##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

|       |  |                                                                                  
|------ |  | ---------------------------------------------------------------------------------
|(XBOX) |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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|       |  | For the quarterly period ended June 30, 2002                                     
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|(BOX)  |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT                  
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|       |  | For the transition period from _______________ to _______________                

COMMISSION FILE NUMBER: 0-27217

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




Check whether the issuer:



|(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   (XBOX)    No   (BOX)

As of August 12, 2002, the registrant had only one outstanding class of common
stock, of which there were 154,013,917 shares outstanding.

1



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TABLE OF CONTENTS



|                                     |                                                                                                |  |  |  |  |  |  | 
|------------------------------------ | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                     | Check whether the issuer:                                                                     
|                                     | UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                     
|                                     | NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                            
|                                     | ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                     | ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II  OTHER INFORMATION         
|                                     | ITEM 1. LEGAL PROCEEDINGS                                                                     
|                                     | ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                                             
|                                     | ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                       
|                                     | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   
|                                     | ITEM 5. OTHER INFORMATION                                                                     
|                                     | ITEM 6. EXHIBITS AND REPORTS ON FORM 8K                                                      
|                                     | SIGNATURES                                                                                    
|Section 906 Certification of the CEO
|Section 906 Certification of the CFO



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##### Table of Contents



INDEX

|                               |  |                                                                                                                     |  |   
|------------------------------ |  | ------------------------------------------------------------------------------------------------------------------- |  | --
|PART I  FINANCIAL INFORMATION |  |                                                                                                                    
|                              
|                              
|                              
|                              
|                               |  |                                                                                                                     |  |   
|                              
|                              
|                              
|                              
|                               |  | ITEM 1  UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                                      |  |   
|                              
|                              
|                              
|                              
|                               |  | Condensed Consolidated Balance Sheets
at June 30, 2002 (unaudited) and December 31, 2001                            |  | 3 
|                              
|                              
|                              
|                              
|                               |  | Unaudited Condensed Consolidated Statements of Operations
for the three and six months ended June 30, 2002 and 2001 |  | 4 
|                              
|                              
|                              
|                              
|                               |  | Unaudited Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 2002 and 2001           |  | 5 
|                              
|                              
|                              
|                              
|                               |  | Notes to the Unaudited Condensed Consolidated Financial Statements                                                  |  | 6 
|                              
|                              
|                              
|                              
|                               |  | ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                      |  | 13
|                              
|                              
|                              
|                              
|                               |  | ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK                                                 |  | 21
|                              
|                              
|                              
|                              
|                               |  |                                                                                                                     |  |   
|                              
|                              
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|PART II  OTHER INFORMATION    |  |                                                                                                                    
|                              
|                              
|                              
|                              
|                               |  |                                                                                                                     |  |   
|                              
|                              
|                              
|                              
|                               |  | ITEM 1  LEGAL PROCEEDINGS                                                                                          |  | 22
|                              
|                              
|                              
|                              
|                               |  | ITEM 2  CHANGES IN SECURITIES AND USE OF PROCEEDS                                                                  |  | 22
|                              
|                              
|                              
|                              
|                               |  | ITEM 3  DEFAULTS UPON SENIOR SECURITIES                                                                            |  | 22
|                              
|                              
|                              
|                              
|                               |  | ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                        |  | 22
|                              
|                              
|                              
|                              
|                               |  | ITEM 5  OTHER INFORMATION                                                                                          |  | 22
|                              
|                              
|                              
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|                               |  | ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K                                                                           |  | 23
|                              
|                              
|                              
|                              
|                               |  | SIGNATURES                                                                                                          |  | 25

2



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##### Table of Contents



SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS
At June 30, 2002 and December 31, 2001
(dollars in thousands)

|                                     |                                                                                                                                 |                                            |           |            |           |              |           |           |           | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------- | ---------- | --------- | ------------ | --------- | --------- | --------- | 
|                                     |                                                                                                                                 |                                            |           | June 30,   |           | December 31,
|                                     |                                                                                                                                 |                                            |           | 2002       |           | 2001        
|                                     |                                                                                                                                 |                                            |           |            |           |             
|Assets                               |                                                                                                                                 | (unaudited)                                |           |            |           |             
|Current assets:                      |                                                                                                                                 |                                            |           |            |           |              |           |          
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                                                                       |                                            | $         | 45,307     |           |              | $         | 31,547    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts receivable, net of allowance of $9,529 and $8,891                                                                      |                                            |           | 57,723     |           |              |           | 90,776    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Costs and estimated earnings in excess of billings                                                                              |                                            |           | 20,312     |           |              |           | 18,578    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Inventories                                                                                                                     |                                            |           | 16,142     |           |              |           | 14,391    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Prepaid expenses and other                                                                                                      |                                            |           | 13,209     |           |              |           | 11,769    |          
|                                     |                                                                                                                                 |                                            |           |            |           |              |           |           |          
|                                     |                                                                                                                                 | Total current assets                       |           |            | 152,693   |              |           |           | 167,061   | 
|                                    
|                                    
|                                    
|                                    
|Property and equipment, net          |                                                                                                                                 |                                            | 2,395,355 |            |           |              | 2,462,103 |          
|                                    
|                                    
|                                    
|                                    
|Goodwill, net                        |                                                                                                                                 |                                            | 60,626    |            |           |              | 437,350   |          
|                                    
|                                    
|                                    
|                                    
|Other assets                         |                                                                                                                                 |                                            | 112,597   |            |           |              | 135,085   |          
|                                     |                                                                                                                                 |                                            |           |            |           |              |           |           |          
|                                     |                                                                                                                                 | Total assets                               |           | $          | 2,721,271 |              |           | $         | 3,201,599 | 
|                                     |                                                                                                                                 |                                            |           |            |           |              |           |           |          
|Liabilities
and shareholders equity |                                                                                                                                 |                                            |           |            |           |              |           |          
|                                    
|                                    
|                                    
|                                    
|Current liabilities:                 |                                                                                                                                 |                                            |           |            |           |              |           |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts payable                                                                                                                |                                            | $         | 31,398     |           |              | $         | 54,585    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accrued and other expenses                                                                                                      |                                            |           | 73,608     |           |              |           | 76,642    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Billings in excess of costs and estimated earnings                                                                              |                                            |           | 2,103      |           |              |           | 8,674     |          
|                                     |                                                                                                                                 |                                            |           |            |           |              |           |           |          
|                                     |                                                                                                                                 | Total current liabilities                  |           |            | 107,109   |              |           |           | 139,901   | 
|                                    
|                                    
|                                    
|                                    
|Long-term debt                       |                                                                                                                                 |                                            | 785,000   |            |           |              | 695,000   |          
|                                    
|                                    
|                                    
|                                    
|Senior notes                         |                                                                                                                                 |                                            | 400,000   |            |           |              | 400,000   |          
|                                    
|                                    
|                                    
|                                    
|Senior convertible notes             |                                                                                                                                 |                                            | 200,000   |            |           |              | 200,000   |          
|                                    
|                                    
|                                    
|                                    
|Senior discount notes                |                                                                                                                                 |                                            | 1,081,481 |            |           |              | 1,020,332 |          
|                                    
|                                    
|                                    
|                                    
|Other long-term liabilities          |                                                                                                                                 |                                            | 27,697    |            |           |              | 27,021    |          
|                                     |                                                                                                                                 |                                            |           |            |           |              |           |           |          
|                                     |                                                                                                                                 | Total liabilities                          |           |            | 2,601,287 |              |           |           | 2,482,254 | 
|                                     |                                                                                                                                 |                                            |           |            |           |              |           |           |          
|Shareholders equity:                |                                                                                                                                 |                                            |           |            |           |              |           |          
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock, $0.001 par value, 300,000,000 shares
authorized, 154,013,917 and 153,424,509 issued and
outstanding, respectively |                                            |           | 154        |           |              |           | 153       |          
|                                    
|                                    
|                                    
|                                    
|                                     | Additional paid-in-capital                                                                                                      |                                            |           | 1,624,824  |           |              |           | 1,622,089 |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive income (loss)                                                                                   |                                            |           | (14        | )         |              |           | 21,984    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated deficit                                                                                                             |                                            |           | (1,504,980 | )         |              |           | (924,881  | )        
|                                     |                                                                                                                                 |                                            |           |            |           |              |           |           |          
|                                     |                                                                                                                                 | Total shareholders equity                 |           |            | 119,984   |              |           |           | 719,345   | 
|                                     |                                                                                                                                 |                                            |           |            |           |              |           |           |          
|                                     |                                                                                                                                 | Total liabilities and shareholders equity |           | $          | 2,721,271 |              |           | $         | 3,201,599 | 
|                                     |                                                                                                                                 |                                            |           |            |           |              |           |           |          

See accompanying notes.

3



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##### Table of Contents



SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Six Months Ended June 30, 2002 and 2001
(in thousands, except per share amounts)

