Table of Contents

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

UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

FORM10-Q

|        |                                                                                        |
|--------|----------------------------------------------------------------------------------------|
|   | QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

Forthe quarterly period ended June  30,2006

OR

|        |                                                                                        |
|--------|----------------------------------------------------------------------------------------|
|   | TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934 |

For the transition period from______________   to   ______________

Commission File Number001-32168

GLOBAL SIGNALINC.

|                                                              |  |  |                                       |
|--------------------------------------------------------------|--|--|---------------------------------------|
| DELAWARE                                                     |  |  | 65-0652634                            |
| (State or otherjurisdiction of incorporation ororganization) |  |  | (I.R.S.  EmployerIdentification  No.) |
|                                                              |

301 NorthCattlemen Road, Suite 300, Sarasota, Florida 34232-6427(Addressof principal executive offices)

Telephone: (941)364-8886(Registrant’s telephone number, including areacode)

Indicate by check mark whether theregistrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes       No

Indicate by check mark whether theregistrant is a large accelerated filer, an accelerated filer or anon-accelerated filer. See definition of ‘‘acceleratedfiler and large accelerated filer’’ in Rule 12b-2 of theExchange Act. (Check one):Large accelerated filer        Accelerated filer        Non-accelerated filer

Indicate by check mark whether theregistrant is a shell company (as defined in Rule 12b-2 of the Act).Yes     No 

AtAugust  1,  2006, Registrant had outstanding 70,219,342shares of $0.01 par value commonstock.

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

----

PARTI.    FINANCIAL INFORMATION

|                                                 |  |  |                                                                                                                                    |  |        |      |  |        |  |
|-------------------------------------------------|--|--|------------------------------------------------------------------------------------------------------------------------------------|--|--------|------|--|--------|--|
|                                            |  |  |                                                                                                                               |  |        | Page |
| Item1.                                          |  |  | FinancialStatements                                                                                                                |  |        |      |  |   |  |
|                                            |  |  | Condensed Consolidated BalanceSheets as of June 30, 2006 (unaudited) and    December 31,2005                   |  |        |      |  | 1      |  |
|                                            |  |  | Condensed ConsolidatedStatements of Operations (unaudited) for the Three     MonthsEnded June 30, 2006 and2005 |  |        |      |  | 2      |  |
|                                            |  |  | Condensed ConsolidatedStatements of Operations (unaudited) for the Six Months    Ended June 30, 2006 and2005   |  |        |      |  | 3      |  |
|                                            |  |  | Condensed ConsolidatedStatement of Changes in Stockholders’ Equity    (unaudited)                        |  |        |      |  | 4      |  |
|                                            |  |  | CondensedConsolidated Statements of Cash Flows (unaudited) for the Six Months    Ended June 30, 2006 and2005   |  |        |      |  | 5      |  |
|                                            |  |  | Notes to Unaudited CondensedConsolidated Financial Statements                                                                      |  |        |      |  | 6      |  |
| Item2.                                          |  |  | Management’s Discussion and Analysis of FinancialCondition and Results ofOperations                                          |  |        |      |  | 20     |  |
| Item3.                                          |  |  | Quantitative and Qualitative Disclosures About MarketRisk                                                                          |  |        |      |  | 33     |  |
| Item 4.                                         |  |  | ControlsandProcedures                                                                                                              |  |        |      |  | 34     |  |
| PARTII.    OTHERINFORMATION |  |  |                                                                                                                                    |  |   |      |
| Item1.                                          |  |  | Legal Proceedings                                                                                                                  |  |        |      |  | 35     |  |
| Item 1A.                                        |  |  | RiskFactors                                                                                                                        |  |        |      |  | 35     |  |
| Item2.                                          |  |  | Unregistered Sales of Equity Securities and Use ofProceeds                                                                         |  |        |      |  | 35     |  |
| Item3.                                          |  |  | Defaults Upon SeniorSecurities                                                                                                     |  |        |      |  | 36     |  |
| Item4.                                          |  |  | Submission of Matters to a Vote of SecurityHolders                                                                                 |  |        |      |  | 36     |  |
| Item 5.                                         |  |  | OtherInformation                                                                                                                   |  |        |      |  | 36     |  |
| Item6.                                          |  |  | Exhibits                                                                                                                           |  |        |      |  | 37     |  |
|                                                 |

1

----

Table of Contents

PARTI.    FINANCIAL INFORMATION

Item 1.    FinancialStatements

GLOBAL SIGNAL INC.CONDENSEDCONSOLIDATED BALANCE SHEETS(in thousands, except sharedata)

|                                                                                                                                                                                           |  |  |              |   |           |                  |  |  |  |   |           |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--------------|---|-----------|------------------|--|--|--|---|-----------|---|
|                                                                                                                                                                                      |  |  | June30, 2006 |   |           | December 31,2005 |
|                                                                                                                                                                                      |  |  | (unaudited)  |   |           |             |
| Assets                                                                                                                                                                                    |  |  |              |   |      |                  |  |  |  |   |      |   |
| Currentassets:                                                                                                                                                                            |  |  |              |   |      |                  |  |  |  |   |      |   |
| Cash and cashequivalents                                                                                                                                                                  |  |  |              | $ | 142,071   |                  |  |  |  | $ | 47,793    |   |
| Accountsreceivable, less allowance for doubtful accounts of $1,722 and $1,559,respectively                                                                                                |  |  |              |   | 4,399     |                  |  |  |  |   | 2,360     |   |
| Prepaidexpenses and other currentassets                                                                                                                                                   |  |  |              |   | 45,603    |                  |  |  |  |   | 36,930    |   |
| Interestrate swap asset, at fairvalue                                                                                                                                                     |  |  |              |   | —   |                  |  |  |  |   | 22,609    |   |
| Totalcurrentassets                                                                                                                                                                        |  |  |              |   | 192,073   |                  |  |  |  |   | 109,692   |   |
| Restrictedcash                                                                                                                                                                            |  |  |              |   | 28,713    |                  |  |  |  |   | 20,232    |   |
| Fixed assets, netof accumulated depreciation of $242,177 and $174,917,respectively                                                                                                        |  |  |              |   | 1,669,887 |                  |  |  |  |   | 1,681,755 |   |
| Intangibleassets:                                                                                                                                                                         |  |  |              |   |      |                  |  |  |  |   |      |   |
| Goodwill                                                                                                                                                                                  |  |  |              |   | 10,610    |                  |  |  |  |   | 10,610    |   |
| Leaseholdinterests, net of accumulated amortization of $14,469 and $12,811,respectively                                                                                                   |  |  |              |   | 6,004     |                  |  |  |  |   | 8,084     |   |
| Leaseabsorption value, net of accumulated amortization of $68,357 and$53,229,respectively                                                                                                 |  |  |              |   | 379,867   |                  |  |  |  |   | 395,391   |   |
| Leaseorigination value, net of accumulated amortization of $2,334 and$1,669,respectively                                                                                                  |  |  |              |   | 22,706    |                  |  |  |  |   | 23,638    |   |
| Deferreddebt issuance costs, net of accumulated amortization of $3,251 and$10,943,respectively                                                                                            |  |  |              |   | 15,925    |                  |  |  |  |   | 16,870    |   |
| Otherassets                                                                                                                                                                               |  |  |              |   | 31,128    |                  |  |  |  |   | 22,540    |   |
|                                                                                                                                                                                      |  |  |              | $ | 2,356,913 |                  |  |  |  | $ | 2,288,812 |   |
| Liabilitiesand Stockholders' Equity                                                                                                                                                       |  |  |              |   |      |                  |  |  |  |   |      |   |
| Currentliabilities:                                                                                                                                                                       |  |  |              |   |      |                  |  |  |  |   |      |   |
| Accountspayable                                                                                                                                                                           |  |  |              | $ | 20,969    |                  |  |  |  | $ | 20,299    |   |
| Accruedexpenses                                                                                                                                                                           |  |  |              |   | 22,267    |                  |  |  |  |   | 22,266    |   |
| Dividendpayable                                                                                                                                                                           |  |  |              |   | 36,859    |                  |  |  |  |   | 34,304    |   |
| Deferredrevenue                                                                                                                                                                           |  |  |              |   | 27,120    |                  |  |  |  |   | 21,307    |   |
| Currentportion of long-termdebt                                                                                                                                                           |  |  |              |   | 496       |                  |  |  |  |   | 538       |   |
| Totalcurrentliabilities                                                                                                                                                                   |  |  |              |   | 107,711   |                  |  |  |  |   | 98,714    |   |
| Long-termdebt, net of currentportion                                                                                                                                                      |  |  |              |   | 1,844,002 |                  |  |  |  |   | 1,693,058 |   |
| Otherliabilities                                                                                                                                                                          |  |  |              |   | 59,731    |                  |  |  |  |   | 43,851    |   |
| Totalliabilities                                                                                                                                                                          |  |  |              |   | 2,011,444 |                  |  |  |  |   | 1,835,623 |   |
| Stockholders'equity:                                                                                                                                                                      |  |  |              |   |      |                  |  |  |  |   |      |   |
| Preferredstock, $0.01 par value, 20,000,000 shares authorized, no shares issuedor outstanding at June  30,  2006 and December31,2005                                                      |  |  |              |   | —   |                  |  |  |  |   | —   |   |
| Commonstock, $0.01 par value, 150,000,000 shares authorized, 70,206,766shares issued and outstanding at June  30,  2006, and68,608,725 shares issued and outstanding at December  31,2005 |  |  |              |   | 702       |                  |  |  |  |   | 686       |   |
| Additionalpaid-incapital                                                                                                                                                                  |  |  |              |   | 411,086   |                  |  |  |  |   | 476,388   |   |
| Treasurystock, at cost, 29,327 shares at June  30,  2006 and 0shares at December  31,2005                                                                                                 |  |  |              |   | (1,463    | )                |  |  |  |   | —   |   |
| Deferredstock-basedcompensation                                                                                                                                                           |  |  |              |   | —   |                  |  |  |  |   | (1,055    | ) |
| Accumulatedother comprehensiveincome                                                                                                                                                      |  |  |              |   | 30,830    |                  |  |  |  |   | 20,800    |   |
| Accumulateddeficit                                                                                                                                                                        |  |  |              |   | (95,686   | )                |  |  |  |   | (43,630   | ) |
| Totalstockholders'equity                                                                                                                                                                  |  |  |              |   | 345,469   |                  |  |  |  |   | 453,189   |   |
|                                                                                                                                                                                      |  |  |              | $ | 2,356,913 |                  |  |  |  | $ | 2,288,812 |   |
|                                                                                                                                                                                           |

Theaccompanying Notes to Unaudited Condensed Consolidated FinancialStatementsare an integral part of these condensed financialstatements.

1

----

Table of Contents

GLOBAL SIGNAL INC.CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)(in thousands,except per sharedata)

|                                                                                                                         |  |  |                           |   |         |      |  |  |  |   |         |   |
|-------------------------------------------------------------------------------------------------------------------------|--|--|---------------------------|---|---------|------|--|--|--|---|---------|---|
|                                                                                                                    |  |  | ThreeMonths Ended June30, |
|                                                                                                                    |  |  | 2006                      |   |         | 2005 |
| Revenues                                                                                                                |  |  |                           | $ | 122,467 |      |  |  |  | $ | 77,557  |   |
| Directsite operating expenses (excluding depreciation, amortization andaccretion)                                       |  |  |                           |   | 56,872  |      |  |  |  |   | 30,133  |   |
| Grossmargin                                                                                                             |  |  |                           |   | 65,595  |      |  |  |  |   | 47,424  |   |
| Otherexpenses:                                                                                                          |  |  |                           |   |    |      |  |  |  |   |    |   |
| Selling,general and administrative (including $4,867 and $972 of non-cashstock-based compensation expense,respectively) |  |  |                           |   | 16,827  |      |  |  |  |   | 9,398   |   |
| Sprintsites integrationcosts                                                                                            |  |  |                           |   | 192     |      |  |  |  |   | 3,164   |   |
| Statefranchise, excise and minimumtaxes                                                                                 |  |  |                           |   | 263     |      |  |  |  |   | 157     |   |
| Depreciation,amortization andaccretion                                                                                  |  |  |                           |   | 42,638  |      |  |  |  |   | 28,351  |   |
|                                                                                                                    |  |  |                           |   | 59,920  |      |  |  |  |   | 41,070  |   |
| Operatingincome                                                                                                         |  |  |                           |   | 5,675   |      |  |  |  |   | 6,354   |   |
| Interest expense,net                                                                                                    |  |  |                           |   | 22,415  |      |  |  |  |   | 15,538  |   |
| Loss on earlyextinguishment ofdebt                                                                                      |  |  |                           |   | — |      |  |  |  |   | 461     |   |
| Other expense(income)                                                                                                   |  |  |                           |   | (1      | )    |  |  |  |   | 21      |   |
| Income(loss) from continuing operations before income tax benefit(expense)                                              |  |  |                           |   | (16,739 | )    |  |  |  |   | (9,666  | ) |
| Incometax benefit(expense)                                                                                              |  |  |                           |   | (2      | )    |  |  |  |   | (16     | ) |
| Income(loss) from continuingoperations                                                                                  |  |  |                           |   | (16,741 | )    |  |  |  |   | (9,682  | ) |
| Income(loss) from discontinuedoperations                                                                                |  |  |                           |   | (173    | )    |  |  |  |   | 377     |   |
| Income(loss) before loss on sale ofproperties                                                                           |  |  |                           |   | (16,914 | )    |  |  |  |   | (9,305  | ) |
| Loss onsale ofproperties                                                                                                |  |  |                           |   | (56     | )    |  |  |  |   | (119    | ) |
| Netincome(loss)                                                                                                         |  |  |                           | $ | (16,970 | )    |  |  |  | $ | (9,424  | ) |
| Basicincome (loss) per commonshare:                                                                                     |  |  |                           |   |    |      |  |  |  |   |    |   |
| Income (loss) fromcontinuingoperations                                                                                  |  |  |                           | $ | (0.24   | )    |  |  |  | $ | (0.16   | ) |
| Income(loss) from discontinuedoperations                                                                                |  |  |                           |   | — |      |  |  |  |   | — |   |
| Losson sale ofproperties                                                                                                |  |  |                           |   | — |      |  |  |  |   | — |   |
| Netincome(loss)                                                                                                         |  |  |                           | $ | (0.24   | )    |  |  |  | $ | (0.16   | ) |
| Dilutedincome (loss) per commonshare:                                                                                   |  |  |                           |   |    |      |  |  |  |   |    |   |
| Income (loss) fromcontinuingoperations                                                                                  |  |  |                           | $ | (0.24   | )    |  |  |  | $ | (0.16   | ) |
| Income(loss) from discontinuedoperations                                                                                |  |  |                           |   | — |      |  |  |  |   | — |   |
| Losson sale ofproperties                                                                                                |  |  |                           |   | — |      |  |  |  |   | — |   |
| Netincome(loss)                                                                                                         |  |  |                           | $ | (0.24   | )    |  |  |  | $ | (0.16   | ) |
| Dividendsdeclared per commonshare                                                                                       |  |  |                           | $ | 0.525   |      |  |  |  | $ | 0.450   |   |
| Weightedaverage number of common sharesoutstanding:                                                                     |  |  |                           |   |    |      |  |  |  |   |    |   |
| Basic                                                                                                                   |  |  |                           |   | 69,809  |      |  |  |  |   | 59,762  |   |
| Diluted                                                                                                                 |  |  |                           |   | 69,809  |      |  |  |  |   | 59,762  |   |
|                                                                                                                         |

Theaccompanying Notes to Unaudited Condensed Consolidated FinancialStatementsare an integral part of these condensed financialstatements.

2

----

Table of Contents

GLOBAL SIGNAL INC.CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)(in thousands,except per sharedata)

|                                                                                                                           |  |  |                         |   |         |      |  |  |  |   |         |   |
|---------------------------------------------------------------------------------------------------------------------------|--|--|-------------------------|---|---------|------|--|--|--|---|---------|---|
|                                                                                                                      |  |  | SixMonths Ended June30, |
|                                                                                                                      |  |  | 2006                    |   |         | 2005 |
| Revenues                                                                                                                  |  |  |                         | $ | 243,462 |      |  |  |  | $ | 131,587 |   |
| Directsite operating expenses (excluding depreciation, amortization andaccretion)                                         |  |  |                         |   | 110,227 |      |  |  |  |   | 46,185  |   |
| Grossmargin                                                                                                               |  |  |                         |   | 133,235 |      |  |  |  |   | 85,402  |   |
| Otherexpenses:                                                                                                            |  |  |                         |   |    |      |  |  |  |   |    |   |
| Selling, generaland administrative (including $4,857 and $1,290 of non-cash stock-basedcompensation expense,respectively) |  |  |                         |   | 27,926  |      |  |  |  |   | 16,153  |   |
| Sprintsites integrationcosts                                                                                              |  |  |                         |   | 446     |      |  |  |  |   | 3,164   |   |
| Statefranchise, excise and minimumtaxes                                                                                   |  |  |                         |   | 788     |      |  |  |  |   | 332     |   |
| Depreciation,amortization andaccretion                                                                                    |  |  |                         |   | 86,920  |      |  |  |  |   | 45,804  |   |
|                                                                                                                      |  |  |                         |   | 116,080 |      |  |  |  |   | 65,453  |   |
| Operatingincome                                                                                                           |  |  |                         |   | 17,155  |      |  |  |  |   | 19,949  |   |
| Interestexpense, net                                                                                                      |  |  |                         |   | 47,062  |      |  |  |  |   | 25,739  |   |
| Gain onderivativeinstruments                                                                                              |  |  |                         |   | (176    | )    |  |  |  |   | — |   |
| Loss onearly extinguishment ofdebt                                                                                        |  |  |                         |   | 21,102  |      |  |  |  |   | 461     |   |
| Other expense(income)                                                                                                     |  |  |                         |   | 43      |      |  |  |  |   | (82     | ) |
| Income(loss) from continuing operations before income tax benefit(expense)                                                |  |  |                         |   | (50,876 | )    |  |  |  |   | (6,169  | ) |
| Incometax benefit(expense)                                                                                                |  |  |                         |   | (40     | )    |  |  |  |   | 509     |   |
| Income(loss) from continuingoperations                                                                                    |  |  |                         |   | (50,916 | )    |  |  |  |   | (5,660  | ) |
| Income(loss) from discontinuedoperations                                                                                  |  |  |                         |   | (517    | )    |  |  |  |   | 270     |   |
| Income(loss) before loss on sale ofproperties                                                                             |  |  |                         |   | (51,433 | )    |  |  |  |   | (5,390  | ) |
| Loss onsale ofproperties                                                                                                  |  |  |                         |   | (623    | )    |  |  |  |   | (138    | ) |
| Netincome(loss)                                                                                                           |  |  |                         | $ | (52,056 | )    |  |  |  | $ | (5,528  | ) |
| Basicincome (loss) per commonshare:                                                                                       |  |  |                         |   |    |      |  |  |  |   |    |   |
| Income (loss) fromcontinuingoperations                                                                                    |  |  |                         | $ | (0.73   | )    |  |  |  | $ | (0.10   | ) |
| Income(loss) from discontinuedoperations                                                                                  |  |  |                         |   | (0.01   | )    |  |  |  |   | — |   |
| Losson sale ofproperties                                                                                                  |  |  |                         |   | (0.01   | )    |  |  |  |   | — |   |
| Netincome(loss)                                                                                                           |  |  |                         | $ | (0.75   | )    |  |  |  | $ | (0.10   | ) |
| Dilutedincome (loss) per commonshare:                                                                                     |  |  |                         |   |    |      |  |  |  |   |    |   |
| Income (loss) fromcontinuingoperations                                                                                    |  |  |                         | $ | (0.73   | )    |  |  |  | $ | (0.10   | ) |
| Income(loss) from discontinuedoperations                                                                                  |  |  |                         |   | (0.01   | )    |  |  |  |   | — |   |
| Losson sale ofproperties                                                                                                  |  |  |                         |   | (0.01   | )    |  |  |  |   | — |   |
| Netincome(loss)                                                                                                           |  |  |                         | $ | (0.75   | )    |  |  |  | $ | (0.10   | ) |
| Dividendsdeclared per commonshare                                                                                         |  |  |                         | $ | 1.050   |      |  |  |  | $ | 0.850   |   |
| Weightedaverage number of common sharesoutstanding:                                                                       |  |  |                         |   |    |      |  |  |  |   |    |   |
| Basic                                                                                                                     |  |  |                         |   | 69,595  |      |  |  |  |   | 55,914  |   |
| Diluted                                                                                                                   |  |  |                         |   | 69,595  |      |  |  |  |   | 55,914  |   |
|                                                                                                                           |

Theaccompanying Notes to Unaudited Condensed Consolidated FinancialStatementsare an integral part of these condensed financialstatements.

