---



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



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



For the quarterly period ended June 30, 2004



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from
 to



Commission File Number 001-32168



GLOBAL SIGNAL INC.



|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|Delaware                                                      |  | 65-0652634                         
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.)



301 North Cattlemen
Road, Suite 300, Sarasota, Florida 34232-6427

(Address of principal executive offices)



Telephone: (941) 364-8886

(Registrants telephone number, including area code)



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



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ̈No x



Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by
a court. Yes x No ̈



At August 11, 2004, Registrant had outstanding 50,575,439 shares of $0.01 par value common stock.



---



---

|                              |  |                                                                                                                        |  |     
|----------------------------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | ----
|                              |  |                                                                                                                        |  | Page
|PART I. FINANCIAL INFORMATION |  |                                                                                                                       
|                              |  |                                                                                                                       
|Item 1.                       |  | Financial Statements                                                                                                   |  |     
|                              |  |                                                                                                                       
|                              |  | Condensed Consolidated Balance Sheets as of December 31, 2003 and June 30, 2004                                        |  | 2   
|                              |  |                                                                                                                       
|                              |  | Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended June 30, 2003 and 2004          |  | 3   
|                              |  |                                                                                                                       
|                              |  | Condensed Consolidated Statements of Operations (unaudited) for the Six Months Ended June 30, 2003 and 2004            |  | 4   
|                              |  |                                                                                                                       
|                              |  | Condensed Consolidated Statement of Changes in Stockholders Equity (unaudited) for the Six Months Ended June 30, 2004 |  | 5   
|                              |  |                                                                                                                       
|                              |  | Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2003 and 2004            |  | 6   
|                              |  |                                                                                                                       
|                              |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                         |  | 7   
|                              |  |                                                                                                                       
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                  |  | 18  
|                              |  |                                                                                                                       
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                             |  | 29  
|                              |  |                                                                                                                       
|Item 4.                       |  | Controls and Procedures                                                                                                |  | 30  
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                       
|                              |  |                                                                                                                       
|Item 1.                       |  | Legal Proceedings                                                                                                      |  | 30  
|                              |  |                                                                                                                       
|Item 2.                       |  | Changes in Securities and Use of Proceeds                                                                              |  | 30  
|                              |  |                                                                                                                       
|Item 3.                       |  | Defaults Upon Senior Securities                                                                                        |  | 31  
|                              |  |                                                                                                                       
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                                    |  | 31  
|                              |  |                                                                                                                       
|Item 5.                       |  | Other Information                                                                                                      |  | 31  
|                              |  |                                                                                                                       
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                                       |  | 32  
|                              | 
|SIGNATURES                    |  | 33                                                                                                                    



1



---

PART I. FINANCIAL INFORMATION



|ITEM1. | FINANCIAL STATEMENTS:
|------ | ---------------------



GLOBAL SIGNAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)



|                                                                                                                                                                                           |  |                  |         |   |              |   |        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------- | ------- | - | ------------ | - | -------
|                                                                                                                                                                                           |  | December 31,2003 |         |   | June 30,2004
|                                                                                                                                                                                           |  |                  |         |   | (unaudited) 
|Assets                                                                                                                                                                                     |  |                  |         |   |              |   |        
|Current assets:                                                                                                                                                                            |  |                  |         |   |              |   |        
|Cash and cash equivalents                                                                                                                                                                  |  | $                | 9,661   |   |              | $ | 42,050 
|Accounts receivable, net                                                                                                                                                                   |  |                  | 987     |   |              |   | 1,024  
|Prepaid expenses and other current assets                                                                                                                                                  |  |                  | 6,919   |   |              |   | 7,850  
|Interest rate swap asset, at fair value                                                                                                                                                    |  |                  |        |   |              |   | 7,555  
|                                                                                                                                                                                           |  |                  |         |   |              |   |        
|                                                                                                                                                                                           |  |                  | 17,567  |   |              |   | 58,479 
|Restricted cash                                                                                                                                                                            |  |                  |        |   |              |   | 22,451 
|Fixed assets, net                                                                                                                                                                          |  |                  | 362,231 |   |              |   | 422,894
|Intangible assets:                                                                                                                                                                         |  |                  |         |   |              |   |        
|Leasehold interests, net                                                                                                                                                                   |  |                  | 12,916  |   |              |   | 9,968  
|Lease absorption value, net                                                                                                                                                                |  |                  | 114,049 |   |              |   | 114,325
|Deferred debt issuance costs, net                                                                                                                                                          |  |                  | 11,227  |   |              |   | 14,884 
|Other                                                                                                                                                                                      |  |                  | 2,485   |   |              |   | 2,677  
|Other assets                                                                                                                                                                               |  |                  | 4,565   |   |              |   | 6,094  
|                                                                                                                                                                                           |  |                  |         |   |              |   |        
|                                                                                                                                                                                           |  | $                | 525,040 |   |              | $ | 651,772
|                                                                                                                                                                                           |  |                  |         |   |              |   |        
|Liabilities and Stockholders Equity                                                                                                                                                       |  |                  |         |   |              |   |        
|Current liabilities:                                                                                                                                                                       |  |                  |         |   |              |   |        
|Accounts payable and accrued expenses                                                                                                                                                      |  | $                | 16,255  |   |              | $ | 19,415 
|Dividends payable                                                                                                                                                                          |  |                  |        |   |              |   | 5,201  
|Deferred revenue                                                                                                                                                                           |  |                  | 10,857  |   |              |   | 12,089 
|Interest rate swap liabilities, at fair value                                                                                                                                              |  |                  | 1,970   |   |              |   |       
|Current portion of long-term debt                                                                                                                                                          |  |                  | 6,535   |   |              |   | 7,959  
|                                                                                                                                                                                           |  |                  |         |   |              |   |        
|                                                                                                                                                                                           |  |                  | 35,617  |   |              |   | 44,664 
|Long-term debt                                                                                                                                                                             |  |                  | 257,716 |   |              |   | 408,797
|Other long-term liabilities                                                                                                                                                                |  |                  | 5,437   |   |              |   | 6,361  
|                                                                                                                                                                                           |  |                  |         |   |              |   |        
|Total liabilities                                                                                                                                                                          |  |                  | 298,770 |   |              |   | 459,822
|                                                                                                                                                                                           |  |                  |         |   |              |   |        
|Minority interest in subsidiary                                                                                                                                                            |  |                  | 817     |   |              |   |       
|                                                                                                                                                                                           |  |                  |         |   |              |   |        
|Stockholders equity:                                                                                                                                                                      |  |                  |         |   |              |   |        
|Preferred stock, $0.01 par value, 20,000,000 shares authorized, no shares issued or outstanding at December 31, 2003 and June 30,
2004                                                     |  |                  |        |   |              |   |       
|Common stock, $0.01 par value, 150,000,000 shares authorized, 41,000,000 shares issued and outstanding at December 31, 2003, and 50,497,527
shares issued and outstanding at June 30, 2004 |  |                  | 410     |   |              |   | 505    
|Additional paid-in capital                                                                                                                                                                 |  |                  | 206,089 |   |              |   | 188,707
|Accumulated other comprehensive income (loss)                                                                                                                                              |  |                  | (1,133  | ) |              |   | 2,738  
|Retained earnings                                                                                                                                                                          |  |                  | 20,087  |   |              |   |       
|                                                                                                                                                                                           |  |                  |         |   |              |   |        
|                                                                                                                                                                                           |  |                  | 225,453 |   |              |   | 191,950
|                                                                                                                                                                                           |  |                  |         |   |              |   |        
|                                                                                                                                                                                           |  | $                | 525,040 |   |              | $ | 651,772
|                                                                                                                                                                                           |  |                  |         |   |              |   |        



The accompanying Notes
to Unaudited Condensed Consolidated Financial Statements are an integral part

of these condensed financial statements.



2



---

GLOBAL SIGNAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)



|                                                                                                               |  |                            |        |   |      |   |        |  
|-------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                                               |  | Three Months EndedJune 30, |       
|                                                                                                               |  | 2003                       |        |   | 2004 |  
|Revenues                                                                                                       |  | $                          | 41,909 |   |      | $ | 44,139 |  
|Direct site operating expenses (excluding depreciation, amortization and accretion)                            |  |                            | 13,652 |   |      |   | 13,318 |  
|                                                                                                               |  |                            |        |   |      |   |        |  
|Gross margin                                                                                                   |  |                            | 28,257 |   |      |   | 30,821 |  
|                                                                                                               |  |                            |        |   |      |   |        |  
|Other expenses:                                                                                                |  |                            |        |   |      |   |        |  
|Selling, general and administrative (excluding $0 and $608 of non-cash stock-based compensation, respectively) |  |                            | 6,694  |   |      |   | 5,855  |  
|State franchise, excise and minimum taxes                                                                      |  |                            | 208    |   |      |   | 165    |  
|Depreciation, amortization and accretion                                                                       |  |                            | 11,176 |   |      |   | 11,954 |  
|Non-cash stock-based compensation expense for services                                                         |  |                            |       |   |      |   | 608    |  
|                                                                                                               |  |                            |        |   |      |   |        |  
|                                                                                                               |  |                            | 18,078 |   |      |   | 18,582 |  
|                                                                                                               |  |                            |        |   |      |   |        |  
|Operating income                                                                                               |  |                            | 10,179 |   |      |   | 12,239 |  
|Interest expense, net                                                                                          |  |                            | 5,092  |   |      |   | 6,803  |  
|Minority interest in net income of subsidiary                                                                  |  |                            | (3     | ) |      |   | (9     | )
|                                                                                                               |  |                            |        |   |      |   |        |  
|Income from continuing operations before income tax benefit (expense)                                          |  |                            | 5,090  |   |      |   | 5,445  |  
|Income tax benefit (expense)                                                                                   |  |                            | 343    |   |      |   | (102   | )
|                                                                                                               |  |                            |        |   |      |   |        |  
|Income from continuing operations                                                                              |  |                            | 5,433  |   |      |   | 5,343  |  
|Income (loss) from discontinued operations                                                                     |  |                            | 95     |   |      |   | (270   | )
|                                                                                                               |  |                            |        |   |      |   |        |  
|Income before loss on sale of properties                                                                       |  |                            | 5,528  |   |      |   | 5,073  |  
|Loss on sale of properties                                                                                     |  |                            | (27    | ) |      |   | (6     | )
|                                                                                                               |  |                            |        |   |      |   |        |  
|Net income                                                                                                     |  | $                          | 5,501  |   |      | $ | 5,067  |  
|                                                                                                               |  |                            |        |   |      |   |        |  
|Basic income per common share:                                                                                 |  |                            |        |   |      |   |        |  
|Income from continuing operations                                                                              |  | $                          | 0.13   |   |      | $ | 0.12   |  
|                                                                                                               |  |                            |        |   |      |   |        |  
|Income (loss) from discontinued operations                                                                     |  | $                          | 0.00   |   |      | $ | (0.01  | )
|                                                                                                               |  |                            |        |   |      |   |        |  
|Net income                                                                                                     |  | $                          | 0.13   |   |      | $ | 0.11   |  
|                                                                                                               |  |                            |        |   |      |   |        |  
|Diluted income per common share:                                                                               |  |                            |        |   |      |   |        |  
|Income from continuing operations                                                                              |  | $                          | 0.13   |   |      | $ | 0.11   |  
|                                                                                                               |  |                            |        |   |      |   |        |  
|Income (loss) from discontinued operations                                                                     |  | $                          | 0.00   |   |      | $ | (0.00  | )
|                                                                                                               |  |                            |        |   |      |   |        |  
|Net income                                                                                                     |  | $                          | 0.13   |   |      | $ | 0.11   |  
|                                                                                                               |  |                            |        |   |      |   |        |  
|Weighted average number of common shares outstanding                                                           |  |                            |        |   |      |   |        |  
|Basic                                                                                                          |  |                            | 41,000 |   |      |   | 44,461 |  
|                                                                                                               |  |                            |        |   |      |   |        |  
|Diluted                                                                                                        |  |                            | 42,900 |   |      |   | 47,183 |  
|                                                                                                               |  |                            |        |   |      |   |        |  



The accompanying Notes
to Unaudited Condensed Consolidated Financial Statements are an integral part

of these condensed financial statements



3



---

GLOBAL SIGNAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)



|                                                                                                                 |  |                          |        |   |      |   |        |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------ | -
|                                                                                                                 |  | Six Months EndedJune 30, |       
|                                                                                                                 |  | 2003                     |        |   | 2004 |  
|Revenues                                                                                                         |  | $                        | 83,143 |   |      | $ | 87,583 |  
|Direct site operating expenses (excluding depreciation, amortization and accretion)                              |  |                          | 26,949 |   |      |   | 26,717 |  
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Gross margin                                                                                                     |  |                          | 56,194 |   |      |   | 60,866 |  
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Other expenses:                                                                                                  |  |                          |        |   |      |   |        |  
|Selling, general and administrative (excluding $0 and $3,212 of non-cash stock-based compensation, respectively) |  |                          | 13,211 |   |      |   | 12,414 |  
|State franchise, excise and minimum taxes                                                                        |  |                          | 417    |   |      |   | 337    |  
|Depreciation, amortization and accretion                                                                         |  |                          | 22,352 |   |      |   | 23,792 |  
|Non-cash stock-based compensation expense for services                                                           |  |                          |       |   |      |   | 3,212  |  
|                                                                                                                 |  |                          |        |   |      |   |        |  
|                                                                                                                 |  |                          | 35,980 |   |      |   | 39,755 |  
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Operating income                                                                                                 |  |                          | 20,214 |   |      |   | 21,111 |  
|Interest expense, net                                                                                            |  |                          | 10,809 |   |      |   | 12,893 |  
|Loss on early extinguishment of debt                                                                             |  |                          |       |   |      |   | 8,449  |  
|Minority interest in net loss of subsidiary                                                                      |  |                          | 3      |   |      |   |       |  
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Income (loss) from continuing operations before income tax benefit (expense)                                     |  |                          | 9,402  |   |      |   | (231   | )
|Income tax benefit (expense)                                                                                     |  |                          | 419    |   |      |   | (112   | )
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Income (loss) from continuing operations                                                                         |  |                          | 9,821  |   |      |   | (343   | )
|Income (loss) from discontinued operations                                                                       |  |                          | 195    |   |      |   | (261   | )
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Income (loss) before gain (loss) on sale of properties                                                           |  |                          | 10,016 |   |      |   | (604   | )
|Gain (loss) on sale of properties                                                                                |  |                          | (85    | ) |      |   | 134    |  
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Net income (loss)                                                                                                |  | $                        | 9,931  |   |      | $ | (470   | )
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Basic income (loss) per common share:                                                                            |  |                          |        |   |      |   |        |  
|Income (loss) from continuing operations                                                                         |  | $                        | 0.24   |   |      | $ | (0.01  | )
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Income (loss) from discontinued operations                                                                       |  | $                        | 0.00   |   |      | $ | (0.00  | )
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Net income (loss)                                                                                                |  | $                        | 0.24   |   |      | $ | (0.01  | )
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Diluted income (loss) per common share:                                                                          |  |                          |        |   |      |   |        |  
|Income (loss) from continuing operations                                                                         |  | $                        | 0.23   |   |      | $ | (0.01  | )
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Income (loss) from discontinued operations                                                                       |  | $                        | 0.00   |   |      | $ | (0.00  | )
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Net income (loss)                                                                                                |  | $                        | 0.23   |   |      | $ | (0.01  | )
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Weighted average number of common shares outstanding                                                             |  |                          |        |   |      |   |        |  
|Basic                                                                                                            |  |                          | 41,000 |   |      |   | 42,760 |  
|                                                                                                                 |  |                          |        |   |      |   |        |  
|Diluted                                                                                                          |  |                          | 42,897 |   |      |   | 42,760 |  
|                                                                                                                 |  |                          |        |   |      |   |        |  



The accompanying Notes
to Unaudited Condensed Consolidated Financial Statements are an integral part

of these condensed financial statements



4



---

GLOBAL SIGNAL INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY (UNAUDITED)

