- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C

----------------Washington, D.C. 20549

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

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For Fiscal Year Ended December 31, 20002001

[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File 001-14195

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

AMERICAN TOWER CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 65-0723837
(State or other jurisdiction of (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or organization) Identification No.)

116 Huntington Avenue
Boston, Massachusetts 02116
(Address of principal executive offices and Zip Code)

(617) 375-7500
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

(Name of exchange on
(Title of Class) which registered)
---------------- --------------------
(Name of exchange on
(Title of Class) which registered)
---------------- -----------------
Class A Common Stock, $0.01 par value New York Stock Exchange

$0.01 par value

Securities registered pursuant to Section 12(g) of the Act:

(Title of Class)

None

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. [_]

The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant as of February 28, 2001March 25, 2002 was approximately
$3,212,206,760.$951,059,506. As of February 28, 2001, 180,165,054March 25, 2002, 185,018,963 shares of Class A Common Stock,
8,077,6358,001,769 shares of Class B Common Stock and 2,267,813 sharesShares of Class C Common
Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement (the "Definitive Proxy
Statement") to be filed with the Securities and Exchange Commission relative to
the Company's 20012002 Annual Meeting of Stockholders are incorporated by reference
into Part III of this Report.

TABLE OF CONTENTS

FORM 10-K ANNUAL REPORT FISCAL YEAR ENDED DECEMBER 31, 20002001

Page
----

PART I.
ITEM 1. Business............................................................................... 1Business............................................................................. 2
ITEM 2. Properties............................................................................. 22Properties........................................................................... 18
ITEM 3. Legal Proceedings...................................................................... 23Proceedings.................................................................... 19
ITEM 4. Submission of Matters to a Vote of Security Holders.................................... 23Holders.................................. 19

PART II.
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters.................. 24Matters................ 19
ITEM 6. Selected Financial Data................................................................ 26Data.............................................................. 20
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.. 28Operations 23
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk............................. 40Risk........................... 41
ITEM 8. Financial Statements and Supplementary Data............................................ 41Data.......................................... 43
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure... 41Disclosure. 43

PART III.
ITEM 10. Directors and Executive Officers of the Registrant..................................... 42Registrant................................... 44
ITEM 11. Executive Compensation................................................................. 43Compensation............................................................... 45
ITEM 12. Security Ownership of Certain Beneficial Owners and Management......................... 43Management....................... 45
ITEM 13. Certain Relationships and Related Transactions......................................... 43Transactions....................................... 45

PART IV.
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K....................... 448-K..................... 45

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-Kannual report contains forward-looking statements relating to our
goals, beliefs, plans or current expectations and other statements that are not
of historical facts. For example, when we use words such as "project,"
"believe," "anticipate," "plan," "expect," "estimate," "intend," "should,"
"would," "could" or "may," or other words that convey uncertainty of future
events or outcome, we are making forward-looking statements. We refer youThese
forward-looking statements may be found under the headings "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business," as well as in this annual report generally. They include, but are
not limited to, our statements regarding the caption entitled "Business--Factors That May Affect Future Results"following topics: (1) the
continued rise in Item
1the use and the number of Part I forsubscribers of wireless
communication services; (2) our belief that wireless carriers will need to add
more cell sites to meet that demand and its impact on our revenues; (3) our
belief that we can utilize our existing tower portfolio to give us continued
organic revenues and cash flows growth; (4) our ability to continue to access
availability under our credit facilities to fund our business plan and to
comply with the covenants contained in our credit facilities; (5) the impact of
the slowdown in capital expenditures by wireless carriers on our future
financial performance, long-term growth rates, liquidity and free cash flow
position; and (6) our estimate that our operations will become free cash flow
positive during 2003. Certain important factors that couldmay cause actual results to
differ materially from those indicated by our forward-looking statements,
made herein
and presented elsewhere by management. Such forward-lookingincluding those set forth under the caption "Business-Factors That May Affect
Future Results". Forward-looking statements represent management's current
expectations and are inherently uncertain. We do not undertake any obligation
to update forward-looking statements made by us.

PART I

ITEM 1. BUSINESS

OverviewOVERVIEW

We are a leading wireless and broadcast communications infrastructure
company operating in three business segments.

. Rental and management.company. Our primary business is rentingleasing antenna space on multi-tenant
communication towers to wireless and broadcast companies on multi-tenant communications towers.companies. We operate the
largest networkportfolio of wireless communications towers in North America and are
the largest independent operator of broadcast towers in North America, based on
number of towers. Our growth strategy
focusestower portfolio provides us with a substantial recurring
base of leasing revenues from our existing customers, the additional capacity
to add more antennae to these towers, and the network of towers capable of
addressing the needs of wireless service providers on both the acquisition and constructiona national basis.

To complement our core business of towers. We use our
own extensive towerleasing antennae space, we also provide a
full array of related services, including network development capabilities, which includedesign, radio frequency
engineering, site acquisition, zoning, tower construction, component parts,
antennae and line installation, maintenance and tower construction services, to construct our own build-
to-suit and other towers.monitoring. These
capabilities enable us to provide a full service solution to our customers'
tower infrastructure needs and generate related revenues that are additive to
our core leasing business. In addition, our service capabilities enable us to
respond cost-effectively to demand for new towers by giving us the flexibility
to construct and operate our own towers at costs that are generally lower than the cost of acquiring
towers.

. Network development services. Through ATC Integrated Services, we
provide the full-range of tower-related services necessary to establish,
develop and maintain wireless and broadcast tower networks. Theses
services include:

. radio frequency engineering consulting;
. site acquisition and network design;
. zoning and other governmental approvals;
. tower construction;
. antenna installation;
. tower component part sales; and
. site monitoring and maintenance.

We provide these services to a variety of customers and actively market
them as part of a turnkey solution to our existing and prospective
rental customers. We believe our full service capabilities enhance our
core rental and management business by:

. making us a more attractive choice for build-to-suit
opportunities;
. enabling us to construct towers at costs that are generally less
than the costs of acquiring towers.

This cost-efficiency enables
usOur goal is to reducecapitalize on the increasing use of wireless communication
services by actively marketing space available for leasing on our weighted average cost perexisting
towers, providing related tower therebyservices to our leasing customers, and
selectively developing or acquiring new towers that meet our return on
investment criteria. We target as customers financially sound wireless service
providers that are improving the overall return ofor extending their infrastructure.

We operate our business in three segments: rental and management
business;
. strengthening our customer relationships;management; network
development services; and . increasing recurring revenues and cash flow from our towers.

. Satellitesatellite and fiber network access services. Our
Verestar subsidiary is
a leading provider of integrated satelliteoperating revenues and fiber network access
services, based on the number of our teleport antennae and facilities.
We provide these services to telecommunications companies, Internet
service providers (ISPs), broadcasters and maritime customers, both
domestic and international. Verestar's teleports and other facilities
enable its customers to transmit Internet traffic, voice, video and
other data through the integration of satellites, high-speed fiber
connections and communications switches.

Our operating revenuesdivisional cash flows for the year ended December 31,
20002001 were $735.3
million.$1.1 billion and $300.5 million, respectively. Our three business
segments accounted for the following percentages of operating revenues and
divisional cash flows for the year ended December 31, 2000:

.Rental2001:

Operating Divisional
Business Segment Revenues Cash Flows*
---------------- --------- -----------

. Rental and management 39.2% 81.3%
. Network development services 40.0% 16.2%
. Satellite and fiber network access services 20.8% 2.5%

----------
* Divisional cash flows means (loss) income from operations before
depreciation and management--38.0%;
.Networkamortization and restructuring, development, services--42.0%; and
.Satellitecorporate general and fiber network access services--20.0%.

The relative contributionsadministrative expenses, plus interest income -
TV Azteca, net.

Our rental and management segment tower leasing activities generate the
highest profit margins. We believe those activities are likely to grow more
rapidly than our other segments because of eachincreased utilization of our
segments to our total operating
revenues in 2000 may not be indicative of future periods.existing towers. For more financial information about our business segments and
geographic information about our operating revenues and long-lived assets, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and note 1315 to our consolidated financial statements included in
this Annual Report on Form 10-K.

We have a diversified base of customers. For the year ended December 31,
2000, none of our customers accounted for more than 10% of our operating
revenues and our five largest customers accounted for approximately 23% of
those revenues.annual report.

STRATEGY

Our customer base includes customers from various sectors
within the wireless communications industry, including personal communication
services, cellular and paging.

Growth Strategy

Background. Our growth strategy is to capitalize on the rapid expansion
taking placeincreasing use of wireless
communication services. From December 1995 to December 2000, the number of
wireless phone subscribers increased from 33.8 million to 109.5 million and the

minutes of use of wireless phone services increased from 37.8 billion to 258.9
billion among major wireless carriers in the wireless communications industry. We believeUnited States. During the increase
in demand for wireless communications is attributable to asame
period, the number of factors,
including:

. technological advances in communications equipment;
. decreasing costscell sites increased from 22,700 to 104,300 sites.* We
expect that the continued growth of wireless services;
.subscribers and minutes of use of
wireless phone services will further require wireless carriers to add a
significant number of additional cell sites to maintain the developmentperformance of
new applications for wireless services;
.their networks in the increasing mobility of the U.S. population;
. the growing awareness of the benefits of mobile communications;
. the auctioning of new communications spectrum; and
. business and consumer preferences for higher quality wireless, Internet,
voice and data transmission.

Weareas in which they currently cover. In addition, we
believe that when data wireless services, such as email and internet access,
are deployed on a widespread basis they will require wireless carriers to
increase further the cell density of their existing networks, and require
geographical expansion of their network coverage. To meet this demand, we
believe wireless communications industry grows and becomes
more competitive, many carriers seekwill continue to preserve capital and speedoutsource their tower infrastructure
needs as a means of speeding access to their markets by:

. focusing on activities that contribute directly to subscriber growth;
. outsourcing infrastructure requirements such as owning,and preserving capital,
rather than constructing and operating their own towers and maintaining towers;their
own tower service and . co-locating transmission facilities, which is likely to accelerate
because of environmental and other regulatory restrictions, resulting in
the growing tendency of local authorities to slow the proliferationdevelopment capabilities.

We believe that our existing portfolio of towers, in their communities.

We believe we are well positionedour tower related services
and network development capabilities, and our management team, position us to
benefit from these trends in wireless
communications and to play an increasing role in addressing the
needs of the
wireless broadcastservice providers and Internet infrastructure industries. Our belief is
based on the following reasons:broadcasters. The key elements of our
strategy include:

. We operate the largest network of wireless communications towers in
North America and are the largest independent operator of broadcast
towers in North America, based on number of towers.MAXIMIZE UTILIZATION OF OUR TOWER CAPACITY. We believe that national and other large wireless service providers prefer to dealour existing
portfolio of towers provides us with a company, such as ours, that can meet the majority of their tower needs
within a particular market or region. In addition, we offer turnkey
solutionssignificant base to continue our
customers, including a broad range of network
development servicesorganic growth in our rental and related components and equipment.
. We are both an experienced builder and acquirer of towers, providing us
the flexibility to choose the most cost-effective means to expand our
network of towers.
. We are involved in a number of build-to-suit projects, which generally
reduce the financial risk of building new towers because these projects
have anchor tenants which are often located in markets where we would
like to expand our existing operations or in new markets where we would
like to establish a presence.
. Through our Verestar subsidiary, we are addressing the expanding market
for satellite and fiber network access services.

