ended 2002,
respectively.

Cash used in financing activities was
$108.7 million in the five months ended June 30, 2003
and $10.9 million in the one month ended January 31,
2003. Cash provided by financing activities was $88.8 million in
the six months ended June 30, 2002. Cash used in financing
activities for the five months ended June 30, 2003
consisted primarily of $200.0 million in proceeds from the
issuance of our 8 1/4% Senior Notes Due 2010 and $1.6
million in proceeds from the issuance of common stock, offset by
$303.0 million of payments on our credit facility, payments
on capital leases of $0.3 million and $7.0 million in
debt issuance costs related to the Senior Notes. Cash used in
financing activities for the one month ended January 31,
2003 consisted of payments on capital leases of
$10.9 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 six months ended June 30, 2002 was
primarily attributable to $90.0 million of draws on our
credit facility.

Financing Transaction

On May 21, 2003, we issued
$200.0 million aggregate principal amount of 8 1/4%
Senior Notes due 2010 for proceeds of $194.5 million, net
of debt issuance costs. Semi-annual interest payments for the
8 1/4% Senior Notes are due on each May 15 and
November 15 beginning on November 15, 2003. We are
required to comply with certain covenants under the terms of the
8 1/4% Senior Notes that restrict our ability to incur
additional indebtedness and make certain payments, among other
things.

Credit Facility

Our principal operating subsidiary,
Communications, is party to an amended and restated credit
facility with lending commitments totaling approximately
$680.0 million. The credit facility includes a revolving
credit facility with a borrowing limit of $200.0 million,
subject to compliance with covenants and the satisfaction of
certain conditions precedent. As of June 30, 2003,
Communications could borrow up to approximately
$193.7 million of the $200.0 million under the
revolving credit facility. The maximum amount available will be
reduced (and, if necessary, the amounts outstanding must be
repaid) in quarterly installments beginning on
September 30, 2005 and ending on June 30, 2007. The
credit facility also includes a multiple draw term loan that is
fully drawn and which must be repaid in quarterly installments
beginning on March 31, 2006 and ending on June 30,
2007, and a 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. As of June 30,
2003, $204.8 million was outstanding under the multiple
draw term loan and $275.2 million was outstanding under the
term loan.

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 term loan
bears interest, at

41



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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.


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

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

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

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.

With the proceeds from the issuance of the
8 1/4% Senior Notes Due 2010, Communications repaid
$83.0 million of the multiple draw term loan and
$111.5 million of the term loan on May 21, 2003. In
addition, Communications repaid $1.1 million of the
multiple draw term loan and $1.4 million of the term loan
on June 24, 2003 and $12.8 million of the multiple
draw term loan and $17.2 million of the term loan on
June 30, 2003. In connection with these repayments,
Communications wrote off $4.6 million in debt issuance
costs. This charge is included in interest expense in the
unaudited condensed consolidated statement of operations.

Liquidity and Commitments

We emerged from bankruptcy in February 2003. As a
result, $1.76 billion of previously outstanding
indebtedness was cancelled. Communications, the borrower under
the credit facility, and our other subsidiaries were not part of
the bankruptcy. The credit facility has remained in place
during, and since, the reorganization.

We had cash and cash equivalents of
$81.0 million at December 31, 2002 and
$58.8 million at June 30, 2003. We also had
$783.0 million outstanding under our credit facility at
December 31, 2002 and $480.0 million outstanding at
June 30, 2003. The revolving portion of our credit facility
was undrawn. Our ability to borrow under the revolving credit
facility is limited by the financial covenants regarding the
total debt to Annualized EBITDA (as defined in the credit

42



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agreement) and interest and fixed charge coverage
ratios of Communications and its subsidiaries. Communications
could borrow approximately $193.7 million under the
revolving credit facility as of June 30, 2003. Our ability
to borrow under the credit facilitys financial covenants
will increase or decrease as our Annualized EBITDA (as defined
in the credit facility) increases or decreases. The weighted
average interest rate on outstanding borrowings under the credit
facility was 5.94% as of December 31, 2002 and 4.83% as of
June 30, 2003.


While we have taken steps to reduce our capital
commitments, we are contractually obligated to purchase an
additional 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 and available
cash on hand will be sufficient to fund our capital expenditures
and other currently anticipated cash needs for the next three
years. Our ability to meet these needs from cash provided by
operating activities will depend on the demand for wireless
services, developments in competing technologies and our ability
to add new customers, as well as general economic, financial,
competitive, legislative, regulatory and other factors, many of
which are beyond our control. In addition, 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.