SIX MONTHS ENDED JUNE
30, 2004

(in thousands, except share data)



|                                                                                         |  |              |  |                          |     |  |                            |          |   |                                            |   |       |                  |  |   |                     |   |  |   |         |   |  |   |          |  
|---------------------------------------------------------------------------------------- |  | ------------ |  | ------------------------ | --- |  | -------------------------- | -------- | - | ------------------------------------------ | - | ----- | ---------------- |  | - | ------------------- | - |  | - | ------- | - |  | - | -------- | -
|                                                                                         |  | Common Stock |  | AdditionalPaid-inCapital |     |  | ComprehensiveIncome (Loss) |          |   | AccumulatedOtherComprehensiveIncome (Loss) |   |       | RetainedEarnings |  |   | StockholdersEquity |  
|                                                                                         |  | Shares       |  | Amount                   |     |  |                            |          |  
|Balance at December 31, 2003                                                             |  | 41,000,000   |  | $                        | 410 |  | $                          | 206,089  |   |                                            |   |       |                  |  | $ | (1,133              | ) |  | $ | 20,087  |   |  | $ | 225,453  |  
|Unaudited:                                                                               |  |              |  |                          |     |  |                            |          |   |                                            |   |       |                  |  |   |                     |   |  |   |         |   |  |   |          |  
|Comprehensive income (loss):                                                             |  |              |  |                          |     |  |                            |          |   |                                            |   |       |                  |  |   |                     |   |  |   |         |   |  |   |          |  
|Net loss                                                                                 |  |             |  |                          |    |  |                            |         |   |                                            | $ | (470  | )                |  |   |                    |   |  |   | (470    | ) |  |   | (470     | )
|Foreign currency translation gain                                                        |  |             |  |                          |    |  |                            |         |   |                                            |   | 28    |                  |  |   | 28                  |   |  |   |        |   |  |   | 28       |  
|Change in fair value of derivative financial instruments, net of applicable income taxes |  |             |  |                          |    |  |                            |         |   |                                            |   | 3,350 |                  |  |   | 3,350               |   |  |   |        |   |  |   | 3,350    |  
|Amortization of other comprehensive income on terminated derivative instrument           |  |             |  |                          |    |  |                            |         |   |                                            |   | 493   |                  |  |   | 493                 |   |  |   |        |   |  |   | 493      |  
|                                                                                         |  |              |  |                          |     |  |                            |          |   |                                            |   |       |                  |  |   |                     |   |  |   |         |   |  |   |          |  
|Total comprehensive income (loss)                                                        |  |              |  |                          |     |  |                            |          |   |                                            | $ | 3,401 |                  |  |   |                     |   |  |   |         |   |  |   |          |  
|                                                                                         |  |              |  |                          |     |  |                            |          |   |                                            |   |       |                  |  |   |                     |   |  |   |         |   |  |   |          |  
|Issuance of common stock:                                                                |  |              |  |                          |     |  |                            |          |   |                                            |   |       |                  |  |   |                     |   |  |   |         |   |  |   |          |  
|Initial public offering, net of offering costs of $12.7 million                          |  | 8,050,000    |  |                          | 81  |  |                            | 132,106  |   |                                            |   |       |                  |  |   |                    |   |  |   |        |   |  |   | 132,187  |  
|Warrants exercised                                                                       |  | 732,494      |  |                          | 7   |  |                            | 6,240    |   |                                            |   |       |                  |  |   |                    |   |  |   |        |   |  |   | 6,247    |  
|Options exercised                                                                        |  | 695,033      |  |                          | 7   |  |                            | 3,512    |   |                                            |   |       |                  |  |   |                    |   |  |   |        |   |  |   | 3,519    |  
|Ordinary dividends declared and paid                                                     |  |             |  |                          |    |  |                            | (16,372  | ) |                                            |   |       |                  |  |   |                    |   |  |   | (18,288 | ) |  |   | (34,660  | )
|Special distribution declared and paid                                                   |  |             |  |                          |    |  |                            | (142,188 | ) |                                            |   |       |                  |  |   |                    |   |  |   |        |   |  |   | (142,188 | )
|Ordinary dividends declared                                                              |  |             |  |                          |    |  |                            | (3,872   | ) |                                            |   |       |                  |  |   |                    |   |  |   | (1,329  | ) |  |   | (5,201   | )
|Non-cash stock-based compensation for services                                           |  | 20,000       |  |                          |    |  |                            | 3,212    |   |                                            |   |       |                  |  |   |                    |   |  |   |        |   |  |   | 3,212    |  
|Purchase of PTA subsidiary stock                                                         |  |             |  |                          |    |  |                            | (20      | ) |                                            |   |       |                  |  |   |                     |   |  |   |        |   |  |   | (20      | )
|                                                                                         |  |              |  |                          |     |  |                            |          |   |                                            |   |       |                  |  |   |                     |   |  |   |         |   |  |   |          |  
|Balance at June 30, 2004                                                                 |  | 50,497,527   |  | $                        | 505 |  | $                          | 188,707  |   |                                            |   |       |                  |  | $ | 2,738               |   |  | $ |        |   |  | $ | 191,950  |  
|                                                                                         |  |              |  |                          |     |  |                            |          |   |                                            |   |       |                  |  |   |                     |   |  |   |         |   |  |   |          |  



The accompanying Notes
to Unaudited Condensed Consolidated Financial Statements are an integral part of these condensed

financial statements



5



---

GLOBAL SIGNAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)



|                                                                                         |  |                           |         |   |      |   |          |  
|---------------------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | -------- | -
|                                                                                         |  | Six Months Ended June 30, |        
|                                                                                         |  | 2003                      |         |   | 2004 |  
|Cash flows from operating activities:                                                    |  |                           |         |   |      |   |          |  
|Net income (loss)                                                                        |  | $                         | 9,931   |   |      | $ | (470     | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                           |         |   |      |   |          |  
|Depreciation, amortization and accretion                                                 |  |                           | 22,352  |   |      |   | 23,792   |  
|Amortization of deferred debt issuance and hedging costs                                 |  |                           | 2,373   |   |      |   | 2,629    |  
|Loss on early extinguishment of debt                                                     |  |                           |        |   |      |   | 8,449    |  
|Non-cash stock-based compensation expense for services                                   |  |                           |        |   |      |   | 3,212    |  
|Other non-cash adjustments                                                               |  |                           | 960     |   |      |   | 1,185    |  
|(Increase) decrease in current assets                                                    |  |                           | 311     |   |      |   | (2,890   | )
|Increase (decrease) in current liabilities                                               |  |                           | (7,312  | ) |      |   | 3,473    |  
|                                                                                         |  |                           |         |   |      |   |          |  
|Net cash provided by operating activities                                                |  |                           | 28,615  |   |      |   | 39,380   |  
|                                                                                         |  |                           |         |   |      |   |          |  
|Cash flows from investing activities:                                                    |  |                           |         |   |      |   |          |  
|Payments made in connection with acquisitions of communications sites                    |  |                           |        |   |      |   | (77,470  | )
|Capital expenditures                                                                     |  |                           | (3,679  | ) |      |   | (4,981   | )
|Proceeds from the sale of fixed assets                                                   |  |                           | 1,951   |   |      |   | 637      |  
|Funds provided by (invested in) restricted cash                                          |  |                           | 254     |   |      |   | (22,451  | )
|Other                                                                                    |  |                           |        |   |      |   | (20      | )
|                                                                                         |  |                           |         |   |      |   |          |  
|Net cash used in investing activities                                                    |  |                           | (1,474  | ) |      |   | (104,285 | )
|                                                                                         |  |                           |         |   |      |   |          |  
|Cash flows from financing activities:                                                    |  |                           |         |   |      |   |          |  
|Borrowings under mortgage loan                                                           |  |                           |        |   |      |   | 418,000  |  
|Borrowings under long-term debt                                                          |  |                           | 1,000   |   |      |   | 5,416    |  
|Repayment of long-term debt                                                              |  |                           | (18,857 | ) |      |   | (271,887 | )
|Payment of debt issuance costs                                                           |  |                           | (23     | ) |      |   | (14,034  | )
|Payment made to terminate interest rate swap                                             |  |                           |        |   |      |   | (6,175   | )
|Special distribution paid                                                                |  |                           |        |   |      |   | (142,188 | )
|Ordinary dividends paid                                                                  |  |                           |        |   |      |   | (34,660  | )
|Proceeds from the issuance of common stock, net of offering costs                        |  |                           |        |   |      |   | 143,021  |  
|Minority interest in subsidiary                                                          |  |                           | 4       |   |      |   |         |  
|                                                                                         |  |                           |         |   |      |   |          |  
|Net cash provided by (used in) financing activities                                      |  |                           | (17,876 | ) |      |   | 97,493   |  
|                                                                                         |  |                           |         |   |      |   |          |  
|Effect of exchange rate changes on cash                                                  |  |                           | 302     |   |      |   | (199     | )
|                                                                                         |  |                           |         |   |      |   |          |  
|Net increase in cash and cash equivalents                                                |  |                           | 9,567   |   |      |   | 32,389   |  
|Cash and cash equivalents, beginning of period                                           |  |                           | 4,350   |   |      |   | 9,661    |  
|                                                                                         |  |                           |         |   |      |   |          |  
|                                                                                         |  | $                         | 13,917  |   |      | $ | 42,050   |  
|                                                                                         |  |                           |         |   |      |   |          |  
|Non-cash investing and financing transactions:                                           |  |                           |         |   |      |   |          |  
|Assets acquired under a capital lease obligation                                         |  | $                         |        |   |      | $ | 1,108    |  
|                                                                                         |  |                           |         |   |      |   |          |  
|Change in interest rate swap recorded to other comprehensive income                      |  | $                         | 192     |   |      | $ | 3,350    |  
|                                                                                         |  |                           |         |   |      |   |          |  
|Common stock options issued in connection with the initial public offering               |  | $                         |        |   |      | $ | 1,865    |  
|                                                                                         |  |                           |         |   |      |   |          |  



The accompanying Notes
to Unaudited Condensed Consolidated Financial Statements are an integral part of these condensed

financial statements



6



---

GLOBAL SIGNAL INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2004



| | 1. | Nature of Business
| | -- | ------------------



The accompanying unaudited condensed consolidated financial statements reflect the financial position, results of operations and cash flows of Global
Signal Inc. and its wholly-owned subsidiaries. Global Signal Inc., formerly Pinnacle Holdings Inc., owns, leases and manages communications towers and other communications sites to providers of wireless communications and broadcast services, such as
wireless telephony services, paging, mobile radio, wireless data transmission and radio and television broadcasting, and to operators of private networks such as federal, state and local government agencies.



| | 2. | Basis of Presentation
| | -- | ---------------------



As used herein, as of June 30, 2004, and for the three and six months ended June 30, 2003 and 2004, unless the context otherwise requires, we,
us, our, Company, or Global Signal refers to Global Signal Inc. and its wholly-owned consolidated subsidiaries, including Pinnacle Towers LLC, Pinnacle Towers Canada, Inc., Pinnacle Towers Acquisitions
Holdings LLC, Global Signal Services LLC, and Pinnacle Towers Ltd. Fortress refers to Fortress Investment Holdings LLC and certain of its affiliates, and Greenhill refers to Greenhill Capital Partners, L.P. and affiliated
investment funds. Since November 1, 2002, Fortress has been our largest stockholder and Greenhill has been our second largest stockholder.



As of May 11, 2004, we completed our formation of an UPREIT structure whereby we own substantially all of our assets and conduct our operations through an
operating partnership, Global Signal Operating Partnership, L.P. (Global Signal OP). Global Signal Inc. is the special limited partner of Global Signal OP. Global Signal GP LLC, our wholly-owned subsidiary, is the managing general
partner and as such, has the exclusive power to manage and conduct the business of Global Signal OP. The partnership agreement of Global Signal OP provides that it distribute cash flows from its operations to its limited partners and the managing
general partner in accordance with their relative percentage interests. The distributions that we receive from Global Signal OP will, among other things, enable us to make dividend distributions to our stockholders. We believe that the UPREIT
structure provides flexibility by enabling us to execute certain acquisitions more effectively by giving tax advantages to transferees who accept partnership units in the UPREIT as payment.



Results of operations for any interim period are not necessarily indicative
of results of any other periods or for the year. The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States for interim financial
statements and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments), considered necessary for fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with Global Signals audited
consolidated financial statements and notes thereto for the year ended December 31, 2003 included in Global Signals Prospectus, dated June 2, 2004, filed with the Securities and Exchange Commission pursuant to Rule 424(b) under
the Securities Act of 1933, as amended.



7



---

| | 3. | Summary of Significant Accounting Policies
| | -- | ------------------------------------------



Use of Estimates



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



Stock-Based Compensation



As permitted by Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation, we account for our stock option grants to employees and directors using the intrinsic value method under Accounting Principle Board (APB) Opinion 25, Accounting for Stock Issued to Employees,
and adopt the disclosure-only provisions of SFAS No. 123 and SFAS No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure  an amendment of SFAS Statement No. 123. Under APB 25, no compensation costs are
recognized relating to the option grants to employees if the exercise price of the options awarded was equal to or greater than the fair value of the common stock on the dates of grant. We follow SFAS No. 123 and Emerging Issues Task Force (EITF)
Issue No. 96-18, Accounting for Equity Investments that are Issued to Other than Employees for Acquiring or in Conjunction with Selling Goods and Services, for our stock option grants to other individuals. As such, we measure compensation
expense at the date of grant and recognize the expense ratably over the service period. Prior to vesting, we recognize expense using the fair value of the option at the end of the reporting period. Additional expense due to increases in the value of
the options prior to the vesting date will be recognized in the period of the option value increase. The pro forma net income for the 2003 period presented below has been revised to increase the additional pro forma compensation expense arising from
the January 2003 acceleration of the vesting of options associated with the termination of our former CEO. Had compensation costs for the employee and director stock option activity been determined based on the fair value at the dates of grant
consistent with the provisions of SFAS No. 123, our net income would have been decreased to the pro forma amounts indicated below (in thousands, except per share data):



|                                                                                                                                              |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------ | - | ------------------------ | - | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                                                                              |  | Three Months EndedJune 30, |        |   | Six Months EndedJune 30, |  
|                                                                                                                                              |  | 2003                       |        |   | 2004                     |   |       | 2003 |  |   | 2004   |  
|Net income attributable to common stockholders:                                                                                               |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Net income (loss) as reported                                                                                                                 |  | $                          | 5,501  |   |                          | $ | 5,067 |      |  | $ | 9,931  |   |  | $ | (470   | )
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of $0 related tax
effect |  |                            | (1,286 | ) |                          |   | (687  | )    |  |   | (3,952 | ) |  |   | (1,672 | )
|                                                                                                                                              |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Pro forma net income (loss)                                                                                                                   |  | $                          | 4,215  |   |                          | $ | 4,380 |      |  | $ | 5,979  |   |  | $ | (2,142 | )
|                                                                                                                                              |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Basic income (loss) per share attributable to common stockholders:                                                                            |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Net income (loss) per share as reported                                                                                                       |  | $                          | 0.13   |   |                          | $ | 0.11  |      |  | $ | 0.24   |   |  | $ | (0.01  | )
|                                                                                                                                              |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Pro forma net income (loss) per share                                                                                                         |  | $                          | 0.10   |   |                          | $ | 0.10  |      |  | $ | 0.15   |   |  | $ | (0.05  | )
|                                                                                                                                              |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Diluted income (loss) per share attributable to common stockholders:                                                                          |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Net income (loss) per share as reported                                                                                                       |  | $                          | 0.13   |   |                          | $ | 0.11  |      |  | $ | 0.23   |   |  | $ | (0.01  | )
|                                                                                                                                              |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  
|Pro forma net income (loss) per share                                                                                                         |  | $                          | 0.10   |   |                          | $ | 0.09  |      |  | $ | 0.14   |   |  | $ | (0.05  | )
|                                                                                                                                              |  |                            |        |   |                          |   |       |      |  |   |        |   |  |   |        |  



On February 5, 2004,
pursuant to the terms of the stock option plan, the exercise price of the then outstanding stock options was adjusted as follows as a result of the one-time special distribution of $142.2 million declared and paid on that date: the $5 exercise price
was reduced to $4.26 per share and the $10 exercise price was reduced to $8.53 per share. The exercise price of our outstanding options was adjusted such that the ratio of the option exercise price to the fair market value of our common stock, as
determined by our board of directors, is the same before and after the one-time special distribution; therefore, there was no accounting impact.