. We have a strong and experienced management team, ledbusiness by our Chairman
and Chief Executive Officer, Steven B. Dodge.

We are seeking to enhance our position as a leader in each of our business
segments by:

. expanding our leading national footprint of desirable communications
towers in most major markets in the United States, creating networks in
Mexico and Canada, and creating networks internationally to serve
attractive foreign markets that we do not currently serve;
. increasing the profitability of our tower operations by reducing average
cost per tower through construction and attractive acquisitions,
reducing tower operating expenses and actively marketing unusedleasing additional
antennae space on these towers. Organic same tower revenues and cash flows
growth in our towers;
. serving profitably selected infrastructure needs of our customers;rental and . expanding Verestar as a leading provider of satellite and fiber network
access servicesmanagement segment for telecommunications companies, ISPs, broadcasters and
maritime customers.

Internal growth through sales, service and capacity utilization. We believe
that a substantial opportunity for profitable growth exists by increasing the utilization of our existing towers and8,751 towers that we
may build or acquire inowned both at the future. Becausebeginning of the costsfourth quarter 2000 and at the beginning
of operating a site are largely fixed,
increasing tower utilization significantly improves site operating margins.
Manythe fourth quarter 2001 was 20% and 26%, respectively. We anticipate
continuing to grow our revenues and cash flows because many of our towers
have significant capacity available for additional antenna space rental that
we believe can be utilizedutilize at low incremental cost.costs to us. Because the costs of
operating a tower are largely fixed, increasing utilization significantly
improves tower operating margins. We intend towill continue to use our targeted sales
and marketing techniques to increase utilization of, and investment return
on, our existing towers.

. LEVERAGE OUR EXTENSIVE TOWER SERVICE CAPABILITIES. We intend to use our
extensive service capabilities to generate related revenues that are
additive to our core leasing business and to minimize the cost of any new
tower sites we may add based on our return on investment criteria. Tenants
who lease antenna space on our towers need a variety of additional products
and services, including network design, radio frequency engineering, site
acquisition, zoning, tower construction, component parts, antennae and line
installation, maintenance and tower monitoring. Tenants often outsource some
or all of these services to third parties, including us. We believe that the key to the success of
this strategy lies in our
ability to developoffer a full array of products and consistently deliver a high
level of customer service,services and our preexisting
relationship with the tenants on our towers position us well to provide
these products and services and to be widely recognizedcapture more incremental revenues.

We also intend to take advantage of our extensive experience and
capabilities as a companydeveloper of new towers when responding to demand by
wireless carriers for new towers. We can construct and operate towers at
costs to us that makes
realistic commitmentsare generally less than the cost related to acquiring
towers. This cost-efficiency enables us to reduce the average cost to own
and then delivers on them.operate our towers. As a result, we plan to emphasize selective new
tower development for the foreseeable future in responding to demand by
wireless carriers.

. CONTINUE OUR FOCUS ON CUSTOMER SERVICE. Since speed to market and reliable
network performance are critical components to the success of wireless
service providers, our ability to assist our customers in meeting thesetheir
goals will ultimately define our marketing success and capacity
utilization. We target as customers wireless service providerssuccess. To that are
expanding or improving their existing network infrastructure, as well as those
deploying new technologies.

We alsoend, we intend to continue
actively marketingto focus on our customer service by, for example, reducing cycle time for
key functions, such as lease processing and sellingantennae and line installations.

. BUILD ON STRONG RELATIONSHIP WITH MAJOR WIRELESS CARRIERS. Our
understanding of the network needs of our network
developmentwireless carrier customers and our
ability to convey effectively how we can satisfy those needs is key

- --------
* Subscriber and use information includes only cellular, personal
communication services, and satelliteenhanced specialized mobile radio wireless
services. The term cell site above refers to the number of antennae and
fiberrelated equipment in commercial operation, not the number of towers on which
that equipment is attached.

to our efforts to add new antennae leases, cross-sell our services and win
desirable new tower development projects. We are building on our strong
relationship with our customers to gain more familiarity with their evolving
network access services as
related sourcesplans so we can identify opportunities where our nationwide
portfolio of revenue from those earned throughtowers, extensive service offerings and seasoned construction
capabilities can be used to satisfy their needs. We believe that we are well
positioned to be a preferred partner to major wireless carriers in leasing
tower space and new tower development projects because of our rentalproven
operating experience and management
business.the national scope of our tower portfolio and
services.

. EMPLOY SELECTIVE CRITERIA FOR NEW TOWER CONSTRUCTION AND ACQUISITIONS. We
believe that the unused capacity of our existing tower portfolio is capable
of addressing the current needs of many wireless service providers. Because
of this capacity and our desire to increase the near term returns on our
capital, we have adopted more selective criteria for new tower development
and acquisitions. We expect that a significant partthe application of these new criteria will
increase our growth may consistreturn on investments in new towers we build or acquire.

. ACTIVELY MANAGE OUR TOWER PORTFOLIO. We plan to pursue exchanges and sales
of
selling services and components to new customers on our existing towers or tower clusters with other tower operators and other entities.
Our goal is to enhance operating efficiencies by either acquiring towers that we may construct on a build-to-suit or other basis.

Growth by build-to-suit/construction. We believe we can achieve attractive
investment returns for our company by constructing new tower clusters:

. in
and around markets in which we already have a presence;
. along major highways; and
. in targeted new markets, particularly markets that have not been
significantly built out by carriers or other communications site
companies.

We often seek to work with one or more anchor tenants when we construct
towers. When we do so, we develop an overall master plan for a particular
network by locating new sites in areas identified by our customers as optimal
for their network expansion requirements. We generally secure commitments for
leasing from the customer prior to commencing construction, thereby reducing
the risks associated with the investment.

In some cases, however, we may invest in the zoning and permitting of sites,
and even the construction of tower build-outs,regions where we have no anchor tenant.insufficient coverage or disposing or exchanging
towers in areas where we do not have operating economies of scale. If we are
successful in disposing of certain tower assets, we may redeploy proceeds
received in more productive tower assets.

OPERATIONAL INITIATIVES

In the latter half of 2001, the major wireless carriers reduced their
planned capital expenditures for geographic network expansion. In the near
term, we expect wireless carriers to make capital expenditures primarily to
increase the density of their current network coverage and improve the quality
of service to their existing subscribers, while selectively investing to expand
network coverage. We do this when, based on radio frequency engineering studies, our market
knowledgebelieve that the increasing minutes of use of wireless
phone service and our awarenessnumber of our customers' build-out plans,wireless phone subscribers will continue to require
wireless carriers to add a significant number of additional cell sites to
maintain the performance of their networks in the areas which they currently
cover.

Because we believe demand will exist inthat our existing tower portfolio has the near term.

We intendscope and
available capacity to placeaddress a strong emphasissignificant portion of these needs, we have
lowered our planned capital expenditures for 2002 on new tower development and
acquisitions. Our 2002 capital budget provides for total expenditures of
approximately $200.0 million to $225.0 million, which includes towers to be
built under existing build-to-suit agreements, compared to total capital
expenditures of approximately $568.0 million in 2001. In contrast to 2001,
during which we built approximately 1,300 towers, including five broadcast
towers, our 2002 plans call for the foreseeable future because we believe that this can produce relatively
attractive initial returns.construction of between 400 and 500 towers,
including nine broadcast towers. In addition, we can design and build towers to
specifications that assure ample future capacity and minimize the needhave adopted more selective
criteria for
future capital expenditures. We also intend to pursue new tower constructiondevelopment. We will not undertake new tower development
unless the project is likely to service the demand for digital television and for tower space for radio
antennae displaced by digital television requirements.

Growth by acquisitions. We have achieved a leading industry position through
acquisitions and construction. We intend to continue to pursue strategic
mergers and acquisitions with independent tower operators, consolidators and
wireless service providers. Our acquisition strategy is designed to:

. achieve enhanced operating efficiencies;
. take advantage of divestiture opportunities presented by wireless
service providers;
. broaden and strengthenmeet our penetration of major markets;
. facilitate entry into new geographic markets in the United States and
abroad; and
. complement our construction program.

Among the potential acquisitions are tower networks still owned by major
wireless service providers. We have entered into these types of transactions
with ALLTEL, AirTouch and AT&T, as described elsewhere in this report. These
transactions are usually substantial, involving several thousand towers and
purchase prices in the hundreds of millions of dollars. In addition, they often
entail build-to-suit contracts involving thousands of towers.

We also intend to pursue,heightened near term return on
a selective basis, the acquisition of companies
to enhance our satellite and fiber network access business.

Products and Servicesinvestment criteria.

PRODUCTS AND SERVICES

We offer our products and services through three business segments:

. Rental and management;

. Network development services; and

. Satellite and fiber network access services provided by Verestar.

Rental and Management Segmentservices.

RENTAL AND MANAGEMENT

Leasing of antennae sites.Antennae Sites. Our primary business is renting antenna space to
wireless and broadcast companies on multi-tenant communications towers. We
operate the largest network of wireless communications towers in North America
and are the largest independent operator of broadcast towers in North America,
based on number of towers. Assuming the consummation of our pending
transactions, we operate a tower network of approximately 13,600 multi-user14,500 multi- user sites in the United
States, CanadaMexico and Mexico,Brazil, including more than 300 broadcast tower sites.
Approximately 12,60013,600 of these towers are owned or leased sites and
approximately 1,000900 are managed sites or lease/sublease sites under which we hold
a position as lessee that is co-terminousco-terminus with a related sublease. Our networks
in the United States Canada and Mexico are national in scope. Our U.S. network spans
49 states and the District of Columbia, with
tower clustersColumbia. In addition, 83% of our U.S. network
provides coverage in 43 of the 50 largest U.S. metropolitan statistical areas.top 100 markets or core areas such as high traffic
interstate corridors. Our
developing Mexican network includes more than 1,100 sites in
highly populated areas, including Mexico City, Monterrey, Guadalajara and
Acapulco. We plan for our Canadian
operations to include sitesOur Brazilian network is located in major metropolitan areas.the high-growth southern part of
Brazil, as well as in certain northern and central-western cities that have a
total population of approximately 40.0 million.

We lease antenna space on our towers to tenants in a diverse range of
wireless communications and broadcast industries. Wireless industries we serve
include: personal communications services, cellular, enhanced specialized
mobile radio, specialized mobile radio, paging, fixed microwave and fixed
wireless. 4
Our wirelessmajor customers include:

.include ALLTEL, . Winstar . AT&T Wireless .Services, Cingular
. Mobile Wireless, Services
Wireless .Nextel, Sprint PCS, . Nextel
. PowerTel . VoiceStream . Teligent
. Verizon* . Western Wireless

Most major radioVerizon and television broadcasters rent antenna space on our
broadcast towers, including:

. ABC . CBS . Clear Channel
. Cox . Fox . Infinity
. NBC . Paxson . Paramount
. Sinclair . Telemedia . Tribune
. TV Azteca . Univision

Lease Terms. Our leases, like most of those in the industry, generally vary
depending upon the region and the industry user. Television and radio
broadcasters prefer long-term leases while wireless communications providers
favor somewhat shorter lease terms. In both cases, the leases often have
multiple renewals at the option of the tenant.