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

|                                   |  |                        |           |           |  |           |         |           |  |               |         |  |  |   |         |  |  |   |         | 
|---------------------------------- |  | ---------------------- | --------- | --------- |  | --------- | ------- | --------- |  | ------------- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                   |  |                       
|                                   |  | Payments Due by Period
|                                   |  |                       
|                                   |  |                        |           | Less than |  |          
|Contractual Obligations            |  | Total                  |           | 1 Year    |  | 1-3 Years |         | 4-5 Years |  | After 5 Years
|                                   |  |                        |           |           |  |           |         |           |  |              
|                                   |  |                       
|                                   |  | (in thousands)        
|Credit Facility                    |  | $                      | 479,955   |           |  | $         |        |           |  | $             | 30,137  |  |  | $ | 449,818 |  |  | $ |        | 
|Senior Notes                       |  |                        | 200,000   |           |  |           |        |           |  |               |        |  |  |   |        |  |  |   | 200,000 | 
|Capital Lease Payments             |  |                        | 931       |           |  |           | 704     |           |  |               | 227     |  |  |   |        |  |  |   |        | 
|Operating Leases Payments          |  |                        | 297,891   |           |  |           | 63,369  |           |  |               | 97,210  |  |  |   | 49,326  |  |  |   | 87,986  | 
|Asset Retirement Obligations       |  |                        | 36,684    |           |  |           | 381     |           |  |               | 411     |  |  |   | 962     |  |  |   | 34,930  | 
|SBC Tower Purchase Commitment(1)   |  |                        | 141,960   |           |  |           | 104,000 |           |  |               | 37,960  |  |  |   |        |  |  |   |        | 
|                                   |  |                        |           |           |  |           |         |           |  |               |         |  |  |   |         |  |  |   |         | 
|Total Contractual Cash Obligations |  | $                      | 1,157,421 |           |  | $         | 168,454 |           |  | $             | 165,945 |  |  | $ | 500,106 |  |  | $ | 322,916 | 
|                                   |  |                        |           |           |  |           |         |           |  |               |         |  |  |   |         |  |  |   |         | 



---



|    |                                                                                     
|--- | ------------------------------------------------------------------------------------
|(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 $5.5 million
outstanding at June 30, 2003, most of which expire within
one year.

Non-GAAP Financial Measures

Adjusted
EBITDA.Adjusted EBITDA consists
of net income (loss) before depreciation, amortization and
accretion, interest, income tax expense (benefit) and, if
applicable, before discontinued operations and cumulative effect of change in accounting
principle. For the periods
prior to January 31, 2003, Adjusted EBITDA also excludes gain on
debt discharge, reorganization items, and writeoffs of
investments in and loans to affiliates. We use a different
definition of Adjusted EBITDA for the fiscal periods prior to
our reorganization to enable investors to view our operating
performance on a consistent basis before the impact of the items
discussed above on the predecessor company. Each of these historical items was incurred
prior to, or in connection

43



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with, our bankruptcy and is excluded from Adjusted EBITDA to
reflect, as accurately as possible, the results of our core
operations. Management does not expect any of these items to
have a material financial impact on our operations on a
going-forward basis because none of these pre-reorganization
items is expected to occur in the foreseeable future.


Adjusted EBITDA may not be comparable to a
similarly titled measure employed by other companies and is not
a measure of performance calculated in accordance with
accounting principles generally accepted in the United States,
or GAAP.

We use Adjusted EBITDA as a measure of operating
performance. Adjusted EBITDA should not be considered in
isolation or as a substitute for operating income, net income or
loss, cash flows provided by operating, investing and financing
activities or other income statement or cash flow statement
data prepared in accordance with GAAP.

We believe Adjusted EBITDA is useful to an
investor in evaluating our operating performance because:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | it is the primary measure used by our management
    to evaluate the economic productivity of our operations,
    including the efficiency of our employees and the profitability
    associated with their performance, the realization of contract
    revenue under our long-term contracts, our ability to obtain and
    maintain our customers and our ability to operate our leasing
    and licensing business effectively;
|
| |  | it is widely used in the wireless tower industry
    to measure operating performance without regard to items such
    as depreciation and amortization, which can vary depending upon
    accounting methods and the book value of assets; and                                                                                                                                                                                    
|
| |  | we believe it helps investors meaningfully
    evaluate and compare the results of our operations from period
    to period by removing the impact of our capital structure
    (primarily interest charges from our outstanding debt) and asset
    base (primarily depreciation and amortization) from our
    operating results.                                                                                                

Our management uses Adjusted EBITDA:



| |   |                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | as a measurement of operating performance because
    it assists us in comparing our operating performance on a
    consistent basis as it removes the impact of our capital
    structure (primarily interest charges from our outstanding debt)
    and asset base (primarily depreciation and amortization) from
    our operating results;
|
|
| |  | in presentations to our Board of Directors to
    enable it to have the same measurement of operating performance
    used by management;                                                                                                                                                                                                     
|
|
| |  | for planning purposes, including the preparation
    of our annual operating budget;                                                                                                                                                                                                                                                          
|
| |  | for compensation purposes, including the basis
    for incentive quarterly and annual bonuses for certain
    employees, including our sales force;                                                                                                                                                                                           
|
| |  | as a valuation measure in strategic analyses in
    connection with the purchase and sale of assets; and                                                                                                                                                                                                                                      
|
| |  | with respect to compliance with our credit
    facility, which requires us to maintain certain financial ratios
    based on Annualized EBITDA (as defined in our credit agreement).                                                                                                                                                          

There are material limitations to using a measure
such as Adjusted EBITDA, including the difficulty associated with
comparing
results among more than one company and the inability to analyze
certain significant items, including depreciation and
interest expense, that directly affect our net income or loss.
Management compensates for these limitations by
considering

44



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##### 



the economic effect of the excluded expense items
independently as well as in connection with its analysis of net
income. Adjusted EBITDA should be considered in addition to, but
not as a substitute for, other measures of financial performance
reported in accordance with generally accepted accounting
principles.