8



---

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



On February 5, 2004, we fully repaid and terminated our senior credit facility (Old Credit Facility) with the proceeds from a $418.0 million mortgage loan (Mortgage Loan). In addition, on
February 6, 2004, we amended our November 2003 credit facility (Credit Facility) to increase the commitment to $200.0 million and extend the maturity date to February 2005, which was further extended to October 2005 upon the completion
of our initial public offering (see Note 6 - Stockholders Equity). On June 8, 2004, we repaid the outstanding borrowings under our Credit Facility. Since amounts repaid can not be re-borrowed, the total commitment under our Credit Facility was
reduced to $166.6 million. Our outstanding debt consists of the following (in thousands):



|                                                                                                                                                                                                                                                                                   |  |                  |         |   |              |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ------------ | - | ------- | -
|                                                                                                                                                                                                                                                                                   |  | December 31,2003 |         |   | June 30,2004 |  
|                                                                                                                                                                                                                                                                                   |  | (audited)        |         |   |              |  
|Mortgage Loan, weighted average interest rate of 5.0% secured by first priority mortgage liens on certain sites, and a pledge of the
Issuers capital stock, monthly principal and interest installments of approximately $2.4 million beginning March 2004, maturing January 2009 |  | $                |        |   |              | $ | 415,648 |  
|Old Credit Facility, Sixth Amended, interest at variable rates (5.6% to 6.13% at December 31, 2003) secured, quarterly principal installments
beginning March 31, 2003, paid in full February 2004                                                                                 |  |                  | 234,980 |   |              |   |        |  
|Credit Facility, interest at variable rates (4.87% to 4.92% at December 31, 2003 and 3.58% to 3.90% at June 30, 2004), monthly installments of
interest beginning January 2, 2004, paid in full June 2004                                                                          |  |                  | 28,026  |   |              |   |        |  
|Note payable to former tower owner, interest at 10.0% per annum, monthly installments of principal and interest through June 18, 2008, paid in
full February 2004                                                                                                                  |  |                  | 168     |   |              |   |        |  
|Pinnacle UK Term Loan, interest rate at 2% above base rate (5.75% at December 31, 2003), paid in full June 2004                                                                                                                                                                    |  |                  | 1,077   |   |              |   |        |  
|Capital lease obligations, interest rate fixed at 10.3%, secured by the underlying capital assets, with monthly principal installments
beginning April 2004                                                                                                                        |  |                  |        |   |              |   | 1,108   |  
|                                                                                                                                                                                                                                                                                   |  |                  |         |   |              |   |         |  
|                                                                                                                                                                                                                                                                                   |  |                  | 264,251 |   |              |   | 416,756 |  
|Less: current portion of long-term debt                                                                                                                                                                                                                                            |  |                  | (6,535  | ) |              |   | (7,959  | )
|                                                                                                                                                                                                                                                                                   |  |                  |         |   |              |   |         |  
|                                                                                                                                                                                                                                                                                   |  | $                | 257,716 |   |              | $ | 408,797 |  
|                                                                                                                                                                                                                                                                                   |  |                  |         |   |              |   |         |  



The following table
shows the maturities of long-term debt for the five twelve month periods after June 30, 2004 (in thousands):



|                                     |  |   |        
|------------------------------------ |  | - | -------
|For the twelve months ended June 30, |  |  
|2005                                 |  | $ | 7,959  
|2006                                 |  |   | 8,467  
|2007                                 |  |   | 8,891  
|2008                                 |  |   | 9,085  
|2009                                 |  |   | 382,354
|                                     |  |   |        
|                                     |  | $ | 416,756
|                                     |  |   |        



9



---

Mortgage Loan



On February 5, 2004, our largest operating subsidiary, Pinnacle Towers LLC, then known as Pinnacle Towers Inc., and thirteen
of its direct and indirect subsidiaries (collectively, the Issuers) issued a $418.0 million mortgage note to a newly formed trust, Global Signal Trust I (the Trust). The Trust then issued an identical amount of commercial
mortgage pass-through certificates in a private transaction. We have continued to consolidate our subsidiaries, but have not consolidated the Trust in our financial statements. The net proceeds from the Mortgage Loan were used to repay the then
outstanding borrowings under our Old Credit Facility of $234.4 million, to fund a $142.2 million one-time special distribution to our stockholders, to fund $4.6 million into an imposition reserve for taxes, insurance and rents, and the remaining
$15.9 million was available to fund operations. Due to the repayment in full of our Old Credit Facility, we incurred a loss on the early extinguishment of debt of $8.4 million associated with the expensing of deferred debt issuance costs.



The Mortgage Loan bears interest at a weighted average rate of
approximately 5.0% and is secured by mortgages, deeds of trust, deeds to secure debt and first priority mortgage liens on substantially all of the Issuers tangible assets. The Mortgage Loan requires monthly payments of principal and interest
calculated based on a 25-year amortization schedule through January 2009 (the Anticipated Repayment Date). If the Mortgage Loan is not repaid in its entirety by the Anticipated Repayment Date, the interest rate on the Mortgage Loan
increases by the greater of 5.0% or a U.S. Treasury-based index and substantially all of the Issuers excess cash flows from operations are to be utilized to repay outstanding amounts due under the Mortgage Loan.



On a monthly basis, the excess cash flows from the Issuers, after the payment
of principal, interest, escrow reserves and expenses, are distributed to us. The Mortgage Loan requires us to maintain a minimum debt service coverage ratio (DSCR) defined as the preceding 12 months of net cash flow, as defined in the
Mortgage Loan, divided by the amount of principal and interest payments required under the Mortgage Loan in the next 12 months, of 1.45 times. Net cash flow, as defined in the Mortgage Loan with respect to the Issuers, is approximately equal to
gross margin minus capital expenditures made for the purpose of maintaining our sites, minus 10% of revenues. If the DSCR falls below 1.45 times, the excess cash flows from the Issuers are escrowed until the DSCR exceeds 1.45 times for two
consecutive quarters, at which time the previously escrowed excess cash flows are released to us. If the DSCR falls below 1.2 times, all excess cash flows, including amounts previously escrowed, are used to repay outstanding principal due under the
Mortgage Loan. The Mortgage Loan also restricts our ability to incur or guarantee unsecured indebtedness without confirmation from the rating agencies that such indebtedness will not impact the Mortgage Loan rating. The Mortgage Loans
covenants could also indirectly limit the payment of dividends. As of June 30, 2004, our DSCR was sufficient to avoid any excess cash flows escrow, thus no net assets were restricted.



Credit Facility



In November 2003, Pinnacle Towers Acquisition Holdings LLC, then known as Pinnacle Towers Acquisition, Inc. (PTA), a wholly-owned subsidiary,
entered into a $100.0 million committed acquisition line of credit provided by Morgan Stanley. On February 6, 2004, our Credit Facility was amended to increase the total commitment to $200.0 million, extend the due date to February 6, 2005 and
reduce the required interest rates to LIBOR plus 2.5% or the federal funds rate plus 2.1175%. The due date was further extended to October 1, 2005, upon completion of the initial public offering of our shares at terms as defined in the agreement. In
addition, the February 2004 amendment provides that $5.0 million of the commitment can be used for working capital. On May 12, 2004, we further amended our Credit Facility in connection with the implementation of the UPREIT operating partnership
structure to, among other things, substitute Global Signal OP for Global Signal Inc. as the guarantor and the pledgor under our Credit Facility. Upon consummation of the initial public offering (see Note 6 - Stockholders Equity), Global Signal
OPs pledge of PTA stock, and our stockholders pledge of our stock, were both released. In addition, our stockholders were released as guarantors. PTA paid a $1.0 million commitment fee equal to 0.5% of the total commitment. Furthermore,
our Credit Facility requires an exit fee of 0.5% of the outstanding loan balance when the loan is repaid unless Morgan Stanley is engaged, at market terms, as the lead underwriter or placement agent on the replacement financing.



On June 8, 2004, we repaid the outstanding borrowings under our Credit
Facility. Since amounts repaid can not be re-borrowed, the total commitment under our Credit Facility was reduced from $200.0 million to $166.6 million. Our Credit Facility is secured by substantially all of PTAs tangible and intangible
assets. Borrowings under our Credit Facility are further limited based on a borrowing base and, as of June 30, 2004, $66.6 million remains available to fund future acquisitions. Our Credit Facility contains restrictive covenants including minimum
consolidated EBITDA as defined in our Credit Facility, and debt to consolidated EBITDA levels. In addition, if Fortress and Greenhill do not maintain at least 51% ownership of Global Signal Inc., this would constitute an event of default under the
Credit Facility.



10



---

Our Credit Facility also limits the payment of dividends from PTA to us to $5.0 million during the term
of our Credit Facility and further prohibits payment of dividends to our stockholders directly from these funds. As of June 30, 2004, PTA had not declared or paid any dividends.



| | 5. | Interest Rate Swap Agreements
| | -- | -----------------------------



December 2003 Swap



On December 11 2003, in anticipation of the issuance of the Mortgage Loan, we entered into an interest rate swap agreement (December 2003
Swap) with Morgan Stanley as the counterparty to hedge the variability of expected future interest payments under the Mortgage Loan. Under the December 2003 Swap, we agreed to pay Morgan Stanley a fixed rate of 3.816% on a notional amount of
$400.0 million for five years beginning in March 2004 in exchange for receiving floating payments based on three month LIBOR on the notional amount for the same five-year period. The December 2003 Swap required us to begin making monthly payments to
the counter party equal to the difference between 3.816% and the then current three-month LIBOR rate, which was 1.15% on December 31, 2003, on the notional amount of $400.0 million. The December 2003 Swap was terminated in connection with the
issuance of the Mortgage Loan on February 5, 2004 at a cost of $6.2 million which was recorded as part of other comprehensive income and which is being amortized as interest expense using the effective interest method over five years, the expected
life of the Mortgage Loan, in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. The effective interest rate on the Mortgage Loan, including the cost of terminating the interest rate swap and the
amortization of deferred debt issuance costs, is 6.0%. For the three and six months ended June 30, 2004, amortization of $0.4 million and $0.5 million, respectively, was recorded as interest expense.



March 2004 Swaps



On March 26, 2004, in anticipation of a future financing, we entered into
four interest rate swaps with Morgan Stanley as counterparty to hedge the variability of future interest rates on the financing. Under the interest rate swaps, we agreed to pay the counterparty a fixed interest rate of 3.416% on a total notional
amount of $200.0 million beginning in October 2004 through April 2009 in exchange for receiving three-month LIBOR on the same notional amount for the same period. The swaps terminate on the earlier of the issuance of any new mortgage loan or January
1, 2005, at which time the swaps will be settled for cash based on the then fair market value, which, as of June 30, 2004, is approximately a $7.6 million asset. We do not have a firm commitment for this future financing, but believe that it is
probable. The anticipated financing is estimated to aggregate in excess of $200.0 million and is estimated to occur during the fourth quarter of 2004. Because the interest rate swaps qualify as anticipatory hedges, we will recognize any settlement
cost as other comprehensive income and amortize the cost as interest expense over the life of the mortgage loan, in accordance with SFAS No. 133. Should the issuance of the mortgage loan not be consummated as anticipated, we would be required to
recognize the aggregate fair market value of the swaps in current earnings.



| | 6. | Stockholders Equity
| | -- | --------------------



Initial Public Offering



On June 2, 2004, we completed our initial public offering through the issuance of 8,050,000 shares of our common stock at $18.00 per common share. We
received net proceeds of $132.0 million after estimated expenses, underwriters discounts and commissions, but excluding $1.9 million of non-cash offering costs representing the fair value of options issued to Fortress and Greenhill in
connection with the initial public offering. See Stock Options below. A portion of the net proceeds equal to $6.8 million was designated to be used for tower and land acquisitions, which had not yet closed as of June 30, 2004. This $6.8
million has been reflected as a part of restricted cash in the accompanying condensed consolidated balance sheet.



Stock Split



On February 11, 2004, the board of directors approved a 2-for-1 stock split. All common share and per common share amounts have been retroactively
restated.



Change in Authorized Shares



On February 11, 2004, the stockholders approved an increase in the number of
authorized shares to 20,000,000 preferred shares and 100,000,000 common shares. In addition, on May 11, 2004, the stockholders approved a further increase in the number of authorized shares to 150,000,000 common shares.



11



---

Stock Options



In April 2004, two former executives exercised 281,876 common stock options for an equal number of shares of common stock,
at an average exercise price of $6.40 per share of common stock. We withheld 43,787 shares from one of the former executives to cover his federal income tax withholding obligation and his share of employment taxes.



In June 2004, our former Chief Executive Officer exercised 233,472 and
183,472 common stock options for an equal number of shares of common stock, at an exercise price of $4.26 per share of common stock and $8.53 per share of common stock, respectively.



In conjunction with the initial public offering, and to compensate Fortress and Greenhill for their successful efforts in
raising capital in the offering, Fortress and Greenhill received 644,000 and 161,000 common stock options, respectively, issued at an exercise price of $18.00 per share, the initial public offering price (see Note 11  Related Party
Transactions).



Warrants



Pursuant to the stated terms of the then outstanding warrants, the exercise
price of the warrants was adjusted as follows as a result of the one-time special distribution of $142.2 million declared and paid on February 5, 2004; the $10 exercise price was reduced to $8.53 per share.



On March 5, 2004, Abrams Capital, LLC and certain of its affiliates exercised
197,088 warrants for an equal number of shares of common stock, at an exercise price of $8.53 per share of common stock.



On April 5, 2004, Fortress exercised 418,050 warrants for an equal number of shares of common stock, at an exercise price of $8.53 per share of common
stock.



Director Shares



In conjunction with the initial public offering, 5,000 shares of fully
vested, unrestricted common stock were issued to each of our four independent directors, who did not beneficially own 10.0% or more of our common stock, upon consummation of the offering, in accordance with our board compensation package for
independent directors. We follow APB 25,as amended, for stock grants to our directors. As such, we measured the compensation expense at the date of grant based on the fair market value of our common stock on that date. We recognized the
entire associated $0.4 million of non-cash stock-based compensation expense in the three months ended June 30, 2004.



Dividends



On February 5, 2004, the board of directors declared and paid an ordinary dividend to all our stockholders of $0.3125 per share of common stock, or an
aggregate of $12.8 million for the three months ended December 31, 2003 and on the same day the board of directors declared and paid a one-time special distribution of $3.468 per share of common stock, or an aggregate $142.2 million, to our
stockholders which represented a return of capital, as it exceeded our retained earnings at that date. The board of directors determined that it was in the best interest of our stockholders to utilize the excess cash available from the net proceeds
of the Mortgage Loan (see Note 4  Debt) to make this distribution.



On March 22, 2004, the board of directors declared an ordinary dividend of $0.3125 per share of our common stock, or an aggregate of $13.1 million for the three months ended March 31, 2004, paid on April 22, 2004 to
all stockholders of record as of April 9, 2004, of which $11.3 million represented a return of capital to our stockholders, as it exceeded our retained earnings at that date.



On May 11, 2004, the board of directors declared an ordinary dividend of $0.2095 per share of our common stock, or an
aggregate of $8.8 million for the two months ended May 31, 2004, paid on June 14, 2004 to all stockholders of record as of May 26, 2004, of which $5.0 million represented a return of capital to our stockholders, as it exceeded our retained earnings
at that date.



