##### 



U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

|     |  |                                                                                  
|---- |  | ---------------------------------------------------------------------------------
|[X]  |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|     |  |                                                                                  
|     |  | For the quarterly period ended September 30, 2003                                
|     |  |                                                                                  
|[  ] |  | 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(State or jurisdiction of
incorporation or organization) |  | 4899(Primary Standard Industrial
Classification Code Number) |  | 56-2027322(I.R.S. Employer
Identification Number)

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

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

Yes [X]        No [  ]

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

Yes [  ]        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 [X]        No [  ]

As of October 31, 2003, the registrant had only one outstanding class of common
stock, of which there were 47,550,172 shares outstanding.





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##### 



INDEX

|                               |  |                                                                                                                                                                                                                                                                                                                                                                                            |  |   
|------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --
|PART I  FINANCIAL INFORMATION |  |                                                                                                                                                                                                                                                                                                                                                                                           
|                               |  | ITEM 1  UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                                                                                                                                                                                                                                                                                                             |  |   
|                               |  | Condensed Consolidated Balance Sheets at September 30, 2003 (unaudited; Reorganized Company) and
December 31, 2002 (Predecessor Company)                                                                                                                                                                                                                                                   |  | 3 
|                               |  | Unaudited Condensed Consolidated Statements of Operations for the three months ended
September 30, 2003 (Reorganized Company), the three months ended September 30, 2002
(Predecessor Company), the eight months ended September 30, 2003 (Reorganized Company), the
month ended
January 31, 2003 (Predecessor Company) and the nine months ended September 30, 2002 (Predecessor
Company) |  | 4 
|                               |  | Unaudited Condensed Consolidated Statements of Cash Flows for the eight months ended
September 30, 2003 (Reorganized Company), the month ended January 31, 2003 (Predecessor Company)
and
the nine months ended September 30, 2002 (Predecessor Company)                                                                                                                                   |  | 6 
|                               |  | Notes to the Unaudited Condensed Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                         |  | 7 
|                               |  | ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS                                                                                                                                                                                                                                                                                             |  | 22
|                               |  | ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                                                                                                                                                                                                                                                                        |  | 48
|                               |  | ITEM 4  CONTROLS AND PROCEDURES                                                                                                                                                                                                                                                                                                                                                           |  | 48
|PART II  OTHER INFORMATION    |  |                                                                                                                                                                                                                                                                                                                                                                                           
|                               |  | ITEM 1  LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                                                                                                 |  | 49
|                               |  | ITEM 2  CHANGES IN SECURITIES AND USE OF PROCEEDS                                                                                                                                                                                                                                                                                                                                         |  | 49
|                               |  | ITEM 3  DEFAULTS UPON SENIOR SECURITIES                                                                                                                                                                                                                                                                                                                                                   |  | 49
|                               |  | ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                                                                                                                                                                                                                                                               |  | 49
|                               |  | ITEM 5  OTHER INFORMATION                                                                                                                                                                                                                                                                                                                                                                 |  | 49
|                               |  | ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K                                                                                                                                                                                                                                                                                                                                                  |  | 49
|SIGNATURES                     |  | 51                                                                                                                                                                                                                                                                                                                                                                                        
|EXHIBITS                       |  |                                                                                                                                                                                                                                                                                                                                                                                           

2



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
At September 30, 2003 and December 31, 2002

|                                           |                                                                                                                        |                                                      |                                                |         |           |                        |           |                   |           |   |  | 
|------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ---------------------------------------------- | ------- | --------- | ---------------------- | --------- | ----------------- | --------- | - |  | 
|                                           |                                                                                                                        |                                                      |                                                |         |           | Reorganized            |           | Predecessor      
|                                           |                                                                                                                        |                                                      |                                                |         |           | Company                |           | Company          
|                                           |                                                                                                                        |                                                      |                                                |         |           | September 30, 2003     |           | December 31, 2002
|                                           |                                                                                                                        |                                                      |                                                |         |           |                        |           |                  
|                                           |                                                                                                                        |                                                      |                                                |         |           | (unaudited)            |           |                   |           |  
|                                           |                                                                                                                        |                                                      |                                                |         |           | (dollars in thousands)
|ASSETS                                     |                                                                                                                        |                                                      |                                                |         |           |                        |           |                  
|Current assets:                            |                                                                                                                        |                                                      |                                                |         |           |                        |           |                  
|                                           | Cash and cash equivalents                                                                                              |                                                      | $                                              | 55,850  |           |                        | $         | 80,961            |          
|                                           | Accounts receivable, net of allowance of $9,555 and $11,431, respectively                                              |                                                      |                                                | 8,451   |           |                        |           | 15,180            |          
|                                           | Costs and estimated earnings in excess of billings                                                                     |                                                      |                                                | 1,814   |           |                        |           | 2,169             |          
|                                           | Inventories                                                                                                            |                                                      |                                                | 7,561   |           |                        |           | 7,878             |          
|                                           | Prepaid expenses and other                                                                                             |                                                      |                                                | 13,369  |           |                        |           | 16,696            |          
|                                           |                                                                                                                        |                                                      |                                                |         |           |                        |           |                  
|                                           |                                                                                                                        | Total current assets                                 |                                                |         | 87,045    |                        |           |                   | 122,884   |  
|Property and equipment, net                |                                                                                                                        |                                                      | 1,223,424                                      |         |           |                        | 2,292,945 |                  
|Goodwill, net                              |                                                                                                                        |                                                      |                                               |         |           |                        | 60,626    |                  
|Other assets                               |                                                                                                                        |                                                      | 217,002                                        |         |           |                        | 102,001   |                  
|                                           |                                                                                                                        |                                                      |                                                |         |           |                        |           |                  
|                                           |                                                                                                                        | Total assets                                         |                                                | $       | 1,527,471 |                        |           | $                 | 2,578,456 |  
|                                           |                                                                                                                        |                                                      |                                                |         |           |                        |           |                   |          
|                                           |                                                                                                                        |                                                      | LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |         |           |                        |           |                   |           |   | 
|Current liabilities:                       |                                                                                                                        |                                                      |                                                |         |           |                        |           |                  
|                                           | Accounts payable                                                                                                       |                                                      | $                                              | 8,726   |           |                        | $         | 13,029            |          
|                                           | Accrued and other expenses                                                                                             |                                                      |                                                | 86,914  |           |                        |           | 66,280            |          
|                                           | Liabilities under SBC agreement                                                                                        |                                                      |                                                | 55,660  |           |                        |           |                  |          
|                                           | Billings in excess of costs and estimated earnings                                                                     |                                                      |                                                | 380     |           |                        |           | 703               |          
|                                           | Current portion of credit facility                                                                                     |                                                      |                                                |        |           |                        |           | 2,244             |          
|                                           |                                                                                                                        |                                                      |                                                |         |           |                        |           |                  
|                                           |                                                                                                                        | Total current liabilities                            |                                                |         | 151,680   |                        |           |                   | 82,256    |  
|                                           |                                                                                                                        |                                                      |                                                |         |           |                        |           |                  
|Long-term portion of credit facility       |                                                                                                                        |                                                      | 439,955                                        |         |           |                        | 780,711   |                  
|Senior notes                               |                                                                                                                        |                                                      | 200,000                                        |         |           |                        |          |                  
|Other long-term liabilities                |                                                                                                                        |                                                      | 53,744                                         |         |           |                        | 27,330    |                  
|                                           |                                                                                                                        |                                                      |                                                |         |           |                        |           |                  
|                                           |                                                                                                                        | Total long-term liabilities                          |                                                |         | 693,699   |                        |           |                   | 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, 47,548,475 issued
and outstanding at September 30, 2003  |                                                      |                                                | 475     |           |                        |           |                  |          
|                                           | Additional paid-in-capital                                                                                             |                                                      |                                                | 687,669 |           |                        |           | 1,624,939         |          
|                                           | Accumulated other comprehensive income (loss)                                                                          |                                                      |                                                |        |           |                        |           | (355              | )        
|                                           | Accumulated deficit                                                                                                    |                                                      |                                                | (6,052  | )         |                        |           | (1,699,865        | )        
|                                           |                                                                                                                        |                                                      |                                                |         |           |                        |           |                  
|                                           |                                                                                                                        | Total stockholders equity (deficit)                 |                                                |         | 682,092   |                        |           |                   | (75,127   | )
|                                           |                                                                                                                        |                                                      |                                                |         |           |                        |           |                  
|                                           |                                                                                                                        | Total liabilities and stockholders equity (deficit) |                                                | $       | 1,527,471 |                        |           | $                 | 2,578,456 |  
|                                           |                                                                                                                        |                                                      |                                                |         |           |                        |           |                   |          

See accompanying notes to the unaudited condensed consolidated financial statements.

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  |         | Eight Months  |         | One Month   |         | Nine Months  
|                                                                         |                                                                                  |                    |                              |         | Ended                                    |         | Ended         |         | Ended         |         | Ended       |         | Ended        
|                                                                         |                                                                                  |                    |                              |         | September 30,                            |         | September 30, |         | September 30, |         | January 31, |         | September 30,
|                                                                         |                                                                                  |                    |                              |         | 2003                                     |         | 2002          |         | 2003          |         | 2003        |         | 2002         
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |              
|                                                                         |                                                                                  |                    |                              |         | (in thousands, except per share amounts)
|Revenues:                                                                |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|                                                                         | Site operations                                                                  |                    | $                            | 79,526  |                                          |         | $             | 72,030  |               |         | $           | 208,093 |               |         | $         | 25,556    |       |           | $        | 207,615  |       
|                                                                         | Broadcast services                                                               |                    |                              | 4,334   |                                          |         |               | 7,310   |               |         |             | 11,322  |               |         |           | 1,237     |       |           |          | 19,998   |       
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|                                                                         |                                                                                  |                    | Total revenues               |         |                                          | 83,860  |               |         |               | 79,340  |             |         |               | 219,415 |           |           |       | 26,793    |          |          |        | 227,613  |  
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|Operating expenses:                                                      |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|                                                                         | Costs of operations, excluding depreciation,
amortization and accretion expense: |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |          |       
|                                                                         |                                                                                  | Site operations    |                              |         | 26,051                                   |         |               |         | 27,465        |         |             |         | 68,875        |         |           |           | 8,840 |           |          |          | 79,675 |         
|                                                                         |                                                                                  | Broadcast services |                              |         | 3,857                                    |         |               |         | 5,230         |         |             |         | 10,284        |         |           |           | 1,492 |           |          |          | 15,605 |         
|                                                                         | Selling, general and administrative expenses                                     |                    |                              | 13,188  |                                          |         |               | 14,154  |               |         |             | 34,463  |               |         |           | 4,280     |       |           |          | 45,130   |       
|                                                                         | Depreciation, amortization and accretion expenses                                |                    |                              | 25,675  |                                          |         |               | 48,658  |               |         |             | 68,127  |               |         |           | 16,075    |       |           |          | 143,921  |       
|                                                                         | Restructuring and non-recurring charges                                          |                    |                              |        |                                          |         |               |        |               |         |             |        |               |         |           |          |       |           |          | 28,570   |       
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|                                                                         |                                                                                  |                    | Total operating expenses     |         |                                          | 68,771  |               |         |               | 95,507  |             |         |               | 181,749 |           |           |       | 30,687    |          |          |        | 312,901  |  
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|Operating income (loss)                                                  |                                                                                  |                    | 15,089                       |         |                                          |         | (16,167       | )       |               |         | 37,666      |         |               |         | (3,894    | )         |       |           | (85,288  | )       
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|Other income (expense):                                                  |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|                                                                         | Interest income                                                                  |                    |                              | 143     |                                          |         |               | 148     |               |         |             | 639     |               |         |           | 137       |       |           |          | 525      |       
|                                                                         | Interest expense                                                                 |                    |                              | (12,563 | )                                        |         |               | (67,018 | )             |         |             | (40,428 | )             |         |           | (4,721    | )     |           |          | (187,510 | )     
|                                                                         | Gain on debt discharge                                                           |                    |                              |        |                                          |         |               |        |               |         |             |        |               |         |           | 1,034,764 |       |           |          |         |       
|                                                                         | Reorganization expense                                                           |                    |                              |        |                                          |         |               | (1,854  | )             |         |             |        |               |         |           |          |       |           |          | (1,854   | )     
|                                                                         | Other income (expense)                                                           |                    |                              | 1,134   |                                          |         |               | 1,997   |               |         |             | (1,936  | )             |         |           | (493      | )     |           |          | (9,185   | )     
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|                                                                         |                                                                                  |                    | Total other income (expense) |         |                                          | (11,286 | )             |         |               | (66,727 | )           |         |               | (41,725 | )         |           |       | 1,029,687 |          |          |        | (198,024 | )
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|Income (loss) from continuing operations before
income taxes             |                                                                                  |                    | 3,803                        |         |                                          |         | (82,894       | )       |               |         | (4,059      | )       |               |         | 1,025,793 |           |       |           | (283,312 | )       
|Income tax expense                                                       |                                                                                  |                    | 589                          |         |                                          |         | 551           |         |               |         | 1,397       |         |               |         | 5         |           |       |           | 694      |         
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|Income (loss) from continuing operations                                 |                                                                                  |                    | 3,214                        |         |                                          |         | (83,445       | )       |               |         | (5,456      | )       |               |         | 1,025,788 |           |       |           | (284,006 | )       
|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                             |                                                                                  |                    | 3,214                        |         |                                          |         | (83,445       | )       |               |         | (5,456      | )       |               |         | 357,206   |           |       |           | (284,006 | )       
|Discontinued operations:                                                 |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|                                                                         | Loss from operations of discontinued segment, net
of income tax expense          |                    |                              |        |                                          |         |               | (5,520  | )             |         |             |        |               |         |           |          |       |           |          | (8,305   | )     
|                                                                         | Loss on disposal of discontinued segment                                         |                    |                              |        |                                          |         |               | (45,627 | )             |         |             | (596    | )             |         |           |          |       |           |          | (45,627  | )     
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|Income (loss) before cumulative effect of change in
accounting principle |                                                                                  |                    | 3,214                        |         |                                          |         | (134,592      | )       |               |         | (6,052      | )       |               |         | 357,206   |           |       |           | (337,938 | )       
|Cumulative effect of change in accounting principle
(Note 4)             |                                                                                  |                    |                             |         |                                          |         |              |         |               |         |            |         |               |         | (12,236   | )         |       |           | (376,753 | )       
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |         
|Net income (loss)                                                        |                                                                                  | $                  | 3,214                        |         |                                          | $       | (134,592      | )       |               | $       | (6,052      | )       |               | $       | 344,970   |           |       | $         | (714,691 | )       
|                                                                         |                                                                                  |                    |                              |         |                                          |         |               |         |               |         |             |         |               |         |           |           |       |           |          |          |       

See accompanying notes to the unaudited condensed consolidated financial statements.