Adjusted EBITDA for the three months ended
June 30, 2003 and 2002, the six months ended
June 30, 2002, the one month ended January 31, 2003
and the five months ended June 30, 2003 was calculated as
follows:

|                                                                                     |                               |                |          |               |  |               |        |                  |  |               |          |   |  |   |            |         |  |   |        |   | 
|------------------------------------------------------------------------------------ | ----------------------------- | -------------- | -------- | ------------- |  | ------------- | ------ | ---------------- |  | ------------- | -------- | - |  | - | ---------- | ------- |  | - | ------ | - | 
|                                                                                     |                               |                |          |               |  |               |        |                 
|                                                                                     |                               | Three Months   |          | Three Months  |  | Six Months    |        | One Month        |  | Five Months  
|                                                                                     |                               | Ended          |          | Ended         |  | Ended         |        | Ended            |  | Ended        
|                                                                                     |                               | June 30, 2002  |          | June 30, 2003 |  | June 30, 2002 |        | January 31, 2003 |  | June 30, 2003
|                                                                                     |                               |                |          |               |  |               |        |                  |  |              
|                                                                                     |                               |               
|                                                                                     |                               | (in thousands)
|Net income (loss)                                                                    |                               | $              | (127,568 | )             |  | $             | (7,574 | )                |  | $             | (580,099 | ) |  | $ | 344,970    |         |  | $ | (9,266 | )
|Depreciation, amortization and accretion expense                                     |                               |                | 50,625   |               |  |               | 25,626 |                  |  |               | 95,263   |   |  |   | 16,075     |         |  |   | 42,452 |  
|Interest income                                                                      |                               |                | (293     | )             |  |               | (279   | )                |  |               | (377     | ) |  |   | (137       | )       |  |   | (496   | )
|Interest expense                                                                     |                               |                | 61,795   |               |  |               | 18,604 |                  |  |               | 120,492  |   |  |   | 4,721      |         |  |   | 27,865 |  
|Gain on debt discharge                                                               |                               |                |         |               |  |               |       |                  |  |               |         |   |  |   | (1,034,764 | )       |  |   |       |  
|Writeoff of investments in affiliates                                                |                               |                |         |               |  |               |       |                  |  |               |         |   |  |   |           |         |  |   |       |  
|Writeoff of loans to affiliates                                                      |                               |                |         |               |  |               |       |                  |  |               |         |   |  |   |           |         |  |   |       |  
|Income tax expense                                                                   |                               |                | (18      | )             |  |               | 206    |                  |  |               | 143      |   |  |   | 5          |         |  |   | 808    |  
|Reorganization items:                                                                |                               |                |          |               |  |               |        |                  |  |               |          |   |  |   |            |         |  |   |        |  
|                                                                                     | Adjust accounts to fair value |                |          |              |  |               |        |                 |  |               |          |  |  |   |            | 644,688 |  |   |        |  | 
|                                                                                     | Professional and other fees   |                |          |              |  |               |        |                 |  |               |          |  |  |   |            | 23,894  |  |   |        |  | 
|Loss (income) from operations of discontinued
    segment, net of income tax expense |                               |                | 4,797    |               |  |               |       |                  |  |               | 2,785    |   |  |   |           |         |  |   |       |  
|Loss on disposal of discontinued segment                                             |                               |                |         |               |  |               | 596    |                  |  |               |         |   |  |   |           |         |  |   | 596    |  
|Cumulative effect of change in accounting
    principle                              |                               |                |         |               |  |               |       |                  |  |               | 376,753  |   |  |   | 12,236     |         |  |   |       |  
|                                                                                     |                               |                |          |               |  |               |        |                  |  |               |          |   |  |   |            |         |  |   |        |  
|Adjusted EBITDA                                                                      |                               | $              | (10,662  | )             |  | $             | 37,179 |                  |  | $             | 14,960   |   |  | $ | 11,688     |         |  | $ | 61,959 |  
|                                                                                     |                               |                |          |               |  |               |        |                  |  |               |          |   |  |   |            |         |  |   |        |  

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Free Cash
Flow.Free cash flow (deficit), as
we have defined it, is calculated as the cash provided by (used
in) operating activities less purchases of property and
equipment. We believe free cash flow to be relevant and useful
information to our investors as this measure is used by our
management in evaluating our liquidity and the cash generated by
our consolidated operating businesses. Our definition of free
cash flow does not take into consideration cash provided by or
used for acquisitions or sales of tower assets or cash used to
acquire other businesses. Additionally, our definition of free
cash flow does not reflect cash used to make mandatory repayments of
our debt obligations. The limitations of using this measure include
the difficulty in analyzing the impact on our operating cash flow of
certain discretionary expenditures, such as purchases of property and
equipment and our mandatory debt service requirements. Management
compensates for these limitations by analyzing the economic effect of
these expenditures and asset dispositions independently as well as in
connection with the analysis of our cash flow. Free cash flow reflects cash available for financing activities,
to strengthen our balance sheet, or cash available for strategic
investments, including acquisitions of tower assets or
businesses. We believe free cash flow should be considered in
addition to, but not as a substitute for, other measures of
liquidity reported in accordance with generally accepted
accounting principles. Free cash flow, as we have defined it,
may not be comparable to similarly titled measures reported by
other companies. Free cash flow (deficit) for the three
months ended June 30, 2002 and 2003, the six months ended
June 30, 2002, the one month ended January 31, 2003
and the five months ended June 30, 2003 was calculated as
follows:

