SPECTRASITE HOLDINGS INC, S-1/A, 2000-07-13

SPECTRASITE HOLDINGS INC
S-1/A, 2000-07-13
COMMUNICATIONS SERVICES, NEC

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 13, 2000

Registration No. 333-41022

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SPECTRASITE HOLDINGS, INC.
(Exact name of Registrant as Specified in its Charter)

<TABLE>
<S> <C> <C>
DELAWARE 4899 56-2027322
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

100 REGENCY FOREST DRIVE
SUITE 400
CARY, NORTH CAROLINA 27511
(919) 468-0112
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
DAVID P. TOMICK
SPECTRASITE HOLDINGS, INC.
100 REGENCY FOREST DRIVE
SUITE 400
CARY, NORTH CAROLINA 27511
(919) 468-0112
(Name, address, including zip code, and telephone number, including area code,
of registrant's agent for service)

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Copies to:

TIMOTHY J. KELLEY
THOMAS D. TWEDT
DOW, LOHNES & ALBERTSON, PLLC
1200 NEW HAMPSHIRE AVENUE, N.W.
WASHINGTON, D.C. 20036
(202) 776-2000
JOEL S. KLAPERMAN
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NY 10022
(212)848-4000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

------------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
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<PAGE> 2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO
BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.

PROSPECTUS (Subject to Completion)

Issued July 13, 2000

[SpectraSite Logo]

SpectraSite Holdings, Inc.
COMMON STOCK
------------------------

SPECTRASITE HOLDINGS, INC. IS OFFERING SHARES OF ITS COMMON STOCK.
------------------------

OUR COMMON STOCK IS QUOTED ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL
"SITE." ON JULY 12, 2000, THE REPORTED LAST SALE PRICE FOR OUR COMMON STOCK ON
THE NASDAQ NATIONAL MARKET WAS $28 1/4 PER SHARE.

------------------------

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 7.
------------------------
PRICE $ A SHARE
------------------------

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS SPECTRASITE
-------- ------------- -----------
<S> <C> <C> <C>
Per Share......................... $ $ $
Total............................. $ $ $
</TABLE>

SpectraSite Holdings, Inc. has granted the underwriters the right to purchase up
to an additional shares to cover over-allotments.

The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers on
, 2000.

------------------------

MORGAN STANLEY DEAN WITTER DEUTSCHE BANC ALEX. BROWN

CIBC WORLD MARKETS

CREDIT SUISSE FIRST BOSTON

LEHMAN BROTHERS

RAYMOND JAMES & ASSOCIATES, INC.

THOMAS WEISEL PARTNERS LLC

WASSERSTEIN PERELLA SECURITIES, INC.

, 2000
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Risk Factors........................... 7
Special Note Regarding Forward-Looking
Statements........................... 14
Use of Proceeds........................ 15
Price Range of Common Stock............ 16
Dividend Policy........................ 16
Capitalization......................... 17
Unaudited Pro Forma Financial Data..... 18
Selected Historical Financial Data..... 26
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 28
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Business............................... 37
Management............................. 47
Certain Transactions................... 54
Principal Stockholders................. 59
Description of Common Stock............ 61
Certain United States Federal Tax
Considerations to Non-U.S. Holders... 65
Underwriters........................... 70
Legal Matters.......................... 73
Experts................................ 73
Where You Can Find More Information.... 73
Index to Financial Statements.......... F-1
</TABLE>

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SpectraSite Holdings, Inc. is a Delaware corporation. Our principal
executive offices are located at 100 Regency Forest Drive, Suite 400, Cary,
North Carolina 27511, and our telephone number at that address is (919)
468-0112. Our World Wide Web site address is http://www.spectrasite.com. The
information in our website is not part of this prospectus.

In this prospectus, Holdings refers to SpectraSite Holdings, Inc., and
SpectraSite, we, us and our refer to SpectraSite Holdings, Inc., its wholly
owned subsidiaries and all predecessor entities collectively, unless the context
requires otherwise. The term common stock refers to the common stock, par value
$0.001 per share, of Holdings.

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of common stock.

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(This page intentionally left blank)

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PROSPECTUS SUMMARY

This summary highlights the most important features of this offering and
the information contained elsewhere in this prospectus. This summary is not
complete and does not contain all of the information that you should consider
before investing in our common stock. You should read the entire prospectus
carefully, especially the risks of investing in our common stock discussed under
"Risk Factors."

SPECTRASITE

OVERVIEW

We are one of the leading providers of outsourced antenna site and network
services to the wireless communications and broadcast industries in North
America and Europe. Our businesses include the ownership and leasing of antenna
sites on towers, managing rooftop and in-building telecommunications access on
commercial real estate, network planning and deployment, and construction of
towers and related wireless facilities. Our customers are leading wireless
communications providers and broadcasters, including Nextel, Sprint PCS, AT&T
Wireless, VoiceStream Communications, Tritel Communications, Teligent, WinStar,
Cox Broadcasting, Clear Channel Communications and Paxson Communications. As of
March 31, 2000, we owned or managed over 15,000 sites, including 3,070 owned
towers, in 98 of the top 100 markets in the United States. In addition, we
acquired 121 towers in May 2000 and have agreements to acquire 11 broadcast
towers and leasehold or subleasehold interests in 430 wireless towers. We also
own 50% of SpectraSite-Transco Communications Ltd., a joint venture with
Transco, the arm of BG Group plc that runs Britain's gas network. The joint
venture owns 718 towers and 1,500 sites and has the option to purchase 30,000
potential sites in the United Kingdom.

The wireless communications industry is growing rapidly as the demand for
wireless services continues to increase. In addition, as the number and type of
wireless service providers has grown, the industry has also become increasingly
competitive. To meet the increased demand for their services and enhance their
competitive positions, wireless carriers continue to make large capital
investments to expand their networks as well as to satisfy customer demands for
enhanced services, seamless and comprehensive coverage, better call quality,
faster data transmission and lower prices.

We believe that as carriers face the increased challenges of expanding
their networks and improving their services, they must allocate their available
capital and resources in the most efficient manner. In particular, carriers are
increasingly outsourcing tower ownership, as well as network planning,
deployment and management to independent tower owners like SpectraSite. This
outsourcing allows our customers to focus on their core competencies and to rely
on us for planning and deploying their networks. Our services are designed to
improve our customers' competitive positions through the efficient planning,
deployment and management of their networks. Our services include:

-- WIRELESS TOWER OWNERSHIP AND LEASING. We are one of the largest
independent owners and operators of wireless communications towers in the
United States and Canada, with 3,070 owned towers in 44 states and three
Canadian provinces.

-- WIRELESS ROOFTOP AND IN-BUILDING ACCESS. We are the largest independent
provider of rooftop and in-building access to the wireless communications
industry in the United States, with over 12,000 sites under management
across the country.

-- NETWORK DESIGN AND DEPLOYMENT SERVICES. We are a leading provider of
design and deployment services for wireless networks. These services
include radio frequency engineering, network architecture, microwave
relocation, fixed network engineering, site development, tower and
facility construction and network installation and optimization.

-- BROADCAST TOWER DEVELOPMENT AND LEASING. We are a leading provider of
broadcast tower analysis, design, fabrication, installation and technical
services. We have over 50 years of experience in the broadcast tower
industry and have worked on the development of more than 700 broadcast
towers, which we believe

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represents approximately 50% of the existing broadcast tower
infrastructure in the United States. We intend to capitalize on our
broadcast tower development expertise to create tower ownership and
leasing opportunities.

GROWTH STRATEGY

Our objective is to be the leading independent provider of outsourced
antenna site and network services to the telecommunications and broadcast
industries. Key elements of our strategy include:

-- MAXIMIZING THE UTILIZATION OF OUR TOWERS AND MANAGED SITES. We intend to
capitalize on the substantial opportunities for revenue and cash flow
growth by maximizing the number of tenants we have on each of our towers
and managed sites. We believe that our strategy of owning clustered groups
of towers and managed sites in major metropolitan markets and providing
our customers with a full range of products and services allows us to
deliver reliable, scalable network solutions and will result in increased
co-location on our towers and managed sites.

-- EXPANDING OUR TOWER PORTFOLIO. We seek to expand our tower portfolio by
building new towers for anchor tenants and by making selective
acquisitions of towers. We believe that Nextel's agreement to lease space
on an additional 1,200 towers we own, acquire or construct for Nextel or
other tenants will substantially increase the number of towers we own and
operate.

-- ENTERING ATTRACTIVE INTERNATIONAL MARKETS. We intend to expand our
presence in attractive international markets by replicating our business
strategy in international markets where we expect there will be
significant demand for wireless antenna sites and services. We believe
that our joint venture with Transco will provide a platform for
international development in Europe.

-- EXPANDING THE SUITE OF SERVICES WE OFFER AND PURSUING CROSS-SELLING
OPPORTUNITIES. We believe our ability to provide a package of integrated
services, which have traditionally been offered by multiple subcontractors
coordinated by a carrier's deployment staff, will make us a preferred
provider of all outsourced antenna site and network services.

RECENT DEVELOPMENTS

On May 18, 2000, we acquired Lodestar Towers, Inc., an owner and operator
of wireless communications and broadcast towers, for approximately $175.6
million in cash.

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THE OFFERING

Common stock offered.................... shares

Common stock to be outstanding after the
offering................................ shares

Use of proceeds......................... We will receive net proceeds from
this offering of approximately
$ million. We intend to use the
net proceeds from this offering to
fund costs related to the
construction and acquisition of
towers, and for general corporate
purposes. We may submit a bid to
lease a substantial portfolio of
towers, and if our bid is
successful, this will be our
largest tower transaction to date.

Nasdaq National Market symbol........... SITE

------------------------

Unless we specifically state otherwise, the information in this prospectus
does not take into account the sale of up to shares of common stock
which the underwriters have the option to purchase from us to cover
over-allotments.

The number of shares listed above does not include 8,374,062 shares
issuable upon the exercise of outstanding stock options as of March 31, 2000,
having a weighted average exercise price of $8.20 per share.

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SUMMARY UNAUDITED FINANCIAL INFORMATION

We present the following summary unaudited pro forma financial information
to give you a better understanding of what the results of operations and
financial position of the combined businesses of SpectraSite and Westower
Corporation may have been for the year ended December 31, 1999, if the Westower
merger, the acquisition of 2,000 towers from Nextel Communications, Inc. and the
other transactions described under "Unaudited Pro Forma Financial Data" had
occurred on January 1, 1999. We prepared the unaudited pro forma statement of
operations by adding or combining the historical pro forma results of each
company with adjustments. The companies may have performed differently had they
actually been combined on January 1, 1999. The unaudited pro forma information
is not necessarily indicative of the historical results that we actually would
have had or the future results we will experience.

The data for the three months ended March 31, 2000 were derived from
SpectraSite's unaudited financial statements for the period. Operating results
for the three months ended March 31, 2000 are not necessarily indicative of
results expected for the entire year.

Tower cash flow consists of site leasing revenues less site leasing costs
of operations. EBITDA consists of operating income (loss) before depreciation
and amortization expense, non-cash compensation charges and restructuring and
non-recurring charges. Adjusted EBITDA consists of EBITDA less estimated
incremental operating expenses related to the Nextel tower acquisition. Tower
cash flow, EBITDA and adjusted EBITDA are not measurements of financial
performance under generally accepted accounting principles and should not be
considered alternatives to net income (loss) as a measure of performance or to
cash flow as a measure of liquidity. Tower cash flow, EBITDA and adjusted EBITDA
are not necessarily comparable with similarly titled measures for other
companies. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by
revenues. Tower cash flow, EBITDA and adjusted EBITDA are provided because they
are used in the communications site industry as measures of operating
performance and financial position.

<TABLE>
<CAPTION>
POST-MERGER ACTUAL
PRO FORMA THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1999 MARCH 31, 2000
----------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................................. $177,468 $ 75,237
Costs of operations...................................... 105,207 50,290
Selling, general and administrative expenses............. 56,271 15,625
Depreciation and amortization............................ 61,972 19,926
Non-cash compensation charges............................ 350 376
Restructuring and non-recurring charges.................. 7,727 --
-------- --------
Operating loss........................................... $(54,059) $(10,980)
======== ========
OTHER DATA:
Tower cash flow.......................................... $ 37,556 $ 11,074
EBITDA................................................... 15,990 9,322
Adjusted EBITDA.......................................... 11,348 9,322
Adjusted EBITDA margin................................... 6.4% 12.4%

SELECTED OPERATING DATA:
Number of towers owned................................... 2,765 3,070
</TABLE>

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RISK FACTORS

This offering involves a high degree of risk. You should consider carefully
the risks and uncertainties described below and the other information in this
prospectus, including the financial statements and related notes, before
deciding to invest in shares of our common stock. While these are the risks and
uncertainties we believe are most important for you to consider, you should know
that they are not the only risks or uncertainties facing us or which may
adversely affect our business. If any of the following risks or uncertainties
actually occurs, our business, financial condition or results of operations
would likely suffer. In that event, the market price of our common stock could
decline, and you could lose all or part of your investment.

OUR LIMITED OPERATING HISTORY MAKES EVALUATING OUR BUSINESS DIFFICULT.

SpectraSite was formed in May 1997, purchased 2,000 towers from Nextel in
April 1999, which represented approximately 65% of our towers as of March 31,
2000, and acquired Westower Corporation in September 1999. As a result, we have
only a limited operating history on which you can evaluate our business and
prospects. Our prospects must be considered in the light of the risks,
uncertainties, expenses and difficulties frequently encountered by companies in
their early stages of development, particularly companies in new and rapidly
evolving industries, such as wireless communications. To address these risks and
uncertainties we must, among other things, successfully:

-- co-locate tenants on our towers;

-- perform under our agreements with Nextel; and

-- integrate our acquisitions.

We may not be successful in accomplishing these objectives.

WE ARE NOT PROFITABLE AND EXPECT TO CONTINUE TO INCUR LOSSES.

We incurred net losses of $98.4 million ($135.9 million on a pro forma
basis) and $32.5 million for the year ended December 31, 1999 and the three
months ended March 31, 2000, respectively. Our losses are principally due to
significant depreciation, amortization and interest expense. We have not
achieved profitability and expect to continue to incur losses for the
foreseeable future.

WE HAVE SUBSTANTIAL INDEBTEDNESS, AND SERVICING OUR INDEBTEDNESS COULD REDUCE
FUNDS AVAILABLE TO GROW OUR BUSINESS.

We are, and will continue to be, highly leveraged. As of March 31, 2000, we
had total consolidated indebtedness of $1.2 billion. Our high level of
indebtedness could interfere with our ability to grow. For example, it could:

-- increase our vulnerability to general adverse economic and industry
conditions;

-- limit our ability to obtain additional financing;

-- require the dedication of a substantial portion of our cash flow from
operations to the payment of principal of, and interest on, our
indebtedness;

-- limit our flexibility in planning for, or reacting to, changes in our
business and the industry; and

-- place us at a competitive disadvantage relative to less leveraged
competitors.

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

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OUR BUSINESS DEPENDS ON THE DEMAND FOR WIRELESS COMMUNICATIONS SITES AND OUR
ABILITY TO SECURE CO-LOCATION TENANTS.

Our business depends on demand for communications sites from wireless
service providers, which, in turn, depends on the demand for wireless services.
A reduction in demand for communications sites or increased competition for
co-location tenants could have a material adverse effect on our business,
financial condition or results of operations. In particular, the success of our
business model requires us to secure co-location tenants, and securing
co-location tenants depends upon the demand for communications sites from a
variety of service providers in a particular market. The extent to which
wireless service providers lease communications sites on our towers depends on
the level of demand for wireless services, the financial condition and access to
capital of those providers, the strategy of providers with respect to owning or
leasing communications sites, government licensing of communications licenses,
changes in telecommunications regulations, the characteristics of each company's
technology, and geographic terrain.

A SIGNIFICANT PORTION OF OUR REVENUES AND TOWER CONSTRUCTION ACTIVITY DEPENDS ON
NEXTEL.

Nextel accounts for a significant portion of our total revenues. Nextel
represented approximately 35% and 26% of our revenues for the year ended
December 31, 1999 and for the three months ended March 31, 2000, respectively.
If Nextel were to suffer financial difficulties or if Nextel were unwilling or
unable to perform its obligations under its arrangements with us, our business,
financial condition or results of operations could be materially and adversely
affected.

Nextel agreed to lease 1,700 additional sites on our towers as part of its
national service deployment, and as of March 31, 2000, they had leased 500 of
those sites. Under the terms of our agreements with Nextel, we are required to
construct or purchase agreed upon numbers of qualified towers at specified
times, and in the case of towers we purchase from Nextel, at specified prices.
Our failure to construct or purchase the towers as agreed could result in the
cancellation of our right to construct or purchase additional towers under these
agreements. Such a cancellation could have a material adverse effect on our
business, financial condition or results of operations and on our ability to
implement or achieve our business objectives in the future.

Under our agreements with Nextel, subject to limited exceptions, we will be
required to construct new towers in locations to be determined by Nextel. These
towers may have limited appeal to other providers of wireless communications
services, which may limit our opportunities to attract additional tenants,
which, in turn, could have a material adverse effect on our business, financial
condition or results of operations.

WE MAY ENCOUNTER DIFFICULTIES IN INTEGRATING ACQUISITIONS WITH OUR OPERATIONS,
WHICH COULD LIMIT OUR REVENUE GROWTH AND OUR ABILITY TO ACHIEVE OR SUSTAIN
PROFITABILITY.

Acquiring additional tower assets and complementary businesses is an
integral part of our business strategy. We may not be able to realize the
expected benefits of past or future acquisitions or identify suitable
acquisition candidates. Our ability to complete future acquisitions will depend
on a number of factors, some of which are beyond our control, including the
attractiveness of acquisition prices and the negotiation of acceptable
definitive acquisition agreements. In addition, the process of integrating
acquired operations into our existing operations may result in unforeseen
operating difficulties, divert managerial attention or require significant
financial resources that could otherwise be used for existing tower construction
and network deployment contracts. Future acquisitions also may require us to
incur additional indebtedness and contingent liabilities, which could have a
material adverse effect on our business, financial condition and results of
operations.

WE MAY BE UNABLE TO INCREASE OUR CONSTRUCTION ACTIVITIES OR TO ACQUIRE TOWERS AS
CONTEMPLATED BY OUR GROWTH STRATEGY.

Our growth strategy depends on our ability to construct, acquire and
operate towers as wireless service providers expand their tower network
infrastructure. Regulatory and other barriers could adversely affect our ability
to construct towers in accordance with the requirements of our customers, and,
as a result, we may be subject to penalties and forfeiture provisions under our
anchor tenant leases. Our ability to construct new
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towers may be affected by a number of factors beyond our control, including
zoning and local permitting requirements, FAA considerations, FCC tower
registration procedures, availability of tower components and construction
equipment, availability of skilled construction personnel and weather
conditions. In addition, because the concern over tower proliferation has grown
in recent years, certain communities now restrict new tower construction or
delay granting permits required for construction.

Our expansion plans call for a significant increase in construction
activity. We may not be able to overcome the barriers to new construction, and
we may not complete the number of towers planned for construction. Our failure
to complete the necessary construction could have a material adverse effect on
our business, financial condition or results of operations.

We compete for tower acquisition opportunities with wireless service
providers, broadcasters, site developers and other independent tower owners and
operators, and we expect competition to increase. Increased competition for
acquisitions may result in fewer acquisition opportunities and higher
acquisition prices. We regularly explore acquisition opportunities; however, we
may have trouble identifying towers or tower companies to acquire in the future.

WE COMPETE WITH COMPANIES THAT MAY HAVE GREATER FINANCIAL RESOURCES.

If we are unable to successfully compete, our business will suffer. We
believe that tower location and capacity, price, quality of service and density
within a geographic market historically have been, and will continue to be, the
most significant competitive factors affecting the site leasing business. We
compete for site leasing tenants with:

-- wireless service providers that own and operate their own towers and
lease, or may in the future decide to lease, antenna space to other
providers;

-- other independent tower operators;

-- site acquisition companies which acquire antenna space on existing
towers for wireless service providers, manage new tower construction
and provide site acquisition services; and

-- owners of non-tower antenna sites, including rooftops, water towers
and other alternate structures.

Wireless service providers that own and operate their own towers generally
are substantially larger and have substantially greater financial resources than
SpectraSite. For example, AT&T Wireless and Sprint PCS own and operate their own
tower networks.

We compete for acquisition, new tower construction and network development
opportunities primarily with other independent tower companies and site
construction firms. Some of these competitors may have greater financial
resources than we have.

RAPID GROWTH COULD STRAIN OR DIVERT OUR MANAGEMENT TEAM AND WILL INCREASE OUR
OPERATING EXPENSES.

Implementation of our business strategy may impose significant strains on
our management, operating systems and financial resources. In addition, we
anticipate that operating expenses will increase significantly as we build and
acquire additional tower assets. Our failure to manage growth or unexpected
difficulties encountered during our expansion could have a material adverse
effect on our business, financial condition or results of operations. The
pursuit and integration of acquisitions, investments, joint ventures and
strategic alliances will require substantial attention from our senior
management, which will limit the amount of time they have available to devote to
existing operations.

WE ANTICIPATE SIGNIFICANT CAPITAL EXPENDITURES AND MAY NEED ADDITIONAL FINANCING
WHICH MAY NOT BE AVAILABLE.

Our current plans call for significant capital expenditures during the
second half of 2000 for the construction and acquisition of communication sites,
primarily towers. As of March 31, 2000, we had approximately $300.0 million
available under our credit facility, and after giving effect to the acquisition
of Lodestar and the Transco joint venture, we would have had approximately
$ million of cash and cash

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equivalents. However, if we make additional acquisitions or pursue other
opportunities or if our estimates prove to be inaccurate, we may need additional
sources of debt or equity capital prior to the end of 2000. Additional financing
may not be available or may be restricted by the terms of the credit facility
and the indentures governing our outstanding notes.

COMPETING TECHNOLOGIES AND OTHER ALTERNATIVES COULD REDUCE THE DEMAND FOR OUR
SERVICES.

Most types of wireless services currently require ground-based network
facilities, including communications sites for transmission and reception. The
development and growth of communications technologies which do not require
ground-based sites or other alternatives could reduce the demand for space on
our towers.

In particular, the emergence of new technologies that do not require
terrestrial antenna sites and that can be substituted for those that do, could
have a negative impact on our operations. For example, the FCC has granted
license applications for several low-earth orbiting satellite systems that are
intended to provide mobile voice and data services; one system was operating
commercially, but has suspended operations because of bankruptcy, and another
has recently initiated service. In addition, the FCC has issued licenses for
several low-earth orbiting satellite systems that are intended to provide solely
data services, and one of those systems is operational. Although these systems
are highly capital-intensive and have only begun to be tested, mobile satellite
systems could compete with land-based wireless communications systems, thereby
reducing the demand for the infrastructure services we provide. Reduced demand
for ground-based antenna sites could have a material adverse effect on our
business, financial condition or results of operations.

In addition, wireless service providers frequently enter into agreements
with competitors allowing them to utilize one another's wireless communications
facilities to accommodate customers who are out of range of their home
providers' services. These roaming agreements may be viewed by wireless service
providers as a superior alternative to leasing space for their own antennas on
communications sites we own. The proliferation of these roaming agreements could
have a material adverse effect on our business, financial condition or results
of operations.

A SMALL NUMBER OF STOCKHOLDERS CONTROL THE VOTING POWER OF HOLDINGS, AND THESE
STOCKHOLDERS' INTERESTS MAY BE DIFFERENT FROM YOURS.

Affiliates of Welsh, Carson, Anderson & Stowe will own 32.4 million shares,
or %, of our common stock after giving effect to this offering. This
ownership will allow Welsh, Carson to exert significant influence over the
management and policies of SpectraSite. In addition, Welsh, Carson and certain
other Holdings stockholders have a right to board representation under a
stockholders' agreement. Welsh, Carson and the other parties to the
stockholders' agreement may have interests that are different from yours. See
"Description of Capital Stock--Stockholders' Agreement."

OUR BUSINESS DEPENDS ON OUR KEY PERSONNEL.

Our future success depends to a significant extent on the continued
services of our Chief Executive Officer, Stephen H. Clark, our Chief Operating
Officer, Timothy G. Biltz, our Chief Financial Officer, David P. Tomick, our
Executive Vice President--Wireless Tower Group, Richard J. Byrne, and our
Executive Vice President--Construction Operations, Calvin J. Payne. Although
each of these officers other than Mr. Biltz has an employment agreement with
Holdings, the loss of any of these key employees would likely have a
significantly detrimental effect on our business.

OUR OPERATIONS REQUIRE COMPLIANCE WITH AND APPROVAL FROM FEDERAL AND STATE
REGULATORY AUTHORITIES.

We are subject to a variety of regulations, including those at the federal,
state and local levels. Both the FCC and the FAA regulate towers and other sites
used for wireless communications transmitters and receivers. Failure to comply
with applicable requirements may lead to civil penalties and tort liability.
These regulations control siting, marking, and lighting of towers and may,
depending on the characteristics of the tower, require registration of tower
facilities with the FCC. Wireless communications devices operating on
10
<PAGE> 13

towers are separately regulated and independently licensed by the FCC based upon
the particular frequency used and the services being provided. Any proposals to
construct new communications sites or modify existing communications sites that
could affect air traffic must be reviewed by the FAA to ensure that the
proposals will not present a hazard to aviation. Tower owners may have an
obligation to paint their towers or install lighting to conform to FCC and FAA
standards and to maintain such painting or lighting. Tower owners also may bear
the responsibility for notifying the FAA of any tower lighting failure.
SpectraSite generally indemnifies its customers against any failure by
SpectraSite to comply with applicable standards.

Local regulations include city or other local ordinances, zoning
restrictions and restrictive covenants imposed by community developers. These
regulations vary greatly, but typically require tower owners to obtain approval
from local officials or community standards organizations prior to tower
construction. Local regulations can delay or prevent new tower construction or
site upgrade projects, thereby limiting our ability to respond to customers'
demands. In addition, these regulations increase the costs associated with new
tower construction. Existing regulatory policies may adversely affect the timing
or cost of new tower construction, and additional regulations may be adopted
that will increase these delays or result in additional costs to SpectraSite.
These factors could have a material adverse effect on our business, financial
condition or results of operations and on our ability to implement or achieve
our business objectives.

The FCC has initiated a rulemaking proceeding to consider how to improve
telecommunications service providers' access to rooftops, other rights-of-way
and conduits in multi-tenant buildings. The FCC is considering whether such
access should be mandated and, if so, under what rules, terms, and conditions.
While new telecommunications entrants have supported the proposals, building
owners and incumbent local exchange carriers have argued that the proposals are
unconstitutional and that the agency lacks the statutory authority to adopt
them. Federal legislation addressing access by telecommunications providers to
multi-tenant buildings has also been introduced and may be considered in the
coming year. Other legislative proposals concerning tower siting and related
environmental issues may also be considered. We cannot predict whether these
regulatory and legislative initiatives will be adopted and, if they are, the
effect that they will have on our business.

As part of the Westower merger, we acquired operations in Canada. As a
result, we are subject to regulation in Canada. If we pursue additional
international opportunities, we will be subject to regulation in additional
foreign jurisdictions. In addition, our customers also may become subject to new
regulatory policies which may adversely affect the demand for communications
sites.

WE GENERALLY LEASE THE LAND UNDER OUR TOWERS AND MAY NOT BE ABLE TO MAINTAIN
THESE LEASES.

Our real property interests relating to towers primarily consist of
leasehold interests, private easements and licenses, easements and rights-of-way
granted by governmental entities. A loss of these interests would interfere with
our ability to conduct our business and generate revenues. Our ability to
protect our rights against persons claiming superior rights in towers depends on
our ability to:

-- recover under title policies, the policy limits of which may be less
than the purchase price of a particular tower;

-- in the absence of title insurance coverage, recover under title
warranties given by tower sellers, which warranties often terminate
after the expiration of a specific period, typically one to three
years; and

-- recover under title covenants from landlords contained in lease
agreements.

WE ARE SUBJECT TO ENVIRONMENTAL LAWS THAT IMPOSE LIABILITY WITHOUT REGARD TO
FAULT.

Our operations are subject to federal, state, provincial, local, and
foreign environmental laws and regulations regarding the use, storage, disposal,
emission, release and remediation of hazardous and nonhazardous substances,
materials or wastes. Under these laws, SpectraSite could be held strictly, as
well as jointly and severally, liable for the investigation and remediation of
hazardous substance contamination at its facilities or at third-party waste
disposal sites and also could be held liable for any personal or property damage
related to such contamination. Although we believe that we currently have no
material liability under
11
<PAGE> 14

applicable environmental laws, the costs of complying with existing or future
environmental laws, investigating and remediating any contaminated real property
and resolving any related liability could have a material adverse effect on our
business, financial condition or results of operations.

The FCC requires tower owners who are subject to the agency's antenna
structure registration program to comply at the time of registration with
federal environmental rules that may restrict the siting of towers. Under these
rules, tower owners are required initially to identify whether proposed sites
are in environmentally sensitive locations. If so, the tower owners must prepare
and file environmental assessments, which must be reviewed by the FCC staff
prior to registration and construction of the particular towers.

OUR TOWERS MAY BE DAMAGED BY NATURAL DISASTERS.

Our towers are subject to risks associated with natural disasters such as
ice and wind storms, tornadoes, hurricanes and earthquakes. We self-insure
almost all of our towers against such risks. A tower accident for which we are
uninsured or underinsured, or damage to a tower or group of towers, could have a
material adverse effect on our business, financial condition or results of
operations.

PERCEIVED HEALTH RISKS OF RADIO FREQUENCY EMISSIONS COULD IMPACT OUR BUSINESS.

The wireless service providers that utilize our towers are subject to FCC
requirements and other guidelines relating to radio frequency emissions. The
potential connection between radio frequency emissions and certain negative
health effects, including some forms of cancer, has been the subject of
substantial study by the scientific community in recent years. To date, the
results of these studies have been inconclusive. If radio frequency emissions
were conclusively proved harmful, our tenants and possibly we could face
lawsuits claiming damages from such emissions and demand for wireless services
and new towers would be adversely affected. Although we have not been subject to
any claims relating to radio frequency emissions, we cannot assure you that
these claims will not arise in the future.

WE DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE AND, BECAUSE WE ARE
A HOLDING COMPANY, WE MAY BE UNABLE TO PAY DIVIDENDS.

We have never declared or paid any cash dividends on our common stock. For
the foreseeable future, we intend to retain any earnings to finance the
development and expansion of our business, and we do not anticipate paying any
cash dividends on our common stock. In addition, our credit facility and the
indentures governing our outstanding notes restrict our ability to pay
dividends. Any future determination to pay dividends will be at the discretion
of our board of directors and will be dependent upon then existing conditions,
including our financial condition and results of operations, capital
requirements, contractual restrictions, business prospects and other factors
that the board of directors considers relevant. Furthermore, because Holdings is
a holding company, it depends on the cash flow of its subsidiaries, and
SpectraSite Communications' credit facility imposes restrictions on Holdings'
subsidiaries' ability to distribute cash to Holdings.

OUR STOCK PRICE HAS BEEN HIGHLY VOLATILE, AND YOU COULD LOSE A SIGNIFICANT PART
OF YOUR INVESTMENT AS A RESULT.

Prior to the Westower merger in September 1999, our common stock was
privately held with no public trading market. On September 1, 1999, our common
stock was approved for trading on the Nasdaq National Market under the symbol
"SITE", and public trading commenced on September 3, 1999. The average daily
trading volume for the week ended June 30, 2000 was 841,700 shares. The market
price of our common stock has been and can be expected to be significantly
affected by:

-- quarterly variations in our operating results;

-- operating results that vary from the expectations of securities
analysts and investors;

-- changes in expectations as to our future financial performance,
including financial estimates by securities analysts and investors;

12
<PAGE> 15

-- changes in market valuations of other communications tower companies;

-- announcements of technological innovations or new services by us or
our competitors;

-- announcements of significant contracts, acquisitions, strategic
partnerships, joint ventures or capital commitments by us or our
competitors;

-- additions or departures of key personnel;

-- future sales of our common stock; and

-- stock market price and volume fluctuations.

In addition, the stock market in general has experienced extreme volatility
that often has been unrelated to the operating performance of particular
companies. These broad market and industry fluctuations may adversely affect the
trading price of our common stock, regardless of our actual operating
performance.

SUBSTANTIAL SALES OF OUR COMMON STOCK COULD ADVERSELY AFFECT OUR STOCK PRICE.

Sales of a substantial number of shares of our common stock after this
offering, or the perception that these sales could occur, could adversely affect
our stock price. Given the volatility that exists for our shares, such sales
could cause the market price of our common stock to decline.

After this offering, we will have outstanding shares of common
stock, and, as of March 31, 2000, we had reserved an additional 8,374,062 shares
of common stock for issuance under outstanding stock options. All of the shares
of common stock to be sold in this offering will be freely tradable without
restriction or further registration under the federal securities laws unless
purchased by our affiliates, as that term is defined in Rule 144 under the
Securities Act. Approximately 80,034,056 shares of outstanding common stock,
representing approximately % of the outstanding common stock upon
completion of this offering, will be restricted securities under the Securities
Act, subject to restrictions on the timing, manner and volume of sales of such
shares.

We will also file registration statements on Form S-8 under the Securities
Act covering 20 million shares of common stock reserved for issuance under our
stock incentive plan and one million shares of common stock for issuance under
our employee stock purchase plan.

We cannot predict whether future sales of our common stock or the
availability of our common stock for sale will adversely affect the market price
for our common stock or our ability to raise capital by offering equity
securities.

13
<PAGE> 16

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21C of the Securities
Exchange Act of 1934, including statements concerning possible or assumed future
results of operations of SpectraSite and those preceded by, followed by or that
include the words may, will, should, could, expects, plans, anticipates,
believes, estimates, predicts, potential or continue or the negative of such
terms and other comparable terminology. You should understand that the factors
described below, in addition to those discussed elsewhere in this document,
could affect our future results and could cause those results to differ
materially from those expressed in such forward-looking statements. These
factors include:

-- material adverse changes in economic conditions in the markets we
serve;

-- future regulatory actions and conditions in our operating areas;

-- competition from others in the communications tower industry;

-- the integration of our operations with those of businesses we have
acquired or may acquire in the future and the realization of the
expected benefits; and

-- other risks and uncertainties as may be detailed from time to time in
our public announcements and SEC filings.

14
<PAGE> 17

USE OF PROCEEDS

Our net proceeds from the sale of the shares of common stock in
this offering are estimated to be $ million, or $ million if the
underwriters exercise their over-allotment option in full, after deducting
underwriting discounts and commissions and estimated offering expenses of $
million payable by us.

We are continuously engaged in discussions with carriers and other tower
owners to explore acquisition, leasing and investment opportunities in the
consolidating tower ownership and management industry. We may submit a bid to
lease a substantial portfolio of towers from a major telecommunications carrier
and to build additional towers for that carrier over a period of several years.
It is likely that other companies will submit bids to lease this portfolio, so
there can be no assurance that we will be the successful bidder. If successful,
any final agreement would be subject to negotiation of definitive documentation.
Our bid will be for an amount in excess of the proceeds of this offering, and it
will be our largest tower transaction to date. If we win the bid, the amount we
agree to pay the carrier may be paid in cash or may be paid partly in cash and
partly by the issuance to the carrier of shares of our common stock or other
SpectraSite securities. All of the proceeds of this offering would be used to
pay part of the price payable to the carrier. The remaining cash portion of the
amount payable to the carrier could be paid from some combination of
cash-on-hand, increased borrowings under an amended credit facility and proceeds
from public or private issuances of debt or additional equity securities. We
would lease back space to the carrier on the leased towers, and the carrier
would become our largest customer. Whether or not we win this bid, we intend to
continue to pursue, on an opportunistic basis, additional strategic
acquisitions, lease transactions, joint venture arrangements and smaller fill-in
acquisitions in furtherance of our growth strategy and to enhance our
operational and financial performance.

If our bid described above is not accepted, we intend to use the net
proceeds from this offering to fund costs related to the construction and
acquisition of towers, and for working capital and general corporate purposes,
including the expansion of our sales and marketing activities. Some or all of
the net proceeds may also be used to acquire or invest in additional tower
assets or tower companies and complementary businesses, technologies or
products. We have no current agreements or commitments with respect to any
material business acquisitions. Pending such uses, the net proceeds of this
offering will be invested in short term investments.

15
<PAGE> 18

PRICE RANGE OF COMMON STOCK

Prior to the Westower merger, our common stock was privately held with no
public trading market. On September 1, 1999, our common stock was approved for
trading on the Nasdaq National Market under the symbol "SITE", and public
trading commenced on September 3, 1999. The following table sets forth on a per
share basis the high and low sales prices for consolidated trading in our common
stock as reported on the Nasdaq National Market for the period from September 3,
1999 through September 30, 1999, the fourth quarter of 1999, the first and
second quarter of 2000 and the third quarter of 2000 through July 12, 2000.

<TABLE>
<CAPTION>
COMMON STOCK
-------------
HIGH LOW
---- ---
<S> <C> <C>
1999
Third quarter (beginning September 3)....................... $14 7/8 $11
Fourth quarter.............................................. 12 1/8 7 3/8
2000
First quarter............................................... 30 3/8 10 3/4
Second quarter.............................................. 28 1/2 15 1/8
Third quarter (through July 12, 2000)....................... 29 26 7/8
</TABLE>

The last reported sale price for our stock on July 12, 2000 is set forth on
the cover page to this prospectus. As of July 12, 2000, there were approximately
222 holders of record of our common stock.

DIVIDEND POLICY

16
<PAGE> 19

CAPITALIZATION

The following table sets forth our cash and capitalization as of March 31,
2000:

-- on an actual basis; and

-- on an as adjusted basis to give effect to this offering, assuming a
public offering price of $ per share, and application of the
proceeds.

This information should be read in conjunction with our financial
statements and related notes thereto included elsewhere in this prospectus.

<TABLE>
<CAPTION>
AS OF
MARCH 31, 2000
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 796,908 $
========== ==========
Long-term debt:
Credit facility........................................... $ 200,000 $
10 3/4% senior notes due 2010............................. 200,000
12% senior discount notes due 2008........................ 153,591
11 1/4% senior discount notes due 2009.................... 377,312
12 7/8% senior discount notes due 2010.................... 301,691
Other debt................................................ 2,427
---------- ----------
Total long-term debt................................... 1,235,021
---------- ----------
Shareholders' equity:
Common stock, $0.001 par value, 300,000,000 shares
authorized, 123,179,486 shares outstanding, actual and
shares outstanding, as adjusted............ 123
Additional paid-in capital................................ 1,060,514
Accumulated other comprehensive income.................... 39
Accumulated deficit....................................... (144,991)
---------- ----------
Total shareholders' equity............................. 915,685
---------- ----------
Total capitalization................................. $2,150,706 $
========== ==========
</TABLE>

17
<PAGE> 20

UNAUDITED PRO FORMA FINANCIAL DATA

GENERAL

The unaudited pro forma financial data are based on the historical
financial statements of SpectraSite and Westower and the adjustments described
in the accompanying notes. The unaudited pro forma financial data do not purport
to represent what SpectraSite's, Westower's or the combined entity's financial
position or results of operations would actually have been if the transactions
had in fact occurred on the dates indicated and are not necessarily
representative of SpectraSite's financial position or results of operations at
any future date or for any future period. The unaudited pro forma consolidated
financial data should be read in conjunction with "Selected Historical Financial
Data," "Management's Discussion and Analysis of Financial Condition and Results
of Operations," and the consolidated financial statements and related notes
thereto included elsewhere in this prospectus.

SPECTRASITE

The following unaudited pro forma consolidated financial data present both
the pre-merger and post-merger unaudited pro forma consolidated statements of
operations of SpectraSite for the year ended December 31, 1999. The SpectraSite
pro forma column and the Westower pro forma column presented in the post-merger
SpectraSite unaudited pro forma consolidated statement of operations for the
year ended December 31, 1999 are derived from the pre-merger SpectraSite and
Westower pro forma consolidated statements of operations for the corresponding
periods. The unaudited pro forma consolidated statement of operations data give
effect to the following transactions as if they had occurred on January 1, 1999:

- the acquisition of 2,000 communications towers from Nextel, the leaseback
of antenna space by Nextel and SpectraSite's exclusive agreement to
acquire or construct 1,700 additional sites for Nextel;

- the issuance and sale of Holdings' 11 1/4% senior discount notes due
2009;

- initial borrowings under SpectraSite's credit facility; and

- the consummation of the Westower merger.

Certain of the data presented in the "Nextel" column to the unaudited pro
forma statement of operations of SpectraSite are estimates provided by Nextel.
None of SpectraSite's independent accountants, Nextel's independent accountants
or Westower's independent accountants have audited or otherwise tested this
data. We believe the estimated amounts are factually supported and based on
reasonable assumptions. However, these amounts may not accurately reflect the
results of operations from the Nextel towers for the periods presented or the
operating results that we can expect from the Nextel towers in the future.

The acquisition of tower assets from Nextel and the leaseback of antenna
space by Nextel are presented as if the purchase of assets had occurred on
January 1, 1999. Adjustments for revenues are based on the terms of the master
site lease agreement and on historical co-location revenues. Adjustments for
costs of operations consist of direct operating expenses, which include ground
lease payments, historical routine maintenance costs and property taxes
associated with the towers. Depreciation expense is straight-line depreciation
of the aggregate cost of the towers. Ground leases are non-cancelable operating
leases, generally for terms of five years and include options for renewal, and
pro forma ground lease expense is based on executed ground leases. Nextel has
leased space on each of the 2,000 towers we acquired, primarily for five-year
terms with options for renewal.

18
<PAGE> 21

The pro forma minimum ground lease expenses and minimum rental income for
these leases assuming the Nextel transaction occurred and the related leases
commenced January 1, 1999 are as follows:

<TABLE>
<CAPTION>
GROUND LEASE RENTAL
EXPENSE INCOME
------------ --------
(IN THOUSANDS)
<S> <C> <C>
1999............................... $17,648 $ 40,766
2000............................... 17,648 40,766
2001............................... 17,648 40,766
2002............................... 17,648 40,766
2003............................... 17,648 40,766
------- --------
Total............................ $88,240 $203,830
======= ========
</TABLE>

WESTOWER

The following unaudited pro forma consolidated financial data of Westower
present the unaudited pro forma consolidated statement of operations of Westower
for the period from January 1, 1999 through September 2, 1999, the date on which
SpectraSite acquired Westower.

This statement gives effect to the acquisition of communications towers
from Koch Industries, Inc. and its affiliates, which occurred in February 1999,
as if this acquisition occurred on January 1, 1999. In addition to the above
acquisition, from January 1 through September 2, 1999, Westower acquired Cypress
Real Estate Services, Inc. and Telecommunications R. David. These acquisitions,
which are included in the historical financial statements of Westower, were not
considered significant transactions, individually or in the aggregate, and
therefore, were not included in the unaudited pro forma consolidated statement
of operations of Westower.

Adjustments for revenues are based on the executed tenant lease terms for
the Koch towers. Adjustments for costs of operations consist of direct operating
expenses, which include ground lease payments, estimated routine maintenance
costs, property taxes and insurance associated with the towers. Depreciation
expense is straight-line depreciation of the aggregate cost of $17.0 million.
The Koch ground leases are non-cancelable operating leases for a term of 49
years, and pro forma ground lease expense is based on executed ground leases.
Koch has leased space on these towers for a ten-year term with options for
renewal. The pro forma minimum ground lease expense and minimum rental income
for these leases assuming the transaction occurred and the related leases
commenced January 1, 1999 are as follows:

<TABLE>
<CAPTION>
GROUND LEASE RENTAL
EXPENSE INCOME
------------ -------
(IN THOUSANDS)
<S> <C> <C>
1999................................ $ 439 $ 1,364
2000................................ 439 1,364
2001................................ 439 1,364
2002................................ 439 1,364
2003................................ 439 1,364
Thereafter.......................... 19,322 6,824
------- -------
Total............................. $21,517 $13,644
======= =======
</TABLE>

19
<PAGE> 22

PRE-MERGER SPECTRASITE HOLDINGS, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRE-MERGER
SPECTRASITE
HISTORICAL NEXTEL PRO FORMA
---------- -------- -----------
<S> <C> <C> <C>
Revenues:
Site leasing........................................ $ 46,515 $ 14,954(a) $ 61,469
Network services.................................... 53,570 -- 53,570
-------- -------- ---------
Total revenues........................................ 100,085 14,954 115,039
-------- -------- ---------
Operating expenses:
Costs of operations:
Site leasing..................................... 17,825 6,913(b) 24,738
Network services................................. 36,489 -- 36,489
Selling, general and administrative expenses........ 37,832 --(c) 37,832
Depreciation and amortization....................... 37,976 11,808(d) 49,784
Non-cash compensation charges....................... 350 -- 350
Restructuring and non-recurring charges............. 7,727 -- 7,727
-------- -------- ---------
Total operating expenses.............................. 138,199 18,721 156,920
-------- -------- ---------
Operating loss........................................ (38,114) (3,767) (41,881)
-------- -------- ---------
Other income (expense):
Interest income..................................... 8,951 -- 8,951
Interest expense.................................... (67,513) (20,554)(e) (88,067)
Other income (expense).............................. (424) -- (424)
-------- -------- ---------
Total other income (expense)..................... (58,986) (20,554) (79,540)
-------- -------- ---------
Loss before income taxes.............................. (97,100) (24,321) (121,421)
Income tax expense.................................... 568 -- 568
-------- -------- ---------
Net loss.............................................. $(97,668) $(24,321) $(121,989)
======== ======== =========

Net loss.............................................. $(97,668)
Accretion of redemption value of preferred stock...... (760)
--------
Net loss applicable to common shareholders............ $(98,428)
========
Net loss per share:
Basic and diluted................................ $ (12.48)
========
Weighted average number of shares of common stock
outstanding:
Basic and diluted................................ 7,886
========
</TABLE>

See accompanying notes to unaudited pro forma consolidated statement of
operations.
20
<PAGE> 23

PRE-MERGER SPECTRASITE HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS)

(a) Consists of $2,611 of historical co-location revenues received by
Nextel prior to the acquisition, which are based on fixed payment lease
terms. This information was provided to us by Nextel. Also consists of
$12,343 of additional revenues to be recognized by SpectraSite under the
terms of the Nextel master site lease agreement.

(b) Reflects certain direct operating expenses, primarily the cost of
executed ground leases, historical routine maintenance and property taxes
associated with the towers, paid by Nextel prior to the acquisition.

(c) SpectraSite has incurred incremental operating expenses as a
result of the Nextel tower acquisition. Such incremental expenses are
estimated to have been approximately $1,500 per month. These incremental
operating expenses are based upon management's estimates rather than on any
contractual obligation; as such, these amounts have not been presented as
adjustments in the accompanying pro forma financial statements.

(d) Reflects the depreciation of the acquired towers calculated on a
straight-line basis over 15 years.

(e) Reflects adjustment to interest expense as if SpectraSite had
issued its 11 1/4% senior discount notes due 2009 and had entered into the
credit facility on January 1, 1999 as follows:

<TABLE>
<S> <C>
PRO FORMA INTEREST EXPENSE:
Interest on 2009 notes at 11 1/4%................... $13,794
Interest on $150,000 term loan...................... 3,964
Amortization of debt issuance costs................. 1,626
Commitment fees on unused portion of credit
facility.......................................... 1,170
-------
Total adjustment.................................... $20,554
=======
</TABLE>

21
<PAGE> 24

WESTOWER CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 1999 THROUGH SEPTEMBER 2, 1999

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
HISTORICAL KOCH WESTOWER
WESTOWER ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
Revenues:
Site leasing..................................... $ 1,649 $ 227(a) $ 1,876
Network services................................. 62,002 -- 62,002
------- ----- -------
Total revenues................................... 63,651 227 63,878
------- ----- -------
Operating expenses:
Costs of operations:
Site leasing.................................. 928 123(b) 1,051
Network services.............................. 43,943 -- 43,943
Selling, general and administrative expenses..... 18,439 -- 18,439
Depreciation and amortization.................... 2,920 142(c) 3,062
Restructuring and non-recurring charges.......... 4,629 -- 4,629
------- ----- -------
Total operating expenses........................... 70,859 265 71,124
------- ----- -------
Operating loss..................................... (7,208) (38) (7,246)
------- ----- -------
Other income (expense):
Interest income.................................. 151 -- 151
Interest expense................................. (2,317) (213)(d) (2,530)
Other income (expense)........................... 154 -- 154
------- ----- -------
Total other income (expense).................. (2,012) (213) (2,225)
------- ----- -------
Loss before income taxes........................... (9,220) (251) (9,471)
Income tax expense................................. 223 (100)(e) 123
------- ----- -------
Net loss........................................... $(9,443) $(151) $(9,594)
======= ===== =======
Net loss per share:
Basic and diluted................................ $ (1.10)
=======
Weighted average number of shares of common stock
outstanding:
Basic and diluted................................ 8,562
=======
</TABLE>

See accompanying notes to unaudited pro forma consolidated statement of
operations.
22
<PAGE> 25

WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 1999 THROUGH SEPTEMBER 2, 1999

(a) Consists of additional revenues to be recognized by Westower in
connection with site lease agreements with Koch.

(b) Reflects certain direct operating expenses, primarily the cost of
executed ground leases, estimated routine maintenance, property taxes and
insurance associated with the towers.

(d) Reflects adjustment to interest expense related to additional
borrowings under Westower's credit facility to acquire the Koch towers, based on
the credit facility's approximate interest rate of 7.5%.

(e) Reflects income tax benefit for the Koch tower operating results at
Westower's estimated tax rate of 40%.

23
<PAGE> 26

POST-MERGER SPECTRASITE HOLDINGS, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
POST-MERGER
SPECTRASITE WESTOWER MERGER SPECTRASITE
PRO FORMA PRO FORMA ADJUSTMENTS PRO FORMA
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Site leasing..................... $ 61,469 $ 1,876 $ -- $ 63,345
Network services................. 53,570 62,002 (1,449)(a) 114,123
--------- ------- ------- ---------
Total revenues..................... 115,039 63,878 (1,449) 177,468
--------- ------- ------- ---------
Operating expenses:
Costs of operations:
Site leasing.................. 24,738 1,051 -- 25,789
Network services.............. 36,489 43,943 (1,014)(a) 79,418
Selling, general and
administrative expenses....... 37,832 18,439 -- 56,271
Depreciation and amortization.... 49,784 3,062 9,577(b) 61,972
(451)(c)
Non-cash compensation charges.... 350 -- -- 350
Restructuring and non-recurring
charges....................... 7,727 4,629 (4,629)(d) 7,727
--------- ------- ------- ---------
Total operating expenses........... 156,920 71,124 3,483 231,527
--------- ------- ------- ---------
Operating loss..................... (41,881) (7,246) (4,932) (54,059)
--------- ------- ------- ---------
Other income (expense):
Interest income.................. 8,951 151 (1,466)(e) 7,636
Interest expense................. (88,067) (2,530) 2,052(f) (88,545)
Other income (expense)........... (424) 154 -- (270)
--------- ------- ------- ---------
Total other income
(expense)................... (79,540) (2,225) 586 (81,179)
--------- ------- ------- ---------
Loss before income taxes........... (121,421) (9,471) (4,346) (135,238)
Income tax expense................. 568 123 -- 691
--------- ------- ------- ---------
Net loss........................... $(121,989) $(9,594) $(4,346) $(135,929)
========= ======= ======= =========
Net loss per share:
Basic and diluted................ $ 6.73(g)
=========
Weighted average number of shares
of common stock outstanding:
Basic and diluted................ 20,192
=========
</TABLE>

See accompanying notes to unaudited pro forma consolidated statement of
operations.
24
<PAGE> 27

POST-MERGER SPECTRASITE HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS)

(a) Reflects the elimination of intercompany site construction revenues
and costs of site construction for towers built by Westower for SpectraSite
during the period from January 1 through September 2, 1999.

(b) Reflects amortization of goodwill as if the merger of Westower and
SpectraSite had occurred on January 1, 1999. Goodwill is amortized over 15
years.

(c) Reflects adjustments to eliminate amortization of historical goodwill
of Westower of $1,062 and to convert Westower tower depreciation from 20 years
to 15 years, increasing expense by $611.

(d) Reflects the elimination of certain non-recurring charges resulting
directly from the transaction which were incurred by Westower prior to its
acquisition by Spectrasite.

(e) Reflects an adjustment to eliminate interest income as if SpectraSite
had used cash-on-hand to repay Westower's outstanding indebtedness.

(f) Reflects adjustments to eliminate interest expense as if Westower's
credit facility and its $15,000 convertible note from BET Associates were paid
in full on January 1, 1999.

(g) SpectraSite's earnings per share for the year ended December 31, 1999
reflects the adoption of Statement of Financial Accounting Standards No. 128,
"Earnings Per Share", which requires companies to compute earnings per share
under two different methods, basic and diluted. The weighted average common
shares outstanding at December 31, 1999 reflects the issuance of 15.5 million
shares of SpectraSite common stock in exchange for all of the outstanding shares
of Westower common stock.

If SpectraSite had net income during this period, diluted earnings per
share would have included potential common shares related to its convertible
preferred stock and outstanding options. These potential common shares were not
included in the diluted earnings per share calculation for the year ended
December 31, 1999 because the effect would have been antidilutive. In connection
with the Nextel tower acquisition, provisions for dividends and redemption were
eliminated with respect to Holdings' Series A and Series B preferred stock.

25
<PAGE> 28

SELECTED HISTORICAL FINANCIAL DATA

The following table sets forth summary historical financial data derived
from the audited financial statements included elsewhere in this prospectus, as
of and for:

-- the year ended December 31, 1996;

-- the period from January 1, 1997 to May 12, 1997;

-- the period from SpectraSite's inception on April 25, 1997 to December
31, 1997;

-- the year ended December 31, 1998; and

-- the year ended December 31, 1999.

The data for the three months ended March 31, 1999 and March 31, 2000 were
derived from SpectraSite's unaudited financial statements for those periods.
Operating results for the three months ended March 31, 2000 are not necessarily
indicative of results expected for the entire year.

The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and related notes thereto
included elsewhere in this prospectus.

26
<PAGE> 29

TELESITE (PREDECESSOR) SPECTRASITE
------------------------- ------------

JANUARY 1, APRIL 25,
YEAR ENDED 1997- 1997-
DECEMBER 31, MAY 12, DECEMBER 31,
1996 1997 1997
------------ ---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
Site leasing............. $ -- $ -- $ --
Network services......... 8,841 1,926 5,002
------ ------ -------
Total revenues............. 8,841 1,926 5,002
------ ------ -------
Operating expenses:
Costs of operations:
Site leasing, excluding
depreciation and
amortization
expense.............. -- -- --
Network services....... 2,255 595 1,120
Selling, general and
administrative
expenses............... 4,256 1,742 4,790
Depreciation and
amortization expense... 91 56 489
Non-cash compensation
charges................ -- -- 2,600
Restructuring and non-
recurring charges...... -- -- --
------ ------ -------
Total operating expenses... 6,602 2,393 8,999
------ ------ -------
Income (loss) from
operations............... $2,239 $ (467) $(3,997)
====== ====== =======
Net income (loss).......... $2,289 $ (503) $(3,890)
Net income (loss)
applicable to common
shareholders............. 2,289 (503) (4,390)
Net loss per share (basic
and diluted)............. $ (5.21)
Weighted average common
shares outstanding (basic
and diluted)............. 842
OTHER DATA:
Net cash provided by (used
in) operating
activities............... $1,109 $ (71) $ 223
Net cash provided by (used
in) investing
activities............... (853) (322) (7,178)
Net cash provided by (used
in) financing
activities............... (266) 390 9,189
EBITDA(a).................. 2,330 (411) (908)
Capital expenditures(b).... 498 64 850
SELECTED OPERATING DATA (AT END OF PERIOD):
Number of owned towers...............................................
BALANCE SHEET DATA (AT END OF PERIOD):
Cash, cash equivalents and short term investments....................
Total assets.........................................................
Total long-term debt.................................................
Total shareholders' (deficiency) equity..............................