4



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SPECTRASITE, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

|                                                     |                                                     |  |                                          |      |               |  |               |       |             |  |               |       |   |  |         |       |   |  |         |       |  
|---------------------------------------------------- | --------------------------------------------------- |  | ---------------------------------------- | ---- | ------------- |  | ------------- | ----- | ----------- |  | ------------- | ----- | - |  | ------- | ----- | - |  | ------- | ----- | -
|                                                     |                                                     |  | Reorganized                              |      | Predecessor   |  | Reorganized   |       | Predecessor |  | Predecessor  
|                                                     |                                                     |  | Company                                  |      | Company       |  | Company       |       | Company     |  | Company      
|                                                     |                                                     |  | Three Months                             |      | Three Months  |  | Eight Months  |       | One Month   |  | Nine Months  
|                                                     |                                                     |  | Ended                                    |      | Ended         |  | Ended         |       | Ended       |  | Ended        
|                                                     |                                                     |  | September 30,                            |      | September 30, |  | September 30, |       | January 31, |  | September 30,
|                                                     |                                                     |  | 2003                                     |      | 2002          |  | 2003          |       | 2003        |  | 2002         
|                                                     |                                                     |  |                                          |      |               |  |               |       |             |  |              
|                                                     |                                                     |  | (in thousands, except per share amounts)
|Basic earnings per share:                            |                                                     |  |                                          |      |               |  |               |       |             |  |               |       |   |  |         |       |   |  |         |      
|                                                     | Income (loss) from continuing operations            |  | $                                        | 0.07 |               |  | $             | (0.54 | )           |  | $             | (0.12 | ) |  | $       | 6.66  |   |  | $       | (1.84 | )
|                                                     | Reorganization items                                |  |                                          |     |               |  |               |      |             |  |               |      |   |  |         | (4.34 | ) |  |         |      |  
|                                                     | Discontinued operations                             |  |                                          |     |               |  |               | (0.33 | )           |  |               | (0.01 | ) |  |         |      |   |  |         | (0.35 | )
|                                                     | Cumulative effect of change in accounting
principle |  |                                          |     |               |  |               |      |             |  |               |      |   |  |         | (0.08 | ) |  |         | (2.45 | )
|                                                     |                                                     |  |                                          |      |               |  |               |       |             |  |               |       |   |  |         |       |   |  |         |      
|                                                     | Net income (loss)                                   |  | $                                        | 0.07 |               |  | $             | (0.87 | )           |  | $             | (0.13 | ) |  | $       | 2.24  |   |  | $       | (4.64 | )
|                                                     |                                                     |  |                                          |      |               |  |               |       |             |  |               |       |   |  |         |       |   |  |         |       |  
|Diluted earnings per share:                          |                                                     |  |                                          |      |               |  |               |       |             |  |               |       |   |  |         |       |   |  |         |      
|                                                     | Income (loss) from continuing operations            |  | $                                        | 0.06 |               |  | $             | (0.54 | )           |  | $             | (0.12 | ) |  | $       | 6.66  |   |  | $       | (1.84 | )
|                                                     | Reorganization items                                |  |                                          |     |               |  |               |      |             |  |               |      |   |  |         | (4.34 | ) |  |         |      |  
|                                                     | Discontinued operations                             |  |                                          |     |               |  |               | (0.33 | )           |  |               | (0.01 | ) |  |         |      |   |  |         | (0.35 | )
|                                                     | Cumulative effect of change in accounting
principle |  |                                          |     |               |  |               |      |             |  |               |      |   |  |         | (0.08 | ) |  |         | (2.45 | )
|                                                     |                                                     |  |                                          |      |               |  |               |       |             |  |               |       |   |  |         |       |   |  |         |      
|                                                     | Net income (loss)                                   |  | $                                        | 0.06 |               |  | $             | (0.87 | )           |  | $             | (0.13 | ) |  | $       | 2.24  |   |  | $       | (4.64 | )
|                                                     |                                                     |  |                                          |      |               |  |               |       |             |  |               |       |   |  |         |       |   |  |         |      
|Weighted average common shares outstanding (basic)   |                                                     |  | 47,507                                   |      |               |  | 154,014       |       |             |  | 47,325        |       |   |  | 154,014 |       |   |  | 153,894 |      
|                                                     |                                                     |  |                                          |      |               |  |               |       |             |  |               |       |   |  |         |       |   |  |         |      
|Weighted average common shares outstanding
(diluted) |                                                     |  | 51,617                                   |      |               |  | 154,014       |       |             |  | 47,325        |       |   |  | 154,014 |       |   |  | 153,894 |      
|                                                     |                                                     |  |                                          |      |               |  |               |       |             |  |               |       |   |  |         |       |   |  |         |      

See accompanying notes to the unaudited condensed consolidated financial statements.

5



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##### 



SPECTRASITE, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                         |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |         |         |         |  
|---------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ------------------------------------------------------- | ---------------------------------------------------- | ------ | ------------------ | -------- | ---------------- | ---------- | ------------------ | ------- | -------- | ------- | ------- | ------- | -
|                                                                                         |                                                                   |                                                         |                                                      |        | Reorganized        |          | Predecessor      |            | Predecessor       
|                                                                                         |                                                                   |                                                         |                                                      |        | Company            |          | Company          |            | Company           
|                                                                                         |                                                                   |                                                         |                                                      |        | Eight Months       |          | One Month        |            | Nine Months       
|                                                                                         |                                                                   |                                                         |                                                      |        | Ended              |          | Ended            |            | Ended             
|                                                                                         |                                                                   |                                                         |                                                      |        | September 30, 2003 |          | January 31, 2003 |            | September 30, 2002
|                                                                                         |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                   
|                                                                                         |                                                                   |                                                         |                                                      |        |                    |          |                  |            | (in thousands)     |         |          |         |        
|Operating activities                                                                     |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|Net income (loss)                                                                        |                                                                   | $                                                       | (6,052                                               | )      |                    | $        | 344,970          |            |                    | $       | (714,691 | )      
|Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|                                                                                         | Depreciation                                                      |                                                         |                                                      | 56,330 |                    |          |                  | 15,609     |                    |         |          | 145,639 |        
|                                                                                         | Cumulative effect of change in accounting principle               |                                                         |                                                      |       |                    |          |                  | 12,236     |                    |         |          | 376,753 |        
|                                                                                         | Amortization of intangible assets                                 |                                                         |                                                      | 10,041 |                    |          |                  | 252        |                    |         |          | 2,507   |        
|                                                                                         | Amortization of debt issuance costs                               |                                                         |                                                      | 3,480  |                    |          |                  | 425        |                    |         |          | 12,325  |        
|                                                                                         | Amortization of asset retirement obligation                       |                                                         |                                                      | 1,756  |                    |          |                  | 214        |                    |         |          |        |        
|                                                                                         | Amortization of senior discount notes                             |                                                         |                                                      |       |                    |          |                  |           |                    |         |          | 92,900  |        
|                                                                                         | Writeoff of debt issuance costs                                   |                                                         |                                                      | 8,938  |                    |          |                  |           |                    |         |          |        |        
|                                                                                         | Non-cash compensation charges                                     |                                                         |                                                      |       |                    |          |                  |           |                    |         |          | 638     |        
|                                                                                         | (Gain) loss on disposal of assets                                 |                                                         |                                                      | 3,898  |                    |          |                  | (84        | )                  |         |          | 80,883  |        
|                                                                                         | Gain on sale of available-for-sale securities                     |                                                         |                                                      | (3,837 | )                  |          |                  |           |                    |         |          |        |        
|                                                                                         | Gain on sale of investments in affiliates                         |                                                         |                                                      |       |                    |          |                  |           |                    |         |          | (1,364  | )      
|                                                                                         | Gain on sale of subsidiary                                        |                                                         |                                                      | (394   | )                  |          |                  |           |                    |         |          |        |        
|                                                                                         | Gain on debt discharge                                            |                                                         |                                                      |       |                    |          |                  | (1,034,764 | )                  |         |          |        |        
|                                                                                         | Adjust accounts to fair value                                     |                                                         |                                                      |       |                    |          |                  | 644,688    |                    |         |          |        |        
|                                                                                         | Equity in net loss of affiliates                                  |                                                         |                                                      |       |                    |          |                  |           |                    |         |          | 59      |        
|                                                                                         | Changes in operating assets and liabilities, net of acquisitions: |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |         |        
|                                                                                         |                                                                   | Accounts receivable                                     |                                                      |        | 1,666              |          |                  |            | 5,045              |         |          |         | 34,786  |        
|                                                                                         |                                                                   | Costs and estimated earnings in excess of billings, net |                                                      |        | 305                |          |                  |            | (272               | )       |          |         | (4,127  | )      
|                                                                                         |                                                                   | Inventories                                             |                                                      |        | 318                |          |                  |            | (2                 | )       |          |         | (227    | )      
|                                                                                         |                                                                   | Prepaid expenses and other                              |                                                      |        | (4,679             | )        |                  |            | (2,238             | )       |          |         | (4,534  | )      
|                                                                                         |                                                                   | Accounts payable                                        |                                                      |        | (17,845            | )        |                  |            | 13,549             |         |          |         | (36,997 | )      
|                                                                                         |                                                                   | Other liabilities                                       |                                                      |        | 8,959              |          |                  |            | 6,264              |         |          |         | 16,983  |        
|                                                                                         |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|                                                                                         |                                                                   |                                                         | Net cash provided by operating activities            |        |                    | 62,884   |                  |            |                    | 5,892   |          |         |         | 1,533   |  
|                                                                                         |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|Investing activities                                                                     |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|Purchases of property and equipment                                                      |                                                                   |                                                         | (10,143                                              | )      |                    |          | (2,737           | )          |                    |         | (52,431  | )      
|Acquisitions of towers                                                                   |                                                                   |                                                         | (10,148                                              | )      |                    |          |                 |            |                    |         | (10,067  | )      
|Loans to affiliates                                                                      |                                                                   |                                                         |                                                     |        |                    |          |                 |            |                    |         | (750     | )      
|Proceeds from the sale of assets                                                         |                                                                   |                                                         | 81,349                                               |        |                    |          |                 |            |                    |         | 1,283    |        
|Proceeds from sale of available-for-sale securities                                      |                                                                   |                                                         | 4,970                                                |        |                    |          |                 |            |                    |         |         |        
|Proceeds from sale of subsidiary                                                         |                                                                   |                                                         | 2,053                                                |        |                    |          |                 |            |                    |         |         |        
|Proceeds from the sale of investments in affiliates                                      |                                                                   |                                                         |                                                     |        |                    |          |                 |            |                    |         | 7,500    |        
|                                                                                         |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|                                                                                         |                                                                   |                                                         | Net cash provided by (used in) investing activities  |        |                    | 68,081   |                  |            |                    | (2,737  | )        |         |         | (54,465 | )
|                                                                                         |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|Financing activities                                                                     |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|Proceeds from issuance of common stock, net of issuance costs                            |                                                                   |                                                         | 2,415                                                |        |                    |          |                 |            |                    |         | 477      |        
|Proceeds from issuance of long-term debt                                                 |                                                                   |                                                         | 200,000                                              |        |                    |          |                 |            |                    |         | 90,000   |        
|Repayments of debt and capital leases                                                    |                                                                   |                                                         | (343,389                                             | )      |                    |          | (10,884          | )          |                    |         | (2,234   | )      
|Debt issuance costs                                                                      |                                                                   |                                                         | (7,373                                               | )      |                    |          |                 |            |                    |         | (2,612   | )      
|                                                                                         |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|                                                                                         |                                                                   |                                                         | Net cash provided by (used in) financing activities  |        |                    | (148,347 | )                |            |                    | (10,884 | )        |         |         | 85,631  |  
|                                                                                         |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|                                                                                         |                                                                   |                                                         | Net increase (decrease) in cash and cash equivalents |        |                    | (17,382  | )                |            |                    | (7,729  | )        |         |         | 32,699  |  
|Cash and cash equivalents at beginning of period                                         |                                                                   |                                                         | 73,232                                               |        |                    |          | 80,961           |            |                    |         | 31,547   |        
|                                                                                         |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|Cash and cash equivalents at end of period                                               |                                                                   | $                                                       | 55,850                                               |        |                    | $        | 73,232           |            |                    | $       | 64,246   |        
|                                                                                         |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|Supplemental disclosures of cash flow information:                                       |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|Cash paid during the period for interest                                                 |                                                                   | $                                                       | 19,718                                               |        |                    | $        | 4,265            |            |                    | $       | 72,696   |        
|Cash paid during the period for income taxes                                             |                                                                   |                                                         | 1,915                                                |        |                    |          | 5                |            |                    |         | 1,471    |        
|Supplemental disclosures of noncash investing and financing
activities:                  |                                                                   |                                                         |                                                      |        |                    |          |                  |            |                    |         |          |        
|Common stock issued for deposits                                                         |                                                                   | $                                                       |                                                     |        |                    | $        | 408              |            |                    | $       |         |        
|Common stock issued for acquisitions                                                     |                                                                   |                                                         |                                                     |        |                    |          |                 |            |                    |         | 1,678    |        
|Capital lease obligations incurred for purchases of property and
equipment               |                                                                   |                                                         | 162                                                  |        |                    |          |                 |            |                    |         | 908      |        

See accompanying notes to the unaudited condensed consolidated financial statements.

6



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##### 



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, 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

7



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##### 



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 $9.6 million as of December 31, 2002 and
September 30, 2003, respectively.