|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |          |  
|--------------------------------------------------------------- | -------------------------------------------------------------------- | ---------------------------- | -------- | --------------------------- | ------- | ------------------------- | -------- | ------- | ------- | ---- | -------- | -------- | -------- | - | -------- | -------- | -------- | -
|                                                                |                                                                      |                              |          | Three Months Ended June 30, |         | Six Months Ended June 30,
|                                                                |                                                                      |                              |          |                             |         |                          
|                                                                |                                                                      |                              |          | 2002                        |         | 2001                      |          | 2002    |         | 2001
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |     
|Revenues:                                                       |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |         
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Site leasing                                                         |                              | $        | 69,633                      |         |                           | $        | 53,001  |         |      | $        | 135,585  |          |   | $        | 99,389   |         
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Network services                                                     |                              |          | 42,008                      |         |                           |          | 58,901  |         |      |          | 90,307   |          |   |          | 119,776  |         
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         
|                                                                |                                                                      | Total revenues               |          |                             | 111,641 |                           |          |         | 111,902 |      |          |          | 225,892  |   |          |          | 219,165  |  
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         
|Operating Expenses:                                             |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |         
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Costs of operations, excluding
depreciation and amortization expense |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                                      | Site leasing                 |          |                             | 26,705  |                           |          |         | 22,158  |      |          |          | 52,210   |   |          |          | 40,300   |  
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                                      | Network services             |          |                             | 39,199  |                           |          |         | 46,929  |      |          |          | 79,367   |   |          |          | 95,783   |  
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Selling, general and administrative expenses                         |                              |          | 18,788                      |         |                           |          | 23,201  |         |      |          | 37,633   |          |   |          | 44,968   |         
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Depreciation and amortization expense                                |                              |          | 52,356                      |         |                           |          | 42,548  |         |      |          | 98,431   |          |   |          | 79,258   |         
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Restructuring and non-recurring charges                              |                              |          | 30,757                      |         |                           |          | 72,323  |         |      |          | 30,757   |          |   |          | 72,323   |         
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         
|                                                                |                                                                      | Total operating expenses     |          |                             | 167,805 |                           |          |         | 207,159 |      |          |          | 298,398  |   |          |          | 332,632  |  
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         
|Operating loss                                                  |                                                                      |                              | (56,164  | )                           |         |                           | (95,257  | )       |         |      | (72,506  | )        |          |   | (113,467 | )       
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         
|Other income (expense):                                         |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |         
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Interest income                                                      |                              |          | 293                         |         |                           |          | 4,940   |         |      |          | 377      |          |   |          | 15,019   |         
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Interest expense                                                     |                              |          | (61,795                     | )       |                           |          | (53,362 | )       |      |          | (120,492 | )        |   |          | (101,731 | )       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Other income (expense)                                               |                              |          | (9,955                      | )       |                           |          | (42,458 | )       |      |          | (10,543  | )        |   |          | (49,468  | )       
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         
|                                                                |                                                                      | Total other income (expense) |          |                             | (71,457 | )                         |          |         | (90,880 | )    |          |          | (130,658 | ) |          |          | (136,180 | )
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         
|Loss before income taxes                                        |                                                                      |                              | (127,621 | )                           |         |                           | (186,137 | )       |         |      | (203,164 | )        |          |   | (249,647 | )       
|                                                               
|                                                               
|                                                               
|                                                               
|Income tax expense (benefit)                                    |                                                                      |                              | (53      | )                           |         |                           | 896      |         |         |      | 182      |          |          |   | 1,284    |         
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         
|Loss before cumulative effect of change in
accounting principle |                                                                      |                              | (127,568 | )                           |         |                           | (187,033 | )       |         |      | (203,346 | )        |          |   | (250,931 | )       
|                                                               
|                                                               
|                                                               
|                                                               
|Cumulative effect change in accounting
for goodwill             |                                                                      |                              |         |                             |         |                           |         |         |         |      | (376,753 | )        |          |   |         |         
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         
|Net loss                                                        |                                                                      | $                            | (127,568 | )                           |         | $                         | (187,033 | )       |         | $    | (580,099 | )        |          | $ | (250,931 | )       
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         
|Basic and diluted loss per share:                               |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |         
|                                                               
|                                                               
|                                                               
|                                                               
|Loss before cumulative effect of change in
accounting principle |                                                                      | $                            | (0.83    | )                           |         | $                         | (1.24    | )       |         | $    | (1.32    | )        |          | $ | (1.69    | )       
|                                                               
|                                                               
|                                                               
|                                                               
|Cumulative effect of change in accounting for
goodwill          |                                                                      |                              |         |                             |         |                           |         |         |         |      | (2.45    | )        |          |   |         |         
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         
|Net loss                                                        |                                                                      | $                            | (0.83    | )                           |         | $                         | (1.24    | )       |         | $    | (3.77    | )        |          | $ | (1.69    | )       
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         
|Weighted average common
shares outstanding (basic and diluted)  |                                                                      |                              | 154,014  |                             |         |                           | 150,446  |         |         |      | 153,834  |          |          |   | 148,163  |         
|                                                                |                                                                      |                              |          |                             |         |                           |          |         |         |      |          |          |          |   |          |          |         

See accompanying notes.

4



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##### Table of Contents






SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2002 and 2001
(dollars in thousands)

|                                                                              |                                                                   |                                                         |                                                      |         |               |         |               |        |         |          |  
|----------------------------------------------------------------------------- | ----------------------------------------------------------------- | ------------------------------------------------------- | ---------------------------------------------------- | ------- | ------------- | ------- | ------------- | ------ | ------- | -------- | -
|                                                                              |                                                                   |                                                         |                                                      |         | Six Months    |         | Six Months   
|                                                                              |                                                                   |                                                         |                                                      |         | Ended         |         | Ended        
|                                                                              |                                                                   |                                                         |                                                      |         | June 30, 2002 |         | June 30, 2001
|                                                                              |                                                                   |                                                         |                                                      |         |               |         |              
|Operating
activities                                                          |                                                                   |                                                         |                                                      |         |               |         |               |       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Net loss                                                                      |                                                                   | $                                                       | (580,099                                             | )       |               | $       | (250,931      | )     
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Adjustments to reconcile net loss to net cash
used in operating activities:   |                                                                   |                                                         |                                                      |         |               |         |               |       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Depreciation                                                      |                                                         |                                                      | 96,703  |               |         |               | 60,014 |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Cumulative effect of change in accounting for goodwill            |                                                         |                                                      | 376,753 |               |         |               |       |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Amortization of goodwill and other intangible assets              |                                                         |                                                      | 1,728   |               |         |               | 19,244 |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Amortization of debt issuance costs                               |                                                         |                                                      | 5,267   |               |         |               | 5,107  |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Amortization of senior discount notes                             |                                                         |                                                      | 61,149  |               |         |               | 54,409 |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Non-cash compensation charges                                     |                                                         |                                                      | 580     |               |         |               | 1,063  |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Loss on disposal of assets                                        |                                                         |                                                      | 31,426  |               |         |               | 25,693 |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Write-off of goodwill                                             |                                                         |                                                      |        |               |         |               | 44,476 |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Write-off of loan to and investment in affiliates                 |                                                         |                                                      |        |               |         |               | 27,500 |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Equity in net loss of affiliates                                  |                                                         |                                                      | 102     |               |         |               | 19,248 |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Changes in operating assets and liabilities, net of acquisitions: |                                                         |                                                      |         |               |         |               |        |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                                   | Accounts receivable                                     |                                                      |         | 33,053        |         |               |        | 3,705   |         
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                                   | Costs and estimated earnings in excess of billings, net |                                                      |         | (8,305        | )       |               |        | (11,211 | )       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                                   | Inventories                                             |                                                      |         | (1,751        | )       |               |        | (7,421  | )       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                                   | Prepaid expenses and other                              |                                                      |         | (3,879        | )       |               |        | (5,993  | )       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                                   | Accounts payable                                        |                                                      |         | (23,187       | )       |               |        | 7,033   |         
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                                   | Other liabilities                                       |                                                      |         | (5,228        | )       |               |        | 7,431   |         
|                                                                              |                                                                   |                                                         |                                                      |         |               |         |               |       
|                                                                              |                                                                   |                                                         | Net cash used in operating activities                |         |               | (15,688 | )             |        |         | (633     | )
|                                                                              |                                                                   |                                                         |                                                      |         |               |         |               |       
|Investing
activities                                                          |                                                                   |                                                         |                                                      |         |               |         |               |       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Purchases of property and equipment                                           |                                                                   |                                                         | (58,597                                              | )       |               |         | (598,748      | )     
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Loans to affiliates                                                           |                                                                   |                                                         | (750                                                 | )       |               |         | (26,150       | )     
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Refunds of deposits on asset purchases                                        |                                                                   |                                                         |                                                     |         |               |         | 6,847         |       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Acquisitions, net of cash acquired                                            |                                                                   |                                                         |                                                     |         |               |         | (4,773        | )     
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Investments in affiliates                                                     |                                                                   |                                                         |                                                     |         |               |         | (6,626        | )     
|                                                                              |                                                                   |                                                         |                                                      |         |               |         |               |       
|                                                                              |                                                                   |                                                         | Net cash used in investing activities                |         |               | (59,347 | )             |        |         | (629,450 | )
|                                                                              |                                                                   |                                                         |                                                      |         |               |         |               |       
|Financing
activities                                                          |                                                                   |                                                         |                                                      |         |               |         |               |       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Proceeds from issuance of common stock                                        |                                                                   |                                                         | 483                                                  |         |               |         | 4,082         |       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Stock issuance costs                                                          |                                                                   |                                                         | (6                                                   | )       |               |         | (434          | )     
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Proceeds from issuance of long-term debt                                      |                                                                   |                                                         | 90,000                                               |         |               |         | 300,000       |       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Repayments of debt                                                            |                                                                   |                                                         | (1,656                                               | )       |               |         | (220          | )     
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Debt issuance costs                                                           |                                                                   |                                                         | (26                                                  | )       |               |         | (19,893       | )     
|                                                                              |                                                                   |                                                         |                                                      |         |               |         |               |       
|                                                                              |                                                                   |                                                         | Net cash provided by financing activities            |         |               | 88,795  |               |        |         | 283,535  |  
|                                                                              |                                                                   |                                                         |                                                      |         |               |         |               |       
|                                                                              |                                                                   |                                                         | Net increase (decrease) in cash and cash equivalents |         |               | 13,760  |               |        |         | (346,548 | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Cash and cash equivalents at beginning of period                              |                                                                   |                                                         | 31,547                                               |         |               |         | 552,653       |       
|                                                                              |                                                                   |                                                         |                                                      |         |               |         |               |       
|Cash and cash equivalents at end of period                                    |                                                                   | $                                                       | 45,307                                               |         |               | $       | 206,105       |       
|                                                                              |                                                                   |                                                         |                                                      |         |               |         |               |       
|Supplemental
disclosures of cash flow information:                            |                                                                   |                                                         |                                                      |         |               |         |               |       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Cash paid during the period for interest                                      |                                                                   | $                                                       | 55,828                                               |         |               | $       | 41,964        |       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Cash paid during the period for income taxes                                  |                                                                   |                                                         | 772                                                  |         |               |         | 598           |       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Supplemental
disclosures of noncash investing and financing activities:       |                                                                   |                                                         |                                                      |         |               |         |               |       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Common stock issued for property and equipment                                |                                                                   | $                                                       | 1,677                                                |         |               | $       | 118,580       |       
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Capital lease obligations incurred for the purchase of property and
equipment |                                                                   |                                                         | 4,515                                                |         |               |         | 16,103        |       

See accompanying notes.

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



|1. |  | Description of Business and Significant Accounting Policies
|-- |  | -----------------------------------------------------------

SpectraSite Holdings, Inc. (SpectraSite) and its wholly owned
subsidiaries (collectively referred to as the Company) are principally
engaged in providing services to companies operating in the telecommunications
industry, including leasing antenna sites on multi-tenant towers, network
design, tower construction and antenna installation throughout the United
States and Canada.

Principles of Consolidation

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

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles in the United States requires management to make
estimates and assumptions that affect the amounts reported in the unaudited
condensed consolidated financial statements and accompanying notes. Actual
results could differ from those estimates.

Revenue Recognition

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

Allowance for Uncollectible Accounts

The Company evaluates the collectibility of accounts receivable based on a
combination of factors. In circumstances where a specific customer is unable to
meet its financial obligations, the Company records a specific allowance
against amounts due to reduce the net recognized receivable 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 $8.9 million and $9.5 million as
of December 31, 2001 and June 30, 2002, respectively.

Significant Customers

The Companys customer base consists of businesses operating in the
wireless telecommunications and broadcast industries. The Companys exposure to
credit risk consists primarily of unsecured accounts receivable from these
customers. One customer, which is a significant shareholder of the Company,
accounted for 19% and 20% of revenues in the three months ended June 30, 2001
and 2002 and 18% and 21% in the six months ended June 30, 2001 and 2002,
respectively. In addition, another customer, that is an affiliate of another
significant shareholder of the Company, accounted for 16% and 15% of revenues
in the three and six months ended June 30, 2002.