<CAPTION>
TELESITE &
SPECTRASITE
COMBINED SPECTRASITE
----------- --------------------------------------------------
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------- ---------------------
1997 1998 1999 1999 2000
----------- ----------- ------------ -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
Site leasing............. $ -- $ 656 $ 46,515 $ 572 $ 20,284
Network services......... 6,928 8,142 53,570 2,383 54,953
------- -------- ---------- -------- ----------
Total revenues............. 6,928 8,798 100,085 2,955 75,237
------- -------- ---------- -------- ----------
Operating expenses:
Costs of operations:
Site leasing, excluding
depreciation and
amortization
expense.............. -- 299 17,825 354 9,210
Network services....... 1,715 2,492 36,489 550 41,080
Selling, general and
administrative
expenses............... 6,532 9,690 37,832 2,830 15,625
Depreciation and
amortization expense... 545 1,268 37,976 501 19,926
Non-cash compensation
charges................ 2,600 -- 350 -- 376
Restructuring and non-
recurring charges...... -- -- 7,727 600 --
------- -------- ---------- -------- ----------
Total operating expenses... 11,392 13,749 138,199 4,835 86,217
------- -------- ---------- -------- ----------
Income (loss) from
operations............... $(4,464) $ (4,951) $ (38,114) $ (1,880) $ (10,980)
======= ======== ========== ======== ==========
Net income (loss).......... $(4,393) $ (9,079) $ (97,668) $ (4,517) $ (32,495)
Net income (loss)
applicable to common
shareholders............. (4,893) (11,235) (98,428) (5,277) (32,495)
Net loss per share (basic
and diluted)............. $ (11.98) $ (12.48) $ (5.51) $ (0.38)
Weighted average common
shares outstanding (basic
and diluted)............. 938 7,886 957 85,277
OTHER DATA:
Net cash provided by (used
in) operating
activities............... $ 152 $ (2,347) $ 17,555 $ (278) $ (15,064)
Net cash provided by (used
in) investing
activities............... (7,500) (45,002) (813,225) 12,062 (128,401)
Net cash provided by (used
in) financing
activities............... 9,579 144,663 733,900 (253) 902,595
EBITDA(a).................. (1,319) (3,683) 7,939 (779) 9,322
Capital expenditures(b).... 914 26,598 644,778 3,373 90,544
SELECTED OPERATING DATA (AT END OF PERIOD)
Number of owned towers..... 5 106 2,765 125 3,070
BALANCE SHEET DATA (AT END OF PERIOD)
Cash, cash equivalents and
short term investments... $ 2,234 $114,962 $ 37,778 $111,079 $ 796,908
Total assets............... 13,642 161,946 1,219,953 160,712 2,202,988
Total long-term debt....... 2,331 132,913 718,778 136,875 1,235,021
Total shareholders' (deficiency)
equity (1,898) (14,067) 457,756 (19,344) 915,685
</TABLE>

---------------

(a) EBITDA consists of operating income (loss) before depreciation and
amortization expense, non-cash compensation charges and restructuring and
non-recurring charges. EBITDA is provided because it is a measure commonly
used in the communications site industry as a measure of a company's
operating performance. EBITDA is not a measurement of financial performance
under generally accepted accounting principles and should not be considered
an alternative to net income as a measure of performance or to cash flow as
a measure of liquidity. EBITDA is not necessarily comparable with similarly
titled measures for other companies. SpectraSite believes that EBITDA can
assist in comparing company performance on a consistent basis without regard
to depreciation and amortization expense, which may vary significantly
depending on accounting methods where acquisitions are involved or
non-operating factors such as historical cost bases. EBITDA presented in the
table is consistent with EBITDA calculated under the indentures governing
SpectraSite's 2008 notes, 2009 notes and 2010 notes.

(b) Capital expenditures for Telesite have been reduced for the periods ended
December 31, 1996 and May 12, 1997 by $340 and $258, respectively. These
expenditures were for land and construction in progress which were sold
prior to the closing of the acquisition of Telesite.

27
<PAGE> 30

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BUSINESS OVERVIEW

SpectraSite's primary focus is on the ownership of multi-tenant towers and
leasing of antenna space on such towers. We had 3,070 towers in service at March
31, 2000, as compared to 2,765 and 106 towers at December 31, 1999 and 1998,
respectively. As a result of our limited operating history and primary focus on
tower ownership and leasing, management believes that our results of operations
for the years ended December 31, 1998 and 1999 are not indicative of our results
of operations in the future. We previously operated in one business segment. As
a result of the Nextel tower acquisition and the Westower merger, we now operate
in two business segments, site leasing and network services. For further details
about our business segments, refer to Note 11 to our consolidated financial
statements for 1999.

Historically, we have derived most of our revenues from network services
activities. As a result of recent acquisitions, principally the Nextel and
Westower transactions, we expect that network services and antenna site leasing
will generate most of our revenues. We believe that our antenna site leasing
business will continue to represent a substantial portion of our revenues and
will continue to grow as we increase our network of towers.

Our two largest expense line items have been depreciation and amortization
and selling, general and administrative expense. Depreciation expense primarily
relates to our towers, which we depreciate over 15 years. In 2000, amortization
expense is primarily due to goodwill associated with the acquisitions of
Westower, Stainless, Doty Moore, Apex, International Towers and Lodestar. We
experienced a significant increase in selling, general and administrative
expense in 1999 and 2000 as we integrated Westower's operations and increased
our employee base to market and manage the 2,000 Nextel towers and build towers
for Nextel under the master site commitment agreement.

We are continuously engaged in discussions with carriers and other tower
owners to explore acquisition, leasing and investment opportunities, and we may
submit a bid to lease a substantial portfolio of towers from a major
telecommunications carrier and to build additional towers for that carrier over
a period of several years. If we win the bid, the amount we agree to pay the
carrier may be paid in cash or may be paid partly in cash and partly by the
issuance to the carrier of shares of our common stock or other SpectraSite
securities. The cash portion of the amount payable to the carrier could be paid
from some combination of proceeds from this offering, cash-on-hand, increased
borrowings under an amended credit facility and proceeds from public or private
issuances of debt or additional equity securities. Accordingly, if our bid is
successful, our leverage and capital expenditure requirements, as well as our
operating cash flow, will increase. For additional information, see "Use of
Proceeds."

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE RESULTS FOR THE THREE
MONTHS ENDED MARCH 31, 1999

Consolidated revenues for the three months ended March 31, 2000 were $75.2
million, an increase of $72.3 million from the three months ended March 31,
1999. Revenues from site leasing increased to $20.3 million for the three months
ended March 31, 2000 from $0.6 million for the three months ended March 31, 1999
primarily as a result of revenues derived from 2,000 communications towers which
we acquired from Nextel in April 1999. We owned 3,070 communications towers at
March 31, 2000 compared to 125 communications towers at March 31, 1999.

Revenues from network services increased to $55.0 million for the three
months ended March 31, 2000 compared to $2.4 million in the three months ended
March 31, 1999 primarily as a result of the acquisitions of Westower, Stainless,
Doty Moore, and International Towers.

Costs of operations increased to $50.3 million for the three months ended
March 31, 2000 from $0.9 million for the three months ended March 31, 1999. The
increase in costs was primarily attributable to operating costs of the 2,000
communication towers purchased from Nextel in April 1999 and to the

28
<PAGE> 31

acquisitions of Westower, Stainless, Doty Moore, and International Towers. Costs
of operations for site leasing as a percentage of site leasing revenues
decreased to 45.4% for the three months ended March 31, 2000 from 61.9% for the
three months ended March 31, 1999 primarily due to revenues generated from the
acquisition of towers from Nextel and co-location revenues on those towers. As
our site leasing operations mature, additional tenants on a tower will generate
decreases in costs of operations for site leasing as a percentage of site
leasing revenues and increases in cash flow because a significant proportion of
tower operating costs are fixed and do not increase with additional tenants.
Costs of operations for network services as a percentage of network services
revenues increased to 74.8% for the three months ended March 31, 2000 from 23.1%
for the three months ended March 31, 1999. This increase is due to construction
activities associated with the operations of Westower, Stainless, Doty Moore,
and International Towers which have higher levels of direct costs than
historical site acquisition activities.

Selling, general and administrative expenses increased to $15.6 million for
the three months ended March 31, 2000 from $2.8 million for the three months
ended March 31, 1999. The increase is a result of expenses related to additional
corporate overhead and field operations to manage and operate the growth in the
ongoing activities of SpectraSite and the acquisitions of Westower, Stainless,
Doty Moore, and International Towers and Apex.

Depreciation and amortization expense increased to $19.9 million for the
three months ended March 31, 2000 from $0.5 million for the three months ended
March 31, 1999 primarily as a result of the increased depreciation from the
towers we have acquired or constructed and amortization of goodwill related to
acquisitions.

For the three months ended March 31, 2000, we recorded non-cash
compensation charges of $0.4 million related to the issuance of stock options
and restricted shares issued to employees. We did not incur non-cash
compensation charges in the quarter ended March 31, 1999.

In March 1999, we announced that we would relocate our marketing and
administrative operations from Little Rock, Arkansas and Birmingham, Alabama to
our corporate headquarters in Cary, North Carolina. As a result, we recorded a
non-recurring charge of $0.6 million for employee termination and other costs
related to the relocation of these activities.

As a result of the factors discussed above, our loss from operations was
$11.0 million for the three months ended March 31, 2000 compared to $1.9 million
for the three months ended March 31, 1999.

Net interest expense increased to $20.8 million during the three months
ended March 31, 2000 from $2.6 million for the three months ended March 31,
1999, reflecting additional interest expense due to the issuance of 12% senior
discount notes due 2008 in June 1998, 11.25% senior discount notes due 2009 in
April 1999, 12.875% senior discount notes due 2010 in March 2000 and 10.75%
senior discount notes due 2010 in March 2000 as well as borrowings under our
credit facility.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998

Consolidated revenues for the year ended December 31, 1999 were $100.1
million, an increase of $91.3 million from the year ended December 31, 1998.
Revenues from site leasing increased to $46.5 million for the year ended
December 31, 1999 from $0.7 million for the year ended December 31, 1998,
primarily as a result of revenues derived from 2,000 communications towers which
we acquired from Nextel in April 1999. We owned 2,765 communications towers at
December 31, 1999 compared to 106 communications towers at December 31, 1998.

Revenues from network services increased to $53.6 million for the year
ended December 31, 1999 compared to $8.1 million for the year ended December 31,
1998, primarily as a result of the acquisition of Westower in September 1999. In
September 1999, we announced that we would no longer directly provide site
acquisition services. Revenues from site acquisition activities were $7.2
million and $8.1 million in the years ended December 31, 1999 and 1998,
respectively.

29
<PAGE> 32

Costs of operations increased to $54.3 million for the year ended December
31, 1999 from $2.8 million for the year ended December 31, 1998. The increase in
costs was attributable to operating costs of the 2,000 communications towers
purchased from Nextel in April 1999 and the acquisition of Westower in September
1999. Costs of operations for site leasing as a percentage of site leasing
revenues decreased to 38.3% for the year ended December 31, 1999 from 45.6% for
the year ended December 31, 1998 primarily due to revenues generated from the
acquisition of towers from Nextel and co-location revenues on those towers. As
our site leasing operations mature, additional tenants on a tower will generate
decreases in costs of operations for site leasing as a percentage of site
leasing revenues and increases in cash flow because a significant proportion of
tower operating costs are fixed and do not increase with additional tenants.
Costs of operations for network services as a percentage of network services
revenues increased to 68.1% for the year ended December 31, 1999 from 30.6% for
the year ended December 31, 1998. This increase is due to construction
activities associated with Westower's operations which have higher levels of
direct costs than our historical site acquisition activities.

Selling, general and administrative expenses increased to $38.2 million for
the year ended December 31, 1999 from $9.7 million for the year ended December
31, 1998. The increase is a result of expenses related to additional corporate
overhead and field operations implemented to manage and operate the growth in
the ongoing activities of SpectraSite and the acquisition of Westower.

Depreciation and amortization expense increased to $38.0 million for the
year ended December 31, 1999 from $1.3 million for the year ended December 31,
1998, primarily as a result of the increased depreciation from the towers we
acquired or constructed and amortization of goodwill related to the Westower
acquisition.

For the year ended December 31, 1999, we recorded restructuring and
non-recurring charges of $7.7 million. In September 1999, we announced that we
would no longer directly provide site acquisition services. As a result, we
recorded restructuring charges of $7.1 million, of which $6.2 million related to
the write-off of goodwill associated with the purchase of Telesite Services, LLC
and $0.9 million related to costs of employee severance. In March 1999,
SpectraSite announced that it would relocate its marketing and administrative
operations from Little Rock, Arkansas and Birmingham, Alabama to its corporate
headquarters in Cary, North Carolina. As a result, we recorded a non-recurring
charge of $0.6 million for employee termination and other costs related to the
relocation of these activities.

As a result of the factors discussed above, our loss from operations was
$38.1 million for the year ended December 31, 1999 compared to $5.0 million for
the year ended December 31, 1998.

Net interest expense increased to $58.6 million during the year ended
December 31, 1999 from $4.6 million for the year ended December 31, 1998,
reflecting additional interest expense due to the issuance of our 12% senior
discount notes due 2008 in June 1998 and our 11 1/4% senior discount notes due
2009 in April 1999, as well as borrowings under our credit facility in April
1999.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE COMBINED RESULTS FOR THE YEAR
ENDED DECEMBER 31, 1997

The following is a discussion of the financial condition and results of
operations of SpectraSite for the year ended December 31, 1998 and the year
ended December 31, 1997, which consists of the period from April 25, 1997
through December 31, 1997 and Telesite's results of operations for the period
from January 1, 1997 through May 12, 1997.

Revenues increased to $8.8 million for the year ended December 31, 1998
from $6.9 million for the year ended December 31, 1997 due to the initiation of
site leasing activity and an increase in the number and size of site development
services projects.

Selling, general and administrative expenses, including depreciation
expense, increased to $11.0 million for the year ended December 31, 1998 from
$9.7 million for the year ended December 31, 1997. The increase is a result of
expenses related to additional corporate overhead to manage and operate the
ongoing activities of SpectraSite. Marketing expenses related to tower
development activities as well as the site acquisition operations also
contributed to the increase in expenses. Telesite did not actively market its
services, relying
30
<PAGE> 33

primarily on its reputation in the industry and customer referrals to generate
revenues. To support our entry into tower development and leasing, we have
established a dedicated marketing effort which promotes tower development and
leasing as well as site acquisition services. Amortization of goodwill increased
to approximately $0.6 million in the year ended December 31, 1998 compared to
approximately $0.3 million in the year ended December 31, 1997 as a result of
acquisitions.

As a result of the factors discussed above, our operating loss was $5.0
million for the year ended December 31, 1998, compared to $4.5 million for the
year ended December 31, 1997.

Other income, which consists primarily of gain on sales of assets and
equity in earnings of affiliates, increased to approximately $0.5 million for
the year ended December 31, 1998 from approximately $0.1 million for the year
ended December 31, 1997. The increase is a result of a gain on the sale of
assets in connection with the disposal of Metrosite during the first quarter of
1998 of approximately $0.5 million. During the year ended December 31, 1997, we
recognized approximately $0.2 million as equity earnings of Communication
Management Specialists. We disposed of our interest in Communication Management
Specialists during the second quarter of 1998 and did not recognize any equity
in the earnings of this affiliate during 1998.

LIQUIDITY AND CAPITAL RESOURCES

SpectraSite Holdings is a holding company whose only significant asset is
the outstanding capital stock of its subsidiaries, SpectraSite Communications
and SpectraSite International. Our only source of cash to pay interest on and
principal of our indebtedness is distributions from SpectraSite Communications.
On June 26, 1998, we privately placed $225.2 million aggregate principal amount
at maturity of 12% senior discount notes due 2008. Prior to July 15, 2003,
interest expense on the 2008 notes will consist solely of non-cash accretion of
original issue discount and the 2008 notes will not require annual cash interest
payments. After such time, the 2008 notes will have accreted to approximately
$225.2 million and will require semi-annual cash interest payments of $13.5
million. The 2008 notes mature on July 15, 2008. On April 20, 1999, we privately
placed $586.8 million aggregate principal amount at maturity of our 11 1/4%
senior discount notes due 2009. Prior to October 15, 2004, interest expense on
the 2009 notes will consist solely of non-cash accretion of original issue
discount and the 2009 notes will not require annual cash interest payments.
After such time, the 2009 notes will have accreted to approximately $586.8
million and will require semi-annual cash interest payments of $33.0 million.
The 2009 notes mature on April 15, 2009. On March 15, 2000, we privately placed
$200,000,000 aggregate principal amount of our 11 3/4% senior notes due 2010 and
$559,800,000 aggregate principal amount at maturity of our 12 7/8% senior
discount notes due 2010. The 2010 discount notes will not require cash interest
payments prior to October 15, 2005, and mature March 15, 2010. On March 15,
2005, the 2010 discount notes will have accreted to $559.8 million and will
require semi-annual cash interest payments of $36.0 million. The 2010 cash notes
require semi-annual cash interest payments of $10.75 million and mature March
15, 2010. Furthermore, our credit facility provides for periodic principal and
interest payments.

Our ability to fund capital expenditures, make scheduled payments of
principal of, or pay interest on, our debt obligations, and our ability to
refinance any such debt obligations, including the 2008 notes, the 2009 notes
and the 2010 notes, will depend on our future performance, which, to a certain
extent is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond our control. Our business strategy
contemplates substantial capital expenditures, including an expected approximate
amount of $350 million during the second half of 2000, primarily to fund the
construction and acquisition of additional communications towers. Management
believes that cash flow from operations, available cash on hand and anticipated
borrowings under our credit facility will be sufficient to fund our capital
expenditures for the foreseeable future. However, if we make additional
acquisitions or pursue other opportunities or if our estimates prove inaccurate,
we may seek additional sources of debt or equity capital prior to the end of
2000 or reduce the scope of tower construction and acquisition activity. We
cannot assure you that we will generate sufficient cash flow from operations or
that future borrowings or equity or debt financings will be available on terms
acceptable to us, in amounts sufficient to service our indebtedness and make
anticipated capital expenditures.

31
<PAGE> 34

CASH FLOWS

For the three months ended March 31, 2000, cash flows used in operating
activities were $15.1 million as compared to $0.3 million for the three months
ended March 31, 1999. The change is primarily attributable to increased accounts
receivable partially offset by the favorable cash flow generated from
acquisitions completed in 1999. For the three months ended March 31, 2000, cash
flows used in investing activities were $128.4 million compared to cash flows
provided by investing activities of $12.1 million for the three months ended
March 31, 1999. In the three months ended March 31, 2000, we invested $113.5
million in purchases of property and equipment and deposits on future
acquisitions, primarily related to the acquisition of communications towers. In
addition, we used $14.5 million to acquire Apex Site Management, Vertical
Properties, Inc. and International Towers in January 2000. In the three months
ended March 31, 1999, $15.4 million in maturities of short-term investments were
partially offset by $3.4 million in purchases of property and equipment. In the
three months ended March 31, 2000, cash flows provided by financing activities
were $902.6 million as compared to cash flows used by financing activities of
$0.3 million in the three months ended March 31, 1999. The increase in cash
provided by financing activities was attributable to the proceeds from the sales
of common stock and the 2010 notes.

For the year ended December 31, 1999, cash flows provided by operating
activities were $17.6 million as compared to $2.3 million used in operating
activities in the year ended December 31, 1998. The change is primarily
attributable to the favorable cash flows generated from communications tower
acquisitions in 1999. For the year ended December 31, 1999, cash flows used in
investing activities were $813.2 million compared to $45.0 million for the year
ended December 31, 1998. In the year ended December 31, 1999, SpectraSite
invested $692.8 million in purchases of property and equipment and deposits on
future acquisitions, primarily related to the acquisition of communication
towers from Nextel. In addition, we used $128.4 million to acquire Westower in
September 1999 and Stainless and Doty-Moore in December 1999. These investments
were partially offset by $15.4 million in maturities of short-term investments.
In the year ended December 31, 1999, cash flows provided by financing activities
were $733.9 million as compared to $144.7 million in the year ended December 31,
1998. The increase in cash provided by financing activities was attributable to
the proceeds from the sales of Series C preferred stock and the 2009 notes, as
well as proceeds from borrowings under the credit facility.

Net cash used in operating activities during the year ended December 31,
1998 was $2.3 million compared to $0.2 million provided by operating activities
during the comparable period in 1997. The increase in cash used in operating
activities was primarily attributable to an increase in accounts receivable
resulting from the timing of billings related to site development services and
the net loss incurred during the year. Net cash used for investing for the year
ended December 31, 1998 was $45.0 million compared to $7.5 million for the year
ended December 31, 1997. The cash used for investing activities during the year
ended December 31, 1998 was primarily the result of the investment of unused
proceeds from the sale of the 2008 notes in short-term investments, costs
associated with tower construction, the acquisition of towers from Airadigm
Communications, Inc. and the acquisition of GlobalComm. The cash used for
investing activities during the year ended December 31, 1997 primarily related
to the acquisition of Telesite. Net cash provided by financing activities for
the year ended December 31, 1998 was $144.7 million compared to $9.6 million for
the same period in 1997. The increase in cash provided by financing activities
was attributable to the proceeds from the sales of Series B preferred stock and
the 2008 notes.

MERGERS AND ACQUISITIONS

We acquired 45 communications towers and certain related assets from
Airadigm for an aggregate purchase price of $11.25 million in 1998 and 1999.
Airadigm is the anchor tenant on 48 of our towers and has filed for protection
under Chapter 11 of the U.S. Bankruptcy Code. We cannot predict the impact of
this proceeding on our future results of operations or financial condition.

On April 20, 1999, we acquired 2,000 communications towers from Nextel in a
merger transaction. All the sites were then leased back to Nextel under a master
lease agreement. In addition, in connection with this transaction, Nextel and
its controlled affiliates agreed to offer SpectraSite certain exclusive
opportunities

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<PAGE> 35

relating to the construction or purchase of an additional 1,700 sites. Some of
these sites may in the future be leased to Nextel Partners Operating Corp.
instead of Nextel. Nextel Partners, Inc., the parent of Nextel Partners
Operating Corp., is an entity in which Nextel has a minority equity interest. In
connection with this acquisition, we paid $560.0 million in cash and issued 14.0
million shares of Series C preferred stock, valued at $70.0 million, to Nextel.

The following table sets forth the sources and uses of funds for the Nextel
tower acquisition in thousands of dollars:

<TABLE>
<S> <C>
SOURCES OF FUNDS:
Credit facility..................................... $150,000
11 1/4% senior discount notes due 2009.............. 340,004
Series C preferred stock issued to Nextel........... 70,000
Series C preferred stock sold to the Series C
investors......................................... 231,434
--------
Total sources..................................... $791,438
========
USES OF FUNDS:
Cash paid to Nextel................................. $560,000
Series C preferred stock issued to Nextel........... 70,000
Cash available for general corporate purposes....... 127,688
Estimated fees and expenses......................... 33,750
--------
Total uses........................................ $791,438
========
</TABLE>

On September 2, 1999, we acquired Westower Corporation, a Washington
corporation, in a stock-for-stock merger. In this transaction, Westower
stockholders received 1.81 shares of our common stock, plus cash for any
fractional Westower share, in exchange for each of their shares of Westower
common stock. In connection with the merger, SpectraSite repaid approximately
$70.0 million of Westower indebtedness with cash-on-hand. Westower Corporation
now operates as a wholly-owned subsidiary of SpectraSite Communications, which
in turn is a wholly-owned subsidiary of SpectraSite Holdings.

On September 8, 1999, we acquired a 33% interest in Concourse
Communications Group, LLC for an aggregate purchase price of $2.5 million.
Concourse was established to build certain wireless communications
infrastructures at facilities owned by the Port Authority of New York and New
Jersey, including the Holland and Lincoln Tunnels, World Trade Center Concourse
and New York's three major airports. As part of our investment, we agreed to
provide approximately $14.4 million of working capital and construction
financing to Concourse in the form of secured loans over the next three years.
At March 31, 2000, Concourse owed us $3.0 million under these loans. In
addition, after three years, we have an option to purchase an additional 33%
interest in Concourse, and after six years, we have an option to purchase the
remaining interest in Concourse.

In November 1999, we entered into an agreement to acquire 94 communications
towers from DigiPH PCS, Inc. The towers span the corridor connecting Jackson,
Mississippi, Mobile, Alabama and Tallahassee, Florida. We acquired 61 towers for
approximately $23.9 million on December 29, 1999 and the remaining towers for
approximately $12.3 million on March 21, 2000.

On December 30, 1999, we acquired Stainless, Inc., formerly a wholly-owned
subsidiary of Northwest Broadcasting, L.P., for $40.0 million in cash. Stainless
provides engineering, fabrication and other services in connection with the
erection of towers used for television broadcast companies. Also on December 30,
1999, we acquired Doty-Moore Tower Services, Inc., Doty-Moore Equipment Company,
Inc. and Doty Moore RF Services, Inc. for $2.5 million in cash and 500,000
unregistered shares of our common stock. Doty-Moore is a leading source for
broadcast tower construction and technical services. In addition, on January 5,
2000, we acquired Vertical Properties, Inc. in a merger transaction under which
we issued 225,000 unregistered shares of our common stock and repaid outstanding
indebtedness of approximately $2.0 million. Vertical Properties is a broadcast
tower development company formed to meet the needs of broadcasters in secondary
broadcast markets faced with the complexities of converting to digital
technology through site acquisition, tower

33
<PAGE> 36

placement and leasing of antenna space. On January 28, 2000, we acquired
substantially all of the assets of International Towers Inc. and its
subsidiaries, including S&W Communications Inc. International Towers owns a
modern broadcast tower manufacturing facility and, through S&W Communications,
provides integrated services for the erection of broadcast towers, foundations
and multi-tenant transmitter buildings. We paid $5.5 million and issued an
aggregate of 350,000 unregistered shares of our common stock in connection with
this acquisition. We borrowed an additional $50.0 million under our credit
facility in December 1999 to partially fund these mergers and acquisitions.

On January 5, 2000, we acquired Apex Site Management Holdings, Inc. in a
merger transaction. Apex provides rooftop and in-building access to wireless
carriers. We issued approximately 4.5 million unregistered shares of our common
stock to the stockholders of Apex and approximately 194,000 options to purchase
common stock at an exercise price of $3.58 per share to certain option holders
of Apex at the closing of the merger. In addition, we issued approximately 1.5
million additional shares of common stock into escrow, which shares will be
returned to SpectraSite or released to Apex's stockholders on July 29, 2000
based on the average trading price for our common stock for the 30-day period
immediately preceding July 29, 2000. We also used approximately $6.2 million in
cash to repay outstanding indebtedness and other obligations of Apex in
connection with the merger.

On February 17, 2000, we entered into an agreement with AirTouch
Communications and several of its affiliates, under which we agreed to lease or
sublease approximately 430 communications towers for $155.0 million, subject to
adjustment. Under the terms of the agreement and the master sublease which the
parties will enter into at closing, we will manage, maintain and lease the
available space on AirTouch towers covered by the agreement and located
throughout Southern California. AirTouch will pay us an average monthly fee per
site for its cellular, microwave and paging facilities. We also have the right
to lease available tower space to co-location tenants in specified situations.
We also entered into a site marketing agreement with AirTouch to provide
AirTouch with certain tower leasing and marketing services pending the closing
of the master sublease, and we have agreed to enter into a three-year exclusive
build-to-suit agreement with AirTouch in Southern California. Under the terms of
the build-to-suit agreement, we will develop and construct locations for
wireless communications towers on real property designated by AirTouch.

We expect the AirTouch transaction to close in stages, with the initial
closing to occur no later than November 15, 2000, if certain conditions are met.
The initial closing will involve at least 105 towers and each subsequent closing
will involve at least 45 towers, or a smaller number when fewer than 45 towers
remain to be transferred, and the final closing will occur no later than six
months after the initial closing. At each respective closing, we will pay for
the towers included in that closing according to a formula contained in the
master sublease. As partial security for our obligations under the master
sublease, we deposited $23.0 million into escrow.

On March 14, 2000, we acquired Telco Site Services, Inc. for 155,127 shares
of our unregistered common stock. Telco Site Services provides certain tower
construction services.

On April 18, 2000, we entered into an agreement to acquire 11 broadcast
towers from Pegasus Communications Corporation and to build up to five new
digital television towers in the next 12 months. The purchase price will be a
multiple of tower cash flow and will be payable primarily in shares of our
unregistered common stock. We expect to complete the acquisition in the third
quarter of 2000.

On April 7, 2000, we acquired Ample Design, Ltd. for approximately $20.2
million. Ample Design provides wireless network development services in the
United Kingdom.

On May 18, 2000, we acquired Lodestar Towers, Inc., formerly a wholly-owned
subsidiary of LeBlanc & Royle Enterprises Inc., for approximately $175.6 million
in cash. As of May 18, 2000, Lodestar owned and operated approximately 110
wireless towers and 11 broadcast towers and managed approximately 120 Florida
Department of Transportation wireless towers and 10 broadcast towers.

On June 8, 2000, we completed a joint venture with Transco to develop a
tower business to support Europe's growing mobile communications industry.
SpectraSite and Transco each own 50% of the joint venture, which owns 718 towers
and 1,500 sites and has the option to purchase 30,000 potential sites in the
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<PAGE> 37

United Kingdom. Transco transferred existing operational communications towers
and industrial land suitable for construction of new towers into the joint
venture, and SpectraSite provided intellectual property and wireless network
development skills. In addition, we contributed $164.1 million for future
developments and possible acquisitions. We also contributed Ample Design into
the joint venture.

FINANCING TRANSACTIONS

In connection with the Nextel tower acquisition, we privately placed
46,286,795 shares of Holdings' Series C preferred stock for an aggregate
purchase price of $231.4 million. On April 20, 1999, SpectraSite completed the
private offering of $586.8 million aggregate principal amount at maturity of
11 1/4% senior discount notes due 2009. We used a portion of the net proceeds
from these offerings to partially fund the Nextel tower acquisition and to pay
related fees and expenses. We used the remaining proceeds for general corporate
purposes, including the purchase and construction of new towers and selective
acquisitions.

Also on April 20, 1999, we entered into a $500.0 million seven-year credit
facility. We borrowed $150.0 million under this facility at the closing of the
Nextel tower acquisition. We also issued 2.0 million shares of common stock to
various parties as consideration for providing financing commitments related to
the Nextel tower acquisition. We did not utilize these commitments for the
Nextel acquisition primarily because of the success of the 2009 notes offering.
We currently have $300.0 million available under our credit facility to fund new
tower construction or acquisition activity.

On September 15, 1999, we completed registered exchange offers for our 2008
notes and our 2009 notes. Under a registration rights agreement with the initial
purchasers of the 2008 notes, we agreed to complete an exchange offer for the
privately placed 2008 notes prior to March 10, 1999. Since we did not complete
this exchange offer prior to March 10, 1999, the interest rate on the 2008 notes
increased by 0.50% per year. This additional interest accrued on the 2008 notes
until we completed the exchange offer, and we paid this interest in cash on
January 15, 2000. Similarly, under a registration rights agreement with the
initial purchasers of the 2009 notes, Holdings agreed to file a registration
statement with the SEC for an exchange offer of registered notes for the
privately placed 2009 notes before July 20, 1999. Since we did not file the 2009
notes exchange offer registration statement before July 20, 1999, the interest
rate on the 2009 notes increased by 0.50% per year. This additional interest
accrued on the 2009 notes until we filed the exchange offer registration
statement on August 12, 1999, and we paid this interest in cash on October 15,
1999.

On February 4, 2000, we completed a public offering of our common stock. We
offered 25,645,000 shares of common stock, including an over-allotment option
exercised by our underwriters. In addition, all 70,749,625 outstanding shares of
our preferred stock converted into common stock on a share-for-share basis upon
the closing of this offering. We received net proceeds of $411.3 million from
the offering, which we have used to fund costs related to the construction and
acquisition of towers and for general corporate purposes.

On March 15, 2000, we privately-placed our 2010 notes and received net
proceeds of approximately $485.0 million. We intend to use these proceeds to
fund costs related to the construction and acquisition of towers and for general
corporate purposes. On June 13, 2000, our registered exchange offer with respect
to our 2010 notes expired at 5:00 p.m., New York City time. All of the
outstanding 2010 notes were tendered in the exchange offer, and the registered
notes have been issued to the holders in exchange for the old notes.

INFLATION

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 133
requires that derivative instruments be recognized as either assets or
liabilities in the consolidated balance sheet based on their fair values.
Changes in the fair

35
<PAGE> 38

values of such derivative instruments will be recorded either in results of
operations or in other comprehensive income, depending on the intended use of
the derivative instrument. The initial application of SFAS 133 will be reported
as the effect of a change in accounting principle. SFAS 133 is effective for all
fiscal years beginning after June 15, 2000. We have not yet determined the
effect that the adoption of SFAS 133 will have on our consolidated financial
statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

We use financial instruments, including fixed and variable rate debt, to
finance our operations. The information below summarizes our market risks
associated with debt obligations outstanding as of March 31, 2000. The following
table presents principal cash flow and related weighted average interest rates
by fiscal year of maturity. Variable interest rate obligations under the credit
facility are not included in the table. We have no long-term variable interest
obligations other than borrowings under the credit facility.

<TABLE>
<CAPTION>
EXPECTED MATURITY DATE
------------------------------------------------------------------------------
1999 2000 2001 2002 2003 THEREAFTER TOTAL
-------- -------- -------- -------- -------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Long-term obligations:
Fixed rate.......... $ -- $ -- $ -- $ -- $ -- $1,032,594 $1,032,594
Average interest
rate........... -- -- -- -- -- 11.74% 11.74%
</TABLE>

36
<PAGE> 39

BUSINESS

OVERVIEW

We are one of the leading providers of outsourced antenna site and network
services to the wireless communications and broadcast industries in North
America and Europe. Our businesses include the ownership and leasing of antenna
sites on towers, managing rooftop and in-building telecommunications access on
commercial real estate, network planning and deployment and construction of
towers and related wireless facilities. Our customers are leading wireless
communications providers and broadcasters, including Nextel, Sprint PCS, AT&T
Wireless, VoiceStream Communications, Tritel Communications, Teligent, WinStar,
Cox Broadcasting, Clear Channel Communications and Paxson Communications. As of
March 31, 2000, we owned or managed over 15,000 sites, including 3,070 owned
towers, in 98 of the top 100 markets in the United States. In addition, we
acquired 120 towers in May 2000 and have agreements to acquire 11 broadcast
towers and leasehold and subleasehold interests in 430 wireless towers. We also
own 50% of SpectraSite-Transco Communications Ltd., which owns 718 towers and
1,500 sites and has the option to purchase 30,000 potential sites in the United
Kingdom.

The wireless communications industry is growing rapidly and carriers are
making large capital investments to expand their networks. We believe that the
number of wireless communications sites, including towers, is likely to continue
to increase together with the growth in demand for wireless services. This
expected growth in communications sites is the result of several factors,
including:

- the continuing build-out of higher frequency technologies, such as
personal communications services, which have a reduced cell range and
require a more concentrated network of towers than previous wireless
technologies;

- the need to expand the capacity of existing networks;

- the issuance of new wireless network licenses requiring the construction
of new wireless networks; and

- the emergence of new wireless technologies.

As carriers deploy these networks, they are faced with a proliferation in
both the number and type of competitors. Because of this increasingly
competitive environment, carriers must also focus on satisfying customer demand
for enhanced services, seamless and comprehensive coverage, better call quality,
faster data transmission and lower prices.

We believe that as carriers face the increased challenges of expanding
their networks and improving their services, they must allocate their available
capital and resources in the most efficient manner. In particular, carriers are
increasingly outsourcing tower ownership, as well as network planning deployment
and management to independent tower owners like SpectraSite. This outsourcing
allows our customers to focus on their core competencies and to rely on us for
planning and deploying their networks. Our services are designed to improve our
customers' competitive positions through the efficient planning, deployment and
management of their networks.

GROWTH STRATEGY

Our objective is to be the leading independent provider of outsourced
antenna site and network services to the telecommunications and broadcast
industries. Our growth strategy involves the following key elements:

MAXIMIZING THE UTILIZATION OF OUR TOWERS AND MANAGED SITES

We intend to capitalize on the substantial opportunities for revenue and
cash flow growth by maximizing the number of tenants we have on each of our
towers and managed sites. We believe that our strategy of owning clustered
groups of towers and managed sites in major metropolitan markets and providing
our customers with a full range of products and services allows us to deliver
reliable, scalable network solutions and will result in increased co-location on
our towers and managed sites. Since most tower costs are fixed, leasing
available space on an existing tower results in minimal additional expenses
while generating a larger

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<PAGE> 40

percentage increase in tower cash flow. In addition, tenant turnover is low
because of the relatively high cost of antenna relocation. We generally
construct towers to accommodate at least three broadband tenants and have a
dedicated sales force which markets co-location opportunities to wireless
communications providers. Our objective is to use our national tower presence to
enable wireless service providers to more quickly establish wireless coverage in
individual and multiple markets.

EXPANDING OUR TOWER PORTFOLIO

We seek to expand our tower portfolio by building new towers for anchor
tenants and by making selective acquisitions of towers. We believe that Nextel's
agreement to lease space on an additional 1,200 towers we own, acquire or
construct for Nextel or other tenants will substantially increase the number of
towers we own and operate. We also continue to pursue attractive network
development opportunities with other wireless service providers. In addition, we
evaluate other tower development opportunities from time to time which we
believe have higher than average co-location opportunities. We intend to
continue to make selective acquisitions in the highly fragmented tower owner and
operator industry. Our strategy is to acquire towers that have some, or all, of
the following criteria:

- underutilized with additional co-location potential;

- favorably located, either individually or in clusters, in large urban
areas and along major transportation corridors; and

- complementary to our existing coverage areas.

We believe there are tower acquisition opportunities currently available
from both wireless service providers and smaller independent tower operators.
Furthermore, we believe that the number of tower opportunities available in the
future is likely to grow as large wireless communications service providers and
smaller independent tower companies continue to divest their tower holdings. We
regularly evaluate acquisition opportunities, engage in negotiations and submit
bids with respect to acquisitions of individual towers, groups of towers and
entities that own or manage towers and related businesses. In addition to our
acquisition of 2,000 towers from Nextel in April 1999, we continue to seek
partnerships and other strategic arrangements with other major wireless
communications carriers in order to assume ownership of their towers.

ENTERING ATTRACTIVE INTERNATIONAL MARKETS

We intend to expand our presence in attractive international markets by
replicating our business strategy in international markets where we expect there
will be significant demand for wireless antenna sites and services. We believe
that our joint venture with Transco will provide a platform for international
development in Europe.

EXPANDING THE SUITE OF SERVICES WE OFFER AND PURSUING CROSS-SELLING
OPPORTUNITIES

We believe our ability to provide a package of integrated services, which
have traditionally been offered by multiple subcontractors coordinated by a
carrier's deployment staff, will make us a preferred provider of all outsourced
antenna site and network services. For example, we believe that our leadership
in rooftop and in-building access will give us an advantage across all of our
product offerings as fixed wireless carriers expand their networks and as
wireless telephone and data companies increasingly focus on network deployment
and in-building service. In addition, our leadership in broadcast tower design,
fabrication and construction will give us a competitive advantage as
broadcasters increasingly outsource tower and facilities ownership and
management.

PRODUCTS AND SERVICES

WIRELESS TOWER OWNERSHIP AND LEASING

We are one of the largest independent owners and operators of wireless
communications towers in the United States and Canada. We provide antenna site
leasing services, which primarily involve the leasing of

38
<PAGE> 41

antenna space on our communications towers to wireless carriers. Each of our
towers has an anchor tenant, and we seek to add several co-location tenants over
time. In leasing antenna space, we generally receive monthly lease payments from
customers. Our customer leases typically have original terms of five years, with
four or five renewal periods of five years each, and usually provide for
periodic price increases. Monthly lease pricing varies with the number and type
of antennas installed on a communications site.

The following chart shows the locations of our owned towers as of March 31,
2000:

<TABLE>
<CAPTION>
NUMBER
STATE/PROVINCE OF TOWERS
-------------- ---------
<S> <C>
California........... 416
Florida.............. 207
Ohio................. 206
Illinois............. 198
Texas................ 195
Michigan............. 191
Georgia.............. 157
North Carolina....... 124
Louisiana............ 116
Alabama.............. 112
Washington........... 91
Wisconsin............ 87
Tennessee............ 79
</TABLE>

<TABLE>
<CAPTION>
NUMBER
STATE/PROVINCE OF TOWERS
-------------- ---------
<S> <C>
Pennsylvania......... 77
Missouri............. 72
Indiana.............. 56
Mississippi.......... 56
South Carolina....... 52
Arizona.............. 51
Massachusetts........ 45
Oregon............... 43
Oklahoma............. 39
Nevada............... 38
Maryland............. 36
Colorado............. 33
New Mexico........... 31
</TABLE>

<TABLE>
<CAPTION>
NUMBER
STATE/PROVINCE OF TOWERS
-------------- ---------
<S> <C>
Iowa................. 29
Minnesota............ 27
Utah................. 27
Quebec............... 23
New Jersey........... 20
New York............. 19
Virginia............. 19
Kansas............... 18
Idaho................ 17
Alberta.............. 13
Connecticut.......... 11
Other................ 39
-----
Total................ 3,070
=====
</TABLE>

In addition to towers we build for Nextel under the master site commitment
agreement and towers we selectively build and acquire, we also expect to expand
our tower portfolio through build-to-suit programs. Under build-to-suit
programs, we utilize our network development capabilities to construct tower
networks after having signed an antenna site lease agreement with an anchor
tenant and having made the determination that the initial or planned capital
investment for that tower network would not exceed a targeted multiple of tower
cash flow after a certain period of time.

In addition to leasing antenna space, we also provide maintenance and
management services at our communication sites. In providing these services to
our customers we use a combination of in-house personnel and independent
contractors. In-house personnel are responsible for oversight and supervision of
all aspects of site maintenance and management and are particularly responsible
for monitoring, security, access and lighting, radio frequency emission and
interference issues, signage, structural engineering and tower capacity, tenant
relations and supervision of independent contractors. We hire local independent
contractors to perform routine maintenance functions, such as landscaping, pest
control, snow removal and site access.

WIRELESS ROOFTOP AND IN-BUILDING ACCESS

We are the largest independent provider of rooftop and in-building access
services in the United States. We are the exclusive site manager for over 12,000
diverse real estate properties, with significant access clusters in New York,
Philadelphia, Baltimore/Washington, D.C., Atlanta, New England, Florida, Western
Pennsylvania/Ohio/Indiana, Chicago, Seattle, Southern California, Texas and St.
Louis. A principal attraction of this portion of our business is the opportunity
to develop new sources of revenue and value for building owners by managing:

- rooftops for transmitting and receiving installations; and

- rooftops, risers and internal telecommunications equipment space for
competitive voice, data and Internet services offered to in-building
tenants.

Wireless communications carriers utilize our managed sites as transmitting
locations, often where there are no existing towers for co-location or where new
towers are difficult to build. Our transmitting tenants

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<PAGE> 42

encompass a broad array of wireless communications providers, including personal
communications service, cellular, enhanced specialized mobile radio, specialized
mobile radio, wireless data, two-way radio, microwave, wireless cable and paging
companies. As the largest rooftop and in-building access manager in the United
States, we provide services to the facilities-based (wired and wireless)
competitive local exchange carrier and Internet service provider market. We have
executed agreements allowing these carriers access to over 4,950 properties,
including agreements with national providers such as Adelphia Business
Solutions, AT&T Local Services, Eureka Broadband, NEXTLINK, Site Line, Teligent
and WinStar, as well as numerous regional carriers. These access agreements are,
to date, predominantly for office and industrial properties.

Our managed portfolio contains 3,860 office and industrial properties
encompassing over 406 million square feet. We are engaged by ten of the top
nineteen office real estate investment trusts, based on market capitalization,
in the United States, according to the National Association of Real Estate
Investment Trusts. In most cases, multiple carriers will access a single
property. Our management contracts are generally for a period of three to five
years, and contain renewal periods unless terminated by either party before
renewal or upon an uncured default. Under these contracts, we are engaged as the
exclusive site manager for rooftop management. In most cases, we are also
engaged as the exclusive manager for riser and telecommunications access
management. As the site manager, we are responsible for marketing the properties
as part of our portfolio of potential telecommunications sites, reviewing
existing license agreements, negotiating new license agreements, managing and
enforcing those agreements, supervising installation of equipment by carriers to
ensure, among other things, non-interference with other users, as well as site
billing, collections and contract administration. For these services, we receive
a percentage of occupancy fees, which is higher for the new carriers we add than
for existing carriers. Upon any termination of a contract, unless due to our
default, we are entitled to continue to receive our percentage with respect to
carriers added during the term of our management agreement for so long as they
remain tenants.

NETWORK DESIGN AND DEPLOYMENT SERVICES

We are a leading provider of design and deployment services for wireless
networks. These services include architectural and engineering design, tower
construction, line and antenna installation and site acquisition services. We
offer these services individually and as an integrated package. We believe that
we have a competitive advantage in our ability to provide comprehensive network
development services by eliminating our customers' need to seek services from
different providers.

In providing these network design and deployment services, we have
developed the capability to effectively manage multiple site acquisition and
tower development projects in various locations at the same time. Where
appropriate, we supplement our in-house expertise with a pre-qualified pool of
local contractors and advisors. In addition, we have developed detailed and
standardized site acquisition and construction specifications and procedures
that allow us to rapidly construct tower networks. Wireless carriers require
aggressive network build-out schedules, and uniform procedures and
specifications allow for reduced employee training time, improved vendor
performance and quicker identification of potential tower sites.

Architectural and Engineering Design. Our architecture and engineering
team manages a complex array of electrical, structural and architectural
elements while interfacing with our clients and construction crews to ensure
that site-specific objectives are reflected in construction documents. Our
structural engineering and design abilities enable us to construct towers that
have maximum antenna site capacity based on the physical features of the land on
which the tower is constructed and the demand in the market in which the tower
is located. We seek to design aesthetically acceptable sites and construct
towers with minimal environmental impact. Our custom structure design abilities
combined with our engineering skills also allow us to build towers in
geographically difficult locations at competitive prices. We believe that this
specialty service will enable us to compete effectively in regions in which
other companies are not able to participate on a cost-efficient basis.

Tower Construction. Our engineering, general contracting, electrical,
structural steel and other specialty licenses allow us to perform services
required to design, develop and construct communications towers. Our

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<PAGE> 43

ability to perform civil and electrical engineering as well as tower
construction enables us to expedite and simplify this phase of development by
minimizing the need to subcontract.

During tower construction, a project team of five to seven people is
dispatched to the site. A temporary field office is established at the site. The
project team is typically composed of our permanent employees, but may be
supplemented with local hires.

We use our information technology abilities to create construction models,
development budgets, critical path schedules and status reports covering
schedules and costs throughout the course of a project. Our civil engineering
capability allows us to prepare the construction site by leveling the land,
removing vegetation and installing access roads as needed. Based on the results
of soil tests that we conduct at each site, we design and build the tower
foundation. After the foundation is in place, we erect the tower. We utilize our
structural engineering capability by constructing a tower designed for maximum
antenna capacity.

Line and Antenna Installation. After erecting the tower and placing the
equipment shelter, we install the antennas and feed lines, including the sweep,
test and orientation. Depending on the project, electricity is installed either
during the erection process to conform with the FAA lighting requirements or
after the tower has been constructed. Our technical crews are regularly trained
in cellular, microwave, fiber optic and direct current power plant system
installation and testing methods. We are also a leader in designing and
implementing in-building wireless systems, as well as a broad range of cellular
and personal communications services repeater systems. Our test equipment and
dedicated radio frequency testing teams allow us to monitor and maintain system
integrity and quality control.

We also offer the ability to construct the switch facility that controls an
antenna's communications with other communications sites. Although switch
construction is not performed at every project site, it is an additional
specialty service we provide.

After constructing the tower, placing the equipment shelter and completing
the antenna work, we install grounding lines and protective fencing around the
site. We then perform final grounding and landscaping as necessary to complete
the project.

Site Acquisition Services. We offer a full range of site acquisition
services, including network pre-design, communication site selection,
communication site acquisition and local zoning and permitting. We offer these
services through local contractors who have knowledge and expertise in the
specific geographic area.

BROADCAST TOWER DEVELOPMENT AND LEASING

We are a leading provider of broadcast tower analysis, design, fabrication,
installation, and technical services. We have over 50 years of experience in the
broadcast tower industry and have worked on the development of more than 700
broadcast towers, which we believe represent approximately 50% of the existing
broadcast tower infrastructure in the United States. Our broadcast tower group
extends our core business of outsourced wireless antenna sites to broadcast
towers. We intend to capitalize on our broadcast tower development expertise to
create tower ownership and leasing opportunities.

In November 1999, Congress passed the Community Broadcasters Protection Act
of 1999, which directs the FCC to offer a new Class A status to qualifying low
power television stations. To qualify, Class A low power television stations,
which were required to notify the FCC of their eligibility by January 28, 2000,
will have to meet certain programming and operational criteria. Under the
statute, Class A low power television stations will not be protected from
interference from digital television stations proposing to maximize their DTV
service, provided the digital television stations notified the FCC of their
intent to maximize facilities no later than December 31, 1999, and the digital
television stations submit a maximization application by May 1, 2000. The FCC
has adopted rules to govern the new service. The new rules specify protection
criteria to be applied in evaluating Class A low power television station
operations vis-a-vis full power and other low power television stations. Class A
stations are required to protect existing analog stations and the facilities
proposed in full power analog applications that had completed all processing
short of grant by November 29, 1999. The decision adopting the new rules also
clarified that DTV maximization applications filed by May 1, 2000 may include
both power and antenna height increases above the allotted parameters and site
changes that extend
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<PAGE> 44

DTV service areas beyond the replicated analog service areas. DTV stations may
submit maximization applications after May 1, 2000, but they will be required to
protect Class A stations. The new rules limit the filing of Class A applications
to a single, one-time-only window which opened for six months beginning in early
June 2000.

In 1996, the FCC mandated the conversion of analog television signals to
digital. The mandate specifies that by May 1, 2003, each television station in
the United States must complete construction of new digital broadcasting
facilities and, beginning April 21, 2003, must be simulcasting at least 50% of
its programming on both its analog and digital facilities. This conversion
creates significant potential demand for co-location on broadcast towers.

Broadcast towers require a high level of technical design and erection
expertise, as they reach heights of up to 2,000 feet. Broadcast towers support
extremely powerful television and FM radio signals over entire metropolitan
areas. The existing domestic broadcast tower infrastructure was generally
developed to accommodate individual broadcast signals. This broadcast tower
infrastructure was built primarily in the 1940's and 1950's. Today, it is
considered to be at capacity and somewhat antiquated. The FCC mandate creates
significant infrastructure deployment requirements and burdens for the broadcast
community in the United States. In addition, the engineering and construction
expertise for broadcast towers is limited to a relatively small number of
fabrication and construction companies that specialize in broadcast towers.

Recognizing this opportunity to capitalize on the broadcast infrastructure
tower development and leasing requirement, we have developed a strategic plan
that is designed to position us as the leading tower resource in the broadcast
sector. We have identified the critical core competencies necessary to fulfill
broadcast industry requirements. We offer broadcast tower engineering,
fabrication and erection services. In addition, we have original tower design
specifications and considerable tower modification historical information on
approximately 50% of the existing broadcast tower infrastructure. We believe
that this intellectual property positions us as one of broadcasters' first
points of contact for any broadcast tower project.

CUSTOMERS

Our primary customer currently is Nextel, which represented approximately
35% of our revenues for the year ended December 31, 1999 and approximately 26%
for the three months ended March 31, 2000. Nextel provides a wide array of
digital wireless communications services throughout the United States. Nextel
offers a differentiated, integrated package of digital wireless communications
services under the Nextel brand name, primarily to business users. Nextel's
digital mobile network constitutes one of the largest integrated wireless
communications systems utilizing a single transmission technology in the United
States. Nextel has significant specialized mobile radio spectrum holdings in and
around every major business population center in the country, including all of
the top 50 metropolitan statistical areas in the United States. Nextel files
periodic reports and other information with the SEC. For more information about
Nextel, you should read Nextel's SEC filings. However, we are not incorporating
any of Nextel's SEC filings by reference into this document.

In addition, our customers also include several of the largest wireless
service providers in the United States, including AT&T Wireless and Sprint PCS.
We also have provided services to enhanced specialized mobile radio, specialized
mobile radio and cellular wireless providers. For the year ended December 31,
1997, Powertel, Sprint PCS, GTE Mobility, Intercel and Horizon accounted for
38.9%, 18.8%, 14.7%, 13.0% and 11.2%, respectively, of our revenues. For the
year ended December 31, 1998, Powertel and Tritel accounted for 46.6% and 24.3%,
respectively, of our revenues.

SALES AND MARKETING

We believe that our ability to satisfy a wide range of our customers'
network deployment requirements will make us a preferred provider of all
outsourced antenna site and network services. Our sales and marketing goals are
to:

- use existing relationships and develop new relationships with wireless
service providers to lease antenna space on our owned and managed
communication sites; and

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<PAGE> 45

- form affiliations with select communications system vendors who utilize
end-to-end services, including those provided by SpectraSite, which will
enable us to market our services and products through additional channels
of distribution.

Historically, we have capitalized on the strength of our experience,
performance and relationships with wireless service providers to obtain
build-to-suit projects, and we intend to continue to emphasize our capability in
these areas in selling our broad range of services.

Maintaining and cultivating relationships with wireless service providers
is a main focus of senior management. In addition, we have a dedicated group of
representatives focused on sales efforts and establishing relationships with
wireless service providers. The representatives are assigned specific accounts
based on historical experience with a provider and the quality of the
relationship between the SpectraSite representative and such provider. Most
wireless service providers have national corporate headquarters with regional
offices. We believe that most decisions for site acquisition and site leasing
services are made by providers at the regional level with input from their
corporate headquarters. Our sales representatives work with provider
representatives at the local level and, when appropriate, at the national level.
Our sales staff compensation is heavily weighted to incentive-based goals and
measurements. In addition to our dedicated marketing and sales staff, we rely
upon our executive and operations personnel at the national and field office
levels to identify sales opportunities within existing customer accounts, as
well as acquisition opportunities.

COMPETITION

Our principal competitors include American Tower Corporation, Crown Castle
International Corp., Pinnacle Holdings Inc. and SBA Communications Corporation.

Towers are not the only kind of platform for radio transmitters. The FCC
has authorized numerous entities and is considering applications from many
others to provide fixed and mobile satellite services using various frequency
bands in a manner that may compete with terrestrial service providers. Iridium
LLC, for example, had commenced space-borne provision of mobile satellite
service, but suspended service while in bankruptcy proceedings. GlobalStar,
another provider of mobile satellite services, also has recently commenced
commercial operations. Teledesic plans to provide high-speed fixed satellite
data services through low-earth-orbit satellites. In 1997, the FCC allocated one
gigahertz of spectrum in the 47 GHz band for any use consistent with the
spectrum allocation table. The FCC has decided to auction this spectrum in 200
MHz blocks for the provision of communications services. It is unclear whether
these new technologies will be commercially feasible, and to what extent they
will offer significant competitive alternatives to terrestrial structures.

EMPLOYEES

As of March 31, 2000, SpectraSite had 1,439 employees, none of whom are
represented by a collective bargaining agreement. We consider our employee
relations to be good. Due to the nature of the site construction business, we
may experience increases and decreases in employees as site construction
contracts are entered into or completed.

INTERNATIONAL

Our primary focus is on operations in North America and Europe. However, we
continue to evaluate other international opportunities we consider attractive
and may, in the future, expand our international focus. We have recently
acquired a network development services company in the United Kingdom and
entered into a joint venture to develop a tower business in the United Kingdom.

REGULATORY AND ENVIRONMENTAL MATTERS

FEDERAL REGULATIONS

Both the FCC and the FAA regulate towers used for wireless communications
transmitters and receivers. Such regulations control the siting, marking and
lighting of towers and may, depending on the characteristics

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of particular towers, require registration of tower facilities. Wireless
communications antennas operating on towers are separately regulated and
independently licensed by the FCC based upon the particular frequency being used
and the service being provided. In addition to these regulations, SpectraSite
must comply with certain environmental laws and regulations.