Significant Customers

The Companys customer base consists of businesses operating in the
wireless telecommunications and broadcast industries 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 $22.1 million and $23.6
million, or 28% of revenues for both the three months ended September 30, 2002
and 2003 and $65.6 million, $7.4 million and $62.8 million, or 29%, 28% and 29%
of revenues in the nine months ended September 30, 2002, the one month ended
January 31, 2003 and the eight months ended September 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 $16.0 million and $16.5 million, or 20% of revenues for both the three
months ended September 30, 2002 and 2003 and $44.8 million, $5.9 million and
$42.1 million, or 20%, 22% and 19% of the Companys revenues in the nine months
ended September 30, 2002, the one month ended January 31, 2003 and the eight
months ended September 30, 2003, respectively. This customer also accounted for
$5.5 million or 21% of accounts receivable at December 31, 2002.

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. In addition, upon initial
recognition of a liability for the retirement of a purchased or constructed
long-lived asset as required by Statement of Financial Accounting Standards No.
143, Accounting for Asset Retirement Obligations(SFAS 143), the cost of that
liability is capitalized as part of the cost basis of the related asset and
depreciated over the related life of the asset. 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.

Available-for-Sale Securities

Available-for-sale securities are classified as other assets in the
condensed consolidated balance sheets and are stated at fair value, with any
unrealized gains and losses reported in other comprehensive income. Realized
gains and losses and declines in value judged to be other-than-temporary on
available-for-sale securities are included in other income (expense). During
the three and eight months ended September 30, 2003, the Company sold its
available-for-sale securities for proceeds of $5.0 million and recognized a
gain on the sale of $3.8 million. This gain is included in Other income
(expense) in the unaudited condensed consolidated statements of operations.

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.

8



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##### 



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 $182.5 million as of September
30, 2003 and are classified as Other assets in the unaudited condensed
consolidated financial statements.

Liabilities under SBC Agreement

In connection with the Plan of Reorganization and the implementation of
fresh start accounting on January 31, 2003, the Company recorded liabilities in
the amount of $60.5 million related to its obligation to complete the lease or
sublease of the remaining 600 towers under the SBC agreement as discussed in
Note 5. This amount was determined as the difference between the estimated
purchase price for the remaining 600 towers, including direct 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
eight months ended September 30, 2003, $4.5 million of the purchase price of 59
towers acquired and $0.3 million of acquisition costs were applied against the
liability. As of September 30, 2003, the remaining liability was $55.7 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 September 30,
2003, the carrying amount and fair value of this instrument was $0.3 million
and is included in Other assets in the unaudited condensed consolidated balance
sheets.

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.

9



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##### 



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.

|                                          |                                      |  |                     |       |                     |  |               |      |               |  |        |        |   |  |     |       | 
|----------------------------------------- | ------------------------------------ |  | ------------------- | ----- | ------------------- |  | ------------- | ---- | ------------- |  | ------ | ------ | - |  | --- | ----- | 
|                                          |                                      |  | Predecessor Company |       | Reorganized Company
|                                          |                                      |  |                     |       |                    
|                                          |                                      |  |                     |       |                     |  | Cash          |      | Cash          |  |        |        |  
|                                          |                                      |  |                     |       |                     |  | Payments for  |      | Payments for  |  |        |        |  
|                                          |                                      |  |                     |       |                     |  | the One       |      | the Eight     |  |        |        |  
|                                          |                                      |  | Liability as        |       | Month               |  | Months        |      | Liability as 
|                                          |                                      |  | of                  |       | Ended               |  | Ended         |      | of           
|                                          |                                      |  | December 31,        |       | January 31,         |  | September 30, |      | September 30,
|                                          |                                      |  | 2002                |       | 2003                |  | 2003          |      | 2003         
|                                          |                                      |  |                     |       |                     |  |               |      |              
|                                          |                                      |  | (in thousands)     
|Accrued restructuring liabilities:        |                                      |  |                     |       |                     |  |               |      |               |  |        |        |   |  |     |      
|Reduced tower acquisition and
development |                                      |  |                     |       |                     |  |               |      |               |  |        |        |   |  |     |      
|                                          | Employee severance                   |  | $                   | 1,950 |                     |  | $             | (81  | )             |  | $      | (635   | ) |  | $   | 1,234 | 
|                                          | Lease termination and office closing |  |                     | 1,496 |                     |  |               | (12  | )             |  |        | (779   | ) |  |     | 705   | 
|                                          |                                      |  |                     |       |                     |  |               |      |               |  |        |        |   |  |     |      
|                                          | Total                                |  |                     | 3,446 |                     |  |               | (93  | )             |  |        | (1,414 | ) |  |     | 1,939 | 
|Cingular
BTS termination                  |                                      |  |                     |       |                     |  |               |      |               |  |        |        |   |  |     |      
|                                          | Employee severance                   |  |                     | 1,266 |                     |  |               | (101 | )             |  |        | (763   | ) |  |     | 402   | 
|                                          | Lease termination and office closing |  |                     | 2,065 |                     |  |               | (410 | )             |  |        | (1,059 | ) |  |     | 596   | 
|                                          |                                      |  |                     |       |                     |  |               |      |               |  |        |        |   |  |     |      
|                                          |                                      |  | 3,331               |       |                     |  | (511          | )    |               |  | (1,822 | )      |   |  | 998 |      
|                                          |                                      |  |                     |       |                     |  |               |      |               |  |        |        |   |  |     |      
|                                          | Total                                |  | $                   | 6,777 |                     |  | $             | (604 | )             |  | $      | (3,236 | ) |  | $   | 2,937 | 
|                                          |                                      |  |                     |       |                     |  |               |      |               |  |        |        |   |  |     |       | 

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 September 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 presented 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
(SFAS 128). During the three and nine months ended September 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 and all
outstanding warrants and stock options were cancelled. These potential common
stock equivalents were not included in diluted earnings (loss) per share for
the three and nine months ended September 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
nine months ended September 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 common stock, par value
$0.01 per share 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 common stock to employees and directors. Approximately 5.4
million options to purchase common stock were granted under this plan in March
2003. During the three and eight months ended September 30, 2003, the Company
had potential common stock equivalents related to its new warrants and
outstanding stock options on common stock. These potential common stock
equivalents were not included in diluted earnings (loss) per share for the
eight months ended September 30, 2003 because the effect would have been
antidilutive. Accordingly, basic and diluted net loss per share are the same
for the eight months ended September 30, 2003. For the three months ended
September 30, 2003, there were

10



---



##### 



approximately 5.4 million options to purchase common stock and warrants
exercisable into 2.5 million shares of common stock outstanding which were
included in the calculation of diluted earnings per share. No options or
warrants were excluded from the calculation of diluted earnings per share for
the three months ended September 30, 2003 as all such options and warrants were
dilutive. The shares used in the computation of the Companys basic and diluted
earnings per share are reconciled as follows:

|                                                     |  |                |        |               |  |               |         |             |  |               |        |  |  |  |         |  |  |  |         | 
|---------------------------------------------------- |  | -------------- | ------ | ------------- |  | ------------- | ------- | ----------- |  | ------------- | ------ |  |  |  | ------- |  |  |  | ------- | 
|                                                     |  | Reorganized    |        | Predecessor   |  | Reorganized   |         | Predecessor |  | Predecessor  
|                                                     |  | Company        |        | Company       |  | Company       |         | Company     |  | Company      
|                                                     |  | Three Months   |        | Three Months  |  | Eight Months  |         | One Month   |  | Nine Months  
|                                                     |  | Ended          |        | Ended         |  | Ended         |         | Ended       |  | Ended        
|                                                     |  | September 30,  |        | September 30, |  | September 30, |         | January 31, |  | September 30,
|                                                     |  | 2003           |        | 2002          |  | 2003          |         | 2003        |  | 2002         
|                                                     |  |                |        |               |  |               |         |             |  |              
|                                                     |  | (in
thousands)
|Weighted average common shares outstanding (basic)   |  |                | 47,507 |               |  |               | 154,014 |             |  |               | 47,325 |  |  |  | 154,014 |  |  |  | 153,894 | 
|Effect of dilutive options                           |  |                | 2,934  |               |  |               |        |             |  |               |       |  |  |  |        |  |  |  |        | 
|Effect of dilutive warrants                          |  |                | 1,176  |               |  |               |        |             |  |               |       |  |  |  |        |  |  |  |        | 
|                                                     |  |                |        |               |  |               |         |             |  |               |        |  |  |  |         |  |  |  |         | 
|Weighted average common shares outstanding
(diluted) |  |                | 51,617 |               |  |               | 154,014 |             |  |               | 47,325 |  |  |  | 154,014 |  |  |  | 153,894 | 
|                                                     |  |                |        |               |  |               |         |             |  |               |        |  |  |  |         |  |  |  |         | 

Comprehensive Income (Loss)

Other comprehensive income (loss) consists of foreign currency translation
adjustments and unrealized holding gains (losses) on available-for-sale
securities as follows (in thousands):

|                                                            |  |                    |        |                    |  |                    |          |                     |  |                    |        |   |  |   |         |   |  |   |          |  
|----------------------------------------------------------- |  | ------------------ | ------ | ------------------ |  | ------------------ | -------- | ------------------- |  | ------------------ | ------ | - |  | - | ------- | - |  | - | -------- | -
|                                                            |  | Reorganized        |        | Predecessor        |  | Reorganized        |          | Predecessor Company
|                                                            |  | Company            |        | Company            |  | Company            |          |                    
|                                                            |  | Three Months       |        | Three Months       |  | Eight Months       |          | One Month           |  | Nine Months       
|                                                            |  | Ended              |        | Ended              |  | Ended              |          | Ended               |  | Ended             
|                                                            |  | September 30, 2003 |        | September 30, 2002 |  | September 30, 2003 |          | January 31, 2003    |  | September 30, 2002
|                                                            |  |                    |        |                    |  |                    |          |                     |  |                   
|Reported net income (loss)                                  |  | $                  | 3,214  |                    |  | $                  | (134,592 | )                   |  | $                  | (6,052 | ) |  | $ | 344,970 |   |  | $ | (714,691 | )
|Foreign currency translation
Adjustment                     |  |                    | (189   | )                  |  |                    | (432     | )                   |  |                    |       |   |  |   | (123    | ) |  |   | 115      |  
|Unrealized holding gains
(losses) arising during the
period |  |                    | (3,335 | )                  |  |                    | (1,467   | )                   |  |                    |       |   |  |   | (200    | ) |  |   | (24,012  | )
|                                                            |  |                    |        |                    |  |                    |          |                     |  |                    |        |   |  |   |         |   |  |   |          |  
|Comprehensive income (loss)                                 |  | $                  | (310   | )                  |  | $                  | (136,491 | )                   |  | $                  | (6,052 | ) |  | $ | 344,647 |   |  | $ | (738,588 | )
|                                                            |  |                    |        |                    |  |                    |          |                     |  |                    |        |   |  |   |         |   |  |   |          |  

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 Old 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 Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation(SFAS 123), the Companys net income (loss) and
net income (loss) per share for the three months ended September 30, 2002, the
one month ended January 31, 2003 and the nine months ended September 30, 2002
would have been as follows (in thousands):

|                                                                                                             |  |                    |          |                  |  |                    |         |   |  |   |          |  
|------------------------------------------------------------------------------------------------------------ |  | ------------------ | -------- | ---------------- |  | ------------------ | ------- | - |  | - | -------- | -
|                                                                                                             |  | Predecessor        |          | Predecessor      |  | Predecessor       
|                                                                                                             |  | Company            |          | Company          |  | Company           
|                                                                                                             |  | Three Months       |          | One Month        |  | Nine Months       
|                                                                                                             |  | Ended              |          | Ended            |  | Ended             
|                                                                                                             |  | September 30, 2002 |          | January 31, 2003 |  | September 30, 2002
|                                                                                                             |  |                    |          |                  |  |                   
|Reported net income (loss)                                                                                   |  | $                  | (134,592 | )                |  | $                  | 344,970 |   |  | $ | (714,691 | )
|Non-cash compensation charges included in net income (loss)                                                  |  |                    | 58       |                  |  |                    |        |   |  |   | 638      |  
|Stock-based employee compensation cost that would
have been included in net loss under the fair value method |  |                    | (2,484   | )                |  |                    | (694    | ) |  |   | (9,807   | )
|                                                                                                             |  |                    |          |                  |  |                    |         |   |  |   |          |  
|Adjusted net income (loss)                                                                                   |  | $                  | (137,018 | )                |  | $                  | 344,276 |   |  | $ | (723,860 | )
|                                                                                                             |  |                    |          |                  |  |                    |         |   |  |   |          |  

11



---



##### 



|                                                                                                             |  |                    |       |                  |  |                    |      |  |  |   |       |  
|------------------------------------------------------------------------------------------------------------ |  | ------------------ | ----- | ---------------- |  | ------------------ | ---- |  |  | - | ----- | -
|                                                                                                             |  | Predecessor        |       | Predecessor      |  | Predecessor       
|                                                                                                             |  | Company            |       | Company          |  | Company           
|                                                                                                             |  | Three Months       |       | One Month        |  | Nine Months       
|                                                                                                             |  | Ended              |       | Ended            |  | Ended             
|                                                                                                             |  | September 30, 2002 |       | January 31, 2003 |  | September 30, 2002
|                                                                                                             |  |                    |       |                  |  |                   
|Basic and diluted income (loss) per share:                                                                   |  |                    |       |                  |  |                    |      |  |  |   |       |  
|Reported net income (loss)                                                                                   |  | $                  | (0.87 | )                |  | $                  | 2.24 |  |  | $ | (4.64 | )
|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 | )                |  |                    |     |  |  |   | (0.06 | )
|                                                                                                             |  |                    |       |                  |  |                    |      |  |  |   |       |  
|Adjusted net income (loss)                                                                                   |  | $                  | (0.89 | )                |  | $                  | 2.24 |  |  | $ | (4.70 | )
|                                                                                                             |  |                    |       |                  |  |                    |      |  |  |   |       |  