Tenants tend to renew their leases because of the complications associated
with moving antennae. For example, in the case of cellular, personal
communications services and other wireless users, moving one antennae might
necessitate moving several others because of the interlocking grid-like nature
of wireless systems. Moreover, a move by a television or radio broadcaster
would necessitate FCC approval and could entail major dislocations and the
uncertainty associated with building antennae in new coverage areas. In
addition, the increasing difficulty of obtaining local zoning approvals, the
increasing environmental concerns of communities, and the restrictions imposed
by the Federal Aviation Administration and FCC tend to reduce the number of
choices available to a tower user.

Most of our leases have escalator provisions. These automatic increases are
based on specified estimated cost measures or on increases in the consumer
price index.

Annual rental payments vary considerably depending upon:

. size of the transmission line and the number and weight of the antennae
on the tower;
. existing capacity of the tower;
. the placement of the customer's antenna on the tower;
. the location and height of the tower on which antenna space is rented;
and
. the competitive environment.

Because of the factors listed above, we believe that it is not possible to
state with any degree of precision the vacancy or unused capacity of a
"typical" tower, group of related towers or all of our towers.

Build-to-Suit Projects. Historically, cellular and other wireless service
providers have constructed and owned a majority of the towers for their
antennae needs, rather than leasing space on towers from a third party.
Beginning a few years ago, wireless service providers expressed a growing
interest in having independent companies own and operate the towers for their
antennae. We believe this trend is the result of a need among such providers to
preserve capital and to speed access to their markets by focusing on activities
that contribute to subscriber growth and by outsourcing infrastructure
requirements. This trend has resulted in our entering into
- --------
* Includes the former operations of AirTouch, Bell Atlantic Mobile and GTE
Mobilenet.

agreements with a number of wireless carriers for build-to-suit projects. In
build-to-suit projects, we develop and construct a tower network for a major
anchor tenant, after the anchor tenant signs a lease agreement with us. Because
we own the constructed towers, we are able to rent space on them to other
tenants, as well as to the anchor tenant.

These build-to-suit projects constitute a major part of our rental business
and have the following benefits for us:

. build-to-suit projects generally reduce the financial risk of
constructing new towers because they have a pre-established anchor
tenant;
. build-to-suit projects are often located in markets where we would like
to expand our existing operations or in a new market where we would like
to establish a presence; and
. by utilizing our experienced in-house network development services,
build-to-suit projects enable us to construct towers at costs that are
generally less than the costs of acquiring towers. This cost-efficiency
reduces our weighted average cost per tower, thereby improving the
overall return of our rental and management business.

We are currently engaged in build-to-suit projects for the following
companies:

. ALLTEL . AT&T Wireless . Cingular Wireless
. Nextel . Omnipoint . Verizon

We continue to seek additional major build-to-suit projects, although we may
not enter into any of them.

Communications site management business. We are a leading manager of
communications sites. These sites include rooftop sites and ground towers. A
central aspect of this business is the development by us of new sources of
revenue for building owners by effectively managing all aspects of rooftop and
ground tower telecommunications, including:

. two-way radio systems . microwave . fiber optics
. wireless cable . paging . rooftop
. personal . cellular infrastructure
communications construction
services services

. marketing antennae sites on the tower;
. reviewing existing and negotiating future license agreements with tenant
users;
. managing and enforcing those agreements;
. supervising installation of equipment by tenants to ensure non-
interference with other users;
. supervising repairs and maintenance to the towers; and
. site billing, collections and contract administration.

In addition, we handle all service related calls and questions regarding the
site so that the building management team or owner is relieved of this
responsibility. For such services, we are entitled to a percentage of lease
payments, which is higher for new tenants than for existing tenants. Upon
termination of a contract, unless it is because of our default, we are
generally entitled to our percentage with respect to then existing tenants so
long as they remain tenants.

Network Development Services

. radio frequency . tower construction . tower component part
engineering consulting . network design sales
. site acquisition . antennae . tower monitoring
. zoning and other installation
regulatory
approvals

We provide network development services to most of the major wireless service
providers and have constructed or are constructing towers on a build-to-suit
basis for a variety of wireless and broadcast companies. We are increasingly
applying our site acquisition and construction capabilities for our own account
as we engage in more built-to-suit and other proprietary construction projects.

Our ability to provide this full range of services is critical to our business
model because these services:

. enhance our overall returns as our costs for constructing towers are
generally lower than those we acquire;
. make us a more attractive choice for built-to-suit projects since we
believe wireless carriers prefer to work with a national company, rather
than contract with multiple vendors, to address their tower-related
needs;
. strengthens our existing customer relationships by increasing our
knowledge of our customers network needs, which we believe leads to
greater customer satisfaction and the opportunity to offer our customers
other services; and
. increase recurring revenues and cash flow from our towers. For example,
throughout a customer's lease with us, we often perform antenna
installation-related services and radio frequency engineering services
as our customer's needs change and as their network develops, and as
part of routine maintenance.

Site acquisition services. We engage in site acquisition services for our own
account, in connection with build-to-suit projects and other proprietary
construction, as well as for third parties. We provided site acquisition
services for some of the first personal communications services projects in the
United States, including the personal communication services network that at
the time of launch had the largest number of sites in the United States. We
provide these services nationally through our field offices in several major
cities, including Atlanta, Chicago, Charlotte, Cleveland, Jacksonville, New
Orleans and Seattle. Our site acquisition services include:

. site identification . geographic analysis . custom mapping
. market analysis . zoning review . zoning and other
governmental
approval

The site selection and acquisition process begins with the network design. We
identify highway corridors, population centers and topographical features
within the carrier's existing or proposed network. We then conduct drive tests
in the area to monitor all personal communication services, cellular and
enhanced specialized mobile radio frequencies to locate any systems then
operating in that area. This enables us to identify where any holes in coverage
may exist. Based on this data, we and the carrier develop a "search ring,"
generally of one-mile radius, within which our site acquisition department
identifies land available either for purchase or lease. Our personnel select
the most suitable sites, based on demographics, traffic patterns and signal
characteristics. If the customer approves the site, we then submit it to the
local zoning/planning board for approval. If we receive approval, our customer
typically engages us to supervise the construction of the towers or to
construct the towers ourselves.

We have performed site acquisition services for a wide range of customers,
including:

. ALLTEL . AT&T Wireless . Metricom
. Cingular Wireless . MobileComm . Sprint PCS
. PowerTel . SkyTel . Western Wireless
. Triton PCS . Verizon

We will continue to provide site acquisition services to those customers
desiring only these services. However, we also intend to continue to actively
market these services as part of a turnkey solution, including network design,
tower construction, tower site leasing, equipment installation and maintenance,
that we offer prospective rental customers. We believe that wireless service
providers will select companies that demonstrate the ability to successfully
locate, acquire and permit sites and finance and construct towers in a timely
manner for their built-to-suit projects.

Engineering Consulting Services and Network Design. Through Galaxy
Engineering Services, we provide a number of engineering services that enable
our customers to plan new tower networks, modify existing tower networks and
improve the quality of their networks. These engineering services include:

. wireless broadband design and implementation;
. wireless data network design and implementation;
. radio frequency network design for all mobile and fixed wireless
technologies;
. drive testing, which consists of measuring the signal strength of an
antenna from multiple points in a moving vehicle;
. performance engineering, which consists of adjusting variables in a
network to establish optimum performance levels;
. technical planning for spectrum license holders;
. upgrading networks to the next generation of broadcast technology, which
is often referred to as "3G" or third-generation technologies;
. transport engineering, which consists of improving transmission media
and interconnections for wireless service providers; and
. interconnection and microwave services

Tower Construction and Antennae Installation. We are one of the leading
builders of wireless and broadcast towers. Our Specialty Constructors unit has
over 30 years of wireless tower construction and equipment installation
experience. We also own and operate Kline Iron & Steel, an experienced builder
of broadcast towers. The following table shows the approximate number of towers
that we constructed during 1999 and 2000, and our projection for 2001 tower
construction:

Number of
Towers
Year Constructed
---- -----------

1999......................................................... 1,000
2000......................................................... 1,600
2001--Projection............................................. 2,000

We construct towers both for our own account in connection with build-to-suit
projects and other proprietary construction projects, as well as for third
parties. For third party construction, we bill customers on a fixed price or
time and materials basis, and we may negotiate fees on individual sites or for
groups of sites.

The cost of construction of a tower varies both by site location, which will
determine, among other things, the required height of the tower, and type of
tower. Non-broadcast towers, whether on a rooftop or the ground, generally cost
between approximately $185,000 and $225,000. Broadcast towers are generally
much taller and are built to bear a greater load. The costs per broadcast
tower are significantly greater than non-broadcast towers and vary based on
size, location and terrain.

As part of our construction service and as a separate service offering, we
provide antennae installation services. These services use not only our
construction-related skills, but also our technical expertise to ensure that
new installations do not cause interference with other tenants.Voicestream.

The number of antennae that our towers can accommodate varies depending on
whether the tower is broadcast or non-broadcast, and on the tower's location,
height, and the loaded capacity at certain wind speeds. An antenna's height on
a tower and the tower's location determine the line-of-sight of the antenna
with the horizon and, consequently, the distance a signal can be transmitted.
Some of our customers, including paging companies and specialized mobile radio
providers in rural areas, need higher elevations for broader coverage. Other
customers, such as personal communications services, enhanced specialized
mobile radio and cellular companies in metropolitan areas, usually do not need
to place their equipment at the highest tower point. In most cases,We believe that many well
engineered and well located towers built to serve the specifications of an
initial anchor tenant in the wireless communications sector will attract three
or more additional wireless tenants over time, thereby increasing revenue and enhancing
margins.

Lease Terms. Our leases, like most of those in the industry, generally vary
depending upon the region and the industry user. Television and radio
broadcasters prefer long-term leases, while wireless communications providers
favor leases in the range of five to ten years in duration. In both cases, the
leases often have multiple renewal terms at the option of the tenant.

Tenants tend to renew their leases because of the complications and costs
associated with moving antennae. For example, in the case of cellular, personal
communications services and other wireless users, moving one antennae might
necessitate moving or adjusting several others because of the interlocking
grid-like nature of wireless systems. Moreover, a move by a television or radio
broadcaster would necessitate FCC approval and could entail major dislocations
and the uncertainty associated with building antennae in new coverage areas. In
addition, the increasing difficulty of obtaining local zoning approvals, the
increasing environmental concerns of communities, and the restrictions imposed
by the Federal Aviation Administration and FCC tend to reduce the number of
choices available to a tower user.

Most of our leases have escalator provisions. These automatic increases are
most frequently based on a fixed amount. They are also sometimes based on
increases in the consumer price index.

Annual rental payments vary considerably depending upon:

. size of the transmission line and the number and weight of the antennae
on the tower;

. geographic location of the tower;

. existing capacity of the tower;

. the placement of the customer's antenna on the tower;

. frequency spectrum;

. the location and height of the tower on which antenna space is rented;
and

. the competitive environment.