3

----

Table of Contents

GLOBAL SIGNALINC.CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'EQUITY(in thousands, except sharedata)(unaudited)

|                                                                                        |  |  |             |  |            |                          |  |  |               |   |         |                                 |  |  |                   |   |         |                                     |  |  |                    |   |         |                     |  |  |        |   |         |   |  |  |  |   |         |   |  |  |  |   |        |   |  |  |  |   |         |   |  |  |  |   |         |   |
|----------------------------------------------------------------------------------------|--|--|-------------|--|------------|--------------------------|--|--|---------------|---|---------|---------------------------------|--|--|-------------------|---|---------|-------------------------------------|--|--|--------------------|---|---------|---------------------|--|--|--------|---|---------|---|--|--|--|---|---------|---|--|--|--|---|--------|---|--|--|--|---|---------|---|--|--|--|---|---------|---|
|                                                                                   |  |  | CommonStock |  |            | AdditionalPaid-InCapital |  |  | TreasuryStock |   |         | DeferredStock-BasedCompensation |  |  | ComprehensiveLoss |   |         | AccumulatedOtherComprehensiveIncome |  |  | AccumulatedDeficit |   |         | Stockholders'Equity |
|                                                                                   |  |  | Shares      |  |            | Amount                   |  |  |          |   |         |                            |  |  |              |   |         |                                |  |  |               |   |         |                |  |  |   |
| Balanceat December  31,2005                                                            |  |  |             |  | 68,608,725 |                          |  |  |               | $ | 686     |                                 |  |  |                   | $ | 476,388 |                                     |  |  |                    | $ | — |                     |  |  |        | $ | (1,055  | ) |  |  |  |   |    |   |  |  |  | $ | 20,800 |   |  |  |  | $ | (43,630 | ) |  |  |  | $ | 453,189 |   |
| Comprehensiveloss:                                                                     |  |  |             |  |       |                          |  |  |               |   |    |                                 |  |  |                   |   |    |                                     |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  |   |    |   |  |  |  |   |   |   |  |  |  |   |    |   |  |  |  |   |    |   |
| Netloss                                                                                |  |  |             |  |       |                          |  |  |               |   |    |                                 |  |  |                   |   |    |                                     |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  | $ | (52,056 | ) |  |  |  |   |   |   |  |  |  |   | (52,056 | ) |  |  |  |   | (52,056 | ) |
| Foreigncurrency translation adjustment                                                 |  |  |             |  |       |                          |  |  |               |   |    |                                 |  |  |                   |   |    |                                     |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  |   | 430     |   |  |  |  |   | 430    |   |  |  |  |   |    |   |  |  |  |   | 430     |   |
| Changein fair value of derivative financial instruments, net of applicableincome taxes |  |  |             |  |       |                          |  |  |               |   |    |                                 |  |  |                   |   |    |                                     |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  |   | 8,450   |   |  |  |  |   | 8,450  |   |  |  |  |   |    |   |  |  |  |   | 8,450   |   |
| Amortizationof accumulated comprehensiveincome                                         |  |  |             |  |       |                          |  |  |               |   |    |                                 |  |  |                   |   |    |                                     |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  |   | (2,258  | ) |  |  |  |   | (2,258 | ) |  |  |  |   |    |   |  |  |  |   | (2,258  | ) |
| Write-offof other comprehensive income due torefinancing                               |  |  |             |  |       |                          |  |  |               |   |    |                                 |  |  |                   |   |    |                                     |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  |   | 3,408   |   |  |  |  |   | 3,408  |   |  |  |  |   |    |   |  |  |  |   | 3,408   |   |
| Total comprehensiveloss                                                                |  |  |             |  |       |                          |  |  |               |   |    |                                 |  |  |                   |   |    |                                     |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  | $ | (42,026 | ) |  |  |  |   |   |   |  |  |  |   |    |   |  |  |  |   |    |   |
| Issuanceof commonstock:                                                                |  |  |             |  |       |                          |  |  |               |   |    |                                 |  |  |                   |   |    |                                     |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  |   |    |   |  |  |  |   |   |   |  |  |  |   |    |   |  |  |  |   |    |   |
| Warrantsexercised                                                                      |  |  |             |  | 21,676     |                          |  |  |               |   | — |                                 |  |  |                   |   | 183     |                                     |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  |   |    |   |  |  |  |   |   |   |  |  |  |   |    |   |  |  |  |   | 183     |   |
| Optionsexercised                                                                       |  |  |             |  | 1,230,744  |                          |  |  |               |   | 13      |                                 |  |  |                   |   | 4,637   |                                     |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  |   |    |   |  |  |  |   |   |   |  |  |  |   |    |   |  |  |  |   | 4,650   |   |
| Sharesissued to directors andexecutives                                                |  |  |             |  | 84,000     |                          |  |  |               |   | 1       |                                 |  |  |                   |   | 4,110   |                                     |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  |   |    |   |  |  |  |   |   |   |  |  |  |   |    |   |  |  |  |   | 4,111   |   |
| Restrictedsharesissued                                                                 |  |  |             |  | 349,488    |                          |  |  |               |   | 3       |                                 |  |  |                   |   | (3      | )                                   |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  |   |    |   |  |  |  |   |   |   |  |  |  |   |    |   |  |  |  |   | — |   |
| Restrictedshares forfeited                                                             |  |  |             |  | (58,540    | )                        |  |  |               |   | (1      | )                               |  |  |                   |   | (445    | )                                   |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  |   |    |   |  |  |  |   |   |   |  |  |  |   |    |   |  |  |  |   | (446    | ) |
| Purchaseof treasurystock                                                               |  |  |             |  | (29,327    | )                        |  |  |               |   |    |                                 |  |  |                   |   |    |                                     |  |  |                    |   | (1,463  | )                   |  |  |        |   |    |   |  |  |  |   |    |   |  |  |  |   |   |   |  |  |  |   |    |   |  |  |  |   | (1,463  | ) |
| Dividends                                                                              |  |  |             |  |       |                          |  |  |               |   |    |                                 |  |  |                   |   | (73,921 | )                                   |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  |   |    |   |  |  |  |   |   |   |  |  |  |   |    |   |  |  |  |   | (73,921 | ) |
| Stock-basedcompensation                                                                |  |  |             |  |       |                          |  |  |               |   |    |                                 |  |  |                   |   | 1,192   |                                     |  |  |                    |   |    |                     |  |  |        |   |    |   |  |  |  |   |    |   |  |  |  |   |   |   |  |  |  |   |    |   |  |  |  |   | 1,192   |   |
| Transferof deferred stock-based compensation to additional paid-incapital              |  |  |             |  |       |                          |  |  |               |   |    |                                 |  |  |                   |   | (1,055  | )                                   |  |  |                    |   |    |                     |  |  |        |   | 1,055   |   |  |  |  |   |    |   |  |  |  |   |   |   |  |  |  |   |    |   |  |  |  |   | — |   |
| Balanceat June  30,2006                                                                |  |  |             |  | 70,206,766 |                          |  |  |               | $ | 702     |                                 |  |  |                   | $ | 411,086 |                                     |  |  |                    | $ | (1,463  | )                   |  |  |        | $ | — |   |  |  |  |   |    |   |  |  |  | $ | 30,830 |   |  |  |  | $ | (95,686 | ) |  |  |  | $ | 345,469 |   |
|                                                                                        |

Theaccompanying Notes to Unaudited Condensed Consolidated FinancialStatements are an integral part of these condensedfinancialstatements.

4

----

Table of Contents

GLOBAL SIGNALINC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)(in thousands, except per sharedata)

|                                                                                                              |  |  |                         |   |            |             |  |  |  |   |            |   |
|--------------------------------------------------------------------------------------------------------------|--|--|-------------------------|---|------------|-------------|--|--|--|---|------------|---|
|                                                                                                         |  |  | SixMonths Ended June30, |
|                                                                                                         |  |  | 2006                    |   |            | 2005        |
|                                                                                                         |  |  |                    |   |            | (Revised)   |
|                                                                                                         |  |  |                    |   |            | (seeNote 2) |
| Cash flows from operatingactivities:                                                                         |  |  |                         |   |       |             |  |  |  |   |       |   |
| Netloss                                                                                                      |  |  |                         | $ | (52,056    | )           |  |  |  | $ | (5,528     | ) |
| Adjustmentsto reconcile net loss to net cash provided by operatingactivities:                                |  |  |                         |   |       |             |  |  |  |   |       |   |
| Depreciation,amortization andaccretion                                                                       |  |  |                         |   | 86,920     |             |  |  |  |   | 45,804     |   |
| Amortizationof deferred debt issuance costs and other accumulated comprehensiveincome                        |  |  |                         |   | 522        |             |  |  |  |   | 3,734      |   |
| Loss on earlyextinguishment ofdebt                                                                           |  |  |                         |   | 21,102     |             |  |  |  |   | 461        |   |
| Non-cashstock-based compensationexpense                                                                      |  |  |                         |   | 4,857      |             |  |  |  |   | 1,290      |   |
| Netof effects from otheradjustments:                                                                         |  |  |                         |   |       |             |  |  |  |   |       |   |
| Continuingoperations                                                                                         |  |  |                         |   | 1,018      |             |  |  |  |   | (932       | ) |
| Discontinuedoperations                                                                                       |  |  |                         |   | 190        |             |  |  |  |   | 213        |   |
| Increase inassets                                                                                            |  |  |                         |   | (21,923    | )           |  |  |  |   | (14,053    | ) |
| Increaseinliabilities                                                                                        |  |  |                         |   | 20,691     |             |  |  |  |   | 7,764      |   |
| Netcash provided by operatingactivities                                                                      |  |  |                         |   | 61,321     |             |  |  |  |   | 38,753     |   |
| Cashflows from investingactivities:                                                                          |  |  |                         |   |       |             |  |  |  |   |       |   |
| Payments made inconnection with acquisitions of communication sites andland                                  |  |  |                         |   | (45,368    | )           |  |  |  |   | (1,345,689 | ) |
| Capitalexpenditures                                                                                          |  |  |                         |   | (10,172    | )           |  |  |  |   | (5,591     | ) |
| Proceedsfrom the sale of fixedassets:                                                                        |  |  |                         |   |       |             |  |  |  |   |       |   |
| Continuingoperations                                                                                         |  |  |                         |   | 282        |             |  |  |  |   | 2,252      |   |
| Discontinuedoperations                                                                                       |  |  |                         |   | 54         |             |  |  |  |   | —    |   |
| Fundsprovided by (invested in) restrictedcash                                                                |  |  |                         |   | (8,481     | )           |  |  |  |   | 54,606     |   |
| Netcash used in investingactivities                                                                          |  |  |                         |   | (63,685    | )           |  |  |  |   | (1,294,422 | ) |
| Cashflows from financingactivities:                                                                          |  |  |                         |   |       |             |  |  |  |   |       |   |
| Borrowings undernotes payable and long-termdebt                                                              |  |  |                         |   | 1,557,050  |             |  |  |  |   | 1,018,631  |   |
| Repaymentof notes payable and long-termdebt                                                                  |  |  |                         |   | (1,413,153 | )           |  |  |  |   | (97,965    | ) |
| Payment ofdebt issuancecosts                                                                                 |  |  |                         |   | (12,524    | )           |  |  |  |   | (5,841     | ) |
| Paymentreceived to terminate interest rateswaps                                                              |  |  |                         |   | 33,759     |             |  |  |  |   | —    |   |
| Ordinarydividendspaid                                                                                        |  |  |                         |   | (71,366    | )           |  |  |  |   | (41,754    | ) |
| Proceeds fromthe issuance of commonstock                                                                     |  |  |                         |   | 3,374      |             |  |  |  |   | 437,257    |   |
| Netcash provided by financingactivities                                                                      |  |  |                         |   | 97,140     |             |  |  |  |   | 1,310,328  |   |
| Effectof exchange rate changes oncash                                                                        |  |  |                         |   | (498       | )           |  |  |  |   | 492        |   |
| Netincrease in cash and cashequivalents                                                                      |  |  |                         |   | 94,278     |             |  |  |  |   | 55,151     |   |
| Cash andcash equivalents, beginning ofperiod                                                                 |  |  |                         |   | 47,793     |             |  |  |  |   | 5,991      |   |
| Cashand cash equivalents, end ofperiod                                                                       |  |  |                         | $ | 142,071    |             |  |  |  | $ | 61,142     |   |
| Non-cashinvesting and financingtransactions:                                                                 |  |  |                         |   |       |             |  |  |  |   |       |   |
| Increase(decrease) in the fair value of interest rate swaps recorded toaccumulated other comprehensiveincome |  |  |                         | $ | 8,450      |             |  |  |  | $ | (12,189    | ) |
| Assetsacquired under a capital leaseobligation                                                               |  |  |                         | $ | —    |             |  |  |  | $ | 243        |   |
|                                                                                                              |

Theaccompanying Notes to Unaudited Condensed Consolidated FinancialStatements are an integral part of these condensed financialstatements.

5

----

Table of Contents

NOTES TO UNAUDITEDCONDENSED CONSOLIDATED FINANCIAL STATEMENTS

|          |                   |
|----------|-------------------|
| 1.  | Nature ofBusiness |

The accompanying unaudited condensed consolidatedfinancial statements reflect the financial position, results ofoperations and cash flows of Global Signal Inc. and its wholly ownedsubsidiaries. Global Signal Inc. owns, leases and managescommunications towers and other communications sites and leases spaceon them to providers of communications and broadcast services, such aswireless telephony, paging, mobile radio, wireless data transmission,radio and television broadcasting, and to operators of private networkssuch as federal, state and local government agencies. For the three andsix months ended June  30,  2006, Sprint Corporationcomprised 38.3% and 38.4%, respectively, and CingularWireless comprised 15.7% and 15.6%, respectively, of oursite revenues.

As used herein, unless the context otherwiserequires, ‘‘we,’’‘‘us,’’‘‘our,’’‘‘Company,’’ or ‘‘GlobalSignal’’ refers to Global Signal Inc. and its whollyowned consolidated subsidiaries. All significant intercompany balancesand transactions have been eliminated.‘‘Fortress’’ refers to Fortress InvestmentHoldings LLC and certain of its affiliates,‘‘Greenhill’’ refers to Greenhill CapitalPartners, L.P. and affiliated investment funds, and‘‘Abrams’’ refers to Abrams Capital, LLCand certain of its affiliates. Since November  1,  2002,Fortress has been our largest stockholder, Greenhill has been oursecond largest stockholder and Abrams has been our third largeststockholder.

On May  11,  2004, we completed ourformation of an UPREIT structure whereby we own substantially all ofour assets and conduct our operations through an operating partnership,Global Signal Operating Partnership, L.P. (‘‘GlobalSignal OP’’). Global Signal Inc. is the special limitedpartner of Global Signal OP. Global Signal GP LLC, our wholly ownedsubsidiary, is the managing general partner and, as such, has the powerto manage and conduct the business of Global Signal OP. Global SignalInc. holds 99% of the partnership interests and Global Signal GPLLC holds 1% of the partnership interests in Global Signal OP.The partnership agreement of Global Signal OP provides that it shalldistribute cash flows from its operations to its limited partners andthe managing general partner in accordance with their relativepercentage interests. The distributions that we receive from GlobalSignal OP are, among other things, used to make dividend distributionsto our stockholders.

Results of operations for any interim periodare not necessarily indicative of results of any other periods or forthe year. The accompanying unaudited condensed consolidated financialstatements have been prepared in conformity with generally acceptedaccounting principles in the United States for interim financialstatements and with the instructions to Form 10-Q and Rule 10-01 ofRegulation S-X. They do not include all information and notes requiredby U.S. generally accepted accounting principles for complete financialstatements. In the opinion of management, all adjustments (consistingof normal recurring adjustments) considered necessary for fairpresentation have been included. Certain amounts from the prior yearperiod have been reclassified for consistency with currentpresentation. These reclassifications were not material to thecondensed consolidated financial statements. These unaudited condensedconsolidated financial statements should be read in conjunction withGlobal Signal’s audited consolidated financial statements andnotes thereto for the year ended December  31,  2005,included in Global Signal’s Annual Report on Form 10-K for theyear ended December  31,  2005, filed with the Securitiesand Exchange Commission on March  16,2006.

|          |                                           |
|----------|-------------------------------------------|
| 2.  | Summary of Significant AccountingPolicies |

The financial statements have been prepared inaccordance with U.S. generally accepted accounting principles. Theprincipal accounting policies are set forth below:

Use ofEstimates

The preparation of financial statements in conformitywith generally accepted accounting principles in the United Statesrequires management to make estimates and assumptions that affect theamounts reported in the unaudited condensed consolidated financialstatements and accompanying notes. Actual results may differ from thoseestimates and such differences could be material.

6

----

Table of Contents

Stock-Based Compensation

EffectiveJanuary  1,  2006, we adopted Statement of FinancialAccounting Standard (‘‘SFAS’’) No. 123(R)Share-Based-Payments, using the modified prospective transitionmethod to account for our employee stock options. Under that transitionmethod, compensation costs for the portion of awards for which therequisite service had not yet been rendered, and that were outstandingas of the adoption date, will be recognized as the service is renderedbased on the grant date fair value of those awards calculated underSFAS No. 123. Prior period results are not restated. The adoption ofSFAS No. 123(R) had no impact on net income or earnings per share. Inconnection with the adoption of SFAS No. 123(R), we reclassified$1.1  million of deferred stock-based compensation expense, whichrelates entirely to unvested restricted stock, to additional paid-incapital as of January  1,  2006. See Note 7 for disclosuresrelated to stock-based compensation.

New AccountingPronouncements

Effective January  1,  2006, weadopted Financial Accounting Standards Board(‘‘FASB’’) Interpretation No. 47(‘‘FIN 47’’), Accounting for ConditionalAsset Retirement Obligations. This interpretation clarifies thatthe term ‘‘conditional asset retirementobligation’’ as used in SFAS No. 143, Accounting forAsset Retirement Obligations, refers to a legal obligation toperform an asset retirement activity in which the timing and (or)method of settlement are conditional on a future event that may or maynot be within the control of the entity. The obligation isunconditional even though uncertainty exists about the timing and (or)method of settlement. Our asset retirement obligations are within ourcontrol as to timing and method as they relate to the removal of ourcommunications towers from leased land; therefore the adoption of thisinterpretation did not impact our financial statements.

EffectiveJanuary  1,  2006, we adopted FASB Staff Position 13-1,Accounting for Rental Costs Incurred during a Construction Period.This staff position concludes that rental costs associated withground or building operating leases that are incurred during aconstruction period should be recognized as rental expense. We hadalready accounted for such rental costs in the manner prescribed by thestaff position, so this staff position did not impact our financialstatements.

In June  2006, the FASB issued InterpretationNo. 48 (‘‘FIN 48’’), Accounting forUncertainty in Income Taxes. This interpretation clarifies theaccounting for uncertainty in income taxes recognized in anenterprise’s financial statements in accordance with SFAS No.109, Accounting for Income Taxes. This interpretation prescribesa recognition threshold and measurement attribute for the financialstatement recognition and measurement of a tax position taken orexpected to be taken in a tax return. This interpretation also providesguidance on derecognition, classification, interest and penalties,accounting in interim periods, disclosure and transition. This standardmust be adopted as of January  1,  2007. We anticipate thatthis standard will have an immaterial effect on our financialstatements due to the fact that as a REIT our income taxes areimmaterial.