Property and Equipment

Property and equipment, including towers, are recorded at cost and
depreciated over their estimated useful lives. The Company capitalizes costs
incurred in bringing towers to an operational state. Costs clearly associated
with the acquisition,

6



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

development and construction of towers are capitalized as
a cost of that tower. Indirect costs that relate to several towers are
capitalized and allocated to the towers to which the costs relate. Indirect
costs that do not clearly relate to projects under development or construction
are charged to operating expenses as incurred. Depreciation on property and
equipment excluding towers is computed using the straight-line method over the
estimated useful lives of the assets ranging from three to fifteen years.
Depreciation on towers is computed using the straight-line method over the
estimated useful lives of 15 years for wireless towers and 30 years for
broadcast towers. Amortization of assets recorded under capital leases is
included in depreciation.

Restructuring and Non-recurring Charges

In May 2002, the Company announced that it would terminate its
build-to-suit programs with Cingular and other carriers and implement other
cost-cutting measures as a part of the curtailment of tower development
activities. As a result of these actions, the Company recorded restructuring
charges of $26.5 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, $4.1 million was related to the costs of closing offices and $6.0
million was related to the costs of employee severance. In addition, we
recorded a non-recurring impairment charge of $4.3 million to write-down the
carrying value of 21 towers that are not marketable. The charge was based on
the estimated discounted cash flows of the towers.

Non-recurring charges for the six months ended June 30, 2001 were $72.3
million, consisting of $35.8 million in non-recurring charges relating to the
decision to consolidate the rooftop management operations from Philadelphia,
Pennsylvania to Cary, North Carolina, $32.2 million in non-recurring charges
relating to the decision to divest operations in Mexico, and $4.3 million
relating to the decision to close operations from the purchase of Vertical
Properties. Of the $35.8 million relating to the consolidation of the rooftop
management operations, $34.4 million related to the write-off of goodwill, $0.3
million related to the write-down of assets and $1.1 million was related to the
costs of employee severance and other costs related to the consolidation of
those operations. Of the $32.2 million relating to the divestiture of
operations in Mexico, $10.7 million related to the write-off of goodwill, $17.6
related to the write-down of assets in Mexico and $3.9 million was related to
the costs of employee severance and other costs related to the divestiture. Of
the $4.3 million relating to Vertical Properties, $4.2 million was related to
the write-off of goodwill and $0.1 million was related to the costs of employee
severance and other costs related to the closing.

Income Taxes

The Company provides for income taxes at the end of each interim period
using the liability method based on the estimated effective tax rate for the
full fiscal year for each tax reporting entity. Any cumulative adjustments to
the Companys estimate are recorded in the interim period in which a change in
the estimated annual effective rate is determined.

Earnings Per Share

Basic and diluted earnings (loss) per share are calculated in accordance
with Statement of Financial Accounting Standards No. 128 Earnings per Share.
The Company has potential common stock equivalents related to its convertible
notes, warrants and outstanding stock options. These potential common stock
equivalents were not included in diluted earnings (loss) per share because the
effect would have been antidilutive. Accordingly, basic and diluted net loss
per share are the same for all periods presented.

Reclassifications

Certain reclassifications have been made to the 2001 condensed
consolidated financial statements to conform to the 2002 presentation. These
reclassifications had no effect on previously reported net loss or
shareholders equity.

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

7



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##### Table of Contents



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

recurring adjustments) which are, in the opinion of management, necessary for a
fair presentation of results for interim periods. Results of interim periods
are not necessarily indicative of the results to be expected for a full year.



|2. |  | Property and Equipment
|-- |  | ----------------------

Property and equipment consist of the following:

|                              |  |                |           |              |  |   |           |  
|----------------------------- |  | -------------- | --------- | ------------ |  | - | --------- | -
|                              |  | June 30,       |           | December 31,
|                              |  | 2002           |           | 2001        
|                              |  |                |           |             
|                              |  | (in thousands)
|Towers                        |  | $              | 2,534,595 |              |  | $ | 2,483,049 |  
|                             
|                             
|                             
|                             
|Equipment                     |  |                | 55,626    |              |  |   | 46,827    |  
|                             
|                             
|                             
|                             
|Land                          |  |                | 19,781    |              |  |   | 19,109    |  
|                             
|                             
|                             
|                             
|Buildings                     |  |                | 40,018    |              |  |   | 40,588    |  
|                             
|                             
|                             
|                             
|Other                         |  |                | 62,628    |              |  |   | 56,155    |  
|                              |  |                |           |              |  |   |           |  
|                              |  |                | 2,712,648 |              |  |   | 2,645,728 |  
|                             
|                             
|                             
|                             
|Less accumulated depreciation |  |                | (341,273  | )            |  |   | (245,828  | )
|                              |  |                |           |              |  |   |           |  
|                              |  |                | 2,371,375 |              |  |   | 2,399,900 |  
|                             
|                             
|                             
|                             
|Construction in progress      |  |                | 23,980    |              |  |   | 62,203    |  
|                              |  |                |           |              |  |   |           |  
|Property and equipment, net   |  | $              | 2,395,355 |              |  | $ | 2,462,103 |  
|                              |  |                |           |              |  |   |           |  



|3. |  | New Accounting Pronouncements: Business Combinations, Goodwill and Other Intangible Assets
|-- |  | ------------------------------------------------------------------------------------------

On June 29, 2001, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards No. 141, Business Combinations
(SFAS 141) and No. 142, Goodwill and Other Intangible Assets (SFAS 142).
SFAS 141 eliminates the pooling-of-interests method of accounting for business
combinations except for qualifying business combinations that were initiated
prior to July 1, 2001. SFAS 141 also includes new criteria to recognize
intangible assets separately from goodwill. The requirements of SFAS 141 are
effective for any business combination accounted for by the purchase method
that is completed after June 30, 2001. The application of SFAS 141 did not
affect any of our previously reported amounts included in goodwill or other
intangible assets.

Effective January 1, 2002, the Company adopted SFAS 142 which establishes
new accounting and reporting requirements for goodwill and other intangible
assets. Under SFAS 142, goodwill and intangible assets with indefinite lives
are no longer amortized but are reviewed annually, or more frequently if
impairment indicators arise, for impairment. Separable intangible assets that
are not deemed to have an indefinite life will continue to be amortized over
their useful lives. The amortization provisions of SFAS 142 requiring
nonamortization of goodwill and indefinite lived intangible assets apply to
goodwill and indefinite lived intangible assets acquired after June 30, 2001.
With respect to goodwill and intangible assets acquired prior to July 1, 2001,
we ceased amortization 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 income statement. Impairment
adjustments recognized after adoption, if any, generally are required to be
recognized as an operating expense.

Actual results of operations for the three and six months ended June 30,
2002 and pro forma results of operations for the three and six months ended
June 30, 2001 had we applied the nonamortization provisions of
SFAS 142 in those
periods are as follows:

8



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##### Table of Contents



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

|                                     |                       |   |                                         |       |                  |   |          |       |      |   |          |       |   |   |          |       |  
|------------------------------------ | --------------------- | - | --------------------------------------- | ----- | ---------------- | - | -------- | ----- | ---- | - | -------- | ----- | - | - | -------- | ----- | -
|                                     |                       |   | Three Months Ended                      |       | Six Months Ended
|                                     |                       |   | June 30,                                |       | June 30,        
|                                     |                       |   |                                         |       |                 
|                                     |                       |   | 2002                                    |       | 2001             |   | 2002     |       | 2001
|                                     |                       |   |                                         |       |                  |   |          |       |     
|                                     |                       |   | (in thousands except per share amounts)
|                                    
|                                    
|                                    
|                                    
|Reported net loss                    |                       | $ | (127,568                                | )     |                  | $ | (187,033 | )     |      | $ | (580,099 | )     |   | $ | (250,931 | )    
|                                    
|                                    
|                                    
|                                    
|Goodwill amortization                |                       |   |                                        |       |                  |   | 8,475    |       |      |   |         |       |   |   | 17,737   |      
|                                     |                       |   |                                         |       |                  |   |          |       |      |   |          |       |   |   |          |      
|Adjusted net loss                    |                       | $ | (127,568                                | )     |                  | $ | (178,558 | )     |      | $ | (580,099 | )     |   | $ | (233,194 | )    
|                                     |                       |   |                                         |       |                  |   |          |       |      |   |          |       |   |   |          |      
|                                    
|                                    
|                                    
|                                    
|Basic and diluted earnings per share |                      
|                                    
|                                    
|                                    
|                                    
|                                     | Reported net loss     | $ | (0.83                                   | )     |                  | $ | (1.24    | )     |      | $ | (3.77    | )     |   | $ | (1.69    | )    
|                                    
|                                    
|                                    
|                                    
|                                     | Goodwill amortization |   |                                         |      |                  |   |          | 0.05  |      |   |          |      |   |   |          | 0.12  |  
|                                     |                       |   |                                         |       |                  |   |          |       |      |   |          |       |   |   |          |      
|                                     | Adjusted net loss     |   | $                                       | (0.83 | )                |   | $        | (1.19 | )    |   | $        | (3.77 | ) |   | $        | (1.57 | )
|                                     |                       |   |                                         |       |                  |   |          |       |      |   |          |       |   |   |          |      

In August 2001, FASB issued Statement of Financial Accounting Standards
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS
144), which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
and the accounting and reporting provisions of APB Opinion No. 30, Reporting
the Results of Operations for a disposal of a segment of a business. The
Company adopted SFAS 144 as of January 1, 2002.



|4. |  | Acquisition Activities
|-- |  | ----------------------

SBC transaction On August 25, 2000, the Company entered into an
agreement to acquire leasehold and sub-leasehold interests in approximately
3,900 wireless communications towers from affiliates of SBC Communications
(collectively, SBC) in exchange for $982.7 million in cash and $325.0 million
in common stock. Under the agreement, and assuming the sublease of all 3,900
towers, the stock portion of the consideration was initially approximately 14.3
million shares valued at $22.74 per share. The stock consideration is subject
to an adjustment payment to the extent the average closing price of
SpectraSites common stock during the 60-day period immediately preceding
December 14, 2003 (the third anniversary of the initial closing) decreases from
$22.74 down to a floor of $12.96. The adjustment payment may be accelerated if
there is a change of control of SpectraSite or upon the occurrence of certain
specified liquidity events. In any case, the adjustment payment is payable, at
the Companys option, in the form of cash or shares of common stock. The
maximum amount potentially payable to satisfy the adjustment payment is
approximately 10.8 million shares of common stock or $139.8 million in cash.
The Company and SBC entered into a Lease and Sublease Agreement pursuant to
which the Company will manage, maintain and lease available space on the SBC
towers and have the right to co-locate tenants on the towers. SBC is an anchor
tenant on all of the towers and pays a monthly fee per tower of $1,470, subject
to an annual adjustment. In addition, the Company had agreed to build towers
for Cingular, an affiliate of SBC, over the next four years under an exclusive
build-to-suit agreement, but this agreement was terminated on May 15, 2002.