Under the requirements of the Communications Act of 1934, as amended, the
FCC, in conjunction with the FAA, has developed standards to consider proposals
for new or modified antenna structures. These standards mandate that the FCC and
the FAA consider the height of the proposed antenna structure, the relationship
of the structure to existing natural or man-made obstructions and the proximity
of the structure to runways and airports. Proposals to construct or modify
existing structures above certain heights or within certain proximity to
airports are reviewed by the FAA to ensure they will not present a hazard to
aviation. The FAA may condition its issuance of no-hazard determinations upon
compliance with specified lighting and marking requirements. The FCC will not
license the operation of wireless telecommunications antennas on towers unless
the tower has been registered with the FCC or a determination has been made that
such registration is not necessary. The FCC will not register a tower unless it
has received all necessary clearances from the FAA. The FCC also enforces
special lighting and painting requirements. Owners of towers on which wireless
communications antennas are located have an obligation to maintain painting and
lighting to conform to FCC standards. Tower owners may also bear the
responsibility of notifying the FAA of any tower lighting failures. SpectraSite
generally indemnifies its customers against any failure to comply with
applicable regulatory standards. Failure to comply with the applicable
requirements may lead to civil penalties and tort liability.

In 1995, the FCC adopted regulations making the owners of towers, rather
than communications licensees, primarily responsible for compliance with antenna
structure painting and lighting requirements. These rule changes are based on
statutory amendments adopted by Congress in 1992 extending regulatory
jurisdiction to tower owners. Communications licensees are now secondarily
responsible for tower maintenance if the tower owners are unwilling or unable to
perform those duties. Currently, these requirements apply to antenna structures
that are more than 200 feet in height, or that may interfere with the approach
or departure space of a nearby airport runway.

The regulatory requirements adopted in 1995 required tower owners, like
SpectraSite, to register existing structures by state, in accordance with filing
windows, over a two-year period between July 1, 1996 and June 30, 1998.
Historically, tower locations were determined using area maps. The FCC has
recognized that, with the proliferation of inexpensive, satellite-based locating
devices, such as Global Positioning System receivers, structures can now be
easily located with a higher degree of accuracy. Accordingly, the FCC has told
owners who determined that tower registration information conflicted with
previously issued licenses for antennas on their towers to register their
structures using the new data and to seek new FAA determinations of no hazard as
necessary under the FAA's rules. The FCC also has instructed licensees or
permittees who discovered that the coordinates on their authorizations differed
from those determined by more accurate means to submit corrective construction
permit applications. In February 1999, the FCC's Wireless Telecommunications
Bureau announced a new policy under which defective applications for wireless
authorizations and antenna structure registrations will be summarily dismissed,
without giving the applicants an opportunity to amend but requiring them to
correct and retender their applications. As part of the new policy, the Bureau
said that effective May 1, 1999, it will return and not process tower
registration applications including data that do not agree with information
listed on previously issued FAA determinations. The FCC also announced that
applications for FCC communications authorizations would be dismissed if a tower
registration number is not listed on the FCC application. Although the FCC
initially said the rule affecting communications applications would apply
beginning May 1, 1999, for applicants proposing antennas on existing structures,
and July 1, 1999, for applicants proposing to utilize new towers, the FCC in
late April 1999 extended these deadlines. For services, such as cellular,
paging, and personal communications services, which have already had their
records converted to the FCC's new Uniform Licensing System database, the new
tougher dismissal rule applied effective July 1, 1999. For other communications
services that have not yet been converted to the Uniform Licensing System, the
FCC said the new processing rules would go into effect six months after each
service's incorporation into the Uniform Licensing System. This new policy means
that for

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towers to be of use to FCC applicants, it will be necessary for tower owners to
notify the FAA and obtain FCC tower registrations well in advance of the date
tenants will be filing FCC applications.

In December 1998, the FCC announced that an audit of existing antenna
structures revealed that over one quarter of the audited structures had not been
registered as required by the FCC's rules. In light of this finding and several
reported near misses of towers by aircraft, the FCC in January 1999 announced a
no-tolerance policy, requiring all owners of existing unregistered structures to
register them immediately or face monetary forfeitures or civil fines.
SpectraSite has been working to review the registration of the towers it has
acquired and to confirm the accuracy of the information submitted to the FAA and
the FCC by the prior owners.

The Telecommunications Act of 1996 amended the Communications Act of 1934
by limiting state and local zoning authorities' jurisdiction over the
construction, modification and placement of wireless communications towers. The
new law preserves local zoning authority but prohibits any action that would
discriminate between different providers of wireless services or ban altogether
the construction, modification or placement of communications towers. The 1996
Telecom Act also requires the federal government to help licensees for wireless
communications services gain access to preferred sites for their facilities.
This may require that federal agencies and departments work directly with
licensees to make federal property available for tower facilities.

STATE AND LOCAL REGULATIONS

Most states regulate certain aspects of real estate acquisition and leasing
activities. Where required, SpectraSite outsources site acquisition to licensed
real estate brokers or agents. Local regulations include city and other local
ordinances, zoning restrictions and restrictive covenants imposed by community
developers. These regulations vary greatly, but typically require tower owners
to obtain approval from local officials or community standards organizations
prior to tower construction. Local zoning authorities generally have been
hostile to construction of new transmission towers in their communities because
of the height and visibility of the towers. Companies owning or seeking to build
towers have encountered an array of obstacles arising from state and local
regulation of tower site construction, including environmental assessments, fall
radius assessments, marketing/lighting requirements, and concerns with
interference to other electronic devices. The delays resulting from the
administration of such restrictions can last for several months, and when
appeals are involved, can take several years.

ENVIRONMENTAL REGULATIONS

Owners and operators of communications towers are subject to, and,
therefore, must comply with environmental laws. The FCC's decision to register a
proposed tower may be subject to environmental review under the National
Environmental Policy Act of 1969, which requires federal agencies to evaluate
the environmental impacts of their decisions under certain circumstances. The
FCC has issued regulations implementing the National Environmental Policy Act.
These regulations place responsibility on each applicant to investigate any
potential environmental effects of operations and to disclose any significant
effects on the environment in an environmental assessment prior to constructing
a tower. In the event the FCC determines the proposed tower would have a
significant environmental impact based on the standards the FCC has developed,
the FCC would be required to prepare an environmental impact statement. This
process could significantly delay the registration of a particular tower. In
addition, we are subject to environmental laws which may require investigation
and clean-up of any contamination at facilities we own or operate or at third-
party waste disposal sites. These laws could impose liability even if we did not
know of, or were not responsible for, the contamination. Although we believe
that we currently have no material liability under applicable environmental
laws, the costs of complying with existing or future environmental laws,
investigating and remediating any contaminated real property and resolving any
related liability could have a material adverse effect on our business,
financial condition or results of operations.

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PROPERTIES

SpectraSite is headquartered in Cary, North Carolina, where it currently
leases 62,136 square feet of space. We have established regional offices in the
Atlanta, Chicago and San Francisco areas. We open and close project offices from
time to time in connection with our network design and development services,
which offices are generally leased for periods not exceeding 18 months.

We own a broadcast tower manufacturing facility located in Pine Forge,
Pennsylvania. We also own five acres of land in Surrey, British Columbia,
Canada, on which a 10,000 square foot wireless tower fabrication, assembly and
storage facility and a 5,000 square foot office building are located; four acres
of land near Montreal, Quebec, Canada, on which a 7,000 square foot facility is
located; a one acre lot in Houston, Texas, on which approximately 2,500 square
feet of office space and 5,000 square feet of warehouse space are located; 8.6
acres of land in Visalia, California, on which a 57,000 square foot broadcast
tower manufacturing facility is located; and 0.4 acres of land in Tucson,
Arizona, on which a 6,250 square foot office building is located. We also lease
office space in the following locations:

- Phoenix and Tucson, Arizona;

- Little Rock, Arkansas;

- Irvine, Los Angeles, Newport Beach, Sacramento, San Jose and Sun Valley,
California;

- Cedar Rapids, Iowa;

- Boyton Beach, Ft. Lauderdale, Orlando, Palm Beach Gardens and Tampa,
Florida;

- Metaire, Louisiana;

- Silver Spring, Maryland;

- Ridgeland, Mississippi;

- Las Vegas and Reno, Nevada;

- Parsippany and Florham Park, New Jersey;

- Syracuse, New York;

- Charlotte and Greensboro, North Carolina;

- Columbus, Ohio;

- Portland and Roseburg, Oregon;

- Conshohocken, Forty Fort, Pittsburgh and Upper Gwynedd Township,
Pennsylvania;

- Austin, Dallas, Houston and Richardson, Texas;

- Redmond and Seattle, Washington; and

- Alberta, Nova Scotia and Ontario, Canada.

Our interests in communications sites are comprised of a variety of fee
interests, leasehold interests created by long-term lease agreements, private
easements, easements and licenses or rights-of-way granted by government
entities. In rural areas, a communications site typically consists of a
three-to-five acre tract which supports towers, equipment shelters and guy wires
to stabilize the structure. Less than 2,500 square feet are required for a
self-supporting tower structure of the kind typically used in metropolitan
areas. Land leases generally have an initial term of five years, with five
additional five-year renewal periods. You should read "--Products and
Services--Wireless Tower Ownership and Leasing" for a list of the locations of
our owned towers.

LEGAL PROCEEDINGS

From time to time, SpectraSite is involved in various legal proceedings
relating to claims arising in the ordinary course of business. We are not
currently a party to any such legal proceeding, the adverse outcome of which,
individually or in the aggregate, is expected to have a material adverse effect
on our business, financial condition or results of operations.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers, directors and key employees of SpectraSite are as
follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- ------------------------------------------------------
<S> <C> <C>
Stephen H. Clark..................... 55 President and Chief Executive Officer and a Director
Timothy G. Biltz..................... 41 Chief Operating Officer
David P. Tomick...................... 48 Executive Vice President and Chief Financial Officer
Adam F. Stulberger................... 32 Chief Development Officer
Richard J. Byrne..................... 43 Executive Vice President--Wireless Tower Group
Calvin J. Payne...................... 47 Executive Vice President--Construction Operations and
a Director
Terry L. Armant...................... 51 Senior Vice President--Operations
John H. Lynch........................ 42 Vice President, General Counsel and Secretary
Daniel I. Hunt....................... 36 Vice President--Finance and Administration
Steven C. Lilly...................... 31 Vice President and Treasurer
Douglas A. Standley.................. 42 Vice President--Broadcast Group
Lawrence B. Sorrel................... 41 Chairman of the Board
Timothy M. Donahue................... 51 Director
Andrew R. Heyer...................... 42 Director
James R. Matthews.................... 33 Director
Thomas E. McInerney.................. 58 Director
Michael J. Price..................... 43 Director
Rudolph E. Rupert.................... 34 Director
Steven M. Shindler................... 37 Director
Michael R. Stone..................... 37 Director
</TABLE>

Stephen H. Clark is President and Chief Executive Officer of SpectraSite
and a director of Holdings. He has been a director of SpectraSite since its
formation in May 1997. Mr. Clark has 22 years of general management experience
in high growth, start-up companies in the communications, technology and
manufacturing sectors. In 1994, he co-founded PCX Corporation, a manufacturer of
electrical distribution systems. Prior to starting PCX, Mr. Clark co-founded and
served as Chairman and President of Margaux, a supplier of building automation
systems. Prior to starting Margaux, he worked at several technology based,
start-up companies. Mr. Clark has a B.A. in physics and an M.B.A. from the
University of Colorado.

Timothy G. Biltz is Chief Operating Officer. Prior to joining SpectraSite
in August 1999, Mr. Biltz spent 10 years at Vanguard Cellular Systems, Inc.,
most recently as Executive Vice President and Chief Operating Officer. He joined
Vanguard in 1989 as Vice President of Marketing and Operations and was Executive
Vice President and President of U.S. Wireless Operations from November 1996
until May 1998 when he became Chief Operating Officer. Mr. Biltz was
instrumental in Vanguard's development from an initial start-up to an enterprise
with over 800,000 subscribers.

David P. Tomick is Executive Vice President and Chief Financial Officer.
Mr. Tomick has extensive experience raising capital in both private and public
markets for high growth companies in the telecommunications industry. From 1994
to 1997, Mr. Tomick was Chief Financial Officer of Masada Security, Inc., a
company engaged in the security monitoring business. From 1988 to 1994, he was
Vice President--Finance of Falcon Cable TV, a multiple system operator of cable
television systems, where he was responsible for debt management, mergers and
acquisitions, equity origination and investor relations. Prior to 1988, he
managed a team of corporate finance professionals focusing on the communications
industry for The First National Bank of Chicago. Mr. Tomick holds a Master of
Management degree from the Kellogg Graduate School of Management at Northwestern
University.

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<PAGE> 50

Adam F. Stulberger is Chief Development Officer. Prior to joining
SpectraSite in April 2000, Mr. Stulberger was a Principal in the Media Group of
Morgan Stanley Dean Witter from 1999 to 2000 and a Vice President in the Media
and Telecommunications Group of Credit Suisse First Boston from 1996 to 1999.
Mr. Stulberger holds a B.A. in economics from Lafayette College and a J.D. from
New York University.

Richard J. Byrne is Executive Vice President--Wireless Tower Group. Prior
to assuming his current position, Mr. Byrne was Executive Vice
President--Business Development for SpectraSite. Prior to joining SpectraSite in
April 1999, Mr. Byrne served as the Director of Business Development for Nextel.
He had primary responsibility for the tower sale/lease-back and build-to-suit
commitment. In addition, Mr. Byrne was responsible for all carrier-to-carrier
co-location agreements. Before joining Nextel in 1997, Mr. Byrne held positions
of increasing responsibility in the System Development Group of AT&T Wireless
Services. Prior to entering the wireless communications industry, Mr. Byrne
spent 15 years in the real-estate industry. His work centered on property
management, ownership and brokerage of investment properties.

Calvin J. Payne is Executive Vice President--Construction Operations of
SpectraSite and a director of Holdings. Mr. Payne was Co-founder, Chairman of
the Board and Chief Executive Officer of Westower and had been a director of
Westower or its predecessor since 1990. Prior to founding Westower, Mr. Payne
acquired experience in all aspects of the construction of steel communications
towers. Mr. Payne, an award-winning tower designer, has engineered over 600
towers. Mr. Payne is a graduate of the University of British Columbia and the
University of Western Australia.

Terry L. Armant is Senior Vice President--Operations. Prior to joining
SpectraSite in August 1998, Mr. Armant was Director--System Implementation at
AT&T Wireless Services. In this position, he was responsible for site
acquisition, construction, equipment installation and site management for the
Northeast region. Mr. Armant oversaw eight departments and a staff of over 115.

John H. Lynch is Vice President, General Counsel and Secretary. Prior to
joining SpectraSite in August 1999, Mr. Lynch served as General Counsel for
Qualex Inc., the wholly-owned photofinishing subsidiary of Eastman Kodak
Company. Before joining Qualex in 1989, Mr. Lynch practiced corporate and real
estate law in the Atlanta, Georgia offices of Wildman, Harrold, Allen, Dixon and
Branch. Mr. Lynch holds a B.A. in Economics and English from Ohio Wesleyan
University, an M.B.A. from Ohio State University, and a J.D. from Ohio State
University.

Daniel I. Hunt is Vice President--Finance and Administration. Prior to
joining SpectraSite in April 1999, Mr. Hunt served as Director of Accounting and
Financial Reporting at Wavetek Wandel & Goltermann, Inc., a developer and
manufacturer of communications test equipment based in North Carolina and
Eningen, Germany. Previously, Mr. Hunt was Controller for Wandel & Goltermann
Technologies, Inc. Before joining Wandel & Goltermann, Mr. Hunt worked in the
audit and business consulting practice of Arthur Andersen. Mr. Hunt is a
certified public accountant and a graduate of Wake Forest University.

Steven C. Lilly is Vice President and Treasurer. Prior to joining
SpectraSite in July 1999, Mr. Lilly served as a Vice President in First Union
Corporation's loan syndications group where he was primarily responsible for
structuring and negotiating transactions for emerging telecommunications
companies, including wireless service providers, competitive local exchange
carriers and tower companies.

Douglas A. Standley is Vice President of SpectraSite's Broadcast Group.
Prior to joining SpectraSite in December 1999, Mr. Standley was President of
Stainless, Inc. From 1997 to 1999, Mr. Standley was the Chief Executive Officer
and President of FWT, Inc., a provider of wireless infrastructure products, and
from 1995 to 1997, he was a director of Synergetics, Inc., a boutique
international management consulting firm. Mr. Standley holds a B.A. in Business
Administration from California State University and is completing a Presidential
Key Executive M.B.A. through Pepperdine University.

Lawrence B. Sorrel has been Chairman of the Board of Holdings since April
1999. Mr. Sorrel joined Welsh, Carson, Anderson & Stowe in 1998 and is a
managing member or general partner of the respective sole general partners of
WCAS VIII and other associated investment partnerships. Prior to joining Welsh,
Carson, Mr. Sorrel spent 12 years at Morgan Stanley, where he was a Managing
Director and senior executive in Morgan Stanley's private equity group, Morgan
Stanley Capital Partners. Mr. Sorrel is a director of Select
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<PAGE> 51

Medical Corp., Emmis Communications, Westminster Healthcare Ltd, Valor
Telecommunications, LLC, CFW Communications, FirstMark Communications and
Winstar Communications, Inc.

Timothy M. Donahue has been a director of Holdings since April 1999. Mr.
Donahue has served as Chief Executive Officer of Nextel since July 15, 1999, and
as a director of Nextel since May 1996. Prior to being named Chief Executive
Officer, Mr. Donahue served as President, and on February 29, 1996, he was
elected to the additional position of Chief Operating Officer of Nextel. From
1986 to January 1996, Mr. Donahue held various senior management positions with
AT&T Wireless Services, Inc., including Regional President for the Northeast.
Mr. Donahue serves as a director of Nextel International.

Andrew R. Heyer has been a director of Holdings since April 1999. Mr. Heyer
is a Managing Director at CIBC World Markets Corp., where he serves as co-head
of The High Yield Group. Prior to joining CIBC World Markets, Mr. Heyer was
founder and Managing Director of the Argosy Group L.P., which was acquired by
CIBC World Markets in 1995. Mr. Heyer is also Chairman of the Board of Directors
of the Hain Food Group, and is a director of Niagara Corporation, Hayes Lemmerz
International, Inc., Lancer Industries, Fairfield Manufacturing Company and
Millenium Digital Media Holdings, Inc.

James R. Matthews has been a director of Holdings since August 1998. Mr.
Matthews was employed by J. H. Whitney & Co. from 1994 to 2000 and serves as a
Managing Director. Previously, he was with Gleacher & Co. Inc. and Salomon
Brothers Inc. Mr. Matthews is a director of ClearSource, Inc. and NewPath
Holdings, Inc.

Thomas E. McInerney has been a director of Holdings since April 1999. Mr.
McInerney joined Welsh, Carson, Anderson & Stowe in 1986 and is a managing
member or general partner of the respective sole general partners of WCAS VIII
and other associated investment partnerships. Formerly, he co-founded and served
as President and Chief Executive Officer of Dama Telecommunications Corp., a
telecommunications services company. Earlier, he was Group Vice
President--Financial Services at ADP and Senior Vice President--Operations at
the American Stock Exchange. Mr. McInerney is a director of, among others,
Centennial Cellular Corp., Control Data Systems, Bridge Information Systems, The
BISYS Group, The Cerplex Group, Attachmate Corp., Global Knowledge Network and
Valor Telecommunications, LLC.

Michael J. Price has been a director of Holdings since April 1999. Mr.
Price is Co-Chairman of FirstMark Communications International LLC, a broadband
wireless telecommunications company. Prior to that, he worked at Lazard Freres &
Co. LLC, starting in 1987, serving first as a Vice President and then as a
Managing Director, where he led their global technology and telecommunications
practice.

Rudolph E. Rupert has been a director of Holdings since April 1999. Mr.
Rupert joined Welsh, Carson, Anderson & Stowe in 1997 and is a managing member
or general partner of the respective sole general partners of Welsh, Carson,
Anderson, & Stowe VIII and other associated investment partnerships. Previously
he was at General Atlantic Partners and Lazard Freres. Mr. Rupert is a director
of Centennial Cellular and Control Data Systems, Inc.

Steven M. Shindler has been a director of Holdings since April 1999. Mr.
Shindler joined Nextel in May 1996 and serves as Executive Vice President and
Chief Financial Officer. Between 1987 and 1996, Mr. Shindler was an officer with
Toronto Dominion Bank, where most recently he was a Managing Director in its
Communications Finance Group. Mr. Shindler serves as a director of Nextel
International.

Michael R. Stone has been a director of Holdings since its formation in May
1997. Mr. Stone has been employed by J. H. Whitney & Co. since 1989 and serves
as a Managing Director. Previously, he was with Bain & Company. Mr. Stone is a
director of TBM Holdings, Inc., Scirex Corporation, MedSource Technologies, Inc.
and Physicians Surgical Care, Inc.

BOARD OF DIRECTORS

Each member of the board of directors holds office until the next annual
meeting of stockholders and until his or her successor has been duly elected and
qualified. For information regarding certain voting arrangements with respect to
the board of directors, see "Certain Transactions--Stockholders' Agreement."

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<PAGE> 52

COMMITTEES OF THE BOARD OF DIRECTORS

The board of directors has formed the following committees:

-- Executive Committee;

-- Audit Committee; and

-- Compensation Committee.

EXECUTIVE COMMITTEE. The members of the executive committee are Stephen
Clark, Andrew Heyer, Thomas McInerney, Steven Shindler, Lawrence Sorrel and
Michael Stone. The principal functions of the executive committee include
exercising the powers of the board of directors during intervals between board
meetings and acting as an advisory body to the board of directors by reviewing
various matters prior to their submission to the board.

AUDIT COMMITTEE. The members of the audit committee are James Matthews,
Michael Price and Lawrence Sorrel. The audit committee performs the following
functions:

-- approves the selection of independent auditors for SpectraSite;

-- reviews the scope and results of the annual audit;

-- approves the services to be performed by the independent auditors;

-- reviews the independence of the auditors;

-- reviews the adequacy of the system of internal accounting controls;

-- reviews the scope and results of internal auditing procedures; and

-- reviews related party transactions.

COMPENSATION COMMITTEE. The members of the compensation committee are
Thomas McInerney, Lawrence Sorrel, Timothy Donahue and Michael Stone. The
compensation committee performs the following functions:

-- adopts and oversees the administration of compensation plans for
executive officers and senior management of SpectraSite;

-- determines awards granted to executive officers under such plans;

-- approves the Chief Executive Officer's compensation; and

-- reviews the reasonableness of such compensation.

50
<PAGE> 53

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth the cash and non-cash compensation paid by
or incurred on behalf of SpectraSite to its Chief Executive Officer and four
other most highly compensated executive officers for the years ended December
31, 1997, 1998 and 1999. Amounts shown for 1997 include compensation paid by
Holdings to the named executive officers from April 25, 1997, the date of
Holdings' inception, through December 31, 1997.

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
-----------------------
NUMBER OF
ANNUAL COMPENSATION SECURITIES
--------------------------------------- UNDERLYING
NAME AND PRINCIPAL OTHER RESTRICTED OPTIONS/ ALL OTHER
POSITION YEAR SALARY($) BONUS($) ANNUAL($) STOCK($) SARS(#) COMPENSATION($)(e)
------------------ ---- --------- -------- --------- ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen H. Clark.......... 1999 219,006 150,000 -- -- 775,000 2,535
Chief Executive Officer 1998 168,000 68,000 -- -- 300,000 2,400
1997 107,046 -- -- -- 425,000 --
David P. Tomick........... 1999 187,921 77,360 -- -- 225,000 2,442
Chief Financial Officer 1998 140,000 56,000 -- -- 50,000 2,178
1997 64,029 -- -- -- 225,000 --
Terry L. Armant(a)........ 1999 148,025 51,845 -- -- 25,000 2,316
Senior Vice 1998 55,192 68,150 -- -- 125,000 --
President-Operations
Richard J. Byrne(b)....... 1999 103,205 70,613 138,613 224,500(d) 200,000 22,172
Executive Vice
President-Business
Development
Timothy G. Biltz(c)....... 1999 89,000 50,000 17,609 -- 400,000 32,064
Chief Operating Officer
</TABLE>

---------------

(a) Mr. Armant joined SpectraSite in August 1998.
(b) Mr. Byrne joined SpectraSite in April 1999.
(c) Mr. Biltz joined SpectraSite in August 1999.
(d) Mr. Byrne received 50,000 shares of restricted common stock in April 1999 in
connection with his employment by SpectraSite, and he is entitled to
dividends, if any, paid on his restricted stock. As of December 31, 1999,
Mr. Byrne held 50,000 shares of restricted common stock with a fair market
value of $544,000. No other named executive officer holds shares of
restricted stock.
(e) Amounts reported for 1999 include SpectraSite's contribution under its
401(k) plan of $2,535, $2,442, $2,316 and $707 for Messrs. Clark, Tomick,
Armant and Byrne, respectively, and relocation allowances of $21,465 and
$32,064 for Messrs. Byrne and Biltz, respectively.

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

All options become exercisable immediately upon a change in control. Unless
a particular option grant provides otherwise, a change in control occurs upon a
merger, consolidation, reorganization or any transaction in which all or
substantially all of Holdings' assets are sold, leased or transferred. However,
a transaction in which the holders of Holdings' capital stock immediately prior
to the transaction continue to hold at least a majority of the voting power of
the surviving corporation does not constitute a change in control, and no
options become exercisable upon a change in control as to which a performance
milestone has not been achieved as of the date of the change in control. Holders
of options at the time of the Nextel tower acquisition in April 1999 agreed that
the acquisition and related financing transactions did not constitute a change
of control under their options.

The present value of the options granted was estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions:
dividend yield of 0.0%, volatility of 0.7, risk-free interest rate of 5.0% and
expected option lives of seven years.

51
<PAGE> 54

<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE PRICE EXPIRATION GRANT DATE
NAME GRANTED(#) 1999 PER SHARE($) DATE PRESENT VALUE($)
---- ------------ ------------ -------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Stephen H. Clark..... 775,000 29 5.00 4/20/09 2,187,825
David P. Tomick...... 225,000 8 5.00 4/20/09 635,175
Terry L. Armant...... 25,000 1 5.00 4/20/09 70,575
Richard J. Byrne..... 200,000 7 5.00 4/20/09 564,600
Timothy G. Biltz..... 300,000 11 5.00 8/31/09 1,764,270
100,000 4 9.26 11/23/09 598,370
</TABLE>

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS
SHARES 1999(#) AT DECEMBER 31, 1999($)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen H. Clark..... -- -- 212,500 1,287,500 1,697,875 8,318,875
David P. Tomick...... 112,500 535,500 0 387,500 0 2,565,875
Terry L. Armant...... -- -- 31,250 118,750 249,688 896,063
Richard J. Byrne..... -- -- 0 200,000 0 1,176,000
Timothy G. Biltz..... -- -- 0 400,000 0 1,926,000
</TABLE>

EMPLOYMENT AGREEMENTS

SpectraSite has entered into employment agreements with each of Messrs.
Clark, Tomick and Byrne effective April 20, 1999. The initial term of the
employment agreements is five years. In 2000, the annual salaries for Messrs.
Clark, Tomick and Byrne are $325,000, $220,000 and $175,000, respectively, and
they are eligible to receive annual bonuses determined at the discretion of the
board of directors. Mr. Byrne also received a $40,000 bonus in connection with
his relocation to Cary, North Carolina. If their employment is terminated as a
result of their death, disability or termination without cause Messrs. Clark,
Tomick and Byrne will be entitled to receive continued salary, bonus and health
benefits for a period of 24 months.

Under the employment agreements, Messrs. Clark, Tomick and Byrne were
granted incentive stock options to purchase 775,000, 225,000 and 200,000 shares
of common stock, respectively. The exercise price for the options will be $5.00.
Twenty percent of the stock options will become exercisable each year over the
five-year employment period. If SpectraSite terminates the employment of Mr.
Byrne without cause, or if he dies or becomes disabled, then his stock options
shall be fully exercisable. If SpectraSite terminates the employment of Mr.
Clark or Mr. Tomick without cause, or if either of them dies or becomes
disabled, then the stock options that they held prior to entering into the
employment agreement, but not those granted under the employment agreement,
shall be fully exercisable.

Messrs. Clark, Tomick and Byrne have agreed that for a period of 24 months
following the termination of their employment with SpectraSite they will not:

-- engage in competition, own any interest in, or perform any services
for any business which engages in competition with SpectraSite;

-- solicit management employees of SpectraSite or otherwise interfere
with the employment relationship between SpectraSite and its
employees; or

52
<PAGE> 55

-- engage or work with any supplier, contractor or entity with a
business relationship with SpectraSite, if such action would have a
material adverse effect on SpectraSite.

In addition, in connection with his employment with SpectraSite, Mr. Byrne
purchased 50,000 shares of common stock for a nominal amount. Mr. Byrne's right
to retain these shares of common stock vests in equal 25% installments on each
of the first four anniversaries of his employment agreement. Vesting will
accelerate upon Mr. Byrne's termination without cause or if he dies or becomes
disabled. Mr. Byrne will also receive a bonus to pay income taxes incurred in
connection with this purchase of common stock.

53
<PAGE> 56

CERTAIN TRANSACTIONS

REPURCHASE OF COMMON STOCK FROM FORMER EMPLOYEE

In an agreement dated September 15, 1998, a former employee agreed to sell
125,000 shares of common stock to SpectraSite and to release SpectraSite from
any potential claims for an agreed upon price. In addition, the agreement
provided that stockholders of Holdings would have an option to purchase the
former employee's remaining 37,605 shares of common stock for the same price per
share, provided that SpectraSite advise the former employee in writing of the
exercise of all or any portion of such option by November 15, 1998. On October
9, 1998, SpectraSite paid the former employee $0.5 million for his shares and
the release under the agreement, and on February 5, 1999, David P. Tomick
purchased the remaining 37,605 shares for an aggregate purchase price of
$150,240.

THE PREFERRED STOCK OFFERINGS

According to the terms of a stock purchase agreement, dated as of May 12,
1997, Whitney Equity Partners, L.P. and Kitty Hawk Capital Limited Partnership,
III purchased an aggregate of 3,462,830 shares of Holdings' Series A preferred
stock for an aggregate purchase price of $10.0 million in a transaction exempt
from registration under the Securities Act.

According to the terms of a stock purchase agreement, dated as of March 23,
1998, Whitney Equity Partners, L.P., J.H. Whitney III, L.P., Whitney Strategic
Partners III, L.P., Waller-Sutton Media Partners, L.P., Kitty Hawk Capital
Limited Partnership, III, Kitty Hawk Capital Limited Partnership IV, Eagle Creek
Capital, L.L.C., The North Carolina Enterprise Fund, L.P., Finley Family Limited
Partnership, William R. Gupton, Jack W. Jackman and Alton D. Eckert purchased an
aggregate of 7,000,000 shares of Holdings' Series B preferred stock for an
aggregate purchase price of $28.0 million. As of March 23, 1998 the Series B
investors purchased the first installment of 4,250,000 shares of Series B
preferred stock for $17.0 million. As of August 27, 1998, the Series B investors
(other than Whitney Equity Partners, L.P.) purchased 2,074,016 shares for an
aggregate purchase price of approximately $8.3 million and as of September 21,
1998, Whitney Equity Partners, L.P. purchased the remaining 675,874 shares of
Series B preferred stock for an aggregate purchase price of approximately $2.7
million.

According to the terms of a stock purchase agreement, dated as of February
10, 1999, as amended on April 20, 1999, Welsh, Carson, Anderson & Stowe VIII,
L.P., certain other persons and entities affiliated with Welsh, Carson, Anderson
& Stowe, J.H. Whitney III, L.P., Whitney Strategic Partners III, L.P., CIBC WG
Argosy Merchant Fund 2, L.L.C., Co-Investment Merchant Fund 3, LLC, The North
Carolina Enterprise Fund, L.P., Waller-Sutton Media Partners, L.P., Kitty Hawk
Capital Limited Partnership, IV, Finley Family Limited Partnership, Eagle Creek
Capital, L.L.C., David P. Tomick, Jack W. Jackman, Alton D. Eckert, William R.
Gupton, The Price Family Limited Partnership and Benake L.P. agreed to purchase
46,286,795 shares of Holdings' Series C convertible preferred stock in
connection with and partially to fund the Nextel tower acquisition. The Series C
investors paid an aggregate purchase price of approximately $231.4 million on
April 20, 1999 for the shares of Holdings' Series C preferred stock in a
transaction exempt from registration under the Securities Act.

In connection with the consummation of our public offering of common stock
on February 4, 2000, all outstanding shares of Series A, Series B and Series C
preferred stock converted on a share-for-share basis into common stock. The
Series C investors, including the holders of the Series A preferred stock and
the Series B preferred stock, and certain other stockholders of Holdings are
entitled to certain rights under the stockholders' agreement and the
registration rights agreement, described below.

AGREEMENTS WITH NEXTEL

On April 20, 1999, Nextel and SpectraSite entered into several agreements
in connection with SpectraSite's acquisition of tower assets from Nextel. The
following is a summary of the material terms of these agreements.

54
<PAGE> 57

Master Site Commitment Agreement. SpectraSite and certain of Nextel's
subsidiaries entered into a master site commitment agreement under which Nextel
and its controlled affiliates will offer SpectraSite certain exclusive
opportunities, under specified terms and conditions, relating to the
construction or purchase of, or co-location on, additional communications sites.
These sites will then be leased by subsidiaries of Nextel under the terms of the
master site lease agreement. If the number of new sites leased, whether
purchased from Nextel, constructed at Nextel's request or otherwise made
available for co-location by Nextel, its affiliates and Nextel Partners, is less
than the agreed upon numbers as of particular dates, then commencing with the
37th month after the closing, Nextel has agreed to make certain payments to
SpectraSite. The master site commitment agreement terminates on the earlier of
April 20, 2004 or the date on which the number of sites purchased or constructed
or made available for co-location under the master site commitment agreement
equals or exceeds 1,700. The master site commitment agreement also gives
SpectraSite a right of first refusal to acquire any towers that Nextel or
certain affiliates desire to sell.

The master site commitment agreement specifies that SpectraSite is not
obligated to develop more than 566 new sites each year. SpectraSite has agreed
to abide by Nextel's deployment plan. To date, Nextel's plan has emphasized
filling gaps in current coverage areas to increase capacity and enhance signal
quality, as well as deploying sites in areas contiguous to Nextel's existing
markets and deploying sites in new markets to expand the Nextel network. These
sites also include sites operated or to be developed by Nextel Partners in their
service areas. This strategy contemplates expansion and deployment in most major
metropolitan areas of the contiguous United States, including highway corridors
that connect existing and planned markets, particularly in the eastern half of
the United States and along the west coast. SpectraSite is not obligated to
develop sites outside of Nextel's or Nextel Partners' currently delineated
network deployment area to the extent these sites account for more than 10% of
the total sites developed under this agreement.

The agreement may be terminated by either side, by written notice, under
certain conditions. SpectraSite may terminate the agreement if:

-- Nextel or one of its subsidiaries that transferred assets to
SpectraSite becomes insolvent, or is unable to pay its debts as they
become due; or

-- Nextel or a transferring subsidiary is liquidated, voluntarily or
involuntarily, or a receiver or liquidator is appointed for that
entity.

Nextel may terminate the agreement if:

-- either Holdings or its subsidiary holding the Nextel towers becomes
insolvent, or is unable to pay its debts as they become due;

-- either Holdings or such subsidiary is liquidated, voluntarily or
involuntarily, or a receiver or liquidator is appointed for such
entity; or

-- at or after the end of any calendar year, Nextel has exercised its
rights to recover a penalty payment, as specified in the agreement,
because, for more than 10% of the total number of towers required to
be developed by SpectraSite during each year, SpectraSite has failed
to complete development of new towers during the allotted time
period.

Either SpectraSite or Nextel may terminate the agreement if the other party
is in breach of an obligation to pay money or in breach of a material
nonmonetary obligation, if the breach is neither waived nor cured.

Master Site Lease Agreement. SpectraSite and Nextel entered into a master
site lease agreement under which SpectraSite has agreed to lease to Nextel's
subsidiaries space on wireless communications towers or other transmission
space:

-- at the sites transferred to SpectraSite as part of the Nextel tower
acquisition;

-- at the sites subsequently constructed or acquired by SpectraSite
under the master site commitment agreement; or

55
<PAGE> 58

-- at other sites and related wireless communications towers or
transmission space owned, leased or licensed by SpectraSite.

In addition, an entity in which Nextel holds a minority equity interest,
Nextel Partners, may in the future enter into a separate master site lease
agreement. Under this separate agreement, SpectraSite would agree to lease to
Nextel Partners space on wireless communications towers or other transmission
space:

-- at some of the sites transferred to SpectraSite as part of the Nextel
tower acquisition;

-- at some of the sites subsequently constructed or acquired by
SpectraSite under the master site commitment agreement; or

-- at other sites and related space on wireless communications towers or
transmission space owned, leased or licensed by SpectraSite.

If Nextel Partners does not enter into a master site lease agreement with
SpectraSite in the future, any site that would otherwise have been leased to
Nextel Partners thereunder will instead be leased to Nextel's subsidiaries under
the Nextel master site lease agreement.

The Nextel master site lease agreement and, if executed, the Nextel
Partners master site lease agreement will be supplemented from time to time to
provide for the lease of space on certain additional communications towers or
other transmission space at sites owned, constructed or acquired by SpectraSite.
Nextel and, if Nextel Partners executes a master site lease agreement, Nextel
Partners shall have a right of first refusal with respect to the sale of any
sites acquired by SpectraSite as part of the Nextel tower acquisition or
constructed or acquired by SpectraSite under the master site commitment
agreement.

The Nextel master site lease agreement and, if executed, the Nextel
Partners master site lease agreement provide that within 15 days of the
commencement of the lease of a given site, and on the first day of each month
thereafter for the term of the lease, a rental payment of $1,600 per month will
be due on each tower which SpectraSite leases to any of the tenants who are
parties to the agreement. Monthly payments will be adjusted for partial months
when appropriate. On each annual anniversary of a given lease's commencement,
the rent owed under the lease will increase by 3%.

Other rental provisions include:

-- an option for tenants to lease additional space, if available, on
sites where the tenant already leases space; and

-- a right allowing tenants to install, at their sole option and expense
and only when additional capacity exists at the rental site,
microwave antennas of various sizes and other equipment at additional
rental rates delineated in the agreement.

These provisions are subject to the same annual 3% rate increase as the
base rent.

The agreement further provides that each tenant is responsible for any
portion of personal property taxes assessed on any site and directly
attributable to the tenant's property, franchise and similar taxes imposed on
the tenant's business and sales tax imposed upon payment or receipt of rents
payable under the agreement. The landlord is responsible for all other taxes.
Additionally, the agreement provides that the landlord will be responsible for
certain types of insurance. Each tenant is also responsible for certain other
types of insurance.

The term of each lease contracted under the agreement is at least five
years, with a right to extend for five successive five-year periods. In certain
cases, the initial lease term will be six, seven or eight years. The lease is
automatically renewed unless the tenant submits notification of its intent to
terminate the lease, when its current term expires, prior to such expiration.
The tenant has the right to trade the term of any given site for the term of any
other site, upon written notice to the landlord. However, such a trade is
limited to one time per site per term.

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<PAGE> 59

A tenant may terminate a lease for any site, at its sole discretion,
without further liability to the landlord, with 30 days prior written notice,
if:

-- the tenant uses reasonable efforts and fails to obtain or maintain
any license, permit or other approval necessary for operation of its
communications equipment; or

-- the tenant is unable to use the tower due to FCC action which is not
a result of any action by the tenant.

If either party breaches a nonmonetary obligation, the other party may
terminate a lease for any site with 60 days prior written notice, subject to
certain cure provisions. Either party may terminate a lease for any site with 10
days prior written notice if the other party breaches a monetary obligation and
that breach is not cured within the 10-day period. In addition, if Nextel or
Nextel Partners, in the event that Nextel Partners executes a master site lease
agreement, defaults on rental payments with respect to more than 10% of the
sites covered by its respective master site lease agreement and Nextel or Nextel
Partners, as the case may be, remains in default for 30 days following notice
from SpectraSite, SpectraSite may cancel the master site lease agreement of the
defaulting party as to all sites covered by that agreement.

Security and Subordination Agreement. SpectraSite and Nextel entered into
a security and subordination agreement under which SpectraSite granted to Nextel
a continuing security interest in the assets acquired in the Nextel tower
acquisition or acquired or constructed under the master site commitment
agreement. This interest secures SpectraSite's obligations under the Nextel
master site lease agreement and, if applicable, the Nextel Partners master site
lease agreement. The terms of an intercreditor agreement render Nextel's lien
and the other rights and remedies of Nextel under the security and subordination
agreement subordinate and subject to the rights and remedies of the lenders
under the credit facility.

TRANSACTIONS RELATED TO THE NEXTEL TOWER ACQUISITION

On April 20, 1999, in connection with the Nextel tower acquisition, Messrs.
Sorrel, Rupert, McInerney and Price purchased 50,000, 25,000, 262,973 and
100,000 shares of Holdings' Series C preferred stock for $5.00 per share,
respectively. See "-- The Preferred Stock Offerings." Each of Messrs. Sorrel,
Rupert, McInerney and Price are members of Holdings' board of directors. Messrs.
Sorrel, Rupert and McInerney are also affiliates of Welsh, Carson, Anderson &
Stowe.

Affiliates of Welsh, Carson, Anderson & Stowe, Whitney & Co. and Canadian
Imperial Bank of Commerce received an aggregate of two million shares of common
stock as consideration for financing commitments made in connection with the
Nextel tower acquisition. Welsh Carson, Whitney and Canadian Imperial Bank of
Commerce are each significant stockholders of Holdings and affiliates of each
entity are members of Holdings' board of directors.

To finance a portion of the cash consideration paid to Nextel, Holdings
issued and sold the 2009 notes in a private offering and borrowed $150.0 million
under its credit facility. CIBC World Markets Corp. was an initial purchaser in
the 2009 notes offering, and an affiliate of CIBC World Markets is an agent and
a lender under the credit facility. CIBC World Markets was also an initial
purchaser of Holdings' 2008 notes. CIBC World Markets and its affiliates
received customary fees for such services. Andrew M. Heyer is a director of
Holdings and a Managing Director of CIBC World Markets.

TRANSACTIONS WITH EXECUTIVE OFFICERS

In May 1997, Stephen H. Clark agreed to invest additional personal funds in
SpectraSite at the average per share price of Holdings' Series A and Series B
preferred stock. In satisfaction of this commitment, Mr. Clark purchased 210,000
shares of common stock for an aggregate purchase price of $772,800 on April 20,
1999.

In August 1999, SpectraSite loaned David P. Tomick $325,000 in connection
with the exercise of certain stock options. The 112,500 shares Mr. Tomick
acquired through the exercise of these options are pledged to

57
<PAGE> 60

SpectraSite as security for this loan. The loan bears interest at the applicable
federal rate under the Internal Revenue Code, 5.36% per annum, and matures in
August 2002.

In September 1999, SpectraSite loaned Timothy G. Biltz $500,000 to purchase
a home as a relocation incentive. This loan will be secured by any shares of
common stock issued to Mr. Biltz upon his exercise of options, bears interest at
5.82% per annum and matures in September 2004.

In January 2000, SpectraSite loaned Stephen H. Clark $1,100,000 in
connection with the exercise of stock options to acquire 512,500 shares of
common stock. The loan bears interest at the applicable federal rate under the
Internal Revenue Code and matures in January 2003.

58
<PAGE> 61

PRINCIPAL STOCKHOLDERS

The table below sets forth, as of March 31, 2000, information with respect
to the beneficial ownership of Holdings' capital stock by:

- each person who is known by Holdings to be the beneficial owner of more
than 5% of any class or series of capital stock of Holdings;

- each of the directors and named executive officers individually; and

- all directors and executive officers as a group.

The amounts and percentages of common stock beneficially owned are reported
on the basis of regulations of the SEC governing the determination of beneficial
ownership of securities. Under the rules of the SEC, a person is deemed to be a
beneficial owner of a security if that person has or shares voting power, which
includes the power to vote or to direct the voting of such security, or
investment power, which includes the power to dispose of or to direct the
disposition of such security. A person is also deemed to be a beneficial owner
of any securities of which that person has a right to acquire beneficial
ownership within 60 days. Under these rules, more than one person may be deemed
to be a beneficial owner of securities as to which such person has an economic
interest.

<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENTAGE OF
BENEFICIALLY EQUITY
NAME OF BENEFICIAL OWNER OWNED OWNERSHIP
------------------------ ------------ -------------
<S> <C> <C>
Stephen H. Clark(a)......................................... 1,614,435 1.3%
Timothy G. Biltz............................................ -- --
David P. Tomick(b).......................................... 257,500 *
Richard J. Byrne(c)......................................... 90,000 *
Terry L. Armant(d).......................................... 36,250 *
Calvin J. Payne(e).......................................... 2,091,454 1.7%
Michael R. Stone(f)......................................... 12,676,837 10.3%
James R. Matthews........................................... -- --
Lawrence B. Sorrel(g)....................................... 30,875,000 25.1%
Andrew R. Heyer(h)(k)....................................... 10,312,500 8.4%
Thomas E. McInerney(g)...................................... 31,087,973 25.2%
Michael J. Price(i)......................................... 200,000 *
Rudolph E. Rupert(g)........................................ 30,850,000 25.0%
Timothy M. Donahue(j)....................................... 14,025,000 11.4%
Steven M. Shindler(j)....................................... 14,000,000 11.4%
Nextel Communications, Inc.(j).............................. 14,000,000 11.4%
Welsh, Carson, Anderson & Stowe(g).......................... 30,825,000 25.0%
Funds affiliated with Whitney & Co.(f)...................... 12,676,837 10.3%
Canadian Imperial Bank of Commerce(h)....................... 10,000,000 8.1%
All directors and executive officers as a group (20
persons)(l)............................................... 72,698,949 58.8%
</TABLE>

---------------

* Less than 1%.

(a) Includes 155,000 shares of common stock issuable upon the exercise of
outstanding options exercisable within 60 days. Of the shares reported in
the table, 816,327 are held by Holt Road, L.P. Mr. Clark owns a 1% general
partnership interest, certain family trusts own a 98% limited partnership
interest and Mary Clark, Mr. Clark's spouse, owns a 1% limited partnership
interest in Holt Road, L.P. Mr. Clark is a trustee of each family trust, and
he disclaims beneficial ownership of the shares held by Holt Road, L.P., as
well as those deemed to be beneficially owned by the family trusts.

59
<PAGE> 62

(b) Includes 45,000 shares of common stock issuable upon the exercise of
outstanding options exercisable within 60 days.

(d) Includes 36,250 shares of common stock issuable upon the exercise of
outstanding options exercisable within 60 days.

(e) Includes 177,380 shares of common stock issuable upon the exercise of
outstanding options exercisable within 60 days.

(f) Represents 4,923,524 shares held by Whitney Equity Partners, L.P.; 7,265,734
shares held by J.H. Whitney III, L.P.; 175,079 shares held by Whitney
Strategic Partners III, L.P.; and 312,500 shares held by J.H. Whitney
Mezzanine Fund, L.P. Each of these funds is affiliated with Whitney & Co.
Each of Mr. Stone and Mr. Matthews disclaims beneficial ownership of shares
held by these entities except to the extent of his pecuniary interest in
such funds. The business address for Mr. Stone, Mr. Matthews and the Whitney
funds is 177 Broad Street, Stamford, Connecticut 06901.

(g) Messrs. Sorrel, McInerney and Rupert are each principals of Welsh, Carson,
Anderson & Stowe and acquired directly 50,000, 262,973 and 25,000 shares,
respectively. Messrs. Sorrel, McInerney and Rupert each disclaim beneficial
ownership of the shares held by Welsh, Carson. The business address for
Messrs. Sorrel, McInerney and Rupert and Welsh, Carson is 320 Park Avenue,
Suite 2500, New York, New York 10022.

(h) Andrew R. Heyer, an employee of an affiliate of Canadian Imperial Bank of
Commerce, along with Jay R. Bloom and Dean C. Kehler, who are also employees
of an affiliate of Canadian Imperial Bank of Commerce, have shared power to
vote and dispose of the common stock reported in the table. The business
address for Canadian Imperial Bank of Commerce is 161 Bay Street, PP Box
500, M51 258, Toronto, Canada, and the business address for Mr. Heyer is 425
Lexington Avenue, 3rd Floor, New York, New York 10017. Pursuant to Holdings'
amended and restated articles of incorporation, the shares of common stock
beneficially owned by Canadian Imperial Bank of Commerce in excess of 5% of
the total issued and outstanding common stock shall be non-voting until such
shares are transferred to an entity not subject to the restrictions of the
Bank Holding Company Act of 1956, as amended.

(i) Includes 100,000 shares reported as beneficially owned by Mr. Price, which
are held by The Price Family Limited Partnership. Mr. Price disclaims
beneficial ownership of all such shares.

(j) Messrs. Donahue and Shindler are executive officers of Nextel and disclaim
beneficial ownership of the shares held by Nextel. Mr. Donahue owns 25,000
shares directly, and Mr. Shindler owns no shares directly. The business
address for Messrs. Donahue and Shindler and Nextel is 2001 Edmund Halley
Drive, Reston, Virginia 20191.

(k) Includes 312,500 shares of common stock held by Caravelle Investment Fund,
L.L.C. The general partner and investment manager of Caravelle Investment
Fund, L.L.C. are affiliates of Andrew R. Heyer, Jay R. Bloom and Dean C.
Kehler. See footnote (h).

(l) Includes 460,630 shares of common stock issuable upon the exercise of
outstanding options exercisable within 60 days.

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DESCRIPTION OF COMMON STOCK

The following is a summary of the material terms and provisions of
Holdings' capital stock. Holdings' amended and restated certificate of
incorporation authorizes 300,000,000 shares of common stock, $0.001 par value
per share. Holdings is not authorized to issue preferred stock. As of March 31,
2000, there were 123,179,486 shares of common stock outstanding. In addition:

-- 1,000,000 shares of common stock are reserved for issuance under our
employee stock purchase plan;

-- 10,299,654 shares of common stock are reserved for issuance upon
exercise of stock options available for future grant under the stock
incentive plan, after giving effect to the increase of authorized
shares approved by stockholders at our annual meeting on May 2, 2000;
and

-- 8,374,062 shares of common stock are reserved for issuance upon
exercise of stock options granted under the stock incentive plan.

Holdings has two classes of authorized common stock which are identical in
all respects except that one class is non-voting. If a Holdings stockholder is
deemed a regulated entity under the Bank Holding Company Act of 1956, as
amended, its shares of common stock over 5% of the total issued and outstanding
common stock will become non-voting until transferred to a non-regulated entity.
The voting common stock is entitled to one vote per share. All outstanding
shares of common stock are validly issued, fully paid and nonassessable. The
common stock holders have no preemptive rights, cumulative rights, subscription,
redemption, sinking fund or conversion rights and preferences. The common stock
holders will be entitled to receive such dividends as the board of directors may
declare out of funds legally available for that purpose.

DELAWARE LAW ANTI-TAKEOVER LAW

Section 203 of the Delaware General Corporation Law prohibits SpectraSite
from engaging in a "business combination" with an "interested stockholder." This
restriction applies for three years after the date of the transaction in which
the person became an interested stockholder, unless the business combination is
approved in a prescribed manner. A "business combination" includes (1) mergers,
(2) asset sales and (3) other transactions resulting in a financial benefit to
an interested stockholder. Generally, an "interested stockholder" is a person
who, together with affiliates and associates, owns, or within three years did
own, 15% or more of Holdings' voting stock. Section 203 could delay, defer or
prevent a change in control of Holdings. It might also reduce the price that
investors might be willing to pay in the future for shares of common stock.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The certificate of incorporation provides that directors of Holdings will
not be personally liable to Holdings or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (1) for any
breach of the director's duty of loyalty to Holdings or its stockholders, (2)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (3) under a provision of Delaware law relating to
unlawful payment of dividends or unlawful stock purchase or redemption of stock
or (4) for any transaction from which the director derives an improper personal
benefit. As a result of this provision, Holdings and its stockholders may be
unable to obtain monetary damages from a director for breach of his or her duty
of care.

Our bylaws provide for the indemnification of directors, officers,
employees and agents and any person who is or was serving at the request of
Holdings as a director, officer, partner, trustee, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise and
any person who was or is serving at the request of Holdings as a trustee or
administrator under an employee benefit plan to the fullest extent authorized
by, and subject to the conditions set forth in, the Delaware General Corporation
Law against all expenses and liabilities. The indemnification provided under the
bylaws includes the right to be paid by Holdings the expenses in advance of any
proceeding for which indemnification may be had in advance of its final
disposition.

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TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is BankBoston, N.A.

STOCKHOLDERS' AGREEMENT

In connection with the closing of the Nextel tower acquisition, Holdings
and Nextel, the Series A investors, the Series B investors and the Series C
investors entered into the third amended and restated stockholders' agreement,
which superseded and replaced the existing stockholders' agreement among
Holdings and its stockholders. Parties to the stockholders' agreement own or
control an aggregate of approximately 74.7 million shares of Holdings' common
stock. The following is a summary of the material terms of the stockholders'
agreement.

The stockholders' agreement contains a voting agreement provision under
which Holdings and certain stockholders agreed to take all appropriate action
to:

-- elect the greater of three and the number of directors Welsh, Carson
could appoint based on its proportionate ownership of Holdings stock
to Holdings' board;

-- elect two Nextel designees to Holdings' board;

-- elect two designees of funds affiliated with Whitney & Co. to
Holdings' board;

-- elect one designee of Canadian Imperial Bank of Commerce or its
affiliates to Holdings' board;

-- elect the Chief Executive Officer, initially Stephen H. Clark, to
Holdings' board;

-- remove and replace any director if requested to do so by the
stockholders who designated the director;

-- use their best efforts to cause Welsh, Carson designees to make up
two of the three members of a compensation committee created to,
among other things, set SpectraSite's employee compensation policy;

-- use their best efforts to cause Welsh, Carson and the Whitney funds'
designees to make up two of the three members of an audit committee
to, among other things, review and approve SpectraSite's financial
statements; and

-- use their best efforts to elect a Welsh, Carson affiliate, Lawrence
B. Sorrel, as Chairman of Holdings' board.

As a result of this voting agreement, the parties to the stockholders' agreement
have the ability to elect all of the members of Holdings' board of directors.
This voting agreement provision terminates on February 4, 2005. The voting
agreement provision will terminate as to any given stockholder on the earlier to
occur of that stockholder's disposition of 50% or more of its Holdings stock and
the date on which the stockholder owns less than 8% of Holdings' outstanding
stock.

The stockholders' agreement also prohibits all stockholders that are
parties to the agreement other than Welsh, Carson from selling or otherwise
transferring their Holdings stock, except for transfers:

-- made with the prior written consent of Welsh, Carson;

-- in limited instances, made with the prior written consent of 60% of
the aggregate shares of capital stock held by affiliates of Whitney &
Co., Canadian Imperial Bank of Commerce and Nextel;

-- by an individual stockholder to his or her spouse or descendant;

-- in accordance with the tag-along provisions described below;

-- by institutional stockholders to their affiliates; and

-- by Nextel to its affiliates or creditors to secure obligations under
a secured credit facility.

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These transfer restrictions terminate upon the earlier of the sale, transfer or
other disposition by Welsh, Carson of 50% or more of its Holdings stock and
August 4, 2001. Holdings' stockholders also agreed that they would agree to a
longer transfer restriction period if asked to do so by the underwriter of an
initial public offering of Holdings' stock, so long as the lock-up binds
SpectraSite's executive officers and all holders of more than 5% of Holdings'
outstanding stock, and any exceptions to the lock-up provision apply equally to
all stockholders.

Once the transfer restrictions terminate, all transfers by stockholders
owning more than 5% of Holdings' stock will continue to be governed by the
coordinated distribution requirements of Holdings' second amended and restated
registration rights agreement. See "--Registration Rights Agreement."