Reclassifications and Revisions

For the firsthalf of 2006, we have separately disclosed the operating, investing andfinancing portions of the cash flows attributed to discontinuedoperations, which in the prior period were not separately reported.Certain amounts from the prior year have been reclassified forconsistency with current year presentation. All other reclassificationsrelate to discontinued operations. These reclassifications andrevisions were not material to the consolidated financialstatements.

|          |                         |
|----------|-------------------------|
| 3.  | Discontinued Operations |

As a partof our ongoing operational reviews, we make decisions to divestunder-performing towers or other communications sites, including threeand 22 tower sites in the three and six months ended June30,  2006, and 42 tower sites in the three and six months endedJune  30,  2005. At June  30,  2006, we had 113tower sites that are being marketed for sale. Of these 113 sites, 108are included in continuing operations and classified as held for use,and five are included in discontinued operations and classified as heldfor sale, respectively.

7

----

Table of Contents

In accordance with SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets,we classified the operating results of the five sites held for sale indiscontinued operations and other previously terminated sites asdiscontinued operations in the accompanying condensed consolidatedfinancial statements as of June  30,  2006 and all priorperiods have been reclassified to conform to the currentquarter’s presentation with respect to these sites.

Assets held for sale of $0.1  million and $0.8  millionare included in fixed assets, net in the condensed consolidated balancesheets as of June  30,  2006 and December  31,2005, respectively.

Results of operations for these discontinuedsites for the three and six months ended June  30,  2006and 2005 are as follows (inthousands):

|                                                     |  |  |                            |   |         |                          |  |  |             |   |         |             |  |  |  |   |        |   |  |  |  |   |         |   |
|-----------------------------------------------------|--|--|----------------------------|---|---------|--------------------------|--|--|-------------|---|---------|-------------|--|--|--|---|--------|---|--|--|--|---|---------|---|
|                                                |  |  | ThreeMonths Ended June 30, |   |         | Six Months Ended June30, |
|                                                |  |  | 2006                       |   |         | 2005                     |  |  | 2006        |   |         | 2005        |
|                                                |  |  | (unaudited)                |   |         | (unaudited)              |  |  | (unaudited) |   |         | (unaudited) |
| Revenues                                            |  |  |                            | $ | 250     |                          |  |  |             | $ | 741     |             |  |  |  | $ | 727    |   |  |  |  | $ | 1,426   |   |
| Directoperatingexpenses                             |  |  |                            |   | (405    | )                        |  |  |             |   | (718    | )           |  |  |  |   | (1,028 | ) |  |  |  |   | (1,505  | ) |
| Resultsofoperations                                 |  |  |                            |   | (155    | )                        |  |  |             |   | 23      |             |  |  |  |   | (301   | ) |  |  |  |   | (79     | ) |
| Losson impariment ofassets                          |  |  |                            |   | — |                          |  |  |             |   | — |             |  |  |  |   | (33    | ) |  |  |  |   | — |   |
| Gain(loss) recognized on assets ofdiscontinuedsites |  |  |                            |   | (18     | )                        |  |  |             |   | 354     |             |  |  |  |   | (183   | ) |  |  |  |   | 349     |   |
| Income(loss) from discontinuedoperations            |  |  |                            | $ | (173    | )                        |  |  |             | $ | 377     |             |  |  |  | $ | (517   | ) |  |  |  | $ | 270     |   |
|                                                     |

8

----

Table of Contents

|          |      |
|----------|------|
| 4.  | Debt |

Our outstanding debtas of June  30,  2006 and December  31,  2005consists of the following (inthousands):

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |             |   |           |                 |  |  |  |   |           |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|-------------|---|-----------|-----------------|--|--|--|---|-----------|---|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  | June30,2006 |   |           | December31,2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  | (unaudited) |   |           |            |
| February2004 mortgage loan, weighted average interest rate of approximately5.0%, secured by first priority mortgage liens on substantiallyall tangible assets of Pinnacle Towers LLC and its subsidiaries,monthly principal and interest installments of approximately$2.4  million beginning March  2004. Contractual maturitydate of January  2029, anticipated maturity date ofJanuary  2009 (repaid in full with a portion of the net proceedsfrom the February  2006 mortgageloan) |  |  |             | $ | —   |                 |  |  |  | $ | 404,087   |   |
| December2004 mortgage loan, weighted average interest rate of approximately4.7%, secured by first priority mortgage liens on substantiallyall tangible assets of Pinnacle Towers Acquisition LLC and itssubsidiaries, monthly interest-only installments beginningJanuary  2005, contractual maturity date of December2009                                                                                                                                                              |  |  |             |   | 293,825   |                 |  |  |  |   | 293,825   |   |
| February2006 mortgage loan, weighted average interest rate of approximately5.7%, secured by first priority mortgage liens on substantiallyall tangible assets of Pinnacle Towers LLC, Global Signal AcquisitionsLLC (‘‘GSA’’) and Global SignalAcquisitions II LLC (‘‘GSA II’’), monthlyinterest-only installments beginning March  2006, contractualmaturity date of February2011                                                      |  |  |             |   | 1,550,000 |                 |  |  |  |   | —   |   |
| Bridgeloan, interest at LIBOR plus 1.50% (5.8% atDecember  31,  2005), secured by our ownership interests inGSA II, and in GSA II’s leasehold and subleasehold interests inthe Sprint Towers, and an assignment of leases and rent. Interestinstallments due monthly and a contractual maturity date of May25,  2006, before extension options (repaid in full with aportion of the net proceeds from the February  2006 mortgageloan)                                            |  |  |             |   | —   |                 |  |  |  |   | 850,000   |   |
| $200.0million acquisition credit facility, interest at LIBOR plus 2.0%(6.4% at December  31,  2005), secured by theacquired tower assets through a pledge of Global Signal OP’sequity interest in GSA. Interest installments due monthly and acontractual maturity date of April  24,  2006 (repaid infull with a portion of the net proceeds from the February  2006mortgage loan.)                                                                                              |  |  |             |   | —   |                 |  |  |  |   | 144,725   |   |
| Capitallease obligations, interest rate fixed at a weighted average rate of9.5%, secured by the underlying capital assets, with monthlyprincipal installments beginning April  2004 and continuingthrough July2010                                                                                                                                                                                                                                                                      |  |  |             |   | 673       |                 |  |  |  |   | 959       |   |
| Revolvingcredit facility interest at a variable rate of LIBOR plus 3.0%or the lender’s base rate plus 2.0%, secured by a pledgeof Global Signal OP’s assets, maturity date of December2006                                                                                                                                                                                                                                                                                  |  |  |             |   | —   |                 |  |  |  |   | —   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |             |   | 1,844,498 |                 |  |  |  |   | 1,693,596 |   |
| Less:Current portion of long-termdebt                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |             |   | (496      | )               |  |  |  |   | (538      | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |             | $ | 1,844,002 |                 |  |  |  | $ | 1,693,058 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

9

----

Table of Contents

As noted in the table above, theFebruary  2004 mortgage loan, the bridge loan and the$200.0  million acquisition credit facility were repaid in fullwith a portion of the net proceeds from the February  2006mortgage loan described below. In accordance with SFAS No. 6Classification of Short-Term Obligations Expected to beRefinanced, we reclassified the current portion of debt atDecember  31,  2005 under these three loans tolong-term.

The following table shows the maturities of long-termdebt for the five twelve month periods after June  30,2006 (inthousands):

|                                     |  |  |  |   |           |  |
|-------------------------------------|--|--|--|---|-----------|--|
| Forthe twelve months ending June30, |  |  |  |   |      |  |
| 2007                                |  |  |  | $ | 496       |  |
| 2008                                |  |  |  |   | 140       |  |
| 2009                                |  |  |  |   | 18        |  |
| 2010                                |  |  |  |   | 293,844   |  |
| 2011                                |  |  |  |   | 1,550,000 |  |
|                                |  |  |  | $ | 1,844,498 |  |
|                                     |

TheFebruary  2006 Mortgage Loan

On February28,  2006, three of our wholly owned special purpose entities,Global Signal Acquisitions II LLC, Global Signal Acquisitions LLC andPinnacle Towers LLC (and its 13 subsidiaries), borrowed a total of$1.55  billion under a mortgage loan made payable to a newlyformed trust, Global Signal Trust III (‘‘February 2006mortgage loan’’), that issued $1.55  billion infixed-rate commercial mortgage pass-through certificates to providefixed-rate financing for the assets leased in May  2005 fromSprint Corporation (the ‘‘Sprint Towers’’),the communications sites originally financed with the February2004 mortgage loan, and for other communications sites acquired fromApril  2005 to January  2006. We have continued toconsolidate our subsidiaries, but have not consolidated Global SignalTrust III in our financial statements. The proceeds of theFebruary  2006 mortgage loan were used to repay the $850.0million bridge loan, to repay $402.7  million (the totalthen-outstanding borrowings under the February  2004 mortgageloan), to repay $151.8  million (the total then-outstandingborrowings under the acquisition credit facility) and to provide$145.5  million of funds for working capital and generalcorporate purposes, including payment of fees and expenses of theoffering and potential future acquisitions. The borrowers and theirdirect parent, Global Signal Holdings V LLC, are separate legalentities from Global Signal Inc., with their own assets, which are notavailable to satisfy the debts and other obligations of Global SignalInc. or any of its other affiliates.

The principal amount of theFebruary  2006 mortgage loan is divided into seven tranches, eachhaving a different level of seniority. Interest accrues on theFebruary  2006 mortgage loan at a weighted average interest rateof approximately 5.7%. The effective interest rate on theFebruary  2006 mortgage loan, including the benefit fromterminating the 2005 interest rate swaps which qualified for hedgeaccounting and the amortization of deferred debt issuance costs, isapproximately 5.5%. The February  2006 mortgage loanrequires monthly payments of interest until its repayment date inFebruary  2011. The February  2006 mortgage loan is securedby, among other things, (1) mortgage liens on the borrowers’interests (fee, leasehold or easement) in over 80% of theircommunications sites, (2) a security interest in substantially all ofthe borrowers’ personal property and fixtures and (3)  apledge of the capital stock (or equivalent equity interests) of each ofthe borrowers (including a pledge of the capital stock of PinnacleTowers LLC, Global Signal Acquisitions LLC and Global SignalAcquisitions II LLC from its direct parent, Global Signal Holdings VLLC).

On a monthly basis, the excess cash flows from thesecuritized entities, after the payment of principal, interest,reserves and expenses, are distributed to us. If the debt servicecoverage ratio (‘‘DSCR’’), defined in theFebruary  2006 mortgage loan as the net cash flow for the sitesfor the immediately preceding twelve calendar month period divided bythe amount of interest that we will be required to pay over thesucceeding twelve months on the February  2006 mortgage loan, asof the end of any calendar quarter falls to 1.35 times or lower, thenall excess cash flow will be deposited into a reserve account insteadof being released to us. The funds in the reserve account will not bereleased to us until the DSCR exceeds 1.35 times for two consecutivecalendar quarters. If the DSCR falls below 1.20 times as of the end ofany 

10

----

Table of Contents

calendar quarter, then all funds on depositin the reserve account along with future excess cash flows will beapplied to prepay the February  2006 mortgage loan withapplicable prepayment penalties.

We may not prepay theFebruary  2006 mortgage loan in whole or in part at any timeprior to February  28,  2008, the second anniversary of theclosing date, except in limited circumstances (such as the occurrenceof certain casualty and condemnation events relating to thecommunications sites securing the February  2006 mortgage loan).Thereafter, prepayment is permitted provided it is accompanied by anyapplicable prepayment consideration. If the prepayment occurs withinthree months of the February  2011 monthly payment date, noprepayment consideration is due.

The February  2006mortgage loan documents include covenants customary for mortgage loanssubject to rated securitizations. Among other things, the borrowers areprohibited from incurring additional indebtedness or furtherencumbering their assets.

The December  2004 MortgageLoan

On December  7,  2004, our subsidiary PinnacleTowers Acquisition Holdings LLC and five of its direct and indirectsubsidiaries issued a $293.8  million mortgage loan to a newlyformed trust, Global Signal Trust II (the ‘‘December 2004mortgage loan’’). Global Signal Trust II(‘‘Trust II’’) then issued an identicalamount of commercial mortgage pass-through certificates in a privatetransaction. We have continued to consolidate our subsidiaries, buthave not consolidated Trust II in our financial statements. The netproceeds of the December  2004 mortgage loan were used primarilyto repay the $181.7  million of then-outstanding borrowings underour credit facility and to partially fund a $120.7  million siteacquisition reserve account which was used to acquire additionalqualifying wireless communications sites over the six-month periodfollowing the December  2004 closing. The borrowers and theirdirect parent, Global Signal Holdings III LLC, are separate legalentities from Global Signal Inc., with their own assets, which are notavailable to satisfy the debts and other obligations of Global SignalInc. or any of its other affiliates.

The principal amount of theDecember  2004 mortgage loan is divided into seven tranches, eachhaving a different level of seniority. Interest accrues on each trancheat a fixed rate per annum. The weighted average interest rate on thevarious tranches is approximately 4.7%. The December  2004mortgage loan requires monthly payments of interest until its maturityin December  2009 when the unpaid principal balance will be due.The December  2004 mortgage loan is secured by, among otherthings, (1) mortgage liens on the borrowers’ interests (fee,leasehold or easement) in substantially all of their wirelesscommunications sites, (2) a security interest in substantially all ofthe borrowers’ personal property and fixtures and (3) a pledgeof the capital stock (or equivalent equity interests) of each of theborrowers (including a pledge of the capital stock of Pinnacle TowersAcquisition Holdings LLC from its direct parent, Global Signal HoldingsIII LLC).

On a monthly basis, the excess cash flows from thesecuritized entities, after the payment of principal, interest,reserves and expenses, are distributed to us. If the debt servicecoverage ratio (‘‘DSCR’’), defined in theDecember  2004 mortgage loan as the net cash flow for the sitesfor the immediately preceding twelve calendar month period divided bythe amount of principal and interest that we will be required to payover the succeeding twelve months on the December  2004 mortgageloan, as of the end of any calendar quarter falls to 1.30 times orlower, then all excess cash flow will be deposited into a reserveaccount instead of being released to us. The funds in the reserveaccount will not be released to us until the DSCR exceeds 1.30 timesfor two consecutive calendar quarters. If the DSCR falls below 1.15times as of the end of any calendar quarter, then all funds on depositin the reserve account along with future excess cash flows will beapplied to prepay the December  2004 mortgage loan.

We maynot prepay the December  2004 mortgage loan in whole or in partat any time prior to December  7,  2006, the secondanniversary of the closing date, except in limited circumstances (suchas the occurrence of certain casualty and condemnation events relatingto the communications sites securing the December  2004 mortgageloan). Thereafter, prepayment is permitted provided it is accompaniedby any applicable prepayment consideration. If the prepayment occurswithin three months of the December  2009 monthly payment date,no prepayment consideration is due.

11

----

Table of Contents

The December  2004 mortgage loandocuments include covenants customary for mortgage loans subject torated securitizations. Among other things, the borrowers are prohibitedfrom incurring additional indebtedness or further encumbering theirassets.

The February  2004 Mortgage Loan

OnFebruary  5,  2004, one of our subsidiaries, PinnacleTowers LLC and thirteen of its direct and indirect subsidiaries, issueda $418.0  million mortgage loan to a newly formed trust, GlobalSignal Trust I (‘‘February 2004 mortgageloan’’). On February  28,  2006, a portion ofthe net proceeds from the February  2006 mortgage loan was usedto repay the February  2004 mortgage loan in full. A prepaymentpenalty of $7.0  million was paid and recognized in the firstquarter of 2006 as loss on early extinguishment of debt. In addition,unamortized deferred debt issuance costs of $9.5  million andaccumulated other comprehensive loss of $3.4  million related tothe elimination of the portion for interest rate swaps related to theFebruary  2004 mortgage loan (see Note 5), respectively, wereexpensed in the first quarter of 2006 as loss on early extinguishmentof debt.

Sprint Bridge Financing

At the closing of theSprint Transaction in May 2005, we executed the $850.0  millionbridge loan financing with Morgan Stanley Asset Funding Inc. and Bankof America, N.A. The borrower was a newly created entity, Global SignalAcquisitions II LLC, under our indirect control, which owned100% of our interest in the Sprint Towers. On February28,  2006, a portion of the net proceeds from the February2006 mortgage loan was used to repay the Sprint bridge loan in full.Unamortized deferred debt issuance costs of $1.0  million relatedto the Sprint bridge loan were expensed in the first quarter of 2006 asloss on early extinguishment of debt.

Acquisition CreditFacility

On April  25,  2005, our wholly ownedsubsidiary, GSA, entered into a 364-day $200.0  million creditfacility, which we refer to as the acquisition credit facility, withMorgan Stanley Asset Funding Inc. and Bank of America, N.A. to providefunding for the acquisition of additional communications sites. OnFebruary  28,  2006, a portion of the net proceeds from theFebruary  2006 mortgage loan was used to repay in full andterminate the acquisition credit facility. Unamortized deferred debtissuance costs of $0.2  million related to the acquisition creditfacility were expensed in the first quarter of 2006 as loss on earlyextinguishment of debt.

Revolving Credit Agreement

OnDecember  1,  2005, Global Signal OP entered into a 364-day$15.0  million revolving credit facility pursuant to a revolvingcredit agreement, which we refer to as the revolving credit agreement,with Morgan Stanley Asset Funding Inc. and Bank of America, N.A. toprovide funding for working capital and other corporate purposes.

At June  30,  2006 and December  31,  2005,there were no balances outstanding under the revolving credit facility.Interest on the $15.0  million revolving credit facility ispayable, at Global Signal OP’s option, at either LIBOR plus3.0% or the bank’s base rate plus 2.0%. Interestis payable at the end of the interest period or at the time ofprincipal repayments. Principal on the revolving credit facility may bepaid, in whole or in part, at any time and must be repaid by the loanmaturity date, December  1,  2006.

The revolvingcredit agreement and the related ancillary documentation containcovenants and restrictions customary for a facility of this type,including a limitation on our consolidated indebtedness atapproximately $1.875  billion and a requirement to limit ourratio of consolidated indebtedness to consolidated EBITDA, as definedin the loan document, to a ratio of 7.65 to 1.0. The revolving creditagreement is guaranteed by us, Global Signal GP, LLC and certainsubsidiaries of Global Signal OP. It is secured by a pledge of GlobalSignal OP’s assets, including a pledge of 65% of itsinterest in our United Kingdom subsidiary, 100% of its interestin certain other domestic subsidiaries, a pledge by us and GlobalSignal GP, LLC of our interests in Global Signal OP, and a pledge by usof 65% of our interest in our Canadiansubsidiary.

12

----

Table of Contents

|          |                              |
|----------|------------------------------|
| 5.  | Interest Rate SwapAgreements |

2005 Interest Rate Swaps

On January11,  2005, in anticipation of the issuance of interim bridgefinancing and later a third mortgage loan to finance the acquisition ofadditional communications sites we expected to acquire during 2005, weentered into six forward-starting interest rate swap agreements withMorgan Stanley as counterparty to hedge the variability of futureinterest rates on our anticipated mortgage financing. Concurrent withthe pricing of our February  2006 mortgage loan, we terminatedour six interest rate swaps and received a payment, excluding accruedinterest, of $8.1  million, of which $4.3  million wasrecorded as accumulated other comprehensive income and is beingamortized as a reduction of interest expense on the February2006 mortgage loan using the effective interest method over five years,the life of the February  2006 mortgage loan.

OnFebruary  2,  2005 and March  21,  2005, inconnection with the Sprint Transaction, we entered into tenforward-starting interest rate swap agreements with Bank of America,N.A. as counterparty, in anticipation of securing $850.0  millionof bridge financing, which was expected to be replaced by a mortgageloan, for a total notional value of $850.0  million. Concurrentwith the pricing of our February  2006 mortgage loan, weterminated our ten interest rate swaps and received a payment,excluding accrued interest, of $25.8  million, which was recordedas accumulated other comprehensive income and which is being amortizedas a reduction of interest expense on the February  2006 mortgageloan using the effective interest method over five years, the life ofthe February  2006 mortgage loan.