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 will lease or sublease by 300 towers, from 3,900 in the
original agreement to 3,600 towers in the agreement as amended. 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 and under the terms of
the amended agreement, the parties agreed to complete the lease or sublease of
the remaining 894 towers during the period beginning April 2003 and ending
January 2004. In addition, pursuant to the amendment the Company will receive
all new co-location revenue on the towers
remaining to be subleased after February 25, 2002. The amendment also extends
the December 14, 2003 stock adjustment date to the last date on which towers
will be subleased, which is expected to be January 1, 2004. In the six months
ended June 30, 2002, the Company subleased 41 towers, for which it paid $10.1
million in cash and issued 146,569 shares of common stock valued at $1.7
million.

On May 15, 2002, the Company entered into agreements with SBC and Cingular
Wireless LLC (Cingular) to (i) terminate its build-to-suit agreement, (ii)
transfer SpectraSites lease or sublease interests in 545 SBC towers to
Cingular and (iii) reduce SpectraSites future sublease commitment by 187
towers. The Company would receive net proceeds of $98 million

9



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##### Table of Contents



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

at closing which
would be used to reduce bank facility borrowings. Under the agreement,
SpectraSite would issue approximately 12.1 million shares of its common stock
to SBC in full satisfaction of its obligations to pay the stock portion of the
prepaid rent for the remaining 707 towers to be subleased from SBC and to
satisfy any adjustment payments to SBC under the Agreement to Sublease. The
closing of this transaction (except the termination of the build-to-suit
agreement, which became effective immediately) is subject to the successful
consummation of the Refinancing Transactions (described in Note 5) or other
similar transactions that reduce SpectraSites indebtedness by at least $200
million, the consent of SpectraSites bank credit facility lenders and other
customary closing conditions. If the closing conditions are not met by August
15, 2002, and the agreements are not extended, then the agreements (except the
termination of the build-to-suit agreement) may be terminated by either party.

As of June 30, 2002, the Company has issued approximately 9.9 million
shares of common stock to SBC pursuant to the SBC acquisition agreements.
Assuming the sublease of all 3,600 towers, the Company will be required to
issue to SBC an additional 3.3 million shares to complete the lease or sublease
of the remaining 894 towers, for a total of approximately 13.2 million shares.
Based on the closing market price of the Companys common stock on June 30,
2002, the Company would be required to issue approximately 10 million
additional shares of common stock to SBC under the stock adjustment provisions
described above.



|5. |  | Financing Transactions
|-- |  | ----------------------

Credit Facility

In connection with the acquisition of communications towers from Nextel
Communications, Inc. in April 1999, SpectraSite Communications, Inc.
(Communications), a wholly-owned subsidiary of SpectraSite, entered into a
$500.0 million credit facility. In February 2001, Communications amended and
restated its credit facility to provide, among other things, for an aggregate
borrowing capacity of up to $1.3 billion, subject to the covenants and
conditions contained in the credit facility. The amended and restated credit
facility consists of a $350.0 million revolving credit facility which may be
drawn at any time, subject to the satisfaction of certain financial covenants,
and the amount available will be reduced (and, if necessary, the amounts
outstanding must be repaid) in quarterly installments beginning on September
30, 2003 and ending on June 30, 2007; a $500.0 million multiple draw term loan
that may be drawn, subject to the satisfaction of certain financial covenants,
at any time through August 22, 2002, at which time the amount drawn must be
repaid in quarterly installments beginning on September 30, 2003 and ending on
June 30, 2007; and a $450.0 million term loan that was drawn in full in
February 2001 which will, from September 30, 2003 through June 30, 2007,
amortize at a rate of .25% per quarter and be payable in quarterly installments
and, from July 1, 2007 through December 31, 2007, amortize at a rate of 48% per
quarter and be payable on September 30, 2007 and December 31, 2007.
Communications has $785.0 million outstanding under the credit facility at June
30, 2002. The remaining $515.0 million under the credit facility was undrawn.
Communications ability to borrow under the credit facility is limited by the
financial covenants regarding the total debt to EBITDA and interest and fixed
charge coverage ratios of Communications and its subsidiaries. Under the terms
of the credit facility, the Company could borrow approximately $84 million
under the revolving credit facility and approximately $165 million under the
multiple draw term loan as of June 30, 2002 while remaining in compliance with
these covenants. However, such compliance would depend on provisions in the
credit facilitys financial covenants that allow the Company to net cash on
hand against indebtedness in determining the ratio of Communications total
debt to annualized EBITDA. As of June 30, 2002 the total amount that the
Company could spend (other than for income producing acquisitions) from cash on
hand and additional borrowings under the credit facility without violating the
credit facility covenants was approximately $84 million. The Companys ability
to borrow and use cash under the credit facility financial covenants will
increase or decrease as annualized EBITDA increases or decreases. In
addition, the requirements of the financial covenants in the credit facility
get tighter over time beginning September 30, 2002 and the ability to net cash on hand
against indebtedness ends on January 1, 2003.

The revolving credit loans and the multiple draw term loans bear interest,
at Communications option, at either Canadian Imperial Bank of Commerces base
rate plus an initial applicable margin of 2.00% per annum, which margin may,
over time, decrease based on a leverage ratio, or the Eurodollar rate plus an
initial applicable margin of 3.25% per annum, which margin may, over time,
decrease based on a leverage ratio. The term loan bears interest, at
Communications option, at either Canadian Imperial Bank of Commerces base
rate plus 2.75% per annum or the Eurodollar rate plus 4.00% per annum. The
weighted average interest rate on outstanding borrowings under the credit
facility as of June 30, 2002 was 5.77%.

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 multiple draw term
loan and the revolving credit facility, depending on the respective undrawn
amounts. Communications may be required to prepay the amended and restated
credit facility in part upon the occurrence of certain events, such as a sale
of assets, the incurrence of certain additional indebtedness, the termination
of the SBC transaction or the generation of excess cash flow.

SpectraSite and each of Communications domestic subsidiaries have
guaranteed the obligations under the amended and restated 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

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

capital stock of Communications foreign subsidiaries.

The amended and 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. Communications, however, is permitted to pay
dividends for the purpose of providing SpectraSite with funds to pay interest
on its senior notes, senior convertible notes and senior discount notes so long
as no default under the credit facility then exists or would exist after giving
effect to such payment. In addition, the amended and 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, a minimum interest coverage
ratio and a minimum fixed charge coverage ratio.

Refinancing Transactions

In May 2002, SpectraSite undertook a series of transactions (the
Refinancing Transactions) as part of an effort to reduce commitments for
capital expenditures, reduce indebtedness and reduce ongoing interest payments.
These included the agreements with SBC and Cingular described in Note 4
Acquisition Activities. In connection with the Refinancing Transactions,
SpectraSite created a new, wholly-owned subsidiary, SpectraSite Intermediate
Holdings, LLC (Intermediate Holdings). SpectraSite and Intermediate Holdings
entered into a Funding Agreement pursuant to which SpectraSite and Intermediate Holdings agreed to
issue to certain affiliates of Welsh, Carson, Anderson and Stowe (the
Lenders) up to $350 million aggregate
principal amount of secured convertible term notes (the New Term Notes). Of
the proceeds from the issuance of the New Term Notes, $10 million were to be
used to refinance indebtedness under SpectraSites existing credit facility.
The remainder was to be used to fund purchases of SpectraSites outstanding
Senior Notes and Senior Discount Notes pursuant to tender offers (the Tender
Offers) or in the open market.

SpectraSite
and Intermediate Holdings also commenced offers to exchange
(the Exchange Offers) up to $75 million of new notes issued by SpectraSite and
Intermediate Holdings (the Exchange Notes) for Senior Notes and Senior
Discount Notes outstanding following the Tender Offers.

In connection with the execution of the Funding Agreement on May 15, 2002,
SpectraSite paid the Lenders a fee of $2.6 million, equal to 0.75% of the
aggregate principal amount of New Term Notes that the Lenders had committed to
fund. SpectraSite also paid the Lenders $2.3 million related to their expenses
associated with the Funding Agreement.

On July 12, 2002 SpectraSite, Intermediate Holdings and the Lenders terminated
the Funding Agreement. Also on that day, the Tender Offers expired without being consummated and the Exchange
Offers (which were conditioned on the successful completion of the Tender
Offers) were terminated. The Company has recorded $9.3 million related to
expenses incurred in connection with the terminated Refinancing Transactions in
other expenses in the statement of operations for the three months ended June
30, 2002.

The Funding Agreement provides that if SpectraSite commences or enters
into an alternative transaction which restructures, repurchases or retires at
least $200 million in aggregate face value of its indebtedness before January
12, 2003, then the Lenders have the right to provide all or a portion of the
financing required to fund such alternative transaction. This financing would
be provided on the same terms as agreed to in the Funding Agreement. In
addition, if the alternative transaction does not require at least $100 million
of financing, then SpectraSite would be required to pay an additional fee of
$10.5 million to the Lenders.



|6. |  | Business Segments
|-- |  | -----------------

The Company operates in two business segments, site leasing and network
services. The site leasing segment provides for leasing and subleasing of
antenna sites on multi-tenant towers for a diverse range of wireless and
broadcast communication services. The network services segment offers a broad
range of network development services, including network design, tower
construction and antenna installation.

In evaluating financial performance, management focuses on operating
profit (loss), excluding depreciation and amortization and restructuring and
non-recurring charges. This measure of operating profit (loss) is also before
interest

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

income, interest expense, other income (expense) and income taxes. All
reported segment revenues are generated from external customers as intersegment
revenues are not significant.

Summarized financial information concerning the reportable segments as of
and for the three and six months ended June 30, 2002 and 2001 is shown in the
following table. The Other column represents amounts excluded from specific
segments, such as income taxes, corporate general and administrative expenses,
depreciation and amortization, restructuring and other non-recurring charges
and interest. In addition, Other also includes corporate assets such as cash
and cash equivalents, tangible and intangible assets and income tax accounts
that have not been allocated to a specific segment.