The stockholders' agreement contains a tag-along provision which gives the
parties to the stockholders' agreement the right to participate in any sale by
Welsh, Carson of its Holdings stock on the same terms as Welsh, Carson sells its
stock. This provision will terminate at the same time as the transfer
restrictions terminate.

SpectraSite may not redeem any shares of common stock, except for
repurchases from employees of up to $0.5 million in any twelve-month period.

REGISTRATION RIGHTS AGREEMENT

In connection with the closing of the Nextel tower acquisition,
SpectraSite, Nextel, the Series A investors, the Series B investors, the Series
C investors and certain members of SpectraSite's management entered into a
second amended and restated registration rights agreement. In connection with
SpectraSite's acquisition of Apex, the former stockholders of Apex joined the
registration rights agreement. The original parties to the stockholders'
agreement and the former Apex holders own or control an aggregate of
approximately 80.2 million shares of our common stock. The following is a
summary of the material terms of the registration rights agreement.

Under the registration rights agreement, the holders of Holdings' stock
party to the agreement may require SpectraSite to register all or some of their
shares under the Securities Act. The following conditions must be met to trigger
this registration obligation:

-- SpectraSite must receive a request for registration from holders of
at least 25% of its outstanding stock covered by the registration
rights agreement, exclusive of stock held by management;

-- the request must be received at any time following August 4, 2001;
and

-- SpectraSite must expect the aggregate offering price of the
registered securities will exceed $50.0 million.

SpectraSite is only obligated to effect three such registrations. Both
Holdings and its management have the right to include their shares in any
registration statement required by the registration rights agreement.

The registration rights agreement also provides that Holdings'
institutional stockholders and Nextel have the right to require SpectraSite to
file a registration statement on Form S-3 covering their stock if and when
Holdings becomes eligible to file such a registration statement. Nextel or the
institutional shareholders may request this registration if:

-- Holdings is eligible to file a registration statement on Form S-3;
and

-- SpectraSite expects the aggregate offering price of the registered
securities will exceed $10.0 million.

In addition to SpectraSite's registration obligations discussed above, if
Holdings registers any of its common stock under the Securities Act for sale to
the public for SpectraSite's own account or for the account of others or both,
the registration rights agreement requires that it use its best efforts to
include in the registration statement stock held by other Holdings stockholders
who wish to participate in the offering. Registrations by Holdings on Form S-4,
Form S-8 or any other form not available for registering stock for sale to the
public will not trigger this registration obligation.

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The parties to the registration rights agreement also agreed that if they
publicly sell their securities after an initial public offering they will
attempt to conduct the sale in a manner that will not adversely disrupt the
market for SpectraSite stock. The stockholders agreed, to the extent
practicable, to coordinate those sales and make them through a single broker or
market maker over a sufficient period of time to permit an orderly disposition
of their securities. This coordinated distribution restriction terminates:

-- with respect to any shares that have been effectively registered and
disposed of in accordance with the registration statement covering
those shares;

-- as to any stockholder who owns less than 5% of Holdings' outstanding
stock; or

-- at such time as the number of shares of common stock in the hands of
the public exceeds the number of shares of Holdings' restricted stock
and stock held by management.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have outstanding shares
of common stock, assuming no exercise of the underwriters' over-allotment option
and no exercise of outstanding options, of which, as of March 31, 2000,
1,262,621 were vested and an additional 7,106,441 will vest in the future. Of
these shares, the shares, or shares if the underwriters
exercise their over-allotment option in full, of common stock sold in this
offering will be freely tradable without restriction under the Securities Act
unless purchased by our affiliates, as that term is defined in Rule 144 under
the Securities Act. Approximately 80,034,056 shares of common stock outstanding
are restricted securities under Rule 144 and may in the future be sold without
registration under the Securities Act to the extent permitted by Rule 144 or any
other applicable exemption under the Securities Act. Of these shares, 74,707,932
shares are subject to the stockholders' agreement described above and 79,213,929
shares are covered by the registration rights agreement described above.

In general, under Rule 144 as currently in effect, a person, or persons
whose shares are aggregated, who has beneficially owned restricted shares for at
least one year, including the holding period of any prior owner except an
affiliate, would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of:

-- one percent of the number of shares of common stock then outstanding,
which will equal approximately shares immediately after
this offering, or

-- the average weekly trading volume of the common stock during the four
calendar weeks preceding the filing of a Form 144 with respect to the
sale.

Sales under Rule 144 also are subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about us. Under Rule 144(k), a person who is not deemed to have been an
affiliate of SpectraSite at any time during the three months preceding a sale
and who has beneficially owned the shares proposed to be sold for at least two
years, including the holding period of any prior owner except an affiliate, is
entitled to sell those shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.

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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS TO NON-U.S. HOLDERS

The following is a summary of the material United States federal income,
estate and gift tax consequences of the purchase, ownership and disposition of
the common stock by holders that are non-U.S. holders, as that term is defined
below. This summary does not purport to be a complete analysis of all potential
tax effects and is based upon the Internal Revenue Code of 1986, as amended,
existing and proposed regulations promulgated thereunder, published rulings and
court decisions, all as in effect and existing on the date hereof and all of
which are subject to change at any time, which change may be retroactive or
prospective. Unless otherwise specifically noted, this summary applies only to
those persons that hold the common stock as a capital asset within the meaning
of Section 1221 of the Internal Revenue Code.

THIS SUMMARY IS FOR GENERAL INFORMATION ONLY AND DOES NOT ADDRESS THE TAX
CONSEQUENCES TO TAXPAYERS WHO ARE SUBJECT TO SPECIAL RULES OR CIRCUMSTANCES.
THIS SUMMARY DOES NOT ADDRESS ANY TAX CONSEQUENCES ARISING UNDER ANY STATE,
MUNICIPALITY, FOREIGN COUNTRY OR OTHER TAXING JURISDICTION. WE URGE YOU TO
CONSULT YOUR OWN TAX ADVISOR REGARDING THE UNITED STATES FEDERAL TAX
CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF THE COMMON STOCK, INCLUDING
YOUR STATUS AS A NON-U.S. HOLDER, AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE
UNDER THE LAWS OF ANY STATE, MUNICIPALITY, FOREIGN COUNTRY OR OTHER TAXING
JURISDICTION.

GENERAL

A Non-U.S. holder is a beneficial owner of the common stock that is not:

(1) a citizen or individual resident, as defined in Section 7701(b)
of the Internal Revenue Code, of the United States;

(2) a corporation including any entity treated as a corporation for
United States federal income tax purposes, created or organized under the
laws of the United States, any State thereof or the District of Columbia;

(3) an estate the income of which is subject to United States federal
income tax without regard to its source; or

(4) a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more
United States persons have the authority to control all substantial
decisions of the trust.

Notwithstanding the preceding sentence, certain trusts in existence on
August 20, 1996, and treated as a U.S. holder prior to such date, may elect to
continue to be treated as a U.S. holder. If a partnership holds SpectraSite
common stock, the tax treatment of a partner will generally depend upon the
status of the partner and upon the activities of the partnership. Partners and
partnerships holding SpectraSite common stock should consult their tax advisors.

DIVIDENDS

Although we do not anticipate paying any cash dividends for the foreseeable
future, any such dividends paid to a non-U.S. holder will generally be subject
to the withholding of United States federal income tax at the rate of 30% of the
gross amount of such dividends, unless:

-- the dividends are effectively connected with the conduct of a trade
or business (or, if an income tax treaty applies, are attributable to
a permanent establishment, as defined therein), within the United
States of the non-U.S. holder, and such non-U.S. holder furnishes to
us or our paying agent a duly executed copy of Internal Revenue
Service Form W-8ECI, or any successor form executed under penalties
of perjury; or

-- such non-U.S. holder is entitled to a reduced withholding tax rate
pursuant to any applicable income tax treaty.

For purposes of determining whether tax will be withheld at a reduced rate
as specified by an income tax treaty, current law permits us to presume that
dividends paid to an address in a foreign country are paid to a
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resident of such country absent definite knowledge that such presumption is not
warranted. However, under newly issued United States Treasury regulations, in
the case of dividends paid after December 31, 2000, in order to obtain a reduced
rate of withholding under an income tax treaty, a non-U.S. holder generally will
be required to furnish to us or our agent a duly executed Internal Revenue
Service Form W-8BEN, (or any successor form,) certifying, under penalties of
perjury, that such non-U.S. holder is entitled to benefits under an income tax
treaty. The new regulations also provide special rules for dividend payments
made to foreign intermediaries, U.S. or foreign wholly-owned entities that are
disregarded for United States federal income tax purposes and entities that are
treated as fiscally transparent in the United States, the applicable income tax
treaty jurisdiction or both. We urge you to consult your own tax advisor
concerning the effect, if any, of the adoption of these new United States
Treasury regulations on an investment in the common stock. A non-U.S. holder who
is eligible for a reduced withholding rate may obtain a refund of any excess
amounts withheld by filing an appropriate claim for a refund with the Internal
Revenue Service.

Dividends paid to a non-U.S. holder that are effectively connected with the
conduct of a trade or business (or, if an income tax treaty applies, are
attributable to a permanent establishment, as defined therein), within the
United States of the non-U.S. holder will generally be taxed on a net income
basis (that is, after allowance for applicable deductions), at the graduated
rates that are applicable to United States persons. In the case of a non-U.S.
holder that is a corporation, such income may also be subject to the United
States federal branch profits tax, (which is generally imposed on a foreign
corporation upon the deemed repatriation from the United States of effectively
connected earnings and profits), at a 30% rate, unless the rate is reduced or
eliminated by an applicable income tax treaty and the non-U.S. holder is a
qualified resident of the treaty country.

GAIN ON SALE OR OTHER DISPOSITION

A non-U.S. holder generally will not be subject to regular United States
federal income or withholding tax on gain recognized on a sale or other
disposition of the common stock, unless:

(1) the gain is effectively connected with the conduct of a trade or
business (or, if an income tax treaty applies, is attributable to a
permanent establishment, as defined therein), within the United States of
the non-U.S. holder or of a partnership, trust or estate in which such
non-U.S. holder is a partner or beneficiary;

(2) we have been, are or become a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Internal Revenue
Code at any time within the shorter of the five-year period preceding such
sale or other disposition or such non-U.S. holder's holding period for the
common stock; or

(3) the non-U.S. holder is an individual that:

(a) is present in the United States for 183 days or more in the
taxable year of the sale or other disposition; and

(b) either (i) has a tax home in the United States, as specially
defined for purposes of the United States federal income tax, or (ii)
maintains an office or other fixed place of business in the United
States and the gain from the sale or other disposition of the common
stock is attributable to such office or other fixed place of business.

Gains realized by a non-U.S. holder that are effectively connected with the
conduct of a trade or business, (or, if an income tax treaty applies, are
attributable to a permanent establishment, as defined therein), within the
United States of the non-U.S. holder will generally be taxed on a net income
basis (that is, after allowance for applicable deductions), at the graduated
rates that are applicable to United States persons. In the case of a non-U.S.
holder that is a corporation, such income may also be subject to the United
States federal branch profits tax (which is generally imposed on a foreign
corporation upon the deemed repatriation from the United States of effectively
connected earnings and profits), at a 30% rate, unless the rate is reduced or
eliminated by an applicable income tax treaty and the non-U.S. holder is a
qualified resident of the treaty country.

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A corporation is generally considered to be a United States real property
holding corporation if the fair market value of its United States real property
interests within the meaning of Section 897(c)(1) of the Internal Revenue Code
equals or exceeds 50% of the sum of the fair market value of its worldwide real
property interests plus the fair market value of any other of its assets used or
held for use in a trade or business. The determination of the fair market value
of our assets and, therefore, whether we are a United States real property
holding corporation at any given time will depend on the particular facts and
circumstances applicable at the time. Currently, it is our best estimate that
the fair market value of our United States real property interests is
approximately 50% of the fair market value of our United States and non-United
States real property interests and our other assets used or held for use in our
trade or business. Therefore, we believe that it is likely that we currently are
a United States real property holding corporation. Because the determination of
whether we are a United States real property holding corporation is based on the
fair market value of our United States real property interests and our other
assets, it is difficult to predict whether we will be a United States real
property holding corporation in the future.

Nevertheless, even if we are or have been a United States real property
holding corporation, a non-5% holder, as defined below, that is not otherwise
taxed under any other circumstance described above will not be taxed on any gain
realized on the sale or other disposition of the common stock if, at any time
during the calendar year of the disposition, the common stock was regularly
traded on an established securities market. A non-5% holder is a non-U.S. holder
that did not beneficially own, directly or indirectly, more than 5% of the total
fair market value of the common stock at any time during the shorter of the
five-year period ending on the date of disposition and the period that the
common stock was held by the non-U.S. holder. The common stock is quoted on the
Nasdaq National Market. Although the matter is not free from doubt, the common
stock should be considered to be regularly traded on an established securities
market during the time it is regularly quoted on Nasdaq.

If we are treated as a United States real property holding corporation and
either the common stock is not considered to be regularly traded (within the
meaning of applicable United States Treasury regulations) on an established
securities market (e.g. the Nasdaq National Market on which the common stock is
listed) or the selling non-U.S. holder does not qualify as a non-5% holder, then
the selling non-U.S. holder will be taxed on any gain realized on the
disposition of such holder's common stock on a net income basis at the rates and
in the manner applicable to United States persons.

Furthermore, if we are treated as a United States real property holding
corporation and the common stock is not considered to be regularly traded on an
established securities market, the person acquiring the common stock from the
selling non-U.S. holder generally will be required to withhold a withholding tax
at a rate of 10% from the gross amount of the proceeds of the sale. The
witholding tax will be creditable against the selling non-U.S. holder's United
States federal income tax liability and might entitle the non-U.S. holder to a
refund upon furnishing required information to the Internal Revenue Service. In
addition, the witholding tax rate may be reduced or eliminated by obtaining a
withholding certificate from the Internal Revenue Service in accordance with
applicable United States Treasury regulations.

We urge all non-U.S. holders to consult their own tax advisors regarding
the application of the foregoing rules to them.

Individual non-U.S. holders may also be subject to tax pursuant to
provisions of United States federal income tax law applicable to certain United
States expatriates, including former long-term residents of the United States.

FEDERAL ESTATE AND GIFT TAXES

Common stock owned or treated as owned by a non-U.S. holder at the date of
death will be included in such individual's estate for United States federal
estate tax purposes, unless an applicable estate tax treaty provides otherwise.

A non-U.S. holder will not be subject to United States federal gift tax on
a transfer of common stock, unless such person is an individual domiciled in the
United States or such person is an individual subject to

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provisions of United States federal gift tax law applicable to certain United
States expatriates, including certain former long-term residents of the United
States.

BACKUP WITHHOLDING TAX AND INFORMATION REPORTING

We must report annually to the Internal Revenue Service and to each
non-U.S. holder the amount of dividends paid to, and the tax withheld with
respect to, such non-U.S. holder, regardless of whether tax was actually
withheld and whether withholding was reduced by an applicable income tax treaty.
Pursuant to certain income tax treaties and other agreements, that information
may also be made available to the tax authorities of the country in which the
non-U.S. holder resides.

United States federal backup withholding, which generally is withholding
tax imposed at the rate of 31% on certain payments to persons not otherwise
exempt who fail to furnish certain identifying information, will generally not
apply to dividends paid to a non-U.S. holder that are subject to withholding at
the 30% rate (or that are subject to withholding at a reduced rate under an
applicable income tax treaty) or, under current law, dividends paid to a
non-U.S. holder at an address outside of the United States unless the payor has
knowledge that the payee is a United States person.

Under newly issued United States Treasury regulations, in the case of
dividends paid after December 31, 2000, a non-U.S. holder will generally be
subject to backup withholding, unless certain certification procedures (or in
the case of payments made outside of the United States with respect to an
offshore account, certain documentary evidence procedures) are satisfied,
directly or through a foreign intermediary.

The backup withholding and information reporting requirements will
generally also apply to the gross proceeds paid to a non-U.S. holder upon the
sale or other disposition of common stock by or through a United States office
of a United States or foreign broker, unless the non-U.S. holder certifies to
the broker under penalties of perjury as to, among other things, such holder's
name, address and status as a non-U.S. holder by timely filing a duly executed
copy of Internal Revenue Service Form W-8BEN (or any successor form) with the
broker, or unless the non-U.S. holder otherwise establishes an exemption.

Information reporting requirements (but not backup withholding tax) will
generally apply to a payment of the proceeds of a sale or other disposition of
common stock effected at a foreign office of:

(i) a United States broker,

(ii) a foreign broker 50% or more of whose gross income for certain
periods is effectively connected with the conduct of a trade or business
within the United States,

(iii) a foreign broker that is a controlled foreign corporation for
United States federal income tax purposes, or

(iv) pursuant to newly issued United States Treasury regulations
effective after December 31, 2000, a foreign broker that is (A) a foreign
partnership one or more of whose partners are U.S. persons that in the
aggregate hold more than 50% of the income or capital interest in the
partnership at any time during its tax year, or (B) a foreign partnership
engaged at any time during its tax year in the conduct of a trade or
business in the United States,

unless the broker has certain documentary evidence in its records that the
holder is a non-U.S. holder (and the broker has no knowledge to the contrary)
and certain other conditions are met, or unless the non-U.S. holder otherwise
establishes an exemption.

Neither backup withholding nor information reporting will generally apply
to a payment of the proceeds of a sale or other disposition of common stock
effected at a foreign office of a foreign broker not subject to the preceding
paragraph. You should consult your own tax advisor concerning the effect, if
any, of the adoption of the newly issued United States Treasury regulations on
backup withholding and information reporting on an investment in the common
stock.

68
<PAGE> 71

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the non-U.S.
holder's United States federal income tax liability, provided, however, that the
non-U.S. holder files an appropriate claim for a refund with the Internal
Revenue Service.

69
<PAGE> 72

UNDERWRITERS

Under the terms and subject to the conditions of an underwriting agreement
dated July , 2000, the underwriters named below, for whom Morgan Stanley & Co.
Incorporated, Deustche Bank Securities Inc., CIBC World Markets Corp., Credit
Suisse First Boston Corporation, Lehman Brothers Inc., Raymond James &
Associates, Inc., Thomas Weisel Partners LLC and Wasserstein Perella Securities,
Inc. are acting as representatives, have severally agreed to purchase, and
Holdings has agreed to sell to them, severally, the number of shares of
Holdings' common stock indicated below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ----------
<S> <C>
Morgan Stanley & Co. Incorporated...........................
Deustche Bank Securities Inc. ..............................
CIBC World Markets Corp. ...................................
Credit Suisse First Boston Corporation......................
Lehman Brothers Inc. .......................................
Raymond James & Associates, Inc. ...........................
Thomas Weisel Partners LLC..................................
Wasserstein Perella
Securities, Inc. ........................................
----------
Total.............................................
==========
</TABLE>

The underwriters are offering the shares of common stock subject to their
acceptance of the shares from Holdings and subject to prior sale. The
underwriting agreement provides that the obligations of the several underwriters
to pay for and accept delivery of the shares of common stock offered by this
prospectus are subject to the approval of specific legal matters by their
counsel and to certain other conditions. The underwriters are obligated to take
and pay for all of the shares of common stock offered by this prospectus, if any
are purchased. However, the underwriters are not required to take or pay for the
shares covered by the underwriters' over-allotment option described below.

The underwriters initially propose to offer part of the shares of common
stock directly to the public at the public offering price listed on the cover
page of this prospectus and part to certain dealers at a price that represents a
concession not in excess of $ a share under the public offering price. Any
underwriter may allow, and such dealers may reallow, a concession not in excess
of $ a share to other underwriters or to certain dealers. After the initial
offering of the shares of common stock, the offering price and other selling
terms may from time to time be changed by the representatives.

Holdings has granted to the underwriters an option, exercisable for 30 days
from the date of this prospectus, to purchase up to an aggregate of
additional shares of common stock at the public offering price listed on the
cover page of this prospectus, less underwriting discounts and commissions. The
underwriters may exercise this option solely for the purpose of covering
over-allotments, if any, made in connection with the offering of the shares of
common stock offered by this prospectus. To the extent the option is exercised,
each underwriter will become obligated, subject to specified conditions, to
purchase the same percentage of additional shares of common stock as the number
listed next to the underwriter's name in the preceding table bears to the total
number of shares of common stock listed next to the names of all underwriters in
the preceding table. If the underwriters' option is exercised in full, the total
price to the public for this offering would be $ , the total underwriters'
discounts and commissions would be $ and total proceeds to SpectraSite would
be $ .

Our common stock is quoted on the Nasdaq National Market under the symbol
"SITE."

70
<PAGE> 73

Each of Holdings and the directors, executive officers and certain other
stockholders of Holdings, has agreed that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the underwriters, it will not,
during the period ending days after the date of this prospectus:

-- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose
of, directly or indirectly, any shares of common stock or any
securities convertible into or exercisable or exchangeable for common
stock; or

-- enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of
the common stock;

whether any transaction described above is to be settled by delivery of common
stock or such other securities, in cash or otherwise. In addition, these
directors, executive officers and stockholders have agreed that, without the
prior written consent of Morgan Stanley & Co. Incorporated on behalf of the
underwriters, they will not, during the period ending days after the date
of this prospectus, make any demand for, or exercise any right with respect to,
the registration of any shares of common stock or any securities convertible
into or exercisable or exchangeable for common stock.

The restrictions described in the preceding paragraph do not apply to:

-- the sale of shares to the underwriters under the underwriting
agreement;

-- the issuance by Holdings of shares of common stock upon the exercise
of an option or a warrant or the conversion of a security outstanding
on the date of this prospectus of which the underwriters have been
advised in writing;

-- transactions by any person other than Holdings relating to shares of
common stock or other securities acquired in open market transactions
after the completion of this offering;

-- the pledge or transfer of shares in accordance with certain
provisions of the stockholders' agreement;

-- the granting by Holdings of any options, deferred shares or other
equity awards under Holdings' stock incentive plan, so long as such
options do not vest and become exercisable or such deferred share or
other awards do not vest, in each case, in the absence of
extraordinary events or occurrences beyond the control of the grantee
or recipient, until after the expiration of such 180 day period;

-- the issuance by Holdings of shares of common stock in connection with
acquisitions of businesses or portions thereof, provided the parties
in any such acquisition agree in writing to be bound by the foregoing
restrictions;

-- the pledge of shares to us by our employees to secure loans from us;
or

-- any disposition made among such persons' family members or
affiliates.

In order to facilitate this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
shares of common stock. Specifically, the underwriters may agree to sell or
allot more shares than the shares of our common stock which we have agreed
to sell them. This over-allotment would create a short position in our common
stock for the underwriters' account. To cover any over-allotments or to
stabilize the price of the common stock, the underwriters may bid for, and
purchase, shares of common stock in the open market. Finally, the underwriting
syndicate may reclaim selling concessions allowed to an underwriter or a dealer
for distributing the common stock in the offering, if the syndicate repurchases
previously distributed common stock in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. The underwriters have
reserved the right to reclaim selling concessions in order to encourage
underwriters and dealers to distribute the common stock for investment, rather
than for short-term profit taking. Increasing the proportion of the offering
held for investment may reduce the supply of common stock available for
short-term trading. Any of these activities may stabilize or maintain the market
price of the common stock above independent market levels. The underwriters are
not required to engage in these activities and may end any of these activities
at any time.

71
<PAGE> 74

From time to time, some of the underwriters have provided, and may continue
to provide, investment banking services to us. Morgan Stanley & Co.
Incorporated, CIBC World Markets Corp., Credit Suisse First Boston Corporation,
Deustche Bank Securities Inc. and Lehman Brothers Inc. were placement agents for
Holdings' 10 3/4 senior notes due 2010 and its 12 7/8% senior discount notes due
2010 in March 2000 and also acted as representatives of the underwriters in
connection with Holdings' public offering of common stock in February 2000. In
addition, Morgan Stanley & Co. Incorporated, CIBC World Markets Corp. and Credit
Suisse First Boston Corporation were initial purchasers of Holdings' 11 1/4%
senior discount notes due 2009 in April 1999. Affiliates of CIBC World Markets
Corp. and Credit Suisse First Boston Corporation are acting as agents and
lenders under our credit facility and each receives customary fees for
performing those services.

Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since December
1998, Thomas Weisel Partners has been named as a lead or co-manager on 171 filed
public offerings of equity securities, of which 127 have been completed, and has
acted as a syndicate member in an additional 97 public offerings of equity
securities. Thomas Weisel Partners does not have any material relationship with
us or any of our officers, directors or other controlling persons, except with
respect to its contractual relationship with us pursuant to the underwriting
agreement entered into in connection with this offering.

Holdings and the underwriters have agreed to indemnify each other against a
variety of liabilities, including liabilities under the Securities Act.

72
<PAGE> 75

LEGAL MATTERS

Dow, Lohnes & Albertson, PLLC, Washington, D.C., will pass upon the
validity of the shares of common stock offered by this prospectus. Shearman &
Sterling, New York, New York will pass upon certain legal matters for the
underwriters.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements for the period from inception (April 25, 1997) to December
31, 1997 and the years ended December 31, 1998 and 1999 and the consolidated
financial statements of our predecessor, Telesite Services, LLC, for the year
ended December 31, 1996 and for the period from January 1, 1997 to May 12, 1997
included in this registration statement, as set forth in their reports appearing
elsewhere herein, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.

Westower's consolidated financial statements as of September 30, 1998 and
for the seven months then ended and Summit's financial statements as of
September 30, 1998 and for the nine months then ended have been included in this
registration statement in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

Westower's consolidated financial statements as of February 28, 1997 and
February 28, 1998 and for the three years ended February 28, 1998 and Cord's
financial statements as of June 30, 1998 and for the two years ended June 30,
1998 have been included in this prospectus in reliance on the report of Moss
Adams LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.

The financial statements of MJA Communications Corp. as of December 31,
1996 and December 31, 1997 and for the three years ended December 31, 1997, have
been consolidated with those of Westower in this prospectus in reliance on the
report of Lamn, Krielow, Dytrych & Darling, independent accountants, given on
the authority of said firm as experts in auditing and accounting.

The financial statements of Summit Communications LLC as of December 31,
1997 and for the period from inception, May 24, 1997, to December 31, 1997 have
been included in this prospectus in reliance on the report of Shearer, Taylor &
Co., P.A., independent accountants, given on the authority of said firm as
experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

Holdings filed a registration statement on Form S-1 with the SEC for this
offering, and this prospectus is part of that registration statement. For
further information on SpectraSite, you should refer to our registration
statement and its exhibits. This prospectus summarizes material provisions of
contracts and other documents that we refer you to. Since the prospectus may not
contain all the information that you may find important, you should review the
full text of these documents. We have included copies of these documents as
exhibits to our registration statement.

Holdings files reports with the SEC as the Exchange Act requires. In
addition, the indentures governing Holdings' outstanding notes require that we
file Exchange Act reports with the SEC and provide those reports to the
indenture trustee and holders of notes. Our SEC filings are also available over
the Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York and Chicago. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference rooms and their copy charges.

73
<PAGE> 76

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets as of March 31, 2000
(unaudited) and December 31, 1999......................... F-3
Unaudited Condensed Consolidated Statements of Operations
for the three months ended March 31, 2000 and 1999........ F-4
Unaudited Condensed Consolidated Statements of Shareholders'
Equity for the three months ended March 31, 2000.......... F-5
Unaudited Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 2000 and 1999........ F-6
Notes to Unaudited Consolidated Financial Statements........ F-7
Report of Independent Auditors.............................. F-13
Consolidated Balance Sheets as of December 31, 1998 and
1999...................................................... F-14
Consolidated Statements of Operations for the period from
inception (April 25, 1997) to December 31, 1997 and for
the years ended December 31, 1998 and 1999................ F-15
Consolidated Statements of Redeemable Convertible Preferred
Stock and Shareholders' Equity (Deficiency)............... F-16
Consolidated Statements of Cash Flows for the period from
inception (April 25, 1997) to December 31, 1997 and for
the years ended December 31, 1998 and 1999................ F-17
Notes to Consolidated Financial Statements.................. F-18
TELESITE SERVICES, LLC
Report of Independent Auditors.............................. F-35
Consolidated Balance Sheet as of December 31, 1996.......... F-36
Consolidated Statements of Operations for the year ended
December 31, 1996 and for the period from January 1, 1997
through May 12, 1997...................................... F-37
Consolidated Statements of Members' Equity.................. F-38
Consolidated Statements of Cash Flows for the year ended
December 31, 1996 and for the period from January 1, 1997
through May 12, 1997...................................... F-39
Notes to Consolidated Financial Statements.................. F-40
WESTOWER CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets at September 30, 1998
and June 30, 1999 (unaudited)............................. F-44
Unaudited Condensed Consolidated Statements of Operations
for the three and nine months ended June 30, 1999 and
1998...................................................... F-45
Unaudited Condensed Consolidated Statements of Stockholders'
Equity for the nine months ended June 30, 1999............ F-46
Unaudited Condensed Consolidated Statements of Cash Flows
for the nine months ended June 30, 1999 and 1998.......... F-47
Notes to Unaudited Condensed Consolidated Financial
Statements................................................ F-48
Report of Independent Accountants........................... F-55
Independent Auditors' Reports............................... F-56
Consolidated Balance Sheets as of February 28, 1997 and 1998
and September 30, 1998.................................... F-58
Consolidated Statements of Income for the years ended
February 29, 1996, February 28, 1997 and 1998 and for the
seven months ended September 30, 1997 (unaudited) and
1998...................................................... F-59
</TABLE>

F-1
<PAGE> 77

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Consolidated Statements of Stockholders' Equity for the
years ended February 29, 1996, February 28, 1997 and 1998
and for the seven months ended September 30, 1998......... F-60
Consolidated Statements of Cash Flows for the years ended
February 29, 1996, February 28, 1997 and 1998 and for the
seven months ended September 30, 1997 (unaudited) and
1998...................................................... F-61
Notes to Consolidated Financial Statements.................. F-62
CORD COMMUNICATIONS, INC.
Report of Independent Auditors.............................. F-82
Balance Sheets as of June 30, 1998 and 1997................. F-83
Statements of Operations for the years ended June 30, 1998
and 1997.................................................. F-84
Statement of Changes in Stockholders' Equity (Deficit) for
the years ended June 30, 1998 and 1997.................... F-85
Statements of Cash Flows for the years ended June 30, 1998
and 1997.................................................. F-86
Notes to Financial Statements............................... F-87
SUMMIT COMMUNICATIONS, LLC
Reports of Independent Accountants.......................... F-95
Balance Sheets as of December 31, 1997 and September 30,
1998...................................................... F-97
Statements of Income for the period from May 24, 1997
(Inception) to December 31, 1997 and for the nine months
ended September 30, 1998.................................. F-98
Statement of Members' Equity for the period from May 24,
1997 (Inception) to December 31, 1997 and for the nine
months ended September 30, 1998........................... F-99
Statements of Cash Flows for the period from May 24, 1997
(Inception) to December 31, 1997 and for the nine months
ended September 30, 1998.................................. F-100
Notes to Financial Statements............................... F-101
</TABLE>

F-2
<PAGE> 78

SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
AT MARCH 31, 2000 AND DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 796,908 $ 37,778
Accounts receivable, net of allowance of $1,936 and
$1,530................................................. 52,249 31,785
Costs and estimated earnings in excess of billings........ 12,535 11,545
Inventories............................................... 5,438 4,083
Prepaid expenses and other................................ 4,315 4,353
---------- ----------
Total current assets.............................. 871,445 89,544
Property and equipment, net................................. 852,439 763,757
Goodwill and other intangible assets, net................... 402,774 307,197
Other assets................................................ 76,330 59,455
---------- ----------
Total assets................................................ $2,202,988 $1,219,953
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 21,745 $ 21,230
Accrued and other expenses................................ 22,909 16,942
Billings in excess of costs and estimated earnings........ 7,628 5,247
---------- ----------
Total current liabilities......................... 52,282 43,419
Long-term debt.............................................. 202,427 202,527
Senior discount notes....................................... 832,594 516,251
Senior notes................................................ 200,000 --
---------- ----------
Total liabilities................................. 1,287,303 762,197
---------- ----------
Shareholders' equity:
Convertible preferred stock (Series A, B and C)........... -- 339,494
Common stock ($.001 par value, 300,000,000 shares
authorized and 123,179,486 and 20,191,604 issued and
outstanding at March 31, 2000 and December 31, 1999)... 123 20
Additional paid-in-capital................................ 1,060,514 230,546
Accumulated other comprehensive income.................... 39 192
Accumulated deficit....................................... (144,991) (112,496)
---------- ----------
Total shareholders' equity........................ 915,685 457,756
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........ $2,202,988 $1,219,953
========== ==========
</TABLE>

See accompanying notes to these financials
F-3
<PAGE> 79

SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
2000 1999
------------ ------------
<S> <C> <C>
Revenues:
Site leasing.............................................. $ 20,284 $ 572
Network services.......................................... 54,953 2,383
-------- -------
Total revenues.............................................. 75,237 2,955
-------- -------
Operating expenses:
Costs of operations, excluding depreciation and
amortization expense: Site leasing..................... 9,210 354
Network services....................................... 41,080 550
Selling, general and administrative expenses.............. 15,625 2,830
Depreciation and amortization expense..................... 19,926 501
Non-cash compensation charges............................. 376 --
Restructuring and non-recurring charges................... -- 600
-------- -------
Total operating expenses.................................... 86,217 4,835
-------- -------
Operating loss.............................................. (10,980) (1,880)
-------- -------
Other income (expense):
Interest income........................................... 3,452 1,268
Interest expense.......................................... (24,204) (3,905)
Other income (expense).................................... (245) --
-------- -------
Total other income (expense)................................ (20,997) (2,637)
-------- -------
Loss before income taxes.................................... (31,977) (4,517)
Income tax expense.......................................... 518 --
-------- -------
Net loss.................................................... $(32,495) $(4,517)
======== =======
Loss applicable to common shareholders:
Net loss.................................................... $(32,495) $(4,517)
Accretion of redemption value of preferred stock............ -- (760)
-------- -------
Net loss applicable to common shareholders.................. $(32,495) $(5,277)
======== =======
Net loss per common share
Basic and diluted......................................... $ (0.38) (5.51)
======== =======
Weighted average common shares outstanding
Basic and diluted......................................... 85,277 957
======== =======
</TABLE>

See accompanying notes to these financials
F-4
<PAGE> 80

SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

COMMON STOCK ADDITIONAL COMPREHENSIVE
CONVERTIBLE -------------------- PAID-IN INCOME
PREFERRED STOCK SHARES AMOUNT CAPITAL (LOSS)
--------------- ----------- ------ ---------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1999...................... $339,494 20,191,604 $ 20 $ 230,546
Net loss.......................................... -- -- -- -- $(32,495)
Foreign currency translation adjustment........... -- -- -- -- (153)
--------
Total comprehensive loss.......................... $(32,648)
========
Issuance of common stock, net of stock issuance
costs of $24,475................................ -- 32,238,257 32 490,169
Non-cash compensation charges..................... -- -- -- 376
Conversion of preferred stock to common stock..... (339,494) 70,749,625 71 339,423
-------- ----------- ---- ----------
Balance at March 31, 2000......................... $ -- 123,179,486 $123 $1,060,514
======== =========== ==== ==========

<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE ACCUMULATED
INCOME DEFICIT TOTAL
------------- ----------- --------
<S> <C> <C> <C>
Balance at December 31, 1999...................... $ 192 $(112,496) $457,756
Net loss.......................................... -- (32,495) (32,495)
Foreign currency translation adjustment........... (153) -- (153)
Total comprehensive loss..........................
Issuance of common stock, net of stock issuance
costs of $24,475................................ -- -- 490,201
Non-cash compensation charges..................... -- -- 376
Conversion of preferred stock to common stock..... -- -- --
------ --------- --------
Balance at March 31, 2000......................... $ 39 $(144,991) $915,685
====== ========= ========
</TABLE>

See accompanying notes to these financials

F-5
<PAGE> 81

SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
2000 1999
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................... $(32,495) $ (4,517)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation.............................................. 13,858 501
Amortization of goodwill.................................. 6,068 154
Amortization of debt issuance costs....................... 1,133 75
Amortization of senior discount notes..................... 16,368 3,962
Non-cash compensation charges............................. 376 --
Equity in net loss of affiliate........................... 328 --
Changes in operating assets and liabilities, net of
acquisitions:
Accounts receivable....................................... (16,835) 209
Costs and estimated earnings in excess of billings........ (330) --
Inventories............................................... (418) --
Prepaid expenses and other................................ 1,571 13
Accounts payable.......................................... (1,702) (784)
Other current liabilities................................. (2,986) 109
-------- --------
Net cash used in operating activities....................... (15,064) (278)
-------- --------
INVESTING ACTIVITIES
Purchases of property and equipment......................... (90,544) (3,373)
Deposits on asset purchases................................. (23,000) --
Maturities of short-term investments........................ -- 15,414
Acquisitions, net of cash acquired.......................... (14,507) --
Other, net.................................................. (350) 21
-------- --------
Net cash provided by (used in) investing activities......... (128,401) 12,062
-------- --------
FINANCING ACTIVITIES
Proceeds from issuance of common stock...................... 443,075 --
Stock issuance costs........................................ (24,475) --
Repayments of debt.......................................... (383) (3)
Proceeds from issuance of senior notes...................... 200,000 --
Proceeds from issuance of senior discount notes............. 299,974 --
Debt issuance costs......................................... (15,596) (250)
-------- --------
Net cash provided by (used in) financing activities......... 902,595 (253)
-------- --------
Net increase in cash and cash equivalents................... 759,130 11,531
Cash and cash equivalents at beginning of period............ 37,778 99,548
-------- --------
Cash and cash equivalents at end of period.................. $796,908 $111,079
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest.................... $ 7,305 $ --
======== ========
Cash paid during the period for income taxes................ $ 370 $ --
======== ========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for acquisitions........................ $ 71,667 $ --
======== ========
</TABLE>

See accompanying notes to these financials
F-6
<PAGE> 82

SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

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

PRINCIPLES OF CONSOLIDATION

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

USE OF ESTIMATES

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

REVENUE RECOGNITION

Site leasing revenues are recognized when earned. Escalation clauses
present in the lease agreements with the Company's customers are recognized on a
straight-line basis over the term of the lease. Network service revenues from
site selection, construction and construction management activities are derived
under service contracts with customers which provide for billing on a time and
materials or fixed price basis. Revenues are recognized as services are
performed with respect to time and materials contracts. Revenues are recognized
using the percentage-of-completion method for fixed price contracts, measured by
the percentage of contract costs incurred to date compared to estimated total
contract costs. Costs and estimated earnings in excess of billings on
uncompleted contracts represent revenues recognized in excess of amounts billed.
Billings in excess of costs and estimated earnings on uncompleted contracts
represent billings in excess of revenues recognized. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses are
determined.

SIGNIFICANT CUSTOMERS

In the three months ended March 31, 2000, one customer, which is a
significant shareholder of the Company, accounted for 26.1% of revenues. In the
three months ended March 31, 1999, three different customers accounted for
57.4%, 14.5% and 14.2% of revenues, respectively.

RESTRUCTURING AND NON-RECURRING CHARGES

In March 1999, the Company announced that it would relocate its marketing
and administrative operations from Little Rock, Arkansas and Birmingham, Alabama
to its corporate headquarters in Cary, North Carolina. As a result, the Company
recorded a non-recurring charge of $0.6 million for employee termination and
other costs related to the relocation of these activities.

INCOME TAXES

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

F-7
<PAGE> 83
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

EARNINGS PER SHARE

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

RECLASSIFICATIONS

Certain reclassifications have been made to the 1999 condensed consolidated
financial statements to conform to the 2000 presentation.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS
133"). SFAS 133 requires that derivative instruments be recognized as either
assets or liabilities in the consolidated balance sheet based on their fair
values. Changes in the fair values of such derivative instruments will be
recorded either in results of operations or in other comprehensive income,
depending on the intended use of the derivative instrument. The initial
application of SFAS 133 will be reported as the effect of a change in accounting
principle. SFAS 133 is effective for all fiscal quarters beginning after June
15, 2000. The Company has not yet determined the effect that the adoption of
SFAS 133 will have on its consolidated financial statements.

UNAUDITED INTERIM FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial reporting and in accordance with the instructions for Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and disclosures normally required by generally accepted
accounting principles for complete financial statements or those normally
reflected in the Company's Annual Report on Form 10-K. The financial information
included herein reflects all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of results for interim periods. Results of interim periods are not
necessarily indicative of the results to be expected for a full year.

2. LONG-LIVED ASSETS

Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
Towers............................................ $792,249 $723,075
Equipment......................................... 11,318 9,884
Furniture and fixtures............................ 3,360 2,256
Other............................................. 22,882 15,240
-------- --------
829,809 750,455
Less accumulated depreciation..................... (46,695) (32,837)
-------- --------
783,114 717,618
Construction in progress.......................... 69,325 46,139
-------- --------
$852,439 $763,757
======== ========
</TABLE>

F-8
<PAGE> 84
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

Goodwill and other intangible assets consist of the following (in
thousands):

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
Goodwill.......................................... $365,717 $280,666
Debt issuance costs............................... 49,549 33,955
-------- --------
Other............................................. 1,000 --
416,266 314,621
Less accumulated amortization..................... (13,492) (7,424)
-------- --------
$402,774 $307,197
======== ========
</TABLE>

Other assets consist of the following (in thousands):

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
Deposits.......................................... $63,548 $49,153
Other............................................. 12,782 10,302
------- -------
$76,330 $59,455
======= =======
</TABLE>

3. ACQUISITION ACTIVITIES

On January 5, 2000, SpectraSite acquired Vertical Properties, Inc. in a
merger for 225,000 shares of its common stock valued at $2.6 million and repaid
outstanding indebtedness of $1.5 million. Vertical Properties is a broadcast
tower development company formed to meet the needs of broadcasters in secondary
broadcast markets faced with the complexities of converting to digital
technology through site acquisition, tower placement and leasing of antenna
space.

On January 5, 2000, SpectraSite acquired Apex Site Management Holdings,
Inc. ("Apex") in a merger transaction for 4.5 million shares of its common stock
valued at $55.8 million and 191,465 options to purchase common stock at an
exercise price of $3.58 per share to the shareholders of Apex at the closing of
the merger. In addition, SpectraSite issued approximately 1.5 million additional
shares of common stock into escrow. These shares may be released to Apex's
shareholders six months based on the average trading price for SpectraSite's
common stock for the 30-day period immediately preceding the six-month
anniversary of the public offering. SpectraSite also used approximately $6.2
million in cash to repay outstanding indebtedness and other obligations of Apex
in connection with the merger. Apex provides rooftop and in-building access to
wireless carriers.

On January 28, 2000, SpectraSite acquired substantially all of the assets
of International Towers Inc. and its subsidiaries, including S&W Communications
Inc. International Towers owns a broadcast tower manufacturing facility and,
through S&W Communications, provides integrated services for the erection of
broadcast towers, foundations and multi-tenant transmitter buildings.
SpectraSite paid $5.4 million and issued 350,000 shares of its common stock
valued at $7.1 million in connection with this acquisition.

On March 14, 2000, SpectraSite acquired substantially all of the assets of
TelCo Site Services, Inc. ("TelCo"), which provides network services.
SpectraSite issued 155,000 shares of common stock valued at $4.2 million in
connection with the acquisition.

The acquisitions of Vertical Properties, Apex, International Towers and
TelCo were accounted for as purchases, and the excess of cost over fair value of
the net assets acquired is being amortized on a straight-line

F-9
<PAGE> 85
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

basis over fifteen years. The operations of each are included in the
consolidated statement of operations from the date of acquisition.

The following unaudited pro forma summary for the three months ended March
31, 2000 and 1999 presents the condensed consolidated results of operations as
if the 1999 acquisitions of Westower, Stainless and Doty Moore and the 2000
acquisitions discussed above had occurred as of January 1, 1999. These unaudited
pro forma results have been prepared for comparative purposes only and do not
purport to be indicative of what would have occurred had the acquisitions been
made as of January 1, 1999 or of results that may occur in the future.

<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 2000 MARCH 31, 1999
------------------ ------------------
<S> <C> <C>
Revenues........................... $ 76,139 $ 30,835
Net loss........................... $(33,747) $(14,362)
Basic and diluted net loss per
common share..................... $ (0.40) $ (0.74)
</TABLE>

4. DEBT

12.875% SENIOR DISCOUNT NOTES DUE 2010

In March 2000, SpectraSite issued $559.8 million aggregate principal amount
at maturity of senior discount notes due 2010 (the "2010 Notes") for gross
proceeds of $300.0 million. Interest on the 2010 Notes accretes daily at a rate
of 12.875% per annum, compounded semiannually, to an aggregate principal amount
of $559.8 million on March 15, 2005. Cash interest will not accrue on the 2010
Notes prior to March 15, 2005. Commencing March 15, 2005, cash interest will
accrue and be payable semiannually in arrears on each March 15 and September 15,
commencing September 15, 2005, at a rate of 12.875% per annum. After March 15,
2005, the Company may redeem all or a portion of the 2010 Notes at specified
redemption prices, plus accrued and unpaid interest. On one or more occasions
prior to March 15, 2003, the Company may redeem up to 35% of the aggregate
principal amount at maturity of the 2010 Notes with the net cash proceeds from
one or more equity offerings. The redemption price would be 112.875% of the
accreted value on the redemption date. The Company is required to comply with
certain covenants under the terms of the 2010 Notes that restrict the Company's
ability to incur additional indebtedness and make certain payments, among other
things.

10.75% SENIOR NOTES DUE 2010

In March 2000, SpectraSite issued $200.0 million aggregate principal amount
of senior discount notes due 2010 (the "Cash Notes"). The Cash Notes bear
interest at a rate of 10.75% per annum, payable semi-annually in arrears on
March 15 and September 15 commencing September 15, 2000. After March 15, 2005,
the Company may redeem all or a portion of the Cash Notes at specified prices,
plus accrued interest. On one or more occasions prior to March 15, 2003, the
Company may redeem up to 35% of the Cash Notes with the net cash proceeds from
one or more equity offerings. The redemption price would be 110.75% of the
principal amount of the Cash Notes bought, plus accrued interest. The Company is
required to comply with certain covenants under the terms of the Cash Notes that
restrict the Company's ability to incur additional indebtness and make certain
payments, among other things.

5. SHAREHOLDERS' EQUITY

On February 4, 2000, SpectraSite completed an underwritten public offering
of 25.6 million shares of common stock for net proceeds of approximately $411.3
million. As a result of the offering, all Series A, B and C preferred stock
automatically converted to common stock on a share-for-share basis.

F-10
<PAGE> 86
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

6. BUSINESS SEGMENTS

The Company operates in two business segments, site leasing and network
services. Prior period information has been restated to reflect the current
business segments. The site leasing segment provides for leasing and subleasing
of antennae sites on multi-tenant towers for a diverse range of wireless
communication services, including personal communication services, paging,
cellular and microwave. The network services segment offers a broad range of
network development services, including network design, tower construction and
antenna installation.

In evaluating financial performance, management focuses on operating profit
(loss), excluding depreciation and amortization and restructuring charges. This
measure of operating profit (loss) is also before interest income, interest
expense, other income (expense) and income taxes. All reported segment revenues
are generated from external customers as intersegment revenues are not
significant.

Summarized financial information concerning the reportable segments as of
and for the three months ended March 31, 2000 and 1999 is shown in the following
table. The "Other" column represents amounts excluded from specific segments,
such as income taxes, corporate general and administrative expenses,
depreciation and amortization, restructuring and other non-recurring charges and
interest. In addition, "Other" also includes corporate assets such as cash and
cash equivalents, tangible and intangible assets and income tax accounts which
have not been allocated to a specific segment.

<TABLE>
<CAPTION>
NETWORK
SITE LEASING SERVICES OTHER TOTAL
------------ -------- -------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 2000
Revenues.................................. $ 20,284 $54,953 $ -- $ 75,237
Income (loss) before income taxes......... 9,549 5,892 (47,418) (31,977)
Assets.................................... 872,996 76,061 1,253,931 2,202,988
THREE MONTHS ENDED MARCH 31, 1999
Revenues.................................. $ 572 $ 2,383 $ -- $ 2,955
Income (loss) before income taxes......... 218 1,833 (6,568) (4,517)
Assets.................................... 25,367 -- 135,345 160,712
</TABLE>

7. SUBSEQUENT EVENTS

On February 17, 2000, the Company signed a definitive agreement with
AirTouch Communications, Inc. to obtain the rights to approximately 430 towers
through a master sublease for approximately $155 million. The transaction is
expected to close in stages with the initial closing to occur no later than
November 15, 2000, if certain conditions are met.

On April 7, 2000, the Company acquired Ample Design, Ltd. for $20.2
million. Ample Design provides wireless network development services in the
United Kingdom.

On April 12, 2000, the Company entered into an agreement to acquire
Lodestar Towers, Inc. for approximately $170.0 million. Lodestar owns and
operates 90 wireless towers and 10 broadcast towers, and manages an additional
139 wireless towers and 10 broadcast towers. Lodestar is also in the process of
acquiring 27 multi-tenant towers and developing approximately 200 wireless
towers. The acquisition is expected to close in the second quarter of 2000,
subject to customary regulatory approvals.

On April 13, 2000, SpectraSite entered into a joint venture shareholders'
agreement, pursuant to which SpectraSite and Transco (BG Group plc), the arm of
BG Group plc which runs Britains' gas network, will jointly develop a tower
business to support Europe's growing mobile communications industry. SpectraSite

F-11
<PAGE> 87
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)

and Transco will each own 50% of the joint venture. Transco will transfer
existing operational communications towers and industrial land suitable for
construction of new towers into the joint venture, and SpectraSite will provide
intellectual property and wireless network development skills. In addition,
SpectraSite will contribute approximately $165 million for future developments
and possible acquisitions and will contribute Ample Design to the joint venture.

F-12
<PAGE> 88

REPORT OF INDEPENDENT AUDITORS

Board of Directors
SpectraSite Holdings, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of SpectraSite
Holdings, Inc. and subsidiaries as of December 31, 1998 and 1999 and the related
consolidated statements of operations, redeemable convertible preferred stock
and shareholders' equity (deficiency) and cash flows for the years ended
December 31, 1998 and 1999 and for the period from April 25, 1997 (inception) to
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of SpectraSite
Holdings, Inc. and subsidiaries at December 31, 1998 and 1999 and the
consolidated results of its operations and its cash flows for the years ended
December 31, 1998 and 1999 and for the period from April 25, 1997 (inception) to
December 31, 1997 in conformity with accounting principles generally accepted in
the United States.