The effective interestrate on the February  2006 mortgage loan including the effect ofterminating the swaps and the amortization of deferred debt issuancecosts is approximately 5.5%. For the three and six months endedJune  30,  2006, amortization of accumulated othercomprehensive income of $1.7  million and $2.3  million,respectively, was recorded as an offset to interestexpense.

2004 Interest Rate Swaps

On March26,  2004, in anticipation of a future financing, we entered intofour forward-starting interest rate swaps with Morgan Stanley ascounterparty to hedge the variability of future interest rates on thefinancing. On August  27,  2004, in anticipation of afuture financing, we entered into two additional forward-startinginterest rate swaps with Morgan Stanley as counterparty to hedge thevariability of future interest rates on the financing.

Concurrent with the pricing of the December  2004 mortgageloan, we terminated our six interest rate swaps and received a netpayment of $2.0  million which was recorded as part ofaccumulated other comprehensive income and is being amortized as areduction of interest expense using the effective interest method overfive years, the life of the December  2004 mortgage loan. Theeffective interest rate on the December  2004 mortgage loan,including the proceeds from terminating the interest rate swaps and theamortization of deferred debt issuance costs, is approximately5.0%. For the three and six months ended June  30,2006, amortization of accumulated other comprehensive income of$0.1  million and $0.2  million, respectively, was recordedas an offset to interest expense. For the three and six months endedJune  30,  2005, amortization of accumulated othercomprehensive income of $0.1  million and $0.2  million,respectively, was recorded as an offset to interestexpense.

2003 Interest Rate Swap

On December11,  2003, in anticipation of the issuance of the February2004 mortgage loan, we entered into a forward-starting interest rateswap agreement (the ‘‘December 2003 swap’’)with Morgan Stanley as the counterparty to hedge the variability offuture interest payments under the anticipated February  2004mortgage loan. The December  2003 swap was terminated inconnection with the issuance of the February  2004 mortgage loanon February  5,  2004 at a cost of $6.2  millionwhich was recorded as part of accumulated other comprehensive loss andwas being amortized as interest expense using the effective interestmethod over five years, the expected life of the February  2004mortgage loan. The effective interest rate on the February  2004mortgage loan, including the cost of terminating the interest

13

----

Table of Contents

rate swap and the amortization of deferreddebt issuance costs, was approximately 6.0%. For the six monthsended June  2006 and 2005, amortization of accumulated othercomprehensive loss of $0.2  million and $0.7  million,respectively, was recorded as interest expense. For the three monthsended June  30, 2005, amortization of accumulated othercomprehensive income of $0.3  million, was recorded as interestexpense. On February  28,  2006, the February  2004mortgage loan was repaid in full from a portion of the net proceedsfrom the February  2006 mortgage loan (see Note 4), and theremaining $3.4  million of unamortized accumulated othercomprehensive loss related to the 2003 interest rate swap was recordedin the first quarter of 2006 as loss on early extinguishment ofdebt.

|          |                               |
|----------|-------------------------------|
| 6.  | Commitments and Contingencies |

PurchaseCommitments

As of June  30,  2006, we signed masterservices agreements with Stratos VSAT, Inc. and Hark Tower Systems,Inc. which require us to purchase approximately $6.5  million insatellite data monitoring equipment. As of June  30,  2006,we purchased $4.9  million of equipment under these commitments.As of June  30,  2006, we signed an agreement with Intuit,Inc. to purchase and install lease and asset management software. Theamount of the purchase commitment is $1.2  million of which$0.2  million has been paid. As of June  30,  2006,we also had outstanding purchase agreements to acquire threecommunications sites from various sellers for a total estimatedpurchase price of $4.2  million, including estimated fees andexpenses, and 139 land parcels for $22.2  million, includingestimated fees and expenses. As of June  30,  2006, we alsohad letters of intent to purchase seven additional communications sitesfor approximately $7.7  million, including estimated fees andexpenses. Subsequent to June  30,  2006, we completed theacquisition of one communication site.

Earn Outs

A numberof our asset purchase agreements provide for additional monies to bepaid to the sellers based on future lease commencements during alimited period after the acquisition is completed, generally one yearor less. The aggregate amount of these contingent purchase prices isnot expected to be material for the acquisitions we have closed throughJune  30,  2006. As of June  30,  2006, we hadno accruals for any such additional acquisition payments. The maximumadditional contingent payments on closed acquisitions wereapproximately $0.9  million at June  30,2006.

Legal Matters

We are involved in litigationincidental to the conduct of our business. We believe that none of suchpending litigation, or unasserted claims of which we have knowledge,will have a material adverse effect on our business, financialcondition, results of operations orliquidity.

|          |                           |
|----------|---------------------------|
| 7.  | Stockholders’Equity |

Dividends

On March  15,  2006, ourboard of directors declared a dividend of $0.525 per share of ourcommon stock for the three months ended March  31,  2006,which was paid on April  20,  2006, to stockholders ofrecord as of April  6,  2006. The entire dividend of$36.7  million was a reduction of additional paid-in capital. OnJune  15,  2006, our board of directors declared a dividendof $0.525 per share of our common stock for the three months endedJune  30,  2006, which was paid on July  20,2006, to stockholders of record as of July  6,  2006. Theentire dividend of $36.9  million was a reduction of additionalpaid-in capital.

Stock-Based Compensation

Prior to ourJanuary  1,  2006 adoption of SFAS No. 123(R), we accountedfor stock option and restricted stock grants to employees and stockgrants to directors using the intrinsic value method under AccountingPrinciples Board (APB) Opinion No. 25, Accounting for Stock Issuedto Employees. Under 

14

----

Table of Contents

APB No. 25, no compensation costs wererecognized relating to the stock option grants to employees if theexercise price of the options awarded was equal to or greater than thefair value of the common stock on the dates of grant. We used and willcontinue to use under SFAS No. 123(R) the accelerated method torecognize compensation expense of our equity-based awards with gradedvesting. For restricted stock grants under APB No. 25, the unamortizedportion of the related compensation expense was recorded as deferredstock compensation expense, a contra account withinstockholders’ equity. In connection with the adoption of SFASNo. 123(R), we reclassified $1.1  million of deferred stock-basedcompensation expense, which relates entirely to unvested restrictedstock, to additional paid-in capital as of January  1,2006. Prior to adopting SFAS No. 123(R) as part of a restructuring ofcompensation, we amended a former officer’s option agreement tocancel options relating to 35,875 shares with an exercise price of$8.53 per share and options relating to 107,625 shares with an exerciseprice of $18.00 per share, and accelerated vesting of options relatingto 46,125 shares with an exercise price of $8.53 per share and optionsrelating to 138,375 shares with an exercise price of $18.00 pershare.

Had compensation costs for employee stock option activitybeen determined based on the fair value at the dates of grant for theperiods prior to 2006, our net loss for the three and six months endedJune  30,  2005, would have increased to the pro formaamounts indicated below (in thousands, except per share data):

|                                                                                                                                                            |  |  |                            |   |        |                         |  |  |  |   |        |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|----------------------------|---|--------|-------------------------|--|--|--|---|--------|---|
|                                                                                                                                                       |  |  | ThreeMonths Ended June 30, |   |        | Six Months EndedJune30, |
|                                                                                                                                                       |  |  | 2005                       |   |        | 2005                    |
|                                                                                                                                                       |  |  | (unaudited)                |   |        | (unaudited)             |
| Netloss attributable to commonstockholders:                                                                                                                |  |  |                            |   |   |                         |  |  |  |   |   |   |
| Net loss asreported                                                                                                                                        |  |  |                            | $ | (9,424 | )                       |  |  |  | $ | (5,528 | ) |
| Add:Stock-based compensation costs included in reported net income, net of$0 related tax effect for allperiods                                             |  |  |                            |   | 972    |                         |  |  |  |   | 1,290  |   |
| Deduct:Total stock-based employee compensation expense determined under fairvalue based method for all awards, net of $0 related tax effect for allperiods |  |  |                            |   | (1,312 | )                       |  |  |  |   | (1,970 | ) |
| Proforma netloss                                                                                                                                           |  |  |                            | $ | (9,764 | )                       |  |  |  | $ | (6,208 | ) |
| Basicloss per share attributable to commonstockholders:                                                                                                    |  |  |                            |   |   |                         |  |  |  |   |   |   |
| Net loss pershare asreported                                                                                                                               |  |  |                            | $ | (0.16  | )                       |  |  |  | $ | (0.10  | ) |
| Proforma net loss pershare                                                                                                                                 |  |  |                            | $ | (0.16  | )                       |  |  |  | $ | (0.11  | ) |
| Dilutedloss per share attributable to commonstockholders:                                                                                                  |  |  |                            |   |   |                         |  |  |  |   |   |   |
| Net loss pershare asreported                                                                                                                               |  |  |                            | $ | (0.16  | )                       |  |  |  | $ | (0.10  | ) |
| Proforma net loss pershare                                                                                                                                 |  |  |                            | $ | (0.16  | )                       |  |  |  | $ | (0.11  | ) |
|                                                                                                                                                            |

StockIncentive Plan

The Global Signal Inc. Omnibus Stock IncentivePlan (the ‘‘Plan’’) became effectiveNovember  1,  2002, and was amended on December21,  2005. The Plan provides for awards consisting of stockoptions, restricted stock grants or deferred stock awards(‘‘Awards’’) to employees, non-employeedirectors, and other persons who perform services for us. The Plan isadministered by the board of directors or, at the board ofdirectors’ sole discretion, by a committee consisting solely ofpersons who are non-employee directors and outside directors (the‘‘Committee’’).

On February11,  2004, the stockholders approved an increase of 2,000,000shares in the shares available under the Plan and as of January1,  2005, subsequent annual increases of the lesser of 1,000,000shares or 2% of the then-outstanding number of shares of commonstock on the last day of the immediately preceding fiscal year. Themaximum number of shares of common stock that may be made subject toawards granted under the Plan was 7,715,000 at December31,  2005. On January  1,  2006, the number of sharesavailable increased by 1,000,000 pursuant to the annual increasesprovision discussed above. In the event of any change in ourcapitalization, an equitable substitution or proportionate

15

----

Table of Contents

adjustment shall be made in the aggregatenumber and/or kind of shares of common stock reserved for issuanceunder the Plan and the kind, number and/or option price at the solediscretion of the Committee. In addition, if any Award expires orterminates without having been exercised, the shares of common stocksubject to the Award again become available for grant under thePlan.

The Committee is authorized to grant to eligible personsincentive stock options (‘‘ISO’’) ornonqualified stock options (‘‘NSO’’). Theterm of an ISO cannot exceed 10 years, and the exercise price of anyISO must be equal to or greater than the fair market value of theshares of common stock on the date of the grant. Any ISO granted to aholder of 10% or more of the combined voting power of ourcapital stock must have an exercise price equal to or greater than110% of the fair market value of the common stock on the date ofgrant and may not have a term exceeding five years from the grant date.The Committee shall determine the exercise price and the term of an NSOon the date that the NSO is granted.

Options shall becomeexercisable in whole or in part on the date or dates specified by theCommittee. The Committee, in its sole discretion, may accelerate thedate or dates on which an option becomes exercisable. Each option shallexpire on such date or dates as the Committee shall determine at thetime the option is granted. Upon termination of an optionee’semployment for retirement, death or disability, options granted to theemployee will expire one year from the date of termination. Upontermination of an optionee’s employment for involuntarytermination other than for cause, options granted to the employee willexpire ninety days plus the number of days the employee is prohibitedfrom trading in Global Signal’s shares because of insidertrading rules or other arrangements, after the date of termination.Upon termination of an optionee’s employment for any otherreasons, options granted to the employee will expire on the expirationdate specified in the agreement. If an optionee’s employment isterminated for cause (as defined in the Plan), all of suchperson’s options shall immediately terminate.

TheCommittee may also grant to an eligible person an award of common stocksubject to future service and such other restrictions and conditions asthe Committee may determine, which may be either restricted stock,wherein the recipient receives the benefits of ownership (such asvoting and the receipt of dividends) prior to the vesting of the stock(other than the right to sell or transfer the stock), or deferredstock, wherein the recipient does not have any benefits of ownershipprior to the vesting of the stock (as applicable, the‘‘Restricted Stock’’ or the‘‘Deferred Stock’’). The Committee willdetermine the terms of such Restricted Stock and/or Deferred Stock,including the price, if any, to be paid by the recipient for the stock,the restrictions placed on the shares and the time or times when therestrictions will lapse, at the time of the granting thereof.

Asummary of our stock option activity under the Plan for the six monthsended June  30,  2006, is presented in the table below. Netproceeds from the exercise of stock options for the six months endedJune  30,  2006, were $4.7  million which wasrecorded in common stock and additional paid-in capital. The fair valueat the time of issuance of the options that vested during the sixmonths ended June  30,  2006, was $2.1  million. Theintrinsic value at the time of exercise of the stock options exercisedduring the six months ended June  30,  2006, was$47.9million.

|                                 |  |  |                                  |  |            |                    |  |  |                               |   |             |  |  |  |  |   |      |  |
|---------------------------------|--|--|----------------------------------|--|------------|--------------------|--|--|-------------------------------|---|-------------|--|--|--|--|---|------|--|
|                            |  |  | Numberof SharesSubject to Option |  |            | ExercisePriceRange |  |  | Weighted AverageExercisePrice |
| Under option, December  31,2005 |  |  |                                  |  | 1,317,134  |                    |  |  |                               | $ | 4.26-$18.00 |  |  |  |  | $ | 9.41 |  |
| Granted                         |  |  |                                  |  | —    |                    |  |  |                               |   | N/A         |  |  |  |  |   | N/A  |  |
| Forfeited                       |  |  |                                  |  | —    |                    |  |  |                               |   | N/A         |  |  |  |  |   | N/A  |  |
| Exercised                       |  |  |                                  |  | (1,317,134 | )                  |  |  |                               | $ | 4.26-$18.00 |  |  |  |  | $ | 9.41 |  |
| Underoption, June  30,2006      |  |  |                                  |  | —    |                    |  |  |                               |   | N/A         |  |  |  |  |   | N/A  |  |
|                                 |

Allshares that were issued upon option exercises were newly issuedshares.

16

----

Table of Contents

The following table discloses the numberof shares subject to option that are unvested and the weighted averagefair value of these shares at the date of grant as of June30,  2006 and December  31,2005:

|                                      |  |  |                                  |  |          |                                            |  |  |  |   |      |  |
|--------------------------------------|--|--|----------------------------------|--|----------|--------------------------------------------|--|--|--|---|------|--|
|                                 |  |  | Numberof SharesSubject to Option |  |          | Weighted Average FairValueat Date of Grant |
| Unvested balance atDecember  31,2005 |  |  |                                  |  | 459,208  |                                            |  |  |  | $ | 4.57 |  |
| Vested                               |  |  |                                  |  | (459,208 | )                                          |  |  |  | $ | 4.57 |  |
| Unvestedbalance at June  30,2006     |  |  |                                  |  | —  |                                            |  |  |  |   | N/A  |  |
|                                      |

OtherStock Options

In connection with the initial public offering andto compensate Fortress and Greenhill for their successful efforts inraising capital in the offering, in March  2004 we grantedoptions to Fortress and Greenhill, or their respective affiliates, topurchase the number of shares of our common stock equal to an aggregateof 10% of the number of shares issued in the initial publicoffering in the following amounts (1) for Fortress (or its affiliates),the right to acquire the number of shares equal to 8% of thenumber of shares issued in the initial public offering, including theover-allotment and (2) for Greenhill (or its affiliate), the right toacquire the number of shares equal to 2% of the number of sharesissued in the initial public offering, including the over-allotment,all at an exercise price per share equal to the initial offering priceper share. Upon consummation of the offering, the number of shares andexercise price were thereby fixed at 805,000 shares at $18.00 pershare, respectively. All of the options were immediately vested uponthe initial public offering and are exercisable for ten years fromJune  8,  2004. We recognized the fair value of theseoptions using the Black-Scholes method on the offering date as a costof the offering of $1.9  million by netting it against the netproceeds of the offering. These options were granted outside of thePlan, and therefore are excluded from the Plan activity shown above.Greenhill exercised 128,800 of its options in March  2006. AtJune  30,  2006, 644,000 of the Fortress options remainoutstanding.

Common Stock Grants

In the first quarter of2006, we issued 28,488 shares of restricted stock to certain employees.The grants vest 33.3%, 33.3% and 33.4% onDecember  31,  2008, 2009 and 2010, respectively. We valuedthe restricted stock awards at $1.3  million on the dates ofgrant using the current market price. This amount will be amortized asnon-cash stock-based compensation expense over the vesting period usingthe accelerated method, over a weighted average period of approximatelythree years. Also, 58,540 restricted shares issued in 2004 and 2006were forfeited in the first half of 2006. Prior to the adoption of SFASNo. 123(R), we accounted for forfeitures at the time they occurred.Under SFAS No. 123(R), we estimate forfeitures each quarter.

InApril  2006, our new Chief Financial Officer was granted 120,000shares of restricted stock of which 20% vested immediately and20% vests on December  31,  2007, 2008, 2009 and2010, respectively. In May  2006, our new Chief Executive Officerwas granted 200,000 shares of restricted stock, of which 20%vested immediately and 20% vests on December  31,2007, 2008, 2009 and 2010, respectively.

In June  2006, sixexecutives were granted a total of 65,000 shares of restricted stockwhich vest 20% on December  31,  2006, 2007, 2008,2009 and 2010, respectively.

In July  2006, one executivewas issued 12,500 shares of restricted stock which vest 20% onDecember  31,  2006, 2007, 2008, 2009 and 2010,respectively.

17

----

Table of Contents

The following table discloses the numberof unvested shares of restricted stock and the weighted average fairvalue of these shares at date of grant:

|                                       |  |  |                 |  |         |                                           |  |  |  |   |       |  |
|---------------------------------------|--|--|-----------------|--|---------|-------------------------------------------|--|--|--|---|-------|--|
|                                  |  |  | RestrictedStock |  |         | Weighted AverageFair Valueat Date ofGrant |
| Unvested balance at December  31,2005 |  |  |                 |  | 54,917  |                                           |  |  |  | $ | 26.02 |  |
| Granted                               |  |  |                 |  | 413,488 |                                           |  |  |  | $ | 48.09 |  |
| Vested                                |  |  |                 |  | (64,000 | )                                         |  |  |  | $ | 49.15 |  |
| Forfeited                             |  |  |                 |  | (58,540 | )                                         |  |  |  | $ | 28.86 |  |
| Unvestedbalance at June  30,2006      |  |  |                 |  | 345,865 |                                           |  |  |  | $ | 47.64 |  |
|                                       |

Asof June 30, 2006, total unearned compensation on stock-based awards was$15.4 million and the weighted average vesting period is 2.9years.

Deferred Shares

On January 3, 2006, we enteredinto Deferred Shares Award Agreements with certain employees. Thenumber of shares that will be granted in December 2006 will bedetermined by the amount of our fourth quarter 2006 dividend. Theseemployees were awarded an aggregate base grant of 5,233 shares, but theactual number of shares to be issued will vary between 0% and150% of the base grant. These shares, if granted, will vest33.3%, 33.3% and 33.4% on December 31, 2008, 2009and 2010, respectively. As of June  30, 2006, 2,326 of thedeferred shares have been forfeited.

In December 2005, we awardedtwo officers an aggregate base grant of 124,698 deferred shares. Theseofficers have resigned and their deferred shares wereforfeited.

Warrants

In connection with our 2002bankruptcy plan, 1,229,850 common stock warrants were issued to ourconvertible note holders and our common stockholders. The warrants havea current exercise price of $8.53 and expire on October31,  2007. In the first half of 2006, warrants were exercisedresulting in the issuance of 21,676 shares. As of June30,  2006, there were 423,830 warrants outstanding to acquirecommon stock.