|                                                        |  |                |         |               |  |               |        |                  |  |               |         |   |  |   |        |   |  |   |        |  
|------------------------------------------------------- |  | -------------- | ------- | ------------- |  | ------------- | ------ | ---------------- |  | ------------- | ------- | - |  | - | ------ | - |  | - | ------ | -
|                                                        |  | Predecessor    |         | Reorganized   |  | Predecessor   |        | Predecessor      |  | Reorganized  
|                                                        |  | Company        |         | Company       |  | Company       |        | Company          |  | Company      
|                                                        |  | Three Months   |         | Three Months  |  | Six Months    |        | One Month        |  | Five Months  
|                                                        |  | Ended          |         | Ended         |  | Ended         |        | Ended            |  | Ended        
|                                                        |  | June 30, 2002  |         | June 30, 2003 |  | June 30, 2002 |        | January 31, 2003 |  | June 30, 2003
|                                                        |  |                |         |               |  |               |        |                  |  |              
|                                                        |  |                |         |              
|                                                        |  | (in thousands) |         |              
|Net cash provided by (used in) operating
    activities |  | $              | (19,890 | )             |  | $             | 16,623 |                  |  | $             | (15,688 | ) |  | $ | 5,892  |   |  | $ | 28,550 |  
|Less: Purchases of property and equipment               |  |                | (19,579 | )             |  |               | (3,926 | )                |  |               | (48,530 | ) |  |   | (2,737 | ) |  |   | (6,181 | )
|                                                        |  |                |         |               |  |               |        |                  |  |               |         |   |  |   |        |   |  |   |        |  
|Free cash flow (deficit)                                |  | $              | (39,469 | )             |  | $             | 12,697 |                  |  | $             | (64,218 | ) |  | $ | 3,155  |   |  | $ | 22,369 |  
|                                                        |  |                |         |               |  |               |        |                  |  |               |         |   |  |   |        |   |  |   |        |  

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Cash flow provided by (used in) investing
activities and cash flows provided by (used in) financing
activities for the three months ended June 30, 2002 and
2003, the six months ended June 30, 2002, the one month
ended January 31, 2003 and the five months ended
June 30, 2003 are as follows:

|                                                        |  |                |         |               |  |               |         |                  |  |               |         |   |  |   |         |   |  |   |          |  
|------------------------------------------------------- |  | -------------- | ------- | ------------- |  | ------------- | ------- | ---------------- |  | ------------- | ------- | - |  | - | ------- | - |  | - | -------- | -
|                                                        |  | Predecessor    |         | Reorganized   |  | Predecessor   |         | Predecessor      |  | Reorganized  
|                                                        |  | Company        |         | Company       |  | Company       |         | Company          |  | Company      
|                                                        |  | Three Months   |         | Three Months  |  | Six Months    |         | One Month        |  | Five Months  
|                                                        |  | Ended          |         | Ended         |  | Ended         |         | Ended            |  | Ended        
|                                                        |  | June 30, 2002  |         | June 30, 2003 |  | June 30, 2002 |         | January 31, 2003 |  | June 30, 2003
|                                                        |  |                |         |               |  |               |         |                  |  |              
|                                                        |  |               
|                                                        |  | (in thousands)
|Net cash provided by (used in) investing
    activities |  | $              | (19,579 | )             |  | $             | (13,171 | )                |  | $             | (59,347 | ) |  | $ | (2,737  | ) |  | $ | 65,702   |  
|                                                        |  |                |         |               |  |               |         |                  |  |               |         |   |  |   |         |   |  |   |          |  
|Net cash provided by (used in) financing
    activities |  | $              | (791    | )             |  | $             | (32,603 | )                |  | $             | 88,795  |   |  | $ | (10,884 | ) |  | $ | (108,731 | )
|                                                        |  |                |         |               |  |               |         |                  |  |               |         |   |  |   |         |   |  |   |          |  

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 operations revenues are recognized when
earned based on lease and license agreements. Rate increases
based on fixed escalation clauses that are included in certain
lease and license agreements are recognized on a straight-line
basis over the term of the lease or license. Revenues from fees,
such as engineering and site inspection fees, are recognized
upon delivery of the related products and services to the
customer. Additionally, we generate revenues related to the
management of sites on rooftops. Under each site management
agreement, we are entitled to a fee based on a percentage of the
gross revenue derived from the rooftop site subject to the
agreement. We recognize this fee as revenue when earned.

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 reasonable 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.

Unbilled revenues (costs and estimated earnings
in excess of billings) become billable when, in accordance with
the terms of the contract, certain pre-determined targets are
reached.

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Typically these targets are reached as certain
pre-defined stages of the project are completed. In the event
that the contractual payment provisions are not triggered or a
contract is terminated, the Companys contracts typically
provide for a payment to be due based on the extent of work
performed to date.


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

Goodwill

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

Impairment of Long-lived
Assets

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

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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.


Accounting for Income Taxes

As part of the process of preparing our
consolidated financial statements, we are required to estimate
income taxes in each of the jurisdictions in which we operate.
This process involves estimating the actual current tax
liability together with assessing temporary differences
resulting from differing treatment of items for tax and
accounting purposes. These differences result in deferred tax
assets and liabilities. We must then assess the likelihood that
our deferred tax assets will be recovered from future taxable
income. To the extent that we believe that recovery is not
likely, we must establish a valuation allowance. Significant
management judgment is required in determining the provision for
income taxes, deferred tax assets and liabilities and any
valuation allowance recorded against net deferred tax assets. We
have recorded a valuation allowance of $464.7 million as of
December 31, 2002, due to uncertainties related to
utilization of deferred tax assets, primarily consisting of net
operating losses carryforwards, before they expire.