|                                  |  |         |           |          |  |                |         |       |  |   |          |   |  |   |           |  
|--------------------------------- |  | ------- | --------- | -------- |  | -------------- | ------- | ----- |  | - | -------- | - |  | - | --------- | -
|                                  |  | Site    |           | Network  |  |                |         |       |  |   |          |  
|                                  |  | Leasing |           | Services |  | Other          |         | Total
|                                  |  |         |           |          |  |                |         |      
|                                  |  |         |           |          |  | (in thousands) |         |       |  |  
|Three months ended June 30, 2002  |  |         |           |          |  |                |         |       |  |   |          |   |  |   |           |  
|                                 
|                                 
|                                 
|                                 
|Revenues                          |  | $       | 69,633    |          |  | $              | 42,008  |       |  | $ |         |   |  | $ | 111,641   |  
|                                 
|                                 
|                                 
|                                 
|Income (loss) before income taxes |  |         | 35,934    |          |  |                | (1,124  | )     |  |   | (162,431 | ) |  |   | (127,621  | )
|                                 
|                                 
|                                 
|                                 
|Assets                            |  |         | 2,421,234 |          |  |                | 116,089 |       |  |   | 183,948  |   |  |   | 2,721,271 |  
|                                 
|                                 
|                                 
|                                 
|Three months ended June 30, 2001  |  |         |           |          |  |                |         |       |  |   |          |   |  |   |           |  
|                                 
|                                 
|                                 
|                                 
|Revenues                          |  | $       | 53,001    |          |  | $              | 58,901  |       |  | $ |         |   |  | $ | 111,902   |  
|                                 
|                                 
|                                 
|                                 
|Income (loss) before income taxes |  |         | 18,474    |          |  |                | 9,834   |       |  |   | (214,445 | ) |  |   | (186,137  | )
|                                 
|                                 
|                                 
|                                 
|Assets                            |  |         | 2,221,712 |          |  |                | 155,999 |       |  |   | 913,376  |   |  |   | 3,291,087 |  
|                                 
|                                 
|                                 
|                                 
|Six months ended June 30, 2002    |  |         |           |          |  |                |         |       |  |   |          |   |  |   |           |  
|                                 
|                                 
|                                 
|                                 
|Revenues                          |  | $       | 135,585   |          |  | $              | 90,307  |       |  | $ |         |   |  | $ | 225,892   |  
|                                 
|                                 
|                                 
|                                 
|Income (loss) before income taxes |  |         | 68,723    |          |  |                | 3,247   |       |  |   | (275,134 | ) |  |   | (203,164  | )
|                                 
|                                 
|                                 
|                                 
|Assets                            |  |         | 2,421,234 |          |  |                | 116,089 |       |  |   | 183,948  |   |  |   | 2,721,721 |  
|                                 
|                                 
|                                 
|                                 
|Six months ended June 30, 2001    |  |         |           |          |  |                |         |       |  |   |          |   |  |   |           |  
|                                 
|                                 
|                                 
|                                 
|Revenues                          |  | $       | 99,389    |          |  | $              | 119,776 |       |  | $ |         |   |  | $ | 219,165   |  
|                                 
|                                 
|                                 
|                                 
|Income (loss) before income taxes |  |         | 39,314    |          |  |                | 16,340  |       |  |   | (305,301 | ) |  |   | (249,647  | )
|                                 
|                                 
|                                 
|                                 
|Assets                            |  |         | 2,221,712 |          |  |                | 155,999 |       |  |   | 913,376  |   |  |   | 3,291,087 |  



|7. |  | Subsequent Events
|-- |  | -----------------

Following the termination of the Funding Agreement and the expiration of the
Tender Offers, the Company continues to consider various strategic alternatives
to restructure its indebtedness. The Company has engaged Lazard Freres to
render financial advisory services in this regard. In addition, on August 7,
2002, the Company announced that it is exploring the sale of its network
services division. Lazard Freres has been retained by the Company to assist in
this process.

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

Business Overview

This discussion contains forward-looking statements, including statements
concerning possible or assumed future results of operations and liquidity. Our
representatives may also make oral forward-looking statements from time to
time. You should understand that the factors described below, in addition to
those discussed in our report on Form 10-K for the year ended December 31, 2001
under Item 1a. Risk Factors, could affect our future results and could cause
those results to differ materially from those expressed in such forward-looking
statements. These factors include:



| |  |  | substantial leverage and capital requirements;                                                                                                            
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | dependence on demand for wireless communications;                                                                                                         
|
| |  |  | the success of our tower construction program;                                                                                                            
|
| |  |  | our ability to co-locate additional tenants on our towers;                                                                                                
|
| |  |  | material adverse changes in economic conditions in the markets we serve;                                                                                  
|
| |  |  | future regulatory actions and conditions in our operating areas;                                                                                          
|
| |  |  | competition from others in the communications tower industry and technological innovation;                                                                
|
| |  |  | the integration of our operations with those of businesses we have acquired or may acquire in the future and the
realization of the expected benefits; and
|
| |  |  | other risks and uncertainties as may be detailed from time to time in our public announcements and SEC filings.                                           

We are one of the largest wireless tower operators in the United States
and a leading provider of outsourced network services to the wireless
communications and broadcast industries in the United States and Canada. Our
businesses include the ownership and leasing of antenna sites on towers,
managing rooftop and in-building telecommunications access on commercial real
estate, network planning and deployment and construction of towers and related
facilities. As of June 30, 2002, we owned or operated 7,994 towers as compared
to 7,925 towers at December 31, 2001.

On August 7, 2002, we announced that we are exploring the sale of our
network services segment. We have retained Lazard Freres to assist in this
process.

Acquisition Activity

2002 Acquisitions

SBCOn August 25, 2000, we entered into an agreement to acquire leasehold
and sub-leasehold interests in approximately 3,900 wireless communications
towers from affiliates of SBC Communications (collectively, SBC) in exchange
for $982.7 million in cash and $325.0 million in common stock. Under the
agreement, and assuming the sublease of all 3,900 towers, the stock portion of
the consideration was initially approximately 14.3 million shares valued at
$22.74 per share. The stock consideration is subject to an adjustment payment
to the extent the average closing price of SpectraSites common stock during
the 60-day period immediately preceding December 14, 2003 (the third
anniversary of the initial closing) decreases from $22.74 down to a floor of
$12.96. The adjustment payment may be accelerated if there is a change of
control of SpectraSite or upon the occurrence of certain specified liquidity
events. In any case, the adjustment payment is payable by us, at our option, in
the form of cash or shares of our common stock. The maximum amount potentially
payable by us to satisfy the adjustment payment is approximately 10.8 million
shares of common stock or $139.8 million in cash. We and SBC entered into a
Lease and Sublease Agreement pursuant to which we will manage, maintain and
lease available space on the SBC towers and have the right to

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co-locate tenants
on the towers. SBC is an anchor tenant on all of the towers and pays a monthly
fee per tower of $1,470, subject to an annual adjustment. In addition, we had
agreed to build towers for Cingular, an affiliate of SBC, over the next
four years under an exclusive build-to-suit agreement, but this agreement was
terminated on May 15, 2002.

On November 14, 2001, we completed an amendment to the SBC acquisition
agreements. This amendment reduced the maximum number of towers that we will
lease or sublease by 300 towers, from 3,900 in the original agreement to 3,600
towers in the agreement as amended. From the initial closing on December 14,
2000 through a closing on February 25, 2002, we leased or subleased a total of
2,706 towers and under the terms of the amended agreement, the parties agreed
to complete the lease or sublease of the remaining 894 towers during the period
beginning April 2003 and ending January 2004. In addition, pursuant to the
amendment we will receive all new co-location revenue on the towers remaining
to be subleased after February 25, 2002. The amendment also extends the
December 14, 2003 stock adjustment date to the last date on which towers will
be subleased, which is expected to be January 1, 2004. In the six months ended
June 30, 2002, we subleased 41 towers, for which we paid $10.1 million in cash
and issued 146,569 shares of common stock valued at $1.7 million.

On May 15, 2002, we entered into agreements with SBC and Cingular Wireless
LLC (Cingular) to (i) terminate our build-to-suit agreement, (ii) transfer
our lease or sublease interests in 545 SBC towers to Cingular and (iii) reduce
the future sublease commitment by 187 towers. We would receive net proceeds of
$98 million at closing which would be used to reduce bank facility borrowings.
Under the agreement, we would issue approximately 12.1 million shares of common
stock to SBC in full satisfaction of our obligations to pay the stock portion
of the prepaid rent for the remaining 707 towers to be subleased from SBC and
to satisfy any adjustment payments to SBC under the Agreement to Sublease. The
closing of this transaction (except the termination of the build-to-suit
agreement, which became effective immediately) is subject to the successful
consummation of the Refinancing Transactions or other similar transactions that
reduce indebtedness by at least $200 million, the consent of our bank credit
facility lenders and other customary closing conditions. If the closing
conditions are not met by August 15, 2002 and the agreements are not extended,
then the agreements (except the termination of the build-to-suit agreement) may
be terminated by either party.

As of June 30, 2002, we had issued approximately 9.9 million shares of
common stock to SBC pursuant to the SBC acquisition agreements. Assuming the
sublease of all 3,600 towers, we will be required to issue to SBC an additional
3.3 million shares to complete the lease or sublease of the remaining 894
towers, for a total of approximately 13.2 million shares. Based on the closing
market price of our common stock on June 30, 2002, we would be required to
issue approximately 10 million additional shares of common stock to SBC under
the stock adjustment provisions described above.

Results of Operations

Three months ended June 30, 2002 compared to the results for the three months
ended June 30, 2001.

Consolidated revenues for the three months ended June 30, 2002 were $111.6
million, a decrease of $0.3 million from the three months ended June 30, 2001.
Revenues from site leasing increased to $69.6 million for the three months
ended June 30, 2002 from $53.0 million for the three months ended June 30,
2001, primarily as a result of revenues derived from towers acquired or built
subsequent to June 30, 2001. We owned or operated 7,994 communications towers
at June 30, 2002 compared to 6,975 communications towers at June 30, 2001. The
remaining factor contributing to the increase is incremental revenue in 2002
from new co-location tenants on towers that were part of our portfolio on June
30, 2001.

Revenues from network services decreased to $42.0 million for the three
months ended June 30, 2002 compared to $58.9 million in the three months ended
June 30, 2001, primarily as a result of decreased demand for existing services
as wireless carriers reduced 2002 capital spending levels compared to 2001.

Costs of operations decreased to $65.9 million for the three months ended
June 30, 2002 from $69.1 million for the three months ended June 30, 2001.
Costs of operations for site leasing as a percentage of site leasing revenues
decreased to 38.4% for the three months ended June 30, 2002 from 41.8% for the
three months ended June 30, 2001. This decline was the result of lower average
tower maintenance and repair costs as our network services group personnel
began performing all such work in early 2002. In addition, the increase in site
leasing revenues described above contributed to the improvement in the cost of
operations percentage. As our site leasing operations mature, additional
tenants on a tower are expected to generate decreases in costs of operations
for site leasing as a percentage of site leasing revenues and increases in cash
flow because a significant proportion of tower operating costs are fixed and do
not increase with additional tenants. Costs of operations for network services
as a percentage of network services revenues increased to 93.3% for the three
months ended June 30, 2002 from 79.7% for the three months ended June 30, 2001,
primarily due to lower revenues, fixed costs that did not decline as

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revenues
did and a competitive environment for these services which led to lower
pricing.

Selling, general and administrative expenses decreased to $18.8 million
for the three months ended June 30, 2002 from $23.2 million for the three
months ended June 30, 2001. Selling, general and administrative expenses as a
percentage of revenues decreased to 16.8% for the three months ended June 30,
2002 from 20.7% for the three months ended June 30, 2001.
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 2001 and early in 2002.

Depreciation and amortization expense increased to $52.4 million for the
three months ended June 30, 2002 from $42.5 million for the three months ended
June 30, 2001 primarily as a result of the increased depreciation from the
towers we have acquired or constructed partially offset by the $8.5 million
reduction in goodwill amortization as a result of the adoption of SFAS 142. See
 Description of Critical Accounting
Policies  Goodwill.

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 result of these actions, we recorded restructuring charges of
$26.5 million. Of this amount, $16.4 million was related to the write-off of
work in progress related to sites in development that we plan to terminate,
$4.1 million was related to the costs of closing offices and $6.0 million was
related to the costs of employee severance. In addition, we recorded a
non-recurring charge of $4.3 million to write-down the carrying value of 21
towers that are not marketable.