Treasury Stock

In the first quarter of2006, 29,327 shares of outstanding common stock were returned to us topay for the exercise price of certain stock options. The value of thisreturned stock was $1.5  million and was recorded as treasurystock.

|          |                    |
|----------|--------------------|
| 8.  | Earnings Per Share |

The following tablesets forth the reconciliation of basic and diluted average sharesoutstanding (in thousands) used in the computation of income (loss) pershare of commonstock:

|                                                                          |  |  |                            |  |         |                          |  |  |             |  |         |             |  |  |  |  |         |  |  |  |  |  |         |  |
|--------------------------------------------------------------------------|--|--|----------------------------|--|---------|--------------------------|--|--|-------------|--|---------|-------------|--|--|--|--|---------|--|--|--|--|--|---------|--|
|                                                                     |  |  | ThreeMonths Ended June 30, |  |         | Six Months Ended June30, |
|                                                                     |  |  | 2006                       |  |         | 2005                     |  |  | 2006        |  |         | 2005        |
|                                                                     |  |  | (unaudited)                |  |         | (unaudited)              |  |  | (unaudited) |  |         | (unaudited) |
| Denominatorfor basic income per share – adjusted weightedaverage   |  |  |                            |  | 69,809  |                          |  |  |             |  | 59,762  |             |  |  |  |  | 69,595  |  |  |  |  |  | 55,914  |  |
| Effectof dilutivesecurities                                              |  |  |                            |  | — |                          |  |  |             |  | — |             |  |  |  |  | — |  |  |  |  |  | — |  |
| Denominatorfor diluted income per share – adjusted weightedaverage |  |  |                            |  | 69,809  |                          |  |  |             |  | 59,762  |             |  |  |  |  | 69,595  |  |  |  |  |  | 55,914  |  |
|                                                                          |

Approximately0.7  million shares of common stock issuable pursuant to warrantshave been excluded from the calculation of diluted earnings per sharefor the three and six months ended June  30,  2006 as

18

----

Table of Contents

their effect would have been antidilutive.Approximately 1.9  million shares of common stock issuablepursuant to outstanding stock options and warrants have been excludedfrom the calculations of diluted earnings per share for the three andsix months ended June  30,  2005 as their effect would havebeen antidilutive.

|          |                            |
|----------|----------------------------|
| 9.  | Comprehensive Income(Loss) |

Comprehensive income (loss) for the three and six monthsended June  30,  2006 and 2005 is comprised of thefollowing (in thousands):

|                                                                                       |  |  |                            |   |         |                          |  |  |             |   |         |             |  |  |  |   |         |   |  |  |  |   |         |   |
|---------------------------------------------------------------------------------------|--|--|----------------------------|---|---------|--------------------------|--|--|-------------|---|---------|-------------|--|--|--|---|---------|---|--|--|--|---|---------|---|
|                                                                                  |  |  | ThreeMonths Ended June 30, |   |         | Six Months Ended June30, |
|                                                                                  |  |  | 2006                       |   |         | 2005                     |  |  | 2006        |   |         | 2005        |
|                                                                                  |  |  | (unaudited)                |   |         | (unaudited)              |  |  | (unaudited) |   |         | (unaudited) |
| Netloss                                                                               |  |  |                            | $ | (16,970 | )                        |  |  |             | $ | (9,424  | )           |  |  |  | $ | (52,056 | ) |  |  |  | $ | (5,528  | ) |
| Changein fair value of derivative financial instruments, net of applicableincometaxes |  |  |                            |   | — |                          |  |  |             |   | (23,892 | )           |  |  |  |   | 8,450   |   |  |  |  |   | (12,189 | ) |
| Derivativeamounts amortized to interestexpense                                        |  |  |                            |   | (1,801  | )                        |  |  |             |   | 231     |             |  |  |  |   | (2,258  | ) |  |  |  |   | 463     |   |
| Write-offderivative amounts to loss on early extinguishment of debt due torefinancing |  |  |                            |   | — |                          |  |  |             |   | — |             |  |  |  |   | 3,408   |   |  |  |  |   | — |   |
| Foreigncurrency translationadjustment                                                 |  |  |                            |   | 312     |                          |  |  |             |   | (298    | )           |  |  |  |   | 430     |   |  |  |  |   | (520    | ) |
| Othercomprehensiveincome                                                              |  |  |                            |   | (1,489  | )                        |  |  |             |   | (23,959 | )           |  |  |  |   | 10,030  |   |  |  |  |   | (12,246 | ) |
| Comprehensiveincome(loss)                                                             |  |  |                            | $ | (18,459 | )                        |  |  |             | $ | (33,383 | )           |  |  |  | $ | (42,026 | ) |  |  |  | $ | (17,774 | ) |
|                                                                                       |

Thecomponents of accumulated other comprehensive income at June30,  2006 and December  31,  2005 are as follows (inthousands):

|                                        |  |  |             |   |        |                  |  |  |  |   |        |  |
|----------------------------------------|--|--|-------------|---|--------|------------------|--|--|--|---|--------|--|
|                                   |  |  | June30,2006 |   |        | December 31,2005 |
|                                   |  |  | (unaudited) |   |        |             |
| Foreigncurrency translationadjustments |  |  |             | $ | 1,563  |                  |  |  |  | $ | 1,133  |  |
| Changes infair value ofderivatives     |  |  |             |   | 29,267 |                  |  |  |  |   | 19,667 |  |
| Accumulatedother comprehensiveincome   |  |  |             | $ | 30,830 |                  |  |  |  | $ | 20,800 |  |
|                                        |

|           |                 |
|-----------|-----------------|
| 10.  | SubsequentEvent |

As part of the Sprint Agreement, Sprint agreed to refundus a portion of the upfront rental payment if an agreed-upon portion ofthe Sprint Towers did not qualify as financeable sites, within one yearof the closing of the Sprint Transaction. We agreed to use commerciallyreasonable efforts to convert Sprint Towers which did not qualify asfinanceable sites into financeable sites by May 26, 2006. As of May 26,2006, less than the agreed-upon allocated purchase price value for theSprint Towers qualified as financeable sites and we received an upfrontrental payment refund of $3.1 million in July2006.

19

----

Table of Contents

Item2.    Management’s Discussion and Analysis of FinancialCondition and Results of Operations

SAFE HARBOR STATEMENT UNDERTHE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain items in this Quarterly Report on Form 10-Q, and otherinformation we provide from time to time, may constituteforward-looking statements within the meaning of the Private SecuritiesLitigation Reform Act of 1995 and are subject to various risks anduncertainties, including, but not necessarily limited to, statementsrelating to our ability to deploy capital, close accretiveacquisitions, close dispositions of under-performing sites, closeacquisitions under letters of intent and purchase agreements,anticipate, manage and address industry trends and their effect on ourbusiness, the rate and timing of the deployment of new wirelesscommunications systems and equipment by our customers, whether wesuccessfully address future technological changes in the wirelessindustry, the rate at which our customers terminate, or elect not torenew, leases as the result of consolidations or technological changes,pay or grow dividends, generate growth organically or throughacquisitions, secure financing, and increase revenues, Adjusted EBITDAand/or Adjusted Funds From Operations, and add telephony tenants andstatements relating to the integration of and final costs of the SprintTransaction, the incremental costs of operating the Sprint sites, andhow the proceeds of future financings will be used. Forward-lookingstatements are generally identifiable by use of forward-lookingterminology such as ‘‘may,’’‘‘will,’’‘‘should,’’‘‘potential,’’‘‘intend,’’‘‘expect,’’‘‘endeavor,’’‘‘seek,’’‘‘anticipate,’’‘‘estimate,’’‘‘overestimate,’’‘‘underestimate,’’‘‘believe,’’‘‘could,’’‘‘would,’’‘‘project,’’‘‘predict,’’‘‘continue’’ or other similar words orexpressions. Forward-looking statements are based on certainassumptions or estimates, discuss future expectations, describe futureplans and strategies, contain projections of results of operations orof financial condition or state other forward-looking information. Ourability to predict results or the actual effect of future plans orstrategies is inherently uncertain. Although we believe that theexpectations reflected in such forward-looking statements are based onreasonable assumptions, actual results and performance could differmaterially from those set forth in the forward-looking statements.Factors which could have a material adverse effect on our operationsand future prospects or which could cause events or circumstances todiffer from the forward-looking statements include, but are not limitedto, difficulties in acquiring towers at attractive prices orintegrating acquisitions with our operations, the reduced likelihood ofclosing a transaction which is at a letter of intent stage as opposedto one which is subject to a purchase agreement, a decrease in thedemand for our communications sites and our ability to attractadditional tenants, the economies, real estate markets andcommunications industries in the regions where our sites are located,consolidation in the wireless industry, termination or non-renewal oftenant leases, changes to the regulations governing wireless services,the creditworthiness of our tenants, customer concentration and theloss of one or more of our major customers, integration of new softwaresystems, replacement of existing software systems, our ability tocompete, competing technologies, equipment and software developmentsrelating to wireless telephony, our ability to modify our towers, ourability to obtain credit facilities or mortgage loans on favorableterms, our failure to comply with federal, state and local laws andregulations and changes in the law, our failure to comply withenvironmental laws, our ability to conduct our business effectively,secure financing and generate revenues, the termination of sitemanagement agreements, disasters and other unforeseen events, thedemonstrated or perceived negative health effects from our towers orother tenants equipment on our towers, our ability to qualify as aREIT, REIT distribution requirements and the stock ownership limitimposed by the Internal Revenue Code for REITs. When consideringforward-looking statements, you should keep in mind the risk factorsand other cautionary statements detailed from time to time in thisQuarterly Report on Form 10-Q and in Global Signal’s otherfilings with the Securities and Exchange Commission, including our mostrecent Annual Report on Form 10-K for the year ending December31,  2005, filed on March  16,  2006, and our mostrecent Registration Statement on Form S-3, filed on April7,  2006. Readers are cautioned not to place undue reliance onany of these forward-looking statements, which reflect ourmanagement’s views as of the date of this report. Although webelieve that the expectations reflected in the forward-lookingstatements are reasonable, we cannot guarantee future results, levelsof activity, performance or achievements, and our actual results maydiffer significantly from those contained in any forward-lookingstatement. Such forward-looking statements speak only as of the date ofthis Quarterly Report on Form 10-Q and Global Signal expresslydisclaims any obligation to release publicly any updates 

20

----

Table of Contents

or revisions to any forward-lookingstatements contained herein to reflect any change in our expectationswith regard thereto or any change in events, conditions orcircumstances on which any statement is based.

ExecutiveOverview

Global Signal Inc. is one of the largest wirelesscommunications tower operators in the United States. As of June30,  2006, we owned, leased or managed a total of 10,951 wirelesscommunications sites. Our growth strategy is to grow (1) organically byadding additional tenants to our towers, (2) by acquiring towers withexisting telephony tenants in locations where we believe there areopportunities for organic growth, (3) by acquiring the land underneathour towers and (4) by financing these newly acquired towers, on along-term basis, using equity issuances combined with low-costfixed-rate debt obtained through the issuance of mortgage-backedsecurities. Through this strategy, we will seek to increase ourdividend per share over time.

We are organized and conduct ouroperations to qualify as a REIT for federal income tax purposes. Assuch, we will generally not be subject to federal income tax on thatportion of our income that is distributed to our stockholders if wedistribute at least 90% of our REIT taxable income to ourstockholders and comply with various other requirements. We also havecertain subsidiaries that are not qualified REIT subsidiaries andtherefore their operations will be subject to federal income tax.

Our customers include a wide variety of wireless service providers,government agencies, operators of private networks and broadcasters.These customers operate networks from our communications sites andprovide wireless telephony, mobile radio, paging, broadcast and dataservices. As of June  30,  2006, we had an aggregate ofmore than 26,000 tenant leases on our communications sites with over2,000 customers. Our site revenues from wireless telephony tenants haveincreased to 79.7% and 79.7%, respectively, of siterevenues for the three and six months ended June  30,2006, from 67.2% and 61.1%, respectively, of siterevenues for the three months and six months ended June30,  2005.

New wireless technologies, devices andapplications have become more advanced and broadly utilized by wirelesssubscribers. As new technologies, devices and applications havedeveloped, new networks have been deployed to support the more advancedapplications and the growth in the number of wireless subscribers whilemore mature technologies, such as paging and mobile radio, haveexperienced shrinking subscriber bases and network contraction. Some ofthe key indicators that we regularly monitor to evaluate growth trendsaffecting wireless technology usage are the growth or contraction of aparticular technology’s wireless subscribers and the usage asmeasured in minutes of use.

The material opportunities,challenges and risks of our business have changed significantly overthe past several years. More recently, concurrent with an increasedfocus on improving network quality, many of our wireless telephonycustomers have experienced a general improvement in their overallfinancial condition. This has resulted in an increase in thesecustomers’ abilities to invest in their networks and a relatedincrease in our telephony tenant base. Our growth will be primarilyaffected by the future demand for communications sites by wirelesstelephony service providers, paging service providers, users of mobileradio services and government agencies. In recent years, we haveexperienced significant demand from our wireless telephony customers asthey expand their networks, while our paging and mobile radio customershave contracted their networks. The demand for communications sitespace by wireless telephony service providers is expected to be drivenby growth in the number of their subscribers and their utilization ofwireless telephony services, including utilization of their networksfor data services.

Demand could be adversely affected by carrierconsolidation, because consolidation can result in duplicative coverageand excess network capacity. Several carriers have announced plans toeliminate cell sites as a result of consolidation. These carriers mayseek early termination of leases where permitted (upon payment of apenalty up to one year of rent), or elect not to renew leases at theend of their terms. As a result of these mergers, networkconsolidations by these tenants could adversely impact tenant leaserevenues at some of our sites.

In October  2004, Cingularmerged with AT&T Wireless and subsequently announced plans toeliminate approximately 7,000 of its cell sites as part of theintegration of the two networks. As of June  30,  2006, 312of our sites are occupied by both Cingular and AT&T Wireless andthe combined site 

21

----

Table of Contents

revenues from Cingular and AT&T Wirelesson these sites were approximately $3.1  million and $6.6million for the three months and six months ended June30,  2006, respectively. During the first half of 2006 wereceived notices of lease termination or non-renewal from Cingular andAT&T Wireless, which have effective dates from 2006 through 2016,and which represent over that 10 year period total monthly leaserevenues of approximately $400,000. We expect to receive additionalnotices of termination or non-renewal during the remainder of 2006 asCingular and AT&T Wireless continue their network rationalization.In many cases, lease termination requires Cingular to pay us a penalty.We also continue to lease additional space on our towers to Cingularand new lease revenues from Cingular continue to exceed the amount oflease terminations that will be effective during 2006.

Sprintmerged with Nextel Communications and other affiliates in August2005. As of June  30,  2006, 1,382 of our sites areoccupied by both Sprint and Nextel and the combined site revenues fromSprint and Nextel on these sites were approximately $14.1million and $28.1  million for the three and six months endedJune  30,  2006, respectively. We have not experienced anysignificant churn from Sprint-Nextel during 2006, but Sprint-Nextel haspublicly discussed possible network rationalization in the future,which could result in a reduction of our revenues. In August2005, Alltel completed its purchase of Western Wireless. As ofJune  30,  2006, none of our sites are occupied by bothAlltel and Western Wireless. In November  2004, Arch Wirelessmerged with Metrocall Holdings, Inc. to form USA Mobility, our largestpaging customer. Both customers offer paging services throughout theUnited States and consequently have duplicate coverage in most markets.Our revenue from USA Mobility has declined substantially and we expectit will continue to decline. Under our master lease with USA Mobilityentered into in July 2005, the fixed monthly fee for transmitterslocated on our sites decreases periodically over time fromapproximately $1.35 million for July 2006 to approximately $1.0 millionper month in 2008.

The demand for communications site space bygovernment entities will be driven by the agencies’ demand fornew digital networks to communicate with other government agencies aswell as their ability to gain funding for such networks.

Ourgrowth opportunities are primarily organic growth on our existingtowers and acquiring additional towers on which our wireless customersmay seek to locate their equipment, thereby growing our overall tenantbase. Since November  2002, our number of wireless communicationsites has grown from approximately 3,300 to approximately 11,000 atJune  30,  2006, primarily as a result of our acquisitionstrategy. See ‘‘Acquisitions and Dispositions ofCommunications Sites’’ below. A key component of ourgrowth strategy is our capital management strategy, which supports thefinancing of our tower acquisition strategy. Our capital managementstrategy is to finance newly acquired assets, on a long-term basis,using additional equity issuances combined with low-cost fixed-ratedebt obtained through the periodic issuance of mortgage-backedsecurities. For example, in February  2006, we issued$1.55  billion in mortgage loans to provide fixed rate financingfor the Sprint Transaction (as defined below) and other toweracquisitions completed since April  2005, and to refinance ourFebruary  2004 mortgage loan. Prior to financing newly acquiredtowers using mortgage-backed securities, our current strategy is tofinance communications sites we acquire on a short-term basis throughcash on hand, cash remaining from the February  2006 mortgageloan, or short term acquisition credit facilities.

Our currentgrowth strategy, which is in part based on a new site acquisitionstrategy, reflects (1) our strategy to finance our new toweracquisitions using a capital structure which uses low-cost fixed-ratedebt obtained through the issuance of mortgage-backed securitiescombined with proceeds from equity offerings, (2) our strategy to buytower assets with in-place telephony, government or investment gradetenants where we believe there is a high likelihood of multiple leaserenewals, (3) our underwriting process which is generally designed toallow us to evaluate and price acquisitions based on their currentyield and on the asset and tenant attributes and location of the assetand (4) our focus on integrating, maintaining and operating the assetswe acquire efficiently and effectively.

The primary factorsaffecting our determination of the value of a communications site arethe cash flows of the site, its location, competitive structures in theimmediate area, tenant base, tenant credit quality and zoningrestrictions. While we also have communications sites located in Canadaand the United Kingdom, our communications sites are primarily locatedin the United States. The locations of our sites are diverse andinclude sites along active transportation corridors, in dense urbancenters and in 

22

----

Table of Contents

growing suburban communities. We also have adiverse tenant base, which includes large and small wireless serviceproviders, government agencies, and operators of private communicationnetworks. The credit quality of our tenants varies greatly frominvestment grade credits to significantly lesser credits, includingsmall independent operators.

Acquisitions and Dispositions ofCommunications Sites

Our financial results are impacted by thetiming, size and number of acquisitions and dispositions we complete ina period. For the first half of 2006, we acquired 18 communicationsites for $7.1  million, including fees and expenses. Inaddition, we routinely review and dispose of under-performing siteswhich are not compatible with our strategy. As of June30,  2006, we had 113 sites held for sale.

On May26,  2005, we, Sprint Corporation(‘‘Sprint’’) and certain Sprintsubsidiaries (the ‘‘Sprint Contributors’’),closed on an agreement to contribute, lease and sublease (the‘‘Agreement to Lease’’). Under theAgreement to Lease, we will lease or operate, for a period of 32 yearsapproximately 6,553 communications tower sites and the related towersand assets (collectively, the ‘‘SprintTowers’’) from newly formed special purpose entities ofSprint (collectively, ‘‘Sprint TowerCo’’),under six master leases for which we paid an upfront rental payment ofapproximately $1.2  billion as prepaid rent (the‘‘Upfront Rental Payment’’) (the‘‘Sprint Transaction’’). In connection withthe Sprint Transaction, certain Sprint entities agreed to lease spaceon approximately 6,342 of the Sprint Towers. The Sprint Towers had over5,600 collocation leases with other wireless tenants as of May26,  2005, and substantially all of the revenues from the SprintTowers are derived from wireless telephony tenants. We accounted forthis transaction as a capital lease reflecting the substance similar toan acquisition.

We have experienced a substantial reduction inour communications sites acquisition activity since the third quarterof 2005. We have not acquired large portfolios recently primarilybecause the asking prices of available portfolios have risensubstantially in the past twelve months and the anticipated yields onthe potential acquisitions have fallen below our underwritingstandards.