Also, on February 10, 2003, the Company adopted the 2003 Equity Incentive
Plan to grant equity-based incentives in common stock to employees and
directors. In March 2003, the Company granted approximately 5.4 million options
to purchase common stock under this plan. Had compensation cost for the
Companys stock options to purchase 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 eight months ended
September 30, 2003 would have been as follows (in thousands):

|                                                                                                                      |  |                    |        |                    |  |   |        |  
|--------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | ------------------ |  | - | ------ | -
|                                                                                                                      |  | Reorganized        |        | Reorganized       
|                                                                                                                      |  | Company            |        | Company           
|                                                                                                                      |  | Three Months       |        | Eight Months      
|                                                                                                                      |  | Ended              |        | Ended             
|                                                                                                                      |  | September 30, 2003 |        | September 30, 2003
|                                                                                                                      |  |                    |        |                   
|Reported net income (loss)                                                                                            |  | $                  | 3,214  |                    |  | $ | (6,052 | )
|Stock-based employee compensation cost
that would have been included in net
income (loss) under the fair value method |  |                    | (1,757 | )                  |  |   | (3,787 | )
|                                                                                                                      |  |                    |        |                    |  |   |        |  
|Adjusted net income (loss)                                                                                            |  | $                  | 1,457  |                    |  | $ | (9,839 | )
|                                                                                                                      |  |                    |        |                    |  |   |        |  
|Basic income (loss) per share:                                                                                        |  |                    |        |                    |  |   |        |  
|Reported net income (loss)                                                                                            |  | $                  | 0.07   |                    |  | $ | (0.13  | )
|Stock-based employee compensation cost
that would have been included in net
income (loss) under the fair value method |  |                    | (0.04  | )                  |  |   | (0.08  | )
|                                                                                                                      |  |                    |        |                    |  |   |        |  
|Adjusted net income (loss)                                                                                            |  | $                  | 0.03   |                    |  | $ | (0.21  | )
|                                                                                                                      |  |                    |        |                    |  |   |        |  
|Diluted income (loss) per share:                                                                                      |  |                    |        |                    |  |   |        |  
|Reported net income (loss)                                                                                            |  | $                  | 0.06   |                    |  | $ | (0.13  | )
|Stock-based employee compensation cost
that would have been included in net
income (loss) under the fair value method |  |                    | (0.03  | )                  |  |   | (0.08  | )
|                                                                                                                      |  |                    |        |                    |  |   |        |  
|Adjusted net income (loss)                                                                                            |  | $                  | 0.03   |                    |  | $ | (0.21  | )
|                                                                                                                      |  |                    |        |                    |  |   |        |  

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 nine months
ended September 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 eight months ended September 30, 2003), which are, in the
opinion of management, necessary for a fair presentation of results for interim
periods. As a result of the implementation of fresh start accounting as of
January
12

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 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 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 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 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:

13



---



##### 



|                                                    |                                                                                                                                                                                                                                                                          |                                                      |            |                |           |                 |            |        |          |      |      |             |   |             |           |        |           | 
|--------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------- | ---------- | -------------- | --------- | --------------- | ---------- | ------ | -------- | ---- | ---- | ----------- | - | ----------- | --------- | ------ | --------- | 
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |            | 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 | 
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |            |                |           |                 |            |        |          |      |      |             |   |             |           |        |          
|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 | 
|                                                    |                                                                                                                                                                                                                                                                          |                                                      |            |                |           |                 |            |        |          |      |      |             |   |             |           |        |          



---

|References:
|-----------
|           
|(1)        
|           
|(2)        
|           
|(3)        
|           
|(4)        
|           
|(5)        
|           
|(6)        

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3.     Property and Equipment

Property and equipment consist of the following:

|                              |  |                    |           |                   |  |   |           |  
|----------------------------- |  | ------------------ | --------- | ----------------- |  | - | --------- | -
|                              |  | Reorganized        |           | Predecessor      
|                              |  | Company            |           | Company          
|                              |  | September 30, 2003 |           | December 31, 2002
|                              |  |                    |           |                  
|                              |  | (in thousands)    
|Towers                        |  | $                  | 1,204,627 |                   |  | $ | 2,548,712 |  
|Equipment                     |  |                    | 21,629    |                   |  |   | 39,181    |  
|Land                          |  |                    | 16,269    |                   |  |   | 18,081    |  
|Buildings                     |  |                    | 27,278    |                   |  |   | 32,219    |  
|Other                         |  |                    | 7,783     |                   |  |   | 38,217    |  
|                              |  |                    |           |                   |  |   |           |  
|                              |  |                    | 1,277,586 |                   |  |   | 2,676,410 |  
|Less accumulated depreciation |  |                    | (56,222   | )                 |  |   | (401,467  | )
|                              |  |                    |           |                   |  |   |           |  
|                              |  |                    | 1,221,364 |                   |  |   | 2,274,943 |  
|Construction in progress      |  |                    | 2,060     |                   |  |   | 18,002    |  
|                              |  |                    |           |                   |  |   |           |  
|Property and equipment, net   |  | $                  | 1,223,424 |                   |  | $ | 2,292,945 |  
|                              |  |                    |           |                   |  |   |           |  

4.     Recent Accounting Pronouncements

In June 2001, FASB issued Statement of Financial Accounting Standards No.
143, Accounting for Asset Retirement Obligations(SFAS 143). SFAS 143
requires that the fair value of a liability for an asset retirement obligation
be recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made. The associated asset retirement costs are capitalized
as part of the carrying amount of the long-lived asset. The Company adopted
SFAS 143 on January 1, 2003 in connection with certain ground leases that
require removal of the tower upon expiration. Application of the new rules
resulted in an increase in net property, plant and equipment of $23.2 million,
recognition of an asset retirement obligation of $35.4 million, and a
cumulative effect of change in accounting principle of $12.2 million. This
obligation is included in Other long term liabilities in the condensed
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 September 30,
|                            |  | 2003           |        | Expense   |  | Cash Flows |       | 2003            
|                            |  |                |        |           |  |            |       |                 
|                            |  | (in thousands)
|Asset retirement obligation |  | $              | 35,442 |           |  | $          | 1,970 |                  |  | $            | (42 | ) |  | $ | 37,370 | 
|                            |  |                |        |           |  |            |       |                  |  |              |     |   |  |   |        | 

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 nine months ended
September 30, 2002 had the Company adopted SFAS 143 on January 1, 2002 are as
follows:

|                                                  |  |                       |          |                       |  |   |          |  
|------------------------------------------------- |  | --------------------- | -------- | --------------------- |  | - | -------- | -
|                                                  |  | Predecessor Company   |          | Predecessor Company  
|                                                  |  | Three Months Ended    |          | Nine Months Ended    
|                                                  |  | September 30, 2002    |          | September 30, 2002   
|                                                  |  |                       |          |                      
|                                                  |  | (in thousands, except |          | (in thousands, except
|                                                  |  | per share amounts)    |          | per share amounts)   
|Reported net loss                                 |  | $                     | (134,592 | )                     |  | $ | (714,691 | )
|Additional depreciation of property and
equipment |  |                       | (465     | )                     |  |   | (1,393   | )
|Accretion of asset retirement obligation          |  |                       | (623     | )                     |  |   | (1,825   | )
|                                                  |  |                       |          |                       |  |   |          |  
|Adjusted net loss                                 |  | $                     | (135,680 | )                     |  | $ | (717,909 | )
|                                                  |  |                       |          |                       |  |   |          |  

15



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|                                                  |  |                       |       |                       |  |   |       |  
|------------------------------------------------- |  | --------------------- | ----- | --------------------- |  | - | ----- | -
|                                                  |  | Predecessor Company   |       | Predecessor Company  
|                                                  |  | Three Months Ended    |       | Nine Months Ended    
|                                                  |  | September 30, 2002    |       | September 30, 2002   
|                                                  |  |                       |       |                      
|                                                  |  | (in thousands, except |       | (in thousands, except
|                                                  |  | per share amounts)    |       | per share amounts)   
|Basic and diluted earnings per share:             |  |                       |       |                       |  |   |       |  
|Reported net loss per share                       |  | $                     | (0.87 | )                     |  | $ | (4.64 | )
|Additional depreciation of property and
equipment |  |                       |      |                       |  |   | (0.01 | )
|Accretion of asset retirement obligation          |  |                       | (0.01 | )                     |  |   | (0.01 | )
|                                                  |  |                       |       |                       |  |   |       |  
|Adjusted net loss per share                       |  | $                     | (0.88 | )                     |  | $ | (4.66 | )
|                                                  |  |                       |       |                       |  |   |       |  

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

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

In December 2002, the FASB issued 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 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 ending after December 15, 2003. The Company has
reviewed its investments and other arrangements and determined that none of its
investee companies are VIEs. The Company has not invested in any new VIEs
created after January 31, 2003.

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, with
certain exceptions and for hedging relationships designated after June 30, 2003
and should be applied prospectively. The adoption of SFAS 149 did not have a
material impact on the Companys consolidated financial position, results of
operations, or cash flows.

In May 2003, the FASB issued Statement of Financial Accounting Standards
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

16



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##### 



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 adoption of SFAS 150 did not have a material impact on
the Companys consolidated financial position, results of operations, or cash
flows.

5.     Acquisition and Disposition 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.

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 $204.3 million as of September
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 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 eight months ended September 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. In the three months ended
September 30, 2002, comparable revenues and costs of site leasing operations,
excluding

17



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##### 



depreciation, amortization and accretion expense, related to the 545
towers, were $2.8 million and $1.4 million, respectively. In the nine months
ended September 30, 2002, comparable revenues and costs of site leasing
operations, excluding depreciation, amortization and accretion expense, related
to the 545 towers, were $8.1 million and $4.3 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.

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 eight months ended September 30, 2003, the Company leased or subleased
59 towers, for which it paid $14.7 million in cash. Of this amount, $4.5
million was charged against the liability and $10.2 million was capitalized as
property and equipment.

In the nine months ended September 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.

WesTower Leasing Canada, Inc.

On September 30, 2003, the Company completed the sale of WesTower Leasing
Canada, Inc., a wholly-owned subsidiary of the Company consisting primarily of
39 wireless communications towers located in Canada for net cash proceeds
totaling $2.1 million. In connection with the sale, the Company recognized a
gain of $0.4 million in the eight months ended September 30, 2003, which is
included in other income (expense).

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 $640.0 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 $187.8 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
$252.2 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.

18



---



##### 



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 voluntarily repaid $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.

On September 29, 2003, Communications repaid $0.8 million of the multiple
draw term loan and $1.0 million of the term loan. In addition, Communications
voluntarily repaid $16.3 million of the multiple draw term loan and $21.9
million of the term loan on September 30, 2003. In connection with these
repayments, Communications wrote off $0.7 million in debt issuance costs. This
charge is included in interest expense in the unaudited condensed consolidated
statement of operations.

As of September 30, 2003, Communications has $440.0 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 $193.8 million under the revolving
credit facility as of September 30, 2003 while remaining in compliance with the
applicable covenants.

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

| |       |  |                |         | 
| | ----- |  | -------------- | ------- | 
| |       |  | Maturities    
| |       |  |               
| |       |  | (in thousands)
| | 2003  |  | $              |        | 
| | 2004  |  |                |        | 
| | 2005  |  |                |        | 
| | 2006  |  |                | 81,001  | 
| | 2007  |  |                | 358,954 | 
| |       |  |                |        
| | Total |  | $              | 439,955 | 
| |       |  |                |        

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 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 September 30, 2003 was
4.55%. After giving effect to the amendment to the credit facility discussed in
Note 9, the term loan will bear interest, at Communications option, at either
the Canadian Imperial Bank of Commerces base rate plus 1.75% per annum or the
Eurodollar rate plus 3.00% per annum. Giving effect to the amendment, the
weighted average interest rate on outstanding borrowings under the credit
facility as of September 30, 2003 would have been 3.97%.

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 (as
defined in the credit facility).

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.

19



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##### 



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 nine months ended September 30,
2002 were $30.2 million and $107.8 million, respectively. Network services loss
before taxes for the three and nine months ended September 30, 2002 were $5.6
million and $8.3 million, respectively. The Company recorded a loss on disposal
of the network services division of $47.0 million in 2002. In the eight months
ended September 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 nine 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 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 September 30, 2003 and 2002, the eight months
ended September 30, 2003, the one month ended January 31, 2003 and the nine
months ended September 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.