Non-recurring charges for the three months ended June 30, 2001 were $72.3
million, consisting of $35.8 million in non-recurring charges relating to the
decision to consolidate our rooftop management operations from Philadelphia,
Pennsylvania to Cary, North Carolina, $32.2 million in non-recurring charges
relating to the decision to divest operations in Mexico, and $4.3 million
relating to the decision to close operations from the purchase of Vertical
Properties. Of the $35.8 million relating to the consolidation of the rooftop
management operations, $34.4 million related to the write-off of goodwill, $0.3
million related to the write down of assets and $1.1 million related to the
costs of employee severance and other costs related to the consolidation of
these operations. Of the $32.2 million relating to the divestiture of
operations in Mexico, $10.7 million related to the write-off of goodwill, $17.6
related to the write-down of assets in Mexico and $3.9 million was related to
the costs of employee severance and other costs related to the divestiture. Of
the $4.3 million relating to Vertical Properties, $4.2 million was related to
the write-off of goodwill and $0.1 million was related to the costs of employee
severance and other costs related to the closing.

Interest income decreased to $0.3 million for the three months ended June
30, 2002 from $4.9 million in the three months ended June 30, 2001 due to lower
cash balances on hand and lower interest rates. Interest expense increased to
$61.8 million during the three months ended June 30, 2002 from $53.4 million
for the three months ended June 30, 2001, reflecting increased amounts
outstanding under our credit facility partially offset by lower interest rates
on the credit facility.

Other income (expense) was a net expense of $10.0 million in the three
months ended June 30, 2002. Of this amount, $9.3 million was related to
expenses associated with proposed debt tender and exchange offers and $1.5
million related to losses on disposal of assets. These expenses were partially
offset by $0.5 million of foreign currency gains and $0.4 million related to
gains from investments in affiliates accounted for under the equity method.
Other income (expense) was a net expense of $42.5 million in the three months
ended June 30, 2001. Of this amount, $13.3 million related to losses from
investments in affiliates accounted for under the equity method, primarily the
investment in SpectraSite-Transco Communications, Ltd. In addition, $20.0
million related to the write-off of a loan to SpectraSite-Transco and $7.5
million related to a write-off of the Companys investment in Evolution.

Six months ended June 30, 2002 compared to the results for the six months ended
June 30, 2001.

Consolidated revenues for the six months ended June 30, 2002 were $225.9
million, an increase of $6.7 million from the six months ended June 30, 2001.
Revenues from site leasing increased to $135.6 million for the six months ended
June 30, 2002 from $99.4 million for the six months ended June 30, 2001,
primarily as a result of revenues derived from towers acquired or built
subsequent to June 30, 2001. We owned or operated 7,994 communications towers
at June 30, 2002 compared to 6,975 communications towers at June 30, 2001. The
remaining factor contributing to the increase is incremental revenue in 2002
from new co-location tenants on towers that were part of our portfolio on June
30, 2001.

Revenues from network services decreased to $90.3 million for the six
months ended June 30, 2002 compared to $119.8 million in the six months ended
June 30, 2001, primarily as a result of decreased demand for existing services
as

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wireless carriers reduced 2002 capital spending levels compared to 2001.

Costs of operations decreased to $131.6 million for the six months ended
June 30, 2002 from $136.1 million for the six months ended June 30, 2001. Costs
of operations for site leasing as a percentage of site leasing revenues
decreased to 38.5% for the six months ended June 30, 2002 from 40.5% for the
six months ended June 30, 2001. This decline was the result of lower average
tower maintenance and repair costs as our network services group personnel
began performing all such work in early 2002. In addition, the increase in site
leasing revenues described above contributed to the improvement in the cost of
operations percentage. As our site leasing operations mature, additional
tenants on a tower are expected to generate decreases in costs of operations
for site leasing as a percentage of site leasing revenues and increases in cash
flow because a significant proportion of tower operating costs are fixed and do
not increase with additional tenants. Costs of operations for network services
as a percentage of network services revenue increased to 87.9% for the six
months ended June 30, 2002 from 80.0% for the six months ended June 30, 2001,
primarily due to lower revenues, fixed costs that did not decline as revenues
did and a competitive environment for these services which led to lower
pricing.

Selling, general and administrative expenses decreased to $37.6 million
for the six months ended June 30, 2002 from $45.0 million for the six months
ended June 30, 2001. Selling, general and administrative expenses as a
percentage of revenues decreased to 16.7% for the six months ended June 30,
2002 from 20.5% for the six months ended June 30, 2001. 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
2001 and early in 2002.

Depreciation and amortization expense increased to $98.4 million for the
six months ended June 30, 2002 from $79.3 million for the six months ended June
30, 2001 primarily as a result of the increased depreciation from the towers we
have acquired or constructed partially offset by the $17.7 million reduction in
goodwill amortization as a result of the adoption of SFAS 142. See
 Description of Critical Accounting
Policies  Goodwill.

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 result of these actions, we recorded restructuring charges of
$26.5 million. Of this amount, $16.4 million was related to the write-off of
work in progress related to sites in development that we plan to terminate,
$4.1 million was related to the costs of closing offices and $6.0 million was
related to the costs of employee severance. In addition, we recorded a
non-recurring charge of $4.3 million to write-down the carrying value of 21
towers that are not marketable.

Non-recurring charges for the six months ended June 30, 2001 were $72.3
million, consisting of $35.8 million in non-recurring charges relating to the
decision to consolidate our rooftop management operations from Philadelphia,
Pennsylvania to Cary, North Carolina, $32.2 million in non-recurring charges
relating to the decision to divest operations in Mexico, and $4.3 million
relating to the decision to close operations from the purchase of Vertical
Properties. Of the $35.8 million relating to the consolidation of the rooftop
management operations, $34.4 million related to the write-off of goodwill, $0.3
million related to the write-down of assets and $1.1 million was related to the
costs of employee severance and other costs related to the consolidation of
those operations. Of the $32.2 million relating to the divestiture of
operations in Mexico, $10.7 million related to the write-off of goodwill, $17.6
related to the write-down of assets in Mexico and $3.9 million was related to
the costs of employee severance and other costs related to the divestiture. Of
the $4.3 million relating to Vertical Properties, $4.2 million was related to
the write-off of goodwill and $0.1 million was related to the costs of employee
severance and other costs related to the closing.

Interest income decreased to $0.4 million for the six months ended June
30, 2002 from $15.0 million in the six months ended June 30, 2001 due to lower
cash balances on hand and lower interest rates. Interest expense increased to
$120.5 million during the six months ended June 30, 2002 from $101.7 million
for the six months ended June 30, 2001, reflecting increased amounts
outstanding under our credit facility partially offset by lower interest rates
on the credit facility.

Other income (expense) was a net expense of $10.5 million in the six
months ended June 30, 2002. Of this amount, $9.3 million was related to
expenses associated with proposed debt tender and exchange offers and $1.6
million related to losses on disposal of assets. These expenses were partially
offset by foreign currency gains. Other income (expense) was a net expense of
$49.5 million in the six months ended June 30, 2001. Of this amount, $19.2
million related to losses from investments accounted for under the equity
method, primarily the investment in SpectraSite-Transco. In addition, $20.0
million related to the write-off of a loan to SpectraSite-Transco and $7.5
million related to a write-off of the Companys investment in Evolution.

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Liquidity and Capital Resources

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

Cash Flows

For the six months ended June 30, 2002, cash flows used by operating
activities were $15.7 million as compared to
$0.6 million in the six months ended June 30, 2001. The change is primarily
attributable to increased interest payments and decreased accounts payable
partially offset by decreased accounts receivable and increased favorable cash
flow generated from earnings before interest, non-recurring charges, non-cash
compensation charges, depreciation and amortization (EBITDA). EBITDA was
$57.3 million in the six months ended June 30, 2002 compared to $39.2 million
in the six months ended June 30, 2001.

For the six months ended June 30, 2002, cash flows used in investing
activities were $59.3 million compared to $629.5 million for the six months
ended June 30, 2001. We invested $58.6 million and $598.7 million in purchases
of property and equipment, primarily related to the acquisition and
construction of communications towers, in the six months ended June 30, 2002
and 2001, respectively.

In the six months ended June 30, 2002, cash flows provided by financing
activities were $88.8 million, as compared to $283.5 million in the six months
ended June 30, 2001. The cash provided by financing activities in 2001 and 2002
was primarily attributable to draws on our credit facility.

Financing Transactions

As of June 30, 2002, we had total indebtedness of approximately $2.5
billion, consisting of $785 million outstanding under our credit facility, $400
million principal amount of senior notes, $1.1 billion accreted value of senior
discount notes and $200 million of senior convertible notes.

Our credit facility provides an aggregate borrowing capacity of up to $1.3
billion for SpectraSite Communications, subject to the covenants and conditions
contained in the credit facility. The credit facility consists of:



| |  |  | a $350.0 million
revolving credit facility which may be drawn, at any
time, subject
to the satisfaction of certain financial covenants. The amount
available will be reduced (and, if necessary, the amounts outstanding
must be repaid) in quarterly installments beginning on September 30,
2003 and ending on June 30, 2007;                                      
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a $500 million multiple draw term loan which may be drawn, subject to the satisfaction of certain financial covenants, at
any time through August 22, 2002, at which time the amount drawn must be repaid in quarterly installments beginning on September 30,
2003 and ending on June 30, 2007; and                                                                 
|
| |  |  | a $450.0 million term loan that was drawn in full in February 2001 and
which will, from September 30, 2003 through June 30, 2007, amortize at
a rate of .25% per quarter and be payable in quarterly installments
and, from July 1, 2007 through December 31, 2007, amortize at a rate
of 48% per quarter and be payable on September 30, 2007 and December
31, 2007.

The revolving credit loans and the multiple draw term loans will bear
interest, at SpectraSite Communications option, at either Canadian Imperial
Bank of Commerces base rate plus an initial applicable margin of 2.00% per
annum, which margin may, over time, decrease based on a leverage ratio, or the
Eurodollar rate plus an initial applicable margin of 3.25% per annum, which
margin may, over time, decrease based on a leverage ratio. The term loan bears
interest, at SpectraSite 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.

SpectraSite 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 multiple
draw term loan and the revolving credit facility, depending on the respective
undrawn amount. SpectraSite 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, the termination of
the SBC transaction or the generation of excess cash flow.

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The amended and restated credit facility contains a number of covenants
that, among other things, restrict SpectraSite 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. SpectraSite Communications,
however, is permitted to pay dividends for the purpose of providing SpectraSite
with funds to pay interest on its senior notes, senior convertible notes and
senior discount notes so long as no default under the credit facility then
exists or would exist after giving effect to such payment. In addition, the
credit facility requires compliance with certain financial covenants, including
a requirement that SpectraSite Communications and its subsidiaries, on a
consolidated basis, not exceed a maximum ratio of total debt to annualized
EBITDA and not be below a minimum interest coverage ratio and a minimum fixed
charge coverage ratio.