For the first half of 2006, we invested an additional$38.1  million, including fees and expenses, to acquire a feeinterest or permanent or long-term easement under 271 communicationstowers where we previously had a leasehold interest in the land. As ofJune  30,  2006, we have executed definitive agreements andnon-binding letters of intent with other parties to acquire anadditional 10 communications sites and 139 fee interest or long-termeasements, for an aggregate purchase price of approximately$34.1  million, including estimated fees and expenses. We are inthe process of performing due diligence on the communications sitesunder non-binding letters of intent and negotiating definitiveagreements. Subsequent to June  30,  2006, we completed theacquisition of one communication site.

Revenues

Wegenerate substantially all of our revenues from leasing space oncommunications sites to various tenants including wireless serviceproviders, government agencies, operators of private networks, andbroadcasters. Factors affecting our revenues include the rate at whichour customers deploy capital to enhance and expand their networks, therate at which customers rationalize their networks, the renewal ratesof our tenants and fixed-price annual escalation clauses in ourcontracts that allow us to increase our tenants’ rental ratesover time.

Typically, our tenant lease agreements are specific toa site, are for terms of one to ten years and are renewable formultiple pre-determined periods at the option of the tenant. Rentsunder tenant leases are generally due to us on a monthly basis, andrevenues from each agreement are recognized monthly. These agreementstypically contain fixed-price annual escalation clauses. Rentalrevenues are recognized in our financial statements on a straight-linebasis over the contractual term of the agreements without considerationof customer renewal options.

23

----

Table of Contents

Our tenants are responsible for theinstallation and maintenance of their equipment at our sites. Thesetenants transmit from our sites utilizing a wide variety oftechnologies including personal communication services (PCS), cellular,enhanced specialized mobile radio (ESMR), mobile radio, paging, radioand television broadcast and wireless data. For the three months endedJune  30,  2006 and 2005, our revenue mix for the primarytechnology categories was asfollows:

|                               |  |  |                            |  |  |                          |  |  |        |  |  |        |
|-------------------------------|--|--|----------------------------|--|--|--------------------------|--|--|--------|--|--|--------|
|                          |  |  | PercentofRevenues          |
|                          |  |  | ThreeMonths Ended June 30, |  |  | Six Months Ended June30, |
| Tenant TechnologyType         |  |  | 2006                       |  |  | 2005                     |  |  | 2006   |  |  | 2005   |
| Telephony(PCS, Cellular,ESMR) |  |  | 79.7%                      |  |  | 67.2%                    |  |  | 79.7%  |  |  | 61.1%  |
| Mobileradio                   |  |  | 9.0%                       |  |  | 14.6%                    |  |  | 9.1%   |  |  | 17.0%  |
| Paging                        |  |  | 5.9%                       |  |  | 11.4%                    |  |  | 5.9%   |  |  | 13.8%  |
| Broadcast                     |  |  | 3.4%                       |  |  | 4.5%                     |  |  | 3.4%   |  |  | 5.3%   |
| Wirelessdata andother         |  |  | 2.0%                       |  |  | 2.3%                     |  |  | 1.9%   |  |  | 2.8%   |
| Total                         |  |  | 100.0%                     |  |  | 100.0%                   |  |  | 100.0% |  |  | 100.0% |
|                               |

DirectSite Operating Expenses and Other Expenses

Direct site operatingexpenses consist of ground rents (if we do not own the land or have afully prepaid interest in the land at the site), utilities, propertyand ad valorem taxes, insurance and site maintenance costs. Many of ourground lease agreements contain escalation clauses which are typicallybased on either a fixed percentage rate or the change in the ConsumerPrice Index. For ground leases with escalation clauses based on a fixedpercentage rate, ground rental expenses are recognized in our financialstatements on a straight-line basis over the shorter of (i) thecontractual term of the lease agreement assuming we exercise all of therenewal options or (ii) the time period through the first renewaloption period ending after the later of (a) the maximum lease termincluding renewals of our tenant leases which were in place or which weanticipated being in place at the date we entered into the ground leaseor acquired the communications site or (b) the end of the depreciablelife of the assets located on the leased property.

Costs such asproperty management, site operations and contract administration areincluded in selling, general and administrative expenses as describedbelow. The costs of operating an owned site generally do not increasesignificantly as we add additional tenants unless we need to acquireadditional land underneath a tower to accommodate a new tenant or sharea portion of tenant revenue with the landlord. The loss of any tenanton an owned site does not significantly reduce the costs associatedwith operating that site; and as a result, the lost lease revenues willreduce cash flows and gross margin from that site. Fluctuations in ourgross margins on owned sites are directly related to changes in ourtenant lease revenues and any costs of acquiring additional landunderneath a tower. For managed sites, we typically pay the site ownereither a fixed fee, a percentage of revenues or a combination of afixed fee plus a percentage of revenues. In instances where we pay thelandlord a percentage of revenues, changes in revenues result in anincrease or decrease, as applicable, in our communications siteoperating expenses.

Selling, general and administrative expensesconsist of five major components: (1) sales, marketing and towerleasing; (2) property management and site operations; (3) contractsadministration; (4) business development including acquisitions and newbuilds and (5) administrative support, including legal, humanresources, finance, accounting, and informationtechnology.

24

----

Table of Contents

Results of Operations

Comparison of the three months ended June  30, 2006 tothe three months ended June  30, 2005

The following tablesets forth, for the periods indicated, each statement of operationsitem and such item as a percentage of revenues. The results ofoperations for any particular period are not necessarily indicative ofresults for any future period. The following data should be read inconjunction with our unaudited consolidated financial statementsincluded elsewhere herein and our consolidated financial statements andnotes thereto included in our Annual Report on Form 10-K for the yearended December  31, 2005, filed with the Securities and ExchangeCommission on March  16,2006.

|                                                                                                                         |  |  |                           |   |         |             |  |  |        |  |        |             |  |  |   |   |        |   |  |  |  |  |        |    |  |  |  |   |        |   |  |  |  |  |        |    |
|-------------------------------------------------------------------------------------------------------------------------|--|--|---------------------------|---|---------|-------------|--|--|--------|--|--------|-------------|--|--|---|---|--------|---|--|--|--|--|--------|----|--|--|--|---|--------|---|--|--|--|--|--------|----|
|                                                                                                                    |  |  | ThreeMonths Ended June30, |
|                                                                                                                    |  |  | 2006                      |   |         | 2005        |  |  | Change |
|                                                                                                                    |  |  | (dollarsinthousands)      |
|                                                                                                                    |  |  | $                         |   |         | %of Revenue |  |  | $      |  |        | % ofRevenue |  |  | $ |   |        | % |
| Revenues                                                                                                                |  |  |                           | $ | 122,467 |             |  |  |        |  | 100.0  | %           |  |  |   | $ | 77,557 |   |  |  |  |  | 100.0  | %  |  |  |  | $ | 44,910 |   |  |  |  |  | 57.9   | %  |
| Directsite operating expenses (excludingdepreciation,                                                                   |  |  |                           |   |    |             |  |  |        |  |   |             |  |  |   |   |   |   |  |  |  |  |   |    |  |  |  |   |   |   |  |  |  |  |   |    |
| amortizationandaccretion)                                                                                               |  |  |                           |   | 56,872  |             |  |  |        |  | 46.5   | %           |  |  |   |   | 30,133 |   |  |  |  |  | 38.9   | %  |  |  |  |   | 26,739 |   |  |  |  |  | 88.7   | %  |
| Selling,general and administrative (including $4,867 and $972 of non-cashstock-based compensation expense,respectively) |  |  |                           |   | 16,827  |             |  |  |        |  | 13.7   | %           |  |  |   |   | 9,398  |   |  |  |  |  | 12.1   | %  |  |  |  |   | 7,429  |   |  |  |  |  | 79.0   | %  |
| Sprintsites integrationcosts                                                                                            |  |  |                           |   | 192     |             |  |  |        |  | 0.2    | %           |  |  |   |   | 3,164  |   |  |  |  |  | 4.1    | %  |  |  |  |   | (2,972 | ) |  |  |  |  | (93.9  | %) |
| Statefranchise, excise and minimumtaxes                                                                                 |  |  |                           |   | 263     |             |  |  |        |  | 0.2    | %           |  |  |   |   | 157    |   |  |  |  |  | 0.2    | %  |  |  |  |   | 106    |   |  |  |  |  | 67.5   | %  |
| Depreciation,amortization andaccretion                                                                                  |  |  |                           |   | 42,638  |             |  |  |        |  | 34.8   | %           |  |  |   |   | 28,351 |   |  |  |  |  | 36.5   | %  |  |  |  |   | 14,287 |   |  |  |  |  | 50.4   | %  |
|                                                                                                                    |  |  |                           |   | 116,792 |             |  |  |        |  | 95.4   | %           |  |  |   |   | 71,203 |   |  |  |  |  | 91.8   | %  |  |  |  |   | 45,589 |   |  |  |  |  | 64.0   | %  |
| Operatingincome                                                                                                         |  |  |                           |   | 5,675   |             |  |  |        |  | 4.6    | %           |  |  |   |   | 6,354  |   |  |  |  |  | 8.2    | %  |  |  |  |   | (679   | ) |  |  |  |  | (10.7  | %) |
| Interestexpense,net                                                                                                     |  |  |                           |   | 22,415  |             |  |  |        |  | 18.3   | %           |  |  |   |   | 15,538 |   |  |  |  |  | 20.0   | %  |  |  |  |   | 6,877  |   |  |  |  |  | 44.3   | %  |
| Losson early extinguishment ofdebt                                                                                      |  |  |                           |   | — |             |  |  |        |  | 0.0    | %           |  |  |   |   | 461    |   |  |  |  |  | 0.6    | %  |  |  |  |   | (461   | ) |  |  |  |  | N/A    |    |
| Otherexpense(income)                                                                                                    |  |  |                           |   | (1      | )           |  |  |        |  | (0.0   | %)          |  |  |   |   | 21     |   |  |  |  |  | 0.1    | %  |  |  |  |   | (22    | ) |  |  |  |  | N/A    |    |
| Income(loss) from continuing operations before income tax benefit(expense)                                              |  |  |                           |   | (16,739 | )           |  |  |        |  | (13.7  | %)          |  |  |   |   | (9,666 | ) |  |  |  |  | (12.5  | %) |  |  |  |   | (7,073 | ) |  |  |  |  | (73.2  | %) |
| Incometax benefit(expense)                                                                                              |  |  |                           |   | (2      | )           |  |  |        |  | (0.0   | %)          |  |  |   |   | (16    | ) |  |  |  |  | (0.0   | %) |  |  |  |   | 14     |   |  |  |  |  | (87.5  | %) |
| Income(loss) from continuingoperations                                                                                  |  |  |                           |   | (16,741 | )           |  |  |        |  | (13.7  | %)          |  |  |   |   | (9,682 | ) |  |  |  |  | (12.5  | %) |  |  |  |   | (7,059 | ) |  |  |  |  | (72.9  | %) |
| Income(loss) from discontinuedoperations                                                                                |  |  |                           |   | (173    | )           |  |  |        |  | (0.1   | %)          |  |  |   |   | 377    |   |  |  |  |  | 0.5    | %  |  |  |  |   | (550   | ) |  |  |  |  | N/A    |    |
| Income(loss) before loss on sale ofproperties                                                                           |  |  |                           |   | (16,914 | )           |  |  |        |  | (13.8  | %)          |  |  |   |   | (9,305 | ) |  |  |  |  | (12.0  | %) |  |  |  |   | (7,609 | ) |  |  |  |  | (81.8  | %) |
| Losson sale ofproperties                                                                                                |  |  |                           |   | (56     | )           |  |  |        |  | (0.1   | %)          |  |  |   |   | (119   | ) |  |  |  |  | (0.2   | %) |  |  |  |   | 63     |   |  |  |  |  | (52.9  | %) |
| Netincome(loss)                                                                                                         |  |  |                           | $ | (16,970 | )           |  |  |        |  | (13.9  | %)          |  |  |   | $ | (9,424 | ) |  |  |  |  | (12.2  | %) |  |  |  | $ | (7,546 | ) |  |  |  |  | (80.1  | %) |
|                                                                                                                         |

Revenues

Ourrevenues increased $44.9  million, or 57.9%, for thequarter ended June  30,  2006 as compared to the prior yearquarter, primarily as a result of the Sprint Transaction and theacquisition of other communications sites since April  1,2005. During the three months ended June  30,  2006 and2005, $63.3  million and $22.1  million, respectively, ofour revenue was generated from the Sprint Towers. We 

25

----

Table of Contents

also experienced growth in our revenuesgenerated from telephony customers which was in part offset by adecline in our revenues generated by our non-telephony tenants. Our mixof revenues from wireless telephony customers as a percentage of totalsite revenues increased to 79.7% for the three months endedJune  30,  2006, from 67.2% for the three monthsended June  30,  2005, primarily as a result ofacquisitions and organic growth in our telephony revenues. Revenuesfrom Sprint and Cingular Wireless comprised 38.3% and15.7%, respectively, of our revenues for the quarter endedJune  30, 2006.

Expenses

Direct site operatingexpenses (excluding depreciation, amortization and accretionexpense)

Our direct site operating expenses increased$26.7  million primarily due to direct site operating expensesassociated with the Sprint Towers along with other communication siteswe have acquired since April  1,  2005. These increaseswere partially offset by decreased rent expense associated with ourpurchase of land under our towers, which we had previously leased. As apercentage of revenues, our direct site operating expenses increased to46.5% of revenues for the three months ended June30,  2006, from 38.9% of revenues for the three monthsended June  30,  2005, primarily due to the Sprint Towers,which have lower tenant revenues per tower and higher ground rentexpense as a percentage of revenue.

Selling, general andadministrative

Our selling, general and administrative expensesincrease of $7.4  million was primarily attributable to (i)increases in personnel related expenses along with occupancy and othercosts associated with the increase in our corporate staff necessary tomanage our growth primarily related to the addition of the SprintTowers, (ii) an increase in non-cash stock-based compensation expensefrom stock grants to executives in the second quarter of 2006 and (iii)increased professional fees related to a significant number of ITsystem remediation and improvement projects. As a percentage ofrevenues, our selling, general and administrative expenses increased to13.7% of revenues for the three months ended June30,  2006, from 12.1% of revenues for the three monthsended June  30,  2005 primarily due to the increase innon-cash stock-based compensation discussed above.

Sprintintegration costs

For the three months ended June30,  2006, $0.2  million of costs were incurred in relationto the integration of the Sprint Towers into our operations versus$3.2  million during the three months ended June30,  2005. The integration was completed in the second quarter of2006.

Depreciation, amortization and accretion

Theincrease in depreciation, amortization and accretion expenses of$14.3  million for the three months ended June  30,2006 compared to the three months ended June  30,  2005,was primarily due to the Sprint Towers and other communication sites wehave acquired since April  1,  2005.

Interestexpense, net

Our net interest expense increase of $6.9million is related to debt to finance the Sprint Towers and othercommunication sites we have acquired since April  1,  2005.Interest expense in the second quarter of 2006 is net of interestincome earned and three months of amortization of derivative settlementgains recorded in accumulated other comprehensive income and deferreddebt costs related to the February  2006 mortgageloan.

26

----

Table of Contents

Comparison of the six months endedJune  30, 2006 to the six months ended June  30,2005

|                                                                                                                           |  |  |                         |   |         |             |  |  |        |  |        |             |  |  |   |   |         |   |  |  |  |  |        |    |  |  |  |   |         |   |  |  |     |  |        |    |
|---------------------------------------------------------------------------------------------------------------------------|--|--|-------------------------|---|---------|-------------|--|--|--------|--|--------|-------------|--|--|---|---|---------|---|--|--|--|--|--------|----|--|--|--|---|---------|---|--|--|-----|--|--------|----|
|                                                                                                                      |  |  | SixMonths Ended June30, |
|                                                                                                                      |  |  | 2006                    |   |         | 2005        |  |  | Change |
|                                                                                                                      |  |  | (dollarsinthousands)    |
|                                                                                                                      |  |  | $                       |   |         | %of Revenue |  |  | $      |  |        | % ofRevenue |  |  | $ |   |         | % |
| Revenues                                                                                                                  |  |  |                         | $ | 243,462 |             |  |  |        |  | 100.0  | %           |  |  |   | $ | 131,587 |   |  |  |  |  | 100.0  | %  |  |  |  | $ | 111,875 |   |  |  |     |  | 85.0   | %  |
| Directsite operating expenses (excludingdepreciation,                                                                     |  |  |                         |   |    |             |  |  |        |  |   |             |  |  |   |   |    |   |  |  |  |  |   |    |  |  |  |   |    |   |  |  |     |  |   |    |
| amortizationandaccretion)                                                                                                 |  |  |                         |   | 110,227 |             |  |  |        |  | 45.3   | %           |  |  |   |   | 46,185  |   |  |  |  |  | 35.1   | %  |  |  |  |   | 64,042  |   |  |  |     |  | 138.7  | %  |
| Selling,general and administrative (including $1,290 and $4,857 of non-cashstock-based compensation expense,respectively) |  |  |                         |   | 27,926  |             |  |  |        |  | 11.5   | %           |  |  |   |   | 16,153  |   |  |  |  |  | 12.2   | %  |  |  |  |   | 11,773  |   |  |  |     |  | 72.9   | %  |
| Sprintsites integrationcosts                                                                                              |  |  |                         |   | 446     |             |  |  |        |  | 0.2    | %           |  |  |   |   | 3,164   |   |  |  |  |  | 2.4    | %  |  |  |  |   | (2,718  | ) |  |  |     |  | (85.9  | %) |
| Statefranchise, excise and minimumtaxes                                                                                   |  |  |                         |   | 788     |             |  |  |        |  | 0.3    | %           |  |  |   |   | 332     |   |  |  |  |  | 0.3    | %  |  |  |  |   | 456     |   |  |  |     |  | 137.3  | %  |
| Depreciation,amortization andaccretion                                                                                    |  |  |                         |   | 86,920  |             |  |  |        |  | 35.7   | %           |  |  |   |   | 45,804  |   |  |  |  |  | 34.8   | %  |  |  |  |   | 41,116  |   |  |  |     |  | 89.8   | %  |
|                                                                                                                      |  |  |                         |   | 226,307 |             |  |  |        |  | 93.0   | %           |  |  |   |   | 111,638 |   |  |  |  |  | 84.8   | %  |  |  |  |   | 114,669 |   |  |  |     |  | 102.7  | %  |
| Operatingincome                                                                                                           |  |  |                         |   | 17,155  |             |  |  |        |  | 7.0    | %           |  |  |   |   | 19,949  |   |  |  |  |  | 15.2   | %  |  |  |  |   | (2,794  | ) |  |  |     |  | (14.0  | %) |
| Interestexpense,net                                                                                                       |  |  |                         |   | 47,062  |             |  |  |        |  | 19.3   | %           |  |  |   |   | 25,739  |   |  |  |  |  | 19.6   | %  |  |  |  |   | 21,323  |   |  |  |     |  | 82.8   | %  |
| Gainon derivativeinstruments                                                                                              |  |  |                         |   | (176    | )           |  |  |        |  | (0.1   | %)          |  |  |   |   | — |   |  |  |  |  | 0.0    | %  |  |  |  |   | (176    | ) |  |  |     |  | N/A    |    |
| Losson early extinguishment ofdebt                                                                                        |  |  |                         |   | 21,102  |             |  |  |        |  | 8.7    | %           |  |  |   |   | 461     |   |  |  |  |  | 0.4    | %  |  |  |  |   | 20,641  |   |  |  | N/M |
| Otherexpense(income)                                                                                                      |  |  |                         |   | 43      |             |  |  |        |  | 0.0    | %           |  |  |   |   | (82     | ) |  |  |  |  | (0.1   | %) |  |  |  |   | 125     |   |  |  |     |  | N/A    |    |
| Income(loss) from continuing operations before income tax benefit(expense)                                                |  |  |                         |   | (50,876 | )           |  |  |        |  | (20.9  | %)          |  |  |   |   | (6,169  | ) |  |  |  |  | (4.7   | %) |  |  |  |   | (44,707 | ) |  |  | N/M |
| Incometax benefit(expense)                                                                                                |  |  |                         |   | (40     | )           |  |  |        |  | (0.0   | %)          |  |  |   |   | 509     |   |  |  |  |  | 0.4    | %  |  |  |  |   | (549    | ) |  |  |     |  | N/A    |    |
| Income(loss) from continuingoperations                                                                                    |  |  |                         |   | (50,916 | )           |  |  |        |  | (20.9  | %)          |  |  |   |   | (5,660  | ) |  |  |  |  | (4.3   | %) |  |  |  |   | (45,256 | ) |  |  | N/M |
| Income(loss) from discontinuedoperations                                                                                  |  |  |                         |   | (517    | )           |  |  |        |  | (0.2   | %)          |  |  |   |   | 270     |   |  |  |  |  | 0.2    | %  |  |  |  |   | (787    | ) |  |  |     |  | N/A    |    |
| Income(loss) before loss on sale ofproperties                                                                             |  |  |                         |   | (51,433 | )           |  |  |        |  | (21.1  | %)          |  |  |   |   | (5,390  | ) |  |  |  |  | (4.1   | %) |  |  |  |   | (46,043 | ) |  |  | N/M |
| Losson sale ofproperties                                                                                                  |  |  |                         |   | (623    | )           |  |  |        |  | (0.3   | %)          |  |  |   |   | (138    | ) |  |  |  |  | (0.1   | %) |  |  |  |   | (485    | ) |  |  | N/M |
| Netincome(loss)                                                                                                           |  |  |                         | $ | (52,056 | )           |  |  |        |  | (21.4  | %)          |  |  |   | $ | (5,528  | ) |  |  |  |  | (4.2   | %) |  |  |  | $ | (46,528 | ) |  |  | N/M |
|                                                                                                                           |

Revenues

Ourrevenues increased $111.9  million, or 85.0%, for the sixmonths ended June  30,  2006 as compared to the prior yearsix month period, primarily as a result of the Sprint Transaction andthe acquisition of other communications sites since April1,  2005. During the six months ended June  30,  2006and 2005, $125.5  million and $22.1  million, respectively,of our revenue was generated from the Sprint Towers. We alsoexperienced growth in our revenues generated from telephony customerswhich was in part offset by a decline in our revenues generated by ournon-telephony tenants. Our mix of revenues from wireless telephonycustomers as a percentage of total site revenues increased to79.7% for the six months ended June  30,  2006, from61.1% for the six months ended June  30,  2005,primarily as a result of acquisitions and organic growth in ourtelephony revenues. Revenues from Sprint and Cingular Wirelesscomprised 38.4% and 15.6%, respectively, of our revenuesfor the six months ended June  30,  2006.