On June 21, 2004, the board of directors
declared an ordinary dividend of $0.1030 per share of our common stock, or an aggregate of $5.2 million for the one month ended June 30, 2004, paid on July 20, 2004 to all stockholders of record as of July 6, 2004, of which $3.9 million represented
a return of capital to our stockholders, as it exceeded our retained earnings on that date. The dividend declared is recorded as a liability at June 30, 2004 in the accompanying condensed consolidated financials statements.



12



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| | 7. | Discontinued Operations
| | -- | -----------------------



During 2003 and 2004, we decided to divest certain non-core assets and under-performing tower sites. Included in these divestures were two wholly-owned
subsidiaries, an office building, a portfolio of microwave tower sites and various non-strategic under-performing sites. The operations related to each of these assets were sold or liquidated by June 30, 2004, except for 31 under-performing sites
that were held for disposal by sale.



In accordance with SFAS
No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets, we classified the operating results of these assets as discontinued operations in the accompanying unaudited condensed consolidated financial statements and the prior
period has been classified to conform to the current year presentation with respect to these assets. Revenues and results of operations for these discontinued operations, for the three and six months ended June 30, 2003 and 2004 are as follows (in
thousands):



|                                                                 |  |                            |      |   |      |   |      |  
|---------------------------------------------------------------- |  | -------------------------- | ---- | - | ---- | - | ---- | -
|                                                                 |  | Three MonthsEnded June 30, |     
|                                                                 |  | 2003                       |      |   | 2004 |  
|Revenues                                                         |  | $                          | 820  |   |      | $ | 215  |  
|Direct operating expenses                                        |  |                            | (725 | ) |      |   | (258 | )
|                                                                 |  |                            |      |   |      |   |      |  
|Results of operations                                            |  |                            | 95   |   |      |   | (43  | )
|Gain (loss) recognized upon sale of assets of discontinued sites |  |                            |     |   |      |   | (227 | )
|                                                                 |  |                            |      |   |      |   |      |  
|Income (loss) from discontinued operations                       |  | $                          | 95   |   |      | $ | (270 | )
|                                                                 |  |                            |      |   |      |   |      |  



|                                                                 |  |                          |        |   |      |   |      |  
|---------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ---- | -
|                                                                 |  | Six Months EndedJune 30, |       
|                                                                 |  | 2003                     |        |   | 2004 |  
|Revenues                                                         |  | $                        | 1,999  |   |      | $ | 599  |  
|Direct operating expenses                                        |  |                          | (1,804 | ) |      |   | (698 | )
|                                                                 |  |                          |        |   |      |   |      |  
|Results of operations                                            |  |                          | 195    |   |      |   | (99  | )
|Gain (loss) recognized upon sale of assets of discontinued sites |  |                          |       |   |      |   | (162 | )
|                                                                 |  |                          |        |   |      |   |      |  
|Income (loss) from discontinued operations                       |  | $                        | 195    |   |      | $ | (261 | )
|                                                                 |  |                          |        |   |      |   |      |  



The following is a
summarized balance sheet presenting the carrying amounts of major classes of assets and liabilities related to discontinued operations as of December 31, 2003 and June 30, 2004 (in thousands):



|                            |  |                  |     |              |   |    
|--------------------------- |  | ---------------- | --- | ------------ | - | ---
|                            |  | December 31,2003 |     | June 30,2004
|Property and equipment, net |  | $                | 151 |              | $ | 141
|Other assets                |  |                  |    |              |   |   
|                            |  |                  |     |              |   |    
|Assets held for sale        |  | $                | 151 |              | $ | 141
|                            |  |                  |     |              |   |    
|Other liabilities           |  | $                |    |              | $ |   
|                            |  |                  |     |              |   |    



13



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| | 8. | Income (Loss) Per Share
| | -- | -----------------------



The following table sets forth the computation of basic and diluted income (loss) per share of common stock (in thousands, except per share data):



|                                                                            |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|--------------------------------------------------------------------------- |  | -------------------------- | ------ | - | ------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                            |  | Three Months EndedJune 30, |        |   | Six Months EndedJune 30, |  
|                                                                            |  | 2003                       |        |   | 2004                     |   |        | 2003 |  |   | 2004   |  
|Numerator:                                                                  |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Net income (loss)                                                           |  | $                          | 5,501  |   |                          | $ | 5,067  |      |  | $ | 9,931  |   |  | $ | (470   | )
|                                                                            |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Denominator:                                                                |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Denominator for basic income (loss) per share - weighted average shares     |  |                            | 41,000 |   |                          |   | 44,461 |      |  |   | 41,000 |   |  |   | 42,760 |  
|Effect of dilutive securites                                                |  |                            | 1,900  |   |                          |   | 2,722  |      |  |   | 1,897  |   |  |   |       |  
|                                                                            |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Denominator for diluted income (loss) per share - adjusted weighted average |  |                            | 42,900 |   |                          |   | 47,183 |      |  |   | 42,897 |   |  |   | 42,760 |  
|                                                                            |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Basic income (loss) per common share                                        |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Income (loss) from continuing operations                                    |  | $                          | 0.13   |   |                          | $ | 0.12   |      |  | $ | 0.24   |   |  | $ | (0.01  | )
|Income (loss) from discontinued operations                                  |  |                            | 0.00   |   |                          |   | (0.01  | )    |  |   | 0.00   |   |  |   | 0.00   |  
|Gain (loss) on sale of properties                                           |  |                            | (0.00  | ) |                          |   | (0.00  | )    |  |   | (0.00  | ) |  |   | 0.00   |  
|                                                                            |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Net income (loss)                                                           |  | $                          | 0.13   |   |                          | $ | 0.11   |      |  | $ | 0.24   |   |  | $ | (0.01  | )
|                                                                            |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Diluted income (loss) per common share                                      |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Income (loss) from continuing operations                                    |  | $                          | 0.13   |   |                          | $ | 0.11   |      |  | $ | 0.23   |   |  | $ | (0.01  | )
|Income (loss) from discontinued operations                                  |  |                            | 0.00   |   |                          |   | 0.00   |      |  |   | 0.00   |   |  |   | 0.00   |  
|Gain (loss) on sale of properties                                           |  |                            | (0.00  | ) |                          |   | (0.00  | )    |  |   | (0.00  | ) |  |   | 0.00   |  
|                                                                            |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|Net income (loss)                                                           |  | $                          | 0.13   |   |                          | $ | 0.11   |      |  | $ | 0.23   |   |  | $ | (0.01  | )
|                                                                            |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |        |  



For the six months
ended June 30, 2004, approximately 3.0 million shares of common stock are excluded from the calculation of diluted earnings per share, as their effect would have been antidilutive.



14



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| | 9. | Comprehensive Income
| | -- | --------------------



Comprehensive income for the three and six months ended June 30, 2004 was $12.8 million and $3.4 million, respectively. The difference between
comprehensive income and net income, defined as other comprehensive income or loss, is primarily related to the effect of our interest rate swaps (see Note 5 - Interest Rate Swaps). Comprehensive income for the three and six months ended June 30,
2003 was $5.0 million and $9.6 million, respectively, which approximated net income. Other comprehensive income (loss) is comprised of the following (in thousands):



|                                    |  |                            |      |   |      |   |       |  
|----------------------------------- |  | -------------------------- | ---- | - | ---- | - | ----- | -
|                                    |  | Three Months EndedJune 30, |     
|                                    |  | 2003                       |      |   | 2004 |  
|Change in fair value of derivatives |  | $                          |     |   |      | $ | 8,020 |  
|Currency translation adjustment     |  |                            | (540 | ) |      |   | (307  | )
|                                    |  |                            |      |   |      |   |       |  
|                                    |  | $                          | (540 | ) |      | $ | 7,713 |  
|                                    |  |                            |      |   |      |   |       |  



|                                    |  |                          |      |   |      |   |      
|----------------------------------- |  | ------------------------ | ---- | - | ---- | - | -----
|                                    |  | Six Months EndedJune 30,
|                                    |  | 2003                     |      |   | 2004
|Change in fair value of derivatives |  | $                        |     |   |      | $ | 3,838
|Currency translation adjustment     |  |                          | (360 | ) |      |   | 33   
|                                    |  |                          |      |   |      |   |      
|                                    |  | $                        | (360 | ) |      | $ | 3,871
|                                    |  |                          |      |   |      |   |      



| | 10. | Acquisitions
| | --- | ------------



On September 23, 2003, a majority of our stockholders formed a new company, Pinnacle Towers Acquisition Holdings LLC, then known as Pinnacle Towers
Acquisition, Inc. (PTA), with an initial capitalization of $20,000 in cash. This entity had no operations until December 4, 2003, when it acquired a portfolio of 67 tower sites primarily located in the southeastern United States. PTA
paid the seller $26.3 million in cash, and incurred approximately $1.0 million in transaction costs. PTA financed this purchase using borrowings under our Credit Facility.



On February 6, 2004, we acquired all of the common stock of PTA for approximately $21,000 cash and the assumption of
PTAs outstanding debt of $28.0 million under our Credit Facility. Because over 99% of the stockholders of Global Signal were also stockholders of PTA, and in the same proportions, this acquisition is a business combination among entities
under common control and, accordingly, we have accounted for this acquisition in a manner similar to a pooling of interests. As a result, we have included the results of operations and balance sheet of PTA in our financial statements beginning
September 23, 2003.



During April 2004, we also acquired five
wireless communications towers located in Georgia from two non-affiliated parties for approximately $3.5 million including fees and expenses. These towers generate all of their revenues from 19 wireless telephony tenant leases. We financed these
acquisitions with borrowings under our Credit Facility, which we later repaid with proceeds from the initial public offering (see Note 6  Stockholders Equity).



15



---

On June 30, 2004, Pinnacle Towers Acquisition, LLC, our wholly-owned subsidiary, acquired all of the
membership interests in Tower Ventures III LLC (Tower Ventures) from four non-affiliated individuals and their controlled entities for $53.0 million in cash, including expenses of approximately $1.0 million. Of the purchase price, $1.2
million is being held in escrow pending installation of the equipment of certain new tenants under signed tenant leases. Tower Ventures owned 97 wireless communications towers located primarily in Tennessee, Mississippi, Missouri and Arkansas. The
sites are generally less than four years old and generate substantially all of their revenues from approximately 240 tenant leases with wireless telephony tenants. The acquisition was financed with proceeds from the initial public offering (see Note
6 - Stockholders Equity). The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):



|                            |  |   |        |  
|--------------------------- |  | - | ------ | -
|Accounts receivable         |  | $ | 261    |  
|Prepaid rent                |  |   | 464    |  
|Tower assets                |  |   | 44,481 |  
|Intangible assets           |  |   | 7,050  |  
|Land (easements)            |  |   | 143    |  
|Escrowed funds              |  |   | 1,190  |  
|Accrued liabilities         |  |   | (159   | )
|Asset retirement obligation |  |   | (422   | )
|Deferred revenue            |  |   | (621   | )
|                            |  |   |        |  
|Net assets                  |  | $ | 52,387 |  
|                            |  |   |        |  



We also acquired 45
other communications towers in June 2004 for $17.5 million, including fees and expenses, which were funded by proceeds from our initial public offering. These towers are located primarily in the eastern and southeastern United States and generated
substantially all of their revenues from wireless telephony tenants.



During the six months ended June 30, 2004, we acquired various parcels of land, some in fee simple title, and others in long-term easements, which we had previously leased from the sellers, for a total purchase price of $2.5 million. We
also purchased the 9.0% minority interest in Pinnacle Towers, Ltd., our UK subsidiary, for $1.2 million, and repaid its outstanding $0.6 million in borrowings under a term loan with the Bank of Scotland. After this minority interest was acquired, we
now own 100% of Pinnacle Towers, Ltd. All of these transactions were funded by proceeds from our initial public offering (see Note 6  Stockholders Equity).



On July 29, 2004, we signed a definitive asset purchase agreement with Lattice Communications, LLC to acquire 235 wireless
communications sites for an aggregate purchase price of $117.5 million, including estimated fees and expenses. The tenants on these sites include the largest US wireless carriers, as well as subsidiaries of Cinergy Corp. (Cinergy).
Cinergy has multi-year leases on many of these sites and utilizes these sites for its private communications and microwave network. The sites to be acquired are located primarily in Indiana, Ohio, Alabama, Kansas and Georgia. The acquisition is
expected to close in the fourth quarter of 2004 and is subject to customary closing conditions.



| | 11. | Related Party Transactions
| | --- | --------------------------



In 2003, our board of directors awarded options to purchase 820,000 shares of our common stock to an employee of Fortress Capital Finance LLC, who served
on our board of directors from January 2003 until February 2004 and provided financial advisory services to us through March 2004. Of these options, 30% vested on January 9, 2003, 30% were scheduled to vest on December 31, 2004 and the remaining 40%
were scheduled to vest on December 31, 2005. Half of the options had an exercise price of $5 per share and the remainder had an exercise price of $10 per share. Pursuant to the terms of our stock option plan, the exercise price of the then
outstanding options was adjusted from $10 to $8.53 per share and from $5 to $4.26 per share, due to the one-time special distribution declared and paid to our stockholders on February 5, 2004. This individuals agreement to provide financial
advisory services was terminated in March 2004 and the vesting of the outstanding options was modified. Following this modification, the former director is entitled to exercise options to purchase 246,000 shares at an exercise price of $4.26 and
options to purchase 246,000 shares at an exercise price of $8.53 until December 31, 2004. The remaining options to acquire 328,000 shares were forfeited. We follow SFAS No. 123 and EITF Issue No. 96-18, Accounting for Equity Investments that are
Issued to Other than Employees for Acquiring or in Conjunction with Selling Goods and Services, for our stock option grants to this individual. For the three and six months ended June 30, 2004, as a result of the services provided before the
termination, the termination of this individuals agreement and the resulting modification, we recognized a total expense of approximately $0 and $2.6 million, respectively, related to these options.



16



---

In connection with the initial public offering (see Note 6Stockholders Equity), and to
compensate Fortress and Greenhill for their successful efforts in raising capital in the offering, in March 2004 we granted options to FRIT PINN LLC, an affiliate of Fortress, and Greenhill, or affiliates of such entities, to purchase the number of
shares of our common stock equal to an aggregate of 10% of the number of shares issued in the initial public offering in the following amounts (1) for FRIT PINN LLC (or its affiliates), the right to acquire 644,000 shares which is equal to 8% of the
number of shares issued in the initial public offering, including the over-allotment and (2) for Greenhill (or its affiliate), the right to acquire 161,000 shares which is equal to 2% of the number of shares issued in the initial public offering,
including the over-allotment, all at an exercise price per share equal to the initial offering price of $18.00 per share. All of the options were immediately vested and are exercisable for ten years from June 8, 2004. We recognized the fair value of
these options using the Black-Scholes method on the offering date as a cost of the offering of $1.9 million, by netting it against the net proceeds.



At our board meeting in December 2003, the board passed a resolution renewing the annual monitoring fee of $2.0 million for the one-year period from
November 1, 2003 to October 31, 2004 to Fortress Pinnacle Acquisition LLC and Greenhill. This monitoring fee was provided as compensation for consulting and management advisory services and analysis, including assistance in our re-organization and
the re-engineering of our business process, assistance in identifying, recruiting and hiring our executives, assistance in forming and executing our capital management strategy and assistance in executing our acquisition strategy, as were requested
by us and provided by Fortress and Greenhill. The monitoring fee arrangement was terminated on March 22, 2004, effective March 31, 2004, with no additional amounts due and, as a result, the remaining obligation of $1.2 million was not and will not
be paid.



| | 12. | Commitments and Contingencies
| | --- | -----------------------------



Purchase Commitments



As of June 30, 2004, we had no outstanding purchase agreements to acquire assets. Since June 30, 2004, we have entered into asset purchase agreements to
acquire various tower assets from 12 unrelated sellers, for a total estimated purchase price of $126.9 million, including estimated fees and expenses of the purchases, which includes a definitive asset purchase agreement with Lattice Communications,
LLC to acquire 235 wireless communications sites for an aggregate purchase price of $117.5 million, including estimated fees and expenses. The Lattice acquisition is expected to close in the fourth quarter of 2004 and is, as are our other executed
asset purchase agreements, subject to customary closing conditions.