Derivative Financial
Instruments

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

Recently Issued Accounting
Pronouncements

In June 2001, the FASB issued Statement of
Financial Accounting Standards No. 143, Accounting for
Asset Retirement Obligations (SFAS 143)
which is effective for fiscal years beginning after
June 15, 2002. SFAS 143 requires legal obligations
associated with the retirement of long-lived assets to be
recognized at their fair value at the time that the obligations
are incurred. Upon initial recognition of a liability, that cost
should be capitalized as part of the related long-lived asset
and allocated to expense over the useful life of the asset. We
adopted the new rules on asset retirement obligations on
January 1, 2003. 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 that reduced net income and
stockholders equity (deficit) by $12.2 million.
Had the

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Company adopted SFAS 143 as of
January 1, 2000, the asset retirement obligation would have
been as follows (in thousands):


|                  |  |        
|----------------- |  | -------
|January 1, 2002   |  | $32,122
|December 31, 2002 |  | $35,442

These pro forma amounts are measured using
information and assumptions as of the adoption date of this
statement.

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 that were 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 our consolidated
statement of operations. The provisions of SFAS 145 are
effective for fiscal years beginning after May 15, 2002. We
adopted the provisions of SFAS 145 on January 1, 2003.
The adoption of this statement did not have a material impact on
our 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 they are 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. We adopted the provisions of SFAS 146
on January 1, 2003. The adoption of this statement did not
have a material impact on our consolidated financial position,
results of operations or cash flows.

In December 2002, the FASB issued Statement of
Financial Accounting Standards 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 are 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 our consolidated
financial position, results of operations or cash flows.

In April 2003, the FASB issued Statement of
Financial Accounting Standards 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, and
for hedging relationships designated after June 30, 2003
and should be applied

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prospectively. We do not expect the impact of
adopting this statement to have a material impact on our
consolidated financial position, results of operations or cash
flows.


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

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

Inflation

Some of our expenses, such as those for
marketing, wages and benefits, generally increase with
inflation. However, we do not believe that our financial results
have been, or will be, adversely affected by inflation in a
material way.

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Risk Factors

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

Risks Relating to Our Business

We recently emerged from a chapter 11
bankruptcy reorganization, have a history of losses and may not
become profitable.

Because we recently emerged from bankruptcy and
have a history of losses, we cannot assure you that we will grow
or achieve and maintain profitability in the near future, or at
all. We emerged from our chapter 11 bankruptcy reorganization as
a new reporting entity on February 10, 2003, approximately
three months after filing a voluntary petition for bankruptcy
reorganization. Prior to our reorganization, we incurred net
losses of approximately $157.6 million in 2000,
$654.8 million in 2001 and $775.0 million in 2002. In
connection with our reorganization, we adopted fresh start
accounting as of January 31, 2003. The net effect of all
fresh start accounting adjustments resulted in a charge of
$644.7 million, which is reflected in the statement of
operations for the one month ended January 31, 2003. If we
cannot achieve and maintain profitability, the value of your
investment in our company may decline.

You may not be able to compare our
historical financial information to our current financial
information, which will make it more difficult to evaluate an
investment in our company.

As a result of our emergence from bankruptcy, we
are operating our business with a new capital structure, and are
subject to the fresh start accounting prescribed by generally
accepted accounting principles. Accordingly, unlike other
companies that have not previously filed for bankruptcy
protection, our financial condition and results of operations
are not comparable to the financial condition and results of
operations reflected in our historical financial statements
contained in this prospectus. Without historical financial
statements to compare to our current performance, it may be more
difficult for you to assess our future prospects when evaluating
an investment in our common stock.

The financial and operating difficulties in
the wireless telecommunications sector, which have negatively
affected some of our customers, could adversely impact our
revenues and profitability.

The slowdown and intense competition in the
wireless and telecommunications industries over the past several
years have impaired the financial condition of some of our
customers. The financial uncertainties facing our customers
could reduce demand for our communications sites, increase our
bad debt expense and reduce prices on new customer contracts.
Industry consolidation could reduce the number of our potential
customers. In addition, we may be negatively impacted by our
customers limited access to debt and equity capital, which
may constrain their ability to conduct business with us. As a
result, our growth strategy, revenues and profitability may be
adversely affected.

A decrease in the demand for our wireless
communications sites and our ability to secure additional
customers could negatively impact our ability to achieve and
maintain profitability.

Our business depends on demand for communications
sites from wireless service providers, which in turn, depends on
consumer demand for wireless services. A reduction in demand for
our communications sites or increased competition for additional
customers could have an adverse effect on our business. Our
wireless service provider customers lease and license
communications sites on our towers based on a number of factors,
including the level of demand by consumers for wireless
services, the financial condition and access to capital of those
providers, the strategy of providers with respect to owning,
leasing or sharing

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communications sites, available spectrum and
related infrastructure, competitive pricing, consolidation among
our customers and potential customers, government regulation of
communications licenses, changes in telecommunications
regulations, the characteristics of each companys
technology and geographic terrain. Any decrease in the demand
for our communications sites from current levels or in our
ability to secure additional customers could decrease our
ability to become and remain profitable and could decrease the
value of your investment.


Consolidation in the wireless industry
could decrease the demand for our sites and may lead to
reductions in our revenues.

Various wireless service providers, which are our
primary existing and potential customers, could enter into
mergers, acquisitions or joint ventures with each other over
time. These consolidations could reduce the size of our customer
base and have a negative impact on the demand for our services.
Recent regulatory developments have made consolidation in the
wireless industry easier and more likely. For example, the
Federal Communications Commission, or FCC, has
recently eliminated the spectrum aggregation cap in a geographic
area in favor of a case-by-case review of spectrum transactions,
enabled the ownership by a single entity of interests in both
cellular carriers in an overlapping cellular service area and
authorized spectrum leasing for a variety of wireless radio
services. It is possible that at least some
wireless service providers may take advantage of this relaxation
of spectrum and ownership limitations and consolidate their
businesses. Any industry consolidation could decrease the demand
for our sites, which may lead to reductions in our revenues.