27

----

Table of Contents

Expenses

Direct site operatingexpenses (excluding depreciation, amortization and accretionexpense)

Our direct site operating expenses increased$64.0  million primarily due to direct site operating expensesassociated with the Sprint Towers along with other communication siteswe have acquired since April  1,  2005. These increaseswere partially offset by decreased rent expense associated with ourpurchase of various interests in parcels of land in fee simple or otherlong-term easements, which we had previously leased. As a percentage ofrevenues, our direct site operating expenses increased to 45.3%of revenues for the six months ended June  30,  2006, from35.1% of revenues for the six months ended June30,  2005, primarily due to the Sprint Towers, which have lowertenant revenues per tower and higher ground rent expense as apercentage of revenue.

Selling, general andadministrative

Our selling, general and administrative expensesincrease of $11.8  million was primarily attributable to (i)increases in personnel-related expenses along with occupancy and othercosts associated with the increase in our corporate staff necessary tomanage our growth primarily related to the addition of the SprintTowers, (ii) an increase in non-cash stock-based compensation expensefrom stock grants to executives in the second quarter of 2006 and (iii)increased professional fees related to a significant number of ITsystem remediation and improvement projects. As a percentage ofrevenues, our selling, general and administrative expenses declined to11.5% of revenues for the six months ended June30,  2006, from 12.2% of revenues for the six months endedJune  30,  2005.

Sprint integration costs

Forthe six months ended June  30,  2006, $0.4  millionof costs were incurred in relation to the integration of the SprintTowers into our operations versus $3.2  million during the sixmonths ended June  30,  2005. The integration was completedin the second quarter of 2006.

Depreciation, amortization andaccretion

The increase in depreciation, amortization andaccretion expenses of $41.1  million for the six months endedJune  30,  2006 compared to the six months endedJune  30,  2005, was primarily due to the Sprint Towers andother communication sites we have acquired since April  1,2005.

Interest expense, net

Our net interest expenseincrease of $21.3  million is related to debt to finance theSprint Towers and other communication sites we have acquired sinceApril  1,  2005. Interest expense in the first half of 2006is net of interest income earned and four months of amortization ofderivative settlement gains recorded in accumulated other comprehensiveincome and deferred debt costs related to the February  2006mortgage loan.

Loss on early extinguishment of debt

Ourloss on early extinguishment of debt of $21.1  million for thefirst half of 2006 results from the payoff of the February  2004mortgage loan, the Sprint bridge loan and the $200.0  millionacquisition credit facility with a portion of the proceeds from ourFebruary  2006 mortgage loan. The loss was comprised of a$7.0  million prepayment penalty relating to the February2004 mortgage loan, $10.7  million of deferred debt costsrelating to all three loans and a $3.4  million write-off ofaccumulated other comprehensive loss relating to the 2003 interest rateswaps that were used to hedge the February  2004 mortgageloan.

Liquidity and Capital Resources

Our liquidity needsarise from working capital requirements, debt service, toweracquisitions, ground acquisitions, construction costs for occasionalnew tower builds and tower augmentations, other capital expendituresand dividend payments. We expect to meet our cash requirements for thenext twelve 

28

----

Table of Contents

months by using cash on hand, cash generatedfrom operating activities and the $114.5  million of net proceedsfrom our February  2006 mortgage loan.

February2006 Mortgage Loan

On February  28,  2006, three ofour wholly owned special purpose entities, Global Signal AcquisitionsII LLC, Global Signal Acquisitions LLC and Pinnacle Towers LLC (and its13 subsidiaries), borrowed $1.55  billion under three mortgageloans made payable to Global Signal Trust III that issued $1.55billion in commercial mortgage pass-through certificates, to providefixed-rate financing for the Sprint Towers and communications sites weacquired since April  2005, and to refinance the February2004 mortgage loan. The borrowers and their direct parent, GlobalSignal Holdings V LLC, are separate legal entities from Global SignalInc. with their own assets, which are not available to satisfy thedebts and other obligations of Global Signal Inc. or any of itsaffiliates. We have continued to consolidate our subsidiaries, but havenot consolidated Global Signal Trust III into our financial statements.Interest accrues on the mortgage loan at a weighted average fixed rateper annum of approximately 5.7%. The February  2006mortgage loan requires monthly payments of interest until itscontractual repayment date in February  2011. The February2006 mortgage loan is secured by, among other things, (1) mortgageliens on the borrowers’ interests (fee, leasehold or easement)in over 80% of their communications sites, (2) a securityinterest in substantially all of the borrowers’ personalproperty and fixtures and (3) a pledge of the capital stock (orequivalent equity interests) of each of the borrowers (including apledge of the capital stock of Pinnacle Towers LLC, Global SignalAcquisitions LLC and Global Signal Acquisitions II LLC from its directparent, Global Signal Holdings V LLC).

On a monthly basis, theexcess cash flows from the securitized entities, after the payment ofprincipal, interest, reserves and expenses, are distributed to us. Ifthe DSCR, defined in the February  2006 mortgage loan as the netcash flow for the sites for the immediately preceding twelve calendarmonth period divided by the amount of interest that we will be requiredto pay over the succeeding twelve months on the February  2006mortgage loan, as of the end of any calendar quarter falls to 1.35times or lower, then all excess cash flow will be deposited into areserve account instead of being released to us. The funds in thereserve account will not be released to us until the DSCR exceeds 1.35times for two consecutive calendar quarters. If the DSCR falls below1.20 times as of the end of any calendar quarter, then all funds ondeposit in the reserve account along with future excess cash flows willbe applied to prepay the February  2006 mortgage loan withapplicable prepayment consideration.

The borrowers may not prepaythe February  2006 mortgage loan in whole or in part at any timeprior to February  28,  2008, except in limitedcircumstances (such as the occurrence of certain casualty andcondemnation events relating to the communications sites securing theFebruary  2006 mortgage loan). Thereafter, prepayment ispermitted provided it is accompanied by any applicable prepaymentconsideration. If the prepayment occurs within three months of theFebruary  2011 monthly payment date, no prepayment considerationis due.

The February  2006 mortgage loan documents includecovenants customary for mortgage loans subject to ratedsecuritizations. Among other things, the borrowers are prohibited fromincurring additional indebtedness or further encumbering their assets.The effective interest rate on the February  2006 mortgage loanincluding the benefit from terminating the 2005 interest rate swapswhich qualified for hedge accounting and the amortization of deferreddebt issuance costs is approximately 5.5%.

We used theproceeds as follows:

|  |              |                                                                                                                                                                                                                                                                                                      |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | $850.0 million torepay the debt outstanding under our $850.0  million bridge loanthat was incurred in connection with the Sprint Transaction. As aresult of this repayment, we wrote off as a loss on earlyextinguishment of debt unamortized deferred financing cost ofapproximately $1.0  million; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | $402.7million to repay debt on the then-outstanding borrowings under theFebruary  2004 mortgage loan. In the first quarter of 2006 wewrote off as a loss on early extinguishment of debt unamortizeddeferred financing cost of approximately $9.5  million,approximately $3.4  million of accumulated other comprehensiveloss related to the 2003 interest rate swaps and a pre-payment penaltyof $7.0  million; |

29

----

Table of Contents

|  |              |                                                                                                                                                                                                                                                                                                                                      |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | $151.8 million torepay the debt outstanding under the acquisition credit facility. Uponrepayment, we also terminated our ability to make future draws underthe acquisition credit facility. As a result, we wrote off as a loss onearly extinguishment of debt unamortized deferred financing cost ofapproximately $0.2  million;and |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | $145.5 million to pay estimatedexpenses of approximately $14.0  million, to fund increasedimpositions and reserves related to the February  2006 mortgageloan of approximately $10.0  million, to pay the $7.0million prepayment penalty related to the February  2004 mortgageloan refinancing, to provide funds of approximately $114.5million to acquire additional communications sites and additional feeinterests or long-term easements for the ground under ourcommunications sites, and to provide working capital. |

TheDecember  2004 Mortgage Loan

On December  7,2004, our special purpose entities, Pinnacle Towers AcquisitionsHoldings LLC, and five of its direct and indirect subsidiaries, issueda $293.8  million mortgage loan to Global Signal Trust II. GlobalSignal Trust II then issued an identical amount of commercial mortgagepass-through certificates in a private transaction. The borrowers andtheir direct parent, Global Signal Holdings III LLC, are separate legalentities from Global Signal Inc., with their own assets, which are notavailable to satisfy the debts and obligations of Global Signal Inc. orany of its affiliates. We have continued to consolidate oursubsidiaries, but have not consolidated Global Signal Trust II in ourfinancial statements. The net proceeds of the December  2004mortgage loan were used primarily to repay the $181.7  million ofthen-outstanding borrowings under our credit facility and to partiallyfund a $120.7  million site acquisition reserve account which wasused to acquire additional qualifying communications sites over thesix-month period following the December  2004 closing.

Theprincipal amount of the December  2004 mortgage loan is dividedinto seven tranches, each having a different level of seniority.Interest accrues on each tranche at a fixed rate per annum. Theweighted average interest rate on the various tranches is approximately4.7%. The December  2004 mortgage loan requires monthlypayments of interest until its maturity in December  2009 whenthe unpaid principal balance will be due. The December  2004mortgage loan is secured by, among other things, (1) mortgage liens onthe borrowers’ interests (fee, leasehold or easement) insubstantially all of their communications sites, (2) a securityinterest in substantially all of the borrowers’ personalproperty and fixtures and (3) a pledge of the capital stock (orequivalent equity interests) of each of the borrowers (including apledge of the capital stock of Pinnacle Towers Acquisition Holdings LLCfrom its direct parent, Global Signal Holdings III LLC).

On amonthly basis, the excess cash flows from the securitized entities,after the payment of principal, interest, reserves and expenses, aredistributed to us. If the DSCR, defined in the December  2004mortgage loan as the net cash flow for the sites for the immediatelypreceding twelve calendar month period divided by the amount ofinterest that we will be required to pay over the succeeding twelvemonths on the December  2004 mortgage loan, as of the end of anycalendar quarter falls to 1.30 times or lower, then all excess cashflow will be deposited into a reserve account instead of being releasedto us. The funds in the reserve account will not be released to usuntil the DSCR exceeds 1.30 times for two consecutive calendarquarters. If the DSCR falls below 1.15 times as of the end of anycalendar quarter, then all funds on deposit in the reserve accountalong with future excess cash flows will be applied to prepay theDecember  2004 mortgage loan.

We may not prepay theDecember  2004 mortgage loan in whole or in part at any timeprior to December  7,  2006, except in limitedcircumstances (such as the occurrence of certain casualty andcondemnation events relating to the communications sites securing theDecember  2004 mortgage loan). Thereafter, prepayment ispermitted provided it is accompanied by any applicable prepaymentconsideration. If the prepayment occurs within three months of theDecember  2009 monthly payment date, no prepayment considerationis due.

The December  2004 mortgage loan documents includecovenants customary for mortgage loans subject to ratedsecuritizations. Among other things, the borrowers are prohibited fromincurring additional indebtedness or further encumbering theirassets.

30

----

Table of Contents

Revolving Credit Agreement

OnDecember  1,  2005, Global Signal OP entered into a 364-day$15.0  million revolving credit facility pursuant to a revolvingcredit agreement with Morgan Stanley Asset Funding Inc. and Bank ofAmerica, N.A. to provide funding for working capital and othercorporate purposes.

At June  30,  2006 andDecember  31,  2005, there were no balances outstandingunder the revolving credit facility. Interest on the $15.0million revolving credit facility is payable, at Global SignalOP’s option, at either LIBOR plus 3.0% or thebank’s base rate plus 2.0%. Interest is payable at theend of the interest period or at the time of principal repayments.Principal on the revolving credit facility may be paid, in whole or inpart, at any time and must be repaid by the loan maturity date,December  1,  2006.

The revolving credit agreement,and the related ancillary documentation contain covenants andrestrictions customary for a facility of this type including alimitation on our consolidated indebtedness at approximately$1.875  billion and a requirement to limit our ratio ofconsolidated indebtedness to consolidated EBITDA, as defined in theloan document, to a ratio of 7.65 to 1.0. The Revolving CreditAgreement is guaranteed by us, Global Signal GP, LLC and certainsubsidiaries of Global Signal OP. It is secured by a pledge of GlobalSignal OP’s assets, including a pledge of 65% of itsinterest in our United Kingdom subsidiary, 100% of its interestin certain other domestic subsidiaries, a pledge by us and GlobalSignal GP, LLC of our interests in Global Signal OP, and a pledge by usof 65% of our interest in our Canadiansubsidiary.

Internal Control over Financial Reporting

Asof December  31,  2005, we had two material weaknesses inour internal controls over financial reporting. To remediate thesematerial weaknesses, we will spend an estimated $12  millionduring 2006 and 2007 which will either be expensed as additionalselling, general and administrative expense or capitalized as fixedassets, including costs related to (i) computer system enhancements,and the replacement of our lease administration system, (ii) datarevalidation and (iii) redesigning processes and controls.

CashFlows

Net cash flows provided by operating activities were$61.3  million for the six months ended June  30,2006, compared to $38.8  million for the six months endedJune  30,  2005. The increase of $22.5  million ofnet cash provided by operating activities is primarily the result ofcash flow from the communication sites acquired since April1,  2005.

Net cash flows used in investing activities were$63.7  million for the six months ended June  30,2006 compared to $1.29 billion for the six months ended June30,  2005. Investing activities for the six months endedJune  30,  2006 consists of the acquisition of 18communications sites for $7.1 million, including fees andexpenses. Also, during the six months ended June  30,2006, we acquired 271 parcels of land, in fee simple title or underlong-term easements, which we had previously leased from the sellers,for a total purchase price of $38.1 million, including fees andexpenses. Restricted cash increased $8.5  million as a result ofthe February  2006 mortgage loan requirements.

Investingactivities for the six months ended June  30,  2005consisted primarily of (1) the acquisition of 6,553 communicationssites from Sprint for approximately $1.2  billion, including feesand expenses, and (2) the acquisition of 450 communication sites inunrelated transactions for $134.3 million, including fees andexpenses, which were funded from the acquisition line of credit, theSprint bridge loan, our equity issuance and cash in our siteacquisition reserve account established with a portion of the netproceeds from our December  2004 mortgage loan. During the sixmonths ended June  30,  2005, we also acquired 31 parcelsof land, in fee simple title and ten under long-term easements, whichwe had previously leased from the sellers, for a total purchase priceof $3.9 million, including fees and expenses. Additionally,$54.6  million was provided by restricted cash to fund the SprintTransaction deposit and used to fund certain communications siteacquisitions during the six months ended June  30,2005.

Capital expenditures were $10.2  million for the sixmonths ended June  30,  2006, compared to $5.6million for the six months ended June  30,  2005. Thecapital expenditures for these two periods 

31

----

Table of Contents

primarily consisted of the purchase oftower-related equipment and tower augmentations and improvements. Theincrease year-over-year is due to the acquisition of the SprintTowers.

Net cash flows provided by financing activities were$97.1  million for the six months ended June  30,2006 and consisted of (1) $1.55  billion borrowing under theFebruary  2006 mortgage loan, (2) $33.8  million paymentreceived from the termination of the 2005 interest rate swaps and (3)$3.4  million from the issuance of common stock. This was in partoffset by (1) $850.0  million to repay the debt outstanding underour bridge loan that was incurred in connection with the SprintTransaction, (2) $404.1  million to repay debt under theFebruary  2004 mortgage loan, (3) $151.8  million to repaythe debt outstanding under the acquisition credit facility, and (4)payment of $71.4  million in ordinary dividends.

Net cashflows provided by financing activities were $1.3  billion for thesix months ended June  30,  2005 and consisted of (1)$850.0  million in borrowings under the Sprint bridge financing,(2) $74.8  million borrowed under our acquisition creditfacility, and (3) $437.3  million in proceeds from the issuanceof our common stock. These were partially offset by $41.8million in ordinary dividends paid.

ContractualCommitments

As of June  30,  2006, we signed masterservices agreements with Stratos VSAT, Inc. and Hark Tower Systems,Inc. which require us to purchase approximately $6.5  million insatellite data monitoring equipment. As of June  30,  2006,we purchased $4.9  million of equipment under these commitments.As of June  30,  2006, we signed an agreement with Intuit,Inc. to purchase and install lease and asset management software. Theamount of the purchase commitment is $1.2  million of which$0.2  million has been paid. As of June  30,  2006,we also had outstanding purchase agreements to acquire threecommunications sites from various sellers for a total estimatedpurchase price of $4.2  million, including estimated fees andexpenses, and 139 land parcels for $22.2  million, includingestimated fees and expenses. As of June  30,  2006, we alsohad letters of intent to purchase seven additional communications sitesfor approximately $7.7  million, including estimated fees andexpenses. Subsequent to June  30,  2006, we completed theacquisition of one communication site.

Sprint Purchase PriceAdjustment

As part of the Sprint Agreement, Sprint agreed torefund us a portion of the upfront rental payment if an agreed-uponportion of the Sprint Towers did not qualify as financeable sites,within one year of the closing of the Sprint Transaction. We agreed touse commercially reasonable efforts to convert Sprint Towers which didnot qualify as financeable sites into financeable sites by May26,  2006. As of May  26,  2006, less than theagreed-upon allocated purchase price value for the Sprint Towersqualified as financeable sites and we received an upfront rentalpayment refund of $3.1  million in July  2006.