Tower Development. Historically, cellular and other wireless service
providers had constructed and owned a majority of the towers for their antennae
needs, rather than leasing space on towers from a third party. Beginning a few
years ago, wireless service providers expressed a growing interest in having
independent companies own and operate the towers for their antennae. This trend
resulted in our entering into agreements with a number of wireless carriers to
construct and subsequently lease space on towers in key areas identified as
optimal for their network expansion requirements. In most cases, because we own
the constructed towers, we are able to lease space on them to other tenants, as
well as to the anchor tenant.

Communications Site Management Business. We are a leading manager of
communications sites. A central aspect of this business is the development by
us of new sources of revenue for building owners by effectively managing all
aspects of rooftop and ground tower telecommunications, including rooftop
infrastructure construction services.

Our management contracts for these sites are generally for a period of five
years and contain automatic five-year renewal periods, subject to termination
by either party before renewal. Under these contracts, we are responsible for a
wide range of activities, including: marketing antennae sites on the tower,
reviewing existing and negotiating future license agreements with tenant users,
managing and enforcing those agreements, supervising repairs and maintenance
and installation of equipment by tenants and site billing, collections and
contract administration. For such services, we are entitled to a percentage of
lease payments, which is higher for new tenants than for existing tenants.

NETWORK DEVELOPMENT SERVICES

Through ATC Integrated Services, we provide comprehensive network
development services for both wireless service providers and broadcasters. We
offer full turnkey network development solutions to our customers, including
network design, radio frequency engineering, site acquisition, zoning, tower
construction, component parts, antennae and line installation, maintenance and
tower monitoring. We provide network development services to most of the major
wireless service providers. and have constructed or are constructing towers for
a variety of wireless and broadcast companies. We also construct towers for our
rental and management segment.

Our ability to provide this full range of services is an important component
in our business model because these services:

. enhance our overall returns as our costs for constructing towers for our
rental and management segment are generally lower than those we acquire;

. strengthen our existing customer relationships by increasing our
knowledge of their network needs, which we believe leads to greater
customer satisfaction and the opportunity to offer them other services;

. increase recurring revenues and cash flow from our towers; and

. make us a more attractive choice for turnkey projects since we believe
wireless carriers prefer to work with a national company, rather than
contract with multiple vendors, to address their tower-related needs.

Construction and Antennae and Line Installation. We are one of the leading
builders of wireless and broadcast towers. Our ATC Tower Services unit has over
30 years of wireless tower construction and equipment installation experience.
We also own and operate Kline Iron & Steel, an experienced steel fabricator and
builder of broadcast towers. The following table shows the approximate number
of towers that we constructed, utilizing various areas of expertise within our
network development services segment, for our own account during 1999, 2000,
and 2001 and our projection for 2002:

Number of Towers
Year Constructed
---- ----------------

1999............................ 1,000
2000............................ 1,600
2001............................ 1,300
2002--Projection................ 400-500

For third party construction, we bill customers on a fixed price or time and
materials basis, and we may negotiate fees on individual sites or for groups of
sites. The cost of construction of a tower varies both by site location and
terrain, tower type and height, and any governmental or environmental
requirements. Non-broadcast towers, whether on a rooftop or the ground,
generally cost between $200,000 and $250,000. Broadcast towers are generally
much taller and are built to bear a greater load. The costs of broadcast towers
are significantly greater than non-broadcast towers and vary considerably based
on size, location and terrain.

As part of our construction services and as a separate service offering, we
provide antennae and line installation and maintenance services. These services
use not only our construction-related skills, but also our technical expertise
to ensure that new installations do not cause interference with other tenants.
We believe that in 2002 our antennae and line installation services and
maintenance capabilities will provide us with a significant opportunity to
capture incremental revenue on existing and newly built sites, as carriers
shift their focus from geographic network expansion to maximizing their
existing network capacity.

Kline Iron & Steel also performs non-tower related steel fabrication,
including its current work on a large office project pursuant to a multi-year
agreement.

Wireless Components. Through MTS Wireless Components, weWe sell tower related parts and equipment to wireless
and broadcast companies, including:

.including antennae fasteners and other mounting
components;
.components, waveguide bridge products;
.products, square support rail;
.rail, tower lighting
systems;
.systems, and tower safety products; and
. other hardware products. We also manufacture wireless components for
several large wireless communications equipment vendors who market these
products under their own brand names.

SatelliteEngineering Consulting Services and Fiber Network Access ServicesDesign. We provide a number of
engineering services that enable our customers to plan new wireless networks,
modify existing tower networks, and improve the quality of their networks.
These engineering services include design of wireless broadband and data and
radio frequency networks, drive testing, performance engineering, and wireless
broadband and data network design and implementation, upgrading networks to the
next generation of broadcast technology, which is often referred to as "3G" or
third-generation technologies, transport engineering, and interconnection and
microwave services.

Site Acquisition and Zoning Services. We engage in site acquisition
services for our own account, in connection with tower development projects and
other proprietary construction, as well as for third parties. The site
selection and acquisition process begins with the network design. We identify
highway corridors, population centers and topographical features within the
carrier's existing or proposed network. We then select the most suitable sites,
based on demographics, traffic patterns and signal characteristics. Upon
customer approval of the site, we typically provide zoning related services,
working with the local zoning/planning board to obtain the necessary approval.
If we receive approval, our customer typically engages us to supervise the
construction of the towers or to construct the towers ourselves.

SATELLITE AND FIBER NETWORK ACCESS SERVICES

Our Verestar subsidiary is a leading provider of integrated satellite and
fiber network access services for telecommunications companies, ISPs,internet
service providers (ISP), broadcasters, and maritime customers, and governmental
organizations, both domestic and international. We own and operate more than
175 satellite antennae at ten satellite network access points, which we refer
to as SNAPs, in Arizona,Florida, California, Massachusetts, New Jersey, Texas,
Washington state, and the Washington, D.C. area and one in Switzerland.
Our acquisition in 2001 of the satellite business assets of Swisscom provides
us with strategically located antennae in Switzerland and direct fiber links to
New York and London. Our
satellite network access points in the U.S. and in Switzerland enable us to
access the majority of commercial satellites around the world. Our customers
include:

. ABC . British Telecom . Cableinclude many of the major U.S. and Wireless
. CBS . CNN . Deutsche Telekom
. Fox Entertainment . MCI Worldcom . TCI
. Telefonica . UUNET

9
foreign broadcasters. Our maritime customers
include a number of major cruise lines.

Verestar transmits Internet traffic and voice, video and other data through
the integration of the following services:

. Teleport Services. Verestar operates 11 SNAPs.ten satellite network access
points. These SNAPs consist of over 175 satellite antennae, transmitting
and receiving electronics and connectivity to major terrestrial fiber
routes and the Internet. These SNAPs are capable of uplinking and
downlinking data, voice and video (both analog and digital) to
satellites in the Atlantic, Pacific and Indian Ocean regions. Some of
our SNAPs also provide telemetry, tracking and control and communication
systems for the launch and maintenance of satellites in orbit. Each SNAP
is operated 24 hours a day, 365 days a year.

. Satellite Services. Verestar is one of the largest independent lessees
of satellite capacity for the transmission of Internet and other data
around the world. Verestar sells capacity through contracts generally
with a minimum term of one year and also offers spot market capacity on
an as-
neededas-needed basis to news networks in the United States.

. Network Access Services. Verestar offers customers connections to their
choice of leading Internet services and high-speed fiber backbone
providers. Verestar also offersCertain services that allow customers to select the fastest
available Internet connection on a per packet basis. Verestar also
offers long-haul fiber connectivity between select markets in the United
States and internationally.

. Switching Services. Verestar operates carrier-class voice switches in
New York, Miami, and Los Angeles, which enable international telephone
companies to connect their voice traffic to the U.S. public telephone
network and to exchange their traffic with other international long
distance carriers. These switches are connected to satellite and fiber
networks, which provide customers with end-to-end solutions from the
call origination to termination on the U.S. telephone network.

Significant AgreementsDuring 2001, Verestar refocused its business away from second and third tier
telecom carriers to global telecom providers, governmental organizations and
broadcast companies. In addition, during the later stages of 2001 and into
2002, Verestar is focusing on implementing cost reduction measures aimed at
reducing infrastructure costs, consolidating transponder space and
renegotiating certain transponder agreements. These initiatives are designed to
improve Verestar's operating margins and position Verestar for structural
independence.

SIGNIFICANT AGREEMENTS

We are a party to three agreements that we consider to be material to our
business:

ALLTEL transaction. In December 2000, we entered into an agreement to acquire
the rights fromwith
ALLTEL to sublease up to 2,193 communications towers through a 15-year sublease
agreement. Under the agreement we will sublease these towers for
consideration of up to $657.9 million in cash. As of December 31, 2001, we had
subleased 1,748 towers and paid ALLTEL also granted us$524.4 million in cash. During the optionfirst
quarter of 2002, we closed on 28 towers and paid ALLTEL $8.4 million in cash.
As permitted by the agreement, we have decided not to acquiresublease the rights, through sublease agreements, to approximately 200
additionalremaining
417 towers. The ALLTEL towers to be selected by us on a site-by-site basis for cash
consideration of up to $300,000 per tower. We expect the transaction to close
incrementally beginningare located primarily in the second quarterSoutheast and, to a
lesser extent, in the Midwest region of 2001.

Under our agreement with ALLTEL, wethe United States.

We are entitled to all income generated from leasing space on the towers and
are responsible for all expenses, including ground rent. ALLTEL has reserved
space on the towers for its antennae, for which it will paypays a site maintenance fee
of $1,200 per tower per month, escalating at a rate equal to the lower of 5%
per annum or the increase in Consumer Price Index plus 4% per annum.

Under our agreement with ALLTEL, we will8

We have thean option to purchase the 1,776 towers subleased from ALLTEL at the
end of the 15-year sublease term. For approximately 1,900 of the
towers, theThe purchase price per tower will, at
ALLTEL's option, be $27,500 plus interest accrued at 3% per annum. At ALLTEL's option, this price will beannum, payable by us in
cash, or
with 769 shares of our Class A common stock.

For approximately 300 other towers
and any of the 200 additional towers that we sublease, the per tower purchase
arrangement at the end of the sublease term is subject to adjustment based on
the cash consideration paid by us for the sublease and our Class A common stock
price on the date we agree to the tower sublease terms.

As part of the transaction, we entered into ana five-year exclusive
build-to-suit agreement with ALLTEL, that is expected to result ingives us the construction of
approximately 500 sites.

AT&T transaction. In September 1999, we agreed to purchase 1,942 towers from
AT&T. As of December 31, 2000, we had purchased 1,929 towers. The purchase
price for these towers was approximately $258.1 million in cash. We expect to
close on any remaining towers in the first and second quarters of 2001. These
towers are located throughout the United States and were constructed by AT&T
for its microwave operations.

AT&T entered into a master lease agreement covering 468 of these towers on
which it currently conducts microwave operations. The lease has an initial term
of ten years and AT&T has five five-year renewal options. The annual base rent
payment is approximately $1.0 million, payable in January of each lease year.
The master lease agreements provides that we will adjust,right but not below the base rent, the rent payable by AT&T based on AT&T's actual usage of the towers.