Legal Matters



We are involved in litigation
incidental to the conduct of our business. We believe that none of such pending litigation or unasserted claims of which we have knowledge, will have a material adverse effect on our business, financial condition, results of operations or liquidity.



17



---

|ITEM2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
|------ | -------------------------------------------------------------------------------------



SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995



This Quarterly Report on Form 10-Q, and other information we provide from
time to time, contain certain forward-looking statements as that term is defined by Section 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, which are intended to be subject to
the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements regarding our expectations regarding our: performance in 2004 and later; future financial position, revenues, expenses, liquidity and capital
resources; closing of acquisitions; how we will meet our cash requirements; ability to obtain future financing and capital; anticipated capital expenditures for tower related equipment and tower augmentations and improvements; and belief that the
UPREIT structure provides us with flexibility and similar statements including, without limitation, those containing such words as anticipate(s), expect(s), intend(s), plan(s), target(s),
project(s), believe(s), seek(s), estimate(s), and other similar expressions are intended to identify such forward-looking statements. These statements are based on managements current
expectations and beliefs and are subject to a number of factors that could lead to actual results materially different than those described in the forward-looking statements; Global Signal can give no assurance that its expectations will be
attained. Factors that could cause actual results to differ materially from our expectations or beliefs include, but are not limited to: our continued ability to acquire towers at attractive prices and/or which will generate returns consistent with
expectations; the possibility that the towers that we have acquired and will acquire may not generate sufficient additional income to justify their acquisition; possibilities that conditions to closing of transactions will not be satisfied; the
possibility that non-binding Letters of Intent will not result in purchase agreements or closings; and other risks detailed from time to time in Global Signals SEC reports including, but not limited to, its Prospectus, dated June 2, 2004,
filed with the Securities and Exchange Commission pursuant to Rule 424(b), under the Securities Act of 1933, as amended. Such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law,
Global Signal expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the companys expectations with regard thereto or change in events,
conditions or circumstances on which any statement is based.



Executive
Overview



Global Signal, formerly known as Pinnacle
Holdings Inc., is one of the largest wireless communications tower owners in the United States, based on the number of towers owned. For the three and six months ended June 30, 2004, substantially all of our revenues came from our ownership, leasing
and management of wireless communications towers and other communications sites. Our sites are primarily located in the southeastern and mid-Atlantic regions of the country. As of December 31, 2003 and June 30, 2004, we owned 2,206 and 2,343 towers,
respectively, and 251 and 252 other communications sites as of December 31, 2003 and June 30, 2004, respectively. In addition, as of December 31, 2003 and June 30, 2004, we managed 819 and 765 towers, rooftops and other communications sites,
respectively, where we had the right to market space or where we had a sublease arrangement with the site owner. As of December 31, 2003 and June 30, 2004, we owned or managed a total of 3,276 and 3,360 communications sites, respectively. We own
substantially all of our assets and conduct our operations through an operating partnership, Global Signal Operating Partnership, L.P., or Global Signal OP. Global Signal Inc. is the special limited partner and our wholly-owned
subsidiary, Global Signal GP LLC, is the managing general partner of Global Signal OP. Global Signal Inc. holds 99% of the partnership interests and Global Signal GP LLC holds 1% of the partnership interests in Global Signal OP.



We are organized and conduct our operations to qualify as a REIT for federal
income tax purposes. As such, we will generally not be subject to federal income tax on that portion of our income that is distributed to our stockholders if we distribute at least 90% of our REIT taxable income to our stockholders and comply with
various other requirements. We also have certain subsidiaries that are not qualified REIT subsidiaries and, therefore, their operations will be subject to federal income tax.



The majority of our customer base is comprised of wireless service providers. In addition, we serve a broad array of
government agencies, operators of private networks and broadcasters. The economic and industry factors relevant to our business fall into the following four primary categories: (1) the growth or decline in the number of wireless subscribers, (2) the
increase or decrease in wireless usage per subscriber, (3) customer demand for high network quality and ubiquitous coverage, and (4) the development and adoption of new wireless technologies, devices and applications. Over the past ten years, new
wireless technologies, devices and applications have become more advanced and broadly utilized by wireless subscribers. As new technologies, devices and applications have developed, new networks have been deployed to support the more advanced
applications and the growth in the number of wireless subscribers while more mature technologies, such as paging, have experienced shrinking subscriber bases and network contraction. Some of the key indicators that we regularly monitor to evaluate
growth trends affecting wireless technology usage are the growth or contraction of a particular technologys wireless subscribers and the usage as measured in minutes of use or network capacity utilization.



18



---

The material opportunities, challenges and risks of our business have changed significantly over the past
two years. Most recently, concurrent with an increased focus on improving network quality, many of our wireless customers have experienced a general improvement in their overall financial condition. This has resulted in an increase in these
customers abilities to invest in their networks and a related increase in our telephony tenant base. During 2003 and the first half of 2004, the demand by wireless telephony service providers for our communications sites increased compared to
the demand we experienced during 2002 and 2001. Our growth will be primarily affected by the future demand for communications sites by wireless telephony service providers, paging service providers and government agencies. The demand for
communications site space by wireless telephony service providers will be driven by growth in their subscribers utilization of wireless telephony services, including utilization of their networks for data services. In addition, demand could
also be affected by carrier consolidation, because consolidation could result in duplicative coverage and excess network capacity. Recently, Cingular and AT&T Wireless agreed to merge, which could adversely impact tenant lease revenues at some
of our communications sites. For example, as of June 30, 2004, 126 of our sites are occupied by both Cingular and AT&T Wireless and the combined revenues from AT&T Wireless and Cingular on these sites was approximately $1.6 million for the
three months ended June 30, 2004. These tenants may also be located on nearby wireless communications towers owned by our competitors. In addition, Arch Wireless, our largest customer for the six months ended June 30, 2004, has agreed to merge with
MetroCall Holdings, Inc., our seventh largest customer for the six months ended June 30, 2004. Both customers offer paging services throughout the United States and consequently will have duplicate coverage in most markets. As a result, network
consolidation by these tenants after the merger is completed could adversely impact tenant lease revenues at some of our sites. Lastly, the demand for communications site space by government entities will be driven by the agencies demand for
new digital networks and the ability to communicate with other government agencies as well as their ability to gain funding for such networks.



Our growth opportunities are primarily linked to organic growth on our existing towers and acquiring and developing new towers on which our wireless
customers will seek to locate their equipment, thereby growing our overall tenant base.



A key component of our growth strategy is our capital management strategy, which supports the financing of our new tower development and tower acquisition strategy. Our capital management strategy is to finance newly
acquired assets, on a long-term basis, using low cost fixed rate debt obtained through the issuance of mortgage-backed securities combined with a portion of the proceeds from our recent equity offering and additional equity issuances if deemed
appropriate. To accomplish this, we will first use the proceeds from our initial public offering and then we plan to finance newly acquired and developed wireless communications sites through borrowings on our credit facility, which we expect will
be repaid with proceeds from the issuance of mortgage-backed securities.



Prior to our reorganization we acquired certain sites unrelated to our core tower business, which have subsequently been sold, and which our former management was unable to efficiently integrate and manage. Our
current growth strategy, which is in part based on a new site acquisition and development strategy, is significantly different. The primary differences are (1) our strategy to finance our sites using a capital structure which we believe does not
rely on growth to reduce leverage and uses low cost fixed rate debt obtained through the issuance of mortgage-backed securities combined with a portion of the proceeds from our initial public offering to finance our new tower acquisitions and
development growth, (2) our strategy to buy core tower sites with in-place telephony or government tenants where we believe there is a high likelihood of multiple lease renewals, (3) our underwriting process which evaluates each site individually
and prices each site based on its current yield and the site and tenant attributes and location of the site, and (4) our focus on integrating, maintaining and operating the sites we buy efficiently and effectively.



The primary factors affecting our determination of the value of a
communications site are its location and the immediate areas competitive structures, tenant base and tenant credit quality. Our communications sites are primarily located in the southeastern and mid-Atlantic regions of the United States, in
addition to our sites in Canada and the United Kingdom. The locations of our sites are diverse and include sites along active transportation corridors, in dense urban centers and in growing suburban communities. We also have a diverse tenant base,
which includes government agencies, large and small wireless service providers and operators of private communication networks. The credit quality of our tenants varies greatly from investment grade credits to small independent operations. As of
December 31, 2003 and June 30, 2004, our communications sites averaged 4.2 and 4.0 tenants per owned tower, respectively.



Acquisitions and Dispositions of Communications Sites



Our financial results are also impacted by the timing, size and number of acquisitions and dispositions we complete in a period. Our number of active
communications sites increased from 3,225 at June 30, 2003 to 3,360 at June 30, 2004. During the first six months of 2004, we acquired 147 communications towers from various independent sellers. In addition, we routinely review and dispose of
under-performing sites which generate negative cash flows and which are not compatible with our strategy. During the three and six months ended June 30, 2004, we disposed of 35 and 78 under-performing sites, respectively, primarily consisting of
managed sites, and as of June 30, 2004, we had 31 other sites held for sale.



19



---

On September 23, 2003, a majority of our stockholders formed a new company, Pinnacle Towers Acquisition
Holdings LLC (PTA), then known as Pinnacle Towers Acquisition Inc. This entity had no operations until December 4, 2003, when it acquired, from TowerCom Enterprises, L.L.C. and its affiliates, a portfolio of 67 towers with 132 telephony
tenant leases which are primarily located in Florida, Georgia, Alabama and Mississippi and are generally less than four years old. The purchase price was $26.3 million in cash, and PTA accounted for the purchase using purchase accounting. PTA was
initially funded through a $100.0 million committed acquisition credit facility (Credit Facility), provided by Morgan Stanley, which was increased to $200.0 million on February 6, 2004. In addition, on February 6, 2004, we exercised our
option to acquire all the outstanding common stock of PTA, and PTA became our wholly-owned subsidiary. We acquired the common stock of PTA for approximately $21,000. Global Signal and PTA had 99% common controlling stockholders. Because our
acquisition of PTA was a business combination among entities under common control, we have accounted for it in a manner similar to a pooling of interests. As a result, we have included the financial statements of PTA in our financial
statements beginning September 23, 2003.



During the second
quarter ended June 30, 2004, we also acquired 50 wireless communications towers located primarily in the eastern and southeastern United States for approximately $21.2 million including fees and expenses. These towers generate substantially all of
their revenues from wireless telephony tenant leases. We financed these acquisitions either with borrowings under our Credit Facility, which we later repaid with proceeds from the initial public offering, or with proceeds from the initial public
offering, if acquired after the completion of the initial public offering.



On June 30, 2004, Pinnacle Towers Acquisition, LLC, our wholly-owned subsidiary, acquired all of the membership interests in Tower Ventures III LLC (Tower Ventures) from four non-affiliated individuals and
their controlled entities for $53.0 million in cash, including expenses of approximately $1.0 million. Of the purchase price, $1.2 million is being held in escrow pending installation of the equipment of certain new tenants under signed tenant
leases. Tower Ventures owned 97 wireless communications towers located primarily in Tennessee, Mississippi, Missouri and Arkansas. The sites are generally less than four years old and generate substantially all of their revenues from approximately
240 tenant leases with wireless telephony tenants. The acquisition was financed with proceeds from the initial public offering.



During the six months ended June 30, 2004, we acquired various parcels of land, some in fee simple title, and others in long-term easements, which we had
previously leased from the sellers, for a total purchase price of $2.5 million. We also purchased the 9.0% minority interest in Pinnacle Towers, Ltd., our UK subsidiary, for $1.2 million, and repaid its outstanding $0.6 million in borrowings under a
term loan with the Bank of Scotland. After this minority interest was acquired, we now own 100% of Pinnacle Towers, Ltd. All of these transactions were funded by proceeds from our initial public offering.



Recent Developments



On July 29, 2004, we signed a definitive asset purchase agreement with Lattice Communications, LLC to acquire 235 wireless
communications sites for an aggregate purchase price of $117.5 million, including estimated fees and expenses. The tenants on these sites include the largest US wireless carriers, as well as subsidiaries of Cinergy Corp. (Cinergy).
Cinergy has multi-year leases on many of these sites and utilizes these sites for its private communications and microwave network. The sites to be acquired are located primarily in Indiana, Ohio, Alabama, Kansas and Georgia. The acquisition is
expected to close in the fourth quarter of 2004 and is subject to customary closing conditions.



In July 2004, our board of directors elected Greerson G. McMullen to serve as our Executive Vice President, General Counsel and Secretary, replacing
Stephen W. Crawford.



Revenues



We generate substantially all of our revenues from leasing space on
communications sites to various tenants including wireless service providers, government agencies, operators of private networks, and broadcasters. Factors affecting our revenues include the rate at which our customers deploy capital to enhance and
expand their networks, the rate at which customers rationalize their networks, the renewal rates of our tenants and fixed-price annual escalation clauses in our contracts that allow us to increase our tenants rental rates over time.



For the six months ended June 30, 2004, 80.6% and 90.3% of our
revenues and gross margin, respectively, were generated from our owned sites, while 19.4% and 9.7% of our revenues and gross margin, respectively, were generated from our managed sites. Typically, our tenant lease agreements are specific to a site,
are for terms of one to ten years, and are renewable for multiple pre-determined periods at the option of the tenant. Rents under the tenant leases are generally due to us on a monthly basis, and revenues from each agreement are recognized monthly.
These agreements typically contain fixed-price annual escalation clauses; however, rental revenues are recognized in our financial statements on a straight-line basis over the contractual term of the agreements.



20



---

Our tenants are responsible for the installation and maintenance of their equipment at our sites. These
tenants transmit from our sites utilizing a wide variety of technologies including personal communication services (PCS), cellular, enhanced specialized mobile radio (ESMR), mobile radio, paging, and radio and television broadcast. For the months of
June 2003 and 2004, our revenues mix for these primary technology categories was as follows:



|                                |  |                                     |   |  |           |  
|------------------------------- |  | ----------------------------------- | - |  | --------- | -
|                                |  | Percent of Revenues forthe Month of |  
|Tenant technology type          |  | June 2003                           |   |  | June 2004 |  
|Telephony (PCS, Cellular, ESMR) |  | 38.9                                | % |  | 43.2      | %
|Mobile radio                    |  | 27.0                                | % |  | 23.1      | %
|Paging                          |  | 22.0                                | % |  | 21.3      | %
|Broadcast                       |  | 7.0                                 | % |  | 7.7       | %
|Wireless data and other         |  | 5.1                                 | % |  | 4.7       | %
|                                |  |                                     |   |  |           |  
|Total                           |  | 100.0                               | % |  | 100.0     | %
|                                |  |                                     |   |  |           |  



Direct Site Operating Expenses and
Other Expenses



Direct site operating expenses consist of
ground rents (if we do not own the land at our site), utilities, property and ad valorem taxes, insurance and site maintenance cost. Other shared costs such as property management, site operations and contract administration are included in selling,
general and administrative as described below. Because the costs of operating an owned site generally do not increase significantly as we add additional tenants, new lease revenues from additional tenants to a particular site provide high
incremental gross margin for that site. Similarly, the loss of any tenant on an owned site does not significantly reduce the costs associated with operating that site; and as a result, the lost lease revenues will reduce cash flows and gross margin
from that site. Fluctuations in our gross margins on owned sites are directly related to changes in our tenant lease revenues. For managed sites, we typically pay the site owner either a fixed fee, a percentage of revenues or a combination of a
fixed fee plus a percentage of revenues. In instances where we pay the landlord a percentage of revenues, changes in revenues result in an increase or decrease, as applicable, in our communications site operating costs.



Selling, general and administrative expenses consist of five major
components: (1) sales, marketing and collocations, (2) property management and site operations, (3) contracts administration, (4) business development including acquisitions and new builds, and (5) administrative support including legal, finance,
accounting, and information technology.