/s/ ERNST & YOUNG LLP

February 14, 2000
Raleigh, North Carolina

F-13
<PAGE> 89

SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------
1998 1999
-------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 99,548 $ 37,778
Short-term investments.................................... 15,414 --
Accounts receivable, net of allowance of $0 and $1,530.... 3,353 31,785
Costs and estimated earnings in excess of billings........ -- 11,545
Inventories............................................... -- 4,083
Prepaid expenses and other................................ 253 4,353
-------- ----------
Total current assets........................................ 118,568 89,544
Property and equipment, net................................. 28,469 763,757
Goodwill and other intangible assets, net................... 12,757 307,197
Other assets................................................ 2,152 59,455
-------- ----------
Total assets................................................ $161,946 $1,219,953
======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable.......................................... $ 1,635 $ 21,230
Accrued and other expenses................................ 809 16,942
Billings in excess of costs and estimated earnings........ -- 5,247
-------- ----------
Total current liabilities................................... 2,444 43,419
Long-term debt.............................................. -- 202,527
Other long-term liabilities................................. 224 --
Senior discount notes....................................... 132,689 516,251
-------- ----------
Total liabilities........................................... 135,357 762,197
-------- ----------
Series A redeemable convertible preferred stock, $0.001 par,
3,462,830 shares authorized, and 3,462,830 outstanding,
stated at liquidation value............................... 11,300 --
-------- ----------
Series B redeemable convertible preferred stock, $0.001 par,
7,000,000 shares authorized, and 7,000,000 outstanding,
stated at liquidation value............................... 29,356 --
-------- ----------
Shareholders' equity (deficiency):
Series A convertible preferred stock, $0.001 par,
3,462,830 shares authorized and outstanding, stated at
liquidation value...................................... -- 10,000
Series B convertible preferred stock, $0.001 par,
7,000,000 shares authorized and outstanding, stated at
liquidation value...................................... -- 28,000
Series C convertible preferred stock, $0.001 par,
60,286,795 shares authorized and outstanding, stated at
liquidation value...................................... -- 301,494
Common stock, $0.001 par, 20,000,000 and 300,000,000
authorized, respectively, 956,753 and 20,191,604 issued
and outstanding, respectively.......................... 1 20
Additional paid-in-capital................................ -- 230,546
Accumulated other comprehensive income.................... -- 192
Accumulated deficit....................................... (14,068) (112,496)
-------- ----------
Total shareholders' equity (deficiency)..................... (14,067) 457,756
-------- ----------
Total liabilities, redeemable preferred stock and
shareholders' equity (deficiency)......................... $161,946 $1,219,953
======== ==========
</TABLE>

F-14
<PAGE> 90

SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEAR YEAR
(APRIL 25, 1997) TO ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
------------------- ------------ ------------
<S> <C> <C> <C>
Revenues:
Site leasing............................... $ -- $ 656 $ 46,515
Network services........................... 5,002 8,142 53,570
------- -------- --------
Total revenues............................... 5,002 8,798 100,085
------- -------- --------
Operating expenses:
Cost of operations, excluding depreciation
and amortization expense:
Site leasing.......................... -- 299 17,825
Network services...................... 1,120 2,492 36,489
Selling, general and administrative
expenses................................... 7,390 9,690 38,182
Depreciation and amortization expense........ 489 1,268 37,976
Restructuring and non-recurring charges...... -- -- 7,727
------- -------- --------
Total operating expenses..................... 8,999 13,749 138,199
------- -------- --------
Operating loss............................... (3,997) (4,951) (38,114)
------- -------- --------
Other income (expense):
Interest income............................ 122 3,569 8,951
Interest expense........................... (164) (8,170) (67,513)
Other income (expense)..................... 149 473 (424)
------- -------- --------
Total other income (expense)................. 107 (4,128) (58,986)
------- -------- --------
Loss before income taxes..................... (3,890) (9,079) (97,100)
Income tax expense........................... -- -- 568
------- -------- --------
Net loss..................................... $(3,890) $ (9,079) $(97,668)
======= ======== ========
Loss applicable to common shareholders:
Net loss..................................... $(3,890) $ (9,079) $(97,668)
Accretion of redemption value of preferred
stock...................................... (500) (2,156) (760)
------- -------- --------
Net loss applicable to common shareholders... $(4,390) $(11,235) $(98,428)
======= ======== ========
Net loss per common share:
Basic and diluted.......................... $ (5.21) $ (11.98) $ (12.48)
======= ======== ========
Weighted average common shares outstanding:
Basic and diluted.......................... 842 938 7,886
======= ======== ========
</TABLE>

F-15
<PAGE> 91

SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF REDEEMABLE
CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY (DEFICIENCY)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
REDEEMABLE CONVERTIBLE PREFERRED STOCK
--------------------------------------
REDEEMABLE REDEEMABLE
CONVERTIBLE CONVERTIBLE CONVERTIBLE CONVERTIBLE CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
SERIES A SERIES B SERIES A SERIES B SERIES C
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance at April 25, 1997
(inception).............. $ -- $ -- $ -- $ -- $ --
Issuance of common
stock.................... -- -- -- -- --
Issuance of warrants...... -- -- -- -- --
Issuance of preferred
stock.................... 10,000 -- -- -- --
Stock issuance costs...... -- -- -- -- --
Accretion of redemption
value.................... 500 -- -- -- --
Net loss.................. -- -- -- -- --
-------- -------- ------- ------- --------
Balance at December 31,
1997..................... 10,500 -- -- -- --
Exercise of warrants...... -- -- -- -- --
Issuance of preferred
stock.................... -- 28,000 -- -- --
Stock issuance costs...... -- -- -- -- --
Accretion of redemption
value.................... 800 1,356 -- -- --
Repurchase of common
stock.................... -- -- -- -- --
Net loss.................. -- -- -- -- --
-------- -------- ------- ------- --------
Balance at December 31,
1998..................... 11,300 29,356 -- -- --
Net loss.................. -- -- -- -- --
Foreign currency
translation adjustment... -- -- -- -- --
Total comprehensive
loss.....................
Issuance of common
stock.................... -- -- -- -- --
Stock issuance costs...... -- -- -- -- --
Issuance of Series C
preferred stock.......... -- -- -- -- 301,494
Accretion of redemption
value.................... 200 560 -- -- --
Cancellation of redemption
status of preferred
stock.................... (11,500) (29,916) 10,000 28,000 --
-------- -------- ------- ------- --------
Balance at December 31,
1999..................... $ -- $ -- $10,000 $28,000 $301,494
======== ======== ======= ======= ========

<CAPTION>
SHAREHOLDERS' EQUITY (DEFICIENCY)
---------------------------------------------------------------
ACCUMULATED
COMMON STOCK ADDITIONAL COMPREHENSIVE OTHER
------------------- PAID-IN INCOME COMPREHENSIVE ACCUMULATED
SHARES AMOUNT CAPITAL (LOSS) INCOME DEFICIT TOTAL
---------- ------ ---------- ------------- ------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at April 25, 1997
(inception).............. -- $ -- $ -- $ -- $ -- $ --
Issuance of common
stock.................... 931,753 1 2,281 -- -- 2,282
Issuance of warrants...... -- -- 390 -- -- 390
Issuance of preferred
stock.................... -- -- -- -- -- --
Stock issuance costs...... -- -- (180) -- -- (180)
Accretion of redemption
value.................... -- -- (500) -- -- (500)
Net loss.................. -- -- -- $ (3,890) -- (3,890) (3,890)
---------- ---- -------- ======== ---- --------- --------
Balance at December 31,
1997..................... 931,753 1 1,991 -- (3,890) (1,898)
Exercise of warrants...... 150,000 -- -- -- -- --
Issuance of preferred
stock.................... -- -- -- -- -- --
Stock issuance costs...... -- -- (434) -- -- (434)
Accretion of redemption
value.................... -- -- (1,557) -- (599) (2,156)
Repurchase of common
stock.................... (125,000) -- -- -- (500) (500)
Net loss.................. -- -- -- $ (9,079) -- (9,079) (9,079)
---------- ---- -------- ======== ---- --------- --------
Balance at December 31,
1998..................... 956,753 1 -- (14,068) (14,067)
Net loss.................. -- -- -- $(97,668) -- (97,668) (97,668)
Foreign currency
translation adjustment... -- -- -- 192 192 -- 192
--------
Total comprehensive
loss..................... $(97,476)
========
Issuance of common
stock.................... 19,234,851 19 233,844 -- -- 233,863
Stock issuance costs...... -- -- (6,714) -- -- (6,714)
Issuance of Series C
preferred stock.......... -- -- -- -- -- 301,494
Accretion of redemption
value.................... -- -- -- -- (760) (760)
Cancellation of redemption
status of preferred
stock.................... -- -- 3,416 -- -- 41,416
---------- ---- -------- ---- --------- --------
Balance at December 31,
1999..................... 20,191,604 $ 20 $230,546 $192 $(112,496) $457,756
========== ==== ======== ==== ========= ========
</TABLE>

F-16
<PAGE> 92

SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
(APRIL 25, 1997) TO YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998 DECEMBER 31, 1999
--------------------- ----------------- -----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss........................................... $(3,890) $ (9,079) $ (97,668)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation..................................... 191 712 31,967
Amortization of goodwill and other intangibles... 298 556 6,009
Amortization of debt issuance costs.............. -- 244 3,086
Non-cash financing charge........................ -- -- 9,000
Loss (gain) on sale of assets.................... 60 (473) 95
Amortization of discount--senior discount
notes.......................................... -- 7,689 43,558
Non-cash compensation charges.................... 2,600 -- 350
Write-off of goodwill............................ -- -- 6,178
Equity in net loss of an affiliate............... -- -- 408
Changes in operating assets and liabilities, net of
acquisitions:
Accounts receivable.............................. (289) (1,451) (8,535)
Interest receivable on short-term investments.... -- (759) --
Costs and estimated earnings in excess of
billings....................................... -- -- (4,240)
Inventories...................................... -- -- 1,526
Prepaid expenses and other....................... 136 (164) (4,024)
Accounts payable................................. 317 591 11,457
Other current liabilities........................ 1,005 (213) 18,388
Other, net....................................... (205) -- --
------- -------- ---------
Net cash provided by (used in) operating
activities....................................... 223 (2,347) 17,555
------- -------- ---------
INVESTING ACTIVITIES
Purchases of property and equipment................ (850) (26,598) (644,778)
Acquisitions, net of cash acquired................. (5,028) (1,989) (128,414)
Proceeds from note receivable...................... -- 41 142
Issuance of note receivable........................ -- -- (500)
Investment in affiliates........................... -- -- (4,167)
Loan to affiliate.................................. -- -- (2,875)
Distribution from affiliate........................ -- 150 --
Purchases of investments........................... -- (30,005) --
Maturities of short-term investments............... -- 15,350 15,414
Proceeds from sale of assets....................... -- 299 22
Repurchase of common stock......................... -- (500) --
Deposits on acquisitions........................... (1,300) (1,750) (48,069)
------- -------- ---------
Net cash used in investing activities.............. (7,178) (45,002) (813,225)
------- -------- ---------
FINANCING ACTIVITIES
Proceeds from issuance of preferred stock.......... 10,000 28,000 231,494
Proceeds from issuance of common stock............. -- -- 1,007
Stock issuance costs............................... (179) (434) (6,714)
Proceeds from issuance of long-term debt........... -- -- 200,000
Proceeds from issuance of senior discount notes.... -- 125,000 340,004
Debt issuance costs................................ -- (4,836) (29,307)
Net repayments on line of credit................... (568) (628) --
Repayment of note to shareholder and other debt.... (64) (2,439) (2,584)
------- -------- ---------
Net cash provided by financing activities.......... 9,189 144,663 733,900
------- -------- ---------
Net increase (decrease) in cash and cash
equivalents...................................... 2,234 97,314 (61,770)
Cash and cash equivalents at beginning of period... -- 2,234 99,548
------- -------- ---------
Cash and cash equivalents at end of period......... $ 2,234 $ 99,548 $ 37,778
======= ======== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest........... $ 64 $ 216 $ 9,019
======= ======== =========
SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for acquisitions............... $ -- $ 224 $ 217,855
======= ======== =========
Series C preferred stock issued for purchase of
property and equipment........................... $ -- $ -- $ 70,000
======= ======== =========
</TABLE>

F-17
<PAGE> 93

SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

FORMATION OF COMPANY

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

SpectraSite, formerly known as Integrated Site Development, Inc. ("ISD"),
was incorporated in the State of Delaware on April 25, 1997. On May 12, 1997,
SpectraSite issued 850,000 shares of its common stock and warrants to purchase
150,000 shares of common stock in exchange for the 850,000 issued and
outstanding shares of common stock and warrants to purchase 150,000 shares of
common stock of US Towers, Inc. ("UST"). SpectraSite's chief executive officer
was the principal shareholder of UST prior to this transaction. One of the
primary purposes of the exchange of shares was the hiring of the chief executive
officer. Since UST had minimal assets and operations, this transaction was
compensatory in nature, rather than a business combination or an asset
acquisition. Accordingly, this transaction resulted in a non-cash compensation
charge of $2.6 million based on the estimated fair value of the stock of $2.60
per share and the estimated fair value of the warrants of $2.60 per warrant at
the date of issuance. The warrants entitled the holder to the right to purchase
150,000 shares of SpectraSite common stock at a price of $0.001 per share,
through 2001. In September and October 1998, all of the warrants were exercised.

On May 12, 1997, SpectraSite acquired all of the outstanding membership
interests of TeleSite Services, LLC ("TeleSite") and its subsidiary, MetroSite
Management, LLC ("MetroSite"), for consideration including $4.9 million in cash,
81,753 shares of common stock valued at $0.2 million and a $2.3 million note
payable. Since SpectraSite had minimal operations prior to this acquisition,
TeleSite is considered SpectraSite's predecessor for financial reporting
purposes. In October 1997, TeleSite was merged into UST, and UST changed its
name to SpectraSite Communications, Inc. The acquisition was accounted for as a
purchase in accordance with the provisions of APB 16 and, accordingly, the
results of operations of TeleSite are included in the consolidated operations of
the Company from the date of acquisition.

In connection with the TeleSite acquisition, SpectraSite was required to
provide additional consideration of 55,919 shares of its common stock based upon
TeleSite achieving certain operating goals through the end of December 31, 1998,
pursuant to a provision in the TeleSite acquisition agreement. The Company
accounted for the obligation as an additional cost of the acquisition, recording
approximately $0.2 million of goodwill and a related long-term liability based
upon the fair value of the Company's common stock at December 31, 1998. During
1999, this obligation was satisfied by the issuance of 55,919 shares of common
stock valued at $0.2 million.

PRINCIPLES OF CONSOLIDATION

USE OF ESTIMATES

F-18
<PAGE> 94
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.

SHORT-TERM INVESTMENTS

At December 31, 1998, the Company's short-term investments consisted of
commercial paper and certificates of deposit with maturities of less than one
year. The carrying amount of these investments approximated market value.

REVENUE RECOGNITION

INVENTORIES

Inventories are stated at the lower of cost or market using the first-in,
first-out method and consist primarily of materials purchased for future
construction not associated with specific jobs.

INVESTMENTS

An investment in an entity in which the Company owns more than 20% but less
than 50% is accounted for using the equity method and is included in other
assets. Under the equity method, the investment is stated at cost plus the
Company's equity in net income (loss) of the entity since acquisition. The
equity in net income (loss) of such entity is recorded in "Other income
(expense)" in the accompanying consolidated statements of operations. An
investment in an entity in which the Company owns less than 20% is accounted for
using the cost method and is included in other assets.

PROPERTY AND EQUIPMENT

Property and equipment, including towers, are stated at cost. The Company
capitalizes costs incurred in bringing towers to an operational state. Direct
costs related to the development and construction of towers, including interest,
are capitalized and are included in construction in progress. Approximately $0.1
million and $1.1 million of interest was capitalized for the years ended
December 31, 1998 and 1999, respectively. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets ranging from
three to fifteen years.

GOODWILL

The Company has classified as goodwill the cost in excess of fair value of
net assets acquired in purchase transactions. Goodwill is being amortized on a
straight-line basis over fifteen years. On an on going basis, the Company
assesses the recoverability of its goodwill by determining its ability to
generate future cash flows

F-19
<PAGE> 95
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

sufficient to recover the unamortized balance over the remaining useful life.
Goodwill determined to be unrecoverable based on future cash flows would be
written-off in the period in which such determination is made.

DEBT ISSUANCE COSTS

The Company capitalized costs relating to the issuance of long-term debt
and senior discount notes. The costs are amortized using the straight-line
method over the term of the related debt.

INCOME TAXES

The liability method is used in accounting for income taxes and deferred
tax assets and liabilities are determined based on differences between the
financial reporting and tax basis of assets and liabilities.

FINANCIAL INSTRUMENTS

The carrying amount of cash and cash equivalents, short-term investments
and the credit facility approximates fair value for these instruments. The
estimated fair value of the senior discount notes is based on the quoted market
price. The estimated fair values of the Company's financial instruments, along
with the carrying amounts of the related assets (liabilities), are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1998 DECEMBER 31, 1999
------------------ ---------------------- ----------------------
CARRYING FAIR CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
-------- ------ --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Cash and cash
equivalents.......... $2,234 $2,234 $ 99,548 $ 99,548 $ 37,778 $ 37,778
Short-term
investments.......... -- -- 15,414 15,414 -- --
12% Senior Discount
Notes due 2008....... -- -- (132,689) (114,871) (149,137) (132,890)
11.25 % Senior Discount
Notes Due 2009....... -- -- -- -- (367,114) (312,471)
Credit Facility........ -- -- -- -- (200,000) (200,000)
</TABLE>

EARNINGS PER SHARE

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

COSTS OF OPERATIONS

Costs of operations for network services consist of direct costs incurred
to provide the related services excluding depreciation and amortization expense.
Costs of operations for site leasing consist of direct costs incurred to provide
the related services including ground lease cost, tower maintenance and related
real estate taxes. Costs of operations for site leasing do not include
depreciation expense of the related leased assets.

SIGNIFICANT CUSTOMERS

The Company's customer base consists of businesses operating in the
wireless telecommunications industry. The Company's exposure to credit risk
consists primarily of unsecured accounts receivable from

F-20
<PAGE> 96
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

these customers. Five customers accounted for 96.6% of the Company's 1997
revenue. Two customers accounted for 70.9% of the Company's 1998 revenue.
Following is a list of significant customers:

<TABLE>
<CAPTION>
PERCENT OF
REVENUES
FOR THE PERIOD FROM PERCENT OF REVENUES PERCENT OF
APRIL 25, 1997 PERCENT OF ACCOUNTS FOR THE YEAR ACCOUNTS
(INCEPTION) TO RECEIVABLE AT ENDED RECEIVABLE AT
DECEMBER 31, 1997 DECEMBER 31, 1997 DECEMBER 31, 1998 DECEMBER 31, 1998
------------------- ------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Customer 1........... 38.9% 75.0% 46.6% 15.6%
Customer 2........... 18.8% -- -- --
Customer 3........... 14.7% -- -- --
Customer 4........... 13.0% -- -- --
Customer 5........... 11.2% -- -- --
Customer 6........... -- -- 24.3% 45.0%
Customer 7........... -- -- -- 22.7%
</TABLE>

In the year ended December 31,1999, one customer, which is a significant
shareholder of the Company, accounted for 35.0% of the Company's revenues.

RESTRUCTURING AND NON-RECURRING CHARGES

In September 1999, the Company announced that it would no longer directly
provide site acquisition services. As a result, the Company recorded
restructuring charges of $7.1 million, of which $6.2 million related to the
write-off of goodwill related to the purchase of TeleSite and $0.9 million was
related to the cost of employee severance. In March 1999, the Company announced
that it would relocate its marketing and administrative operations from Little
Rock, Arkansas and Birmingham, Alabama to its corporate headquarters in Cary,
North Carolina. As a result, the Company recorded a non-recurring charge of $0.6
million for employee termination and other costs related to the relocation of
these activities.

STOCK OPTIONS

The Company has elected under the provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock Based Compensation" ("SFAS
123") to account for its employee stock options in accordance with Accounting
Principle Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB
25"). Companies that account for stock based compensation arrangements for its
employees under APB No. 25 are required by SFAS 123 to disclose the pro forma
effect on net income (loss) as if the fair value based method prescribed by SFAS
123 had been applied. The Company plans to continue to account for stock based
compensation using the provisions of APB 25 and has adopted the disclosure
requirements of SFAS 123.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In 1998, the Company adopted Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("SFAS 130"), which establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. SFAS 130 only impacts
financial statement presentation as opposed to actual amounts recorded. Other
comprehensive income includes all nonowner changes in equity that are excluded
from net income. During the period from inception (April 25, 1997) to December
31, 1997 and during the year ended December 31, 1998, the Company had no items
of other comprehensive income. During the year ended December 31, 1999, the
Company had other comprehensive income related to foreign currency translation
adjustments.

F-21
<PAGE> 97
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In 1998, the Company adopted Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"). SFAS 131 changes the way public companies report segment
information in annual financial statements and also requires those companies to
report selected segment information in interim financial statements to
shareholders. SFAS 131 also establishes standards for related disclosures about
products and services, geographic areas, and major customers. The application of
the new rules did not have a significant impact on the Company's financial
position at December 31, 1998 or its results of operations for the year ended
December 31, 1998 as the Company operated in only one segment. During 1999, the
Company commenced operations in a second business segment.

In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"). SFAS 133 requires that derivative instruments be recognized as either
assets or liabilities in the consolidated balance sheet based on their fair
values. Changes in the fair values of such derivative instruments will be
recorded either in results of operations or in other comprehensive income,
depending on the intended use of the derivative instrument. The initial
application of SFAS 133 will be reported as the effect of a change in accounting
principle. SFAS 133 is effective for all fiscal years beginning after June 15,
2000. We have not yet determined the effect that the adoption of SFAS 133 will
have on our consolidated financial statements.

RECLASSIFICATIONS

Certain reclassifications have been made to the 1997 and 1998 consolidated
financial statements to conform to the 1999 presentation. These
reclassifications had no effect on net loss or shareholders' deficiency as
previously reported.

2. LONG-LIVED ASSETS

Property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Towers.......................................... $24,780 $723,075
Equipment....................................... 823 9,884
Furniture and fixtures.......................... 288 2,256
Other........................................... 212 15,240
------- --------
26,103 750,455
Less accumulated depreciation................... (870) (32,837)
------- --------
25,233 717,618
Construction in progress........................ 3,236 46,139
------- --------
Property and equipment, net..................... $28,469 $763,757
======= ========
</TABLE>

F-22
<PAGE> 98
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Goodwill and other intangible assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Goodwill........................................ $ 8,963 $280,666
Debt issuance costs............................. 4,836 33,955
------- --------
13,799 314,621
Less accumulated amortization................... (1,042) (7,424)
------- --------
$12,757 $307,197
======= ========
</TABLE>

Other assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Deposits........................................ $1,750 $49,153
Other........................................... 402 10,302
------ -------
$2,152 $59,455
====== =======
</TABLE>

3. DEBT

11.25% SENIOR DISCOUNT NOTES DUE 2009

In April 1999, the Company issued $586.8 million aggregate principal amount
at maturity of senior discount notes due 2009 (the "2009 Notes") for gross
proceeds of $340.0 million. Interest on the 2009 Notes accretes daily at a rate
of 11.25% per annum, compounded semiannually, to an aggregate principal amount
of $586.8 million on April 15, 2004. Cash interest will not accrue on the 2009
Notes prior to April 15, 2004. Commencing April 15, 2004, cash interest will
accrue and be payable semiannually in arrears on each April 15 and October 15,
commencing October 15, 2004, at a rate of 11.25% per annum. After April 15,
2004, the Company may redeem all or a portion of the 2009 Notes at specified
redemption prices, plus accrued and unpaid interest, to the applicable
redemption date. On one or more occasions prior to April 15, 2002, the Company
may redeem up to 35% of the aggregate principal amount at maturity of the 2009
Notes with the net cash proceeds from one or more equity offerings. The
redemption price would be 111.25% of the accreted value on the redemption date.
The Company is required to comply with certain covenants under the terms of the
2009 Notes that restrict the Company's ability to incur additional indebtedness,
make certain payments and issue preferred stock, among other things.

12% SENIOR DISCOUNT NOTES DUE 2008

In June 1998, the Company issued $225.2 million aggregate principal amount
at maturity of senior discount notes due 2008 (the "2008 Notes") for gross
proceeds of $125.0 million. The 2008 Notes accrete daily at a rate of 12% per
annum, compounded semiannually, to an aggregate principal amount of $225.2
million on July 15, 2003. Cash interest will not accrue on the 2008 Notes prior
to July 15, 2003. Commencing July 15, 2003, cash interest will accrue and be
payable semiannually in arrears on each January 15 and July 15, commencing
January 15, 2004, at a rate of 12% per annum. After July 15, 2003, the Company
may redeem all or a portion of the 2008 Notes at specified redemption prices,
plus accrued and unpaid interest, to the applicable redemption date. On one or
more occasions prior to July 15, 2001, the Company may redeem up to 25% of the
aggregate principal amount at maturity of the 2008 Notes issued with the net
cash proceeds from one or more equity offerings. The redemption price would be
112% of the accreted value on the redemption

F-23
<PAGE> 99
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

date. The Company is required to comply with certain covenants under the terms
of the 2008 Notes that restrict the Company's ability to incur indebtedness,
make certain payments and issue preferred stock among other things.

During the years ended December 31, 1998 and 1999, the Company recorded
amortization of debt discount of approximately $7.7 million and $43.6 million
related to the 2008 Notes and 2009 Notes as additional interest expense. The
senior discount notes consist of the following:

<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
---------------------------
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Senior discount notes........................... $225,238 $ 812,038
Unamortized discount............................ (92,549) (295,787)
-------- ---------
$132,689 $ 516,251
======== =========
</TABLE>

CREDIT FACILITY

In April 1999 in connection with the acquisition of communications towers
from Nextel Communications, Inc. ("Nextel"), SpectraSite Communications, Inc.
("Communications"), a wholly-owned subsidiary of SpectraSite, entered into a
$500.0 million credit facility. The credit facility consists of a $50.0 million
revolving credit facility that subject to the satisfaction of certain financial
covenants, may be drawn at any time up to December 31, 2005, at which time all
amounts drawn under the revolving credit facility must be paid in full; a $300.0
million multiple draw term loan that may be drawn at any time through March 31,
2002, which requires that the amount drawn be repaid in quarterly installments
commencing on June 30, 2002 and ending on December 31, 2005; and a $150.0
million term loan that was drawn in full at the closing of the Nextel tower
acquisition and that amortizes at a rate of 1.0% annually, payable in quarterly
installments beginning on June 30, 2002 through December 31, 2005, $67.5 million
on March 31, 2006 and the balance due on June 30, 2006.

The revolving credit loans and the multiple draw term loans will bear
interest, at our option, at either Canadian Imperial Bank of Commerce's base
rate, plus an applicable margin of 1.5% per annum initially, which margin after
a period of time may decrease based on a leverage ratio, or the reserve adjusted
London interbank offered rate, plus an applicable margin of 3.0% per annum
initially, which margin after a period of time may decrease based on a leverage
ratio.

The term loan bears interest, at our option, at either Canadian Imperial
Bank of Commerce's base rate, plus 2.0% per annum, which margin after a period
of time may decrease based on a leverage ratio, or the reserve adjusted London
interbank offered rate, plus 3.5% per annum, which margin after a period of time
may decrease based on a leverage ratio.

Communications will be required to pay a commitment fee of between 1.25%
and 0.50% per annum in respect of the undrawn portion of the multiple draw term
loan, depending on the amount undrawn. We are required to pay a commitment fee
of 0.50% per annum in respect of the undrawn portion of the revolving credit
facility.

Communications may be required to prepay the credit facility in part upon
the occurrence of certain events, such as a sale of assets, the incurrence of
certain additional indebtedness, the issuance of equity and the generation of
excess cash flow.

SpectraSite and each of Communications' subsidiaries has guaranteed the
obligations under the credit facility. The credit facility is further secured by
substantially all the tangible and intangible assets of

F-24
<PAGE> 100
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Communications and its subsidiaries and a pledge of all of the capital stock of
Communications and its subsidiaries.

The credit facility contains a number of covenants that, among other
things, restrict our ability to incur additional indebtedness; create liens on
assets; make investments, make acquisitions, or engage in mergers or
consolidations; dispose of assets; enter into new lines of business; engage in
certain transactions with affiliates; and pay dividends or make capital
distributions. SpectraSite, however, will be permitted to pay dividends after
July 15, 2003, for the purpose of paying interest on the 2008 Notes and the 2009
Notes so long as no default under the credit facility then exists or would exist
after giving effect to such payment.

In addition, the credit facility requires compliance with certain financial
covenants, including requiring Communications and its subsidiaries, on a
consolidated basis, to maintain a maximum ratio of total debt to annualized
EBITDA; a minimum interest coverage ratio; a minimum fixed charge coverage
ratio; and a minimum annualized EBITDA, for the first year only.

OTHER LONG-TERM DEBT

Long-term debt, other than the 2008 Notes and 2009 Notes, consists of the
following:

<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
----------------
1998 1999
---- --------
(IN THOUSANDS)
<S> <C> <C>
Credit facility........................................... $ -- $200,000
Other obligations......................................... 18 3,128
Less current portion...................................... (18) (601)
---- --------
Long-term debt, less current portion...................... $ -- $202,527
==== ========
</TABLE>

In connection with the acquisition of Westower Corporation ("Westower"),
the Company assumed certain long-term obligations of the acquired entity.
Substantially all of Westower's outstanding long-term obligations were repaid
prior to the acquisition, with the remaining unpaid obligations payable in
monthly installments through 2004. Other obligations for the year ended December
31, 1998 consisted of installment notes payable to a bank, which were
subsequently paid during 1999.

BANK CREDIT AGREEMENT

In January 1998, the Company signed a letter of intent with a bank for a
$50.0 million revolving credit facility for the purpose of financing the
construction and/or the acquisition of telecommunication towers for personal
communications services or other wireless communication services and other
permitted acquisitions as defined by the agreement, contingent upon certain
events. In the year ended December 31, 1998 the Company incurred approximately
$0.3 million in commitment fees related to the agreement. The agreement expired
on December 31, 1998.

4. CONVERTIBLE VOTING PREFERRED STOCK AND SHAREHOLDERS' EQUITY

SERIES A AND B CONVERTIBLE VOTING PREFERRED STOCK

At December 31, 1998, Spectrasite had mandatorily redeemable convertible
preferred stock consisting of Series A and Series B cumulative redeemable
preferred stock, each with a $0.001 par value, 10,462,830 shares authorized in
the aggregate and 3,462,830 and 7,000,000 shares issued and outstanding,
respectively. In connection with closing the Nextel tower acquisition,
provisions for dividends and redemption were eliminated with respect to the
Series A and Series B preferred stock. Previously accrued dividends have been
eliminated,

F-25
<PAGE> 101
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and the outstanding balances have been reclassified as convertible preferred
stock in shareholders' equity in the balance sheet as of December 31, 1999. Each
share of Series A and Series B preferred stock is convertible into one share of
common stock and entitles the holder to vote on an as-converted basis with
holders of common stock. Contemporaneously with the closing of an underwritten
public offering of common stock, the outstanding shares of Series A and Series B
preferred stock automatically converted to common stock on February 4, 2000.

SERIES C CONVERTIBLE PREFERRED STOCK

In connection with closing the Nextel tower acquisition, SpectraSite sold
46,286,795 shares of Series C preferred stock at a price of $5.00 per share. In
addition, Nextel received 14 million shares of Series C preferred stock. At
December 31, 1999, SpectraSite had 60,286,795 of $0.001 par value Series C
shares authorized, issued and outstanding. Each share of Series C preferred
stock is convertible into one share of common stock and entitles the holder to
vote on an as-converted basis with holders of common stock. Contemporaneously
with the closing of an underwritten public offering of common stock, the
outstanding shares of Series C preferred stock automatically converted to common
stock on February 4, 2000.

COMMON STOCK

In connection with the Nextel tower acquisition, SpectraSite also restated
its certificate of incorporation. The amended and restated certificate
authorized 85 million shares of common stock, $0.001 par value per share. In
addition, the Company increased the maximum number of shares for which options
may be granted under its stock option plan to 4.1 million.

In August 1999, SpectraSite amended its restated certificate of
incorporation to increase the authorized shares of common stock to 300 million.
In addition, SpectraSite increased the maximum number of shares for which
options may be granted under its stock option plan to 10 million and authorized
one million shares to be issued under an Employee Stock Purchase Plan.

WARRANTS

During September and October, 1998, 150,000 shares of common stock were
issued in connection with the exercise of common stock warrants at a price of
$0.001 per share.

On October 9, 1998, the Company paid a former employee $500,000 under an
agreement to buy 125,000 shares of SpectraSite common stock from the former
employee for an agreed upon price and to release the Company from any potential
claims. In addition, the agreement provided that shareholders of SpectraSite
would have an option to purchase the former employee's remaining 37,605 shares
of SpectraSite common stock for the same price per share, provided that the
Company advise the former employee in writing of the exercise of all or any
portion of such option by November 15, 1998. The shares were subsequently
purchased by a shareholder of the Company on February 5, 1999 for an aggregate
purchase price of $150,000.

STOCK OPTIONS

During 1997, the Company adopted a stock option plan which provides for the
purchase of common stock by key employees, directors, advisors and consultants
of the Company. The maximum number of shares for which options may be granted
under the plan shall not exceed 10 million shares. Stock options are granted
under various stock option agreements. Each stock option agreement contains
specific terms. During the period from inception (April 25, 1997) to December
31, 1997 and the years ended December 31, 1998 and 1999, option grants were made
solely to employees.

The options without a performance acceleration feature, which were granted
under the terms of the incentive stock option agreement, and options granted
under the terms of the non-qualified stock option
F-26
<PAGE> 102
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

agreement vest and become exercisable ratably over a four or five-year period,
commencing one year after date of grant.

The options with a performance acceleration feature, which were granted
under the terms of the incentive stock option agreement, and the non-qualified
stock option agreement vest and become exercisable upon the seventh anniversary
of the grant date. Vesting, however, can be accelerated upon the achievement of
certain milestones defined in each agreement.

In accordance with SFAS 123, the fair value of each option grant was
determined by using the Black-Scholes option pricing model with the following
weighted average assumptions for the period ended December 31, 1997, the years
ended December 31, 1998 and 1999: dividend yield of 0.0%; volatility of .70;
risk free interest rate of 6.0% to 5.0%; and expected option lives of 7 years.
Had compensation cost for the Company's stock options been determined based on
the fair value at the date of grant consistent with the provisions of SFAS 123,
the Company's net loss and net loss per share would have been $4.0 million and
$5.37 for the period ended December 31, 1997, $9.5 million and $12.44 for the
year ended December 31, 1998 and $100.9 million and $12.80 for the year ended
December 31, 1999.

Option activity under the Company's plans is summarized below:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Outstanding at April 25, 1997................. -- $ --
Options granted............................... 884,700 2.89
Options exercised............................. -- --
Options canceled.............................. -- --
---------
Outstanding at December 31, 1997.............. 884,700 2.89
Options granted............................... 842,000 3.33
Options exercised............................. -- --
Options canceled.............................. (158,800) 2.92
---------
Outstanding at December 31, 1998.............. 1,567,900 3.12
Options granted............................... 2,705,810 5.32
Options exercised............................. (200,006) 2.52
Options canceled.............................. (271,670) 3.41
Options assumed in Westower acquisition....... 1,921,757 8.62
---------
Outstanding at December 31, 1999.............. 5,723,791 6.02
=========
</TABLE>

At December 31, 1997, there were no options exercisable under the stock
option plan. There were 185,475 and 1,765,666 options exercisable under the
stock option plan at December 31, 1998 and 1999, respectively.

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------------------------------------------------------
NUMBER WEIGHTED NUMBER
OUTSTANDING AVERAGE EXERCISABLE
AS OF REMAINING WEIGHTED AVERAGE AS OF WEIGHTED AVERAGE
EXERCISE PRICES 12/31/99 CONTRACTUAL LIFE EXERCISE PRICE 12/31/99 EXERCISE PRICE
--------------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$0.01-$ 4.56 2,061,273 7.92 $ 3.75 1,113,320 $ 3.97
$5.00-$ 5.00 2,382,810 9.41 5.00 -- --
$6.35-$17.06 1,279,708 9.14 11.55 652,346 12.16
--------- ---------
$0.01-$17.06 5,723,791 8.81 6.02 1,765,666 7.00
========= =========
</TABLE>

F-27
<PAGE> 103
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The weighted average remaining contractual life of the stock options
outstanding was 8.76 years, 9.98 years and 8.81 years at December 31, 1997, 1998
and 1999, respectively.

EMPLOYEE STOCK PURCHASE PLAN

In August 1999, SpectraSite adopted the SpectraSite Holdings, Inc. Employee
Stock Purchase Plan. The board of directors has reserved and authorized one
million shares of common stock for issuance under the plan. Eligible employees
may purchase a number of shares of common stock equal to the total dollar amount
contributed by the employee to a payroll deduction account during each six-month
offering period divided by the purchase price per share. The price of the shares
offered to employees under the plan will be 85% of the lesser of the fair market
value at the beginning or end of each six-month offering period. As of December
31, 1999, SpectraSite had not initiated an offering period.

COMMON STOCK RESERVED FOR FUTURE ISSUANCE

The Company has reserved shares of its authorized shares of common stock
for future issuance as follows:

<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1999
-----------------
<S> <C>
Convertible preferred stock...................... 70,749,625
Outstanding stock options........................ 5,723,791
Possible future issuance under stock option
plans.......................................... 4,076,203
Employee stock purchase plan..................... 1,000,000
----------
Total............................................ 81,549,619
==========
</TABLE>

5. LEASES

OPERATING LEASES FROM OTHERS

The Company leases land ("ground leases"), office space and certain office
equipment under noncancelable operating leases. Ground leases are generally for
terms of five years and are renewable at the option of the Company. Rent expense
was approximately $0.2 million, $0.6 million and $17.9 million for the period
from April 25, 1997 (inception) to December 31, 1997 and the years ended
December 31, 1998 and 1999, respectively. The future minimum lease payments for
these leases are as follows:

<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1999
-----------------
(IN THOUSANDS)
<S> <C>
2000............................................. $ 24,686
2001............................................. 22,618
2002............................................. 19,055
2003............................................. 13,121
2004............................................. 8,139
Thereafter....................................... 22,725
--------
Total............................................ $110,344
========
</TABLE>

ANTENNA SPACE LEASED TO OTHERS

The Company currently leases antenna space on multi-tenant towers to a
variety of wireless service providers under non-cancelable operating leases. The
tenant leases are generally for terms of five years and

F-28
<PAGE> 104
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

include options for renewal. The approximate future minimum rental income under
operating leases that have initial or remaining non-cancelable terms in excess
of one year are as follows:

<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1999
-----------------
(IN THOUSANDS)
<S> <C>
2000............................................. $ 63,494
2001............................................. 63,872
2002............................................. 61,548
2003............................................. 58,403
2004............................................. 43,861
Thereafter....................................... 10,684
--------
Total............................................ $301,862
========
</TABLE>

6. INCOME TAXES

The provision for income taxes is comprised of the following:

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(APRIL 25, 1997) TO YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
------------------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
State...................... $ -- $ -- $ 40
Foreign.................... -- -- 528
---------- ---------- ----------
Total provision for income
taxes.................... $ -- $ -- $ 568
========== ========== ==========
</TABLE>

The reconciliation of income taxes computed at the U.S. federal statutory
rate to income tax provision (benefit) is as follows:

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(APRIL 25, 1997) TO YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
------------------- ------------ ------------
<S> <C> <C> <C>
Federal income tax benefit at statutory
rate..................................... (35.0)% (35.0)% (35.0)%
Foreign tax rate differential.............. -- -- 0.6%
Non-deductible goodwill amortization....... -- -- 2.0%
Non-deductible interest expense............ -- 5.8% 0.5%
Change in valuation allowance.............. 35.0% 29.2% 32.5%
---------- ---------- ----------
Effective income tax rate.................. --% --% 0.6%
========== ========== ==========
</TABLE>

F-29
<PAGE> 105
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of net deferred taxes are as follows:

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------
1997 1998 1999
----- ------ --------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred tax assets:
Tax loss carry forwards................................... $ 183 $1,038 $ 15,600
Accreted interest on senior discount notes................ -- 2,978 19,730
Accrued liabilities....................................... -- -- 1,920
Depreciation.............................................. -- 41 1,760
----- ------ --------
Total gross deferred tax assets........................ 183 4,057 39,010
Valuation allowance....................................... (183) (4,057) (39,010)
----- ------ --------
Total net deferred tax assets.......................... $ -- $ -- $ --
===== ====== ========
</TABLE>

The Company has a federal net operating loss carry forward of approximately
$40 million that begins to expire in 2012. Also, the Company has state tax
losses of $40 million that expire beginning in 2002. Based on the Company's
history of losses to date, management has provided a valuation allowance to
fully offset the deferred assets related to federal and state net operating loss
carry forwards.

7. RELATED PARTY TRANSACTIONS

In conjunction with the acquisition of TeleSite, the Company issued a $2.3
million note payable to a shareholder. In the period from April 25, 1997
(inception) to December 31, 1997 and during the year ended December 31, 1998,
the Company incurred approximately $100,000 and $81,000 of interest expense
related to the note payable to shareholder, respectively. In June 1998, the note
was repaid in full.

On April 20, 1999, in connection with the Nextel tower acquisition, four
directors purchased 50,000, 25,000, 262,973 and 100,000 shares of SpectraSite's
Series C preferred stock for $5.00 per share, respectively. In addition, one
director purchased 100,000 shares of common stock and executed promissory notes
as payment for the common stock. The promissory notes mature on April 20, 2009
and bear interest at 5.67% per year. Under the purchase agreement, 25% of the
shares of common stock vest each year, with the first installment vesting on
April 20, 2000. In addition, SpectraSite has the right to repurchase half of the
shares at their original cost to the director at any time prior to April 20,
2000 and upon the date the director ceases to perform services for SpectraSite.

Affiliates of three significant stockholders received an aggregate of two
million shares of SpectraSite's common stock valued at $9.0 million as
consideration for financing commitments made in connection with the Nextel tower
acquisition. Affiliates of each entity are members of the Company's board
directors.

To finance a portion of the cash consideration paid to Nextel, SpectraSite
issued and sold the 2009 Notes in a private offering and borrowed $150.0 million
under its credit facility. CIBC World Markets Corp. was an initial purchaser in
the 2009 notes offering, and an affiliate of CIBC World Markets is an agent and
a lender under the credit facility. CIBC World Markets was also an initial
purchaser of SpectraSite's 2008 Notes. CIBC World Markets and its affiliates
received customary fees for such services. One director of SpectraSite is a
Managing Director of CIBC World Markets.

In May 1997, an officer agreed to invest additional personal funds in
SpectraSite at the average per share price of Series A and Series B preferred
stock. In satisfaction of this commitment, the officer purchased 210,000 shares
of common stock for an aggregate purchase price of $0.8 million on April 20,
1999.

In August 1999, SpectraSite loaned an officer $325,000 in connection with
the exercise of certain stock options. The 112,500 shares the officer acquired
through the exercise of these options are pledged to

F-30
<PAGE> 106
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SpectraSite as security for this loan. The loan bears interest at the applicable
federal rate under the Internal Revenue Code, 5.36% per annum, and matures in
August 2002.

In September 1999, SpectraSite loaned an officer $500,000 to purchase a
home as a relocation incentive. This loan will be secured by any shares of
SpectraSite's common stock issued to the officer upon exercise of options, bears
interest at 5.82% per annum and matures in September 2004.

The Company has a revolving loan arrangement with an affiliate under which
the affiliate may borrow up to $14.4 million. The loan accrues interest at 12%
and is collateralized by property, equipment, investments, contracts and other
assets of the affiliate. At December 31, 1999, the affiliate owed $2.9 million
to the Company under the loan. In 1999, the Company had interest income of $0.1
million from amounts outstanding under the loan.

8. EMPLOYEE BENEFIT PLAN

The Company provides a 401(k) plan for the benefit of all its employees
meeting specified eligibility requirements. The Company's expenses related to
the plan are discretionary and totaled approximately $11,000, $31,000 and
$121,000 for the period from April 25, 1997 (inception) to December 31, 1997 and
for the years ended December 31, 1998 and 1999, respectively.

9. SALE OF AFFILIATES

In February 1998, the Company entered into an agreement under which it sold
a wholly-owned subsidiary, MetroSite, for $299,000. The Company recognized a
gain on the sale of $257,000.

In May 1998, the Company sold its ownership interest in Communication
Management Specialists, LLC ("CMS") for $375,000, in exchange for a note
receivable bearing interest at 8.5% per annum, payable to the Company over 60
months. The total amount due to the Company at December 31, 1999 is $261,000 of
which the current portion, $73,000, is included in prepaid expenses and other
current assets in the accompanying balance sheet. The Company recognized a gain
on the sale of approximately $189,000. Prior to the sale, the Company's
ownership interest in CMS was accounted for using the equity method.

10. ACQUISITION ACTIVITY

In June 1998, the Company entered into an agreement under which it acquired
all of the membership interests of H&K Investments, LLC for $1.4 million in a
transaction accounted for as a purchase. The results of operations of H&K are
included in the Company's operations from the date of acquisition. The Company
paid $1.3 million in cash and recorded notes payable for $0.1 million in
conjunction with the acquisition. The outstanding note payable was subsequently
paid in December 1998.

In August 1998, the Company entered into an asset purchase agreement with
Airadigm Communications, Inc. ("Airadigm") for the purchase of 47 towers for
approximately $11.8 million. As of December 31, 1998, 40 towers had been placed
in service. During 1999, five additional towers were placed in service and
Airadigm refunded the Company's deposit for the remaining two towers. Under the
terms of the agreement, the Company will lease antenna space on the towers to
Airadigm.

In August 1998, the Company entered into an asset purchase agreement with
Amica Wireless Phone Service, Inc. for the purchase of the construction in
progress related to 14 towers for approximately $474,000.

In September 1998, the Company acquired all of the outstanding common stock
of GlobalComm, Inc. for $2.0 million in cash in a transaction accounted for as a
purchase. The results of operations of GlobalComm are included in the Company's
operations from the date of acquisition. The Company recorded approximately $1.7
million of goodwill related to the transaction.

In April 1999, the Company purchased 2,000 communications towers from
Nextel for $560.0 million in cash and 14 million shares of Series C preferred
stock valued at $70.0 million, which represented approximately 18% of all the
Company's outstanding capital stock. As part of the transaction, Nextel agreed
to lease 1,700 additional sites on the Company's towers as part of Nextel's
national deployment. SpectraSite and certain of Nextel's subsidiaries entered
into a master site commitment agreement under which Nextel and its

F-31
<PAGE> 107
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

controlled affiliates will offer SpectraSite exclusive opportunities, under
specific terms and conditions, relating to the construction or purchase of, or
co-location on, additional communications sites. These sites will then be leased
by subsidiaries of Nextel under the terms of the master site lease agreement. If
the number of new sites leased is less than the agreed upon number as of
particular dates, Nextel has agreed to make payments to SpectraSite. The master
site commitment agreement also gives SpectraSite a right of first refusal to
acquire any towers that Nextel or certain affiliates desire to sell. Of the
total consideration paid to Nextel, $45.0 million has been allocated as a
deposit relating to this commitment. The Company used $150.0 million of
borrowings under a $500.0 million committed credit facility, $340.0 million from
the proceeds of the 2009 Notes and $231.4 million from the sale of new Series C
preferred stock to fund the cash purchase price and to pay related fees and
expenses.

In connection with the purchase, Nextel entered into a master site lease
agreement to become the anchor tenant on each of the acquired towers and also
conveyed to the Company certain third-party co-location site leases associated
with the acquired assets. Nextel also transferred to the Company certain
non-cancelable ground leases, and the Company assumed all operating and other
costs associated with the acquired assets.

In September 1999, the Company consummated the Agreement and Plan of
Merger, dated as of May 15, 1999 with Westower. Under the terms of the
agreement, Westower shareholders received 1.81 shares of SpectraSite common
stock for each share of Westower common stock. In the aggregate, SpectraSite
exchanged 15.5 million shares of its common stock valued at $205.6 million for
8.6 million shares of Westower common stock and assumed $81.5 million of debt.
The Company repaid $72.2 million of such assumed debt at closing. In addition,
the Company assumed the outstanding Westower employee stock options, which were
converted into options to purchase 1.7 million shares of SpectraSite's common
stock.

On December 30, 1999, SpectraSite acquired Stainless, Inc., formerly a
wholly-owned subsidiary of Northwest Broadcasting, L.P., for $40.0 million in
cash. Stainless provides engineering, fabrication and other services in
connection with the erection of towers used for television broadcast companies.

Also on December 30, 1999, SpectraSite acquired Doty-Moore Tower Services,
Inc., Doty-Moore Equipment Company, Inc. and Doty Moore RF Services, Inc. for
$2.5 million in cash and 500,000 shares of SpectraSite's common stock valued at
$5.4 million. Doty-Moore is a leading source for broadcast tower construction
and technical services.

The acquisitions of Westower, Stainless and Doty-Moore were accounted for
as purchases, and the excess of cost over fair value of the net assets acquired
is being amortized on a straight-line basis over fifteen years. The operations
of each are included in the consolidated statement of operations from the date
of acquisition.

The following unaudited pro forma summary presents consolidated results of
operations for the Company as if the acquisitions of Westower, Doty-Moore and
Stainless had been consummated as of January 1, 1999. The pro forma information
does not necessarily reflect the actual results that would have been achieved,
nor is it necessarily indicative of future consolidated results for the Company.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
------------------------
(IN THOUSANDS OF DOLLARS
EXCEPT PER SHARE DATA)
<S> <C>
Net revenues........................................ $ 187,082
Net loss............................................ (112,515)
Basic and diluted net loss per common share......... (5.11)
</TABLE>

11. BUSINESS SEGMENTS

The Company previously operated in one business segment. As a result of the
Nextel tower and Westower acquisitions, the Company now operates in two business
segments, site leasing and network services. Prior period information has been
restated to reflect the current business segments. The site leasing segment
provides for leasing and subleasing of antennae sites on multi-tenant towers for
a diverse range of

F-32
<PAGE> 108
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

wireless communication services, including personal communication services,
paging, cellular and microwave. The network services segment offers a broad
range of network development services, including network design, tower
construction and antenna installation.

Summarized financial information concerning each reportable segment is
shown in the following table. The "Other" column represents amounts excluded
from specific segments, such as income taxes, corporate general and
administrative expenses, depreciation and amortization, restructuring and other
non-recurring charges and interest. In addition, "Other" also includes corporate
assets such as cash and cash equivalents, tangible and intangible assets and
income tax accounts which have not been allocated to a specific segment.

<TABLE>
<CAPTION>
SITE NETWORK
LEASING SERVICES OTHER TOTAL
-------- -------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Revenues.......................................... $ 46,515 $53,570 $ -- $ 100,085
Income (loss) before income taxes................. 28,661 7,915 (133,676) (97,100)
Assets............................................ 756,442 60,149 403,362 1,219,953
YEAR ENDED DECEMBER 31, 1998
Revenues.......................................... $ 656 $ 8,142 $ -- $ 8,798
Income (loss) before income taxes................. 357 5,650 (15,086) (9,079)
Assets............................................ 25,865 -- 136,081 161,946
PERIOD FROM INCEPTION (APRIL 25, 1997) TO DECEMBER
31, 1997
Revenues.......................................... $ -- $ 5,002 $ -- $ 5,002
Income (loss) before income taxes................. -- (3,997) 107 (3,890)
Assets............................................ -- -- 13,642 13,642
</TABLE>

From inception (April 25, 1997) until the acquisition of Westower on
September 2, 1999, all of the Company's operations were located in the United
States.

Net revenues for the year ended December 31, 1999 were located in
geographic areas as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
United States........................................ $ 90,984
Canada............................................... 13,794
Eliminations......................................... (4,693)
--------
Consolidated net revenues............................ $100,085
========
</TABLE>

At December 31, 1999, assets were located in geographic areas as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
United States........................................ $1,065,256
Canada............................................... 65,153
----------
Consolidated long-lived assets....................... $1,130,409
==========
</TABLE>

F-33
<PAGE> 109
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. YEAR 2000 ISSUE (UNAUDITED)

The Company has not experienced any immediate adverse impact from the
transition to the Year 2000; however, management cannot provide assurance that
the company, it's suppliers or it's customers have not been affected in a manner
that is not yet apparent. In addition, certain computer programs which were date
sensitive to the Year 2000 may not process the Year 2000 as a leap year, and any
negative consequential effects remain unknown. As a result, the Company
continues to monitor Year 2000 compliance and the Year 2000 compliance of its
suppliers and customers.

13. SUBSEQUENT EVENTS (UNAUDITED)

On January 5, 2000, SpectraSite acquired Vertical Properties, Inc. in a
merger transaction under which SpectraSite issued 225,000 unregistered shares of
its common stock and repaid outstanding indebtedness of approximately $2.0
million. Vertical Properties is a broadcast tower development company formed to
meet the needs of broadcasters in secondary broadcast markets faced with the
complexities of converting to digital technology through site acquisition, tower
placement and leasing of antenna space.

On January 5, 2000, SpectraSite acquired Apex Site Management Holdings,
Inc. ("Apex") in a merger transaction. Apex provides rooftop and in-building
access to wireless carriers. SpectraSite issued approximately 4.5 million
unregistered shares of its common stock and approximately 194,000 options to
purchase common stock at an exercise price of $3.58 per share to the
shareholders of Apex at the closing of the merger. In addition, SpectraSite
issued approximately 1.5 million additional shares of common stock into escrow.
These shares may be released to Apex's shareholders six months after
SpectraSite's currently pending public offering is consummated based on the
average trading price for SpectraSite's common stock for the 30-day period
immediately preceding the six-month anniversary of the public offering.
SpectraSite also used approximately $6.2 million in cash to repay outstanding
indebtedness and other obligations of Apex in connection with the merger.

On January 28, 2000, SpectraSite acquired substantially all of the assets
of International Towers Inc. and its subsidiaries, including S&W Communications
Inc. International Towers owns a broadcast tower manufacturing facility and,
through S&W Communications, provides integrated services for the erection of
broadcast towers, foundations and multi-tenant transmitter buildings.
SpectraSite paid $5.5 million and issued an aggregate of 350,000 unregistered
shares of its common stock in connection with this acquisition.

On February 4, 2000, SpectraSite completed an underwritten public offering
of 25.6 million shares of common stock for net proceeds of approximately $411.3
million. As a result of the offering, all Series A, B, C preferred stock
automatically converted to common stock on a share-for-share basis.

On February 17, 2000, the company signed a definitive agreement with
AirTouch Communications, Inc. to obtain the rights to approximately 430 towers
through a master sublease for approximately $155 million. The transaction is
expected to close in stages with the initial closing to occur no later than
November 15, 2000, if certain conditions are met.

F-34
<PAGE> 110

REPORT OF INDEPENDENT AUDITORS

The Members
TeleSite Services, LLC

We have audited the accompanying consolidated balance sheet of TeleSite
Services, LLC (the "Company") as of December 31, 1996 and the related
consolidated statements of operations and members' equity and cash flows for the
year ended December 31, 1996 and for the period from January 1, 1997 through May
12, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of TeleSite
Services, LLC at December 31, 1996 and the consolidated results of its
operations and its cash flows for the year ended December 31, 1996 and for the
period from January 1, 1997 through May 12, 1997, in conformity with accounting
principles generally accepted in the United States.

ERNST & YOUNG LLP

Raleigh, North Carolina
March 27, 1998

F-35
<PAGE> 111

TELESITE SERVICES, LLC

CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash...................................................... $ 4,854
Accounts receivable:
Trade.................................................. 1,777,611
Other.................................................. 37,107
Prepaid expenses and other................................ 39,964
----------
Total current assets........................................ 1,859,536
Property and equipment, net................................. 931,291
Investment in affiliate..................................... 131,459
----------
Total assets................................................ $2,922,286
==========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Line of credit............................................ $ 946,724
Accounts payable.......................................... 688,180
Accrued expenses.......................................... 33,092
Current portion of long-term debt......................... 295,711
----------
Total current liabilities................................... 1,963,707
Long-term debt, less current portion........................ 81,106
----------
Total liabilities........................................... 2,044,813
Members' equity............................................. 877,473
----------
Total liabilities and members' equity....................... $2,922,286
==========
</TABLE>

See accompanying notes.
F-36
<PAGE> 112

TELESITE SERVICES, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
FOR THE JANUARY 1, 1997
YEAR ENDED TO
DECEMBER 31, 1996 MAY 12, 1997
----------------- ---------------
<S> <C> <C>
Revenues................................................ $8,840,869 $1,925,985
Costs of operations..................................... 2,254,777 594,683
Selling, general and administrative expenses............ 4,255,840 1,741,856
Depreciation expense.................................... 91,133 55,870
---------- ----------
Operating income (loss)................................. 2,239,119 (466,424)
Interest expense........................................ (66,505) (35,695)
Equity in earnings (loss) of affiliate.................. 116,459 (1,087)
---------- ----------
Net income (loss)....................................... $2,289,073 $ (503,206)
========== ==========
Pro forma income data (unaudited):
Net income (loss) as reported......................... $2,289,073 $ (503,206)
Pro forma provision for income taxes.................. 892,783 --
---------- ----------
Pro forma net income (loss)........................... $1,396,290 $ (503,206)
========== ==========
</TABLE>

See accompanying notes.
F-37
<PAGE> 113

TELESITE SERVICES, LLC

CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY

<TABLE>
<S> <C>
Members' deficiency at January 1, 1996...................... $ (445,584)
Distributions to members.................................. (966,016)
Net income................................................ 2,289,073
----------
Members' equity at December 31, 1996........................ $ 877,473
Contribution to capital................................... 100
Distributions to members.................................. (211,256)
Net loss.................................................. (503,206)
----------
Members' equity at May 12, 1997............................. $ 163,111
==========
</TABLE>

See accompanying notes.
F-38
<PAGE> 114

TELESITE SERVICES, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
FOR THE JANUARY 1, 1997
YEAR ENDED TO
DECEMBER 31, 1996 MAY 12, 1997
----------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)....................................... $ 2,289,073 $(503,206)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation.......................................... 91,133 55,870
Equity in (earnings) loss of affiliate................ (116,459) 1,087
Changes in operating assets and liabilities:
Trade accounts receivable.......................... (1,314,087) 456,345
Other accounts receivable.......................... (34,072) (76,610)
Prepaid expenses and other......................... (35,827) (17,487)
Accounts payable................................... 197,702 (42,534)
Accrued expenses................................... 31,568 55,593
----------- ---------
Net cash provided by (used in) operating
activities.................................... 1,109,031 (70,942)
INVESTING ACTIVITIES
Purchases of property and equipment..................... (837,808) (321,788)
Investment in affiliate................................. (15,000) --
----------- ---------
Net cash used in investing activities............ (852,808) (321,788)
FINANCING ACTIVITIES
Net proceeds from line of credit........................ 368,724 249,338
Net proceeds from long-term debt........................ 556,391 293,785
Repayment of long-term debt............................. (224,923) --
Proceeds from capital contribution...................... -- 100
Distribution to members................................. (966,016) (153,499)
----------- ---------
Net cash (used in) provided by financing
activities.................................... (265,824) 389,724
----------- ---------
Net decrease in cash.................................... (9,601) (3,006)
Cash at beginning of period............................. 14,455 4,854
----------- ---------
Cash at end of period................................... $ 4,854 $ 1,848
=========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest................ $ 64,000 $ 30,695
=========== =========
</TABLE>

See accompanying notes.
F-39
<PAGE> 115

TELESITE SERVICES, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

TeleSite Services, LLC (the "Company") was formed on August 1, 1995, for
the purpose of providing site development services, as agent, to companies
operating in the telecommunications industry. TeleSite's clients are located
primarily in the southeastern and south central regions of the United States.

MetroSite Management, LLC ("MetroSite") was formed on February 28, 1997 by
the contribution of $99 by the Company and $1 by a member of the Company for the
99% and 1% ownership of MetroSite, respectively. MetroSite was formed for the
purpose of negotiating agreements with municipalities to lease certain locations
to PCS providers (e.g., water towers, etc.) in return for a percentage of the
monthly rental amounts charged by the municipalities to the PCS providers.

PRINCIPLES OF CONSOLIDATION

The accompanying 1997 consolidated financial statements include the
accounts of TeleSite, LLC and MetroSite Management, LLC from the date of
MetroSite's formation. All significant intercompany transactions and balances
have been eliminated in consolidation. Minority interest related to the
membership interest not owned by the Company is insignificant.

USE OF ESTIMATES

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is computed using
straight-line and accelerated methods over the estimated useful lives of the
assets ranging from three to seven years.

REVENUE RECOGNITION

Revenue from projects is recognized when site selection services are
rendered.

COST OF REVENUES

Cost of revenues consist of the direct costs incurred to provide the
related services.

SIGNIFICANT CONCENTRATIONS

The Company's customer base consists of companies operating in the
telecommunications industry. The Company's exposure to credit risk consists
primarily of unsecured accounts receivable from these customers.

F-40
<PAGE> 116
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Following is information concerning revenue and accounts receivable
concentrations of the Company's major customers:

<TABLE>
<CAPTION>
% OF REVENUES
------------------------------------
PERIOD FROM
JANUARY 1, 1997
YEAR ENDED TO
DECEMBER 31, 1996 MAY 12, 1997
----------------- ---------------
<S> <C> <C>
Customer 1.............................. 21% 34%
Customer 2.............................. 63% 30%
Customer 3.............................. -- 12%
</TABLE>

<TABLE>
<CAPTION>
% OF ACCOUNTS RECEIVABLE AT
---------------------------------
DECEMBER 31, 1996 MAY 12, 1997
----------------- ------------
<S> <C> <C>
Customer 1................................ 11% 37%
Customer 2................................ 67% 24%
</TABLE>

INVESTMENT IN AFFILIATE

The Company's 33% ownership interest in Communication Management
Specialists, LLC, ("CMS") a company that provides construction management
services to telecommunications companies, is accounted for using the equity
method.