As part of this transaction, we entered into a build-to-suit agreement with
AT&T Wireless Services. This agreement requires AT&T Wireless Servicesobligation to
present 1,200 sites nationwide from which we will select and be required to
build 1,000 towers.develop towers for ALLTEL. We also entered into a separate master lease with
AT&T Wireless
ServicesALLTEL for the build-to-suit towers. The initial term is ten years, and AT&T
Wireless Servicesexcept for
our sites that were not constructed pursuant to the build-to-suit agreement,
for which it is for five years. ALLTEL has three five-year renewal options. The
rent for lease supplements entered into pursuant to the master lease agreement
in the initial
year is $1,350$1,200 per tower per month, escalating at a rate equal to the lower of 5%
per antenna site, increasing annually by $50.00annum or the increase in Consumer Price Index plus 4% per year for lease supplements entered into in subsequent years. All rents will be
subject to 4% annual increases.annum.

AirTouch transaction. InPursuant to an August 1999 agreement, we agreed to leaseleased on a
long-term basis up to 2,100(99 years) 1,862 towers located throughout the United States from AirTouch Communications, which is
now a part of Verizon Wireless. Our cumulative lease
payments, based on 2,100 towers, aggregate $800.0We paid AirTouch $709.4 million in cash payable in
part upon each closing and
five-yearissued warrants to purchasefor approximately 3.0 million shares of our Class A common
stock at $22.00 per share. As of December 31, 2000, we had
closed on 1,801 towers, paid AirTouch $686.1 million in cash and issued
warrants for 3.0 million shares of our Class A common stock. We expect that we
will not close on approximately 150 of the towers included in the initial
agreement. We expect the remaining closings to occur in the first and second
quarters of 2001. These towers are located in all of AirTouch's major markets, other than
Los Angeles and San Diego, including Albuquerque, Atlanta, Cleveland, Denver,
Detroit, Minneapolis, Omaha, Phoenix, Portland, Sacramento and Seattle.

Under our agreement with AirTouch, weWe are entitled to all income generated from leasing space on the towers and
are responsible for all tower expenses, including ground rent. AirTouch has
reserved space on the towers for its antennae, for which it has agreed to pay
us a site maintenance charge equal to $1,500 per month for each non-microwave
reserved space and $385 per month for each microwave reserved space, with 3%
annual increases.

We have also entered into an exclusive three-year build-to-suit agreement
with AirTouch.AirTouch expiring in 2002. Under that agreement, we have the right to
construct and own all of AirTouch's towers in all markets covered by the
agreement. AirTouch entered into a separate master lease covering all towers to
be constructed pursuant to the build-to-suit agreement. AirTouch will lease
space for a period of ten years and has the option to extend each lease for
five five-year periods. The rent is $1,500 per month for each non-microwave
antenna site and $385 per month for each microwave antenna site, with 3% annual
increases.

We expect this build-to-
suitAT&T transaction. Pursuant to a September 1999 agreement, will result in our constructing 400 to 500 towers.

Year 2000 Transactions

Completed transactions in 2000

During 2000, we consummated more than 60 transactions involving the
acquisition of approximately 4,600 communications sites and related businesses
and several satellite and fiber network access services and related businessespurchased
1,931 towers from AT&T for an aggregate purchase price of approximately $1.8 billion.$258.2
million in cash. These towers are located throughout the United States and were
constructed by AT&T for its microwave operations.

AT&T entered into a master lease agreement with us covering 468 of these
towers on which it then conducted microwave operations. The aggregate annual
base rent payment is approximately $1.0 million, payable in January of each
lease year. The master lease agreements provides that we will adjust, but not
below the base rent, the rent payable by AT&T based on its actual usage of the
towers.

As part of this transaction, we entered into a build-to-suit agreement that
gives us the right but not the obligation to develop towers for AT&T Wireless
Services. We entered into a separate master lease with AT&T Wireless Services
for the build-to-suit towers. The initial term is ten years, and AT&T Wireless
Services has three five-year renewal options. The rent for lease supplements
entered into pursuant to the master lease agreement in the initial year was
$1,350 per month per antenna site, increasing annually by $50.00 per year for
lease supplements entered into in subsequent years. All rents are subject to 4%
annual increases.

YEAR 2001 TRANSACTIONS

During 2001, we consummated more than 30 transactions in the United States
involving the acquisition of approximately 2,270 communications sites and
related businesses and certain satellite and fiber network access service
assets for an aggregate purchase price of approximately $827.2 million. Of this
total purchase price,

$782.2 million related to the acquisition of tower assets, $36.8 million
related to our purchase of network development services business and $8.2
million related to Verestar. This total purchase price includes $1.4 billionapproximately
$809.6 million in cash 4.5 millionand 377,394 shares of our Class A common stock and options, warrants to purchase 3.0 million shares of our Class A
common stock and $59.2 million of assumed debt. The most significant of these
transactions, otherstock. Other
than the AT&T and AirTouchALLTEL transaction described above, were the following:

Tower and services transactions

UNIsite transaction.none of these acquisitions was
material.

In January 2000,May 2001, we consummated a merger with UNIsite,
an owner and operator of wireless communications sites in the United States.
The purchase price was approximately $196.4 million, which included a payment
of $147.7 million in cash and the assumption of $48.7 million of debt. In
February 2000, we repaid the debt assumed in connection with the UNIsite
transaction.

Galaxy transaction. In January 2000, we acquired Galaxy Engineering Services,
a global turnkey provider of engineering consulting services based in Atlanta,
Georgia. At the time of the merger, we owned one-third of Galaxy, which we had
acquired in December 1999 for $0.5 million. In the merger, the other Galaxy
stockholders received 523,113 shares ofexpanded our Class A common stock and $0.3
million in cash. Galaxy provides a complete array of radio frequency
engineering andtower network design services, including drive testing, voice quality
analysis and transport engineering, interconnect and microwave services.

Foreign transactions

TV Azteca transaction. In December 1999, we signed definitive agreements to
loan up to $120.0 million to TV Azteca S.A. de C.V., the owner of a major
national television broadcast network in Mexico. During 2000, we advanced this
loan and assumed marketing responsibility for approximately 190 broadcasting
towers owned by TV Azteca. Under the terms of the marketing agreement, we are
entitled to receive 100% of the revenues generated by third party leases and
are responsible for any incremental operating expenses associated with those
leases during the term of the loan. The 70-year loan may be prepaid by TV
Azteca without penalty during the last 50 years of the agreement.

Iusacell transaction. In December 1999, weinto Brazil as ATC Brazil our
Brazilian subsidiary, entered into a management
agreementarrangements with Global Village Telecom
Ltd. ("GVT") for approximately 350 existing towers and a build-to-suit agreement
for approximately 200 towers with Grupo Iusacell, the second largest wireless
telecommunications provider in Mexico. The existing towers are located in urban
and rural areas such as Mexico City, Guadalajara, Veracruz and Acapulco. We
expect to construct the build-to-suit towers over the next 18 months in key
metropolitan areas. In February 2001, we purchased 170 of the 350 towers that
are currently under the management agreement.

Unefon transaction. In early 2000, we entered into an agreement with Unefon
S.A. de C.V., a wireless service provider, in Mexico, to form a strategic
alliance to build and operate towers throughout Mexico. In December 2000, we
revised the initial agreement and paid Unefon approximately $15.0 million in
cash for its agreement to terminate the strategic alliance. In connection with
this termination, we modified our build-to-suit agreement with Unefon, which
now provides for us to construct for it up to 1,000 sites on a build-to-suit
basis.

Canadian joint venture. In March 2000, we entered into a joint venture with
Telemedia, a privately held Canadian telecommunications company, to form
Canadian Tower L.P. Canadian Tower, which is Canadian controlled and operated,
will develop and acquire wireless and broadcast towers throughout Canada. We
have committed to invest $18.0 million (Canadian) in exchange for which we will
own 45.0% of Canadian Tower. The joint venture's initial assets will include
more than 20 broadcast towers to be contributed by Telemedia. We plan for our
Canadian operations to include sites in major metropolitan areas.

Verestar transactions

USEI transaction. In June 2000, we acquired U.S. Electrodynamics for
approximately 1.1 million shares of Class A common stock and $33.2 million in
cash. We also issued options to purchase 0.4 million shares of Class A common
stock. At the time of closing, U.S. Electrodynamics operated around-the-clock
teleport facilities in the Pacific Northwest, the Southwest and the Northeast
with a total of 52 antennae that access satellites covering the continental
United States and the Pacific Ocean region.

General Telecom transaction. In June 2000, we acquired General Telecom for
$28.8 million in cash. Our acquisition of General Telecom provided us with
independent partition voice switching capabilities and network management
services at three major voice communications gateways in New York, Miami and
Los Angeles.

Publicom transaction. In October 2000, we acquired Publicom and its
affiliates for approximately 0.4 million shares of Class A common stock and
$14.5 million in cash. Publicom and its affiliates distribute satellite and
telecommunications equipment via strategic vendor relationships with
established equipment providers. Publicom also provides wholesale ISP services
in select markets.

InterPacket Networks transaction. In December 2000, we acquired InterPacket
Networks for approximately 1.1 million shares of Class A common stock and $21.4
million in cash. InterPacket is a leader in providing international ISPs, low
cost Internet access via a global satellite overlay network. InterPacket's
customer base includes companies primarily in Africa, the Middle East, Latin
America and Asia.

Pending transactions as of December 31, 2000

As of December 31, 2000, we were a party to various pending transactions
involving the acquisition of more than 2,500the rights to approximately 156
communications sites and related
businesses withtowers from GVT for an aggregate purchase price of approximately
$870.0$29.2 million. These transactions remain subjectAs part of those arrangements, we entered into a build-to-suit
agreement and a master lease agreement providing for the leasing of space to
regulatory approvalsGVT on the towers we own or control in certain casesBrazil. Under the arrangements, we are
entitled to all income generated by and other closing conditions, which we may not meet. The most significantresponsible for all expenses of these
pending transactions is our agreementthe
towers for a period of 35 years with ALLTEL, which is described under
"Significant Agreements" above.

Management Organizationan option to purchase the towers after
seven years.

MANAGEMENT ORGANIZATION

Our corporate headquarters is in Boston, Massachusetts. We areOur rental and
management segment is organized on a regional basis, with each region being
headed by a vice president who reports to our chief operating officer.Executive Vice President of Tower
Operations who, in turn, reports to our President and Chief Operating Officer.
Our current regional centers are based in Boston, Atlanta, Chicago, Houston,
the San Francisco Bay area and Mexico City. We may establish additional regional centers over time, including in Canada.
Our regional centers are further
subdivided into 2018 area operations centers. OurWe are currently in the process of
completing a reorganization of our regional centers are responsible for legalto consolidate lease
administration, accounting and accounting functions,various administrative and developmental
functions. Upon completion of this reorganization, our arearegional centers will be
focused on sales, operations, centers are responsible forcustomer service, sales and marketing.tower development. We
believe our regional and area operations centers are capable of responding
effectively to the opportunities and customer needs of their defined geographic
areas. Our area operations centers are staffed with skilled engineering,
construction management and marketing personnel.