21



---

Results of Operations



Comparison of the three months ended June 30, 2004 to the three months ended June 30, 2003



The following table sets forth for the periods indicated, each statement of operations item as a percentage of revenues. The
results of operations for any particular period are not necessarily indicative of results for any future period. The following data should be read in conjunction with our condensed consolidated financial statements and notes thereto included in our
Prospectus, dated June 2, 2004, filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended.



|                                                                                                                |  |                             |        |   |             |       |   |        |   |        |             |  |       |   |  |   |       |   |  |        |  
|--------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ----------- | ----- | - | ------ | - | ------ | ----------- |  | ----- | - |  | - | ----- | - |  | ------ | -
|                                                                                                                |  | Three Months Ended June 30, |       
|                                                                                                                |  | 2003                        |        |   | 2004        |       |   | Change |  
|                                                                                                                |  | (dollars in thousands)      |       
|                                                                                                                |  | $                           |        |   | % ofRevenue |       |   | $      |   |        | % ofRevenue |  |       | $ |  |   | %     |  
|Revenues                                                                                                        |  | $                           | 41,909 |   |             | 100.0 | % |        | $ | 44,139 |             |  | 100.0 | % |  | $ | 2,230 |   |  | 5.3    | %
|Direct site operating expenses (excluding depreciation, amortization and accretion)                             |  |                             | 13,652 |   |             | 32.6  | % |        |   | 13,318 |             |  | 30.2  | % |  |   | (334  | ) |  | -2.4   | %
|                                                                                                                |  |                             |        |   |             |       |   |        |   |        |             |  |       |   |  |   |       |   |  |        |  
|Gross margin                                                                                                    |  |                             | 28,257 |   |             | 67.4  | % |        |   | 30,821 |             |  | 69.8  | % |  |   | 2,564 |   |  | 9.1    | %
|                                                                                                                |  |                             |        |   |             |       |   |        |   |        |             |  |       |   |  |   |       |   |  |        |  
|Other expenses:                                                                                                 |  |                             |        |   |             |       |   |        |   |        |             |  |       |   |  |   |       |   |  |        |  
|Selling, general and administrative (excluding $0 and $ 608 of non-cash stock-based compensation, respectively) |  |                             | 6,694  |   |             | 16.0  | % |        |   | 5,855  |             |  | 13.3  | % |  |   | (839  | ) |  | -12.5  | %
|State franchise, excise and minimum taxes                                                                       |  |                             | 208    |   |             | 0.5   | % |        |   | 165    |             |  | 0.4   | % |  |   | (43   | ) |  | -20.7  | %
|Depreciation, amortization and accretion                                                                        |  |                             | 11,176 |   |             | 26.7  | % |        |   | 11,954 |             |  | 27.1  | % |  |   | 778   |   |  | 7.0    | %
|Non-cash stock-based compensation expense for services                                                          |  |                             |       |   |             | 0.0   | % |        |   | 608    |             |  | 1.4   | % |  |   | 608   |   |  | 0.0    | %
|                                                                                                                |  |                             |        |   |             |       |   |        |   |        |             |  |       |   |  |   |       |   |  |        |  
|                                                                                                                |  |                             | 18,078 |   |             | 43.1  | % |        |   | 18,582 |             |  | 42.1  | % |  |   | 504   |   |  | 2.8    | %
|                                                                                                                |  |                             |        |   |             |       |   |        |   |        |             |  |       |   |  |   |       |   |  |        |  
|Operating income                                                                                                |  |                             | 10,179 |   |             | 24.3  | % |        |   | 12,239 |             |  | 27.7  | % |  |   | 2,060 |   |  | 20.2   | %
|Interest expense, net                                                                                           |  |                             | 5,092  |   |             | 12.2  | % |        |   | 6,803  |             |  | 15.4  | % |  |   | 1,711 |   |  | 33.6   | %
|Minority interest in net income of subsidiary                                                                   |  |                             | (3     | ) |             | 0.0   | % |        |   | (9     | )           |  | 0.0   | % |  |   | (6    | ) |  | 200.0  | %
|                                                                                                                |  |                             |        |   |             |       |   |        |   |        |             |  |       |   |  |   |       |   |  |        |  
|Income from continuing operations before income tax benefit (expense)                                           |  |                             | 5,090  |   |             | 12.1  | % |        |   | 5,445  |             |  | 12.3  | % |  |   | 355   |   |  | 7.0    | %
|Income tax benefit (expense)                                                                                    |  |                             | 343    |   |             | 0.8   | % |        |   | (102   | )           |  | -0.2  | % |  |   | (445  | ) |  | -129.7 | %
|                                                                                                                |  |                             |        |   |             |       |   |        |   |        |             |  |       |   |  |   |       |   |  |        |  
|Income from continuing operations                                                                               |  |                             | 5,433  |   |             | 13.0  | % |        |   | 5,343  |             |  | 12.1  | % |  |   | (90   | ) |  | -1.7   | %
|Income (loss) from discontinued operations                                                                      |  |                             | 95     |   |             | 0.2   | % |        |   | (270   | )           |  | -0.6  | % |  |   | (365  | ) |  | -384.2 | %
|                                                                                                                |  |                             |        |   |             |       |   |        |   |        |             |  |       |   |  |   |       |   |  |        |  
|Income before loss on sale of properties                                                                        |  |                             | 5,528  |   |             | 13.2  | % |        |   | 5,073  |             |  | 11.5  | % |  |   | (455  | ) |  | -8.2   | %
|Loss on sale of properties                                                                                      |  |                             | (27    | ) |             | -0.1  | % |        |   | (6     | )           |  | 0.0   | % |  |   | 21    |   |  | -77.8  | %
|                                                                                                                |  |                             |        |   |             |       |   |        |   |        |             |  |       |   |  |   |       |   |  |        |  
|Net income                                                                                                      |  | $                           | 5,501  |   |             | 13.1  | % |        | $ | 5,067  |             |  | 11.5  | % |  | $ | (434  | ) |  | -7.9   | %
|                                                                                                                |  |                             |        |   |             |       |   |        |   |        |             |  |       |   |  |   |       |   |  |        |  



Revenues



The increase in revenues of $2.2 million or 5.3%, was primarily a result of
the addition of approximately $0.8 million in revenues from our acquisition of 67 communications tower sites in December 2003, and five communications towers in April 2004, and from internal growth. The 97 towers acquired from Tower Ventures did not
close until June 30, 2004, therefore, the results for the three months ended June 30, 2004, do not include any results of operations from these towers. Our internal growth was primarily driven by growth in our revenues generated from telephony
customers, which was in part offset by a decline in our revenues generated by our non-telephony tenants. Our mix of revenues from wireless telephony customers as a percentage of total site revenues increased from 38.0% for the three months ended
June 30, 2003 to 42.7% for the three months ended June 30, 2004.



Expenses



Direct site operating expenses (excluding depreciation, amortization
and accretion expense)



Our direct site operating expenses
decrease of $0.3 million primarily related to decreased major maintenance expenses incurred at our sites and lower rent expense resulting from a decline in our revenues generated on managed sites on which a portion of our rent expense is calculated
based on our revenues. This decrease was partially offset by increased site expenses related to the acquisition of 67 communications tower sites in December 2003, and five communications towers in April 2004. As a percentage of revenues, our direct
site operating expenses decreased to 30.2% of revenues for the three months ended June 30, 2004 from 32.6% of revenues for the three months ended June 30, 2003.



22



---

Selling, general and administrative



Our selling, general and administrative expenses decrease of $0.8 was primarily attributable to a $0.5 million decline in
monitoring fees paid to Fortress and Greenhill, as the monitoring agreement ended in March 2004, and decreased professional fees. As a percentage of revenues, our selling, general and administrative expenses declined to 13.3% of revenues for the
three months ended June 30, 2004 from 16.0% of revenues for the three months ended June 30, 2003.



Depreciation, amortization and accretion



The increase in depreciation, amortization and accretion of $0.8 million for the three months ended June 30, 2004 compared to the three months ended June 30, 2003 was primarily due to the addition of 67 communications
tower sites in December 2003 along with additional capital expenditures at our sites.



Non-cash stock-based compensation expense for services



For the three months ended June 30, 2004, we recognized $0.4 million in stock-based compensation related to 20,000 fully-vested and unrestricted common stock shares issued to four independent directors, who did not beneficially own 10.0% or
more of our common stock, upon consummation of the initial public offering, in accordance with our board compensation package for independent directors and $0.2 million related to stock options granted to an executive at an exercise price less than
the market value of the stock on the grant date.



Interest expense, net



Our net interest expense increase of $1.7 million is
related to the increase in the amount of debt in our capital structure resulting from the February 5, 2004 securitization transaction, which included the repayment of our old credit facility (Old Credit Facility), and the issuance of the
mortgage loan (Mortgage Loan) of $418.0 million.



Income tax
expense



Our income tax expense increase of $0.4 million
resulted primarily from a revaluation of deferred tax assets attributable to certain foreign subsidiary operations.



23



---

Comparison of the Six Months Ended June 30, 2004 to the Six Months Ended June 30, 2003



The following table sets forth for the periods indicated, each statement of
operations item as a percentage of revenues. The results of operations for any particular period are not necessarily indicative of results for any future period. The following data should be read in conjunction with our condensed consolidated
financial statements and notes thereto included in our Prospectus, dated June 2, 2004, filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended.



|                                                                                                                  |  |                           |        |   |             |       |   |        |   |        |             |  |       |   |  |   |         |   |  |        |  
|----------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ------ | - | ----------- | ----- | - | ------ | - | ------ | ----------- |  | ----- | - |  | - | ------- | - |  | ------ | -
|                                                                                                                  |  | Six Months Ended June 30, |       
|                                                                                                                  |  | 2003                      |        |   | 2004        |       |   | Change |  
|                                                                                                                  |  | (dollars in thousands)    |       
|                                                                                                                  |  | $                         |        |   | % ofRevenue |       |   | $      |   |        | % ofRevenue |  |       | $ |  |   | %       |  
|Revenues                                                                                                          |  | $                         | 83,143 |   |             | 100.0 | % |        | $ | 87,583 |             |  | 100.0 | % |  | $ | 4,440   |   |  | 5.3    | %
|Direct site operating expenses (excluding depreciation, amortization and accretion)                               |  |                           | 26,949 |   |             | 32.4  | % |        |   | 26,717 |             |  | 30.5  | % |  | $ | (232    | ) |  | -0.9   | %
|                                                                                                                  |  |                           |        |   |             |       |   |        |   |        |             |  |       |   |  |   |         |   |  |        |  
|Gross margin                                                                                                      |  |                           | 56,194 |   |             | 67.6  | % |        |   | 60,866 |             |  | 69.5  | % |  |   | 4,672   |   |  | 8.3    | %
|                                                                                                                  |  |                           |        |   |             |       |   |        |   |        |             |  |       |   |  |   |         |   |  |        |  
|Other expenses:                                                                                                   |  |                           |        |   |             |       |   |        |   |        |             |  |       |   |  |   |         |   |  |        |  
|Selling, general and administrative (excluding $0 and $ 3,212 of non-cash stock-based compensation, respectively) |  |                           | 13,211 |   |             | 15.9  | % |        |   | 12,414 |             |  | 14.2  | % |  |   | (797    | ) |  | -6.0   | %
|State franchise, excise and minimum taxes                                                                         |  |                           | 417    |   |             | 0.5   | % |        |   | 337    |             |  | 0.4   | % |  |   | (80     | ) |  | -19.2  | %
|Depreciation, amortization and accretion                                                                          |  |                           | 22,352 |   |             | 26.9  | % |        |   | 23,792 |             |  | 27.2  | % |  |   | 1,440   |   |  | 6.4    | %
|Non-cash stock-based compensation expense for services                                                            |  |                           |       |   |             | 0.0   | % |        |   | 3,212  |             |  | 3.7   | % |  |   | 3,212   |   |  | 0.0    | %
|                                                                                                                  |  |                           |        |   |             |       |   |        |   |        |             |  |       |   |  |   |         |   |  |        |  
|                                                                                                                  |  |                           | 35,980 |   |             | 43.3  | % |        |   | 39,755 |             |  | 45.4  | % |  |   | 3,775   |   |  | 10.5   | %
|                                                                                                                  |  |                           |        |   |             |       |   |        |   |        |             |  |       |   |  |   |         |   |  |        |  
|Operating income                                                                                                  |  |                           | 20,214 |   |             | 24.3  | % |        |   | 21,111 |             |  | 24.1  | % |  |   | 897     |   |  | 4.4    | %
|Interest expense, net                                                                                             |  |                           | 10,809 |   |             | 13.0  | % |        |   | 12,893 |             |  | 14.7  | % |  |   | 2,084   |   |  | 19.3   | %
|Loss on early extinguishment of debt                                                                              |  |                           |       |   |             | 0.0   | % |        |   | 8,449  |             |  | 9.6   | % |  |   | 8,449   |   |  | 0.0    | %
|Minority interest in net loss of subsidiary                                                                       |  |                           | 3      |   |             | 0.0   | % |        |   |       |             |  | 0.0   | % |  |   | (3      | ) |  | -100.0 | %
|                                                                                                                  |  |                           |        |   |             |       |   |        |   |        |             |  |       |   |  |   |         |   |  |        |  
|Income (loss) from continuing operations before income tax benefit (expense)                                      |  |                           | 9,402  |   |             | 11.3  | % |        |   | (231   | )           |  | -0.3  | % |  |   | (9,633  | ) |  | -102.5 | %
|Income tax benefit (expense)                                                                                      |  |                           | 419    |   |             | 0.5   | % |        |   | (112   | )           |  | -0.1  | % |  |   | (531    | ) |  | -126.7 | %
|                                                                                                                  |  |                           |        |   |             |       |   |        |   |        |             |  |       |   |  |   |         |   |  |        |  
|Income (loss) from continuing operations                                                                          |  |                           | 9,821  |   |             | 11.8  | % |        |   | (343   | )           |  | -0.4  | % |  |   | (10,164 | ) |  | -103.5 | %
|Income (loss) from discontinued operations                                                                        |  |                           | 195    |   |             | 0.2   | % |        |   | (261   | )           |  | -0.3  | % |  |   | (456    | ) |  | -233.8 | %
|                                                                                                                  |  |                           |        |   |             |       |   |        |   |        |             |  |       |   |  |   |         |   |  |        |  
|Income (loss) before gain (loss) on sale of properties                                                            |  |                           | 10,016 |   |             | 12.0  | % |        |   | (604   | )           |  | -0.7  | % |  |   | (10,620 | ) |  | -106.0 | %
|Gain (loss) on sale of properties                                                                                 |  |                           | (85    | ) |             | -0.1  | % |        |   | 134    |             |  | 0.2   | % |  |   | 219     |   |  | -257.6 | %
|                                                                                                                  |  |                           |        |   |             |       |   |        |   |        |             |  |       |   |  |   |         |   |  |        |  
|Net income (loss)                                                                                                 |  | $                         | 9,931  |   |             | 11.9  | % |        | $ | (470   | )           |  | -0.5  | % |  | $ | (10,401 | ) |  | -104.7 | %
|                                                                                                                  |  |                           |        |   |             |       |   |        |   |        |             |  |       |   |  |   |         |   |  |        |  



Revenues



The increase in revenues of $4.4 million or 5.3%, was primarily a result of
approximately $1.5 million in revenues from our acquisition of 67 communications tower sites in December 2003 and five communications towers in April 2004, and from internal growth. The 97 towers acquired from Tower Ventures did not close until June
30, 2004, therefore, the results for the six months ended June 30, 2004, do not include any results of operations from these towers. Our internal growth was primarily driven by growth in our revenues generated from telephony customers, which was in
part offset by a decline in our revenues generated by our non-telephony tenants. Our mix of revenues from wireless telephony customers as a percentage of total site revenues increased from 37.8% for the six months ended June 30, 2003 to 42.5% for
the six months ended June 30, 2004.