An increase in the spectrum available for
wireless services may impact the demand for our communication
towers, which may negatively impact our operating
results.

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

Because a significant portion of our
revenues depends on a small number of customers, the loss of any
of these customers could decrease our revenues.

A significant portion or our revenues is derived
from a small number of customers. For example, Nextel (including
its affiliates) and Cingular represented approximately 28% and
20%, respectively, of our revenues for the year ended
December 31, 2002 and 29% and 19%, respectively, of our
revenues for the five months ended June 30, 2003. If
Nextel, Cingular or any of our other customers were to suffer
financial difficulties or were unwilling or unable to perform
their obligations under their agreements with us, our revenues
could be adversely affected.

In addition, from time to time in the ordinary
course of our business, we have experienced conflicts or
disputes with some of our customers and lessors. Most of these
disputes relate to the interpretation of terms in our contracts.
While we seek to resolve conflicts amicably and have generally
resolved customer disputes on commercially reasonable terms,
these disputes could lead to increased tensions and damaged
relationships with these entities. In some cases, a dispute
could result in a termination of our contracts with customers or
lessors, some of whom

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are key to our business. In addition, if we are
unable to resolve these differences amicably, we may be forced
to litigate these disputes in order to enforce or defend our
rights. Damaged or terminated relationships with our key
customers, or any related litigation, could hurt our business
and lead to decreased revenues (including as a result of losing
a customer or lessor) or increased costs, any of which may have
a negative impact on our operating results.


If we are unable to successfully compete,
our business will suffer.

We believe that tower location and capacity,
price, quality of service and density within a geographic market
historically have been, and will continue to be, the most
significant competitive factors affecting our site operations
business. We compete for customers with:



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

Some of our competitors have significantly more
financial resources than we do. The intense competition in our
industry may make it more difficult for us to attract new
customers, increase our gross margins or maintain or increase
our market share.

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

Most types of wireless and broadcast services
currently require ground-based network facilities, including
communications sites for transmission and reception. The
development and growth of communications and other new
technologies that do not require ground-based sites could reduce
the demand for space on our towers. For example, the growth in
delivery of video, voice and data services by satellites, which
allow communication directly to users terminals without
the use of ground-based facilities, could lessen demand for our
sites. Moreover, the FCC has issued licenses for several
additional satellite systems (including low earth orbit systems)
that are intended to provide more advanced, high-speed data
services directly to consumers. These satellite systems compete
with land-based wireless communications systems, thereby
reducing the demand for the services that we provide.
Technological developments are also making it possible for
carriers to expand their use of existing facilities to provide
service without additional tower facilities. The increased use
by carriers of signal combining and related technologies, which
allow two or more carriers to provide services on different
transmission frequencies using the communications antenna and
other facilities normally used by only one carrier, could reduce
the demand for tower-based broadcast transmissions and antenna
space. In addition to sharing transmitters, carriers are sharing
(or considering the sharing of) telecommunications
infrastructure in ways that might adversely impact the growth of
our business. Furthermore, wireless service providers frequently
enter into agreements with competitors allowing them to utilize
one anothers wireless communications facilities to
accommodate customers who are out of range of their home
providers services, so that the home providers do not need
to lease space for their own antennas on communications sites we
own. Any of the conditions and developments described above
could reduce demand for our ground-based antenna sites, and may
have an adverse effect on our business and revenues.

We may be unable to modify towers and add
new customers, which could negatively impact our growth strategy
and our business.

Our business depends on our ability to modify
towers and add new customers as they expand their tower network
infrastructure. Regulatory and other barriers could adversely
affect

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our ability to modify towers in accordance with
the requirements of our customers, and, as a result, we may not
be able to meet our customers requirements. Our ability to
modify towers and add new customers to towers may be affected by
a number of factors beyond our control, including zoning and
local permitting requirements, Federal Aviation Administration,
or FAA, considerations, FCC tower registration
procedures, availability of tower components and construction
equipment, availability of skilled construction personnel,
weather conditions and environmental compliance issues. In
addition, because public concern over tower proliferation has
grown in recent years, many communities now restrict tower
modifications or delay granting permits required for adding new
customers. In addition, we may not be able to overcome the
barriers to modifying towers or adding new customers. Our
failure to complete the necessary modifications could have an
adverse effect on our growth strategy and our business.


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

We have agreed to complete the lease or sublease
of 600 towers from SBC between May 2003 and
August 2004. The process of integrating acquired operations
into our existing operations may result in unforeseen operating
difficulties, divert managerial attention or require significant
financial resources. These leases or subleases and other future
acquisitions may require us to incur additional indebtedness and
contingent liabilities, which may limit our revenue growth and
our ability to achieve or sustain profitability. Alternatively,
these acquisitions may be financed through the issuance of
additional equity, which would dilute your interest as a
stockholder. Moreover, any future acquisitions may not generate
any additional income for us or provide any benefit to our
business.

Your ability to influence corporate matters
may be limited because a small number of stockholders
beneficially own a substantial amount of our common
stock.

As of August 31, 2003, affiliates of Apollo
Management V, L.P. own approximately 11.1 million
shares, or 23.5%, of our common stock and certain funds managed
by Oaktree Capital Management, LLC own approximately
9.7 million shares, or 20.4%, of our common stock. Two of
our directors are associated with these stockholders. As a
result, Apollo and Oaktree could exert significant influence
over our management and policies and may have interests that are
different from yours.

We may be unable to attract and retain key
personnel, which would adversely affect our ability to
effectively manage our business.