We believe that over time we can achieve enhanced customer serviceOur network development services segment has its headquarters in Waterbury,
Connecticut and greater operating efficienciesis headed by further centralizing certain operating
functions, including accountingPresident, ATC Integrated Services, who reports to
our President and lease administration. We are designing this
centralization of functionsChief Operating Officer. Our satellite and fiber network
access services segment maintains its headquarters in Washington, D.C. and is
headed by its President who reports to enable key information about each site, tower
leaseour Chairman and customer to become part of a centralized database linked to regional
and area operations centers.

Through our various acquisitions and organic growth, we believe we have
obtained the services of key personnel with skills in areas such as:

. site acquisition;

. zoning and other governmental approvals;

. radio frequency engineering;

. construction management;

. tower operations;

. engineering;

. component manufacturing;

. marketing;

. information technology;

. lease administration; and

. finance.

As we seek to expand our size and improve on the quality and consistency of
our services, we believe we may need to supplement our current workforce in
certain areas, develop new regional centers and intensify our dedication to
customer service. Accordingly, we are actively recruiting key personnel to
complete the staffing of our regional operations centers and to strengthen and
deepen our corporate group. We focus our efforts on recruiting people from the
industry sectors we serve. In addition, in some instances we recruit skilled
engineering, marketing and other personnel from outside the communications
site, wireless communications and broadcasting industries.

HistoryChief Executive Officer.

HISTORY

In early 1995, Steven B. Dodge, the then chairman of the board, president
and chief executive officer of American Radio Systems Corporation (American
Radio), and other
members of its management, recognized the opportunity in the communications
site industry as a consequence of its ownership and operation of broadcast
towers. American Radio formed our company to capitalize on this opportunity.
American Radio distributed its stock in our company to its securityholders in
connection with its merger with CBS in June 1998.

Regulatory MattersREGULATORY MATTERS

Towers. Both the FCC and the FAA regulate towers used for wireless
communications and radio and television antennae.broadcasting. These regulations controlgovern
the siting, lighting, marking and maintenance of towers. Depending on factors
such as height and proximity to public airfields, the construction of new
antenna structures or modifications to existing antenna structures must be
reviewed by the FAA prior to initiation to ensure that the structure will not
present a hazard to aircraft navigation. After the FAA issues a "No Hazard"
determination, the tower owner must register the antenna structure with the FCC
and paint and light the structure in accordance with the FAA determination. The
FAA review and the FCC registration processes are prerequisites to FCC
authorization of communications devices placed on the antenna structure.

The FCC separately regulates and licenses wireless communications devices
operating on towers based upon the particular frequency used. In addition, the
FCC separately licenses and regulates television and radio

stations broadcasting from towers. Tower owners bear the responsibility for
notifying the FAA of any tower lighting failures and the repair of those
lighting failures. Tower owners also must notify the FCC when the ownership of
a tower changes. We generally indemnify our customers against any failure to
comply with applicable standards. Failure to comply with applicable
tower-related requirements may lead to monetary penalties.

In January 2001, the FCC concluded investigations of several operators of
communications towers, including us. The FCC sent us a Notice of Apparent
Liability for Forfeiture ("NAL") preliminarily determining that we had failed
to file certain informational forms, had failed to properly post certain
information at various tower sites, and on one occasion had failed to properly
light a tower. The FCC has proposed a fine of $212,000 and intends to undertakealso ordered an additional review of our overall
procedures for and degree of compliance with the FCC's regulations. The proposed fine representsWe reached
a significant increase
fromsettlement with the amount that otherwise might be

imposed in similar situations becauseFCC regarding the compliance issues arising out of the
numberNAL in the form of violationsa Consent Decree. As part of the Consent Decree, the FCC has
rescinded the NAL and the FCC's
negative perception of our compliance. Depending on the outcome ofterminated the further investigation ordered in the FCC could take additional adverse action against us. We are
conducting our own internal investigation into our regulatory compliance
policies. As permitted by the FCC's regulations, on March 1,NAL.
In September 2001 we filedmade a responsevoluntary contribution of $0.3 million to the Notice of Apparent Liability for Forfeiture requesting that the
forfeiture be reduced. We intendU.S.
Treasury and agreed to cooperate furthermaintain an active compliance plan. Failure to comply
with the FCC in any
additional investigationConsent Decree may lead to resolve these matters.monetary penalties and loss of the right to
hold our various registrations and licenses.

The introduction and developmentTelecommunications Act of digital television may affect us and some1996 amended the Communications Act of our broadcast customers. The need to install additional antennae required to
deliver digital television service may necessitate the relocation of many
currently co-located FM antennae. The need to secure state and local regulatory
approvals for the construction and reconstruction of this substantial number of
antennae and the structures on which they are mounted presents a potentially
significant regulatory obstacle to the communications site industry. As a
result, the FCC solicited comments on whether, and in what circumstances, the
FCC should preempt1934 by
limiting state and local zoning authorities' jurisdiction over the
construction, modification and land use laws and ordinances
regulatingplacement of wireless communications towers. The
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 and construction of communications sites. Federal
preemptive regulationstowers. It also
prohibits state or local restrictions based on the environmental effects of
radio frequency emissions to the extent the facilities comply with the FCC
regulations. The 1996 Telecom Act also requires the federal government to help
licensees of wireless communications services gain access to preferred sites
for their facilities. This may never be promulgated. If adopted, they may be more
or less restrictive than existing staterequire that federal agencies and local regulations. In addition,
those regulations, if challenged on constitutional grounds, may not be upheld.departments
work directly with licensees to make federal property available for tower
facilities.

Local regulations include city and other local ordinances, zoning
restrictions and restrictive covenants imposed by local authorities. These
regulations vary greatly, but typically require tower owners and/or licensees
to obtain approval from local officials or community standards organizations
prior to tower construction.construction or collocations on existing towers. Local zoning
authorities generally have been hostile to construction in their communities
and these regulations can delay or prevent new tower construction, colocations
or site upgrade projects, thereby limiting our ability to respond to customer
demand. In addition, those regulations increase costs associated with new tower
construction.construction and colocation. Existing regulatory policies may adversely affect
the timing or cost of new tower construction and colocations and additional
regulations may be adopted which increase delays or result in additional costs
to us. These factors could materially adversely affect our financial condition, results of operations or
liquidity.construction program and
operations.

Our tower operations in Mexico and Brazil are also subject to regulation. AsIf
we pursue additional international opportunities, we will be subject to
regulations in additional foreign jurisdictions. In addition, our customers,
both domestic and foreign, also may be subject to new regulatory policies that
may adversely affect the demand for communications sites.

Verestar. We are required to obtain authorization from the FCC for our use
of radio frequencies to provide satellite and wireless services in the United
States. We are also required to obtain authorizations from foreign regulatory
agencies in connection with our provision of these services abroad. We hold a
number of point-to-point microwave radio licenses that are used to provide
telecommunications services. Additionally, we hold a number of satellite earth
station licenses in connection with our operation of satellite-based networks.
We are required to obtain consent from the FCC prior to assigning these
licenses or transferring control of any of our companies holding an FCC license.

We also provide maritime communications services pursuant to an
experimental license and a grant of Special
Temporary Authority. We also filed
32 applications forAuthority from the FCC, but we have not been able to obtain a
permanent full-termlicense from the FCC licensesor any other sovereign nation holding the
registration of the vessels from which we operate. The FCC has issued a Notice
of Inquiry which

invites comments on possible licensing methods applicable to operate shipboard earth stations on
vessels operating within United States territory. It is possible that this
proceeding could lead to other FCC actions including, without limitation, a
Notice of Proposed Rulemaking, that could result in fixed ports. Those applicationsregulations that are
pending. We may not be granted
permanent licenses,restrictive and costly to our operations. In addition, the experimental license and Special Temporary
Authority currently being used may not be renewed for future terms.

Any license
granted by the FCC may require substantial payments by us.

Environmental MattersENVIRONMENTAL MATTERS

Our operations are subject to federal, state and local and foreign laws
ordinances and regulations
relating to the management, use, storage, disposal, emission and remediation
of, and exposure to, hazardous and non-hazardous substances, materials, and
waste. As the owner and/or operator of real property and facilities, thesewe may
have liability under those laws ordinances and regulations may impose liability on
us for the costs of investigation, removal or
remediation of soil and groundwater contaminated by hazardous substances or
wastes. Certain of these laws impose cleanup responsibility and liability
without regard to whether we, as the owner or operator, of the real estate or

facility knew of or waswere
responsible for the contamination, and whether or not we have discontinued
operations ator sold the property have been discontinued or title to the property has
been transferred. The owner or operator of contaminated real estateproperty. We may also may be subject to common law claims by
third parties based on damages and costs resulting from off-site migration of
the contamination.

In connectionaddition, some environmental regulations affect the registration of
communications towers with our
formerthe FCC. The FCC's decision to register a proposed
tower may be subject to environmental review under the National Environmental
Policy Act of 1969 ("NEPA"), which requires federal agencies to evaluate the
environmental impacts of their decisions under certain circumstances. The FCC
has issued regulations implementing NEPA as well as the National Historic
Preservation Act, the Endangered Species Act and current ownership or operationthe American Indian Religious
Freedom Act. These regulations place responsibility on each applicant to
investigate potential environmental and other effects of operations and to
disclose any significant effects 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 January 2002, the FCC's Wireless Bureau dismissed, for
lack of standing, challenges to the registration of seven of our properties,towers filed
by certain environmental groups. The challenges alleged that we mayhad failed to
comply with NEPA and that the FCC's rules implementing NEPA are inadequate. The
petitioners have appealed the Bureau's decision to the FCC. If the Bureau's
decision is overturned, we could be potentially liable for those typessubject to monetary penalties or increased
compliance obligations.

As previously disclosed, in October 2001, we entered into a settlement
agreement with a local district attorney in California. The county had filed a
civil suit against us alleging that we had failed to make certain filings and
maintain certain records relating to environmental compliance and hazardous
materials. As a result of environmental costs.

We believethe settlement agreement, we are inpaid the county $0.2
million and agreed to maintain an active compliance in all material respects with applicable
environmental laws.plan. We have not received
any other written notice from any governmental authority or third party
asserting, and we are not otherwise aware of, any material environmental
non-compliance, liability or claim.

However, we
might be liable in the future for existing environmental conditions. We also
may incur costs for future regulatory action, as well as compliance with
existing and future environmental laws. The foregoing could have a material
adverse affect on our financial condition, results of operations or liquidity.

Competition and New TechnologiesCOMPETITION AND NEW TECHNOLOGIES

Rental and Management Segment Competition. We compete for antennae site
customers with other national independent tower companies, wireless carriers
that own and operate their own tower networks and lease tower space to other
carriers, site development companies that acquire space on existing towers for
wireless service providers and manage new tower construction, and traditional
local independent tower operators. We believe that tower location and capacity,
price and quality of service and density within a geographic market historically have been and will continue to be the
most significant competitive factors affecting owners, operators and managers
of communications sites. We face strong competitionIn January 2002, the United States Supreme Court
upheld the FCC's determination that wireless carriers are entitled to mandatory
access on utility poles and regulated rates for build-to-suit opportunities, particularly
those withattachments. While we do
not believe that utility poles are an adequate substitute for our towers, we
are unable to predict whether the remaining wireless service providers seeking to divest their
tower ownership, principally from other independent tower companies and site
developers.