We continuously evaluate our capital structure in light of our capital
needs and market conditions and from time to time
consider transactions to raise additional capital, reduce or refinance our
indebtedness or otherwise alter our existing capital structure. These
transactions may include the possibility of issuing additional shares of common
stock or securities convertible into shares of common stock or converting our
existing indebtedness into equity, any of which would dilute our existing
stockholders. No assurances can be given that any particular transaction will
be completed nor can any prediction or assurance be made regarding the possible
impact of future transactions on our business, results or capitalization.

In May 2002, SpectraSite undertook a series of refinancing transactions as
part of an effort to reduce commitments for capital expenditures, reduce
indebtedness and reduce ongoing interest payments. These included the
agreements with SBC and Cingular described under Acquisition
Activity2002 Acquisitions  SBC. In
connection with these transactions, SpectraSite created a new, wholly-owned
subsidiary, SpectraSite Intermediate Holdings, LLC (Intermediate Holdings).
SpectraSite and Intermediate Holdings entered into a Funding Agreement, pursuant to which SpectraSite and
Intermediate Holdings agreed to issue to certain affiliates of Welsh,
Carson (the Lenders) up
to $350 million aggregate principal amount of secured convertible term notes
(the New Term Notes). Of the proceeds from the issuance of the New Term
Notes, $10 million were to be used to refinance indebtedness under
SpectraSites existing credit facility. The remainder was to be used to fund
purchases of SpectraSites outstanding Senior Notes and Senior Discount Notes
pursuant to tender offers (the Tender Offers) or in the open market.

SpectraSite
and Intermediate Holdings also commenced offers to exchange
(the Exchange Offers) up to $75 million of new notes issued by SpectraSite and Intermediate Holdings
for Senior Notes and Senior Discount Notes outstanding following
the Tender Offers.

In connection with the execution of the Funding Agreement on May 15, 2002,
SpectraSite paid the Lenders a fee of $2.6 million, equal to 0.75% of the
aggregate principal amount of New Term Notes that the Lenders had committed to
fund. SpectraSite also paid the Lenders $2.3 million related to their expenses
associated with the Funding Agreement.

On July 12, 2002 SpectraSite, Intermediate Holdings and the Lenders
terminated the Funding Agreement. Also on that day, the Tender Offers expired
without being consummated and the Exchange Offers (which were conditioned on
the successful completion of the Tender Offers) were terminated. The Company
has recorded $9.3 million related to expenses incurred in connection with the
terminated Refinancing Transactions in other expenses in the statement of
operations for the three months ended June 30, 2002.

The Funding Agreement provides that if SpectraSite commences or enters
into an alternative transaction which restructures, repurchases or retires at
least $200 million in aggregate face value of its indebtedness before January
12, 2003, then the Lenders have the right to provide all or a portion of the
financing required to fund such alternative transaction. This financing would
be provided in the same terms as agreed to in the Funding Agreement. In
addition, if the alternative transaction does not require $100 million of
financing, then SpectraSite would be required to pay an additional fee of $10.5
million to the Lenders.

Following the termination of the Funding Agreement and the expiration of
the Tender Offers, we continue to consider various strategic alternatives to
restructure SpectraSites indebtedness. We have engaged Lazard Freres to
render financial advisory services in this regard. In addition, on August 7,
2002, we announced that we were exploring the sale of our network services
division and that we had retained Lazard Freres to assist us in this process as
well.

Liquidity and Commitments

We had cash and cash equivalents of $45.3 million at June 30, 2002. We
also had $785.0 million outstanding under our credit facility at that date. The
remaining $515.0 million under the credit facility was undrawn. The weighted
average interest rate

18



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on outstanding borrowings under the credit facility as of
June 30, 2002 was 5.77%. Our ability to borrow under the credit facility is
limited by the financial covenants regarding the total debt to annualized
EBITDA and interest and fixed charge coverage ratios of SpectraSite Communications and its
subsidiaries. Under the terms of the credit facility, we could borrow
approximately $84 million under the revolving credit facility and approximately
$165 million under the multiple draw term loan as of June 30, 2002 while
remaining in compliance with these covenants. However, such compliance would
depend on provisions in the credit facilitys financial covenants that allow us
to net cash on hand against indebtedness in determining the ratio of
Communications total debt to annualized EBITDA. As of June 30, 2002 the total
amount that we could spend (other than for income producing acquisitions) from
cash on hand and additional borrowings under the credit facility without
violating the credit facility covenants was approximately $84 million. Our
ability to borrow and use cash under the credit facility financial covenants
will increase or decrease as our annualized EBITDA increases or decreases. In
addition, the requirements of the financial covenants in the credit facility
get tighter over time beginning September 30, 2002 and the ability to net cash
on hand against indebtedness ends on January 1, 2003.

Our ability to fund capital expenditures, make scheduled payments of
principal or pay interest on our debt obligations, our
ability to refinance any such debt obligations and our ability to remain
in compliance with the credit facilitys financial covenants will depend on our
future performance, including our ability to generate cash flow from
operations, which, to a certain extent, depends on the demand for wireless
services, developments in competing technologies and our ability to co-locate
new tenants, as well as general economic, financial, competitive, legislative,
regulatory and other factors, many of which are beyond our control.

We are currently in negotiations to amend our credit facility. There can
be no assurance that an amendment to the credit facility will be obtained or
that any amendment obtained will be sufficient to permit continued payment of
interest on SpectraSites outstanding senior notes and senior convertible notes
without violating the financial covenants of the amended credit facility.
Absent an amendment, we may be out of compliance with one or more of our credit
facilitys financial covenants sometime in or after September 2002.

The failure to comply with the provisions of the credit facility would
result in an event of default thereunder, and, depending upon the actions of
the lenders thereunder, all amounts owed under the credit facility could be
declared due and payable. If SpectraSite Communications were not able to repay all amounts
owed under the credit facility, the lenders thereunder would have the right to
proceed against SpectraSites guarantee of the credit facility and
the collateral granted to the lenders to secure such indebtedness. If
the indebtedness outstanding under the credit facility were to be accelerated,
there can be no assurance that the funds and assets of the Company would be
sufficient to repay in full such indebtedness, and there can be no assurance
that there would be sufficient assets remaining after such repayments to pay
amounts due in respect of any or all of the Companys other indebtedness. An
acceleration of indebtedness under the credit facility would result in a
cross-default under SpectraSites indebtedness.

The
failure to pay interest on SpectraSites indebtedness would
result in an event of default thereunder, and all amounts thereunder could be
accelerated and become due and payable after any applicable grace period. An
event of default under SpectraSites indebtedness would also constitute
an event of default under the credit facility.

We currently anticipate that, in order to pay the principal of our
outstanding indebtedness, or to redeem or repurchase such indebtedness upon a
change of control, as defined in the instruments governing our indebtedness, we
will be required to adopt one or more alternatives, such as refinancing our
indebtedness or selling our equity securities or the equity securities or
assets of our subsidiaries. We cannot assure you that we will generate
sufficient cash flow from operations or that future borrowings or equity or
debt financings will be available on terms acceptable to us, in amounts
sufficient to service our indebtedness and make anticipated capital
expenditures.

The following table provides a summary of our material debt, lease and
other contractual commitments as of June 30, 2002.

|                                    |  |                                       |           |        |  |           |         |           |  |               |         |  |  |   |         |  |  |   |           | 
|----------------------------------- |  | ------------------------------------- | --------- | ------ |  | --------- | ------- | --------- |  | ------------- | ------- |  |  | - | ------- |  |  | - | --------- | 
|                                    |  | Payments Due by Period (in thousands)
|                                    |  |                                      
|                                    |  |                                       |           |        |  | Less than |         |           |  |               |         |  |  |   |         |  |  |  
|Contractual Obligations             |  | Total                                 |           | 1 year |  | 1-3 years |         | 4-5 years |  | After 5 years
|                                    |  |                                       |           |        |  |           |         |           |  |              
|Principal Amounts of Long-Term Debt |  | $                                     | 2,466,481 |        |  | $         |        |           |  | $             | 134,625 |  |  | $ | 218,375 |  |  | $ | 2,113,481 | 
|                                   
|                                   
|                                   
|                                   
|Capital Lease Payments              |  |                                       | 24,384    |        |  |           | 4,514   |           |  |               | 5,322   |  |  |   | 3,138   |  |  |   | 11,410    | 
|                                   
|                                   
|                                   
|                                   
|Operating Leases Payments           |  |                                       | 329,872   |        |  |           | 69,538  |           |  |               | 114,340 |  |  |   | 53,384  |  |  |   | 92,610    | 
|                                   
|                                   
|                                   
|                                   
|SBC Tower Purchase Commitment (1)   |  |                                       | 227,420   |        |  |           | 54,184  |           |  |               | 173,236 |  |  |   |        |  |  |   |          | 
|                                    |  |                                       |           |        |  |           |         |           |  |               |         |  |  |   |         |  |  |   |           | 
|Total Contractual Cash Obligations  |  | $                                     | 3,048,157 |        |  | $         | 128,236 |           |  | $             | 427,523 |  |  | $ | 274,897 |  |  | $ | 2,217,501 | 
|                                    |  |                                       |           |        |  |           |         |           |  |               |         |  |  |   |         |  |  |   |           | 



---

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

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In addition, we had standby letters of credit of $6.1 million and
performance bonds of $4.9 million outstanding at June 30, 2002, most of which
expire within one year.

Description of Critical Accounting Policies

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

Revenue Recognition

Site leasing revenues are recognized when earned based on lease
agreements. Increases based on fixed escalation clauses that are included in
certain lease agreements are recognized on a straight-line basis over the term
of the lease. Network services revenues related to construction activities are
derived from service contracts that provide for billing on a time and materials
or fixed price basis. For time and material contracts, revenues are recognized
as services are performed. For fixed price contracts, we recognize revenue and
profit as work progresses using the percentage-of-completion method of
accounting, which relies on estimates of total expected contract revenues and
costs. We follow this method because reasonably dependable estimates of the
revenue and costs applicable to various stages of a contract can be made.
Because the financial reporting of these contracts depends on estimates, which
are assessed continually during the term of the contract, recognized revenues
and profit are subject to revisions as the contract progresses to completion.
Revisions in profit estimates are reflected in the period in which the facts
that give rise to the revision become known. Accordingly, favorable changes in
estimates result in additional revenue and profit recognition, and unfavorable
changes in estimates result in the reversal of previously recognized revenue
and profits. Provisions for estimated losses on uncompleted contracts are made
in the period in which such losses are determined.

Allowance for Uncollectible Accounts

We evaluate the collectibility of our accounts receivable based on a
combination of factors. In circumstances where we are aware of a specific
customers inability to meet its financial obligations to us (e.g., bankruptcy
filings, substantial down-grading of credit ratings), we record a specific
allowance against amounts due to reduce the net recognized receivable 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 to us could be reduced by a
material amount.

Capitalization of Internal Costs

Property and equipment, including towers, are recorded at cost and
depreciated over their estimated useful lives. We capitalize costs incurred in
bringing towers to an operational state. Costs clearly associated with the
acquisition, development and construction of towers are capitalized as a cost
of that tower. Indirect costs that relate to several towers are capitalized and
allocated to the towers 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.