For the six months ended
June 30, 2004, Arch Wireless, Inc. (Arch), our largest customer, accounted for 10.7% of our revenues. Our current contract with Arch, which expires in May 2005, allows Arch to locate a fixed number of transmitters on any of our sites for
a fixed minimum rate. The number of sites that Arch currently occupies is less than the maximum number of sites allowable under the current contract. Consequently, we cannot make assurances that we will be able to renew their lease at the same rate
or terms upon its expiration. In addition, on March 29, 2004, Arch and Metrocall Holdings, Inc., our seventh largest customer for the six months ended June 30, 2004, announced that they had executed a merger agreement.



Expenses



Direct site operating expenses (excluding depreciation, amortization and accretion expense)



Our direct site operating expenses decreased by $0.2 million for the six
months ended June 30, 2004 compared to the six months ended June 30, 2003. The decrease in direct site operating expenses primarily related to decreased utilities and maintenance expenses incurred at our sites, and lower rent expense resulting from
a decline in our revenues generated on managed sites on which a portion of our rent expense is calculated based on our revenues. These decreases were in part offset



24



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by direct site operating expenses from our acquisition of 67 communications tower sites in December 2003 and five communications towers in April 2004. As a
percentage of revenues, our direct site operating expenses decreased to 30.5% of revenues for the six months ended June 30, 2004 from 32.4% of revenues for the six months ended June 30, 2003.



Selling, general and administrative



Our selling, general and administrative expenses decrease of $0.8 was
primarily attributable to a $0.5 million decline in monitoring fees paid to Fortress and Greenhill, as the monitoring agreement was terminated in March 2004, and a decrease in professional fees. As a percentage of revenues, our selling, general and
administrative expenses declined to 14.2% of revenues for the six months ended June 30, 2004 from 15.9% of revenues for the six months ended June 30, 2003.



Depreciation, amortization and accretion



The increase in depreciation, amortization and accretion of $1.4 million for the six months ended June 30, 2004 compared to the six months ended June 30,
2003 was primarily due to the addition of 67 communications tower sites in December 2003 along with additional capital expenditures at our sites.



Non-cash stock-based compensation expense for services



In August 2003, our board of directors awarded options to purchase shares of our common stock to an employee of Fortress Capital Finance LLC, who provided
financial advisory services to us. This agreement was terminated in March 2004 and the vesting of the outstanding options was modified. As a result of the services provided before the termination, the termination of this individuals agreement
and the resulting modification, we recorded a total expense of $2.6 million in the six months ended June 30, 2004 related to these stock options which concludes all charges to be recognized related to this agreement. Additionally, we recognized $0.4
million in stock-based compensation related to 20,000 shares of fully-vested, unrestricted common stock issued to our four independent directors, who did not beneficially own 10.0% or more of our common stock, upon consummation of the initial public
offering, in accordance with our board compensation package for independent directors, and $0.2 million related to options granted to an executive which were granted at an exercise price less than the market value of the stock on the grant date.



Interest expense, net



Our net interest expense increase of $2.1 million is related to the increase
in the amount of debt in our capital structure resulting from the February 5, 2004 securitization transaction, which included the repayment of our Old Credit Facility, and the addition of the Mortgage Loan of $418.0 million.



Loss on early extinguishment of debt



On February 5, 2004, our largest operating subsidiary, Pinnacle Towers LLC,
then known as Pinnacle Towers Inc., and 13 of its direct and indirect subsidiaries borrowed $418.0 million under a Mortgage Loan made payable to a newly formed trust. A portion of the net proceeds was used to repay outstanding borrowings under our
Old Credit Facility, and as a result of this repayment, this facility was terminated and $8.4 million of unamortized deferred financing costs related to the Old Credit Facility were expensed.



Income tax expense



Our income tax expense increase of $0.5 million resulted primarily from a revaluation of deferred tax assets attributable to
certain foreign subsidiary operations.



Liquidity and Capital Resources



Our liquidity needs arise from working capital
requirements, debt service, construction costs for new tower builds, tower acquisitions, other capital expenditures, and dividend payments. We expect to meet our cash requirements for the remainder of 2004 by using cash generated from operating
activities, net proceeds from our recently completed initial public offering, borrowings under our Credit Facility, additional equity issuances, if deemed appropriate, and a second mortgage backed securitization which we expect to complete in the
fourth quarter of 2004. We do not have a firm commitment for this future financing, but believe that it is probable.



On February 5, 2004, our largest operating subsidiary, Pinnacle Towers LLC, then known as Pinnacle Towers Inc., and 13 of its direct and indirect
subsidiaries borrowed $418.0 million under a mortgage note made payable to a newly formed trust. The Mortgage Loan requires monthly payments of principal and interest of approximately $2.4 million, and bears interest at a weighted average interest
rate of 5.0% as of June 30, 2004, with a final maturity date of January 2029; however, the loan documents impose material penalties if we fail to repay the Mortgage Loan on or prior to January 2009. The proceeds from the Mortgage Loan were used
primarily to repay the $234.4 million of then outstanding borrowings under our Old Credit Facility and to fund a $142.2 million one-time special distribution to our stockholders. In connection with the



25



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repayment of our Old Credit Facility, we also terminated our ability to borrow under its line of credit. The Mortgage Loan restricts the ability of our
largest operating subsidiary, Pinnacle Towers LLC and its subsidiaries, from incurring other indebtedness or further encumbering their assets. In addition, so long as the tangible assets of Pinnacle Towers LLC under the Mortgage Loan represent at
least 25% of the assets of Global Signal Inc., it will be an event of default under the Mortgage Loan if Global Signal Inc. incurs any unsecured indebtedness for borrowed money without confirmation from the rating agencies that rated the commercial
mortgage pass-through certificates that none of the ratings will be adversely affected.



On February 6, 2004, we acquired all of the outstanding common stock of PTA through the exercise of an option granted to us by its stockholders, which constituted the majority of our stockholders. In connection with
the acquisition of PTAs outstanding stock, we increased the capacity on our Credit Facility to $200.0 million, including a $5.0 million working capital line, of which $66.6 million was available on June 30, 2004. The maturity date of the
Credit Facility was extended to October 1, 2005 upon consummation of the initial public offering. Because this acquisition was a business combination among entities under common control, we have accounted for it in a manner similar to a
pooling of interests.



On June 2, 2004, we completed the
initial public offering of 8,050,000 shares of our common stock, including shares issued pursuant to the exercise of the underwriters overallotment option, for $18.00 per share. The net cash proceeds were used in part to repay $33.4 million
outstanding under our Credit Facility, fund the acquisition of Tower Ventures for $53.0 million, including expenses, and fund the purchase of 45 other communications towers for $17.5 million, including expenses. Given that amounts repaid under our
Credit Facility can not be re-borrowed, the total commitment under our Credit Facility has been reduced to $166.6 million.



Cash Flows



Net cash flows provided by operating activities was $39.4 million for the six months ended June 30, 2004 compared to $28.8 million for the six months
ended June 30, 2003. The increase of $10.8 million of net cash flows provided by operating activities is primarily the result of $0.6 million of cash flows from operating activities provided by increases in working capital in the six months ended
June 30, 2004 as compared to $7.0 million of cash flows used in working capital in the six months ended June 30, 2003. During the six months ended June 30, 2003, we made payments of liabilities accrued prior to and in connection with our emergence
from Chapter 11 bankruptcy which resulted in a decrease in our accounts payable and accrued expense and cash flows from operating activities being used in working capital.



Net cash flows used in investing activities was $104.3 million for the six months ended June 30, 2004 compared to $1.5
million for the six months ended June 30, 2003. Investing activities for the six months ended June 30, 2004 consisted of (1) the acquisition of Tower Ventures LLC, and various other tower assets for $73.8 million, including fees and expenses, the
purchase of interests in land under which we had previously held a leasehold interest for $2.5 million, and the purchase of the minority interest in our subsidiary, Pinnacle UK, Ltd., for $1.2 million, (2) the funding of restricted cash escrow and
imposition reserve accounts totaling $22.5 million as a part of our Mortgage Loan transaction, and (3) $5.0 million of capital expenditures related to our implementation of new software systems and improvements to our existing communications sites.
These uses were, in part, offset by proceeds of $0.6 million from the disposals of under-performing sites. During the six months ended June 30, 2003, our investing activities of $1.5 million related primarily to improvements and additions to our
communications sites totaling $3.7 million, net of proceeds totaling $2.0 million from the disposal of under-performing sites.



Net cash provided by financing activities was $97.5 million for the six months ended June 30, 2004 and is primarily related to $418.0 million in
borrowings associated with our Mortgage Loan transaction on February 5, 2004, net cash proceeds of $133.3 million from the initial public offering, and proceeds of $9.7 million from the exercise of common stock options and warrants. These funds were
in part offset by $235.1 million used to repay in full our Old Credit Facility, $33.4 million to repay the outstanding borrowings under our Credit Facility, payment of $6.2 million to terminate the December 2003 interest rate swap, debt issuance
costs of $14.0 million on our Mortgage Loan, and payments of $34.7 million in ordinary dividends, of which $16.3 million represents a return of capital, and a $142.2 million one-time special distribution to our stockholders which represented a
return of capital. Net cash used in financing activities for the six months ended June 30, 2003 primarily consisted of $1.0 million of borrowings under our Old Credit Facility and $18.9 million of principal repayments related to that same facility.



Capital expenditures were $5.0 million for the six months
ended June 30, 2004 compared to $3.7 million for the six months ended June 30, 2003. The capital expenditures for these two periods primarily consisted of the purchase of tower-related equipment and tower augmentations and improvements which totaled
$3.3 million and $4.7 million for the six months ended June 30, 2003 and 2004, respectively.



As of June 30, 2004, we had no outstanding purchase agreements to acquire assets. Since June 30, 2004, we have entered into asset purchase agreements to acquire various tower assets from 12 unrelated sellers, for a
total estimated purchase price of $126.9 million, including estimated fees and expenses of the purchases, which includes a definitive asset



26



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purchase agreement with Lattice Communications, LLC to acquire 235 wireless communications sites for an aggregate purchase price of $117.5 million, including
estimated fees and expenses. The Lattice acquisition is expected to close in the fourth quarter of 2004 and is, as are our other executed asset purchase agreements, subject to customary closing conditions. Although we have no material commitments
for capital expenditures, we anticipate our capital expenditures for tower related equipment and tower augmentations and improvements during 2004 to be comparable to our capital expenditures made during 2003, which was $8.5 million. In addition, we
are currently upgrading our software systems. We have completed the initial implementation of our PeopleSoft software system, in July 2004, for our accounting functions including vendor payments, accounts receivable and internal financial reporting
functions. We are also implementing a manageStar software system to manage our communications sites, tenant leases and other operational data. For the six months ended June 30, 2004, we have incurred $2.3 million of costs related to these
implementations. We have obtained three-year financing for approximately $1.2 million of these costs related to new hardware and software. The remaining costs were paid from cash.



Credit Facility



On February 6, 2004, we amended our $100.0 million Credit Facility with Morgan Stanley to, among other things, increase the commitment thereunder to
$200.0 million including a $5.0 million working capital line, and to reduce the applicable margin for federal funds rate loans and LIBOR loans to 2.1175% and 2.50%, respectively. Additionally, we paid a commitment fee of $1.0 million, and we are
required to pay an exit fee in an amount equal to 0.5% of the outstanding principal balance, under certain circumstances. We also extended the maturity date to February 6, 2005, which was further extended to October 1, 2005 upon the consummation of
the initial public offering. Furthermore, we pledged 100% of our ownership interest in PTA and became a guarantor under our Credit Facility. On May 12, 2004, we further amended our Credit Facility in connection with the implementation of the UPREIT
operating partnership structure to, among other things, substitute Global Signal OP for Global Signal Inc. as a guarantor and a pledgor under our Credit Facility. Upon consummation of the initial public offering, Global Signal OPs pledge of
its ownership interest in PTA and our stockholders pledge of our stock, were both released. In addition, our stockholders were released as guarantors. On June 8, 2004, we repaid the outstanding borrowings under our Credit Facility. Given that
amounts repaid can not be re-borrowed, the total commitment was reduced from $200.0 million to $166.6 million, including the $5.0 million working capital line of which $3.1 million was available at June 30, 2004. Our Credit Facility is secured by
substantially all of PTAs tangible and intangible assets. Borrowings under our Credit Facility are further limited based on a borrowing base and, as of June 30, 2004, $66.6 million was available to fund future acquisitions based on the
borrowing base.



Securitization



Our largest operating subsidiary, Pinnacle Towers LLC, then known as
Pinnacle Towers Inc., and 13 of its direct and indirect subsidiaries (collectively, the Issuers) issued a $418.0 million mortgage note payable to a newly formed trust, made on February 5, 2004. The trust simultaneously issued $418.0
million in commercial mortgage pass-through certificates with terms identical to the Mortgage Loan. The Mortgage Loan is secured by (1) mortgage liens on the Issuers interests (fee, leasehold or easement) in more than 1,100 of our wireless
communications sites, (2) a security interest in substantially all of the Issuers personal property and fixtures including the Issuers rights under substantially all of their site management agreements, tenant leases (excluding tenant
leases for sites referred to in (1) above) and a management agreement with Global Signal Services LLC and (3) a pledge of the capital stock (or equivalent equity interests) of each of the Issuers (including a pledge of the ownership interests of
Pinnacle Towers LLC from its direct parent). Our consolidated financial statements include the Mortgage Loan but do not include the financial statements of the trust.



The principal amount of the Mortgage Loan is divided into seven tranches. Interest accrues on each tranche at a fixed rate
per annum. As of June 30, 2004, the weighted average interest rate on the various tranches was 5.0%.



The Issuers are required to make monthly payments of principal and interest on the Mortgage Loan. The amount of principal due each month will initially be
calculated based on a 25-year amortization schedule, with a final maturity date of January 2029. However, the loan documents impose material penalties if the Issuers fail to repay the Mortgage Loan on or prior to the monthly payment date in January
2009, including the following: incurring additional interest, requiring all excess cash flows after the payment of principal, interest, reserves and certain operating expenses, as defined, to be applied to repay the loan, and at the election of the
lender, transferring servicing of the sites to an unrelated third party.



If the debt service coverage ratio, defined in the Mortgage Loan as the net cash flows for the sites for the immediately preceding twelve calendar month period divided by the amount of principal and interest that the
Issuers will be required to pay over the succeeding twelve months on the Mortgage Loan, as of the end of any calendar quarter falls to 1.45 times or lower, then all excess cash flow of the Issuer will be deposited into a reserve account instead of
being released to us. The funds in the reserve account will not be released to us unless the debt service coverage ratio exceeds 1.45 times for two consecutive calendar quarters. If the debt service coverage ratio falls below 1.20 times as of the
end of any calendar quarter, then all funds on deposit in the reserve account along with future excess cash flows of the Issuer will be applied to prepay the Mortgage Loan. As of June 30, 2004, our debt service coverage ratio was 3.39. Our future
debt service coverage ratio will be



27



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affected by our net cash flows which are primarily a result of new leasing activities on our existing communications sites, our existing tenant credit
worthiness and lease renewals, and the future expenses we incur to maintain our sites.



The Issuers may not prepay the Mortgage Loan in whole or in part at any time prior to February 5, 2006, the second anniversary of the closing date, except in limited circumstances (such as the occurrence of certain
casualty and condemnation events relating to the wireless communications sites securing the Mortgage Loan). Thereafter, prepayment is permitted provided it is accompanied by any applicable prepayment consideration. If the prepayment occurs within
three months of the January 2009 monthly payment date, no prepayment consideration is due.



The Mortgage Loan documents include covenants customary for mortgage loans subject to rated securitizations. Among other things, the Issuers are prohibited from incurring other indebtedness for borrowed money or
further encumbering their assets. In addition, as long as the tangible assets of the Issuers represent at least 25% of the total tangible assets of Global Signal Inc., it will be an event of default under the Mortgage Loan if Global Signal Inc.
incurs any unsecured indebtedness for borrowed money without confirmation from the rating agencies that rated the commercial mortgage pass-through certificates, that none of the ratings will be adversely affected.