Our future performance depends largely on the
continued services of senior executive officers, including, but
not limited to, our Chief Executive Officer, Stephen H.
Clark, our Chief Operating Officer, Timothy G. Biltz, and
our Chief Financial Officer, David P. Tomick. This
dependence is particular to our business because the skills,
knowledge, technical experience and customer relationships of
our senior executive officers are essential to obtaining and
maintaining these relationships and executing our business plan.
Although Messrs. Clark, Biltz and Tomick each has an
employment agreement with SpectraSite, the loss of any of these
key employees would likely have a significantly detrimental
effect on our ability to effectively manage our business.

Our failure to comply with federal, state
and local laws and regulations could result in our being fined,
liable for damages and, in some cases, losing our right to
conduct some of our business.

We are subject to a variety of regulations,
including those at the federal, state and local levels. Both the
FCC and the FAA regulate towers and other sites used for
wireless communications transmitters and receivers. In addition,
under the FCCs rules, we are fully liable for the acts or
omissions of our

56



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##### 



contractors. We generally indemnify our customers
against any failure by us to comply with applicable standards.
Our failure to comply with any applicable laws and regulations
(including as a result of acts or omissions of our contractors,
which may be beyond our control) may lead to monetary
forfeitures or other enforcement actions, as well as civil
penalties, contractual liability and tort liability and, in some
cases, losing our right to conduct some of our business, any of
which could have an adverse impact on our business.


We also are subject to local regulations and
restrictions that typically require tower owners to obtain a
permit or other approval from local officials or community
standards organizations prior to tower construction or
modification. Local regulations could delay or prevent new tower
construction or modifications, as well as increase our costs,
any of which could adversely impact our ability to implement or
achieve our business objectives.

Because we generally lease, sublease, or
license the land under our towers, our business may be adversely
affected if we fail to protect our rights under our
contracts.

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



| |   |                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | recover under title insurance policies, the
    policy limits of which may be less than the purchase price of a
    particular tower;                                                                                   
|
| |  | in the absence of title insurance coverage,
    recover under title warranties given by tower sellers, which
    warranties often terminate after the expiration of a specific
    period, typically one to three years;
|
| |  | recover from landlords under title covenants
    contained in lease agreements; and                                                                                                                                     
|
| |  | obtain so-called non-disturbance
    agreements from mortgagees and superior lienholders of the
    land under our towers.                                                                                            

Our inability to protect our rights to the land
under our towers could have a material adverse affect on our
business and operating results.

Our failure to comply with environmental
laws could result in liability and claims for
damages.

We are subject to environmental laws and
regulations that impose liability without regard to fault. These
laws and regulations place responsibility on us to investigate
potential environmental and other effects of operations and to
disclose any significant effects in an environmental assessment
prior to constructing a tower or adding a new customer on a
tower. In the event the FCC determines that one of our towers
would have a significant environmental impact, the FCC would be
required to prepare an environmental impact statement. This
regulatory process could be costly to us and could significantly
delay our registration of a particular tower. In addition, we
are subject to environmental laws that may require investigation
and clean up of any contamination at facilities we own or
operate or at third-party waste disposal sites. These laws could
impose liability even if we did not know of, or were not
responsible for, the contamination. Although we believe that we
currently have no material liability under applicable
environmental laws, the costs of complying with existing or
future environmental laws, responding to petitions filed by
environmental protection groups, investigating and remediating
any contaminated real property and resolving any related
liability could have a material adverse effect on our business.

57



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Our towers may be damaged by disaster and
other unforeseen damage for which our self-insurance may not
provide adequate coverage.

Our towers are subject to risks associated with
natural disasters, such as ice and wind storms, tornadoes,
floods, hurricanes and earthquakes, as well as other unforeseen
damage. We self-insure almost all of our towers against these
risks. Since our inception, two of our towers have been
destroyed by high wind, one has been destroyed by unknown causes
and approximately 25 tower sites have suffered minor damage due
to flooding. In addition, we own, lease and license a large
number of towers in geographic areas, including Texas,
California, Illinois and Ohio, that have historically been
subject to natural disasters, such as high winds, floods,
earthquakes and severe weather. A tower accident for which we do
not have adequate insurance reserves or have no insurance, or a
large amount of damage to a group of towers, could decrease the
value of our assets and have an adverse effect on our operating
results.

If radio frequency emissions from our
towers are demonstrated, or perceived, to cause negative health
effects, our business and revenues may be adversely
affected.

The safety guidelines for radio frequency
emissions from our sites require us to undertake safety measures
to protect workers whose activities bring them into proximity
with the emitters and to restrict access to our sites by others.
If radio frequency emissions are found, or perceived, to be
harmful, our customers and possibly our company could face
lawsuits claiming damages from these emissions, and demand for
wireless services and new towers, and thus our business and
revenues could be adversely affected. Although we have not been
subject to any claims relating to radio frequency emissions, we
cannot assure you that these claims will not arise in the future
or that they will not negatively impact our business.

Our substantial indebtedness could impair
our financial condition and make it more difficult for us to
fund our operations.

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



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

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

In addition, we may be able to incur significant
additional indebtedness in the future. To the extent new debt is
added to our current debt levels, the risks described above
would increase, which could make a material adverse effect on
our operations and our ability to run our business more likely.

58



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##### 



Repayment of the principal of our
outstanding indebtedness, including our senior notes, may
require additional financing that we cannot assure you will be
available to us.