Goodwill

The excess of the purchase price over the fair value of net assets
acquired in purchase business combinations has been recorded as goodwill. Prior
to January 1, 2002, goodwill was amortized over 15 years for purchase business
combinations consummated prior to June 30, 2001. For purchase business
combinations consummated subsequent to June 30, 2001, goodwill is not
amortized, but 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). Effective
January 1, 2002, we adopted SFAS 142, which establishes new accounting and
reporting requirements for goodwill and other intangible assets. Under SFAS
142, goodwill and intangible assets with indefinite lives are no longer
amortized but are reviewed annually, or more frequently if impairment
indicators arise, for impairment. Separable intangible assets that are not
deemed to have an

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indefinite life will continue to be amortized over their
useful lives. The amortization provisions of SFAS 142 requiring nonamortization
of goodwill and indefinite lived intangible assets apply to goodwill and
indefinite lived intangible assets acquired after June 30, 2001. With respect
to goodwill and intangible assets acquired prior to July 1, 2001, we ceased
amortization on January 1, 2002. We 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. Under 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. Impairment adjustments recognized after adoption, if any, generally
are required to be recognized as an operating expense.




ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

|                       |                       |  |                        |   |      |  |      |   |      |  |      |   |            |  |                        |   |  |  |   |   |  |  |   |           |   |  |   |           |  
|---------------------- | --------------------- |  | ---------------------- | - | ---- |  | ---- | - | ---- |  | ---- | - | ---------- |  | ---------------------- | - |  |  | - | - |  |  | - | --------- | - |  | - | --------- | -
|                       |                       |  | Expected Maturity Date
|                       |                       |  |                       
|                       |                       |  | 2002                   |   | 2003 |  | 2004 |   | 2005 |  | 2006 |   | Thereafter |  | Total                 
|                       |                       |  |                        |   |      |  |      |   |      |  |      |   |            |  |                       
|                       |                       |  |                        |   |      |  |      |   |      |  |      |   |            |  | (dollars in thousands) |   |  |  |  
|Longterm obligations: |                       |  |                        |   |      |  |      |   |      |  |      |   |            |  |                        |   |  |  |   |   |  |  |   |           |   |  |   |          
|                      
|                      
|                      
|                      
|                       | Fixed rate            |  | $                      |  |      |  | $    |  |      |  | $    |  |            |  | $                      |  |  |  | $ |  |  |  | $ | 1,681,481 |   |  | $ | 1,681,481 |  
|                      
|                      
|                      
|                      
|                       | Average interest rate |  |                        |  |      |  |      |  |      |  |      |  |            |  |                        |  |  |  |   |  |  |  |   | 11.28     | % |  |   | 11.28     | %

In addition, as of June 30, 2002, we had $785.0 million of variable rate
debt outstanding under our credit facility at a weighted average interest rate
of 5.77%. A 1% increase in the interest rate on our variable rate debt would
have increased interest expense by approximately $2.0 million and $3.8 million
in the three and six months ended June 30, 2002, respectively.

21



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PART II  OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

On June 17, 2002, certain holders of SpectraSites outstanding 10.75%
Senior Notes due 2010, 12.50% Senior Notes due 2010, 12.00% Senior Discount
Notes due 2008, 11.25% Senior Discount Notes due 2009 and 12.875% Senior
Discount Notes due 2010 (collectively, the Notes) commenced an action in the
United States District Court for the District of Delaware seeking, among other
things to enjoin SpectraSite from consummating its cash tender offers to
purchase a portion of the outstanding Notes. The complaint alleges that the
tender offers and the transactions contemplated in connection with the tender
offers, including the funding of new term notes by Welsh, Carson, Anderson &
Stowe (WCAS), violate the indentures governing the Notes as well as the Trust
Indenture Act and other securities laws and breach fiduciary duties owed by the
Company, its Board of Directors and WCAS to holders of the Notes. The
complaint demands declaratory and monetary relief.

On June 25, 2002 the court rejected the application of the noteholder
plaintiffs to temporarily restrain the Company from consummating the tender
offers.

Although
the tender offers have expired and the related exchange offers
terminated, the Company intends to vigorously defend against the action and
seek dismissal of all claims.




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.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8K

|      |  |                                                                                                                                                                                                                                                                                                                                                                         
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)   |  | Exhibits                                                                                                                                                                                                                                                                                                                                                                
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                                                                                                         
|     
|     
|     
|     
|2.1   |  | Agreement to Sublease, dated as of August 25, 2000 (the SBC Agreement),
by and among SBC Wireless, Inc., for itself and on behalf of the Sublessor
Entities, SpectraSite Holdings, Inc. (the Registrant) and Southern
Towers, Inc. Incorporated by reference to exhibit 10.1 to the
Registrants report on Form 8-K dated August 25, 2000 and filed August 31,
2000.
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                                                                                                         
|     
|     
|     
|     
|2.2   |  | Amendment No. 1 to the SBC Agreement, dated as of
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.                                                                                                                                                                                          
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                                                                                                         
|     
|     
|     
|     
|3.1   |  | Second Amended and Restated Certificate of Incorporation. Incorporated by
reference to exhibit 3.1 to the amended registration statement on Form
8-A/A of the Registrant as filed on December 12, 2000.                                                                                                                                                                 
|     
|     
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|3.2   |  | Amended Bylaws. Incorporated by reference to exhibit 3.8 to the
registration statement on Form S-1 of the Registrant, file no. 333-93873.                                                                                                                                                                                                                               
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|10.1  |  | Lease and Sublease, dated as of December 14, 2000, by and among SBC
Wireless, LLC, (SBCW), SBC Tower Holdings LLC, for itself and as agent
for certain affiliates of SBC, the Registrant and Southern Towers, Inc.
Incorporated by reference to exhibit No. 10.2 to the Registrants Form
10-Q for the quarterly period ended March 31, 2001.                         
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|10.2  |  | Funding Agreement, dated as of May 15, 2002, by and among the Registrant,
SpectraSite Intermediate Holdings, LLC (Holdco) and the Purchasers party
thereto. Incorporated by reference to Exhibit 10.1 of the Registrants
report on Form 8-K/A filed on May 22, 2002.                                                                                                 
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|10.3  |  | Consent and Amendment to Funding Agreement, dated as of June 12, 2002, by
and among the Registrant, Holdco and the Purchasers party thereto.
Incorporated by reference to Exhibit 10.1 of the Registrants report on
Form 8-K filed on June 13, 2002.                                                                                                                   
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|10.4  |  | Second Consent and Amendment to Funding Agreement, dated as of June 19,
2002, by and among the Registrant, Holdco and the Purchasers party
thereto. Incorporated by reference to Exhibit 10.1 of the Registrants
report on Form 8-K filed on June 20, 2002.                                                                                                            
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|10.5  |  | Third Consent and Amendment to Funding Agreement, dated as of June 25,
2002, by and among the Registrant, Holdco and the Purchasers party
thereto. Incorporated by reference to Exhibit 10.1 of the Registrants
report on Form 8-K filed on June 27, 2002.                                                                                                             
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|10.6  |  | Fourth Consent and Amendment to Funding Agreement, dated as of July 2,
2002, by and among the Registrant, Holdco and the Purchasers party
thereto. Incorporated by reference to Exhibit 10.1 of the Registrants
report on Form 8-K filed on July 3, 2002.                                                                                                              
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|10.7  |  | Joint Termination of Funding Agreement, dated as of July 12, 2002, by and
among the Registrant, Holdco and the Purchasers party thereto.
Incorporated by reference to Exhibit 10.1 of the Registrants report on
Form 8-K filed on July 16, 2002.                                                                                                                       
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|10.8  |  | 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 10.6 of the Registrants report on
Form 8-K/A filed on May 22, 2002.                                       
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|10.9  |  | Unwind Side Letter, dated as of May
15, 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 10.7 of the Registrants report on
Form 8-K/A filed on May 22, 2002                                                                      
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|10.10 |  | Termination and Amendment to Agreement to Build to Suit, dated as of May
15, 2002, by and among SBC Wireless LLC, the Registrant and SpectraSite
Communications, Inc. Incorporated by reference to Exhibit 10.8 of the
Registrants report on Form 8-K/A filed on May 22, 2002.                                                                                         
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|*99.1 |  | Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                      

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|      |  |                                                                                                                                                   
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|*99.2 |  | Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.



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



|(b) |  | Reports on Form 8-K
|--- |  | -------------------

On May 17, 2002 the Registrant filed a Current Report on Form 8-K related
to a press release it issued announcing the postponement of its Annual Meeting
of Stockholders.

On May 20, 2002 the Registrant filed a Current Report on Form 8-K, which
included unaudited pro-forma financial information and described the commencement
of (i) cash tender offers (the Tender Offers) to purchase a portion of its
outstanding 10 3/4% Senior Notes due 2010, 12 1/2% Senior Notes due 2010,
12% Senior Discount Notes due 2008, 11 1/4% Senior Discount Notes due 2009
and 12 7/8% Senior Discount Notes due 2010 (collectively, the Notes) and (ii)
offers to qualified institutional buyers to exchange a portion of the Notes for
up to $75 million of new convertible notes (the Exchange Offers).

On May 22, 2002 the Registrant filed an amendment to the Current Report on
Form 8-K filed on May 20, 2002 to include exhibits not previously filed.

On June 13, 2002 the Registrant filed a Current Report on Form 8-K related
to a press release it issued announcing an amendment of the Tender Offers.

On June 18, 2002 the Registrant filed a Current Report on Form 8-K related
to a press release it issued announcing that certain holders of the Notes had
filed a complaint to enjoin the Tender Offers.

On June 19, 2002 the Registrant filed a Current Report on Form 8-K related
to a press release it issued reporting developments in the noteholder
litigation.

On June 20, 2002 the Registrant filed a Current Report on Form 8-K related
to a press release it issued announcing an extension of the Tender Offers.

On June 24, 2002 the Registrant filed a Current Report on Form 8-K related
to a press release it issued reporting developments in the noteholder
litigation.

On June 27, 2002 the Registrant filed a Current Report on Form 8-K related
to a press release it issued (i) reporting developments in the noteholder
litigation and (ii) announcing an extension of the Tender Offers.

On July 3, 2002 the Registrant filed a Current Report on Form 8-K related
to a press release it issued announcing an extension of the Exchange Offers.

On July 16, 2002 the Registrant filed a Current Report on Form 8-K related
to a press release it issued announcing (i) the expiration of the Tender Offers
and (ii) the termination of the Exchange Offers.

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SIGNATURES

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

|                      |  |                                                                                        
|--------------------- |  | ---------------------------------------------------------------------------------------
|Date:
August 14, 2002 |  | SPECTRASITE HOLDINGS, INC.
(Registrant)                                                
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|                      |  |                                                                                        
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|                      |  | /s/DAVID P. TOMICK                                                                     
|                      |  |                                                                                        
|                      |  | David P. Tomick
Executive Vice President, Chief Financial Officer and
Secretary        
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|                      |  |                                                                                        
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|                      |  | /s/DANIEL I. HUNT                                                                      
|                      |  |                                                                                        
|                      |  | Daniel I. Hunt
Vice President- Finance and Administration, Principal
Accounting Officer

25