On December 11, 2003, in anticipation of the issuance of the Mortgage Loan,
Pinnacle Towers entered into an interest rate swap agreement with Morgan Stanley as the counter party to hedge the variability of expected future interest payments under the Mortgage Loan. Under the swap agreement, Pinnacle Towers agreed to pay
Morgan Stanley a fixed rate of 3.816% on a notional amount of $400.0 million for five years beginning in March 2004 in exchange for receiving floating payments based on three month LIBOR on the notional amount for the same five-year period. The
swap, effective on December 11, 2003, required us to begin making monthly payments to the counter party equal to the difference between 3.816% and the then current three-month LIBOR rate, which was 1.13% on February 5, 2004, on the notional amount
of $400.0 million. The swap was terminated in connection with the issuance of the Mortgage Loan at a cost to us of $6.2 million.



On March 26, 2004, in anticipation of a future financing, we entered into four interest rate swaps with Morgan Stanley as counterparty to hedge the
variability of future interest rates on the financing. Under the interest rate swaps, we agreed to pay the counterparty a fixed interest rate of 3.416% on a total notional amount of $200.0 million beginning in October 2004 through April 2009 in
exchange for receiving three-month LIBOR on the same notional amount for the same period. The swaps terminate on the earlier of the issuance of any new mortgage loan or January 1, 2005, at which time the swaps will be settled for cash based on the
then fair market value, which, as of June 30, 2004, is approximately a $7.6 million asset. We do not have a firm commitment for this future financing, but believe that it is probable. The anticipated financing is estimated to aggregate in excess of
$200.0 million and is estimated to occur during the fourth quarter of 2004. Because the interest rate swaps qualify as anticipatory hedges, we will recognize any settlement cost or proceeds as other comprehensive income and amortize the cost as
interest expense over the life of the mortgage loan, in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. Should the issuance of the mortgage loan not be consummated as anticipated, we would be
required to recognize the aggregate fair market value of the swaps in current earnings.



Old Credit Facility



Prior to the issuance of
the Mortgage Loan in 2004, our largest operating subsidiary, Pinnacle Towers LLC, then known as Pinnacle Towers Inc., and 13 of its direct and indirect subsidiaries, were party to an amended and restated bank credit facility, which provided a term
loan for $275.0 million and a revolving line of credit of $15.0 million. In connection with our issuance of the Mortgage Loan, we repaid all outstanding amounts due under the term loan and terminated the Old Credit Facilitys line of credit. As
a result, we expensed the remaining unamortized deferred financing costs of approximately $8.4 million in February 2004.



Initial Public Offering



On June 2, 2004, the Securities and Exchange Commission declared effective our Registration Statement on Form S-11 (File No. 333-112839) filed under the
Securities Act of 1933, for an initial public offering of our common stock. On June 2, 2004, we completed our initial public offering and sold 8,050,000 shares of our common stock at a price of $18.00 per share. The managing underwriters in the
initial public offering were Banc of America Securities LLC, Morgan Stanley & Co. Incorporated, Lehman Brothers, Inc. and Raymond James & Associates, Inc., as representatives of the several underwriters (collectively, the
Underwriters).



The net proceeds from the initial
public offering were approximately $132.0 million, after estimated expenses, underwriters discounts and commissions. We used approximately $53.0 million of the net proceeds from the offering to fund the acquisition of Tower Ventures, which we
acquired on June 30, 2004, and funded the June 2004 purchase of 45 other communications towers for $17.5 million, including expenses, and used approximately $33.4 million to repay our Credit Facility. The remaining net proceeds from the offering
were placed in short-term



28



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investments to fund future acquisitions or for working capital purposes. A portion of the net proceeds equal to $6.8 million was designated to be used for
tower and land acquisitions, which had not yet closed as of June 30, 2004. This $6.8 million has been reflected as a part of restricted cash in the accompanying condensed consolidated balance sheet.



|ITEM3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|------ | -----------------------------------------------------------



Interest Rate Risk



We may be exposed to material risks from changing interest rates charged on
our long-term debt. The impact on earnings and value of our long-term debt is subject to change as a result of movements in market rates and prices. Our Credit Facility provides for a variable rate of interest. As of June 30, 2004, we had no
outstanding borrowings under our Credit Facility; however, if we were to draw down on our Credit Facility we would be exposed to changes in market interest rates.



On March 26, 2004, in anticipation of future acquisitions and their financing, we entered into four interest rate swaps with
Morgan Stanley as counterparty to hedge the variability of future interest rates on our anticipated mortgage financing. Under the interest rate swaps, we agreed to pay the counterparty a fixed interest rate of 3.416% on a total notional amount of
$200.0 million beginning in October 2004 through April 2009 in exchange for receiving three-month LIBOR on the same notional amount for the same period. The swaps terminate on the earlier of the issuance of any new mortgage loan or January 1, 2005
at which time the swaps will be settled for cash based on the then fair market value. If LIBOR swap rates decreased by 100 basis points at June 30, 2004, we would be required to make a payment of $0.6 million. If LIBOR swap rates increased by 100
basis points at June 30, 2004, we would receive a payment of $15.3 million. If the financing transaction is completed on terms consistent with those currently anticipated, any settlement payments would be deferred and amortized over the expected
life of the mortgage loan. If the financing transaction is not completed as anticipated, we would be required to recognize the aggregate fair value of the swaps in current earnings.



The following table presents the future principal payment obligations and weighted-average interest rates at June 30, 2004
associated with our existing long-term debt instruments assuming our actual level of long-term indebtedness of $1.1 million under capital leases to finance new computer software and $415.6 million under our Mortgage Loan issued on February 5, 2004.



|                         |  |                             |   |      |       |         |                                                       |      |            |      |   |       |  |   |       |  |   |       |  |   |         |  |   |  
|------------------------ |  | --------------------------- | - | ---- | ----- | ------- | ----------------------------------------------------- | ---- | ---------- | ---- | - | ----- |  | - | ----- |  | - | ----- |  | - | ------- |  | - | -
|                         |  | WeightedAverageInterestRate |   |      | Total |         | Expected Maturity Date  Twelve Months Ended June 30, |      | Thereafter
|                         |  |                             |   | 2005 |       | 2006    |                                                       | 2007 |            | 2008 |   | 2009  | 
|Fixed rate:              |  |                             |   |      |       |         |                                                       |      |            |      |   |       |  |   |       |  |   |       |  |   |         |  |   |  
|Mortgage loan            |  | 5.0                         | % |      | $     | 415,648 |                                                       | $    | 7,592      |      | $ | 8,060 |  | $ | 8,557 |  | $ | 9,085 |  | $ | 382,354 |  | $ | 
|Capital lease obligation |  | 10.3                        | % |      |       | 1,108   |                                                       |      | 367        |      |   | 407   |  |   | 334   |  |   |      |  |   |        |  |   | 
|                         |  |                             |   |      |       |         |                                                       |      |            |      |   |       |  |   |       |  |   |       |  |   |         |  |   |  
|Total debt               |  |                             |   |      | $     | 416,756 |                                                       | $    | 7,959      |      | $ | 8,467 |  | $ | 8,891 |  | $ | 9,085 |  | $ | 382,354 |  | $ | 
|                         |  |                             |   |      |       |         |                                                       |      |            |      |   |       |  |   |       |  |   |       |  |   |         |  |   |  



Foreign Currency
Exchange Risk



Our exposure to adverse movements in
foreign currency exchange rates is primarily related to our subsidiaries operating expenses, primarily in the United Kingdom and Canada, denominated in the respective local currency. A hypothetical change of 10% in foreign currency exchange
rates would not have a material impact on our consolidated financial statements or results of operations.



29



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|ITEM4. | CONTROLS AND PROCEDURES.
|------ | ------------------------



| | a) | Disclosure Controls and Procedures.
| | -- | -----------------------------------



Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the Exchange Act)) as of the end of the period covered by this report. Our Companys
disclosure controls and procedures are designed to provide reasonable assurance that information is recorded, processed, summarized and reported accurately and on a timely basis. Based on such evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.



| | b) | Internal Control Over Financial Reporting.
| | -- | ------------------------------------------



There have not 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 the
Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



PART II  OTHER INFORMATION



|ITEM1. | LEGAL PROCEEDINGS.
|------ | ------------------



We are involved in litigation incidental to the conduct of our business. We believe that none of such pending litigation or unasserted claims of which we
have knowledge, will have a material adverse effect on our business, financial condition, results of operations or liquidity.



|ITEM2. | CHANGES IN SECURITIES AND USE OF PROCEEDS.
|------ | ------------------------------------------



| | (a) | None
| | --- | ----



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



| | (c) | In March 2004, in connection with our initial public offering and for purposes of compensating Fortress and Greenhill for their successful efforts in raising capital for us, we
granted options to FRIT PINN LLC and Greenhill, or affiliates of such entities, to purchase shares of our common stock equal to an aggregate of 10% of the number of shares issued in our initial public offering in the following amounts (1) for FRIT
PINN LLC (or its affiliates), the right to acquire 644,000 shares which is equal to 8% of the number of shares issued in the offering and (2) for Greenhill (or its affiliate), the right to acquire 161,000 shares which is equal to 2% of the number of
shares issued in the offering at an exercise price per share of $18.00, equal to the initial public offering price. All of the options immediately vested and are exercisable and will remain exercisable for ten years. These grants were made in a
private transaction exempt from registration under the Securities Act of 1933, as amended (the Securities Act) by virtue of the exemption provided under Section 4(2) of the Securities Act.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On March 15, 2004 we issued 222,713 shares of our common stock to Mr. W.
Scot Lloyd pursuant to an exercise of stock options granted to him under our stock option plan prior to the termination of his employment on January 16, 2004, at an average exercise price of $6.40 per share. In addition, on April 8, 2004, we issued
15,376 shares of our common stock to Mr. Paul Nussbaum, pursuant to an exercise of stock options granted to him under our stock option plan prior to the termination of his employment on February 3, 2004, at an average exercise price of $6.40 per
share. The shares of common stock issued to Mr. Lloyd and Mr. Nussbaum were exempt from the registration requirements of the Securities Act pursuant to Rule 701 under the Securities Act.



During the six months ended June 30, 2004 we issued options to purchase a total of 615,000 and 205,000 shares of common
stock at an exercise price of $18.00 and $8.53 per share, respectively. These options were granted to an employee under our stock option plan. These grants were exempt from the registration requirements of the Securities Act pursuant to Rule 701
under the Securities Act.



During the six months ended June
30, 2004, former stockholders and former note holders of our predecessor company exercised 732,494 warrants to purchase an equal number of shares of our common stock at an exercise



30



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price of $8.53 per share of common stock. The 732,494 shares of common stock issued pursuant to the exercise of warrants were issued pursuant to an exemption
from registration under the Securities Act in reliance on the provisions of Section 1145 of the United States Bankruptcy Code.



| | (d) | On June 2, 2004, the Securities and Exchange Commission declared effective our Registration Statement on Form S-11 (File No. 333-112839) filed under the Securities Act of 1933, for
an initial public offering of our common stock. On June 2, 2004, we completed our initial public offering and sold 8,050,000 shares of our common stock, including shares issued pursuant to the exercise of the underwriters overallotment option,
at a price of $18.00 per share, for an aggregate offering price of $144.9 million. The managing underwriters in the initial public offering were Banc of America Securities LLC, Morgan Stanley & Co. Incorporated, Lehman Brothers, Inc. and Raymond
James & Associates, Inc., as representatives of the several underwriters (collectively, the Underwriters).
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The net cash proceeds from the initial public offering were approximately $132.0 million, after estimated expenses, including underwriters discounts
and commissions. We used approximately $53.0 million of the net proceeds from the offering to fund the acquisition of Tower Ventures III, LLC, which we acquired on June 30, 2004, and approximately $33.4 million to repay our Credit Facility. We also
acquired 45 other communications towers in June 2004 for $17.5 million, including fees and expenses, which were funded by proceeds from our initial public offering. These towers are located primarily in the eastern and southeastern United States and
generated substantially all of their revenues from wireless telephony tenants. The remaining net proceeds from the offering were placed in short-term investments to fund future acquisitions.



Our Credit Facility limits the payment of dividends to us from PTA to $5.0
million during the term of the Credit Facility, and further prohibits the payment of dividends to our stockholders directly from these funds. As of June 30, 2004, PTA had not declared nor paid any dividends.



Our Mortgage Loan may indirectly restrict the payment of dividends, as
decreases below certain levels in our Debt Service Coverage Ratio would require excess cash flows, that could be used to pay dividends, be used to repay outstanding principal due under the Mortgage Loan.



|ITEM3. | DEFAULTS UPON SENIOR SECURITIES.
|------ | --------------------------------



None.



|ITEM4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
|------ | ----------------------------------------------------



On May 11, 2004,
prior to the initial public offering, stockholders holding 39,158,524 out of 41,854,155 of our outstanding shares consented in lieu of a special meeting to increase the amount of our authorized capital by increasing the number of authorized shares
of common stock from 100,000,000 to 150,000,000 shares.



|ITEM5. | OTHER INFORMATION.
|------ | ------------------



In July 2004, our board of directors elected Greerson G. McMullen to serve as our Executive Vice President, General Counsel and Secretary, replacing
Stephen W. Crawford.



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|ITEM6. | EXHIBITS AND REPORTS ON FORM 8-K.
|------ | ---------------------------------



| | (a) | Exhibits
| | --- | --------



|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|2.1   |  | Membership Interest Purchase Agreement by and among Pinnacle Towers Acquisition LLC, as Purchaser, and Billy Orgel, Lee Holland, Craig Weiss, Jay H. Lindy and Majestic Communications, Inc.,
as Sellers, dated as of April 22, 2004 (incorporated by reference to exhibit 2.4 to our Registration Statement on Form S-11 (No. 333-112839)).                                                                                                       
|      | 
|2.2   |  | Asset Purchase Agreement by and between Lattice Communications, LLC and Pinnacle Towers Acquisition LLC, dated as of July 29, 2004.                                                                                                                                                                                                                                                                                                               
|      | 
|3.1   |  | Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to exhibit 3.1 to our Registration Statement on Form S-11 (No. 333-112839)).                                                                                                                                                                                                                                                                        
|      | 
|3.2   |  | Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated by reference to exhibit 3.2 to our Registration Statement on Form S-11 (No.
333-112839)).                                                                                                                                                                                                                                                              
|      | 
|3.3   |  | Amended and Restated Bylaws of the Registrant (incorporated by reference to exhibit 3.3 to our Registration Statement on Form S-11 (No. 333-112839)).                                                                                                                                                                                                                                                                                              
|      | 
|4.1   |  | Form of Certificate for common stock (incorporated by reference to exhibit 4.1 to our Registration Statement on Form S-11 (No. 333-112839)).                                                                                                                                                                                                                                                                                                       
|      | 
|4.2   |  | Amended and Restated Investor Agreement, dated as of March 31, 2004, among Global Signal Inc., Fortress Pinnacle Acquisition LLC, Greenhill Capital Partners, L.P., and its related
partnerships named therein, and Abrams Capital Partners II, L.P. and certain of its related partnerships named therein, and other parties named therein (incorporated by reference to exhibit 4.2 to our Registration Statement on Form S-11 (No.
333-112839)).
|      | 
|4.3   |  | Warrant Agreement between Pinnacle Holdings Inc. and Wachovia Bank, N.A., dated November 1, 2002 (incorporated by reference to exhibit 4.3 to our Registration Statement on Form S-11 (No.
333-112839)).                                                                                                                                                                                                                                           
|      | 
|10.32 |  | Employment Agreement, between Global Signal Services LLC and Greer McMullen, dated June 18, 2004.                                                                                                                                                                                                                                                                                                                                                  
|      | 
|31.1  |  | Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                     
|      | 
|31.2  |  | Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                     
|      | 
|32.1  |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                 
|      | 
|32.2  |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                 



| - | Certain information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------



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



None



32



---

SIGNATURES



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



Global Signal Inc.RegistrantBy:

/s/ William T. FreemanWilliam T. Freeman, Chief Financial OfficerDated:

August 12, 2004




33