Summary financial information of CMS is as follows:

<TABLE>
<CAPTION>
AS OF AND FOR THE
AS OF AND FOR THE PERIOD FROM
YEAR ENDED JANUARY 1, 1997
DECEMBER 31, TO
1996 MAY 12, 1997
----------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Current Assets.......................... $1,110,500 $810,200
Non-current Assets...................... 16,300 17,800
Current Liabilities..................... 747,400 452,000
Non-current............................. -- --
Liabilities Members' equity............. 379,400 376,000
Net Sales............................... 2,404,866 650,000
Gross Profit............................ 553,164 179,500
Net income.............................. 352,900 (3,300)
</TABLE>

INCOME TAXES

The Company is organized as a limited liability company and is therefore
not subject to income taxes. All taxable income or loss is reported by the
members on their respective income tax returns. Therefore the accompanying
Consolidated Statement of Operations and Members' Equity does not include any
provision for income tax expense.

F-41
<PAGE> 117
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1996:

<TABLE>
<S> <C>
Land..................................................... $ 297,600
Equipment................................................ 304,148
Furniture and fixtures................................... 143,199
Vehicles................................................. 200,240
Leasehold improvements................................... 53,448
Construction in progress................................. 42,259
----------
Total.................................................... 1,040,894
Less accumulated depreciation............................ (109,603)
----------
Property and equipment, net.............................. $ 931,291
==========
</TABLE>

3. LINE OF CREDIT AND LONG-TERM DEBT

The Company has a maximum $1,500,000 line of credit with a bank, with an
outstanding balance of $946,724 at December 31, 1996. The line of credit bears
interest at a variable rate, not to exceed 10.0%, with interest payable monthly
and principal due May 31, 1997. The rate of interest at December 31, 1996 was
8.5%. The line of credit is collateralized by substantially all assets of the
Company.

Long-term debt consisted of the following at December 31, 1996:

<TABLE>
<S> <C>
Note payable to a bank, bearing interest at 8.5%, maturing
April 4, 1997, monthly payments of interest of $1,780,
collateralized by land.................................... $ 250,000
Installment notes payable to a bank, bearing interest at
rates ranging from 8.75% to 10.2%, maturing from October
20, 1998 to December 9, 1999, monthly payments of
principal and interest of $4,614, collateralized by
vehicles.................................................. 126,817
---------
Total....................................................... 376,817
Less current maturities..................................... (295,711)
---------
Long-term debt.............................................. $ 81,106
=========
</TABLE>

Maturities of long-term debt at December 31, 1996 are as follows:

<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
1997............................................. $295,711
1998............................................. 46,815
1999............................................. 34,291
--------
Total............................................ $376,817
========
</TABLE>

The Company estimates that the fair value of notes payable approximates the
carrying value based upon its effective current borrowing rate for debt with
similar terms and remaining maturities. Disclosure about fair value of financial
instruments is based upon information available to management as of December 31,
1996.

4. RELATED PARTY TRANSACTIONS

The Company is affiliated with other organizations by common ownership
and/or control. During the year ended December 31, 1996 and the period from
January 1, 1997 to May 12, 1997, the Company paid approximately $66,000 and
$22,000, respectively, to an affiliated organization for rent expense.

F-42
<PAGE> 118
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On May 9, 1997, a member of the Company assumed the Company's construction
line of credit with a bank of $562,135, in exchange for land and construction in
progress with carrying values of $297,600 and $322,292, respectively. The
Company recorded a non-cash shareholder's distribution of $57,757 associated
with this transaction.

5. LEASES

The Company leases office space and certain office equipment under
noncancelable operating leases. The future minimum lease payments under such
leases at December 31, 1996 are as follows:

<TABLE>
<S> <C>
1997...................................................... $164,597
1998...................................................... 136,409
1999...................................................... 93,696
2000...................................................... 66,429
2001...................................................... 27,500
--------
Total..................................................... $488,631
========
</TABLE>

Rent expense under operating leases was approximately $110,000 and $57,000
for the year ended December 31, 1996 and for the period from January 1, 1997 to
May 12, 1997, respectively.

6. EMPLOYEE BENEFIT PLAN

The Company provides a 401(k) plan for the benefit of its employees meeting
specified eligibility requirements. The Company's contributions to the plan are
discretionary and totaled $15,205 in 1996 and $12,342 for the period from
January 1, 1997 to May 12, 1997.

7. PRO FORMA INCOME DATA (UNAUDITED)

The pro forma provision for income taxes is based upon the statutory income
tax rates in effect during the year ended December 31, 1996. No provision was
provided in the period from January 1 to May 12, 1997 due to the net operating
loss.

8. SUBSEQUENT EVENT

On May 12, 1997, 100% of the members' interests of the Company and its
subsidiary, MetroSite, were acquired by SpectraSite Holdings, Inc., a Delaware
corporation.

F-43
<PAGE> 119

WESTOWER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
AT JUNE 30,1999 AND SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1998
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 4,204,000 $ 9,331,000
Accounts receivable, net.................................. 20,506,000 13,289,000
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. 6,758,000 5,078,000
Inventory................................................. 3,133,000 2,151,000
Related party advances and receivables.................... 419,000 956,000
Income tax receivable..................................... 220,000 220,000
Other current assets...................................... 1,744,000 1,203,000
------------ -----------
Total current assets................................... 36,984,000 32,228,000
PROPERTY AND EQUIPMENT, net................................. 50,217,000 7,574,000
INTANGIBLE ASSETS, net...................................... 26,992,000 19,721,000
OTHER ASSETS................................................ 6,139,000 2,771,000
------------ -----------
TOTAL ASSETS................................................ $120,332,000 $62,294,000
============ ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable.................................... $ 8,374,000 $ 7,053,000
Other current liabilities................................. 1,909,000 2,810,000
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 1,586,000 1,435,000
Income taxes payable...................................... 2,450,000 2,116,000
Deferred income taxes..................................... 395,000 428,000
Stockholder advances and notes payable to related
parties................................................ 154,000 228,000
Note payable.............................................. 68,000 1,089,000
Current portion of long-term debt and capital lease
obligations............................................ 1,576,000 2,419,000
------------ -----------
Total current liabilities......................... 16,512,000 17,578,000
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, excluding
current portion........................................... 57,059,000 14,991,000
DEFERRED INCOME TAXES....................................... 2,977,000 2,962,000
------------ -----------
Total liabilities................................. 76,548,000 35,531,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock ($.01 par value, 25,000,000 and 10,000,000
shares authorized, 8,562,000 and 7,047,000 shares
issued and outstanding at June 30, 1999 and September
30, 1998, respectively)................................ 85,000 70,000
Additional paid-in-capital................................ 39,818,000 22,610,000
Accumulated other comprehensive loss...................... (237,000) (581,000)
Retained earnings......................................... 4,118,000 4,664,000
------------ -----------
Total stockholders' equity........................ 43,784,000 26,763,000
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $120,332,000 $62,294,000
============ ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-44
<PAGE> 120

WESTOWER CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CONTRACT AND OTHER REVENUES
EARNED........................... $25,184,000 $12,637,000 $ 68,455,000 $35,995,000
COSTS OF REVENUES EARNED (exclusive
of depreciation shown below)..... 17,688,000 9,609,000 48,418,000 26,659,000
----------- ----------- ------------- -----------
Gross profit (exclusive of
depreciation)................. 7,496,000 3,028,000 20,037,000 9,336,000
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES......................... 5,128,000 1,640,000 13,385,000 4,827,000
DEPRECIATION AND AMORTIZATION...... 1,078,000 146,000 2,537,000 407,000
MERGER RELATED EXPENSES............ 1,519,000 250,000 1,596,000 250,000
----------- ----------- ------------- -----------
OPERATING INCOME (LOSS)............ (229,000) 992,000 2,519,000 3,852,000
OTHER INCOME (EXPENSE)
Other income (expense)........... (53,000) 41,000 220,000 157,000
Interest income.................. 21,000 75,000 152,000 187,000
Interest and financing expense... (928,000) (31,000) (2,051,000) (103,000)
----------- ----------- ------------- -----------
Total other income
(expense).............. (960,000) 85,000 (1,679,000) 241,000
----------- ----------- ------------- -----------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES..................... (1,189,000) 1,077,000 840,000 4,093,000
PROVISION FOR INCOME TAXES......... (503,000) (213,000) (1,386,000) (1,270,000)
----------- ----------- ------------- -----------
NET INCOME (LOSS).................. $(1,692,000) $ 864,000 $ (546,000) $ 2,823,000
=========== =========== ============= ===========

EARNINGS (LOSS) PER SHARE:
BASIC.............................. $ (0.20) $ 0.14 $ (0.07) $ 0.46
=========== =========== ============= ===========
DILUTED............................ $ (0.20) $ 0.13 $ (0.07) $ 0.39
=========== =========== ============= ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-45
<PAGE> 121

WESTOWER CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
JUNE 30, 1999

<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER
------------------- PAID-IN RETAINED COMPREHENSIVE COMPREHENSIVE
SHARES AMOUNT CAPITAL EARNINGS INCOME (LOSS) INCOME (LOSS) TOTAL
--------- ------- ----------- ---------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, September 30,
1998.................. 7,047,000 $70,000 $22,610,000 $4,664,000 $(581,000) $26,763,000
Net loss................ (546,000) $(546,000)
Foreign currency
translation
adjustment............ 344,000 344,000
---------
Total comprehensive
loss.............. $(202,000) (202,000)
=========
Proceeds from warrants
and options exercised,
net................... 1,112,000 11,000 8,868,000 8,879,000
Stock issuances for
business
acquisitions.......... 403,000 4,000 8,280,000 8,284,000
Stock compensation
expense............... 60,000 60,000
--------- ------- ----------- ---------- --------- -----------
BALANCE, June 30,
1999.................. 8,562,000 $85,000 $39,818,000 $4,118,000 $(237,000) $43,784,000
========= ======= =========== ========== ========= ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-46
<PAGE> 122

WESTOWER CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
CASH FROM OPERATING ACTIVITIES
Net income (loss)......................................... $ (546,000) $ 2,823,000
Adjustments to reconcile net income(loss) to net cash from
operating activities
Depreciation and amortization............................. 2,537,000 407,000
Gain on sale of assets.................................... (125,000)
Non-cash interest and financing expense................... 361,000 142,000
Earnings from equity investment........................... (142,000)
Stock compensation expense................................ 60,000 55,000
Changes in operating assets and liabilities, net of effect
of acquisitions
Accounts receivable....................................... (3,609,000) (646,000)
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. (1,680,000) (1,138,000)
Inventory and other current assets........................ (1,333,000) (867,000)
Other assets.............................................. 13,000
Trade accounts payable.................................... 647,000 109,000
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 151,000 141,000
Other current liabilities................................. (1,023,000) 19,000
Income taxes payable...................................... 334,000 1,280,000
Current and deferred income taxes......................... (18,000) (57,000)
------------ -----------
Net cash flows (used in) provided by operating
activities............................................. (4,261,000) 2,156,000
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for acquisitions, net of cash acquired.......... (6,583,000) (1,474,000)
Increase in other assets.................................. (2,700,000)
Purchases of property and equipment....................... (37,422,000) (1,405,000)
Proceeds from sale of assets.............................. 302,000
------------ -----------
Net cash flows used in investing activities............... (46,705,000) (2,577,000)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issuances, net........................ 8,878,000 8,934,000
Redemption of preferred stock............................. (150,000)
Proceeds from long-term debt.............................. 1,207,000 15,884,000
Repayments to related parties............................. (2,080,000) (1,972,000)
Repayments from (advances to) related parties............. 696,000 (101,000)
Borrowings (repayments) on line of credit, net............ (1,871,000) (245,000)
Proceeds from credit facility............................. 41,600,000
Distributions to stockholders of acquired subsidiaries
prior to acquisition................................... (2,800,000)
Additions to financing costs.............................. (490,000) (349,000)
Repayments of long-term debt.............................. (2,140,000) (476,000)
------------ -----------
Net cash flow from financing activities................... 45,800,000 18,725,000
------------ -----------
EFFECT OF EXCHANGE RATES.................................... 39,000 28,000
------------ -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ (5,127,000) 18,332,000
CASH AND CASH EQUIVALENTS, beginning of period.............. 9,331,000 1,748,000
------------ -----------
CASH AND CASH EQUIVALENTS, end of period.................... $ 4,204,000 $20,080,000
============ ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-47
<PAGE> 123

WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--BASIS OF PRESENTATION

Westower Corporation (the "Company") designs, builds and maintains wireless
communications transmitting and receiving facilities for providers of wireless
communications services. The Company also owns and leases communications towers.
The Company operates throughout the U.S. and Canada.

The unaudited condensed consolidated financial statements and notes thereto
at June 30, 1999 and September 30, 1998 (audited), and for the three and nine
months ended June 30, 1999 and 1998, reflect the October 28, 1997 merger with
Western Telecom Construction Ltd., an Alberta corporation, the May 29, 1998
merger with MJA Communications Corp., a Florida corporation, and the August 31,
1998 merger with Standby Services, Inc., a Texas corporation. All companies
design, fabricate and construct wireless transmitting and receiving facilities
and shelters for communications providers. The Company issued 835,000 shares of
its common stock for all the common shares of Western Telecom Construction Ltd.,
397,000 shares of its common stock for all of the common shares of MJA
Communications Corp., and 544,000 shares of its common stock for all of the
common shares of Standby Services, Inc. All of these mergers were accounted for
as a pooling-of-interests.

On October 27, 1998, the Company changed its fiscal year-end from February
28 to September 30. All prior information has been restated to conform with a
September 30 year end.

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial reporting and in accordance with the instructions for Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and disclosures normally required by generally accepted
accounting principles for complete financial statements or those normally
reflected in the Company's Annual Report on Form 10-KSB. The financial
information included herein reflects all adjustments (consisting of normal
recurring adjustments) which are, in the opinion of management, necessary for a
fair presentation of results for interim periods. Results of interim periods are
not necessarily indicative of the results to be expected for a full year. These
unaudited condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements for the seven-month
Transition Period ended September 30, 1998 and the notes thereto included in the
Company's Form 10-KSB.

CONSOLIDATION--The consolidated financial statements include the accounts
of the Company and its wholly owned domestic and Canadian subsidiaries.
Investments in subsidiaries in which the Company exercises significant influence
but which it does not control are accounted for using the equity method.
Investment in a 60% owned affiliated company is accounted for on the equity
method of accounting. The Company's equity (loss) earnings from this investment
during the three and nine months ended June 30, 1999 was $(83,000) and $142,000,
respectively, which has been included in other income. All material intercompany
accounts and transactions have been eliminated in consolidation.

FOREIGN CURRENCY TRANSLATION--All asset and liability accounts of Canadian
operations are translated into U.S. dollars at current exchange rates. Revenues
and expenses are translated using the average exchange rate during the period.
Foreign currency translation adjustments are reported as a component of
comprehensive income and stockholders' equity in the consolidated balance sheet.
Exchange gains and losses from foreign currency transactions are included in
income currently.

USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the unaudited
condensed consolidated financial statements. Examples of estimates subject to
possible revision based upon the outcome of future events include costs and
estimated earnings on uncompleted contracts, depreciation of property and
equipment, accrued income tax liabilities, and purchase price allocations for
acquisitions. Actual results could differ from those estimates.

F-48
<PAGE> 124
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

RECLASSIFICATION--Certain prior year amounts have been reclassified to
conform to the current year presentation and did not impact previously reported
stockholders' equity or cash flow.

NOTE 2--INVENTORY

Inventory is stated at the lower of cost and estimated net realizable value
using the first-in, first-out method. Inventory consists of materials purchased
for future construction not associated with specific jobs.

NOTE 3--PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1998
----------- -------------
<S> <C> <C>
Buildings....................................... $ 1,883,000 $ 1,795,000
Vehicles........................................ 4,016,000 2,540,000
Equipment....................................... 2,851,000 1,580,000
Communications towers........................... 37,479,000 1,401,000
Furniture and fixtures.......................... 1,840,000 943,000
Leasehold improvements.......................... 161,000 81,000
Construction in progress........................ 3,534,000
----------- -----------
51,764,000 8,340,000
Less accumulated depreciation and
amortization.................................. (2,878,000) (1,562,000)
----------- -----------
48,886,000 6,778,000
Land............................................ 1,331,000 796,000
----------- -----------
$50,217,000 $ 7,574,000
=========== ===========
</TABLE>

In February 1999, the Company completed the acquisition of certain
communications towers under contract in December 1998, at an aggregate cost of
approximately $17 million. In May 1999, the Company completed the acquisition of
certain communications towers under contract in October 1998, at an aggregate
cost of approximately $15.5 million.

NOTE 4--ACQUISITIONS

During the nine months ended June 30, 1999, the Company consummated the
following transactions which were accounted for under the purchase method of
accounting, and accordingly, the operating results of the acquired entities have
been included in the consolidated operating results since the date of
acquisition.

On October 30, 1998 the Company completed the acquisition of Teletronics
Management Services, Inc. ("Teletronics"). The acquisition was effected by
exchanging approximately 188,000 shares of common stock valued at approximately
$3.8 million, based on the publicly traded price, $1.8 million in cash,
including distributions payable to former shareholders in the amount of
$800,000, and the assumption of certain liabilities, for all outstanding shares
of Teletronics. The acquisition was accounted for using the purchase method for
business combinations resulting in goodwill of approximately $5.0 million.

F-49
<PAGE> 125
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

an additional 100,000 shares of common stock, based on certain performance
criteria during the three years following the date of acquisition. The
acquisition was accounted for using the purchase method for business
combinations resulting in goodwill of approximately $8.0 million.

On February 4, 1999 the Company completed the acquisition of Cypress Real
Estate Services, Inc. ("Cypress"), a Florida corporation. The acquisition was
effected by exchanging approximately 15,000 shares of common stock valued at
approximately $424,000, based on the publicly traded price, for all outstanding
shares of Cypress. The former shareholder of Cypress may also receive additional
shares of common stock, based on the number of towers, not to exceed 1,000
towers, acquired or constructed by the Company, subject to certain limitations
and restrictions.

The acquisition was accounted for using the purchase method for business
combinations with substantially all of the purchase price allocated to goodwill.

On February 26, 1999 the Company completed the acquisition of
Telecommunications R. David ("R. David"), a Quebec, Canada company which engages
in operations similar to those of the Company. The acquisition was effected by
exchanging approximately $330,000 in cash, and the assumption of certain
liabilities, for all outstanding shares of R. David. The acquisition was
accounted for using the purchase method for business combinations resulting in
goodwill of approximately $350,000.

The following is a summary of all consideration exchanged for acquisitions
that were accounted for as purchases:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
JUNE 30,
1999
-----------
<S> <C>
Shares issued......................................... 403,000
Value of shares....................................... $ 8,284,000
Cash.................................................. 6,583,000
-----------
Total purchase price........................ $14,867,000
===========
</TABLE>

The assets and liabilities of the acquired entities were recorded at their
estimated fair market values at the dates of acquisition. The initial
allocations of fair market values are preliminary and are subject to adjustments
during the first year following the acquisition. The initial allocations were as
follows:

<TABLE>
<CAPTION>
JUNE 30,
1999
-----------
<S> <C>
Non-compete agreements.................................. $ 136,000
Tangible assets......................................... 5,084,000
Goodwill................................................ 13,825,000
Liabilities assumed and deferred tax liabilities........ (4,178,000)
-----------
Total purchase price.......................... $14,867,000
===========
</TABLE>

Included in the operating results for the three and nine months ended June
30, 1999 are revenues of $5,273,000 and $14,552,000, respectively, and operating
income of $668,000 and $2,028,000, respectively, from the dates of acquisition.
Goodwill is generally amortized over a 20 year period.

F-50
<PAGE> 126
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 5--INTANGIBLE ASSETS

Intangible assets consist of the following:

<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1998
----------- -------------
<S> <C> <C>
Goodwill........................................ $27,864,000 $14,039,000
Communications tower purchase contract.......... -- 5,661,000
Non-compete agreements.......................... 355,000 219,000
----------- -----------
28,219,000 19,919,000
Less accumulated amortization................... (1,227,000) (198,000)
----------- -----------
$26,992,000 $19,721,000
=========== ===========
</TABLE>

NOTE 6--OTHER ASSETS

Other assets consist of the following:

<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1998
---------- -------------
<S> <C> <C>
Deposits on tower purchase contracts............. $1,176,000 $ --
Equity investment in joint venture............... 1,189,000 217,000
Other noncurrent assets, net..................... 3,774,000 2,554,000
---------- ----------
$6,139,000 $2,771,000
========== ==========
</TABLE>

During the nine months ended June 30, 1999, the Company paid approximately
$1.2 million as deposits to acquire additional towers. Equity investment in
joint venture represents the Company's cash investment and the Company's equity
earnings from this investment

NOTE 7--LONG-TERM DEBT

During the nine months ended June 30, 1999, the Company borrowed an
aggregate $41.6 million under its credit facility with Bank Boston N.A. As of
June 30, 1999, the effective interest rate on borrowings under the facility was
approximately 7.75%. The Company borrowed an additional $8.0 million under the
facility subsequent to June 30, 1999. The facility is collateralized by
substantially all of the Company's assets. At June 30, 1999, the Company was in
compliance with all of its covenants with the exception of certain financial
ratio requirements related to cash flow. The Company has received a waiver from
the lenders waiving the right to demand repayment as a result of the violation.

NOTE 8--COMMON STOCK

On October 15, 1997, the Company issued 1,200,000 shares of common stock
and 1,380,000 warrants to purchase common stock in a public offering. The
Company received proceeds, net of costs, of $7,493,000 from its public offering.
During the nine months ended June 30, 1999, the Company received net proceeds of
$7,291,000 on the exercise of 819,000 warrants, at $9.00 per share of common
stock. In addition to the warrants noted above, during the nine months ended
June 30, 1999, the Company's underwriters exercised warrants, issued in
connection with the Company's initial public offering, resulting in the Company
receiving $1,123,000 on the exercise of warrants to purchase 162,000 shares of
common stock at $9 per share. At June 30, 1999, there were unexercised warrants
to purchase approximately 79,000 shares of common stock held by underwriters.

F-51
<PAGE> 127
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 9--EARNINGS (LOSS) PER SHARE

The numerators and denominators of basic and fully diluted earnings (loss)
per share are as follows:

<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Numerator--Net income(loss)
as reported............... $(1,692,000) $ 864,000 $ (546,000) $2,823,000
=========== ========== ========== ==========
Denominator--Weighted
average number of shares
outstanding:
Basic weighted average
number of shares....... 8,525,000 6,356,000 8,234,000 6,104,000
Effect of dilutive stock
options and warrants... 431,000 1,104,000
----------- ---------- ---------- ----------
Diluted weighted
average number of
shares............... 8,525,000 6,787,000 8,234,000 7,208,000
=========== ========== ========== ==========
</TABLE>

For the three and nine months ended June 30, 1999, all potential common
shares were excluded from the computation of diluted earnings (loss) per share
because inclusion would have had an anti-dilutive effect on earnings (loss) per
share. For the three months ended June 30, 1998, shares associated with
convertible debt were excluded from the computation of diluted earnings per
share because inclusion would have had an anti-dilutive effect on earnings per
share. All other potential common shares have been included in the diluted
earnings per share calculations for the three and nine months ended June 30,
1998.

NOTE 10--SEGMENT INFORMATION

The Company's operations are comprised of a number of communication tower
construction entities that were recently acquired. While management assesses the
operating results of each of these entities separately, as these entities and
its existing operations exhibit similar financial performance and have similar
economic characteristics, they have been aggregated as one segment.

The following table summarizes contract and other revenues and long-lived
assets related to the respective countries in which the Company operates.

<TABLE>
<CAPTION>
AS OF AND FOR THE NINE MONTHS ENDED JUNE 30,
---------------------------------------------
TOTAL UNITED STATES CANADA
----------- ------------- -----------
<S> <C> <C> <C>
1999
Contract and Other Revenues........... $68,455,000 $52,658,000 $15,797,000
Long-lived Assets..................... $50,217,000 $43,574,000 $ 6,643,000
</TABLE>

<TABLE>
<CAPTION>
AS OF AND FOR THE NINE MONTHS ENDED JUNE 30,
---------------------------------------------
TOTAL UNITED STATES CANADA
----------- ------------- -----------
<S> <C> <C> <C>
1998
Contract and Other Revenues........... $35,995,000 $19,206,000 $16,789,000
Long-lived Assets..................... $ 4,854,000 $ 1,251,000 $ 3,603,000
</TABLE>

Long-lived assets are comprised of property and equipment and exclude
intangible assets.

F-52
<PAGE> 128
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 11--MERGER OF THE COMPANY

On May 15, 1999, the Company entered into a definitive agreement with
SpectraSite Holdings, Inc. (SpectraSite), under which Westower will merge with a
subsidiary of SpectraSite. The transaction was consummated on September 2, 1999
and under the terms of the agreement, Westower shareholders received 1.81 shares
of SpectraSite common stock for each Westower share. During the nine months
ended June 30, 1999, the Company incurred approximately $1.5 million in expenses
related to the merger, which included $750,000 paid to the Company's investment
advisors for services in connection with the merger. Under the terms of the
arrangement the Company paid an additional $2,250,000 to its investment advisors
at closing.

F-53
<PAGE> 129

(This page intentionally left blank)

F-54
<PAGE> 130

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
Westower Corporation

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of stockholders' equity, and of cash flows
present fairly, in all material respects, the financial position of Westower
Corporation and its subsidiaries at September 30, 1998, and the results of their
operations and their cash flows for the seven months ended September 30, 1998 in
conformity with generally accepted accounting principles in the United States.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards in the United States which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above. The financial statements of Westower
Corporation for the three years in the period ended February 28, 1998 were
audited by other independent accountants whose report dated April 14, 1998,
except for the third paragraph in Note 3, as to which the date is May 31, 1998
and the fourth paragraph in Note 3, as to which the date is June 14, 1999,
expressed an unqualified opinion on those statements.

/s/ PRICEWATERHOUSECOOPERS LLP

Seattle, Washington
February 4, 1999,
except for the fourth
paragraph in Note 3,
as to which the date
is June 17, 1999

F-55
<PAGE> 131

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Westower Corporation

We have audited the accompanying consolidated balance sheets of Westower
Corporation and Subsidiaries as of February 28, 1997 and 1998, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended February 28, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of MJA Communications
Corporation, which are included in the financial statements of Westower
Corporation as discussed in Note 3 to the financial statements, and which
statements reflect total assets constituting 56% and 16% of consolidated total
assets as of February 28, 1997 and 1998 and total revenues constituting 22%, 57%
and 33% of consolidated total revenues for each of the three years in the period
ended February 28, 1998, respectively. Those statements were audited by other
auditors, whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for MJA Communications Corporation, is based
solely on the report of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Westower Corporation
and Subsidiaries as of February 28, 1997 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
February 28, 1998 in conformity with generally accepted accounting principles.

/s/ MOSS ADAMS LLP

Bellingham, Washington
April 14, 1998, except for the third paragraph
in Note 3, as to which the date is
May 31, 1998, and the fourth paragraph in
Note 3, as to which the date is
June 14, 1999

F-56
<PAGE> 132

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholder of
MJA Communications Corp.
Palm Beach Gardens, Florida

We have audited the balance sheet of MJA Communications Corp. as of
December 31, 1996 and 1997, and the related statements of income and retained
earnings, and cash flows for each of the three years in the period ended
December 31, 1997 (not separately presented herein). These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MJA Communications Corp. as
of December 31, 1996 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.

/s/ LAMN, KRIELOW, DYTRYCH &
DARLING
--------------------------------------
LAMN, KRIELOW, DYTRYCH & DARLING
Certified Public Accountants

February 11, 1998, except for Note 4, as to which the date is August 12, 1998

F-57
<PAGE> 133

WESTOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, 1997 AND 1998 AND SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.............................. $ 7,131,000 $ 7,206,000 $ 9,331,000
Accounts receivable, net............................... 4,905,000 7,112,000 13,289,000
Costs and estimated earnings in excess of billings on
uncompleted contracts................................ 938,000 2,143,000 5,078,000
Inventory.............................................. 201,000 1,140,000 2,151,000
Related party advances and receivables................. -- 831,000 956,000
Income tax receivable.................................. -- -- 220,000
Other current assets................................... 63,000 125,000 1,203,000
----------- ----------- -----------
Total current assets................................. 13,238,000 18,557,000 32,228,000
Property and equipment, net.............................. 2,707,000 4,321,000 7,574,000
Intangible assets, net................................... -- 2,088,000 19,721,000
Other assets............................................. 58,000 91,000 2,771,000
----------- ----------- -----------
Total assets............................................. $16,003,000 $25,057,000 $62,294,000
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable................................. $ 4,980,000 $ 4,445,000 $ 7,053,000
Other current liabilities.............................. 275,000 929,000 2,810,000
Billings in excess of costs and estimated earnings on
uncompleted contracts................................ 3,850,000 1,745,000 1,435,000
Income taxes payable................................... 155,000 1,652,000 2,116,000
Deferred income taxes.................................. 580,000 534,000 428,000
Stockholder advances and notes payable to related
parties.............................................. 672,000 2,044,000 228,000
Note payable........................................... 208,000 147,000 1,089,000
Current portion of long-term debt and capital lease
obligations.......................................... 610,000 502,000 2,419,000
----------- ----------- -----------
Total current liabilities....................... 11,330,000 11,998,000 17,578,000
Long-term debt and capital lease obligations, excluding
current portion........................................ 212,000 292,000 14,991,000
Deferred income taxes.................................... 27,000 48,000 2,962,000
----------- ----------- -----------
Total liabilities............................... 11,569,000 12,338,000 35,531,000
Commitments and contingencies
Minority interest........................................ 40,000 -- --
----------- ----------- -----------
Redeemable preferred stock............................... 450,000 -- --
----------- ----------- -----------
Stockholders' equity
Common stock ($.01 par value, 10,000,000 shares
authorized, 4,776,000, 6,117,000 and 7,047,000 shares
issued and outstanding at February 28, 1997 and 1998,
and September 30, 1998, respectively)................ 48,000 61,000 70,000
Additional paid-in-capital............................. (48,000) 8,672,000 22,610,00
Accumulated other comprehensive income (loss).......... 27,000 (67,000) (581,000)
Retained earnings...................................... 3,917,000 4,053,000 4,664,000
----------- ----------- -----------
Total stockholders' equity...................... 3,944,000 12,719,000 26,763,000
----------- ----------- -----------
Total liabilities and stockholders' equity............... $16,003,000 $25,057,000 $62,294,000
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-58
<PAGE> 134

WESTOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1997 AND 1998
SEVEN MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED) AND 1998

<TABLE>
<CAPTION>
SEVEN MONTHS SEVEN MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1998 1997 1998
------------ ------------ ------------ ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Contract and other revenues earned......... $14,775,000 $46,091,000 $41,662,000 $22,869,000 $31,944,000
Costs of revenues earned (exclusive of
depreciation and amortization shown
below)................................... 10,755,000 33,936,000 29,508,000 16,778,000 23,858,000
----------- ----------- ----------- ----------- -----------
Gross profit............................. 4,020,000 12,155,000 12,154,000 6,091,000 8,086,000
Selling, general and administrative
expenses................................. 2,944,000 7,832,000 7,236,000 2,720,000 4,958,000
Depreciation and amortization.............. 196,000 268,000 473,000 187,000 578,000
Merger related expenses.................... -- -- -- -- 327,000
----------- ----------- ----------- ----------- -----------
Operating income........................... 880,000 4,055,000 4,445,000 3,184,000 2,223,000
Other income (expense)
Other income (expense)................... (24,000) 32,000 126,000 -- (2,000)
Interest income.......................... -- 70,000 127,000 41,000 130,000
Interest and financing expense........... (110,000) (72,000) (129,000) (32,000) (771,000)
----------- ----------- ----------- ----------- -----------
Total other income (expense)...... (134,000) 30,000 124,000 9,000 (643,000)
----------- ----------- ----------- ----------- -----------
Income before income taxes and minority
interest................................. 746,000 4,085,000 4,569,000 3,193,000 1,580,000
Minority interest.......................... (6,000) (19,000) -- -- --
----------- ----------- ----------- ----------- -----------
Income before provision for income taxes... 740,000 4,066,000 4,569,000 3,193,000 1,580,000
Provision for income taxes................. 193,000 636,000 1,633,000 1,141,000 351,000
----------- ----------- ----------- ----------- -----------
Net income................................. $ 547,000 $ 3,430,000 $ 2,936,000 $ 2,052,000 $ 1,229,000
=========== =========== =========== =========== ===========
Earnings per share:
Basic...................................... $ 0.11 $ 0.72 $ 0.56 $ 0.43 $ 0.19
=========== =========== =========== =========== ===========
Diluted.................................... $ 0.11 $ 0.72 $ 0.52 $ 0.43 $ 0.16
=========== =========== =========== =========== ===========
Pro forma earnings per share:
Basic...................................... $ 0.11 $ 0.53 $ 0.53 $ 0.37 $ 0.12
=========== =========== =========== =========== ===========
Diluted.................................... $ 0.11 $ 0.53 $ 0.50 $ 0.37 $ 0.10
=========== =========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-59
<PAGE> 135

WESTOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1997 AND 1998
SEVEN MONTHS ENDED SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED
------------------- ADDITIONAL OTHER
PAID-IN RETAINED COMPREHENSIVE COMPREHENSIVE
SHARES AMOUNT CAPITAL EARNINGS INCOME(LOSS) INCOME TOTAL
--------- ------- ----------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, FEBRUARY 28, 1995........ 4,776,000 $48,000 $ (48,000) $ 362,000 $ 29,000 $ 391,000
Net income........................ 547,000 7 $ 547,000
Foreign currency translation
adjustment...................... -- -- -- -- -- --
----------
Total comprehensive
income.................. $ 547,000 547,000
==========
Distributions of earnings to S
corporation stockholders of
acquired subsidiary prior to
acquisition..................... -- -- -- (39,000) -- (39,000)
--------- ------- ----------- ----------- --------- -----------
BALANCE, FEBRUARY 29, 1996........ 4,776,000 48,000 (48,000) 870,000 29,000 899,000
Net income........................ -- -- -- 3,430,000 -- $3,430,000
Foreign currency translation
adjustment...................... -- -- -- -- (2,000) (2,000)
----------
Total comprehensive
income.................. $3,428,000 3,428,000
==========
Distributions of earnings to S
corporation stockholders of
acquired subsidiary prior to
acquisition..................... -- -- -- (383,000) -- (383,000)
--------- ------- ----------- ----------- --------- -----------
BALANCE, FEBRUARY 28, 1997........ 4,776,000 48,000 (48,000) 3,917,000 27,000 3,944,000
Net income........................ -- -- -- 2,936,000 -- $2,936,000
Foreign currency translation
adjustment...................... -- -- -- -- (94,000) (94,000)
----------
Total comprehensive
income.................. $2,842,000 2,842,000
==========
Stock issuances................... 1,341,000 13,000 8,699,000 -- -- 8,712,000
Stock compensation expense........ -- -- 21,000 -- -- 21,000
Distributions of earnings to S
corporation stockholders of
acquired subsidiary prior to
acquisition..................... -- -- -- (2,800,000) -- (2,800,000)
--------- ------- ----------- ----------- --------- -----------
BALANCE, FEBRUARY 28, 1998........ 6,117,000 61,000 8,672,000 4,053,000 (67,000) $12,719,000
Net income........................ -- -- -- 1,229,000 -- $1,229,000
Foreign currency translation
adjustment...................... -- -- -- -- (514,000) (514,000)
----------
Total comprehensive
income.................. $ 715,000 715,000
==========
Adjustment to conform fiscal year
ends of acquired subsidiaries... -- -- -- 438,000 -- 438,000
Proceeds from warrants
exercised....................... 559,000 6,000 4,782,000 -- -- 4,788,000
Proceeds from stock options
exercised and related tax
benefit......................... 35,000 -- 556,000 -- -- 556,000
Stock issuances for business
acquisitions.................... 336,000 3,000 8,097,000 -- -- 8,100,000
Value ascribed to conversion
feature and warrants of
convertible debt, net of
deferred taxes.................. -- -- 468,000 -- -- 468,000
Stock compensation expense........ -- -- 35,000 -- -- 35,000
Distributions of earnings and for
taxes to stockholders of
acquired subsidiaries prior to
acquisition..................... -- -- -- (1,056,000) -- (1,056,000)
--------- ------- ----------- ----------- --------- -----------
BALANCE, SEPTEMBER 30, 1998....... 7,047,000 $70,000 $22,610,000 $ 4,664,000 $(581,000) $26,763,000
========= ======= =========== =========== ========= ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-60
<PAGE> 136

WESTOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1997 AND 1998
SEVEN MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED) AND 1998

<TABLE>
<CAPTION>
SEVEN
SEVEN MONTHS MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1998 1998 1998
------------ ------------ ------------ ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income....................................... $ 547,000 $ 3,430,000 $ 2,936,000 $ 2,052,000 $ 1,229,000
Adjustments to reconcile net income to net cash from
operating activities
Depreciation and amortization...................... 196,000 268,000 473,000 187,000 578,000
Provision for bad debt............................. -- -- -- -- 221,000
Deferred income taxes.............................. 96,000 433,000 (41,000) (209,000) 367,000
Non-cash interest and financing expense............ -- -- -- -- 264,000
Gain on sale of assets............................. -- -- (125,000) -- --
Stock-based compensation........................... -- -- 56,000 -- 35,000
Earnings from equity investment.................... -- -- -- -- (46,000)
Minority interest.................................. 6,000 19,000 -- (40,000) --
Changes in operating assets and liabilities, net of
effect of acquisitions
Accounts receivable................................ (2,570,000) (1,402,000) (1,484,000) (1,962,000) (1,603,000)
Costs and estimated earnings in excess of billings
on uncompleted contracts......................... (284,000) (545,000) (1,200,000) (238,000) (1,350,000)
Inventory and other current assets............... (69,000) (143,000) (938,000) -- (990,000)
Other assets....................................... (32,000) (93,000) (5,000) (597,000) 135,000
Trade accounts payable............................. 1,163,000 3,387,000 (933,000) (810,000) (2,265,000)
Billings in excess of costs and estimated earnings
on uncompleted contracts......................... 1,464,000 2,380,000 (2,105,000) (3,156,000) (963,000)
Other current liabilities........................ 56,000 79,000 648,000 (198,000) 6,000
Income taxes payable............................... (44,000) 147,000 1,354,000 (155,000) 244,000
----------- ----------- ----------- ----------- -----------
Net cash flows (used) provided by operating
activities..................................... 529,000 7,960,000 (1,364,000) (5,126,000) (4,138,000)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for acquisitions, net of cash acquired... -- -- (1,467,000) -- (6,348,000)
Sales of property and equipment.................... 155,000 -- 444,000 -- --
Purchases of property and equipment................ (301,000) (1,245,000) (1,692,000) (455,000) (1,657,000)
----------- ----------- ----------- ----------- -----------
Net cash flows used by investing activities...... (146,000) (1,245,000) (2,715,000) (455,000) (8,005,000)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issuances, net................. -- -- 7,493,000 -- --
Proceeds from stock warrant and option exercises,
net.............................................. -- -- -- -- 5,002,000
Redemption of preferred stock...................... -- -- (450,000) (300,000) --
Principal payments on long-term debt............... (583,000) (389,000) (326,000) (227,000) (392,000)
Distributions to stockholders...................... (39,000) (383,000) (2,800,000) -- (1,056,000)
Advances to related parties........................ -- -- (196,000) (384,000) (65,000)
Advances from related parties...................... 481,000 -- 457,000 1,117,000 34,000
Repayments to related parties...................... (17,000) (480,000) -- -- (1,816,000)
Borrowing (repayments) on line of credit, net...... -- 207,000 (57,000) (85,000) (88,000)
Additions to financing costs....................... -- -- -- -- (2,368,000)
Proceeds from debt incurred........................ 159,000 555,000 104,000 104,000 15,256,000
----------- ----------- ----------- ----------- -----------
Net cash flows provided (used) by financing
activities..................................... 1,000 (490,000) 4,225,000 225,000 14,507,000
----------- ----------- ----------- ----------- -----------
EFFECT OF CHANGES IN EXCHANGE RATES.................. -- -- (71,000) (27,000) (239,000)
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH...................... 384,000 6,225,000 75,000 (5,383,000) 2,125,000
----------- ----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD....... 522,000 906,000 7,131,000 7,131,000 7,206,000
----------- ----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD............. $ 906,000 $ 7,131,000 $ 7,206,000 $ 1,748,000 $ 9,331,000
=========== =========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-61
<PAGE> 137

WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--ORGANIZATION

Westower Corporation (the "Company") was incorporated in Washington state
in June 1997 for the purpose of acquiring Westower Holdings Ltd. and its
wholly-owned subsidiaries, Westower Communications Ltd. and Westower
Communications, Inc. In connection with an initial public offering on October
15, 1997, the Company raised approximately $7.5 million in net cash proceeds.
Proceeds have been used in part to acquire the assets and operations of other
businesses.

The Company is successor to operations begun in 1990 by Westower
Communication Ltd. It designs, builds and maintains wireless communication
transmitting and receiving facilities for providers of wireless communication
services. The Company also owns and leases wireless communication towers to
wireless communication providers. Principal operations are located in the
Pacific Northwest, including the Canadian provinces of British Columbia and
Alberta, and the Southeastern and Southwestern United States. Other operations
extend throughout the Western United States and into Eastern Canada.

On October 27, 1998, the Company changed its fiscal year-end from February
28 to September 30 resulting in a seven month reporting period from March 1,
1998 to September 30, 1998 (the "Transition Period").

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Consolidation--The consolidated financial statements include the
accounts of Westower Corporation and its wholly owned domestic and Canadian
subsidiaries.

Investments in subsidiaries in which the Company exercises significant
influence but which it does not control are accounted for using the equity
method. At September 30, 1998, the Company has an equity investment in a joint
venture which engages in operations in Brazil that are similar to those of the
Company, in which it has an economic ownership interest of 60 percent. Revenues
and associated expenses are transacted in Canadian dollars. As of September 30,
1998, the Company's investment totaled $217,000, which has been included in
other assets, and the Company's equity earnings from this investment during the
Transition Period totaled $46,000, which has been included in contract and other
revenues earned.

All material intercompany accounts and transactions have been eliminated in
consolidation.

(b) Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the consolidated
financial statements. Examples of estimates subject to possible revision based
upon the outcome of future events include costs and estimated earnings on
uncompleted contracts, depreciation of property and equipment, accrued income
tax liabilities, and purchase price allocations for acquisitions. Actual results
could differ from those estimates.

(c) Contract and Other Revenue and Cost Recognition--Revenue from
fixed-price construction contracts is recognized using the
percentage-of-completion method based on cost incurred to total estimated cost.
Revenue from contracts based upon time and materials is recognized based upon
hours worked and materials consumed. Most of the Company's contracts are
short-term and are completed in two to three months. Contract costs include all
direct material and labor costs and those indirect costs related to contract
performance. Provisions for estimated losses on uncompleted contracts are made
in the period in which such losses are determined.

Costs and estimated earnings in excess of billings on uncompleted contracts
represents revenues recognized in excess of amounts billed. Billings in excess
of costs and estimated earnings on uncompleted contracts represents billings in
excess of revenues earned.

F-62
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WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company owns wireless communication towers which it leases to third
parties. Revenues are recognized on a monthly basis over the term of the leasing
agreement. Revenues and cost of services of approximately $170,000 and $25,000,
respectively, have been included in contract and other revenues earned and cost
of revenues earned, respectively, in the Transition Period.

(d) Cash and Cash Equivalents--Cash and cash equivalents consist of cash in
banks and money market investments on deposit with major Canadian and U.S.
financial institutions. Investments with maturities of three months or less when
purchased are considered cash equivalents.

(e) Inventory--Inventory consists of construction parts and supplies and is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.

(f) Property and Equipment--Property and equipment is recorded at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. Estimated useful lives by major asset category are
as follows: buildings--10-25 years; furniture, fixtures and equipment--3 to 10
years; wireless communication towers--20 years; vehicles--5 years. Gains or
losses on the dispositions of assets are recorded at the time of disposition.
The costs of normal repairs and maintenance are charged to expense as incurred.

(g) Capitalized Software--Purchased software is capitalized at cost and
amortized over its estimated useful life of 3 years.

(h) Intangible Assets--Business acquisition costs are allocated to the
tangible and identifiable intangible assets that are acquired. Business
acquisition costs allocated to contracts to purchase wireless communication
towers are amortized over a 20 year period upon acquisition of the wireless
communication towers, and costs allocated to non-compete agreements are
amortized over the term of the agreements, which are generally 5 years. The
excess of the aggregate purchase price over the fair value of the net assets
acquired and identifiable intangible assets acquired is recorded as goodwill.
Goodwill is amortized over a 20 year period. The Company amortizes its
intangible assets using the straight line method.

(i) Financing Costs--Direct costs associated with obtaining debt financing
are deferred and are amortized over the term of the debt using the effective
interest method. Direct costs of obtaining commitments for financing are
deferred and charged to expense over the term of the commitments. Direct costs
associated with obtaining equity financing are charged to additional paid-in
capital as the related funds are raised. Deferred financing costs totaled $2.4
million at September 30, 1998, which has been included in other assets.
Accumulated amortization of deferred financing costs totaled $113,000 at
September 30, 1998.

(j) Valuation of Long-Lived Assets--The Company periodically reviews its
long-lived assets and certain identifiable intangible assets, including
goodwill, whenever events or changes in circumstance indicate that the carrying
amount of an asset may be impaired and not recoverable. Adjustments are made if
the sum of the expected future undiscounted operating cash flows is less than
the carrying value of the asset.

(k) Income Taxes--The Company accounts for income taxes under the liability
method. Deferred taxes are recognized for temporary differences between the
basis of assets and liabilities for financial statement and income tax purposes
at the enacted tax rates. The significant differences relate primarily to the
timing and recognition of depreciation and amortization of long-lived assets,
profit on uncompleted contracts, amortization of financing costs and bad debt
expense. Deferred tax amounts represent the future tax consequences of those
differences, which will either be deductible or taxable when the assets and
liabilities are recovered or settled. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amounts expected to be realized.
The Company files a consolidated federal income tax return in the United States.
The Company files separate tax returns for each of its Canadian subsidiaries in
Canada. Additionally, certain of the Company's operations are subject to
Provincial income taxes in Canada and state income taxes in the United States.

F-63
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WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(l) Foreign Currency Translation--All asset and liability accounts of
Canadian operations are translated into U.S. dollars at current exchange rates.
Revenues and expenses are translated using the average exchange rate during the
period. Foreign currency translation adjustments are reported as a component of
comprehensive income and stockholders' equity in the consolidated balance sheet.
Gains and losses resulting from foreign currency transactions are included in
income currently.

(m) Earnings Per Share and Change in Accounting Policy--During fiscal year
ended February 28, 1998, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 128, Earnings Per Share. The new standard supersedes
Accounting Principles Board (APB) No. 15, Earnings Per Share and establishes
standards for computing and presenting earnings per share. Prior years have been
restated to conform with the new requirements.

Basic earnings per share amounts are computed based on the weighted average
number of shares outstanding during the period after giving retroactive effect
to stock dividends and stock splits. Diluted earnings per share amounts are
computed by determining the number of additional shares that are deemed
outstanding from stock options and warrants, using the treasury stock method,
and convertible debentures.

(n) Segment Information--In the Transition Period, the Company adopted SFAS
No. 131, Disclosures about Segments of an Enterprise and Related Information.
SFAS No. 131 supersedes SFAS 14, Financial Reporting for Segments of a Business
Enterprise, replacing the "industry segment" approach with the "management"
approach. The management approach designates the internal organization that is
used by management for making operating decisions and assessing performance as
the source of the Company's reportable segments. SFAS No. 131 also requires
disclosures about products and services, geographic areas, and major customers.
The adoption of SFAS No. 131 did not significantly affect the disclosure of
segment information previously reported (see "Segment Information" note).

(o) New Accounting Standards--In June 1997, the Financial Accounting
Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. Among other provisions, SFAS No. 133 requires that entities
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. Gains and losses
resulting from changes in the fair values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. This Statement becomes effective beginning June 15, 2000,
for the Company. The Company is currently assessing the impact, if any, to its
financial position or results of operations.

(p) Interim Financial Data (Unaudited)--As discussed in Note 1, on October
27, 1998 the Company changed its fiscal year end to September 30 from February
28. The information presented for the seven months ended September 30, 1997 is
unaudited. The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments necessary for a fair presentation of results of the
interim period have been made and such adjustments were of a normal and
recurring nature. The results of operations and cash flows for the seven months
ended September 30, 1997 are not necessarily indicative of the results that were
reported for the entire fiscal year ending February 28, 1998.

NOTE 3--MERGERS AND ACQUISITIONS

MERGERS

Westower Holdings Ltd. Concurrent with its incorporation in June 1997, the
Company completed a merger with Westower Holdings Ltd. by issuing 3,000,000
shares of common stock in exchange for all outstanding common stock of Westower
Holdings Ltd. Westower Holdings Ltd. is a Wyoming corporation

F-64
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WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

that owns all outstanding common stock of Westower Communications Ltd. and
Westower Communications, Inc. The merger qualified as a tax-free exchange and is
accounted for similar to a pooling-of-interests.

WTC Holdings, Inc. and Western Telecom Construction Ltd. Effective October
28, 1997, the Company completed a merger with WTC Holdings, Inc. (formerly
411677 Alberta Ltd.) and its wholly owned subsidiary, Western Telecom
Construction Ltd., (collectively, "Western Telecom"). WTC Holdings, Inc. was
wholly-owned by a relative of a significant stockholder and a director of
Westower Corporation. WTC Holdings, Inc. is a Wyoming corporation, and Western
Telecom Construction Ltd. is a Canadian corporation. Western Telecom engages in
operations similar to those of the Company. The merger was effected by
exchanging 835,000 shares of common stock for all outstanding common stock of
Western Telecom. The merger qualified as a tax-free exchange and has been
accounted for using the pooling-of-interests method for business combinations.
Accordingly, the consolidated financial statements for the fiscal years ended
February 29, 1996 and February 28, 1997 and 1998 and the Transition Period have
been restated to include the combined financial position, results of operations,
and cash flows of Western Telecom.

MJA Communications Corporation. Effective May 31, 1998, the Company
completed a merger with MJA Communications Corporation ("MJA"). MJA is a Florida
corporation which engages in operations similar to those of the Company. In
connection with the merger, MJA's tax status was changed from an S corporation
to a C corporation. The merger was effected by exchanging 397,000 shares of
common stock for all outstanding common stock of MJA. The merger qualified as a
tax-free exchange and has been accounted for using the pooling-of-interests
method for business combinations. Accordingly, the consolidated financial
statements for the fiscal years ended February 29, 1996 and February 28, 1997
and 1998 and the Transition Period have been restated to include the combined
financial position, results of operations, and cash flows of MJA.

Standby Services, Inc. Effective August 31, 1998, the Company completed a
merger with Standby Services, Inc. ("Standby"). Standby is a Texas corporation
which engages in operations similar to those of the Company. In connection with
the merger, Standby's tax status was changed from an S corporation to a C
corporation. The merger was effected by exchanging 544,000 shares of common
stock for all outstanding common stock of Standby. The merger qualified as a
tax-free exchange and has been accounted for using the pooling-of-interests
method for business combinations. Accordingly, the consolidated financial
statements for the fiscal years ended February 29, 1996 and February 28, 1997
and 1998 and the Transition Period have been restated to include the combined
financial position, results of operations, and cash flows of Standby.

Prior to the respective mergers, Western Telecom had a fiscal year-end of
January 31 and MJA and Standby had a fiscal year end of December 31. In
recording the business combinations, the fiscal years ended 1998 and 1997
financial statements have not been restated to conform with Westower
Corporation's previous fiscal year end of February 28, as the effect on the
consolidated financial statements is not material. As a result of Western
Telecom, MJA and Standby having a different fiscal year end and the change in
the Company's fiscal year end, Western Telecom and MJA and Standby's results of
operations for the respective one and two-month periods ended February 28, 1998
have been excluded from the reported results of operations in the Transition
Period and, therefore, have been presented as an adjustment to the Company's
consolidated statement of stockholders' equity for the Transition Period.
Aggregate revenues, expenses, income before extraordinary items and net income,
attributable to these mergers, which have been excluded from the Company's
reported results of operations in the Transition Period, were $3,302,000,
$2,864,000, $438,000 and $438,000, respectively, for the period from January 1,
1998 to February 28, 1998.

F-65
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WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Summarized results of operations for the separate companies and combined
amounts included in the consolidated financial statements, net of intercompany
transactions, are as follows:

The following pro forma net income and basic diluted earnings per share are
presented as if the Company had been required to provide for income taxes that
were previously taxable to the former shareholders of the merged entities that
were previously S corporations.

F-66
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WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ACQUISITIONS

The following acquisitions have been accounted for using the purchase
method of accounting for business combinations and, accordingly, the operating
results of the acquired companies have been included in the Company's
consolidated financial statements from the date of acquisition.

Acquisitions from November 1, 1997 to February 28, 1998. On dates ranging
between November 1, 1997 and January 17, 1998, the Company acquired all
outstanding shares of common stock of National Tower Service Ltd., 501053 B.C.
Ltd., and the minority interest in WTC Leasing Ltd. which are Canadian
corporations with operations similar to those of the Company. Additionally, on
January 17, 1998 the Company acquired the assets, principally communication
towers, of Ralph's Radio, Inc. and 344813 Alberta Ltd. The aggregate purchase
price of these transactions totaled approximately $2.7 million which consisted
of $1.5 million in cash and the issuance of 134,000 shares of common stock
valued at approximately $1.2 million, based on the publicly traded price.

Jovin Communications, Inc. and Acier Filteau, Inc. On June 12, 1998 the
Company completed the acquisitions of Jovin Communications, Inc. ("Jovin") and
Acier Filteau, Inc. ("Acier"), both Montreal, Quebec (Canada) corporations which
engage in operations similar to those of the Company. The acquisitions were
effected by exchanging shares of common stock of the Company and shares of a
separate class of common stock of an acquisition subsidiary, with rights
identical to those of the Company's common stock, aggregating 118,000 shares in
total and valued at approximately $2.8 million, based on the publicly traded
price, and the assumption of certain obligations of Jovin and Acier, for all
outstanding common shares of Jovin and Acier.

Cord Communications, Incorporated. On August 31, 1998 the Company
completed the acquisition of Cord Communications Incorporated ("Cord"), a
California corporation which engages in operations similar to those of the
Company. The acquisition was effected by exchanging 218,000 shares of common
stock valued at approximately $5.2 million, based on the publicly traded price,
$5 million in cash and the assumption of certain obligations of Cord for all
outstanding common shares of Cord. The former stockholders of Cord may also
receive an additional 348,000 shares of common stock, based on the attainment of
certain performance measures of Cord during the twelve month period following
the date of acquisition. Additional shares of common stock will be recorded as
an adjustment of the purchase price and will increase recorded goodwill.

F-67
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WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CNG Communications, Inc. On September 28, 1998, the Company completed the
acquisition of CNG Communications, Inc. ("CNG") for approximately $1.7 million
in cash and the assumption of certain obligations of CNG. The former shareholder
of CNG may also receive up to an additional $3 million in cash pending the
successful acquisition of certain wireless communication towers under an
existing contract held by CNG. As part of the acquisition, the Company assumed
certain liabilities of CNG, including convertible debentures, outstanding
warrants and the termination costs relating to a financing agreement with a
third party investment banker. The Company entered into a settlement agreement
with the above parties that resulted in an aggregate payment of $3.25 million to
the convertible debenture holders, which included principal and interest, and
the third party investment banker. On October 22, 1998, the Company exercised
its right to acquire the wireless communication towers under contract at an
exercise price of $9.2 million. The consummation of the acquisition is subject
to regulatory approval.