We have historically financed our operations
primarily with indebtedness. Our ability to generate sufficient
cash flow from operations to make scheduled payments on our debt
obligations, including our senior notes, will continue to depend
on our future financial performance. In addition, we currently
anticipate that, in order to pay the principal of our
outstanding indebtedness, including our senior notes, or to
repay such indebtedness upon a change of control as defined in
the instruments governing our indebtedness, we may be required
to adopt one or more alternatives, such as refinancing our
indebtedness or selling our equity securities or the equity
securities or assets of our subsidiaries. We cannot assure you
that we could affect any of the foregoing alternatives on terms
satisfactory to us, that any of the foregoing alternatives would
enable us to pay the interest or principal of our indebtedness
or that any of such alternatives would be permitted by the terms
of our credit facility and other indebtedness then in effect.

The terms of our credit facility and the
indenture relating to our senior notes may restrict our current
and future operations, which would adversely affect our ability
to respond to changes in our business and to manage our
operations.

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



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

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

If Communications is unable to distribute
cash to us, we may be unable to pay dividends or satisfy our
outstanding debt obligations.

We have never declared or paid any cash dividends
on our common stock. We currently intend to retain any earnings
to finance the development and expansion of our business, and we

59



---



##### 



do not anticipate paying any cash dividends on
our common stock in the immediate future. In addition, our
credit facility and the indenture governing our senior notes
restrict our ability to pay dividends. Any future determination
to pay dividends will be at the discretion of our Board of
Directors and will be dependent upon then existing conditions,
including our financial condition and results of operations,
capital requirements, contractual restrictions, business
prospects and other factors that our Board of Directors
considers relevant. Furthermore, Communications credit
facility imposes restrictions on our subsidiaries ability
to distribute cash to us. As a holding company, we are dependent
on our subsidiaries, including primarily Communications, for our
cash flow. If Communications is unable to distribute cash to us
for any reason, including due to restrictions in the credit
facility, we would be unable to pay dividends or possibly to
satisfy our obligations under our debt instruments.


60



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##### 





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

Sales of a substantial number of shares of our common stock into the
public market, or the perception that these sales could occur, could adversely
affect our stock price. As of August 31, 2003, we have
47.5 million shares of
common stock outstanding. We have reserved an additional 135,866 shares of
common stock issuable in connection with further distributions pursuant to our
Plan of Reorganization. As of August 31, 2003, we have also reserved an
additional 5.9 million shares of common stock for issuance under our stock option
plan and 2.5 million shares of common stock for issuance upon the exercise of
warrants. All of our outstanding shares of common stock, as well as the shares
of common stock issuable in connection with our emergence from bankruptcy and
upon exercise of outstanding stock options and warrants, are or will be freely
tradable without restriction or further registration under the federal
securities laws, except to the extent they are held by one or our affiliates,
as that term is defined in Rule 144 under the Securities Act of 1933, as
amended. As of September 24, 2003, certain of our stockholders have proposed to
sell 9.0 million shares of our outstanding common stock in an underwritten public
offering (and an additional 1.35 million shares of our common stock if the
underwriters exercise their overallotment option).

61



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##### 



After
giving effect to the sale of common stock in the proposed offering
(and assuming that the underwriters do
not exercise their over-allotment option), three stockholders holding an
aggregate of approximately 20.5 million shares of our common stock (including
shares issuable upon the exercise of outstanding options) have the right
(subject to limited conditions) to require us to file registration statements
covering their shares or to include their shares in registration statements
that we may file for ourself or other stockholders. Sales by these
stockholders in a registered public offering would not be subject to the
limitations of Rule 144 under the Securities Act. By exercising their
registration rights and selling a large number of shares, these holders could
cause the price of our common stock to decline.

62



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##### 



ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We use financial instruments, including fixed and
variable rate debt, to finance our operations. The information
below summarizes our market risks associated with debt
obligations outstanding as of June 30, 2003 and
December 31, 2002. The following table presents principal
cash flows and related weighted average interest rates by fiscal
year of maturity of our fixed rate debt as of June 30, 2003:

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

As of December 31, 2002, we had
$1.76 billion of liabilities subject to compromise, which
were converted to common stock on February 10, 2003
pursuant to our Plan of Reorganization. Prior to our
chapter 11 filing, these obligations had an average fixed
interest rate of 11.30%.

As of June 30, 2003 and
December 31, 2002, we had $480.0 million and
$783.0 million, respectively, of variable rate debt
outstanding under our credit facility at a weighted average
interest rate of 4.83% and 5.94%, respectively. A 1% increase in
the interest rate on our variable rate debt would have increased
interest expense by approximately $1.6 million,
$2.8 million, $0.7 million and $7.8 million in
the three months ended June 30, 2003, the five months ended
June 30, 2003, the one month ended January 31, 2003
and the year ended December 31, 2002, respectively.

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

ITEM 4  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

We have conducted an evaluation, under the supervision of and
participation by our management, including our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this Report. Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures are effective to ensure that
the information required to be filed in the reports that we file or
submit under the Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified
in the Commissions rules and forms.

Changes in Internal Controls.

None.

63



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PART II  OTHER INFORMATION

Item 1.Legal Proceedings

None.

Item 2.Changes in Securities and Use of Proceeds

None.

Item 3.Defaults Upon Senior Securities

None.

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

None.

Item 5.Other Information

None.

Item 6.Exhibits and Reports on Form 8-K

(a) Exhibits

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

64



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##### 



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



---



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

(b) Reports on Form 8-K

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

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

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

65



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SIGNATURES

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

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

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

Date: September 25, 2003

































66



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##### 



EXHIBIT INDEX

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



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