We compete for tower and site acquisitions principally with other independent
tower owners and operators. Competition may intensify and result in
substantially higher prices, particularly for towers being divested by wireless
service providers. We may not, therefore, be able to complete acquisitions on
as favorable terms as in the past. Under certain circumstances, we may also be
required to pay higher prices or agree to less favorable terms than we would
otherwise have desired. We may also be impededCourt's decision will cause a reduction in
our future acquisition
activities by antitrust constraints, either in local markets or on a regional
or national basis.leasing business.

Network Development Services Segment Competition. We compete as toOur network development
services compete with a variety of companies offering individual, or
combinations of, competing services. The field of competitors includes site
acquisition consultants, zoning consultants, real estate firms, right-of-way
consulting firms, construction companies, tower owners/managers, radio
frequency engineering consultants, telecommunications equipment vendors, which
provide turnkey site development services through multiple subcontractors, and
carriers' internal staffs. We believe that carriers base their decisions on
network development services on various criteria, including a company's
experience, track record, local reputation, price, and time for completion of a
project. Various elements of our components business compete with numerous
other companies. Kline Iron & Steel competes with numerous other steel
fabricators, many of which have substantially greater financial and other
resources.

Satellite and Fiber Network Access Services Segment Competition. In the
delivery of domestic and international satellite services, weWe compete
with other full service teleports in the United States, and satellite
communications companies. The bases of competition arecompanies, and other communications service providers.
Competition is based primarily on reliability, price, transmission quality and
transmission quality. Competition is expected principallythe ability to offer complete solutions. Some of Verestar's existing and
potential competitors consist of companies from a numberwhom Verestar currently leases
satellite and fiber network access in connection with its providing services to
its customers. Increased competition could result in Verestar being forced to
reduce its fees and may limit its ability to obtain, on economical terms,
services that are critical to its business. Verestar's competitors may develop
or acquire services that provide functionality similar to that provided by
Verestar's services and that those competitive services may be offered at
significantly lower prices or bundled with other services. Many of domesticVerestar's
existing and foreign telecommunications carriers and satellite owners, many of
whichpotential competitors have substantially greater financial and other resources
significantly greater than we do.those available to it. In the maritime
telecommunications market, we competeVerestar competes primarily with several other
companies,
that provide similar telecommunications services. Severalcertain of these
companieswhich have FCC licenses that are similar to oursVerestar's and own their
own satellites.

We believe that we compete favorably as to the key competitive factors
relating to each of our business segments.

New Technologies. The emergence of new technologies could reduce the need
for tower-based transmission and reception and may, thereby, 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/or data services. In addition, the emergence of new
technologies could reduce the need for tower-based transmission and reception
and have an adverse effect on our operations. Additionally, the growth in
delivery of video services by direct broadcast satellites and the development and implementation of
signal combining technologies, which permit one antenna to service two
different frequencies of transmission and, thereby, two customers, may reduce
the need for tower-based broadcast transmission and hence demand for tower
space. Finally,Technologies that enhance spectral capacity, such as beam forming or
"smart antennas" can increase the capacity at existing sites and can reduce the
number of additional sites a given carrier needs to serve any given subscriber
base. In addition, the emergence of new technologies could reduce the need for
tower-based transmission and reception and have an adverse effect on our
operations. Similarly, the growth in delivery of video services by direct
broadcast satellites could reduce the demand for tower space. Indoor
distribution systems relieve some capacity on existing networks and could have
an adverse effect on our operations. Capacity enhancing technologies such as
lower-rate vocoders and more spectrally efficient airlink standards potentially
relieve network capacity problems without adding sites and could adversely
effect our operations.

Any increase in the use of network sharing or roaming or resale arrangements
by wireless service providers wouldcould adversely affect the demand for tower
space. These arrangements enable a provider to serve customers outside its
license area, to give licensed providers the right to enter into arrangements
to serve overlapping license areas, and to permit non-licensed providers to
enter the wireless marketplace. Wireless service providers might consider such
sharing or roaming and resale arrangements as superior to constructing their own
facilities or leasing our antenna space from us.

Construction, Manufacturing and Raw Materialsspace. Conversely, in some cases network
sharing arrangements may stimulate network development in areas where a single
carrier network is economically unattractive.

CONSTRUCTION, MANUFACTURING AND RAW MATERIALS

We build, maintain and install land based wireless communications and
broadcast transmitting and receiving facilities by obtaining sheet metal and
other raw material parts and components from a variety of vendors. We

also engage third party contract manufacturers to construct certain of these
wireless transmitting and receiving and broadcast
facilities. We have historically obtained the majority of our sheet metal and
other raw materials parts and components, including for our components
business, from a limited number of suppliers. However, substantially all of
these items are available from numerous other suppliers. We have not, to date,
experienced any significant difficulties in obtaining the needed quantities of
materials from suppliers in a timely manner.

EmployeesEMPLOYEES

As of December 31, 2000,2001, we employed approximately 3,3003,200 full time
individuals and consider our employee relations to be satisfactory.

Factors That May Affect Future ResultsFACTORS THAT MAY AFFECT FUTURE RESULTS

We operate in a rapidly changing environment that involves a number of
risks, some of which are beyond our control. The following discussion
highlights some of the risks that may affect future operating results.

DECREASE IN DEMAND FOR TOWER SPACE WOULD MATERIALLY AND ADVERSELY AFFECT OUR
OPERATING RESULTS AND WE CANNOT CONTROL THAT DEMAND.

Many of the factors affecting the demand for tower space, and to a lesser
extent our services business, materially affect our operating results. Those
factors include:

. consumer demand for wireless services;

. the financial condition of wireless service providers and their
preference for owning rather than leasing antenna sites;

. the ability and willingness of wireless service providers to maintain or
increase their capital expenditures;

. the growth rate of wireless communications or of a particular wireless
segment;

. the number of wireless service providers in a particular segment,
nationally or locally;

17
. governmental licensing of broadcast rights;

. mergers or consolidations among wireless service providers;

. increased use of network sharing arrangements or roaming and resale
arrangements by wireless service providers. These arrangements enable a provider to serve customers
outside its license area, to give licensed providersproviders;

. delays or changes in the right to enter
into arrangements to serve overlapping license areas and to permit
nonlicensed providers to enter the wireless marketplace. Wireless
service providers might consider such roaming and resale arrangements as
superior to constructing their own facilitiesdeployment of 3G or leasing antenna space
from us;other technologies;

. zoning, environmental, health and other government regulations; and

. technological changes.

The demand for antenna space is dependent, to a significantly lesser extent, on
the needs of television and radio broadcasters. Among other things,
technological advances, including the development of satellite-delivered radio,
may reduce the need for tower-based broadcast transmission. We could also be
affected adversely should the development of digital television be delayed or
impaired, or if demand for it were to be less than anticipated because of
delays, disappointing technical performance or cost to the consumer.

A significant general slow downCONTINUATION OF THE CURRENT U.S. ECONOMIC SLOWDOWN COULD MATERIALLY AND
ADVERSELY AFFECT OUR BUSINESS.

The existing slowdown in the economy in 2001 or beyond couldhas negatively affectaffected the foregoing factors
described under the prior heading, influencing demand for tower space and tower
related services. For example, such a slow down could reduce consumer
demand forthe slowdown, coupled with the deterioration of
the capital markets, has caused certain wireless services, thereby causingservice providers to delay
and, in certain

cases, abandon expansion and upgrading of wireless networks, implementation of
new systems, and theor introduction of new technologies. WeThe economic slowdown has
also believe that
the economic slow down in 2001 has already harmed, and may continue to harm, the financial condition of some wireless
service providers. Many wireless service providers operate with substantial
leverage and some wireless service providers, including customers of ours, have
filed for bankruptcy.

OUR SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS MAY ADVERSELY AFFECT OUR
CASH FLOW AND OUR ABILITY TO MAKE PAYMENTS ON OUR SENIOR NOTES.DEBT.

We have a substantial amount of outstanding indebtedness. After giving effect
to our sale of 10.0 million shares of Class A common stock in January 2001, our
sale of $1.0 billion of 9 3/8% senior notes due 2009 in January 2001 and
borrowings that we assume we would have made to close acquisitions that were
pending asAs of December 31,
2000,2001, we would have had at December 31, 2000
approximately $3.4$3.6 billion of consolidated debt. Our substantialWe will be
required to borrow additional funds during 2002 to fund our construction
program, even at the significantly reduced activity level of
indebtedness increases the possibility that we may be unable to generate cash
sufficient to pay when due the principalanticipate,
and other capital expenditures. We anticipate aggregate incremental borrowing
needs for 2002 and 2003 of interest on or other amounts due
in respect of our indebtedness. We may also obtain additional long-term debt
and working capital lines of credit to meet future financing needs. This would
have the effect of increasing our total leverage.under $200.0 million.

Our substantial leverage could have significant negative consequences,
including:

. our being unable to meet one or more of the financial ratios contained
in our debt agreements or to generate cash sufficient to pay interest or
principal, including periodic principal amortization payments, which
events could result in an acceleration of some or all of our outstanding
debt as a result of cross-default provisions;

. increasing our vulnerability to general adverse economic and industry
conditions;

. limiting our ability to obtain additional debt or equity financing;

. requiring the dedication of a substantial portion of our cash flow from
operations to service our indebtedness,debt, thereby reducing the amount of our cash
flow available for other purposes, including capital expenditures;

. requiring us to sell debt or equity securities or to sell some of our
core assets, possibly on unfavorable terms, to meet payment obligations;

. limiting our flexibility in planning for, or reacting to, changes in our
business and the industries in which we compete; and

. placing us at a possible competitive disadvantage with less leveraged
competitors and competitors that may have better access to capital
resources.

A significant portion of our outstanding indebtednessdebt bears interest at floating
rates. As a result, our interest payment obligations on such
indebtednessthat debt will increase
if interest rates increase.

RESTRICTIVE COVENANTS IN OUR CREDIT FACILITIES AND OUR SENIOR NOTES COULD
ADVERSELY AFFECT OUR BUSINESS BY LIMITING FLEXIBILITY.

18
FLEXIBILITY AND CAUSING US TO BREACH
OUR TOWER DEVELOPMENT OBLIGATIONS.

The indenture for our senior notes due 2009 and our credit facilities contain
restrictive covenants thatand, in the case of the credit facilities, requirements
of complying with certain leverage and other financial tests. These limit our
ability to take various actions, including the incurrence of additional debt,
and engage in various types of transactions. These restrictions include:

. paying dividendstransactions, including mergers and making distributions or other restricted payments;
. incurring more debt, guaranteeing indebtedness and issuing preferred
stock;
. issuing stocksales of certain subsidiaries;
. making certain investments;
. creating liens;
. entering into transactions with affiliates;
. entering into sale-leaseback transactions; and
. merging, consolidating or selling
assets. These covenants could have an adverse effect on our business by
limiting our ability to take advantage of financing, new tower development,
merger and acquisition or other corporate opportunities.