The following is a summary of all consideration exchanged for acquisitions
that were accounted for as purchases:

<TABLE>
<CAPTION>
SEVEN
MONTHS
YEAR ENDED ENDED
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Shares issued.................................. 134,000 336,000
Value of shares................................ $1,184,000 $ 8,100,000
Cash........................................... 1,467,000 6,672,000
---------- -----------
Total purchase price........................... $2,651,000 $14,772,000
========== ===========
</TABLE>

The assets and liabilities of the acquired entities were recorded at their
estimated fair market values at the dates of acquisition. The initial
allocations of fair market values are preliminary subject to adjustments during
the first year following the acquisition. The initial allocations were as
follows:

<TABLE>
<CAPTION>
SEVEN
MONTHS
YEAR ENDED ENDED
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Non-compete agreements......................... $ -- $ 219,000
Tangible assets................................ 1,437,000 11,034,000
Communication tower purchase contracts......... -- 5,661,000
Goodwill....................................... 2,104,000 12,507,000
Liabilities assumed and deferred tax
liabilities.................................. (890,000) (14,649,000)
---------- ------------
Total purchase price........................... $2,651,000 $ 14,772,000
========== ============
</TABLE>

The results of operations of these businesses have been included in the
Company's consolidated financial statements from their respective acquisition
dates. The following summarizes the unaudited pro forma results of operations,
on a combined basis, as if the acquisitions had been consummated as of the
beginning of each of

F-68
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WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the periods presented, after including the impact of certain adjustments such as
amortization of intangible assets and income tax effects:

<TABLE>
<CAPTION>
SEVEN
MONTHS
YEAR ENDED ENDED
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Contract and other revenues earned............. $72,720,000 $43,273,000
Pro forma net income........................... $ 4,323,000 $ 140,000
Pro forma basic earnings per share............. $ 0.82 $ 0.02
Pro forma diluted earnings per share........... $ 0.77 $ 0.02
</TABLE>

The unaudited pro forma results are not necessarily indicative of the
results of operations which would actually have been reported had the
acquisitions had been completed prior to the beginning of the periods presented.
In addition, they are not intended to be indicative of future results.

NOTE 4--UNCOMPLETED CONTRACTS

Costs, estimated earnings and billings on uncompleted contracts are
summarized as follows:

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Costs incurred on uncompleted
contracts............................. $ 15,356,000 $ 12,111,000 $ 15,461,000
Estimated earnings...................... 3,516,000 5,084,000 3,212,000
Less billings to date................... (21,784,000) (16,797,000) (15,030,000)
------------ ------------ ------------
Total................................... $ (2,912,000) $ 398,000 $ 3,643,000
============ ============ ============
Presentation in the accompanying balance
sheet:
Costs and estimated earnings in excess
of billings on uncompleted
contracts.......................... $ 938,000 $ 2,143,000 $ 5,078,000
Billings in excess of costs and
estimated earnings on uncompleted
contracts.......................... (3,850,000) (1,745,000) (1,435,000)
------------ ------------ ------------
Total................................... $ (2,912,000) $ 398,000 $ 3,643,000
============ ============ ============
</TABLE>

F-69
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WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5--PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Buildings............................... $ 550,000 $ 1,507,000 $ 1,795,000
Vehicles................................ 737,000 1,497,000 2,540,000
Equipment............................... 381,000 743,000 1,580,000
Communication towers.................... 387,000 620,000 1,401,000
Furniture and fixtures.................. 380,000 634,000 943,000
Leasehold improvements.................. 27,000 73,000 81,000
---------- ----------- -----------
2,462,000 5,074,000 8,340,000
Less accumulated depreciation........... (688,000) (1,458,000) (1,562,000)
---------- ----------- -----------
1,774,000 3,616,000 6,778,000
Land.................................... 933,000 705,000 796,000
---------- ----------- -----------
$2,707,000 $ 4,321,000 $ 7,574,000
========== =========== ===========
</TABLE>

Depreciation expense on property and equipment in the fiscal years ended
February 29, 1996 and February 28, 1997 and 1998 and the Transition Period was
$196,000, $262,000, $457,000 and $396,000, respectively.

NOTE 6--INTANGIBLE ASSETS

Intangible assets consist of the following:

<TABLE>
<CAPTION>
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Goodwill....................................... $2,104,000 $14,039,000
Communication tower purchase contracts......... -- 5,661,000
Non-compete agreements......................... -- 219,000
---------- -----------
2,104,000 19,919,000
Less accumulated amortization.................. (16,000) (198,000)
---------- -----------
$2,088,000 $19,721,000
========== ===========
</TABLE>

Amortization expense on intangible assets in the fiscal years ended
February 29, 1996, February 28, 1997 and 1998 and the Transition Period was
$0.00, $8,000, $16,000 and $182,000, respectively.

NOTE 7--NOTES PAYABLE

NOTE PAYABLE TO FINANCE COMPANY

At September 30, 1998, through one of its acquired subsidiaries, the
Company had a $2.5 million line of credit facility with a finance company,
secured by accounts receivable, inventory, property and equipment, cash and cash
equivalents. At September 30, 1998 the outstanding balance was $1.09 million,
which was repaid in October 1998, and the line of credit was cancelled.

F-70
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WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTES PAYABLE TO BANK

At February 28, 1998 the Company had a line of credit facility with a
Canadian bank that allowed for borrowings at the bank's prime rate plus .75%.
The line was collateralized by essentially all assets of Western Telecom
Construction Ltd. and was cancelled in May 1998.

NOTE 8--LONG TERM DEBT AND CAPITAL LEASE OBLIGATIONS

Long-term debt and capital lease obligations consists of the following:

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Convertible note, interest at 7%, due
April 30, 2007, quarterly interest
payments through April 2005, quarterly
reductions thereafter, see further
description below..................... $ -- $ -- $14,154,000
Convertible notes of acquired
subsidiary, interest at rates ranging
from 12% to 14%, repaid in December
1998 (see Note 3)..................... -- -- 1,882,000
Notes payable to various Canadian banks
repaid in full during the Transition
Period and 1998, due on demand or in
aggregate monthly installments of
$8,200 including interest,
collateralized by assets and an
assignment of lease revenue........... 480,000 263,000 --
Notes payable to various U.S. and
Canadian Banks, repaid in full during
the transition period, due in
aggregate monthly installments of
$7,800, including interest at rates
ranging from 7.5% to 11.25% through
June 2002, collateralized by property,
plant and equipment................... 222,000 129,000 --
Vehicle purchase contracts and other
notes payable with U.S. and Canadian
finance corporations, aggregate
monthly installments of $30,000,
including interest at rates up to
11.15%, payments due through December
2001, collateralized by vehicles and
real property......................... 86,000 192,000 781,000
Capital lease obligations to U.S. and
Canadian lessors, due in aggregate
monthly installments of $19,000
through August 2003, collateralized by
leased equipment...................... 34,000 210,000 593,000
--------- --------- -----------
Total debt.............................. 822,000 794,000 17,410,000
Less current portion.................... (610,000) (502,000) (2,419,000)
--------- --------- -----------
Long-term portion....................... $ 212,000 $ 292,000 $14,991,000
========= ========= ===========
</TABLE>

F-71
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WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Long-term debt and capital lease obligations matures as follows:

<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30,
-------------------------
<S> <C>
1999............................................... $ 2,419,000
2000............................................... 452,000
2001............................................... 225,000
2002............................................... 98,000
2003............................................... 62,000
Thereafter......................................... 14,154,000
-----------
$17,410,000
===========
</TABLE>

CONVERTIBLE NOTE

In June 1998, the Company issued a private placement of $15.0 million of 7%
convertible senior subordinated note (the "Convertible Debt") and warrant to
purchase 40,000 shares of common stock in exchange for $14.85 million net cash
proceeds. The Convertible Debt was immediately convertible at a ratio of $25.03
per share of common stock and the warrant provides for purchase of shares at
$23.00 per share of common stock at the holder's option. The purchase agreement
provides for an adjustment of the conversion amount for the subordinated debt
and warrant exercise price for any stock dividends, splits and other changes as
defined in the respective agreements, so as to preserve the Convertible Debt
holder's relative rights. The conversion ratio and warrant exercise price per
common share were less than the fair value of the Company's common stock at the
date of issuance. The value of the conversion features was approximately
$124,000 and was immediately charged to interest expense and an increase in
additional paid-in capital. The value ascribed to the warrant of approximately
$723,000, was reflected as both a debt discount and an increase in additional
paid-in capital. The debt discount is accounted for as a component of interest
expense using the effective interest rate method.

The Convertible Debt requires quarterly interest payments through April 30,
2005, when the Company will be required to make principal payments of $3 million
each April 30 and October 31 thereafter through the final maturity date, April
30, 2007. The Company may begin making optional prepayments of the Convertible
Debt beginning May 30, 2000 subject to a certain minimum trading price of the
Company's common stock commencing on or after April 30, 2000. The Company is
subject to various affirmative and negative covenants contained in the
agreement, including minimum net worth and earnings requirements, and
limitations on additional indebtedness, asset disposals and asset additions. The
agreement required the holder of the Convertible Debt to consent to
subordination of the obligation to senior bank indebtedness discussed below. On
September 30, 1998, the Company was in compliance with all covenants with the
exception of the certain indebtedness covenant, which was cured subsequent to
year end. The Company has received a waiver from the note holder waiving the
right to demand repayment of the note as a result of the violation.

CREDIT FACILITY

Under terms of a revolving credit facility, dated June 9, 1998 and expiring
April 25, 2005, with a consortium of U.S. and non-U.S. banks, the Company may
borrow up to $75.0 million. The credit facility provides for interest only
payments through August 30, 2000, with escalating principal reductions each
three months from that date through maturity. Borrowings under the credit
facility bear interest at optional rates as specified in the agreement, subject
to the Company's election at the borrowing date. The Company is also required to
pay quarterly commitment fees of .5% on the average undrawn balance of the
credit facility, which is included as a component of interest expense. There
were no borrowings under the credit facility at September 30, 1998. Subsequent
to year end, the Company has drawn approximately $24.0 million on the

F-72
<PAGE> 148
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

credit facility to finance business acquisitions, including the repayment of
acquired subsidiary debt, and to fund operations. Covenants of the credit
facility require the Company to maintain certain debt-to-earnings and interest
coverage ratios. Other provisions limit capital expenditures, subsidiary
indebtedness and require certain minimum levels of earnings and net worth. On
September 30, 1998, the Company was in compliance with all covenants with the
exception of the certain indebtedness covenant, which was cured subsequent to
September 30, 1998. The Company has received a waiver from the lenders waiving
their right to demand repayment of the credit facility as a result of this
violation.

NOTE 9--INCOME TAXES

The provision for income taxes is comprised by the following:

<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1996 1997 1998 1998
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Current
U.S. federal and
state............... $ 38,000 $133,000 $ 272,000 $ 98,000
Canadian federal and
provincial.......... 59,000 70,000 1,402,000 767,000
-------- -------- ---------- ---------
97,000 203,000 1,674,000 865,000
-------- -------- ---------- ---------
Deferred
U.S. federal and
state............... $ -- $ (2,000) $ -- $ (20,000)
Canadian federal and
provincial.......... 96,000 435,000 (41,000) (494,000)
-------- -------- ---------- ---------
96,000 433,000 (41,000) (514,000)
-------- -------- ---------- ---------
Total.......... $193,000 $636,000 $1,633,000 $ 351,000
======== ======== ========== =========
</TABLE>

The total tax provision differs from the amount computed using the U.S.
federal statutory income tax rates as follows:

<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1996 1997 1998 1998
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Pretax net income.......... $740,000 $4,066,000 $4,569,000 $1,580,000
U.S. statutory rates....... 34% 34% 34% 34%
Tax at statutory rates..... 252,000 1,382,000 1,553,000 537,000
Income taxable to S
Corporation
shareholders............. 1,000 (890,000) (165,000) (454,000)
Effect of change in tax
status................... -- 125,000 -- --
Non deductible expenses.... -- -- -- 185,000
U.S. state income taxes,
net of federal tax
benefit.................. -- 8,000 -- 5,000
</TABLE>

F-73
<PAGE> 149
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1996 1997 1998 1998
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Effect of graduated
rates.................... (60,000) -- -- --
Excess income tax payable
in foreign
jurisdictions............ -- 11,000 245,000 78,000
-------- ---------- ---------- ----------
$193,000 $ 636,000 $1,633,000 $ 351,000
======== ========== ========== ==========
</TABLE>

Undistributed earnings of the Company's Canadian subsidiaries amounted to
approximately $5.7 million at September 30, 1998. Essentially all of those
earnings are considered to be indefinitely reinvested and, accordingly, no
provision for U.S. federal and state income taxes has been provided thereon.
Upon distribution of those earnings in the form of dividends or otherwise, the
Company would be subject to both U.S. income taxes, net of foreign tax credits,
and withholding taxes payable in Canada.

The tax effects of temporary differences that give rise to deferred tax
assets and liabilities are as follows:

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Current
Assets:
Allowance for doubtful accounts.... $ -- $ -- $ (51,000)
Liabilities:
Deferred taxable income on
uncompleted contracts............ 580,000 534,000 479,000
-------- -------- ----------
$580,000 $534,000 $ 428,000
======== ======== ==========
Noncurrent
Liabilities:
Depreciation and amortization...... $ 27,000 $ 48,000 $2,626,000
Amortization of debt discount...... -- -- 322,000
Other.............................. -- -- 14,000
-------- -------- ----------
$ 27,000 $ 48,000 $2,962,000
======== ======== ==========
</TABLE>

NOTE 10--EARNINGS PER SHARE

The numerators and denominators of basic and fully diluted earnings per
share are as follows:

F-74
<PAGE> 150
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At September 30, 1998, 342,000 weighted-average shares associated with the
Convertible Debt discussed in Note 8 were excluded from the computation of
diluted earnings per share for the Transition Period because their inclusion
would have had an anti-dilutive effect on earnings per share. All other
potential common shares have been included in the diluted earnings per share
calculation. All potential common shares were included in the calculation of
diluted earnings per share for the years ended February 29, 1996 and February
28, 1997 and 1998.

NOTE 11--STOCKHOLDERS' EQUITY

REDEEMABLE PREFERRED STOCK

During the year ended February 28, 1998, the Company merged with WTC
Holdings Ltd. and its wholly-owned subsidiary, Western Telecom Construction Ltd.
(collectively, "Western Telecom"). The merger was accounted for as a
pooling-of-interests and the February 28, 1997 financial statements have been
restated to include the accounts of Western Telecom. In February 1994, Western
Telecom issued 467 shares of Class A redeemable preferred stock. The preferred
stock ranked in priority to common stock in the event of liquidation,
dissolution or winding up of the affairs of Western Telecom. The shares also
contain stated redemption values and rights to 5% noncumulative dividends when
declared by the Board of Directors. There were no unpaid dividends at February
28, 1997 and 1998. The preferred stock has no voting rights.

The shares have been reflected at their total redemption price of $450,000
in the February 28, 1997 balance sheet. During the year ended February 28, 1998,
the Company redeemed all outstanding shares.

COMMON STOCK

The Company has a single class of $0.01 par value common stock. Authorized
shares total 10 million, of which 2,580,000 have been registered on Form SB-2
with the Securities and Exchange Commission under the 1933 Securities Act. A
total of 1,200,000 of the registered securities were sold in connection with an
initial public offering on October 15, 1997. Proceeds from the offering totaled
$7.5 million, net of $485,000 of underwriting costs.

As disclosed in Note 3, an additional 1,277,000 shares were issued in
connection with various business combinations during the Transition Period and
an additional 3,969,000 shares were issued in the fiscal year ended February 28,
1998. During the fiscal year ended February 28, 1998, a total of 7,000 shares
were issued as stock awards to employees of the Company and acquired businesses
as incentive to remain in the employ of the Company.

F-75
<PAGE> 151
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

STOCK WARRANTS

In connection with its initial public offering in October 1997, the Company
issued stock warrants to purchase 1,380,000 shares of common stock of the
Company with an exercise price of $9.00 per share. The warrants contained a
provision whereby the Company could call for redemption of the warrants if the
closing price of the Company's common stock equaled or exceeded $15.00 for ten
consecutive days. During the Transition Period 559,000 warrants to purchase
559,000 shares of common stock were tendered for exercise with aggregate
proceeds of $4.79 million to the Company, net of commissions and related
expenses of $243,000. On September 29, 1998, the Company exercised its right to
call the remaining warrants, with a redemption date of October 30, 1998.
Subsequent to September 30, 1998 and prior to the redemption date, 819,000
warrants were tendered for conversion with gross proceeds of $7.37 million,
resulting in the cancellation of the remaining warrants which were not tendered.

NOTE 12--STOCK OPTIONS

The Company has two stock option plans that provide for the granting of
stock options to certain officers, employees, directors and consultants of the
Company and its subsidiaries. These options generally vest over a period of
three years from the date of grant (as determined by the Company's Compensation
Committee) and have a maximum exercise term of ten years from the date of grant.
The 1998 Stock Incentive Compensation Plan (the "1998 Plan") is the only plan
with stock option awards currently available for grant; a prior plan has stock
options exercisable at September 30, 1998 to purchase up to 400,000 shares of
common stock. The Company is authorized to grant options for up to ten percent
of the issued shares of common stock under the 1998 Plan. A summary of awards
granted under the plans is as follows for the fiscal year ended February 28,
1998 and the Transition Period:

<TABLE>
<CAPTION>
YEAR ENDED SEVEN MONTHS ENDED
FEBRUARY 28, 1998 SEPTEMBER 30, 1998
--------------------------- ---------------------------
WEIGHTED- WEIGHTED-
NUMBER OF AVERAGE NUMBER OF AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
--------- -------------- --------- --------------
<S> <C> <C> <C> <C>
Options outstanding at
beginning of year....... -- -- 592,000 $ 7.78
Options granted........... 592,000 $7.78 121,500 18.63
Options exercised......... -- -- 37,000 7.80
Options forfeited......... -- -- -- --
------- ----- ------- ------
Options outstanding at end
of year................. 592,000 $7.78 676,500 $ 9.87
======= ===== ======= ======
Options exercisable at end
of year................. 105,000 $8.07 125,500 $ 7.85
======= ===== ======= ======
</TABLE>

A summary of stock options outstanding as of September 30, 1998 is as
follows:

<TABLE>
<CAPTION>
NUMBER WEIGHTED-
OUTSTANDING AVERAGE WEIGHTED- NUMBER WEIGHTED-
AT REMAINING AVERAGE EXERCISABLE AT AVERAGE
SEPTEMBER 30, CONTRACTUAL EXERCISE SEPTEMBER 30, EXERCISE
RANGE OF EXERCISE PRICES 1998 LIFE PRICE 1998 PRICE
------------------------ ------------- ----------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C>
$13.40 to 26.00.............. 137,000 4.8 years $18.60 -- --
$7.50 to 8.25................ 525,000 3.6 years 7.24 123,300 $7.99
$1.00........................ 4,500 3.4 years 1.00 1,500 1.00
$.01......................... 10,000 3.6 years 0.01 700 0.01
</TABLE>

F-76
<PAGE> 152
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company applies the accounting provisions of APB Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations for its
stock-based plans. Accordingly, costs for employee stock options or issuance of
shares is measured as the excess, if any, of the fair value of the Company's
common stock at the measurement date over the amount the employee must pay to
acquire the stock. The cost is recognized ratably by the Company as compensation
expense over the vesting period. The expense for the fiscal year ended February
28, 1998 and the Transition Period was $21,000 and $35,000 respectively.

The Company adopted the disclosure provisions of SFAS No. 123, Accounting
for Stock-Based Compensation ("SFAS No. 123"), which was effective as of January
1, 1996. The fair value of each option was estimated on the date of grant using
the Black-Scholes option pricing model and the following assumptions:

<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Risk-free interest rate........................ 6.38% 4.75%
Expected life.................................. 2.7 years 2.7 years
Expected volatility............................ 29% 70%
Expected dividend yield........................ 0% 0%
</TABLE>

Had the Company elected to recognize compensation expense as provided for
by SFAS No. 123, the Company's net income amounts on a pro forma basis for the
year ended February 28, 1998 and the Transition Period would have been as
follows:

<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Pro forma net income adjusted.................. $2,721,000 $838,000
========== ========
Pro forma basic earnings per share............. $ 0.52 $ 0.13
========== ========
Pro forma diluted earning per share............ $ 0.49 $ 0.11
========== ========
</TABLE>

The weighted average fair values per share at the date of grant for options
granted during the year ended February 28, 1998 and the Transition Period were
as follows:

<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Options with exercise prices less than the fair
value of the stock at the date of grant...... 39,500 19,100
--weighted average fair value................ $ 6.00 $ 12.00
Options with exercise prices equal to the fair
value of the stock at the date of grant...... 311,500 102,400
--weighted average fair value................ $ 1.25 $ 9.00
Options with exercise prices greater than the
fair value of the stock at the date of
grant........................................ 241,000 --
--weighted average fair value................ $ 0.50 --
</TABLE>

F-77
<PAGE> 153
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 13--SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is as follows:

<TABLE>
<CAPTION>
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1996 1997 1998 1998
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Cash paid for interest......... $ 91,000 $80,000 $ 107,000 $ 312,000
Cash paid for income taxes..... 128,000 77,000 177,000 280,000
Non-cash transactions
Stock issuances for business
acquisitions................. -- -- 1,184,000 8,100,000
</TABLE>

NOTE 14--RETIREMENT PLAN

The Company's subsidiary, Westower Communications Inc., adopted a defined
contribution retirement plan, effective January 1, 1997. The plan contains
certain participation criteria and allows for both employee and employer
discretionary contributions. The total Company funded discretionary contribution
for the years ended February 29, 1996 and February 28, 1997 and 1998 was $0,
$46,000 and $52,000, respectively. There were no employer contributions during
the Transition Period.

NOTE 15--RELATED PARTY TRANSACTIONS

ADVANCE TO RELATED PARTIES

During the fiscal year ended February 28, 1998, the Company advanced
$119,000 to a Canadian corporation owned by certain stockholders of Westower
Corporation. Proceeds were used by the Corporation to purchase facilities leased
by two of the Company's subsidiaries. The advance was repaid during the
Transition Period. The Company also advanced $77,000 to several stockholders
during the fiscal year ended February 28, 1998 which were repaid during the
Transition Period. At September 30, 1998, additional related party advances
include $379,000 of unsecured non-interest bearing shareholder loans made by
subsidiaries, prior to acquisition, during the Transition Period which are
expected to be paid in full subsequent to September 30, 1998. At September 30,
1998, the Company has a $65,000 receivable from a former shareholder of an
acquired S corporation. The acquired S corporation made a distribution to the
shareholder, prior to the combination, in an amount to meet the shareholder's
current estimated tax obligation. Subsequent to the combination it was
determined that the tax liability was approximately $65,000 overestimated and a
receivable for the excess distribution has been recorded.

NOTE RECEIVABLE

At September 30, 1998, the Company had a note receivable for $495,000, plus
accrued interest of $17,000, from an organization with which they share a common
director. The note bears interest at 12% and is collateralized by warrants to
purchase shares of the Company's common stock, and is due on demand.

MANAGEMENT SERVICES AND ACCOUNTS PAYABLE

In prior years the Company received consulting services from Westower
Consulting Ltd., a Canadian corporation owned by a stockholder of Westower
Corporation. Charges for these services were $94,000 and $126,000 in the fiscal
years ended February 28, 1997 and 1998, respectively. Included in trade accounts
payable at February 28, 1998 is $39,000 due to Westower Consulting Ltd. Fees
billed by related entities generally do not continue subsequent to acquisition
by the Company as the related services are performed by employees and officers
of the Company.

F-78
<PAGE> 154
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTES AND ADVANCES PAYABLE TO RELATED PARTIES

Notes and advances payable to related parties consist of the following:

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Current
Unsecured advances and notes payable
to stockholders and officers, paid
in full during the Transition
Period............................. $ -- $ 871,000 $ --
Unsecured advances payable to officers
and stockholders, in Canadian
dollars, with no stated interest
rate and no specific repayment
terms, paid in full during the
Transition Period.................. -- 173,000 --
Unsecured advances payable to officers
and stockholders, with no stated
interest rate, and no specific
repayment terms.................... -- -- 228,000
Unsecured notes payable to officers
and stockholders, paid in full
during the transition period....... 672,000 1,000,000 --
-------- ---------- --------
$672,000 $2,044,000 $228,000
======== ========== ========
</TABLE>

FACILITY LEASES

Two subsidiaries acquired during the fiscal year ended February 28, 1998,
501053 B.C. Ltd. and National Tower Service Ltd., lease their operating
facilities, on a month-to-month basis, from Canadian corporations owned by
certain stockholders of Westower Corporation. Lease payments made during the
Transition Period were $39,000 and there were no significant lease payments made
to the stockholders during the fiscal year ended February 28, 1998.

NOTE 16--COMMITMENTS AND CONTINGENCY

The Company leases operating facilities, office equipment and vehicles
under noncancelable operating lease agreements. Future minimum lease payments
are as follows:

<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30:
---------------------------------------------------------
<S> <C>
1999..................................................... $ 607,000
2000..................................................... 348,000
2001..................................................... 203,000
2002..................................................... 67,000
2003..................................................... 63,000
Thereafter............................................... 52,000
----------
Total.................................................... $1,340,000
==========
</TABLE>

Rent and lease expense was $29,000, $224,000, $259,000 and $632,000 for the
fiscal years ended February 29, 1996 and February 28, 1997 and 1998 and the
Transition Period, respectively.

F-79
<PAGE> 155
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

LITIGATION

The Company is subject to lawsuits and other legal claims in the normal
course of its operations. Management believes that the resolution of any such
lawsuits and legal claims, if any, will not have a material impact on the
Company's financial position, results of operations or cash flows.

NOTE 17--CREDIT RISK AND BUSINESS CONCENTRATIONS

Financial instruments that potentially subject the Company to
concentrations of credit consist primarily of cash, cash equivalents and trade
accounts receivable. The Company places its temporary cash investments with a
major financial institution. At times, deposits with any one institution may
exceed federally insured limits. The Company extends credit to customers based
on evaluation of customer's financial condition and credit history. Collateral
is generally not required. Customers include large Canadian and U.S. companies
concentrated in the telecommunications industry.

Contract revenues from two customers accounted for 29% of revenues during
the fiscal year ended February 28, 1998, and one customer accounted for 56% of
revenues during the fiscal year ended February 28, 1997. Accounts receivable
from two customers comprise 48% of accounts receivable at February 28, 1998 and
one customer accounted for 39% of account receivable at February 28, 1997. There
were no customers who accounted for greater than 10% of sales for the Transition
Period and there were no customers with accounts receivable representing 10% or
more of the total accounts receivable at September 30, 1998.

Management expects that sales to relatively few customers will continue to
account for a high percentage of its revenues into the foreseeable future and
believes the Company's financial results depend in significant part upon the
success of these customers. Although the composition of the group comprising the
Company's largest customers may vary from period to period, the loss of a
significant customer or reduction in orders by any significant customers,
including reductions due to market, economic or competitive conditions in the
wireless communications industry, may have an adverse effect on the Company's
business, financial condition and results of operations.

NOTE 18--SEGMENT INFORMATION

The following table summarizes contract and other revenues and long-lived
assets related to the respective countries in which the Company operates.

<TABLE>
<CAPTION>
FEBRUARY 29, 1996
------------------------------------------
TOTAL UNITED STATES CANADA
----------- ------------- ----------
<S> <C> <C> <C>
Contract and other revenues................ $14,775,000 $8,897,000 $5,878,000
</TABLE>

<TABLE>
<CAPTION>
FEBRUARY 28, 1997
------------------------------------------
TOTAL UNITED STATES CANADA
----------- ------------- ----------
<S> <C> <C> <C>
Contract and other revenues................ $46,091,000 $39,177,000 $6,914,000
Long-lived assets.......................... $ 2,707,000 $ 1,000,000 $1,707,000
</TABLE>

F-80
<PAGE> 156
WESTOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
FEBRUARY 28, 1998
-------------------------------------------
TOTAL UNITED STATES CANADA
----------- ------------- -----------
<S> <C> <C> <C>
Contract and other revenues............... $41,662,000 $22,160,000 $19,502,000
Long-lived assets......................... $ 4,321,000 $ 1,196,000 $ 3,125,000
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-------------------------------------------
TOTAL UNITED STATES CANADA
----------- ------------- -----------
<S> <C> <C> <C>
Contract and other revenues............... $31,944,000 $19,982,000 $11,962,000
Long-lived assets......................... $ 7,574,000 $ 3,729,000 $ 3,845,000
</TABLE>

Long-lived assets are comprised of property, plant and equipment and
excludes intangible assets.

NOTE 19--DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of cash and cash equivalents, trade accounts receivable and
payable, and other current liabilities approximate their carrying amounts. The
fair values of advances to and from related parties approximate their fair value
due to the short term nature of the instruments. The fair values of long-term
debt, which are based on the present values of the underlying cash flows
discounted at the Company's incremental borrowing rates, are as follows:

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Long-term debt.......................... $822,000 $794,000 $19,446,000
</TABLE>

NOTE 20--SUBSEQUENT EVENTS

On November 10, 1998 the Company completed the acquisition of Summit
Communications, LLC ("Summit"), a Mississippi limited liability company which
engages in operations similar to those of the Company. The merger was effected
by exchanging 200,000 shares of common stock valued at approximately $4.1
million, based on the publicly traded price, $4.4 million in cash, and the
assumption of certain liabilities, for all membership interests in Summit. The
former members of Summit may also receive an additional 100,000 shares of common
stock, based on certain performance criteria during the three years following
the date of acquisition. The acquisition was accounted for using the purchase
method for business combinations resulting in goodwill of approximately $8.0
million.

On October 30, 1998 the Company completed the acquisition of Teletronics
Management Services, Inc. ("Teletronics"). The acquisition was effected by
exchanging 188,000 shares of common stock valued at approximately $4 million,
based on the publicly traded price, $1 million in cash, and the assumption of
certain liabilities including distributions payable to former shareholders in
the amount of $800,000, for all outstanding shares of Teletronics. The
acquisition was accounted for using the purchase method for business
combinations resulting in goodwill of approximately $5.0 million.

F-81
<PAGE> 157

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
CORD Communications, Inc.

We have audited the accompanying balance sheets of CORD Communications,
Inc. as of June 30, 1998 and 1997, and the related statements of operations,
changes in stockholders' equity (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CORD Communications, Inc. as
of June 30, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

As described in note 13 to the financial statements, the Company was sold
subsequent to June 30, 1998.

/S/ MOSS ADAMS LLP

Beaverton, Oregon
October 21, 1998

F-82
<PAGE> 158

CORD COMMUNICATIONS, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30,
------------------------
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 27,730 $ 913,514
Accounts receivable--trade, (net of allowance)............ 1,951,901 2,452,205
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. 151,817 735,634
Unbilled amounts on completed contracts................... 175,209 394,502
Accrued interest receivable............................... 14,410 7,744
Employee advances......................................... 1,471 5,961
Refundable income taxes................................... 440,320 --
Prepaid expenses.......................................... 43,392 11,069
---------- ----------
Total current assets........................................ 2,806,250 4,520,629
Property and equipment, net of accumulated depreciation..... 401,834 399,218
Other assets................................................ 42,949 39,749
---------- ----------
Total assets................................................ $3,251,033 $4,959,596
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable--trade................................... $1,459,981 $1,247,921
Note payable.............................................. 500,000 155,000
Notes payable--stockholder and related party.............. -- 87,402
Current portion, long-term debt and capital lease
obligations............................................ 38,897 48,474
Accrued wages and payroll taxes........................... 243,426 193,051
Other accrued liabilities................................. 83,562 17,832
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 443,185 69,352
Income taxes payable...................................... -- 547,000
Deferred income taxes..................................... 194,800 841,478
---------- ----------
Total current liabilities................................... 2,963,851 3,207,510
---------- ----------
Long-term debt and capital lease obligations................ 53,766 86,121
---------- ----------
Deferred income taxes....................................... 260,700 --
---------- ----------
Stockholders' equity (deficit):
Common stock, $1 par value, 1,000,000 shares authorized,
2,000 shares issued, 873 shares outstanding............ 873 873
Additional paid-in-capital................................ 350,878 350,878
Retained earnings (deficit)............................... (318,437) 1,374,812
Note receivable--stock subscription....................... (60,598) (60,598)
---------- ----------
Total stockholders' equity (deficit)........................ (27,284) 1,665,965
---------- ----------
Total liabilities and stockholders' equity.................. $3,251,033 $4,959,596
========== ==========
</TABLE>

See accompanying notes.
F-83
<PAGE> 159

CORD COMMUNICATIONS, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
CONTRACT REVENUES........................................... $11,010,207 $15,902,768
COST OF CONTRACTS:
Subcontractors............................................ 3,642,346 3,522,513
Labor..................................................... 2,754,248 3,672,345
Materials and supplies.................................... 1,532,546 2,008,403
Equipment costs and rental................................ 615,980 867,399
Other..................................................... 805,431 875,529
----------- -----------
Total cost of contracts..................................... 9,350,551 10,946,189
GROSS PROFIT................................................ 1,659,656 4,956,579
GENERAL AND ADMINISTRATIVE EXPENSES......................... 4,157,468 1,916,076
----------- -----------
OPERATING INCOME (LOSS)..................................... (2,497,812) 3,040,503
OTHER INCOME (EXPENSES):
Interest income........................................... 10,887 8,044
Interest expense.......................................... (41,521) (100,982)
Other..................................................... 37,088 18,826
----------- -----------
Total other income (expenses)............................... 6,454 (74,112)
INCOME (LOSS) BEFORE INCOME TAXES........................... (2,491,358) 2,966,391
PROVISION FOR INCOME TAXES.................................. (798,109) 1,339,829
----------- -----------
NET (LOSS) INCOME........................................... $(1,693,249) $ 1,626,562
=========== ===========
</TABLE>

See accompanying notes.
F-84
<PAGE> 160

CORD COMMUNICATIONS, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
NOTE
COMMON STOCK ADDITIONAL RETAINED RECEIVABLE
--------------- PAID-IN EARNINGS STOCK
SHARES AMOUNT CAPITAL (DEFICIT) SUBSCRIPTION TOTAL
------ ------ ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1996..... 873 $873 $350,878 $ (251,750) $(80,207) $ 19,794
Receipts on note receivable
stock subscription....... -- -- -- -- 19,609 19,609
Net income for the year.... -- -- -- 1,626,562 -- 1,626,562
--- ---- -------- ----------- -------- -----------
Balance, June 30, 1997..... 873 873 350,878 1,374,812 (60,598) 1,665,965
--- ---- -------- ----------- -------- -----------
Loss for the year.......... -- -- -- (1,693,249) -- (1,693,249)
--- ---- -------- ----------- -------- -----------
Balance, June 30, 1998..... 873 $873 $350,878 $ (318,437) $(60,598) $ (27,284)
=== ==== ======== =========== ======== ===========
</TABLE>

See accompanying notes.
F-85
<PAGE> 161

CORD COMMUNICATIONS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)........................................... $(1,693,249) $ 1,626,562
Adjustments to reconcile net income (loss) to net cash from
operating activities:
Depreciation and amortization............................. 131,561 73,507
Deferred income taxes..................................... (385,978) 780,000
Gain (loss) on sale of fixed assets....................... 10,436 (4,284)
Changes in certain operating assets and liabilities:
Accounts receivable--trade............................. 500,304 (1,716,878)
Costs and estimated earnings in excess of billings..... 583,817 (662,048)
Unbilled amounts on completed contracts................ 219,293 (394,502)
Accrued interest receivable............................ (6,666) 3,466
Employee advances...................................... 4,490 (4,976)
Refundable income taxes................................ (440,320) --
Prepaid expenses....................................... (32,323) (16)
Other assets........................................... (3,200) (26,074)
Accounts payable--trade................................ 212,060 875,528
Accrued wages and payroll taxes........................ 50,375 143,130
Other accrued liabilities.............................. 65,730 (1,702)
Billings in excess of costs and estimated earnings..... 373,833 (65,560)
Income taxes payable................................... (547,000) 542,654
----------- -----------
Net cash (used in) from operating activities......... (956,837) 1,168,807
----------- -----------
CASH FLOWS RELATED TO INVESTING ACTIVITIES
Decrease (increase) in note receivable--stock
subscription.............................................. -- 19,609
Proceeds from sale of equipment............................. 2,800 --
Purchase of property and equipment.......................... (147,413) (290,046)
----------- -----------
Net cash used in investing activities................ (144,613) (270,437)
----------- -----------
CASH FLOWS RELATED TO FINANCING ACTIVITIES
Proceeds from issuance of long-term debt and capital lease
obligations............................................... 8,000 123,620
Principal payments on long-term debt and capital lease
obligations............................................... (49,932) (60,481)
Proceeds from stockholder loans............................. -- 6,767
Principal payments on stockholder loans..................... (87,402) --
Net change in notes payable................................. 345,000 (110,000)
----------- -----------
Net cash from (used in) financing activities......... 215,666 (40,094)
----------- -----------
NET (DECREASE) INCREASE IN CASH............................. (885,784) 858,276
CASH AND CASH EQUIVALENTS, beginning of year................ 913,514 55,238
----------- -----------
CASH AND CASH EQUIVALENTS, end of year...................... $ 27,730 $ 913,514
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid............................................... $ 41,521 $ 100,982
=========== ===========
Interest received........................................... $ 4,221 $ 11,510
=========== ===========
Income taxes paid........................................... $ 575,188 $ 505
=========== ===========
</TABLE>

See accompanying notes.
F-86
<PAGE> 162

CORD COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

CORD Communications, Inc. was incorporated in July 1994 in the state of
California. The Company constructs cellular communication sites, underground and
overhead telephone and utility lines, and commercial tenant improvements. In
addition, they perform site acquisition and lease negotiations, and provide land
use planning services. The Company operates primarily in California, Washington,
and Oregon.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents. At June 30, 1997, cash and cash
equivalents that exceeded the FDIC insurance limits were $711,410.

ACCOUNTS RECEIVABLE

In the normal course of business, the Company extends credit to customers,
principally with customers located in California, Washington, and Oregon.
Collectibility of accounts receivable is periodically assessed by management.
This assessment provides the basis for any allowance for doubtful accounts and
related bad debt expense. An allowance of $83,000 was considered necessary by
management at June 30, 1998. No allowance for doubtful accounts was considered
necessary by management as of June 30, 1997. A concentration of credit risk
exists in connection with the Company's trade customers due to the proximity of
location and services provided. As of June 30, 1998 and 1997, the Company had
accounts receivable balances of $1,951,901 and $2,452,205, which were exposed to
the concentration of credit risk. Credit risk related to contract receivables is
minimized by the Company's rights under lien laws on contracts subject to those
laws.

REVENUE AND COST RECOGNITION

Revenues from fixed-price construction contracts are recognized on the
percentage of completion method, measured on the basis of cost incurred to date
to total estimated cost for each contract. Because of inherent uncertainties in
estimating cost to complete, it is at least reasonably possible that the
estimates used will change in the near term.

Contract costs include all direct material, equipment and labor costs,
subcontract costs and those indirect costs related to contract performance, such
as supplies, travel and per diem costs. General and administrative costs are
charged to expense as incurred. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are determined. Changes in
job performance, job conditions, and estimated profitability, including those
arising from final contract settlements, may result in revisions to costs and
income and are recognized in the period in which the revisions are determined.
Claims are generally included in contract revenues when settled.

The asset, "Cost and estimated earnings in excess of billings on
uncompleted contracts," represents revenues recognized in advance of amounts
billed. The liability, "Billings in excess of costs and estimated earnings on
uncompleted contracts," represents billings in advance of revenues recognized.

F-87
<PAGE> 163
CORD COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

PROPERTY AND EQUIPMENT

Property and equipment is carried at cost and is depreciated on the
straight-line method over the estimated useful lives of the assets.

<TABLE>
<S> <C>
Vehicles................................................ 5 years
Office furniture and equipment.......................... 3 to 7 years
Construction equipment.................................. 5 to 7 years
Leasehold improvements.................................. 3 years
</TABLE>

Property and equipment consisted of the following at June 30, 1998 and
1997, respectively:

<TABLE>
<CAPTION>
JUNE 30,
----------------------
1998 1997
--------- ---------
<S> <C> <C>
Vehicles............................................. $ 342,782 $ 275,864
Office furniture and equipment....................... 183,760 137,735
Construction equipment............................... 119,028 112,648
Leasehold improvements............................... 19,361 19,361
--------- ---------
664,931 545,608
Less accumulated depreciation........................ (263,097) (146,390)
--------- ---------
$ 401,834 $ 399,218
========= =========
</TABLE>

The cost and related accumulated depreciation of assets sold or disposed
are removed from the accounts, and any resulting gain or loss is included in
operations. Repairs and maintenance expenditures are expensed as incurred.

INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in
the financial statements, and consist of taxes currently due plus deferred taxes
related primarily to different methods of accounting for depreciation and the
use of the cash method for income tax purposes. The deferred taxes represent the
future tax return consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered or settled.

USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Significant estimates used in preparing these financial statements include
estimated costs to complete which have a direct effect on gross profit.

VALUATION OF LONG LIVED ASSETS AND CHANGE IN ACCOUNTING POLICY

The Company periodically reviews long-lived assets and certain identifiable
intangibles whenever events of changes in circumstance indicate that the
carrying amount of an asset may not be recoverable. There will be no provisions
for impairment during 1998 or 1997.

F-88
<PAGE> 164
CORD COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

2. NOTE PAYABLE

The Company has a line of credit with South Umpqua State Bank, which bears
interest at the Wall Street Journal's published prime rate plus 1%. The Company
may borrow up to $1,000,000 under the terms of the line of credit. The note is
collateralized by equipment, intangible assets, chattel paper accounts,
equipment, and general intangibles. The note payable is also personally
guaranteed by the stockholders of the Company. Borrowing on the line is limited
to 70% of receivables less than 90 days old, less retainage receivables. The
line of credit was scheduled to expire on February 1, 1999, however, the note
was paid off on September 1, 1998 (see note 13).

3. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

<TABLE>
<CAPTION>
JUNE 30,
--------------------
1998 1997
-------- --------
<S> <C> <C>
Notes payable to Ford Motor Credit Corp. with interest from
9.75% to 10.25%, payable in monthly installments of
$1,149, including interest, maturing from 1999 through
2001, collateralized by vehicles.......................... $ 25,798 $ 36,431
Notes payable to South Umpqua State Bank with interest from
8.48% to 10.75%, payable in monthly installments of
$1,950, including interest, maturing from 1998 through
2001, collateralized by vehicles.......................... 21,968 36,074
Note payable to Damerow Ford with interest at 8.65%, payable
in monthly installments of $646, including interest,
maturing in 2001, collateralized by a vehicle............. 21,349 26,950
Note payable on equipment with interest from 1.9%, to 11.5%
payable in monthly installments of $1,716, including
interest, maturing in 1998 through 2001, collateralized by
equipment................................................. 11,518 28,068
Capital lease obligations for equipment, payable in monthly
installments of $608, including interest, inputed from
15.29% to 20.92%, maturing in 1999 through 2001,
collateralized by equipment............................... 12,030 7,072
-------- --------
92,663 134,595
Less current portion........................................ (38,897) (48,474)
-------- --------
Long-term portion........................................... $ 53,766 $ 86,121
======== ========
</TABLE>

Future maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
AMOUNT
YEAR ENDING JUNE 30, MATURING
-------------------- --------
<S> <C>
1999................................................. $38,897
2000................................................. 27,571
2001................................................. 22,396
2002................................................. 3,743
2003................................................. 56
-------
$92,663
=======
</TABLE>

4. OPERATING LEASE COMMITMENTS

The Company leases office and storage space, vehicles, and communication
analyzing equipment under non-cancelable operating leases expiring on various
dates through February 2000. Total rental payments amounted to $229,482 and
$109,964 for the years ended June 30, 1998 and 1997, respectively.

F-89
<PAGE> 165
CORD COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Future minimum rental commitments under non-cancelable leases payable over
the remaining lives of the leases are:

<TABLE>
<CAPTION>
MINIMUM
LEASE
YEAR ENDING JUNE 30, PAYMENTS
-------------------- --------
<S> <C>
1999................................................ $73,793
2000................................................ 7,098
-------
$80,891
=======
</TABLE>

5. COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN PROGRESS

The Company has recorded the following costs and estimated earnings on
contracts in progress:

<TABLE>
<CAPTION>
JUNE 30,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Costs incurred on contracts in progress........... $ 1,506,191 $ 1,563,604
Estimated earnings................................ 402,937 807,434
----------- -----------
Revenue recognized to date...................... 1,909,128 2,371,038
Less billings to date........................... (2,200,496) (1,704,756)
----------- -----------
$ (291,368) $ 666,282
=========== ===========
</TABLE>

Included in the accompanying balance sheet under the following captions:

<TABLE>
<CAPTION>
JUNE 30,
---------------------
1998 1997
--------- --------
<S> <C> <C>
Costs and estimated earnings in excess of billings on
contracts in progress............................... $ 151,817 $735,634
Billings in excess of costs and estimated earnings on
contracts in progress............................... (443,185) (69,352)
--------- --------
$(291,368) $666,282
========= ========
</TABLE>

6. CONTRACT BACKLOG

The following schedule summarizes changes in backlog on contracts during
the year ended June 30, 1998 and 1997. Backlog represents the amount of gross
revenue the Company expects to realize from work to be performed on contracts in
progress at year-end.

<TABLE>
<CAPTION>
JUNE 30,
----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Backlog balance, beginning of year.............. $ 1,279,115 $ 2,568,957
New contracts during the year................... 10,571,539 14,612,926
------------ ------------
11,850,654 17,181,883
Less: contract revenue earned during the year... (11,010,207) (15,902,768)
------------ ------------
Backlog balance, end of year.................... $ 840,447 $ 1,279,115
============ ============
</TABLE>

F-90
<PAGE> 166
CORD COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

7. INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
JUNE 30,
-----------------------
1998 1997
--------- ----------
<S> <C> <C>
Current
Federal........................................... $(404,249) $ 426,013
State............................................. (7,883) 133,816
--------- ----------
(412,132) 559,829
--------- ----------
Deferred
Federal........................................... (308,781) 624,000
State............................................. (77,196) 156,000
--------- ----------
(385,977) 780,000
--------- ----------
$(798,109) $1,339,829
========= ==========
</TABLE>

The difference between the actual income tax provision (benefit) and the
tax provision (benefit) computed by applying the statutory federal rate to
income (loss) before taxes is attributable to the following:

<TABLE>
<CAPTION>
JUNE 30,
----------------------------------------
1998 1997
------------------ ------------------
AMOUNT % AMOUNT %
--------- ----- ---------- ----
<S> <C> <C> <C> <C>
Federal statutory income tax provision
(benefit)................................. $(847,062) (34.0)% $1,008,573 34.0%
State statutory income tax provision
(benefit)................................. (211,766) (8.5)% 252,143 8.5%
Carryback of net operating losses (NOL) in
years with rates different than statutory
rates..................................... 13,300 0.5% -- --
Change in valuation allowance for deferred
taxes..................................... 283,370 11.4% -- --
Other....................................... (35,951) (1.4)% 79,113 2.7%
--------- ----- ---------- ----
Actual income tax provision (benefit)....... $(798,109) (32.0)% $1,339,829 45.2%
========= ===== ========== ====
</TABLE>

F-91
<PAGE> 167
CORD COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The composition of the deferred income tax assets and liabilities at June
30, 1998 and 1997 are:

<TABLE>
<CAPTION>
JUNE 30,
------------------------
1998 1997
--------- -----------
<S> <C> <C>
Current deferred tax assets
Differences in basis in assets due to cash method
used for income taxes......................... $ -- $ 751,789
Bad debts, vacation accrual and other............ 115,100 --
Tax benefit of net operating loss
carryforwards................................. 283,370 --
Valuation allowance.............................. (283,370) --
--------- -----------
115,100 751,789
--------- -----------
Current deferred tax liabilities
Differences in basis in liabilities due to cash
method used for income taxes.................. -- (1,593,267)
Difference in revenue recognized on uncompleted
contracts..................................... (171,300) --
Deferral of taxes from conversion from cash to
accrual completed contract.................... (134,500) --
Other............................................ (4,100) --
--------- -----------
(309,900) (1,593,267)
--------- -----------
Net current deferred tax liabilities............... $(194,800) $ (841,478)
========= ===========
Non-current deferred tax assets
Capitalization differences between financial and
tax accounting................................ $ 9,000 $ 1,266
Other............................................ 19,300 --
--------- -----------
28,300 1,266
--------- -----------
Non-current deferred tax liabilities
Deferral of taxes from conversion from cash to
accrual completed contract.................... (269,000) --
Depreciation differences between financial and
tax accounting................................ (20,000) (1,266)
--------- -----------
(289,000) (1,266)
--------- -----------
Net non-current deferred tax liabilities........... $(260,700) $ --
========= ===========
</TABLE>

The Company's net operating loss carryforward will expire in 2013.

F-92
<PAGE> 168
CORD COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

8. BOND GUARANTEES

Most of the Company's business activities are performed under contract
agreements with customers which require bond guarantees from an independent
surety company. As is customary in the construction industry, the Company has
pledged all of its assets in order to indemnify the surety company against
losses under these bond guarantees.

9. RELATED PARTY TRANSACTIONS

During the year ended June 30, 1996, the Company bought back 418 shares of
its stock which was owned by a principal stockholder. The buy-back of stock was
accomplished by providing an unsecured promissory note for $138,063 payable upon
demand, which accrued interest at the rate of 10% per annum. During the year
ended June 30, 1998, the Company paid the remaining principal balance
outstanding at June 30, 1997 of $87,402.

The Company leases equipment from a principal stockholder. Lease payments
for the years ended June 30, 1998 and 1997 were $57,600 and $78,920,
respectively. Amounts included in accounts payable that were due to the
stockholder for equipment rental were $0 and $22,200 at June 30, 1998 and 1997,
respectively.

On June 30, 1995, the Company had an outstanding unsecured note receivable
from a stockholder, which it had received in exchange for the issuance of common
stock. The note is payable upon demand and accrues interest at the rate of 10%
per annum. The Company received payments of principal and interest of $0 and
$30,820 at June 30, 1998 and 1997, respectively. The remaining principal balance
owed the Company at June 30, 1998 and 1997 was $60,598. The Company's accrued
interest balance at June 30, 1998 and 1997 was $14,410 and $7,744, respectively.

10. DEFINED CONTRIBUTION PENSION PLAN

Effective January 1997, the Company adopted a 401(k) retirement plan that
covers all employees who have completed one year of service and are at least 21
years of age. The Company's contributions, which are discretionary, are
allocated to participants based on a percentage of wages. Participants may also
make elective contributions. Employer pension expense for the year ended June
30, 1998 and 1997 totaled $28,409 and $0, respectively.

11. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:

Cash, accounts receivable, accounts payable, and other current
liabilities--At June 30, 1998, carrying amounts of these financial instruments
approximate fair value because of their short maturities.

Long term debt and capital lease obligations--At June 30, 1998, estimated
fair value of long-term debt approximates the carrying amount of $92,663, based
on current rates offered for similar debt.

12. YEAR 2000 COMPLIANCE

The Company is conducting a review of its computer and other systems to
identify those areas that could be affected by the "Year 2000" issue and is
developing an implementation plan to resolve the issue. The Company is currently
working with consultants who believe, with modifications to existing software
and converting to new software and hardware, the Year 2000 problem will not pose
significant operational problems and is not anticipated to be material to its
financial position or results of operations in any given year.

F-93
<PAGE> 169
CORD COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

13. SUBSEQUENT EVENTS

On September 1, 1998, the Company's line of credit was paid in full and
canceled.

On August 31, 1998, the stockholders of CORD Communications sold all of the
outstanding shares of stock to Westower Corporation in exchange for $5,000,000
in cash and 217,389 shares of Westower stock. The stockholders can receive
347,826 additional shares contingent on the performance of CORD Communications
during the twelve months following the purchase. The purchase agreement also
provides that Westower will support CORD's need for additional working capital
during the twelve months following the purchase. Westower is a larger cellular
tower contractor and operator, and is planning to bring its additional
marketing, operational and capital resources to CORD Communications in order to
grow and enhance the Company's business activities.

F-94
<PAGE> 170

REPORT OF INDEPENDENT ACCOUNTANTS

To the Members of
Summit Communications, LLC

In our opinion, the accompanying balance sheet and the related statements
of income, members' equity and cash flows present fairly, in all material
respects, the financial position of Summit Communications, LLC at September 30,
1998, and the results of its operations and its cash flows for the nine months
ended September 30, 1998, in conformity with generally accepted accounting
principles in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these statements in accordance with generally accepted auditing standards in
the United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above. The financial
statements of Summit Communications, LLC for the Period of Inception (May 24,
1997) to December 31, 1997 were audited by other independent accountants whose
report dated March 5, 1998 expressed an unqualified opinion on those statements.

/S/ PRICEWATERHOUSECOOPERS LLP

Seattle, Washington
May 21, 1999

F-95
<PAGE> 171

REPORT OF INDEPENDENT ACCOUNTANTS

To the Members of
Summit Communications, LLC
Ridgeland, Mississippi

We have audited the accompanying balance sheet of Summit Communications,
LLC, as of December 31, 1997 and the related statements of income, members'
equity and cash flows for the Period of Inception (May 24, 1997) to December 31,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.

In our opinion the financial statements referred to above present fairly,
in all material respects, the financial position of Summit Communications, LLC
as of December 31, 1997, the results of its operations and its cash flows for
the Period of Inception (May 24, 1997) to December 31, 1997, in conformity with
generally accepted accounting principles.

/S/ SHEARER, TAYLOR & CO., P.A.