20



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##### 



|                                                            |  |                |           |           |  |         |         |          |  |       |        |   |  |   |         |  |  |   |         |   |  |   |           | 
|----------------------------------------------------------- |  | -------------- | --------- | --------- |  | ------- | ------- | -------- |  | ----- | ------ | - |  | - | ------- |  |  | - | ------- | - |  | - | --------- | 
|                                                            |  | Wireless       |           | Broadcast |  | Other   |         | Total   
|                                                            |  |                |           |           |  |         |         |         
|                                                            |  |                |           |           |  | Leasing |         | Services |  | Total |        |   |  |   |         |  |  |  
|                                                            |  |                |           |           |  |         |         |          |  |       |        |   |  |   |         |  |  |  
|                                                            |  | (in thousands)
|Three months ended September 30, 2003
(Reorganized Company) |  |                |           |           |  |         |         |          |  |       |        |   |  |   |         |  |  |   |         |   |  |   |           | 
|Total revenues                                              |  | $              | 73,671    |           |  | $       | 5,855   |          |  | $     | 4,334  |   |  | $ | 10,189  |  |  | $ |        |   |  | $ | 83,860    | 
|Adjusted EBITDA                                             |  |                | 45,461    |           |  |         | 2,158   |          |  |       | 7      |   |  |   | 2,165   |  |  |   | (5,728  | ) |  |   | 41,898    | 
|Assets                                                      |  |                | 1,342,517 |           |  |         | 88,319  |          |  |       | 22,856 |   |  |   | 111,175 |  |  |   | 73,779  |   |  |   | 1,527,471 | 
|Additions to property and equipment                         |  |                | 2,280     |           |  |         | 760     |          |  |       | 266    |   |  |   | 1,026   |  |  |   | 750     |   |  |   | 4,056     | 
|Three months ended September 30, 2002
(Predecessor Company) |  |                |           |           |  |         |         |          |  |       |        |   |  |   |         |  |  |   |         |   |  |   |           | 
|Total revenues                                              |  | $              | 66,196    |           |  | $       | 5,834   |          |  | $     | 7,310  |   |  | $ | 13,144  |  |  | $ |        |   |  | $ | 79,340    | 
|Adjusted EBITDA                                             |  |                | 37,160    |           |  |         | 4,056   |          |  |       | 1,388  |   |  |   | 5,444   |  |  |   | (8,116  | ) |  |   | 34,488    | 
|Assets                                                      |  |                | 2,272,271 |           |  |         | 166,397 |          |  |       | 21,989 |   |  |   | 188,386 |  |  |   | 161,976 |   |  |   | 2,622,633 | 
|Goodwill                                                    |  |                | 60,626    |           |  |         |        |          |  |       |       |   |  |   |        |  |  |   |        |   |  |   | 60,626    | 
|Additions to property and equipment                         |  |                | 787       |           |  |         | 2,197   |          |  |       | 82     |   |  |   | 2,279   |  |  |   | 710     |   |  |   | 3,776     | 
|Eight months ended September 30, 2003
(Reorganized Company) |  |                |           |           |  |         |         |          |  |       |        |   |  |   |         |  |  |   |         |   |  |   |           | 
|Total revenues                                              |  | $              | 193,108   |           |  | $       | 14,985  |          |  | $     | 11,322 |   |  | $ | 26,307  |  |  | $ |        |   |  | $ | 219,415   | 
|Adjusted EBITDA                                             |  |                | 110,611   |           |  |         | 9,602   |          |  |       | (398   | ) |  |   | 9,204   |  |  |   | (15,958 | ) |  |   | 103,857   | 
|Assets                                                      |  |                | 1,342,517 |           |  |         | 88,319  |          |  |       | 22,856 |   |  |   | 111,175 |  |  |   | 73,779  |   |  |   | 1,527,471 | 
|Additions to property and equipment                         |  |                | 5,544     |           |  |         | 2,286   |          |  |       | 818    |   |  |   | 3,104   |  |  |   | 1,657   |   |  |   | 10,305    | 
|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     | 
|Nine months ended September 30, 2002
(Predecessor Company)  |  |                |           |           |  |         |         |          |  |       |        |   |  |   |         |  |  |   |         |   |  |   |           | 
|Total revenues                                              |  | $              | 192,253   |           |  | $       | 15,362  |          |  | $     | 19,998 |   |  | $ | 35,360  |  |  | $ |        |   |  | $ | 227,613   | 
|Adjusted EBITDA                                             |  |                | 73,000    |           |  |         | 7,730   |          |  |       | 603    |   |  |   | 8,333   |  |  |   | (31,885 | ) |  |   | 49,448    | 
|Assets                                                      |  |                | 2,272,271 |           |  |         | 166,397 |          |  |       | 21,989 |   |  |   | 188,386 |  |  |   | 161,976 |   |  |   | 2,622,633 | 
|Goodwill                                                    |  |                | 60,626    |           |  |         |        |          |  |       |       |   |  |   |        |  |  |   |        |   |  |   | 60,626    | 
|Additions to property and equipment                         |  |                | 38,191    |           |  |         | 11,676  |          |  |       | 533    |   |  |   | 12,209  |  |  |   | 4,617   |   |  |   | 55,017    | 

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  |     | Eight Months  |         | One Month   |       | Nine Months  
|                                          |                                                                                                           |                       |     | Ended         |        | Ended         |     | Ended         |         | Ended       |       | Ended        
|                                          |                                                                                                           |                       |     | September 30, |        | September 30, |     | September 30, |         | January 31, |       | September 30,
|                                          |                                                                                                           |                       |     | 2003          |        | 2002          |     | 2003          |         | 2003        |       | 2002         
|                                          |                                                                                                           |                       |     |               |        |               |     |               |         |             |       |              
|Adjusted EBITDA:                          |                                                                                                           |                       |     |               |        |               |     |               |         |             |       |               |         |   |       |        |        |   |       |        
|                                          | Corporate selling, general and
administrative expenses, excluding
corporate non-cash compensation
charges |                       | $   | (5,728        | )      |               | $   | (7,069        | )       |             | $     | (15,958       | )       |   | $     | (1,777 | )      |   | $     | (20,881 | )      
|                                          | Corporate non-cash compensation
charges                                                                   |                       |     |              |        |               |     | (58           | )       |             |       |              |         |   |       |       |        |   |       | (638    | )      
|                                          | Corporate other expense                                                                                   |                       |     |              |        |               |     | (989          | )       |             |       |              |         |   |       |       |        |   |       | (10,366 | )      
|                                          |                                                                                                           |                       |     |               |        |               |     |               |         |             |       |               |         |   |       |        |        |   |       |         |        
|                                          |                                                                                                           | Total Adjusted EBITDA |     | $             | (5,728 | )             |     | $             | (8,116  | )           |       | $             | (15,958 | ) |       | $      | (1,777 | ) |       | $       | (31,885 | )
|                                          |                                                                                                           |                       |     |               |        |               |     |               |         |             |       |               |         |   |       |        |        |   |       |         |        
|Assets:                                   |                                                                                                           |                       |     |               |        |               |     |               |         |             |       |               |         |   |       |        |        |   |       |        
|                                          | Cash and cash equivalents                                                                                 |                       | $   | 55,850        |        |               | $   | 64,246        |         |             | $     | 55,850        |         |   | $     | 73,232 |        |   | $     | 64,246  |        
|                                          | Debt issuance costs                                                                                       |                       |     | 17,929        |        |               |     | 68,152        |         |             |       | 17,929        |         |   |       | 22,974 |        |   |       | 68,152  |        
|                                          | Investments                                                                                               |                       |     |              |        |               |     | 2,843         |         |             |       |              |         |   |       |       |        |   |       | 2,843   |        
|                                          | Assets held for sale                                                                                      |                       |     |              |        |               |     | 26,735        |         |             |       |              |         |   |       |       |        |   |       | 26,735  |        
|                                          |                                                                                                           |                       |     |               |        |               |     |               |         |             |       |               |         |   |       |        |        |   |       |         |        
|                                          |                                                                                                           | Total assets          |     | $             | 73,779 |               |     | $             | 161,976 |             |       | $             | 73,779  |   |       | $      | 96,206 |   |       | $       | 161,976 |  
|                                          |                                                                                                           |                       |     |               |        |               |     |               |         |             |       |               |         |   |       |        |        |   |       |         |        
|Additions to property and equipment:      |                                                                                                           |                       |     |               |        |               |     |               |         |             |       |               |         |   |       |        |        |   |       |        
|                                          | Corporate additions to property and
equipment                                                             |                       | $   | 750           |        |               | $   | 710           |         |             | $     | 1,657         |         |   | $     | 1,610  |        |   | $     | 4,617   |        
|                                          |                                                                                                           |                       |     |               |        |               |     |               |         |             |       |               |         |   |       |        |        |   |       |         |        
|Total additions to property and equipment |                                                                                                           | $                     | 750 |               |        | $             | 710 |               |         | $           | 1,657 |               |         | $ | 1,610 |        |        | $ | 4,617 |        
|                                          |                                                                                                           |                       |     |               |        |               |     |               |         |             |       |               |         |   |       |        |        |   |       |         |        

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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  |  | Eight Months  |         | One Month   |  | Nine Months  
|                                                             |  | Ended         |        | Ended         |  | Ended         |         | Ended       |  | Ended        
|                                                             |  | September 30, |        | September 30, |  | September 30, |         | January 31, |  | September 30,
|                                                             |  | 2003          |        | 2002          |  | 2003          |         | 2003        |  | 2002         
|                                                             |  |               |        |               |  |               |         |             |  |              
|Income (loss) from continuing
operations before income taxes |  | $             | 3,803  |               |  | $             | (82,894 | )           |  | $             | (4,059  | ) |  | $ | 1,025,793  |   |  | $ | (283,312 | )
|Add: Depreciation, amortization and
accretion expenses       |  |               | 25,675 |               |  |               | 48,658  |             |  |               | 68,127  |   |  |   | 16,075     |   |  |   | 143,921  |  
|Less: Interest income                                        |  |               | (143   | )             |  |               | (148    | )           |  |               | (639    | ) |  |   | (137       | ) |  |   | (525     | )
|Add: Interest expense                                        |  |               | 12,563 |               |  |               | 67,018  |             |  |               | 40,428  |   |  |   | 4,721      |   |  |   | 187,510  |  
|Add: Reorganization expense                                  |  |               |       |               |  |               | 1,854   |             |  |               |        |   |  |   |           |   |  |   | 1,854    |  
|Less: Gain on debt discharge                                 |  |               |       |               |  |               |        |             |  |               |        |   |  |   | (1,034,764 | ) |  |   |         |  
|                                                             |  |               |        |               |  |               |         |             |  |               |         |   |  |   |            |   |  |   |          |  
|Adjusted EBITDA                                              |  | $             | 41,898 |               |  | $             | 34,488  |             |  | $             | 103,857 |   |  | $ | 11,688     |   |  | $ | 49,448   |  
|                                                             |  |               |        |               |  |               |         |             |  |               |         |   |  |   |            |   |  |   |          |  

9. Subsequent Events

On October 8, 2003, the Company completed an underwritten public offering
of its common stock, whereby 10.35 million shares of common stock were sold by
four of the Companys existing stockholders, including an over-allotment option
exercised by the underwriters. The selling stockholders received net proceeds
of $292.0 million from the offering. In connection with this offering, the
Company incurred costs of approximately $1.2 million in the
three months ended September 30, 2003, which are included in
Other income (expense). In connection with the offering, on October 3, 2003,
the Companys common stock began trading on the New York Stock Exchange under
the symbol SSI.

Effective October 24, 2003, the Company completed an amendment to the
credit facility to replace the existing term loan with a new term loan that is
substantially the same as the existing term loan, except that the interest rate
was reduced from, at the Companys option, Canadian Imperial Bank of Commerces
base rate plus 2.75% per annum or the Eurodollar rate plus 4.00% per annum to
Canadian Imperial Bank of Commerces base rate plus 1.75% per annum or the
Eurodollar rate plus 3.00% per annum.

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

Business Overview

We are one of the largest wireless tower operators in the United States in
terms of number of towers and revenues. 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. We owned or operated 7,509 towers and in-building systems as of
September 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 were $30.2 million and $107.8 million for
the three and nine months ended September 30, 2002, respectively. In
conjunction with the sale, we recorded a loss on disposal of the network
services division of $47.0 million in the year ended December 31, 2002. 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 eight months ended September 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 variable contractual escalation clauses associated with
existing site leasing and licensing agreements. We expect our broadcast service
revenues to continue to approximate 5% or less of our revenues in the immediate
future.

During the last nine 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

22



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##### 



addition to lower revenues, Adjusted EBITDA
for the broadcast services division for the eight months ended September 30,
2003 and the one month ended January 31, 2003 were ($0.4) million and ($0.5)
million, respectively, compared to Adjusted EBITDA of $0.6 million for the nine
months ended September 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 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 costs incurred
to date compared to estimated total contract costs.

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.

Plan of Reorganization

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

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Reorganization with the Bankruptcy Court. A plan
confirmation hearing was held on January 28, 2003, and the Proposed Plan of
Reorganization, as modified on that date (the Plan of Reorganization), was
confirmed by the Bankruptcy Court. All conditions precedent to the
effectiveness of the Plan of Reorganization were met by February 10, 2003,
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 provided 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 7,509
towers and in-building systems as of September 30, 2003. We have accomplished
this growth through acquisitions and 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 of site operations, excluding
depreciation, amortization and accretion expense. For the eight months ended
September 30, 2003, these towers represented $0.4 million of a total of $208.1
million of site operations revenues and $0.2 million of a total of $68.9
million in costs of site operations, excluding depreciation, amortization and
accretion expense. For the nine months ended September 30, 2002 the same towers
represented $8.1 million of a total of $207.6 million of site operations
revenues and $4.3 million of a total of $79.7 million in costs of site
operations, excluding depreciation, amortization and accretion expense.

We remain contractually obligated to purchase up to an additional 541
towers from SBC from November 2003 through August 2004 for an aggregate
purchase price of approximately $141 million. As of September 30, 2003, the
remaining commitments will require approximately $26 million in 2003 and $115
million in 2004.

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On September 30, 2003, we completed the sale of WesTower Leasing Canada,
Inc., a wholly-owned subsidiary consisting primarily of 39 wireless
communications towers located in Canada for cash proceeds totaling $2.1
million. In connection with the sale, we recognized a gain of $0.4 million,
which is included in Other income (expense) in the unaudited condensed
consolidated statements of operations.

Forward-Looking Statements

This quarterly report, and other oral statements made from time to time by
our representatives, contain 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 these statements,
you should understand that they 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;                                                                                                
|
| |  |  | consolidation in the wireless industry;                                                                                                                         
|
| |  |  | 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 report
after the
date of this report. In light of these risks and uncertainties, you should
keep in mind that any forward-looking statement made in this report or
elsewhere might not occur.

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Results of Operations

Three months ended September 30, 2003 compared to the three months ended
September 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 to the unaudited condensed consolidated
financial statements included in Item 1 of this report for additional
information on the consummation of the Plan of Reorganization and
implementation of fresh start accounting.

Consolidated revenues increased to $83.9 million for the three months
ended September 30, 2003 from $79.3 million for the three months ended
September 30, 2002. Site operations revenues increased to $79.5 million for the
three months ended September 30, 2003 from $72.0 million for the three months
ended September 30, 2002. Revenues from wireless operations increased to $73.7
million for the three months ended September 30, 2003 from $66.2 million for
the three months ended September 30, 2002. Revenues from broadcast leasing were
$5.8 million for both the three months ended September 30, 2003 and 2002.
Increased site operations revenues in 2003 were primarily a result of
incremental revenue in 2003 from new customers on towers that were part of our
portfolio on September 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 September 30, 2002 and
September 30, 2003, same tower revenue growth was 14%. After the sale of 545
towers to Cingular and the sale of WesTower Leasing Canada, Inc., we owned or
operated 7,509 towers at September 30, 2003, as compared to 7,999 towers at
September 30, 2002.

Revenues from broadcast services decreased to $4.4 million for the three
months ended September 30, 2003 compared to $7.3 million for the three months
ended September 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 to
make minimum modifications to their towers.