Critical Accounting Policies and Estimates

New AccountingPronouncements

Effective January  1,  2006, weadopted SFAS No. 123(R) Share-Based-Payments, on a modifiedprospective transition method to account for our employee stockoptions. Under that transition method, compensation costs for theportion of awards for which the requisite service had not yet beenrendered, and that were outstanding as of the adoption date, will berecognized as the service is rendered based on the grant date fairvalue of those awards calculated under SFAS No. 123(R). Prior periodresults are not restated. In connection with the adoption of SFAS No.123(R), we reclassified $1.1  million of deferred compensationexpense, which relates entirely to unvested restricted stock, toadditional paid-in capital as of January  1,  2006. Therewas no impact to earnings from adopting SFAS No. 123(R). Prior toadopting SFAS No. 123(R) as part of a restructuring of compensation, weamended a former officer's option agreement to cancel optionsrelating to 35,875 shares with an exercise price of $8.53 per share andoptions relating to 107,625 shares with an exercise price of $18.00 pershare, and accelerated vesting of options relating to 46,125 shareswith an exercise price of $8.53 per share and options relating to138,375 shares with an exercise price of $18.00 per share. As of June30, 2006, total unearned compensation on stock-based awards was $15.4million and the weighted average vesting period is 2.9years.

32

----

Table of Contents

Effective January  1,  2006,the Company adopted FIN 47 Accounting for Conditional AssetRetirement Obligations. This interpretation clarifies that the term‘‘conditional asset retirement obligation’’as used in SFAS No. 143, Accounting for Asset RetirementObligations, refers to a legal obligation to perform an assetretirement activity in which the timing and (or) method of settlementare conditional on a future event that may or may not be within thecontrol of the entity. The obligation is unconditional even thoughuncertainty exists about the timing and (or) method of settlement. Ourasset retirement obligations are within our control as to timing andmethod as they relate to the removal of our communications towers fromleased land; therefore the adoption of this interpretation did notimpact our financial statements.

Effective January1,  2006, the Company adopted FASB Staff Position 13-1Accounting for Rental Costs Incurred during a Construction Period.This staff position concludes that rental costs associated withground or building operating leases that are incurred during aconstruction period should be recognized as rental expense. We hadalready accounted for such rental costs in the manner prescribed by thestaff position, so this staff position did not impact our financialstatements.

In June  2006, the FASB issued FIN 48,Accounting for Uncertainty in Income Taxes. This interpretationclarifies the accounting for uncertainty in income taxes recognized inan enterprise’s financial statements in accordance with SFAS No.109, Accounting for Income Taxes. This interpretation prescribesa recognition threshold and measurement attribute for the financialstatement recognition and measurement of a tax position taken orexpected to be taken in a tax return. This interpretation also providesguidance on derecognition, classification, interest and penalties,accounting in interim periods, disclosure and transition. This standardmust be adopted as of January  1,  2007. We anticipate thatthis standard will have an immaterial effect on our financialstatements due to the fact that as a REIT our income taxes areimmaterial.

Item 3.    Quantitative and QualitativeDisclosures About Market Risk

Interest Rate Risk

We arenot exposed to market risks from changes in interest rates charged onour outstanding debt as the interest rates on our debt are fixed. Wehad no outstanding variable rate debt under our Revolving CreditAgreement at June  30,  2006.

The following tablepresents the future principal payment obligations and weighted-averageinterest rates at June  30,  2006 associated with ourexisting debt instruments using our actual level of indebtedness of$0.7 million under capital leases to finance computer softwareand $1.84 billion under our mortgage loans issued on February28,  2006 and December  7,2004.

|                           |  |  |                             |  |        |        |  |  |                                                                         |   |           |      |  |  |      |   |         |      |  |  |  |   |         |  |  |  |  |   |         |  |  |  |  |   |         |  |  |  |  |   |           |  |
|---------------------------|--|--|-----------------------------|--|--------|--------|--|--|-------------------------------------------------------------------------|---|-----------|------|--|--|------|---|---------|------|--|--|--|---|---------|--|--|--|--|---|---------|--|--|--|--|---|---------|--|--|--|--|---|-----------|--|
|                      |  |  | WeightedAverageInterestRate |  |        |   |  |  | FuturePrincipal Payment Obligations — Twelve Months Ended June30, |
|                      |  |  | Total                       |  |        | 2007   |  |  | 2008                                                                    |   |           | 2009 |  |  | 2010 |   |         | 2011 |
|                      |  |  |                        |  |        |   |  |  | ($in thousands)                                                         |
| Fixedrate:                |  |  |                             |  |   |        |  |  |                                                                         |   |      |      |  |  |      |   |    |      |  |  |  |   |    |  |  |  |  |   |    |  |  |  |  |   |    |  |  |  |  |   |      |  |
| February2006 mortgageloan |  |  |                             |  | 5.7    |        |  |  |                                                                         | $ | 1,550,000 |      |  |  |      | $ | — |      |  |  |  | $ | — |  |  |  |  | $ | — |  |  |  |  | $ | — |  |  |  |  | $ | 1,550,000 |  |
| December2004 mortgageloan |  |  |                             |  | 4.7    |        |  |  |                                                                         |   | 293,825   |      |  |  |      |   | — |      |  |  |  |   | — |  |  |  |  |   | — |  |  |  |  |   | 293,825 |  |  |  |  |   | —   |  |
| Capitalleaseobligations   |  |  |                             |  | 9.5    |        |  |  |                                                                         |   | 673       |      |  |  |      |   | 496     |      |  |  |  |   | 140     |  |  |  |  |   | 18      |  |  |  |  |   | 19      |  |  |  |  |   | —   |  |
| Totalfixed ratedebt       |  |  |                             |  |   |        |  |  |                                                                         |   | 1,844,498 |      |  |  |      | $ | 496     |      |  |  |  | $ | 140     |  |  |  |  | $ | 18      |  |  |  |  | $ | 293,844 |  |  |  |  | $ | 1,550,000 |  |
|                           |

ForeignCurrency Exchange Risk

Our exposure to adverse movements inforeign currency exchange rates is primarily related to our foreignsubsidiaries’ (United Kingdom and Canada) operating expenses,denominated in the respective local currency. A hypothetical change of10% in foreign currency exchange rates would not have a materialimpact on our consolidated financial statements or results ofoperations.

33

----

Table of Contents

Item 4.    Controls andProcedures

a)    Controls and Procedures.

Our disclosure controls and procedures are designed to providereasonable assurance that information is recorded, processed,summarized and reported accurately and on a timely basis. Ourmanagement, with the participation of our Chief Executive Officer andChief Financial Officer, has evaluated the effectiveness of ourdisclosure controls and procedures (as such term is defined in Rules13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, asamended, (the ‘‘Exchange Act’’)) as of theend of the period covered by this report. Our Chief Executive Officerand our Chief Financial Officer, based on their evaluation of theeffectiveness of the design and operation of our disclosure controlsand procedures as of the end of the period covered by this report, haveconcluded that our disclosure controls and procedures were noteffective to provide reasonable assurance that the foregoing objectiveswere achieved, in light of the material weaknesses described in ourAnnual Report on Form 10-K for the year ended December31,  2005.

b)    Internal Control OverFinancial Reporting.

Other than as set forth below, there havenot been any changes in our internal control over financial reporting(as such term is defined in Rules 13a-15(f) and 15d-15(f) under theExchange Act) during the fiscal quarter to which this report relatesthat have materially affected, or are reasonably likely to materiallyaffect, our internal control over financial reporting.

Managementbelieves the material weaknesses identified and reported for the yearended December  31,  2005, described in our Annual Reporton Form 10-K, were primarily a result of the implementation of a newlease administration system, the effort required to effectivelyintegrate and account for the Sprint Transaction and otheracquisitions, and the tenure of our financial accounting and reportingstaff. We have begun implementing changes to our processes to improveour internal control over financial reporting. The following are amongthe steps we have taken, or intend to take, to remediate the materialweaknesses identified as of December  31,2005:

|  |              |                                                                                                                           |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------|
|  | •  | Improving processes and controls tore-validate key data in the lease administration system, and subsequentchanges thereto |

|  |              |                                                                                                                                                                                                             |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Establishing processesand controls to revise and test detail calculations in the leaseadministration system and subsequent changes thereto, with respect tostraight-line and other amortization oraccretion |

|  |              |                                                                                                                                   |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Developing exception reports toallow accounting personnel to more effectively monitor and detecterrors in certain accountbalances |

|  |              |                                                                                                                    |
|--|--------------|--------------------------------------------------------------------------------------------------------------------|
|  | •  | Reorganizing certain accountingfunctions and increasing the number of financial accounting personneland management |

|  |              |                                                                                        |
|--|--------------|----------------------------------------------------------------------------------------|
|  | •  | Undertaking a project toreplace the Company’s current lease administrationsystem |

|  |              |                                                                                                                                     |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Hiring an experienced ChiefInformation Officer to help oversee the system enhancements required toremediate the control weaknesses. |

Although we have already takensome of the steps above to remediate these material weaknesses, furtheraction is required to remediate the material weaknesses includingfurther additions to the accounting staff, enhancements to our existinglease administration system, and the development and implementation ofenhanced processes and controls. We hired a new Chief InformationOfficer who began work in April  2006. Our management and AuditCommittee continue to monitor closely the continuing progress under ourremediation plan. The effectiveness of the steps we have taken to dateand the steps we are still in the process of completing are subject tocontinued management review, as well as Audit Committee oversight, andwe may make additional changes to our internal control over financialreporting. To address the internal control weaknesses in 2006, theCompany performed other procedures to prepare the unaudited quarterlyconsolidated financial statements in accordance with generally acceptedaccounting principles.

34

----

Table of Contents

PART II — OTHERINFORMATION

Item 1.    Legal Proceedings

We areinvolved in litigation incidental to the conduct of our business. Webelieve that none of such pending litigation or unasserted claims ofwhich we have knowledge will have a material adverse effect on ourbusiness, financial condition, results of operations orliquidity.

Item 1A.    Risk Factors

Our Annual Reporton Form 10-K for the year ended December  31,  2005, filedwith the SEC on March  16,  2006, includes a description ofour risk factors. The information set forth below updates those riskfactors and should be read in conjunction with the risk factors andother information set forth in that Annual Report on Form10-K.

Chairman of the Board, Chief Executive Officer andPresident.

Effective May  10,  2006, our former ChiefExecutive Officer, President and Chairman of the Board of Directors,Wesley R. Edens, resigned from his positions as our Chief ExecutiveOfficer and President in connection with Jerry V. Elliott joiningGlobal Signal and being appointed Chief Executive Officer andPresident, and a director of the company. Mr.  Edens remainsChairman of the Board.

We had previously disclosed as a riskfactor that because of his positions with several companies, includingbeing Chairman of the Management Committee of Fortress, Mr.Edens, as our CEO and President, may not have been able to devotesufficient time to the management of our business operations. This isno longer a risk factor, as Mr.  Edens no longer serves as ourCEO and President.

We have experienced high employeeturnover.

In our Form 10-K for the year ended December31,  2005, we listed as a risk factor the fact that we haveexperienced high employee turnover during 2005, including substantialturnover in our management. Since the filing of that Form 10-K, ourformer Chief Financial Officer and former Chief Operating Officer eachresigned. Since April  2006, we have hired a new Chief ExecutiveOfficer and President, a new Chief Financial Officer, a new ChiefInformation Officer and a new Executive Vice President, Operations. Ifwe fail to attract and retain additional qualified and skilledpersonnel or fail to retain these persons, our ability to conduct ourbusiness operations effectively, remediate weaknesses in internalcontrols and our overall operating results could be harmed.

Item2.    Unregistered Sales of Equity Securities and Use ofProceeds

(a)    None

|           |      |
|-----------|------|
| (b)  | None |

|           |                                                                      |
|-----------|----------------------------------------------------------------------|
| (c)  | Purchasesof Equity Securities by the Issuer and AffiliatedPurchasers |

No shares of Global Signal common stock aredeemed to have been repurchased during the quarter. During the threemonths ended June  30,  2006, 32,045 shares of restrictedstock were forfeited to us by employees.

|  |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (i)  | TheRevolving Credit Agreement restricts the ability of Global Signal OP tomake distributions except: (i) distributions in cash or other propertyto the extent required to satisfy the REIT Distribution Requirement (asdefined in the Revolving Credit Agreement), and (ii) so long as noevent of default then exists or would result, (1) equity distributionsas consideration for a merger, so long as no event of default thenexists or will result, of Global Signal OP, or one of its subsidiaries,into Global Signal Inc. or a subsidiary of Global Signal Inc., (2) inaddition to and without duplication of dividends paid under clause (i)above, ordinary quarterly dividends to the holders of capital stock ofthe Global Signal OP in an amount reasonably comparable to ordinaryquarterly dividends customarily declared (including increases in suchdividends consistent, in terms of the percentage of such increase, withpast practices) by the board of directors of Global Signal Inc., and(3) distributions of cash to the extent necessary to pay the ordinaryoperating expenses of Global Signal Inc., provided that the aggregateamount of such distributions from December  3, 2004 shall notexceed $2.0  million. |

35

----

Table of Contents

|  |            |                                                                                                                                                                                                                                                                                  |
|--|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (ii)  | Our mortgage loansmay indirectly restrict the payment of dividends, as decreases belowcertain levels in our Debt Service Coverage Ratio would require excesscash flows, that could be used to pay dividends, be used to repayoutstanding principal due under the mortgage loans. |

Item3.    Defaults Upon Senior Securities

None

Item4.    Submission of Matters to a Vote of Security Holders

Atthe Annual Meeting of Shareholders held on May  18,  2006,the shareholders of Global Signal Inc. elected two Class I directorsfor a term expiring in 2009. The votes cast‘‘For’’ and‘‘Against/Withheld’’ on this matter were asfollows:

|                      |  |  |               |  |            |                            |  |  |  |  |         |  |
|----------------------|--|--|---------------|--|------------|----------------------------|--|--|--|--|---------|--|
|                 |  |  | VotesCast For |  |            | Votes CastAgainst/Withheld |
| Election ofDirectors |  |  |               |  |       |                            |  |  |  |  |    |  |
| DavidAbrams          |  |  |               |  | 67,605,883 |                            |  |  |  |  | 333,968 |  |
| HowardRubin          |  |  |               |  | 67,477,997 |                            |  |  |  |  | 461,854 |  |
|                      |

The termsof office of the following directors continued after the annualmeeting: Messrs. Edens, Elliott, Niehaus, Gidel, Jacobs andWhiting.

Item 5.    OtherInformation

None

36

----

Table of Contents

Item6.    Exhibits.

|               |    |    |             |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|---------------|----|----|-------------|--|--|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ExhibitNumber |    |    | Description |
|               | 3  | .1 |             |  |  | Amendedand Restated Certificate of Incorporation of the Registrant(incorporated by reference to Exhibit 3.1 to the Company’sRegistration Statement on Form S-11 (Amendment No. 1) (No. 333-112839)filed on April  2,2004).                                                                                                                                                                                                                                                                     |
|               | 3  | .2 |             |  |  | Certificate of Amendmentof Amended and Restated Certificate of Incorporation (incorporated byreference to Exhibit 3.2 to the Company’s Registration Statementon Form S-11 (Amendment No. 3) (No. 333-112839) filed on May19,  2004).                                                                                                                                                                                                                                                           |
|               | 3  | .3 |             |  |  | Amended andRestated Bylaws of the Registrant (incorporated by reference to Exhibit3.1 to the Company’s Current Report on Form 8-K, filed onDecember  23,2005).                                                                                                                                                                                                                                                                                                                                 |
|               | 4  | .1 |             |  |  | Form of Certificate forCommon Stock (incorporated by reference to Exhibit 4.1 to theCompany’s Registration Statement on Form S-11 (Amendment No. 3)(No. 333-112839) filed on May  19,2004).                                                                                                                                                                                                                                                                                                    |
|               | 4  | .2 |             |  |  | Amended and RestatedInvestor Agreement dated as of March  31,  2004 amongGlobal Signal Inc., Fortress Pinnacle Acquisition LLC, GreenhillCapital Partners, L.P., and its related partnerships named therein, andAbrams Capital Partners II, L.P. and certain of its relatedpartnerships named therein, and other parties named therein(incorporated by reference to Exhibit 4.2 to the Company’sRegistration Statement on Form S-11 (Amendment No. 1) (No. 333-112839)filed on April  2,2004). |
|               | 4  | .3 |             |  |  | Warrant Agreement betweenPinnacle Holdings Inc. and Wachovia Bank, N.A., dated November1,  2002 (incorporated by reference to Exhibit 4.3 to theCompany's Registration Statement on Form S-11 (No. 333-112839)filed on February  13,2004).                                                                                                                                                                                                                                                           |
|               | 4  | .4 |             |  |  | Warrant Agreement betweenGlobal Signal Inc. and American Stock Transfer Company, dated as ofFebruary  13,  2006 (incorporated by reference to Exhibit4.4 to the Company’s Annual Report on Form 10-K, filed onMarch  16,2006).                                                                                                                                                                                                                                                                 |
|               | 10 | .1 |             |  |  | Employment Agreement,dated April  9,  2006, by and between Jerry V. Elliott andGlobal Signal Services LLC (incorporated by reference to Exhibit 10.1to the Company’s current report on Form 10-K, filed onApril  12,2006).*                                                                                                                                                                                                                                                                    |
|               | 10 | .2 |             |  |  | Employment Agreement,dated April  5,  2006, by and between Steven G. Osgood andGlobal Signal Services LLC (incorporated by reference to Exhibit 10.2to the Company’s current report on Form 10-K, filed onApril  12,2006).*                                                                                                                                                                                                                                                                    |
|               | 10 | .3 |             |  |  | Restricted Shares AwardAgreement, dated April  9,  2006, by and between GlobalSignal Inc. and Jerry V. Elliott (incorporated by reference to Exhibit10.3 to the Company’s current report on Form 10-K, filed onApril  12,2006).*                                                                                                                                                                                                                                                               |
|               | 10 | .4 |             |  |  | Restricted Shares AwardAgreement, dated April  5,  2006, by and between GlobalSignal Inc. and Steven G. Osgood (incorporated by reference to Exhibit10.4 to the Company’s current report on Form 10-K, filed onApril  12,  2006).*                                                                                                                                                                                                                                                             |
|               | 10 | .5 |             |  |  | Form ofRestricted Shared Award Agreement (incorporated by reference to Exhibit10.1 to the Company’s current report on Form 8-K, filed onJuly  5,2006).*                                                                                                                                                                                                                                                                                                                                        |
|               | 31 | .1 |             |  |  | Certification of ChiefExecutive Officer as adopted pursuant to Section 302 of theSarbanes-Oxley Act of2002.                                                                                                                                                                                                                                                                                                                                                                                          |
|               | 31 | .2 |             |  |  | Certification of ChiefFinancial Officer as adopted pursuant to Section 302 of theSarbanes-Oxley Act of2002.                                                                                                                                                                                                                                                                                                                                                                                          |
|               | 32 | .1 |             |  |  | Certification of ChiefExecutive Officer pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of2002.                                                                                                                                                                                                                                                                                                                                                      |
|               | 32 | .2 |             |  |  | Certification of ChiefFinancial Officer pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of2002.                                                                                                                                                                                                                                                                                                                                                      |
|               |

|  |
|--|
|  |  |
|  |

|  |                                                                                            |
|--|--------------------------------------------------------------------------------------------|
|  | *    Indicates managementcontract or compensatory plan or arrangement. |

37

----

Table of Contents

SIGNATURES

Pursuant to therequirements of the Securities Exchange Act of 1934, as amended, theregistrant has duly caused this report to be signed on its behalf bythe undersigned thereunto dulyauthorized.

|        |  |  |                                               |  |  |                                                                                                                                                                                                                                                                                       |
|--------|--|--|-----------------------------------------------|--|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  |  |                                          |  |  | GlobalSignalInc.Registrant                                                                                                                                                                                                                                                            |
|   |  |  | By:        |  |  | /s/ Steven G.Osgood                            Steven G.OsgoodDuly Authorized Officer, Executive Vice Presidentand Chief FinancialOfficer |
|   |  |  | Dated:                                        |  |  | August8, 2006                                                                                                                                                                                                                                                                         |
|        |

38

----