March 5, 1998
Jackson, Mississippi

F-96
<PAGE> 172

SUMMIT COMMUNICATIONS, LLC

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
ASSETS
Current assets
Cash...................................................... $ 541,850
Accounts receivable....................................... $1,142,771 2,791,203
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. 117,648 411,766
Note receivable from member............................... 155,000
Other current assets...................................... 60,949 98,088
---------- ----------
Total current assets........................................ 1,321,368 3,997,907
---------- ----------
Property and equipment
Machinery and equipment................................... 479,459 568,336
Vehicles.................................................. 398,916 529,734
Furniture and fixtures.................................... 17,292 24,104
---------- ----------
895,667 1,122,174
Less: Accumulated depreciation............................ (196,346) (384,547)
---------- ----------
Property and equipment, net............................ 699,321 737,627
---------- ----------
Other assets................................................ 19,671 18,421
---------- ----------
$2,040,360 $4,753,955
========== ==========
LIABILITIES AND MEMBERS' EQUITY
Liabilities
Current liabilities
Book overdraft......................................... $ 118,249
Accounts payable....................................... 183,876 $1,361,357
Billings in excess of costs and estimated earnings on
uncompleted contracts................................ 265,520 532,608
Accrued expenses and other liabilities................. 84,266 225,356
Line of credit......................................... 116,537 442,144
Note payable to member................................. 388,938
Current portion of capital lease obligations........... 14,917 65,630
Current portion of long-term debt...................... 52,041 125,802
---------- ----------
Total current liabilities................................... 1,224,344 2,752,897
Capital lease obligations, less current portion............. 18,881 126,697
Long-term debt, less current portion........................ 231,053 469,989
---------- ----------
Total liabilities........................................... 1,474,278 3,349,583
---------- ----------
Commitments and contingencies
Members' equity............................................. 566,082 1,404,372
---------- ----------
$2,040,360 $4,753,955
========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-97
<PAGE> 173

SUMMIT COMMUNICATIONS, LLC

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
PERIOD
OF INCEPTION
(MAY 24, 1997) NINE MONTHS
TO ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
-------------- -------------
<S> <C> <C>
Contract revenues earned.................................... $5,477,770 $8,334,650
---------- ----------
Cost of contract revenues (exclusive of depreciation and
amortization shown below)
Materials, supplies and contract services................. 2,519,761 3,992,685
Direct labor.............................................. 867,387 1,261,849
Other direct costs........................................ 726,241 1,031,938
---------- ----------
Total cost of contract revenues............................. 4,113,389 6,286,472
---------- ----------
Gross margin................................................ 1,364,381 2,048,178
---------- ----------
Selling, general and administrative expenses................ 645,953 922,198
Depreciation and amortization............................... 197,061 196,616
---------- ----------
Income from operations...................................... 521,367 929,364
Other income (expense)
Other income, net......................................... 1,533
Interest expense.......................................... (45,285) (92,607)
---------- ----------
Net income.................................................. $ 476,082 $ 838,290
========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-98
<PAGE> 174

SUMMIT COMMUNICATIONS, LLC

STATEMENT OF MEMBERS' EQUITY

<TABLE>
<S> <C>
Capital contributions (May 24, 1997)........................ $ 100,000
Net income.................................................. 476,082
Distributions to members.................................... (10,000)
----------
December 31, 1997........................................... 566,082
Net income.................................................. 838,290
September 30, 1998.......................................... $1,404,372
==========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-99
<PAGE> 175

SUMMIT COMMUNICATIONS, LLC

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD
OF INCEPTION
(MAY 24, 1997) NINE MONTHS
TO ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 476,082 $ 838,290
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FLOWS FROM
OPERATING ACTIVITIES:
Depreciation and amortization............................. 197,061 196,616
Loss on disposal of assets................................ 15,520
CHANGES IN OPERATING ASSETS AND LIABILITIES, NET OF EFFECT
OF ACQUISITION:
Accounts receivable.................................... (1,142,771) (1,648,432)
Cost and estimated earnings in excess of billings on
uncompleted contracts................................ (117,648) (294,118)
Other current assets................................... (37,189) (37,139)
Accounts payable....................................... 183,876 1,177,481
Billings in excess of costs and estimated earnings on
uncompleted contracts................................ 265,520 267,088
Accrued expenses and other liabilities................. 6,253 141,090
----------- -----------
Net cash (used in) provided by operating activities......... (168,816) 656,396
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisition................................. (512,207)
Purchases of property and equipment....................... (13,865) (577,476)
Proceeds from disposals of property and equipment......... 501,670
----------- -----------
Net cash used in investing activities....................... (526,072) (75,806)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances to member........................................ (155,000)
Proceeds from line of credit, net......................... 116,537 325,607
Proceeds from note payable to member...................... 400,000
Repayments of note payable to member...................... (11,062) (10,741)
Repayments of capital lease obligations................... (301,930) (14,857)
Proceeds from long-term debt.............................. 300,174 500,000
Repayments of long-term debt.............................. (17,080) (565,500)
Increase (decrease) in book overdraft..................... 118,249 (118,249)
Capital contributions..................................... 100,000
Distributions to members.................................. (10,000)
----------- -----------
Net cash provided by (used in) financing activities......... 694,888 (38,740)
----------- -----------
Net increase in cash........................................ 541,850
Cash at beginning of period.................................
----------- -----------
Cash at end of period....................................... $ -- $ 541,850
=========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.
F-100
<PAGE> 176

SUMMIT COMMUNICATIONS, LLC

NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD OF INCEPTION (MAY 24, 1997) TO DECEMBER 31, 1997
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1998

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Summit Communications LLC (the "Company") is incorporated under the laws of
the state of Mississippi as a limited liability company (LLC). The Company
constructs communications towers for use by the radio, television, telephone and
other industries in the continental United States.

Accounting Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Examples of estimates subject to possible revision based upon
the outcome of future events include costs and estimated earnings on uncompleted
contracts and depreciation on property and equipment. Actual results could
differ from those estimates.

Revenue and Cost Recognition

Revenues from fixed-priced and modified fixed-price construction contracts
are recognized on the percentage-of-completion method, measured by the
percentage of costs incurred to date to total estimated costs to complete each
contract. Most of the Company's contracts are short-term and are completed in
two to three months.

Contract costs include all direct material and labor costs and those direct
costs related to contract performance, such as supplies, tools and repairs.
Selling, general and administrative costs, including indirect costs on
contracts, are charged to expense as incurred. Provisions for estimated losses
on uncompleted contracts are made in the period in which such losses are
determined.

Property and Equipment

Property and equipment is recorded at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets.
Estimated useful lives by major asset category are as follows: machinery and
equipment--2 to 10 years; vehicles--3 to 5 years; furniture and fixtures--3 to 7
years. Gains or losses on the dispositions of assets are recorded at the time of
disposition and are included in other income. The costs of normal repairs and
maintenance are charged to expense as incurred.

Income Taxes

Income of the Company is taxed directly to its members for Federal income
tax purposes. As a result, no provision for Federal income taxes has been
reflected in the accompanying financial statements.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform
with current year presentation. These reclassifications had no effect on
previously reported results of operations, net assets, cash flows or members'
equity.

F-101
<PAGE> 177
SUMMIT COMMUNICATIONS, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

2. UNCOMPLETED CONTRACTS

The following is a summary of costs, estimated earnings and billings on
uncompleted contracts:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Costs incurred on uncompleted contracts....... $1,143,511 $2,471,585
Estimated earnings............................ 495,683 888,087
---------- ----------
1,639,194 3,359,672
Less: Billings to date........................ 1,787,066 3,480,514
---------- ----------
$ (147,872) $ (120,842)
========== ==========
Presentation in the accompanying balance
sheet:
Cost and estimated earnings in excess of
billings on uncompleted contracts........ $ 117,648 $ 411,766
Billings in excess of costs and estimated
earnings on uncompleted contracts........ (265,520) (532,608)
========== ==========
$ (147,872) $ (120,842)
========== ==========
</TABLE>

3. LINE OF CREDIT

Line of credit consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Line of credit for $600,000 payable to
commercial bank; interest at the lender's
prime rate (8.5% at December 31, 1997) plus
0.5%; principal and interest payable January
1, 1998; collateralized by inventory,
property and equipment, and accounts
receivable.................................. $ 57,593
Line of credit for $750,000 payable to
commercial bank; interest at the lender's
prime rate, (8.5% at December 31, 1997) plus
0.5%; principal and interest payable July 1,
1998; collateralized by inventory, property
and equipment, and accounts receivable...... 58,944
Line of credit for $750,000 payable to
commercial bank; interest at the lender's
prime rate (8.25% at September 30, 1998)
plus 0.25%; principal payable April 30,
1999, interest payable monthly;
collateralized by inventory, property and
equipment and accounts receivable; amended
on October 16, 1998 increasing the line of
credit available to $1,000,000 and interest
to the 90 day LIBOR rate plus 2.25%......... $442,144
-------- --------
$116,537 $442,144
======== ========
</TABLE>

F-102
<PAGE> 178
SUMMIT COMMUNICATIONS, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

4. NOTE PAYABLE TO MEMBER

Note payable to member consists of the following at December 31, 1997:

<TABLE>
<S> <C>
Note payable to member; interest at a specified commercial
bank's prime rate, 8.5% at December 31, 1997; principal
payable on July 18, 1998 and interest payable
quarterly............................................... $388,938
========
</TABLE>

The net proceeds of the note were used to acquire the net assets in Note
11. In April 1998, the Company refinanced the note with a note payable to a
commercial bank (see Note 5).

Interest paid to the member was approximately $17,000 and $11,000 for the
Period of Inception (May 24, 1997) to December 31, 1997 and the nine months
ended September 30, 1998, respectively.

5. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Note payable to commercial bank at an interest
rate of 8.5%; payable in monthly
installments of $6,176, including interest,
through September 25, 2002; collateralized
by property and equipment and accounts
receivable.................................. $283,094 $249,221
Note payable to commercial bank at an interest
rate of 8.75%; payable in monthly
installments of $8,207, including interest,
through April 5, 2003; collateralized by
property and equipment and accounts
receivable.................................. 346,570
-------- --------
283,094 595,791
Less: Current portion......................... (52,041) (125,802)
-------- --------
Long-term debt, less current portion.......... $231,053 $469,989
======== ========
</TABLE>

The following is a summary of the future aggregate amounts of principal
payments for long-term debt at September 30, 1998:

<TABLE>
<S> <C>
Three months ending December 31, 1998.................... $ 30,443
1999..................................................... 128,542
2000..................................................... 140,099
2001..................................................... 152,696
2002..................................................... 144,011
---------
595,791
Less: Current portion.................................... (125,802)
---------
$ 469,989
=========
</TABLE>

F-103
<PAGE> 179
SUMMIT COMMUNICATIONS, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

6. CAPITAL LEASE OBLIGATIONS

The following is a summary of future minimum lease payments under capital
lease agreements at September 30, 1998:

<TABLE>
<S> <C>
Three months ending December 31, 1998..................... $ 22,933
1999...................................................... 70,699
2000...................................................... 65,529
2001...................................................... 62,712
--------
Total minimum lease payments.................... 221,873
Less: Amount representing interest........................ (29,546)
--------
$192,327
========
</TABLE>

The following is a summary of assets and accumulated depreciation of assets
under capital lease agreements as of:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Vehicles...................................... $54,397 $138,697
Machinery..................................... 92,473
------- --------
54,397 231,170
Less: Accumulated depreciation................ (6,802) (21,463)
------- --------
$47,595 $209,707
======= ========
</TABLE>

Depreciation expense includes amortization of assets under capital leases
of $6,802 and $18,811 for the Period of Inception (May 24, 1997) to December 31,
1997 and for the nine months ended September 30, 1998, respectively.

7. EMPLOYEE BENEFIT PLAN

The Company has a defined contribution employee benefit plan, which is the
401(k) Profit Sharing Plan and Trust. Employees become eligible for
participation in the plan after one year of service. Employees may contribute a
percentage of their gross compensation not to exceed certain limits.
Contributions by the Company are made at the discretion of the members. There
were no contributions made by the Company related to this plan for the Period of
Inception (May 24, 1997) to December 31, 1997 and for the nine months ended
September 30, 1998.

8. RELATED PARTY TRANSACTIONS

NOTE RECEIVABLE

At September 30, 1998, the Company had a note receivable for $155,000 from
one of its members. The note bears interest at the same rate as the line of
credit, is payable on demand, and is uncollateralized. The note was subsequently
repaid in full.

SALE OF BUILDINGS

In February 1998, the Company acquired a building from one of the members
for $500,000. In July 1998 the building was sold to the members resulting in a
loss of approximately $12,000.

F-104
<PAGE> 180
SUMMIT COMMUNICATIONS, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

FACILITY LEASES

The Company leases space in two buildings owned by the members of the
Company under a month to month operating lease. For the nine months ended
September 30, 1998, total rent paid to the members was approximately $9,300.

9. CONTINGENCIES

10. CREDIT RISK AND BUSINESS CONCENTRATIONS

Financial instruments that potentially subject the Company to
concentrations of credit consist primarily of cash and accounts receivable. The
Company deposits its cash with a major financial institution. At times, deposits
may exceed federally insured limits. The Company extends credit to customers
based on evaluation of the customer's financial condition and credit history.
Collateral is generally not required. Customers include large U.S. companies
concentrated in the telecommunications industry.

Contract revenues earned from three customers accounted for 54% of revenues
for the Period of Inception (May 24, 1997) to December 31, 1997. Accounts
receivable from these three customers comprise 53% of accounts receivable at
December 31, 1997. Contract revenues earned from two customers accounted for 58%
of revenues for the nine months ended September 30, 1998. Accounts receivable
from these two customers comprise 57% of accounts receivable at September 30,
1998.

Management expects that sales to relatively few customers will continue to
account for a high percentage of its revenues into the foreseeable future and
believes that financial results depend in significant part upon the success of
these customers. Although the composition of the group comprising the Company's
largest customers may vary from period to period, the loss of a significant
customer or reduction in orders by any significant customers, including
reductions due to market, economic or competitive conditions in the wireless
communications industry, may have an adverse effect on the Company's business,
financial condition and results of operations.

F-105
<PAGE> 181
SUMMIT COMMUNICATIONS, LLC

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

11. ACQUISITION

On May 24, 1997, the Company acquired certain assets and assumed certain
liabilities of Summit Communications, Inc. (SCI), an unrelated third party, in a
purchase transaction. The following is a summary of assets acquired and
liabilities assumed in the SCI transaction:

<TABLE>
<S> <C>
Assets acquired
Other current assets.................................... $ 23,760
Property and equipment.................................. 855,896
Other assets............................................ 20,386
--------
900,042
Liabilities assumed
Long-term debt.......................................... 293,634
Capital lease obligations............................... 16,188
Accrued expenses and other liabilities.................. 78,013
--------
387,835
--------
Cash paid............................................... $512,207
========
</TABLE>

12. SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
PERIOD
OF INCEPTION
(MAY 24, 1997) NINE MONTHS
TO ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
-------------- -------------
<S> <C> <C>
Interest paid............................... $42,644 $ 95,248
Non-cash investing and financing activities:
Vehicles and machinery acquired under
capital leases......................... $25,905 $173,386
Note payable to member refinanced with
commercial bank........................ $378,197
</TABLE>

13. SUBSEQUENT EVENTS (UNAUDITED)

On November 10, 1998 the members sold all of their outstanding ownership
interest in the Company to Westower Corporation (Westower), a publicly traded
company, in exchange for approximately 200,000 shares of Westower and $4.4
million in cash. The members may also receive an additional 100,000 shares of
Westower common stock based upon certain performance criteria during the three
years subsequent to the date of acquisition. The purchase agreement also
provides that Westower will supply the Company's need for additional working
capital following the purchase.

On May 15, 1999, Westower entered into a definitive agreement with
SpectraSite Holdings, Inc. (SpectraSite), under which Westower will merge with a
subsidiary of SpectraSite. The transaction was consummated on September 2, 1999
and under the terms of the agreement, Westower shareholders received 1.81 shares
of SpectraSite common stock for each Westower share.

F-106
<PAGE> 182

(This page intentionally left blank)
<PAGE> 183

[SPECTRASITE LOGO]
<PAGE> 184

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than the
underwriting discounts and commissions. All amounts shown are estimates except
for the Securities and Exchange Commission registration fee and the NASD filing
fee. All of these fees are being paid by SpectraSite.

<TABLE>
<S> <C>
Registration Fee............................................ $ 121,440
NASD Filing Fee............................................. 30,500
Blue Sky Fees and Expenses.................................. 5,000
Legal Fees and Expenses..................................... 600,000
Accounting Fees and Expenses................................ 350,000
Printing and Engraving Fees................................. 500,000
Miscellaneous............................................... 93,060
----------
Total....................................................... $1,700,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 102(b)(7) of the General Corporation Law of the State of Delaware
(the "DGCL") provides that a corporation (in its original certificate of
incorporation or amendment thereto) may eliminate or limit the personal
liability of a director (or certain persons who, pursuant to the provisions of
the certificate of incorporation, exercise of perform duties conferred or
imposed upon directors by the DGCL) to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provisions shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL
(providing for liability of directors for unlawful payment of dividends or
unlawful stock purchases or redemptions) or (iv) for any transaction from which
the director derived an improper personal benefit. The Registrant's Certificate
of Incorporation, as amended, limits the liability of directors thereof to the
extent permitted by Section 102(b)(7) of the DGCL.

Under Section 145 of the DGCL, in general, a corporation may indemnify its
directors, officers, employees or agents against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties to which they may be made parties by reason of their being or
having been directors, officers, employees or agents and shall so indemnify such
persons if they acted in good faith and in a manner they reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe their
conduct was unlawful.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

SpectraSite Holdings, Inc. ("Holdings") was formed in 1997 through the
combination of three existing companies: U.S. Towers, Inc., a Delaware
corporation ("UST"); TeleSite Services, LLC, an Arkansas limited liability
company ("TeleSite"); and MetroSite Management LLC, an Arkansas limited
liability company ("MetroSite").

(a) Prior to the date of this registration statement, Holdings has
issued and sold the following unregistered securities.

(1) Effective May 12, 1997, in connection with its formation,
Holdings issued (i) 850,000 shares of common stock and warrants to
purchase 150,000 shares of common stock to the original

II-1
<PAGE> 185

owners of UST and (ii) 490,517 shares of common stock to the original
owners of Telesite and MetroSite. Also in May 1997, Stephen H. Clark
agreed to invest additional personal funds into Holdings, and on April
20, 1999, Holdings sold Mr. Clark 210,000 shares of common stock for an
aggregate purchase price for $772,800.

(2) On May 12, 1997, Holdings sold 3,203,118 shares of its 8%
Series A Cumulative Convertible Redeemable Preferred Stock, $.001 par
value per share, which will automatically convert to common stock upon
the closing of this offering, to J.H. Whitney III, L.P. (the "JHWIII")
for an aggregate purchase price of $9.25 million and 259,712 shares of
its Series A preferred stock, to Kitty Hawk Capital Limited Partnership,
III for an aggregate purchase price of $750,000.

(3) On May 12, 1997, Holdings issued warrants to purchase 150,000
shares of common stock at a price of $ .001 per share in exchange for a
"corporate opportunity" in the tower business to PCX Corporation. These
warrants were later transferred and assigned to the shareholders of PCX.
On September 1, 1998, Holdings issued an aggregate of 150,000 shares of
common stock upon exercise of the warrants.

(4) In a series of transactions on March 23, August 27 and
September 21, 1998, Holdings sold an aggregate of 7,000,000 shares of
its Series B preferred stock, which will automatically convert to common
stock upon the closing of this offering, to Whitney Equity Partners,
L.P., J.H. Whitney III, L.P., Whitney Strategic Partners III, L.P.,
Waller-Sutton Media Partners, L.P., Kitty Hawk Capital Limited
Partnership, III, Kitty Hawk Capital Limited Partnership IV, Eagle Creek
Capital, L.L.C., The North Carolina Enterprise Fund, L.P., Finley Family
Limited Partnership, William R. Gupton, Jack W. Jackman and Alton D.
Eckert for an aggregate purchase price of $28 million to twelve
accredited investors.

(5) On June 26, 1998, Holdings sold $255.2 million in aggregate
principal amount at maturity of its 12% senior discount notes due 2008
to Credit Suisse First Boston Corporation, Lehman Brothers Inc. and CIBC
Oppenheimer Corp., as initial purchasers of the notes.

(6) On April 20, 1999, Holdings sold $586.8 million in aggregate
principal amount at maturity of its 11 1/4% senior discount notes due
2009 to CIBC Oppenheimer Corp., Credit Suisse First Boston Corporation,
Morgan Stanley & Co. Incorporated, BancBoston Robertson Stephens Inc.
and TD Securities (USA), Inc., as initial purchasers of the notes.

(7) On April 20, 1999, Holdings an aggregate of 46,286,795 shares
of its Series C preferred stock, which will automatically convert to
common stock upon the closing of this offering, to Welsh, Carson,
Anderson & Stowe VIII, L.P., WCAS Information Partners, L.P., Kenneth
Melkus, Patrick J. Welsh, Russell L. Carson, Bruce K. Anderson, Andrew
M. Paul, Thomas E. McInerney, Laura M. VanBuren, Robert A. Minicucci,
Anthony J. de Nicola, Paul B. Queally, Lawrence B. Sorrel, D. Scott
Mackesy, Priscilla A. Newman, Rudolph E. Rupert, Trust under an
agreement dated November 26, 1984 for the benefit of Eric Welsh, Trust
under an agreement dated November 26, 1984 for the benefit of Randall
Welsh, Trust under an agreement dated November 26, 1984 for the benefit
of Jennifer Welsh, J.H. Whitney III, L.P., Whitney Strategic Partners
III, L.P., CIBC WG Argosy Merchant Fund 2, L.L.C., Co-Investment
Merchant Fund 3, LLC, The North Carolina Enterprise Fund, L.P.,
Waller-Sutton Media Partners, L.P., Kitty Hawk Capital Limited
Partnership, IV, Finley Family Limited Partnership, Eagle Creek Capital,
L.L.C., David P. Tomick, Jack W. Jackman, Alton D. Eckert, William R.
Gupton, The Price Family Limited Partnership and Benake L.P. for an
aggregate purchase price of approximately $231.4 million.

(8) On April 20, 1999, Holdings issued 14,000,000 shares of its
Series C preferred stock, which will automatically convert to common
stock upon the closing of this offering, to Tower Parent Corp., a
subsidiary of Nextel Communications, Inc., as part of the consideration
paid for certain tower assets.

II-2
<PAGE> 186

(9) On April 20, 1999, Holdings issued two million shares of
common stock to certain stockholders for their commitment to provide
financing for the Nextel tower acquisition.

(10) On April 20, 1999, Holdings sold Michael Price 100,000 shares
of common stock.

(11) On December 30, 1999, Holdings issued 500,000 shares of
common stock to the stockholders of Doty-Moore Tower Services, Inc.,
Doty-Moore Equipment, Inc. and Doty Moore RF Services, Inc. in
connection with Holdings' acquisitions of Doty-Moore Tower Services,
Inc., Doty-Moore Equipment, Inc. and Doty Moore RF Services, Inc.

(12) On January 5, 2000, Holdings issued 225,000 shares of common
stock to the stockholders of Vertical Properties, Inc. in connection
with Holdings' acquisition of Vertical Properties, Inc.

(13) On January 5, 2000, Holdings issued 4,505,997 shares of
common stock to the stockholders of Apex Site Management Holdings, Inc.
and 1,501,999 shares of common stock into escrow in connection with
Holdings' acquisition of Apex Site Management Holdings, Inc.

(14) On March 14, 2000, Holdings issued 155,127 shares of common
stock to the Telco Site Services, Inc. in connection with Holdings'
acquisition of Telco Site Services, Inc.

(15) On March 15, 2000, Holdings sold $200,000,000 aggregate
principal amount of 10 3/4% senior notes due 2010 and $559,800,000
aggregate principal amount at maturity of 12 7/8% senior discount notes
due 2010 to Morgan Stanley & Co. Incorporated, CIBC World Markets Corp.,
Credit Suisse First Boston Corporation, Deustsche Bank Securities Inc.,
Lehman Brothers Inc., BMO Nesbitt Burns Corp. and Scotia Capital (USA)
Inc. as placement agents for the notes.

(16) As of March 31, 2000, Holdings had issued 10,258,943 options
to purchase shares of common stock to directors, employees and
consultants pursuant to Holdings' stock incentive plan, had cancelled
533,744 of such options, and had sold 1,326,284 shares of common stock
upon exercise of such options.

(b) Other than the initial purchasers identified in items 5 and 6,
there were no underwriters, brokers or finders employed in connection with
any of the transactions set forth above.

(c) The sales of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act, or Regulation D or Regulation S promulgated thereunder
(with respect to items 1 through 13), or Rule 701 promulgated under Section
3(b) of the Securities Act (with respect to item 14) as transactions by an
issuer not involving a public offering or transactions pursuant to
compensatory benefit plans and contracts relating to compensation as
provided under such Rule 701. Other than with respect to items 5 and 6, the
recipients of securities in each such transaction represented their
intentions to acquire the securities for investment only and not with a
view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the instruments representing such
securities issued in such transactions. All recipients had adequate access
to information about Holdings.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.

II-3
<PAGE> 187

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.2 Amendment No. 1 to the Nextel Merger Agreement. Incorporated
by reference to the corresponding exhibit to the
registration statement on Form S-4 of the Registrant, file
no. 333-67403.
2.3 Agreement and Plan of Merger among Westower Corporation,
SpectraSite Holdings, Inc. and W. Acquisition Corp., dated
as of May 15, 1999. Incorporated by reference to the
corresponding exhibit to the registration statement on Form
S-4 of the Registrant, file no. 333-67403.
2.4 Merger Agreement and Plan of Reorganization, dated as of
November 24, 1999, among the Registrant, Apex Merger Sub,
Inc. and Apex Site Management Holdings, Inc. (the "Apex
Merger Agreement"). Incorporated by reference to the
corresponding exhibit to the Registrant's registration
statement on Form S-1, file no. 333-93873.
2.5 Stock Purchase Agreement, dated as of December 30, 1999,
between Northwest Broadcasting, L.P. and the Registrant.
Incorporated by reference to the corresponding exhibit to
the Registrant's registration statement on Form S-1, file
no. 333-93873.
2.6 Stock Purchase Agreement, dated as of December 30, 1999,
among Donald Doty, John Patrick Moore and the Registrant.
Incorporated by reference to the corresponding exhibit to
the Registrant's registration statement on Form S-1, file
no. 333-93873.
2.7 Merger Agreement and Plan of Reorganization, dated as of
December 30, 1999, among the Registrant, VPI Merger Sub,
Inc., Vertical Properties, Inc. and the stockholders of
Vertical Properties, Inc. Incorporated by reference to the
corresponding exhibit to the Registrant's registration
statement on Form S-1, file no. 333-93873.
2.8 Asset Purchase Agreement, dated as of January 5, 2000, among
International Towers, Inc., S&W Communications, Inc., Tri-Ex
Tower, Inc., International Tower Industries Inc. and the
Registrant. Incorporated by reference to the corresponding
exhibit to the Registrant's report on Form 8-K filed on
January 21, 2000.
2.9 Agreement to Sublease, dated as of February 16, 2000, by and
between AirTouch Communications, Inc. and the Other Parties
Named Therein as Sublessors, California Tower, Inc. and the
Registrant. Incorporated by reference to the corresponding
exhibit to the Registrant's Form 10-K for the year ended
December 31, 1999.
2.10 Stock Purchase Agreement, dated as of April 12, 2000, by and
between SpectraSite Communications, Inc. and LeBlanc &
Royale Enterprises Inc. Incorporated by reference to exhibit
2.1 of the Registrant's report on Form 8-K filed on April
18, 2000.
2.11 Joint Venture Shareholders' Agreement, dated as of April 13,
2000, by and among SpectraSite International, Inc., Transco
Telecommunications Asset Development Company Limited and
EVER 1267 Limited. Incorporated by reference to exhibit 2.2
of the Registrant's report on Form 8-K filed on April 18,
2000.
3.1 Certificate of Incorporation of Integrated Site Development
("ISD"), dated and filed as of April 25, 1997. Incorporated
by reference to the corresponding exhibit to the
registration statement on Form S-4 of the Registrant, file
no. 333-67403.
3.2 Certificate of Amendment of the Certificate of Incorporation
of ISD, dated as of May 11, 1997 (authorizing Series A
Preferred Stock) and filed May 12, 1997. Incorporated by
reference to the corresponding exhibit to the registration
statement on Form S-4 of the Registrant, file no. 333-67403.
3.3 Certificate of Amendment of the Certificate of Incorporation
of ISD, dated as of August 14, 1997 (changing name to
SpectraSite Communications, Inc. ("SCI")) and filed August
15, 1997. Incorporated by reference to the corresponding
exhibit to the registration statement on Form S-4 of the
Registrant, file no. 333-67403.
3.4 Certificate of Amendment of the Certificate of Incorporation
of SCI, dated and filed as of October 29, 1997 (changing
name to SpectraSite Holdings, Inc. (the "Registrant")).
Incorporated by reference to the corresponding exhibit to
the registration statement on Form S-4 of the Registrant,
file no. 333-67403.
3.5 Certificate of Amendment of the Certificate of Incorporation
of the Registrant, dated and filed as of March 23, 1998
(authorizing Series B Preferred Stock). Incorporated by
reference to the corresponding exhibit to the registration
statement on Form S-4 of the Registrant, file no. 333-67403.
3.6 Certificate of Amendment of the Certificate of Incorporation
of the Registrant, dated as of May 29, 1998 and filed June
2, 1998. Incorporated by reference to the corresponding
exhibit to the registration statement on Form S-4 of the
Registrant, file no. 333-67403.
</TABLE>

II-4
<PAGE> 188

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.7 Certificate of Amendment of the Certificate of Incorporation
of the Registrant, dated as of August 18, 1998 and filed
August 19, 1998. Incorporated by reference to the
corresponding exhibit to the registration statement on Form
S-4 of the Registrant, file no. 333-67403.
3.8 Amended Bylaws of SpectraSite Holdings, Inc. Incorporated by
reference to the corresponding exhibit to the Registrant's
registration statement on Form S-1, file no. 333-93873.
3.9 Amended and Restated Certificate of Incorporation of the
Registrant. Incorporated by reference to the corresponding
exhibit to the registration statement on Form S-4 of the
Registrant, file no. 333-67403.
3.10 Certificate of Amendment of the Amended and Restated
Certificate of Incorporation of the Registrant, dated August
31, 1999. Incorporated by reference to the corresponding
exhibit to the Form 8-K of the Registrant, dated September
2, 1999 and filed September 17, 1999.
4.1 Indenture, dated as of June 26, 1998, between the Registrant
and United States Trust Company of New York, as trustee.
Incorporated by reference to the corresponding exhibit to
the registration statement on Form S-4 of the Registrant,
file no. 333-67403.
4.2 First Supplemental Indenture, dated as of March 25, 1999,
between the Registrant and United States Trust Company of
New York, as trustee. Incorporated by reference to the
corresponding exhibit to the registration statement on Form
S-4 of the Registrant, file no. 333-67403.
4.3 Second Supplemental Indenture, dated as of June 6, 2000,
between the Registrant and United States Trust Company of
New York, as trustee. Incorporated by reference to exhibit
no. 4.1 of the Registrant's report on Form 8-K, dated June
6, 2000, and filed June 21, 2000.
4.4 Indenture, dated as of April 20, 1999, between the
Registrant and United States Trust Company of New York, as
trustee. Incorporated by reference to exhibit no. 4.3 to the
registration statement on Form S-4 of the Registrant, file
no. 333-67403.
4.5 Indenture, dated as of March 15, 2000, between the
Registrant and United States Trust Company of New York, as
trustee. (10 3/4% senior notes) Incorporated by reference to
exhibit no. 4.4 of the Registrant's registration statement
on Form S-4, file no. 333-35094.
4.6 Indenture, dated as of March 15, 2000, between the
Registrant and United States Trust Company of New York, as
trustee. (12 7/8% senior notes) Incorporated by reference to
exhibit no. 4.5 of the Registrant's registration statement
on Form S-4, file no. 333-35094.
**5.1 Opinion of Dow Lohnes & Albertson, PLLC.
10.1 Stock Purchase Agreement (Series A Preferred Stock), dated
as of May 12, 1997, by and among U.S. Towers, Inc. ("UST"),
Telesite Services, LLC ("Telesite"), Metrosite Management,
LLC ("Metrosite"), Whitney Equity Partners, L.P. ("Whitney
Equity"), Kitty Hawk Capital Limited Partnership, L.P., III
("Kitty Hawk III"), and ISD. Incorporated by reference to
the corresponding exhibit to the registration statement on
Form S-4 of the Registrant, file no. 333-67403.
10.2 Stock Purchase Agreement (Series B Preferred Stock), dated
as of March 23, 1998, by and among the Registrant, Whitney
Equity, J. H. Whitney, III, L.P. ("Whitney III"), Whitney
Strategic Partners III, L.P. ("Whitney Strategic"),
Waller-Sutton Media Partners, L.P. ("Waller-Sutton"), Kitty
Hawk III, Kitty Hawk Capital Limited Partnership, IV ("Kitty
Hawk IV"), Eagle Creek Capital, L.L.C. ("Eagle Creek"), The
North Carolina Enterprise Fund, L.P. ("NCEF"), Finley Family
Limited Partnership ("Finley LP"), William R. Gupton
("Gupton"), Jack W. Jackman ("Jackman") and Alton D. Eckert
("Eckert"). Incorporated by reference to the corresponding
exhibit to the registration statement on Form S-4 of the
Registrant, file no. 333-67403.
10.3 First Amendment to Stock Purchase Agreement (Series B
Preferred Stock), dated as of May 29, 1998. Incorporated by
reference to the corresponding exhibit to the registration
statement on Form S-4 of the Registrant, file no. 333-67403.
10.4 Second Amendment to Stock Purchase Agreement (Series B
Preferred Stock), dated as of August 27, 1998. Incorporated
by reference to the corresponding exhibit to the
registration statement on Form S-4 of the Registrant, file
no. 333-67403.
10.5 Second Amended and Restated Registration Rights Agreement,
dated as of April 20, 1999, by and among the Registrant,
Whitney Equity, Whitney III, Whitney Strategic,
Waller-Sutton, Kitty Hawk III, Kitty Hawk IV, Eagle Creek,
NCEF, Finley LP, certain affiliates of CIBC Oppenheimer
Corp. (the "CIBC Purchasers"), certain affiliates and
employees of Welsh Carson Anderson & Stowe (the "WCAS
Purchasers"), Tower Parent Corp., Gupton, Eckert, Stephen H.
Clark ("Clark") and David P. Tomick ("Tomick"). Incorporated
by reference to the corresponding exhibit to the
registration statement on Form S-4 of the Registrant, file
no. 333-67403.
</TABLE>

II-5
<PAGE> 189

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.6 Third Amended and Restated Stockholders' Agreement, dated as
of April 20, 1999, by and among the Registrant, Whitney
Equity, Whitney III, Whitney Strategic, Waller-Sutton, Kitty
Hawk III, Kitty Hawk IV, Eagle Creek, Clark, Tomick, Finely
LP, NCEF, the CIBC Purchasers, the WCAS Purchasers, Tower
Parent Corp., Edward Lutkewich ("Lutkewich"), Jackman,
Eckert, and Gupton. Incorporated by reference to the
corresponding exhibit to the registration statement on Form
S-4 of the Registrant, file no. 333-67403.
10.7 Employment Agreement with Stephen H. Clark. Incorporated by
reference to the corresponding exhibit to the registration
statement on Form S-4 of the Registrant, file no. 333-67403.
10.8 Employment Agreement with David P. Tomick. Incorporated by
reference to the corresponding exhibit to the registration
statement on Form S-4 of the Registrant, file no. 333-67403.
10.9 Employment Agreement with Richard J. Byrne. Incorporated by
reference to the corresponding exhibit to the registration
statement on Form S-4 of the Registrant, file no. 333-67403.
10.10 Credit Agreement, dated as of April 20, 1999, by and among
the Registrant, SCI, CIBC Oppenheimer Corp., Credit Suisse
First Boston Corporation and the other parties thereto (the
"Credit Agreement"). Incorporated by reference to exhibit
no. 10.1 to the Registrant's registration statement on Form
8-A filed on September 1, 1999.
10.11 SpectraSite Holdings, Inc. Stock Incentive Plan.
Incorporated by reference to exhibit no. 10.16 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.12 SpectraSite Holdings, Inc. Employee Stock Purchase Plan.
Incorporated by reference to exhibit no. 10.17 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.13 Agreement, dated September 15, 1998, by and between Robert
M. Long and the Registrant. Incorporated by reference to
exhibit no. 10.22 to the Registrant's registration statement
on Form S-4, file no. 333-67403.
10.14 Asset Purchase Agreement, dated as of August 14, 1998, by
and among Airadigm Communications, Inc. ("Airadigm") and
SCI. Incorporated by reference to exhibit no. 10.23 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.15 Form of Master Tower Attachment Lease Agreement by and
between Airadigm and SCI. Incorporated by reference to
exhibit no. 10.24 to the Registrant's registration statement
on Form S-4, file no. 333-67403.
10.16 Asset Purchase Agreement, dated as of August 20, 1998, by
and among Amica Wireless Phone Service, Inc. ("Amica") and
SCI. Incorporated by reference to exhibit no. 10.25 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.17 Form of Master Design Build Lease Agreement by and between
Amica and SCI. Incorporated by reference to exhibit no.
10.26 to the Registrant's registration statement on Form
S-4, file no. 333-67403.
10.18 Preferred Stock Purchase Agreement (Series C Preferred
Stock), dated as of February 10, 1999, by and among the
Registrant, the WCAS Purchasers, the Whitney Purchasers, the
CIBC Purchasers and the Additional Purchasers. Incorporated
by reference to exhibit no. 10.30 to the Registrant's
registration statement on Form S-4, file no. 333-67403.
10.19 First Amendment to Preferred Stock Purchase Agreement
(Series C Preferred Stock). Incorporated by reference to
exhibit no. 10.31 to the Registrant's registration statement
on Form S-4, file no. 333-67403.
10.20 Security & Subordination Agreement, dated as of April 20,
1999. Incorporated by reference to exhibit no. 10.32 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.21 Master Site Commitment Agreement, dated as of April 20,
1999. Incorporated by reference to exhibit no. 10.33 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.22 Master Site Lease Agreement, dated as of April 20, 1999.
Incorporated by reference to exhibit no. 10.34 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.23 Employment Agreement with Calvin J. Payne. Incorporated by
reference to exhibit 10.1 to the Registrant's report on Form
8-K, dated September 2, 1999 and filed September 17, 1999.
10.24 Joinder Agreement to SpectraSite Restated Registration
Rights Agreement. Incorporated by reference to exhibit no.
10.36 to the Registrant's registration statement on Form
S-1, file no. 333-93873.
10.25 First Amendment to Credit Agreement, dated as of August 23,
1999. Incorporated by reference to exhibit 10.2 to the
Registrant's report on Form 8-K, dated September 2, 1999 and
filed September 17, 1999.
</TABLE>

II-6
<PAGE> 190

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.26 Second Amendment to Credit Agreement, dated as of December
22, 1999. Incorporated by reference to the corresponding
exhibit to the Registrant's Form 10-K for the year ended
December 31, 1999.
10.27 Third Amendment to Credit Agreement, dated as of February
14, 2000. Incorporated by reference to the corresponding
exhibit to the Registrant's Form 10-K for the year ended
December 31, 1999.
10.28 Fourth Amendment to Credit Agreement, dated as of March 9,
2000. Incorporated by reference to the corresponding exhibit
to the Registrant's registration statement on Form S-4, file
no. 333-35094.
*21.1 Subsidiaries of the Registrant.
**23.1 Consent of Dow, Lohnes & Albertson, PLLC (contained in
Exhibit 5.1).
*23.2 Consent of Ernst & Young LLP.
*23.3 Consent of PricewaterhouseCoopers LLP.
*23.4 Consent of Moss Adams LLP.
*23.5 Consent of Lamn, Krielow, Dytrych & Co. (formerly, Lamn,
Krielow, Dytrych & Darling).
*23.6 Consent of Shearer, Taylor & Co., P.A.
**24.1 Power of Attorney for Michael J. Price.
**24.2 Power of Attorney for Michael R. Stone.
</TABLE>

------------

* Previously filed.

** To be filed by amendment.

(b) Financial Statement Schedules.

None.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions, or otherwise, the Registrants have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrants of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

The undersigned registrant hereby undertakes that:

1. For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1)or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

2. For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be anew registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-7
<PAGE> 191

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
SPECTRASITE HOLDINGS, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF CARY, STATE OF NORTH CAROLINA, ON JULY 12, 2000.

SPECTRASITE HOLDINGS, INC.

By: /s/ STEPHEN H. CLARK
------------------------------------
Stephen H. Clark
President, Chief Executive Officer
and Director

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF
OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ STEPHEN H. CLARK President, Chief Executive Officer and July 12, 2000
------------------------------------------ Director (Principal Executive Officer)
Stephen H. Clark

/s/ DAVID P. TOMICK Executive Vice President and Chief July 12, 2000
------------------------------------------ Financial Officer (Principal Financial
David P. Tomick Officer)

* Executive Vice President--Design and July 12, 2000
------------------------------------------ Construction and Director
Calvin J. Payne

/s/ DANIEL I. HUNT Vice President--Finance and Administration July 12, 2000
------------------------------------------ (Principal Accounting Officer)
Daniel I. Hunt

* Chairman of the Board of Directors July 12, 2000
------------------------------------------
Lawrence B. Sorrel

* Director July 12, 2000
------------------------------------------
Timothy M. Donahue

* Director July 12, 2000
------------------------------------------
Andrew R. Heyer

* Director July 12, 2000
------------------------------------------
James R. Matthews
</TABLE>

II-8
<PAGE> 192

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director July 12, 2000
------------------------------------------
Thomas E. McInerney

* Director July 12, 2000
------------------------------------------
Steven M. Shindler
</TABLE>

*Power of Attorney

Stephen H. Clark, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above for whom he is attorney-in-fact
pursuant to a power of attorney duly executed by such person and filed with the
Securities and Exchange Commission.

By: /s/ STEPHEN H. CLARK

------------------------------------

Stephen H. Clark

Attorney-In-Fact

II-9
<PAGE> 193

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

EXHIBITS
TO

FORM S-1

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

------------------
SPECTRASITE HOLDINGS, INC.
------------------

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 194

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
**1.1 Form of Underwriting Agreement.
2.1 Agreement and Plan of Merger, dated as of February 10, 1999,
among Nextel Communications, Inc., Tower Parent Corp., Tower
Merger Vehicle, Inc., Tower Asset Sub Inc., SpectraSite
Holdings, Inc., SpectraSite Communications, Inc. and SHI.
Merger Sub, Inc. (the "Nextel Merger Agreement").
Incorporated by reference to the corresponding exhibit to
the registration statement on Form S-4 of the Registrant,
file no. 333-67403.
2.2 Amendment No. 1 to the Nextel Merger Agreement. Incorporated
by reference to the corresponding exhibit to the
registration statement on Form S-4 of the Registrant, file
no. 333-67403.
2.3 Agreement and Plan of Merger among Westower Corporation,
SpectraSite Holdings, Inc. and W. Acquisition Corp., dated
as of May 15, 1999. Incorporated by reference to the
corresponding exhibit to the registration statement on Form
S-4 of the Registrant, file no. 333-67403.
2.4 Merger Agreement and Plan of Reorganization, dated as of
November 24, 1999, among the Registrant, Apex Merger Sub,
Inc. and Apex Site Management Holdings, Inc. (the "Apex
Merger Agreement"). Incorporated by reference to the
corresponding exhibit to the Registrant's registration
statement on Form S-1, file no. 333-93873
2.5 Stock Purchase Agreement, dated as of December 30, 1999,
between Northwest Broadcasting, L.P. and the Registrant.
Incorporated by reference to the corresponding exhibit to
the Registrant's registration statement on Form S-1, file
no. 333-93873
2.6 Stock Purchase Agreement, dated as of December 30, 1999,
among Donald Doty, John Patrick Moore and the Registrant.
Incorporated by reference to the corresponding exhibit to
the Registrant's registration statement on Form S-1, file
no. 333-93873
2.7 Merger Agreement and Plan of Reorganization, dated as of
December 30, 1999, among the Registrant, VPI Merger Sub,
Inc., Vertical Properties, Inc. and the stockholders of
Vertical Properties, Inc. Incorporated by reference to the
corresponding exhibit to the Registrant's registration
statement on Form S-1, file no. 333-93873
2.8 Asset Purchase Agreement, dated as of January 5, 2000, among
International Towers, Inc., S&W Communications, Inc., Tri-Ex
Tower, Inc., International Tower Industries Inc. and the
Registrant. Incorporated by reference to the corresponding
exhibit to the Registrant's report on Form 8-K filed on
January 21, 2000
2.9 Agreement to Sublease, dated as of February 16, 2000, by and
between AirTouch Communications, Inc. and the Other Parties
Named Therein as Sublessors, California Tower, Inc. and the
Registrant. Incorporated by reference to the corresponding
exhibit to the Registrant's Form 10-K for the year ended
December 31, 1999
2.10 Stock Purchase Agreement, dated as of April 12, 2000, by and
between SpectraSite Communications, Inc. and LeBlanc &
Royale Enterprises Inc. Incorporated by reference to exhibit
2.1 of the Registrant's report on Form 8-K filed on April
18, 2000
2.11 Joint Venture Shareholders' Agreement, dated as of April 13,
2000, by and among SpectraSite International, Inc., Transco
Telecommunications Asset Development Company Limited and
EVER 1267 Limited. Incorporated by reference to exhibit 2.2
of the Registrant's report on Form 8-K filed on April 18,
2000
2.8 Asset Purchase Agreement, dated as of January 5, 2000, among
International Towers, Inc., S&W Communications, Inc., Tri-Ex
Tower, Inc., International Tower Industries and SpectraSite
Holdings, Inc. Incorporated by reference to the
corresponding exhibit to the Registrant's report on Form 8-K
filed on January 21, 2000.
3.1 Certificate of Incorporation of Integrated Site Development
("ISD"), dated and filed as of April 25, 1997. Incorporated
by reference to the corresponding exhibit to the
registration statement on Form S-4 of the Registrant, file
no. 333-67403.
3.2 Certificate of Amendment of the Certificate of Incorporation
of ISD, dated as of May 11, 1997 (authorizing Series A
Preferred Stock) and filed May 12, 1997. Incorporated by
reference to the corresponding exhibit to the registration
statement on Form S-4 of the Registrant, file no. 333-67403.
</TABLE>

<PAGE> 195

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.3 Certificate of Amendment of the Certificate of Incorporation
of ISD, dated as of August 14, 1997 (changing name to
SpectraSite Communications, Inc. ("SCI")) and filed August
15, 1997. Incorporated by reference to the corresponding
exhibit to the registration statement on Form S-4 of the
Registrant, file no. 333-67403.
3.4 Certificate of Amendment of the Certificate of Incorporation
of SCI, dated and filed as of October 29, 1997 (changing
name to SpectraSite Holdings, Inc. (the "Registrant")).
Incorporated by reference to the corresponding exhibit to
the registration statement on Form S-4 of the Registrant,
file no. 333-67403.
3.5 Certificate of Amendment of the Certificate of Incorporation
of the Registrant, dated and filed as of March 23, 1998
(authorizing Series B Preferred Stock). Incorporated by
reference to the corresponding exhibit to the registration
statement on Form S-4 of the Registrant, file no. 333-67403.
3.6 Certificate of Amendment of the Certificate of Incorporation
of the Registrant, dated as of May 29, 1998 and filed June
2, 1998. Incorporated by reference to the corresponding
exhibit to the registration statement on Form S-4 of the
Registrant, file no. 333-67403.
3.7 Certificate of Amendment of the Certificate of Incorporation
of the Registrant, dated as of August 18, 1998 and filed
August 19, 1998. Incorporated by reference to the
corresponding exhibit to the registration statement on Form
S-4 of the Registrant, file no. 333-67403.
3.8 Amended Bylaws of SpectraSite Holdings, Inc. Incorporated by
reference to the corresponding exhibit to the Registrant's
registration statement on Form S-1, file no. 333-93873.
3.9 Amended and Restated Certificate of Incorporation of the
Registrant. Incorporated by reference to the corresponding
exhibit to the registration statement on Form S-4 of the
Registrant, file no. 333-67403.
3.10 Certificate of Amendment of the Amended and Restated
Certificate of Incorporation of the Registrant, dated August
31, 1999. Incorporated by reference to the corresponding
exhibit to the Form 8-K of the Registrant, dated September
2, 1999 and filed September 17, 1999.
4.1 Indenture, dated as of June 26, 1998, between the Registrant
and United States Trust Company of New York, as trustee.
Incorporated by reference to the corresponding exhibit to
the registration statement on Form S-4 of the Registrant,
file no. 333-67403.
4.2 First Supplemental Indenture, dated as of March 25, 1999,
between the Registrant and United States Trust Company of
New York, as trustee. Incorporated by reference to the
corresponding exhibit to the registration statement on Form
S-4 of the Registrant, file no. 333-67403.
4.3 Second Supplemental Indenture, dated as of June 6, 2000,
between the Registrant and United States Trust Company of
New York, as trustee. Incorporated by reference to exhibit
no. 4.1 of the Registrant's report on Form 8-K, dated June
6, 2000, and filed June 21, 2000.
4.4 Indenture, dated as of April 20, 1999, between the
Registrant and United States Trust Company of New York, as
trustee. Incorporated by reference to exhibit no. 4.3 to the
registration statement on Form S-4 of the Registrant, file
no. 333-67403.
4.5 Indenture, dated as of March 15, 2000, between the
Registrant and United States Trust Company of New York, as
trustee. (10 3/4% senior notes) Incorporated by reference to
exhibit no. 4.4 of the Registrant's registration statement
on Form S-4, file no. 333-35094.
4.6 Indenture, dated as of March 15, 2000, between the
Registrant and United States Trust Company of New York, as
trustee. (12 7/8% senior notes) Incorporated by reference to
exhibit no. 4.5 of the Registrant's registration statement
on Form S-4, file no. 333-35094.
**5.1 Opinion of Dow Lohnes & Albertson, PLLC.
10.1 Stock Purchase Agreement (Series A Preferred Stock), dated
as of May 12, 1997, by and among U.S. Towers, Inc. ("UST"),
Telesite Services, LLC ("Telesite"), Metrosite Management,
LLC ("Metrosite"), Whitney Equity Partners, L.P. ("Whitney
Equity"), Kitty Hawk Capital Limited Partnership, L.P., III
("Kitty Hawk III"), and ISD. Incorporated by reference to
the corresponding exhibit to the registration statement on
Form S-4 of the Registrant, file no. 333-67403.
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<PAGE> 196

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<C> <S>
10.2 Stock Purchase Agreement (Series B Preferred Stock), dated
as of March 23, 1998, by and among the Registrant, Whitney
Equity, J. H. Whitney, III, L.P. ("Whitney III"), Whitney
Strategic Partners III, L.P. ("Whitney Strategic"),
Waller-Sutton Media Partners, L.P. ("Waller-Sutton"), Kitty
Hawk III, Kitty Hawk Capital Limited Partnership, IV ("Kitty
Hawk IV"), Eagle Creek Capital, L.L.C. ("Eagle Creek"), The
North Carolina Enterprise Fund, L.P. ("NCEF"), Finley Family
Limited Partnership ("Finley LP"), William R. Gupton
("Gupton"), Jack W. Jackman ("Jackman") and Alton D. Eckert
("Eckert"). Incorporated by reference to the corresponding
exhibit to the registration statement on Form S-4 of the
Registrant, file no. 333-67403.
10.3 First Amendment to Stock Purchase Agreement (Series B
Preferred Stock), dated as of May 29, 1998. Incorporated by
reference to the corresponding exhibit to the registration
statement on Form S-4 of the Registrant, file no. 333-67403.
10.4 Second Amendment to Stock Purchase Agreement (Series B
Preferred Stock), dated as of August 27, 1998. Incorporated
by reference to the corresponding exhibit to the
registration statement on Form S-4 of the Registrant, file
no. 333-67403.
10.5 Second Amended and Restated Registration Rights Agreement,
dated as of April 20, 1999, by and among the Registrant,
Whitney Equity, Whitney III, Whitney Strategic,
Waller-Sutton, Kitty Hawk III, Kitty Hawk IV, Eagle Creek,
NCEF, Finley LP, certain affiliates of CIBC Oppenheimer
Corp. (the "CIBC Purchasers"), certain affiliates and
employees of Welsh Carson Anderson & Stowe (the "WCAS
Purchasers"), Tower Parent Corp., Gupton, Eckert, Stephen H.
Clark ("Clark") and David P. Tomick ("Tomick"). Incorporated
by reference to the corresponding exhibit to the
registration statement on Form S-4 of the Registrant, file
no. 333-67403.
10.6 Third Amended and Restated Stockholders' Agreement, dated as
of April 20, 1999, by and among the Registrant, Whitney
Equity, Whitney III, Whitney Strategic, Waller-Sutton, Kitty
Hawk III, Kitty Hawk IV, Eagle Creek, Clark, Tomick, Finely
LP, NCEF, the CIBC Purchasers, the WCAS Purchasers, Tower
Parent Corp., Edward Lutkewich ("Lutkewich"), Jackman,
Eckert, and Gupton. Incorporated by reference to the
corresponding exhibit to the registration statement on Form
S-4 of the Registrant, file no. 333-67403.
10.7 Employment Agreement with Stephen H. Clark. Incorporated by
reference to the corresponding exhibit to the registration
statement on Form S-4 of the Registrant, file no. 333-67403.
10.8 Employment Agreement with David P. Tomick. Incorporated by
reference to the corresponding exhibit to the registration
statement on Form S-4 of the Registrant, file no. 333-67403.
10.9 Employment Agreement with Richard J. Byrne. Incorporated by
reference to the corresponding exhibit to the registration
statement on Form S-4 of the Registrant, file no. 333-67403.
10.10 Credit Agreement, dated as of April 20, 1999, by and among
the Registrant, SCI, CIBC Oppenheimer Corp., Credit Suisse
First Boston Corporation and the other parties thereto (the
"Credit Agreement"). Incorporated by reference to exhibit
no. 10.1 to the Registrant's registration statement on Form
8-A filed on September 1, 1999.
10.11 SpectraSite Holdings, Inc. Stock Incentive Plan.
Incorporated by reference to exhibit no. 10.16 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.12 SpectraSite Holdings, Inc. Employee Stock Purchase Plan.
Incorporated by reference to exhibit no. 10.17 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.13 Agreement, dated September 15, 1998, by and between Robert
M. Long and the Registrant. Incorporated by reference to
exhibit no. 10.22 to the Registrant's registration statement
on Form S-4, file no. 333-67403.
10.14 Asset Purchase Agreement, dated as of August 14, 1998, by
and among Airadigm Communications, Inc. ("Airadigm") and
SCI. Incorporated by reference to exhibit no. 10.23 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.15 Form of Master Tower Attachment Lease Agreement by and
between Airadigm and SCI. Incorporated by reference to
exhibit no. 10.24 to the Registrant's registration statement
on Form S-4, file no. 333-67403.
10.16 Asset Purchase Agreement, dated as of August 20, 1998, by
and among Amica Wireless Phone Service, Inc. ("Amica") and
SCI. Incorporated by reference to exhibit no. 10.25 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.17 Form of Master Design Build Lease Agreement by and between
Amica and SCI. Incorporated by reference to exhibit no.
10.26 to the Registrant's registration statement on Form
S-4, file no. 333-67403.
</TABLE>
<PAGE> 197

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<C> <S>
10.18 Preferred Stock Purchase Agreement (Series C Preferred
Stock), dated as of February 10, 1999, by and among the
Registrant, the WCAS Purchasers, the Whitney Purchasers, the
CIBC Purchasers and the Additional Purchasers. Incorporated
by reference to exhibit no. 10.30 to the Registrant's
registration statement on Form S-4, file no. 333-67403.
10.19 First Amendment to Preferred Stock Purchase Agreement
(Series C Preferred Stock). Incorporated by reference to
exhibit no. 10.31 to the Registrant's registration statement
on Form S-4, file no. 333-67403.
10.20 Security & Subordination Agreement, dated as of April 20,
1999. Incorporated by reference to exhibit no. 10.32 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.21 Master Site Commitment Agreement, dated as of April 20,
1999. Incorporated by reference to exhibit no. 10.33 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.22 Master Site Lease Agreement, dated as of April 20, 1999.
Incorporated by reference to exhibit no. 10.34 to the
Registrant's registration statement on Form S-4, file no.
333-67403.
10.23 Employment Agreement with Calvin J. Payne. Incorporated by
reference to exhibit 10.1 to the Registrant's report on Form
8-K, dated September 2, 1999 and filed September 17, 1999.
10.24 Joinder Agreement to SpectraSite Restated Registration
Rights Agreement. Incorporated by reference to exhibit no.
10.36 to the Registrant's registration statement on Form
S-1, file no. 333-93873.
10.25 First Amendment to Credit Agreement, dated as of August 23,
1999. Incorporated by reference to exhibit 10.2 to the
Registrant's report on Form 8-K, dated September 2, 1999 and
filed September 17, 1999.
10.26 Second Amendment to Credit Agreement, dated as of December
22, 1999. Incorporated by reference to the corresponding
exhibit to the Registrant's Form 10-K for the year ended
December 31, 1999.
10.27 Third Amendment to Credit Agreement, dated as of February
14, 2000. Incorporated by reference to the corresponding
exhibit to the Registrant's Form 10-K for the year ended
December 31, 1999.
10.28 Fourth Amendment to Credit Agreement, dated as of March 9,
2000. Incorporated by reference to the corresponding exhibit
to the Registrant's registration statement on Form S-4, file
no. 333-35094.
*21.1 Subsidiaries of the Registrant.
**23.1 Consent of Dow, Lohnes & Albertson, PLLC (contained in
Exhibit 5.1).
*23.2 Consent of Ernst & Young LLP.
*23.3 Consent of PricewaterhouseCoopers LLP.
*23.4 Consent of Moss Adams LLP.
*23.5 Consent of Lamn, Krielow, Dytrych & Co. (formerly, Lamn,
Krielow, Dytrych & Darling).
*23.6 Consent of Shearer, Taylor & Co., P.A.
**24.1 Power of Attorney for Michael J. Price.
**24.2 Power of Attorney for Michael R. Stone.
</TABLE>

------------

* Previously filed.

** To be filed by amendment.