Accounts receivable, net of allowance, decreased by $6.7 million from
December 31, 2002 to September 30, 2003. The decrease in accounts receivable
is primarily due to cash collections on account, offset by a decrease in the
allowance for doubtful accounts, which decreased by $1.9 million for the same
period. We analyze the adequacy of our accounts receivable on a periodic basis
to ensure that we appropriately reflect the amount we expect to collect. The
economic factors affecting the wireless communications industry as a whole, our
customers ability to meet their financial obligations and the age of our
outstanding accounts receivable are all factors we take into consideration when
evaluating the adequacy of our estimate for the allowance for doubtful
accounts. During 2002, numerous wireless carriers experienced financial
difficulties and their balances owed to us continued to age; these
circumstances caused us to increase our allowance at December 31, 2002. During
2003, due to increased collection efforts, we were able to recover receivable
amounts which had previously been reserved and as a result, we decreased our
allowance as of September 30, 2003.

Consolidated costs of operations, excluding depreciation, amortization and
accretion expenses, decreased to $29.9 million for the three months ended
September 30, 2003 from $32.7 million for the three months ended September 30,
2002. Consolidated costs of operations, excluding depreciation, amortization
and accretion expenses, as a percentage of revenues decreased to 36% for the
three months ended September 30, 2003 from 41% for the three months ended
September 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 site operations decreased to $26.0 million for the three months
ended September 30, 2003 from $27.5 million for the three months ended
September 30, 2002. 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 September 30, 2003 from
38% for the three months ended September 30, 2002. Costs of operations,
excluding depreciation, amortization and accretion expenses, for wireless
operations decreased to $25.6 million for the three months ended September 30,
2003 from $26.2 million for the three months ended September 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 September 30, 2003 from 40% for the three months ended
September 30, 2002. Costs of operations,
excluding depreciation, amortization and accretion expenses, for broadcast
leasing decreased to $0.4 million for the three months ended September 30, 2003
from $1.3 million for the three months ended September 30, 2002. Costs of
operations, excluding depreciation, amortization and accretion expenses, for
broadcast leasing as a percentage of broadcast leasing revenues decreased to

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7%
for the three months ended September 30, 2003 from 22% for the three months
ended September 30, 2002. These decreases were 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 $3.9 million for the three months
ended September 30, 2003 from $5.2 million for the three months ended September
30, 2002. Costs of operations, excluding depreciation, amortization and
accretion expenses, for broadcast services as a percentage of broadcast
services revenues increased to 89% for the three months ended September 30,
2003 from 72% for the three months ended September 30, 2002, primarily due to
lower revenue volumes in 2003.

Selling, general and administrative expenses decreased to $13.2 million
for the three months ended September 30, 2003 from $14.2 million for the three
months ended September 30, 2002. Selling, general and administrative expenses
as a percentage of revenues decreased to 16% for the three months ended
September 30, 2003 from 18% for the three months ended September 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.

Site operations selling, general and administrative expenses increased to
$7.0 million for the three months ended September 30, 2003 from $6.9 million
for the three months ended September 30, 2002. Site operations selling, general
and administrative expenses as a percentage of site operations revenues
decreased to 9% in the three months ended September 30, 2003 from 10% for the
three months ended September 30, 2002. Selling, general and administrative
expenses for wireless operations decreased to $6.3 million for the three months
ended September 30, 2003 from $6.4 million for the three months ended September
30, 2002. Selling, general and administrative expenses for wireless operations
as a percentage of wireless revenues decreased to 9% for the three months ended
September 30, 2003 from 10% for the three months ended September 30, 2002.

Selling, general and administrative expenses for broadcast leasing
increased to $0.7 million for the three months ended September 30, 2003 from
$0.5 million for the three months ended September 30, 2002. Selling, general
and administrative expenses for broadcast leasing as a percentage of broadcast
leasing revenues increased to 12% for the three months ended September 30, 2003
from 8% for the three months ended September 30, 2002.

Selling, general and administrative expenses for broadcast services
decreased to $0.5 million for the three months ended September 30, 2003 from
$0.7 million for the three months ended September 30, 2002. Selling, general
and administrative expenses for broadcast services as a percentage of broadcast
services revenues increased to 11% for the three months ended September 30,
2003 from 10% for the three months ended September 30, 2002.

Selling, general and administrative expenses not specific to the above
business segments decreased to $5.7 million for the three months ended
September 30, 2003 from $6.6 million for the three months ended September 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 September 30, 2003 from 8% for the three months ended
September 30, 2002.

Other income (expense), net was income of $1.1 million in the three months
ended September 30, 2003. Other income of $3.6 million was recorded in the
wireless segment of our site operations business. This amount consisted
primarily of $3.8 million of gain on the sale of available-for-sale securities,
gain on sale of assets of $0.2 million, gain on sale of subsidiary of $0.7
million, $0.1 million related to the write-up of our interest rate cap to fair
value and $1.2 million of expenses related to the public offering of shares of
our common stock. Other expense of $2.5 million was recorded in the broadcast
leasing component of our broadcast segment and is related to the loss on
disposal of a broadcast tower.

Other income (expense), net was income of $2.0 million in the three months
ended September 30, 2002. Of this amount, other income related to the wireless
segment of our site operations business was $3.0 million for the three months
ended September 30, 2002, consisting of $1.4 million related to gains from
investments in affiliates accounted for under the equity method and $1.6
million related to gains on sales of assets. Other expense not specific to any
business segment for the three months ended September 30, 2002 was $1.0 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
$41.9 million for the three months ended September 30, 2003 from $34.5 million
for the three months ended September 30, 2002. Site operations Adjusted EBITDA
increased to $47.6
million for the three months ended September 30, 2003 from $41.2 million
for the three months ended September 30, 2002. Wireless Adjusted EBITDA
increased to $45.5 million for the three months ended September 30, 2003 from
$37.1 million for the three months ended September 30, 2002. Adjusted EBITDA
for broadcast leasing decreased to $2.1 million for the three months ended
September

27



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30, 2003 from $4.1 million for the three months ended September 30,
2002. Adjusted EBITDA for broadcast services was at a breakeven level for the
three months ended September 30, 2003 compared to $1.4 million for the three
months ended September 30, 2002.

Depreciation, amortization and accretion expenses decreased to $25.7
million for the three months ended September 30, 2003 from $48.7 million for
the three months ended September 30, 2002. Site operations depreciation,
amortization and accretion expenses decreased to $25.4 million for the three
months ended September 30, 2003 from $48.3 million for the three months ended
September 30, 2002. Depreciation, amortization and accretion expenses for our
wireless segment decreased to $24.6 million for the three months ended
September 30, 2003 from $47.1 million for the three months ended September 30,
2002. Depreciation, amortization and accretion expenses for the broadcast
leasing component of our broadcast segment decreased to $0.8 million for the
three months ended September 30, 2003 from $1.2 million for the three months
ended September 30, 2002. Depreciation, amortization and accretion expenses for
the broadcast services component of our broadcast segment decreased to $0.3
million for the three months ended September 30, 2003 from $0.4 million for the
three months ended September 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.

Interest income was $0.1 million for both the three months ended September
30, 2003 and 2002. Interest expense decreased to $12.6 million during the three
months ended September 30, 2003 from $67.0 million for the three months ended
September 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 $0.8 million of
debt issuance costs resulting from prepayments of amounts outstanding under our
credit facility. Interest expense for the three months ended September 30,
2003 consisted of $10.7 million of interest on our credit facility and our
Senior Notes, amortization of debt issuance costs of $1.1 million and writeoff
of debt issuance costs of $0.8 million. Interest expense for the three months
ended September 30, 2002 consisted of $28.2 million of interest on our credit
facility and our Senior Notes, amortization of senior discount notes of $31.7
million and amortization of debt issuance costs of $7.1 million.

Reorganization expense for the three months ended September 30, 2002 was
$1.9 million and related to costs incurred in connection with our Plan of
Reorganization.

As a result of the factors discussed above, our operating income was $15.1
million for the three months ended September 30, 2003, compared to an operating
loss of $16.2 million for the three months ended September 30, 2002.

Loss on disposal of discontinued segment was $45.6 million in the three
months ended September 30, 2002. Loss from operations of discontinued segment
was $5.5 million in the three months ended September 30, 2002. This segment was
sold on December 31, 2002.

As a result of the factors discussed above, net income was $3.2 million
for the three months ended September 30, 2003, compared to a net loss of $134.6
million for the three months ended September 30, 2002.

Eight Months Ended September 30, 2003, One Month Ended January 31, 2003 and the
Nine Months Ended September 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 eight months ended September 30, 2003 and
the one month ended January 31, 2003 were $219.4 million and $26.8 million,
respectively. Consolidated revenues for the nine months ended September 30,
2002 were $227.6 million. Site operations revenues were $208.1 million and
$25.6 million for the eight months ended September 30, 2003 and the one month
ended January 31, 2003, respectively. Site operations revenues were $207.6
million for the nine months ended September 30, 2002.
Wireless revenues were $193.1 million and $23.8 million for the eight
months ended September 30, 2003 and the one month ended January 31, 2003,
respectively. Wireless revenues were $192.2 million for the nine months ended
September 30, 2002. Revenues from broadcast leasing were $15.0 million and $1.8
million for the eight months ended September 30, 2003 and the one month ended

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January 31, 2003, respectively. Revenues from broadcast leasing were $15.4
million for the nine months ended September 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 September 30, 2002, revenues derived from
towers acquired or built subsequent to September 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 September 30, 2002 and September 30, 2003, same tower
revenue growth was 14%. After the sale of 545 towers to Cingular and the sale
of WesTower Leasing Canada, Inc., we owned or operated 7,509 towers and
in-building systems at September 30, 2003, as compared to 7,999 towers and
in-building systems at September 30, 2002.

Revenues from broadcast services were $11.3 million and $1.2 million for
the eight months ended September 30, 2003 and the one month ended January 31,
2003, respectively. Revenues from broadcast services were $20.0 million in the
nine months ended September 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.

Accounts receivable, net of allowance, decreased by $6.7 million from
December 31, 2002 to September 30, 2003. The decrease in accounts receivable
is primarily due to cash collections on account, offset by a decrease in the
allowance for doubtful accounts, which decreased by $1.9 million for the same
period. We analyze the adequacy of our accounts receivable on a periodic basis
to ensure that we appropriately reflect the amount we expect to collect. The
economic factors affecting the wireless communications industry as a whole, our
customers ability to meet their financial obligations and the age of our
outstanding accounts receivable are all factors we take into consideration when
evaluating the adequacy of our estimate for the allowance for doubtful
accounts. During 2002, numerous wireless carriers experienced financial
difficulties and their balances owed to us continued to age; these
circumstances caused us to increase our allowance at December 31, 2002. During
2003, due to increased collection efforts, we were able to recover receivable
amounts which had previously been reserved and as a result, we decreased our
allowance as of September 30, 2003.

Costs of operations, excluding depreciation, amortization and accretion
expenses, were $79.2 million and $10.3 million for the eight months ended
September 30, 2003 and the one month ended January 31, 2003, respectively.
Costs of operations, excluding depreciation, amortization and accretion
expenses, were $95.3 million for the nine months ended September 30, 2002.
Costs of operations, excluding depreciation, amortization and accretion
expenses as a percentage of revenues were 36% for the eight months ended
September 30, 2003, 39% for the one month ended January 31, 2003 and 42% for
the nine months ended September 30, 2002. Costs of operations, excluding
depreciation, amortization and accretion expenses, for site operations were
$68.9 million and $8.8 million for the eight months ended September 30, 2003
and the one month ended January 31, 2003, respectively. Costs of operations,
excluding depreciation, amortization and accretion expenses, for site
operations were $79.7 million for the nine months ended September 30, 2002.
Costs of operations, excluding depreciation, amortization and accretion
expenses for site operations as a percentage of site operations revenues were
33% for the eight months ended September 30, 2003, 35% for the one month ended
January 31, 2003 and 38% for the nine months ended September 30, 2002. Costs
of operations, excluding depreciation, amortization and accretion expenses, for
the wireless segment were $67.5 million and $8.7 million for the eight months
ended September 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 $76.1 million for the nine
months ended September 30, 2002. Costs of operations, excluding depreciation,
amortization and accretion expenses, for the wireless segment as a percentage
of wireless segment revenues were 35% for the eight months ended September 30,
2003, 36% for the one month ended January 31, 2003 and 40% for the nine months
ended September 30, 2002. Broadcast leasing costs of operations, excluding
depreciation, amortization and accretion expenses, were $1.4 million and $0.1
million for the eight months ended September 30, 2003 and the one month ended
January 31, 2003, respectively. Broadcast leasing costs of operations,
excluding depreciation, amortization and accretion expenses, were $3.6 million
for the nine months ended September 30, 2002. Broadcast leasing costs of
operations, excluding depreciation, amortization and accretion expenses, as a
percentage of broadcast leasing revenues were 10% for the eight months ended
September 30, 2003, 11% for the one month ended January 31, 2003 and 23% for
the nine months ended September 30, 2002. Costs of operations, excluding
depreciation, amortization and accretion expenses, for the wireless segment and
broadcast leasing component of our broadcast segment 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 $10.3 million and $1.5 million for the
eight months ended September 30, 2003 and the one month ended January 31, 2003,
respectively. Costs of operations, excluding depreciation, amortization and
accretion expenses, for broadcast services were $15.6 million for the nine
months ended September 30, 2002. Costs of operations, excluding depreciation,
amortization and accretion expenses, for broadcast services as

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a percentage of
broadcast services revenues were 91% for the eight months ended September 30,
2003, 121% for the one month ended January 31, 2003 and 78% for the nine months
ended September 30, 2002. Costs of operations, excluding depreciation,
amortization and accretion expenses, for broadcast services in 2003 were
primarily affected by lower revenue volumes in 2003.

Selling, general and administrative expenses were $34.5 million and $4.3
million for the eight months ended September 30, 2003 and the one-month ended
January 31, 2003, respectively. Selling, general and administrative expenses
were $45.1 for the nine months ended September 30, 2002. Selling, general and
administrative expenses were 16% of total revenues for both the eight months
ended September 30, 2003 and the one-month ended January 31, 2003. Selling,
general and administrative expenses were 20% of total revenues for the nine
months ended September 30, 2002. Selling, general and administrative expenses
in 2003 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 $17.1
million and $2.2 million for the eight months ended September 30, 2003 and one
month ended January 31, 2003, respectively. Site operations selling, general
and administrative expenses were $21.5 million for the nine months ended
September 30, 2002. Site operations selling, general and administrative
expenses as a percentage of site operations revenues were 8% for the eight
months ended September 30, 2003, 9% for the one month ended January 31, 2003
and 10% for the nine months ended September 30, 2003. Selling, general and
administrative expenses for our wireless segment were $15.7 million and $2.1
million for the eight months ended September 30, 2003 and the one-month ended
January 31, 2003, respectively. Selling, general and administrative expenses
for this segment were $20.2 million for the nine months ended September 30,
2002. Selling, general and administrative expenses for our wireless segment
were 8% and 9% of wireless revenues for the eight months ended September 30,
2003 and the one-month ended January 31, 2003, respectively. Selling, general
and administrative expenses for this segment were 11% of wireless revenues for
the nine months ended September 30, 2002. Selling, general and administrative
expenses for the broadcast leasing component of our broadcast segment were $1.4
million and $0.1 million for the eight months ended September 30, 2003 and the
one month ended January 31, 2003, respectively. Selling, general and
administrative expenses for this component were $1.3 million for the nine
months ended September 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% and 6% for the eight months ended September
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% for the nine months ended September 30,
2002.

Selling, general and administrative expenses for the broadcast services
component of our broadcast segment were $1.4 million and $0.3 million for the
eight months ended September 30, 2003 and the one month ended January 31, 2003,
respectively. Selling, general and administrative expenses for this component
were $2.6 million for the nine months ended September 30, 2002. Selling,
general and administrative expenses for the broadcast services component of our
broadcast segment were 13% and 22% of broadcast services revenues for the eight
months ended September 30, 2003 and the one-month ended January 31, 2003,
respectively. Selling, general and administrative expenses for this component
were 13% of broadcast services revenues for the nine months ended September 30,
2002.

Selling, general and administrative expenses not specific to the above
business segments were $16.0 million and $1.8 million for the eight months
ended September 30, 2003 and the one month ended January 31, 2003,
respectively. Selling, general and administrative expenses not specific to the
above business segments were $21.0 million for the nine months ended September
30, 2002. Selling, general and administrative expenses not specific to the
above business segments were 7% of total revenues for both the eight months
ended September 30, 2003 and the one-month ended January 31, 2003. Selling,
general and administrative expenses not specific to the above business segments
were 9% of total revenues for the nine months ended September 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 nine months ended September 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.

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In addition, we recorded a non-recurring impairment charge in the wireless
segment of our site leasing business of $4.3 million in the nine months ended
September 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), net was an expense of $1.9 million and $0.5
million in the eight months ended September 30, 2003 and the one month ended
January 31, 2003, respectively. The eight months ended September 30, 3003
included $0.6 million of other income recorded in the wireless segment of our
site operations business. This amount consisted primarily of $3.8 million of
gain on the sale of available-for-sale securities, gain on sale of subsidiary
of $0.4 million, loss on sale of assets of $1.4 million, $1.2 million of
expenses related to the public offering of shares of our common stock and $0.4
million related to the writedown of our interest rate cap to fair value. In
addition, we recorded $2.5 million of other expense in the broadcast leasing
component of our broadcast segment related to the loss on disposal of a
broadcast tower. 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), net was an expense of $9.2 million in the nine
months ended September 30, 2002. Of this amount, other income related to the
wireless segment of our site operations business was $1.2 million for the nine
months ended September 30, 2002, consisting of $1.3 million related to gains
from investments in affiliates accounted for under the equity method and $0.1
million related to losses on sales of assets. Other expense not specific to any
business segment for the nine months ended September 30, 2002 was $10.4 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 $103.9
million and $11.7 million for the eight months ended September 30, 2003 and the
one month ended January 31, 2003, respectively. Adjusted EBITDA was $49.4
million for the nine months ended September 30, 2002.

Adjusted EBITDA for site operations was $120.2 million and $14.0 million
for the eight months ended September 30, 2003 and the one month ended January
31, 2003, respectively. Adjusted EBITDA for site operations was $80.7 million
for the nine months ended September 30, 2002. Adjusted EBITDA for our wireless
segment was $110.6 million and $12.6 million for the eight months ended
September 30, 2003 and the one month ended January 31, 2003, respectively.
Adjusted EBITDA for this segment was $73.0 million for the nine months ended
September 30, 2002. Adjusted EBITDA for the broadcast leasing component of our
broadcast segment was $9.6 million and $1.4 million for the eight months ended
September 30, 2003 and the one month ended January 31, 2003, respectively.
EBITDA for this component was $7.7 million for the nine months ended September
30, 2002.

Adjusted EBITDA for the broadcast services component of our broadcast
segment were ($0.4) million and ($0.5) million for the eight months ended
September 30, 2003 and the one month ended January 31, 2003, respectively.
Adjusted EBITDA for this component was $0.6 million for the nine months ended
September 30, 2002.

Depreciation, amortization and accretion expenses were $68.1 million and
$16.1 million for the eight months ended September 30, 2003 and the one month
ended January 31, 2003, respectively. Depreciation, amortization and accretion
expenses were $143.9 million for the nine months ended September 30, 2002. Site
operations depreciation, amortization and accretion expenses were $67.4 million
and $15.9 million for the eight months ended September 30, 2003 and the one
month ended January 31, 2003, respectively. Site operations depreciation,
amortization and accretion expenses were $142.6 million for the nine months
ended September 30, 2002. Depreciation, amortization and accretion expenses for
our wireless segment were $64.7 million and $15.4 million for the eight months
ended September 30, 2003 and the one month ended January 31, 2003,
respectively. Depreciation, amortization and accretion expenses for this
segment were $139.1 million for the nine months ended September 30, 2002.
Depreciation, amortization and accretion expenses for the broadcast leasing
component of our broadcast segment were $2.7 million and $0.5 million for the
eight months ended September 30, 2003 and the one month ended January 31, 2003,
respectively. Depreciation, amortization and accretion expenses for this
component were $3.5 million for the nine months ended September 30, 2002.
Depreciation, amortization and accretion expenses for the broadcast services
component of our broadcast segment were $0.7 million and $0.2 million for the
eight months ended September 30, 2003 and the one month ended January 31, 2003,
respectively. Depreciation, amortization and accretion expenses for this
component were $1.3 million for the nine months ended September 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 $0.6 million and $0.1 million for the eight months
ended September 30, 2003 and the one month ended January 31, 2003,
respectively. Interest income was $0.5 million in the nine months ended
September 30, 2002. Interest income for 2003 was affected by higher cash
balances on hand and lower interest rates. Interest expense was $40.4 million
and $4.7 million for

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the eight months ended September 30, 2003 and the one
month ended January 31, 2003, respectively. Interest expense was $187.5 million
for the nine months ended September 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. Interest expense for the eight months ended September 30, 2003
consisted of $28.0 million of interest on our credit facility and our Senior
Notes, amortization of debt issuance costs of $3.5 million and writeoff of debt
issuance costs of $8.9 million. Interest expense for the one month ended
January 31, 2003 consisted of $4.3 million of interest on our credit facility
and amortization of debt issuance costs of $0.4 million. Interest expense for
the nine months ended September 30, 2002 consisted of $83.5 million of interest
on our credit facility and our Senior Notes, amortization of senior discount
notes of $92.9 million, amortization of debt issuance costs of $12.3 million
less capitalized interest of $1.2 million.

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.

Reorganization expense for the nine months ended September 30, 2002 was
$1.9 million and related to costs incurred in connection with our Plan of
Reorganization.

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 eight
months ended September 30, 2003. This amount consisted of the settlement of a
disputed item related to the disposal of our network services business. Loss on
disposal of discontinued segment was $45.6 million in the nine months ended
September 30, 2002. Loss from operations of discontinued segment was $8.3
million in the nine months ended September 30, 2002. This segment was sold on
December 31, 2002.

As a result of the factors discussed above, net loss for the eight months
ended September 30, 2003 was $6.1 million, and net income for the one month
ended January 31, 2003 was $345.0 million. Net loss for the nine months ended
September 30, 2002 was $714.7 million.

Liquidity and Capital Resources

We are a holding company whose only significant asset is the outstanding
capital stock of our 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 $62.9 million for the eight
months ended September 30, 2003 and $5.9 million for the one month ended
January 31, 2003. Cash provided by operating activities was $1.5 million for
the nine months ended September 30, 2002. The increase in cash provided by
operating activities in 2003 is primarily attributable to increased operating
income, decreased interest payments following our reorganization and decreased
accounts receivable.

Cash provided by investing activities was $68.1 million for the eight
months ended September 30, 2003. Cash used in investing activities was $2.7
million for the one month ended January 31, 2003 and $54.5 million for the nine
months ended September 30, 2002. Investing activities for the eight months
ended September 30, 2003 consisted primarily of proceeds received from the sale
of the

32



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545 SBC towers of $81.0 million, proceeds from the sale of an investment
in available-for-sale securities of $5.0 million and proceeds from the sale of
our Canadian leasing operations for $2.1 million. In addition, we invested
$20.3 million, $2.7 million and $62.5 million in purchases of property and
equipment and acquisitions, primarily related to the acquisition and
construction of communications towers, in the eight months ended September 30,
2003, the one month ended January 31, 2003 and the nine months ended September
30, 2002, respectively.

Cash used in financing activities was $148.3 million in the eight months
ended September 30, 2003 and $10.9 million in the one month ended January 31,
2003. Cash provided by financing activities was $85.6 million in the nine
months ended September 30, 2002. Cash used in financing activities for the
eight months ended September 30, 2003 consisted primarily of $200.0 million in
proceeds from the issuance of our 8 1/4% Senior Notes Due 2010 and $2.4 million
in proceeds from the issuance of common stock, offset by $343.0 million of
payments on our credit facility, payments on capital leases of $0.4 million and
$7.4 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 nine
months ended September 30, 2002 was primarily attributable to $90.0 million of
draws on our credit facility.

Financing Transactions

On May 21, 2003, we issued $200.0 million aggregate principal amount of 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.

On October 8, 2003, we completed an underwritten public offering of our
common stock, whereby 10.4 million shares of common stock were sold by four of
our existing stockholders, including an over-allotment option exercised by the
underwriters. The selling stockholders received net proceeds of $292.0 million
from the offering. In connection with this offering, we incurred costs of
approximately $1.2 million in the
three months ended September 30, 2003. In connection with the offering, on October 3,
2003, our common stock began trading on the New York Stock Exchange under the
symbol SSI.

Credit Facility

Our principal operating subsidiary, Communications, is party to an amended
and restated credit facility with lending commitments totaling approximately
$640.0 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 September 30, 2003,
Communications could borrow up to approximately $193.8 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 September 30, 2003, $187.8 million was
outstanding under the multiple draw term loan and $252.2 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 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. After giving effect to the amendment
to the Companys credit facility discussed below, the term loan will bear
interest, at Communications option, at either the Canadian Imperial Bank of
Commerces base rate plus 1.75% per annum or the Eurodollar rate plus 3.00% 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 September 30, 2003, the carrying
amount and fair
value of this instrument was $0.3 million and is included in Other Assets
in the unaudited condensed consolidated financial statements.

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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 (as
defined in the credit facility).

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.

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,
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 voluntarily repaid $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.

On September 29, 2003, Communications repaid $0.8 million of the multiple
draw term loan and $1.0 million of the term loan. In addition, Communications
voluntarily repaid $16.3 million of the multiple draw term loan and $21.9
million of the term loan on September 30, 2003. In connection with these
repayments, Communications wrote off $0.7 million in debt issuance costs. This
charge is included in interest expense in the unaudited condensed consolidated
statement of operations.

On October 24, 2003, we completed an amendment to our credit facility
which reduced the interest rate on our term loan from, at Communications
option, Canadian Imperial Bank of Commerces base rate plus 2.75% per annum or
the Eurodollar rate plus 4.00% per annum to Canadian Imperial Bank of
Commerces base rate plus 1.75% per annum or the Eurodollar rate plus 3.00% per
annum.

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
$55.9 million at September 30, 2003. We also had $783.0 million outstanding
under our credit facility at December 31, 2002 and $440.0 million outstanding
at September 30, 2003. As of September 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 agreement) and interest and fixed
charge coverage ratios of Communications and its subsidiaries. Communications
could borrow approximately $193.8 million under the revolving credit facility
as of September 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 4.55% as of September 30, 2003. After
giving effect to the amendment to our credit facility, the weighted average
interest rate on outstanding borrowings under the credit facility as of
September 30, 2003 would have been 3.97%.

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While we have taken steps to reduce our capital commitments, as of
September 30, 2003, we are contractually obligated to purchase up to an
additional 541 towers from SBC from November 2003 through August 2004. These
commitments will require approximately $26 million in 2003 and $115 million in
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 September 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                    |  | $                      | 439,955   |        |  | $         |        |           |  | $              | 54,313  |  |  | $ | 385,642 |  |  | $ |        | 
|Senior Notes                       |  |                        | 200,000   |        |  |           |        |           |  |                |        |  |  |   |        |  |  |   | 200,000 | 
|Capital Lease Payments             |  |                        | 834       |        |  |           | 645     |           |  |                | 189     |  |  |   |        |  |  |   |        | 
|Operating Leases Payments          |  |                        | 313,526   |        |  |           | 63,911  |           |  |                | 95,099  |  |  |   | 49,564  |  |  |   | 104,952 | 
|Asset Retirement Obligations       |  |                        | 37,370    |        |  |           | 437     |           |  |                | 414     |  |  |   | 1,227   |  |  |   | 35,292  | 
|SBC Tower Purchase Commitment(1)   |  |                        | 140,660   |        |  |           | 140,660 |           |  |                |        |  |  |   |        |  |  |   |        | 
|                                   |  |                        |           |        |  |           |         |           |  |                |         |  |  |   |         |  |  |   |         | 
|Total Contractual Cash Obligations |  | $                      | 1,132,345 |        |  | $         | 205,653 |           |  | $              | 150,015 |  |  | $ | 436,433 |  |  | $ | 340,244 | 
|                                   |  |                        |           |        |  |           |         |           |  |                |         |  |  |   |         |  |  |   |         | 



---

|(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 September 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 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, including companies in the tower sector, 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
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

35



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| |   |  | 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 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 GAAP.

Adjusted EBITDA for the three months ended September 30, 2003 and 2002,
the eight months ended September 30, 2003, the one month ended January 31, 2003
and the nine months ended September 30, 2002 was calculated as follows:

|                                                 |                               |   |                |   |               |   |               |   |             |   |               |   |  |   |            |         |  |   |          |   | 
|------------------------------------------------ | ----------------------------- | - | -------------- | - | ------------- | - | ------------- | - | ----------- | - | ------------- | - |  | - | ---------- | ------- |  | - | -------- | - | 
|                                                 |                               |   | Reorganized    |   | Predecessor   |   | Reorganized   |   | Predecessor |   | Predecessor  
|                                                 |                               |   | Company        |   | Company       |   | Company       |   | Company     |   | Company      
|                                                 |                               |   | Three Months   |   | Three Months  |   | Eight Months  |   | One Month   |   | Nine Months  
|                                                 |                               |   | Ended          |   | Ended         |   | Ended         |   | Ended       |   | Ended        
|                                                 |                               |   | September 30,  |   | September 30, |   | September 30, |   | January 31, |   | September 30,
|                                                 |                               |   | 2003           |   | 2002          |   | 2003          |   | 2003        |   | 2002         
|                                                 |                               |   |                |   |               |   |               |   |             |   |              
|                                                 |                               |   | (in thousands)
|Net income (loss)                                |                               | $ | 3,214          |   |               | $ | (134,592      | ) |             | $ | (6,052        | ) |  | $ | 344,970    |         |  | $ | (714,691 | )
|Depreciation, amortization and accretion
expense |                               |   | 25,675         |   |               |   | 48,658        |   |             |   | 68,127        |   |  |   | 16,075     |         |  |   | 143,921  |  
|Interest income                                  |                               |   | (143           | ) |               |   | (148          | ) |             |   | (639          | ) |  |   | (137       | )       |  |   | (525     | )
|Interest expense                                 |                               |   | 12,563         |   |               |   | 67,018        |   |             |   | 40,428        |   |  |   | 4,721      |         |  |   | 187,510  |  
|Gain on debt discharge                           |                               |   |               |   |               |   |              |   |             |   |              |   |  |   | (1,034,764 | )       |  |   |         |  
|Reorganization expense                           |                               |   |               |   |               |   | 1,854         |   |             |   |              |   |  |   |           |         |  |   | 1,854    |  
|Writeoff of investments in affiliates            |                               |   |               |   |               |   |              |   |             |   |              |   |  |   |           |         |  |   |         |  
|Writeoff of loans to affiliates                  |                               |   |               |   |               |   |              |   |             |   |              |   |  |   |           |         |  |   |         |  
|Income tax expense                               |                               |   | 589            |   |               |   | 551           |   |             |   | 1,397         |   |  |   | 5          |         |  |   | 694      |  
|Reorganization items:                            |                               |   |                |   |               |   |               |   |             |   |               |   |  |   |            |         |  |   |          |  
|                                                 | Adjust accounts to fair value |   |                |  |               |   |               |  |             |   |               |  |  |   |            | 644,688 |  |   |          |  | 

36



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##### 



|                                                                                 |                             |   |                |   |               |   |               |   |             |   |               |   |  |   |        |        |  |   |         |   | 
|-------------------------------------------------------------------------------- | --------------------------- | - | -------------- | - | ------------- | - | ------------- | - | ----------- | - | ------------- | - |  | - | ------ | ------ |  | - | ------- | - | 
|                                                                                 |                             |   | Reorganized    |   | Predecessor   |   | Reorganized   |   | Predecessor |   | Predecessor  
|                                                                                 |                             |   | Company        |   | Company       |   | Company       |   | Company     |   | Company      
|                                                                                 |                             |   | Three Months   |   | Three Months  |   | Eight Months  |   | One Month   |   | Nine Months  
|                                                                                 |                             |   | Ended          |   | Ended         |   | Ended         |   | Ended       |   | Ended        
|                                                                                 |                             |   | September 30,  |   | September 30, |   | September 30, |   | January 31, |   | September 30,
|                                                                                 |                             |   | 2003           |   | 2002          |   | 2003          |   | 2003        |   | 2002         
|                                                                                 |                             |   |                |   |               |   |               |   |             |   |              
|                                                                                 |                             |   | (in thousands)
|                                                                                 | Professional and other fees |   |                |  |               |   |               |  |             |   |               |  |  |   |        | 23,894 |  |   |         |  | 
|Loss (income) from operations of
Discontinued segment, net of income
tax
Expense |                             |   |               |   |               |   | 5,520         |   |             |   |              |   |  |   |       |        |  |   | 8,305   |  
|Loss on disposal of discontinued segment                                         |                             |   |               |   |               |   | 45,627        |   |             |   | 596           |   |  |   |       |        |  |   | 45,627  |  
|Cumulative effect of change in
accounting
Principle                              |                             |   |               |   |               |   |              |   |             |   |              |   |  |   | 12,236 |        |  |   | 376,753 |  
|                                                                                 |                             |   |                |   |               |   |               |   |             |   |               |   |  |   |        |        |  |   |         |  
|Adjusted EBITDA                                                                  |                             | $ | 41,898         |   |               | $ | 34,488        |   |             | $ | 103,857       |   |  | $ | 11,688 |        |  | $ | 49,448  |  
|                                                                                 |                             |   |                |   |               |   |               |   |             |   |               |   |  |   |        |        |  |   |         |  

Free Cash Flow.Free cash flow (deficit), as we have defined it, is
calculated as 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 GAAP. 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 September 30,
2003 and 2002, the eight months ended September 30, 2003, the one month ended
January 31, 2003 and the nine months ended September 30, 2002 was calculated as
follows:

|                                                    |  |                |        |               |  |               |        |             |  |               |         |   |  |   |        |   |  |   |         |  
|--------------------------------------------------- |  | -------------- | ------ | ------------- |  | ------------- | ------ | ----------- |  | ------------- | ------- | - |  | - | ------ | - |  | - | ------- | -
|                                                    |  | Reorganized    |        | Predecessor   |  | Reorganized   |        | Predecessor |  | Predecessor  
|                                                    |  | Company        |        | Company       |  | Company       |        | Company     |  | Company      
|                                                    |  | Three Months   |        | Three Months  |  | Eight Months  |        | One Month   |  | Nine Months  
|                                                    |  | Ended          |        | Ended         |  | Ended         |        | Ended       |  | Ended        
|                                                    |  | September 30,  |        | September 30, |  | September 30, |        | January 31, |  | September 30,
|                                                    |  | 2003           |        | 2002          |  | 2003          |        | 2003        |  | 2002         
|                                                    |  |                |        |               |  |               |        |             |  |              
|                                                    |  | (in thousands)
|Net cash provided by (used
in)
operating activities |  | $              | 34,334 |               |  | $             | 17,221 |             |  | $             | 62,884  |   |  | $ | 5,892  |   |  | $ | 1,533   |  
|Less: Purchases of property
and equipment           |  |                | (3,962 | )             |  |               | (3,901 | )           |  |               | (10,143 | ) |  |   | (2,737 | ) |  |   | (52,431 | )
|                                                    |  |                |        |               |  |               |        |             |  |               |         |   |  |   |        |   |  |   |         |  
|Free cash flow (deficit)                            |  | $              | 30,372 |               |  | $             | 13,320 |             |  | $             | 52,741  |   |  | $ | 3,155  |   |  | $ | (50,898 | )
|                                                    |  |                |        |               |  |               |        |             |  |               |         |   |  |   |        |   |  |   |         |  

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

|                                                    |  |                |         |               |  |               |        |             |  |               |          |   |  |   |         |   |  |   |         |  
|--------------------------------------------------- |  | -------------- | ------- | ------------- |  | ------------- | ------ | ----------- |  | ------------- | -------- | - |  | - | ------- | - |  | - | ------- | -
|                                                    |  | Reorganized    |         | Predecessor   |  | Reorganized   |        | Predecessor |  | Predecessor  
|                                                    |  | Company        |         | Company       |  | Company       |        | Company     |  | Company      
|                                                    |  | Three Months   |         | Three Months  |  | Eight Months  |        | One Month   |  | Nine Months  
|                                                    |  | Ended          |         | Ended         |  | Ended         |        | Ended       |  | Ended        
|                                                    |  | September 30,  |         | September 30, |  | September 30, |        | January 31, |  | September 30,
|                                                    |  | 2003           |         | 2002          |  | 2003          |        | 2003        |  | 2002         
|                                                    |  |                |         |               |  |               |        |             |  |              
|                                                    |  | (in thousands)
|Net cash provided by
(used in)
investing activities |  | $              | 2,379   |               |  | $             | 4,882  |             |  | $             | 68,081   |   |  | $ | (2,737  | ) |  | $ | (54,465 | )
|                                                    |  |                |         |               |  |               |        |             |  |               |          |   |  |   |         |   |  |   |         |  
|Net cash provided by
(used in)
financing activities |  | $              | (39,616 | )             |  | $             | (3,164 | )           |  | $             | (148,347 | ) |  | $ | (10,884 | ) |  | $ | 85,631  |  
|                                                    |  |                |         |               |  |               |        |             |  |               |          |   |  |   |         |   |  |   |         |  

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

37



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##### 



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. 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. In addition, upon initial recognition of a liability for the
retirement of a purchased or constructed asset under Statement of Financial
Accounting Standards No. 143, Accounting for Asset Retirement
Obligations, the
cost of that liability is capitalized as part of the cost basis of the related
asset and depreciated over the related life of the asset. 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.

38



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##### 



Goodwill

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

Impairment of Long-lived Assets

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

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

39



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##### 



|                  |  |   |        | 
|----------------- |  | - | ------ | 
|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
prospectively. The adoption of SFAS 149 did not have a material effect 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 ending after December 15, 2003. We have reviewed
our investments and other arrangements and determined that none of our investee
companies are VIEs. We have not invested in any new VIEs created after January
31, 2003.

In May 2003, the FASB issued Statement of Financial Accounting Standards
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

40



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instruments of nonpublic entities. The adoption of SFAS 150 did not have a
material effect 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.

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 maintain profitability.

Because we recently emerged from bankruptcy and have a history of losses,
we cannot assure you that we will grow or 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 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 report. 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 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 communications sites, available spectrum and related
infrastructure, competitive pricing, consolidation among our customers and
potential customers,

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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 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 of 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 eight months ended September 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 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                                                                                                             

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| |  |  | 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 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.

After giving effect to our underwritten public offering of common shares
on October 8, 2003, affiliates of Apollo Management V, L.P. own approximately
7.9 million shares, or 16.6%, of our common stock and certain funds managed by
Oaktree Capital Management, LLC own approximately 6.8 million shares, or 14.4%,
of our common stock. Two of our directors are associated with

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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 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 many local regulations and restrictions. These
regulations and restrictions typically require tower owners to obtain certain
permits or other approval from local officials or community standards
organizations in connection with tower construction or modification. Local
regulations could delay or prevent 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

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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.

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, fire, 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 September 30, 2003, we had $640.2 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.

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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 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

46



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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.



| |  | 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 September 30, 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 September 30, 2003, we have also reserved an
additional 5.8 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 of our
affiliates, as that term is defined in Rule 144 under the Securities Act of
1933, as amended.

After giving effect to our underwritten public offering of common shares
on October 8, 2003, three stockholders holding an aggregate of approximately
19.4 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.

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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 September 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 September 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 September 30, 2003 and December 31, 2002, we had $440.0 million and
$783.0 million, respectively, of variable rate debt outstanding under our
credit facility at a weighted average interest rate of 4.55% and 5.94%,
respectively. A 1% increase in the interest rate on our variable rate debt
would have increased interest expense by approximately $1.2 million, $4.0
million, $0.7 million and $7.8 million in the three months ended September 30,
2003, the eight months ended September 30, 2003, the one month ended January
31, 2003 and the year ended December 31, 2002, respectively.

In addition, as of September 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 September 30, 2003,
the carrying amount and fair value of this instrument was $0.3 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.

There were no changes in our internal control over financial reporting
that occurred during the fiscal quarter covered by this Report that have
materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.

48



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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.                                          
|        |  |                                                                                                                                                                                                                                                                                                                       
|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                                                                                                                                                                                                                                  

49



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##### 



|        |  |                                                                                                                                                                                                                                                                                                                                                              
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                              
|Number  |  | Description                                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|        |  | 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.                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|10.2    |  | Amendment No. 4 to the Credit Agreement, date October 24, 2003, by
and among SpectraSite Communications, Inc., as Borrower, and certain
other parties thereto. Incorporated by reference to exhibit no.
10.9 to Amendment No. 1 to the Registrants Registration Statement
on Form S-4, file no. 333-106118.                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|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 August 5, 2003, the Registrant filed a current report on Form 8-K
related to a press release announcing the Registrants two-for-one forward
stock split, effective as of August 21, 2003.

On August 12, 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 June 30, 2003.

On September 15, 2003, the Registrant filed an amended Form 8-K to restate
the Registrants prior announcement in its entirety to conform the announcement
to the Registrants presentation included in its Registration Statement on Form
S-1, as amended (File no. 333-107123).

50



---



##### 



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: November 5, 2003

51



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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.                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                              
|10.2    |  | Amendment No. 4 to the Credit Agreement, date October 24, 2003, by
and among SpectraSite Communications, Inc., as Borrower, and certain
other parties thereto. Incorporated by reference to exhibit no.
10.9 to Amendment No. 1 to the Registrants                                                                                                          

52



---



##### 



|        |  |                                                                                                                                                                                                
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                
|Number  |  | Description                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                
|        |  | Registration Statement
on Form S-4, file no. 333-106118.                                                                                                                                       
|        |  |                                                                                                                                                                                                
|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
|- |  | --------------

53