BUILD-TO-SUIT CONSTRUCTION PROJECTS AND MAJOR ACQUISITIONS FROMWe are a party to a number of build-to-suit agreements with wireless
carriers that obligate us to develop new tower sites at the direction of the
wireless carrier, subject to previously agreed upon approval criteria. We do
not expect to have the ability to fund our planned level of capital
expenditures with our operating cash flows until during 2003 and hence we will
need to borrow under our credit facilities until then. To do so, we must comply
with various financial tests. If we are not able to fund our capital
expenditures through this borrowing under our credit

facilities, we might have to attempt to raise money in the debt or equity
capital markets. Alternatively, we would be required to dispose of assets on
terms that might not be favorable to us or to curtail our construction
activities. That curtailment could adversely affect us if it caused us to
breach any of our build-to-suit agreements, because we could be subject to
penalties, damage claims, and contract terminations.

IF OUR WIRELESS SERVICE PROVIDERS INCREASEPROVIDER CUSTOMERS CONSOLIDATE OR MERGE WITH EACH OTHER
TO A SIGNIFICANT DEGREE, OUR DEPENDENCE ON A LIMITED NUMBER OF CUSTOMERS, THE
LOSS OF WHICHGROWTH, OUR REVENUE AND OUR ABILITY TO GENERATE
POSITIVE CASH FLOWS COULD MATERIALLY DECREASE REVENUES, AND MAY ALSO INVOLVE LESS
FAVORABLE TERMS.

Our focus on major build-to-suit projects forBE ADVERSELY AFFECTED.

Significant consolidation among our wireless service providers customers may
result in reduced capital expenditures in the aggregate because the existing
networks of many wireless carriers overlap, as do their expansion plans.
Similar consequences might occur if wireless service providers engage in
extensive sharing or roaming or resale arrangements as an alternative to
leasing our antennae space. In December 2001, the FCC announced that the
spectrum cap, which previously prohibited wireless carriers from owning more
than 45 MHz of spectrum in any given geographical area, would be removed in
January 2003. Some wireless carriers may be encouraged to consolidate with each
other as a result of this regulatory change and related acquisitions entail several unique risks. First isas a means to strengthen their
financial condition. Consolidation among wireless carriers would also increase
our greater
dependence on a limited number of customers and the risk that customer lossesthe loss of one or more of our major customers could materially
decrease revenues and cash flows.

DUE TO THE LONG-TERM EXPECTATIONS OF REVENUE FROM TENANT LEASES, THE TOWER
INDUSTRY IS SENSITIVE TO THE CREDITWORTHINESS OF ITS TENANTS.

Due to the long-term nature of our tenant leases, we, like others in the
tower industry, are dependent on the continued financial strength of our
tenants. During the past two years, several of our customers have filed for
bankruptcy, although to date these bankruptcies have not had a material adverse
effect on our business or revenues. Another risk is that our agreements with
theseMany wireless service providers haveoperate
with substantial leverage. If one or more of our major lease and control terms that are more
favorable to them than the terms we give our tenants generally. In addition,
although we have the benefit of an anchor tenant in build-to-suit projects, we
may not be able to find a sufficient number of additional tenants. In fact, one
reason wireless service providers may prefer build-to-suit arrangements is to
share or escape the costs of an undesirable site. A site may be undesirable
becausecustomers
experienced financial difficulties, it has high construction costs or may be considered a poor location by
other providers.

OUR EXPANDED CONSTRUCTION PROGRAM INCREASES OUR EXPOSURE TO RISKS THAT COULD
INCREASE COSTS AND ADVERSELY AFFECT OUR EARNINGS AND GROWTH.

Our expanded construction activities involve substantial risks. These risks
include:

. increasing our debt and the amount of payments on that debt;
. increasing competition for construction sites and experienced tower
construction companies, resulting in significantly higher costs and
failure to meet time schedules;
. failing to meet time schedules, which could result in uncollectable accounts
receivable and our payingloss of significant penalties to prospective tenants, particularly in build-to-
suit situations;customers and . possible lack of sufficient experienced personnel to manage an expanded
construction program.

IF WE ARE UNABLE TO CONSTRUCT OR ACQUIRE NEW TOWERS AT THE PACE, IN THE
LOCATIONS AND AT THE COSTS THAT WE DESIRE, OUR BUSINESS WOULD BE ADVERSELY
AFFECTED.

Our growth strategy depends in part on our ability to construct and acquire
towers in locations and on a time schedule that meets the requirements of our
customers. If our tower construction and acquisition projects fail to meet the
requirements of our customers, or fail to meet their requirements at our
projected costs, our business would be adversely affected. If we are unable to
build new towers where and when our customers require them, or where and when
we believe the best opportunity to add tenants exists, we could fail to meet
our contractual obligations under build-to-suit agreements, and we could lose
opportunities toanticipated lease space on our towers. Our ability to construct a tower at
a location, on a schedule and at a cost we project can be affected by a number
of factors beyond our control, including:

. zoning, and local permitting requirements and national regulatory
approvals;
. environmental opposition;

. availability of skilled construction personnel and construction
equipment;
. adverse weather conditions; and
. increased competition for tower sites, construction materials and labor.revenues.

INCREASING COMPETITION IN THE SATELLITE AND FIBER NETWORK ACCESS SERVICES
MARKET MAY SLOW VERESTAR'S GROWTH AND ADVERSELY AFFECT ITSVERESTAR'S BUSINESS.

In the satellite and fiber network access services market,

Verestar competes with other satellite communications companies that provide
similar services, as well as other communications service providers. Some of
Verestar'sits existing and potential competitors consist ofare companies from whom Verestar
currently leases satellite and fiber network access in connection with the provision of
Verestar'sorder to provide
services to its customers. Increased competition could result inforce Verestar being forced to reduce
theits fees it charges for its services and may limit Verestar'sits ability to obtain, on economical terms, services
that are critical to its business. We anticipate that Verestar's competitors may develop or
acquire services that provide functionality that is similar to that provided by
Verestar's services and that thosethese competitive services may be offered at
significantly lower prices or bundled with other services. Many of the existing and
potential competitors have financial and other resources significantly greater
than those available to Verestar.

IF WE CANNOT KEEP RAISING CAPITAL, OUR GROWTH WILL BE IMPEDED.

Without additional capital, we would need to curtail our acquisition and
construction programs that are essential for our long-term success. We expect
to use borrowed funds to satisfy a substantial portion of our capital needs.
However, we must continue to satisfy financial ratios and to comply with
financial and other covenants in order to do so. If our revenues and cash flow
do not meet expectations, we may lose our ability to borrow money or to do so
on terms we consider to be favorable. Conditions in the capital markets also
will affect our ability to borrow, as well as the terms of those borrowings.
All of these factors could also make it difficult or impossible for us
otherwise to raise capital, particularly on terms we would consider favorable.

IF WE CANNOT SUCCESSFULLY INTEGRATE ACQUIRED SITES OR BUSINESSES OR MANAGE OUR
OPERATIONS AS WE GROW, OUR BUSINESS WILL BE ADVERSELY AFFECTED AND OUR GROWTH
MAY SLOW OR STOP.

A significant part of our growth strategy is the continued pursuit of
strategic acquisitions of independent tower operators and consolidators,
wireless service providers and service and satellite and fiber network access
services businesses. We cannot assure you, however, that we will be able to
integrate successfully acquired businesses and assets into our existing
business. During 2000, we have consummated more than 60 transactions involving
the acquisition of more than 4,600 communications sites and related businesses
and several satellite and fiber network access services businesses and related
businesses. Our growth has placed, and will continue to place, a significant
strain on our management and operating and financial systems. Successful
integration of these and any future acquisitions will depend primarily on our
ability to manage these assets and combined operations and, with respect to the
services and satellite and fiber network access services businesses, to
integrate new management and employees into our existing operations.

IF OUR CHIEF EXECUTIVE OFFICER LEFT, WE WOULD BE ADVERSELY AFFECTED BECAUSE WE
RELY ON HIS REPUTATION AND EXPERTISE, AND BECAUSE OF OUR RELATIVELY SMALL
SENIOR MANAGEMENT TEAM.EXPERTISE.

The loss of our chief executive officer, Steven B. Dodge, has a greater
likelihood of having a material adverse effect upon us than it would on most
other companies of our size because of our comparatively smaller executive
group and our reliance on Mr. Dodge's expertise.
Our growth strategy is highly dependent on the efforts of Mr. Dodge. Our
ability, even when capital markets are more receptive than they presently are,
to raise capital also depends significantly on the reputation of Mr. Dodge. You
should be aware that we havedo not entered intohave an employment agreement with Mr. Dodge.

The tower
industry is relatively new and does not have a large group of seasoned
executives from which we could recruit a replacement for Mr. Dodge.

EXPANDINGOUR FOREIGN OPERATIONS INTO FOREIGN COUNTRIES COULD CREATE EXPROPRIATION, GOVERNMENTAL REGULATION,
FUNDS INACCESSIBILITY, FOREIGN EXCHANGE EXPOSURE AND MANAGEMENT PROBLEMS.

Our recent expansion into CanadaMexico and Mexico,Brazil, and any other possible foreign
operations in the future, could result in adverse financial consequences and
operational problems not experienced in the United States. We have made

a substantial loan to a Mexican company, own towers in Mexico and are committed
to construct a sizable number of towers in that country. We have also investedacquired
the rights to 156 communications towers in Brazil and entered into a
Canadian joint
venture that intendsbuild-to-suit agreement to acquire and construct towers in that country. We may, should
economic and capital market conditions improve, also engage in comparable
transactions in other countries in the future. Among the risks of foreign
operations are governmental expropriation and regulation, inability to
repatriate earnings or other funds, currency fluctuations, difficulty in
recruiting trained personnel, and language and cultural differences, all of
which could adversely affect our operations.

NEW TECHNOLOGIES COULD MAKE OUR TOWER ANTENNA LEASING SERVICES LESS DESIRABLE
TO POTENTIAL TENANTS AND RESULT IN DECREASING REVENUESREVENUES.

The development and implementation of signal combining technologies, which
permit one antenna to service two different transmission frequencies and,
thereby, two customers, may reduce the need for tower-based broadcast
transmission and hence demand for our antenna space. Mobile satellite systemsTechnologies that enhance
spectral capacity, such as beam forming or "smart antennas" can increase the
capacity at existing sites and other new technologies could compete with land-
based wireless communications systems, thereby reducingcan reduce the demand for tower
lease space and other services we provide. The Federal Communication Commission
has granted license applications for several low-earth orbiting satellite
systems that are intendednumber of additional sites a
given carrier needs to provide mobile voice or data services.serve any given subscriber base.

In addition, the emergence of new technologies could reduce the need for
tower-
basedtower-based transmission and reception and have an adverse effect on our
operations. The growth in delivery of video services by direct broadcast
satellites could also adversely affect demand for our antenna space.

Indoor distribution systems relieve some capacity on existing networks and
could have an adverse effect on our operations. Capacity enhancing technologies
such as lower-rate vocoders and more spectrally efficient airlink standards
potentially relieve network capacity problems without adding sites and could
adversely effect our operations

WE COULD HAVE LIABILITY UNDER ENVIRONMENTAL LAWS.

Under various federal, state and local environmental laws, we, as an owner,
lessee or operator of more than 13,60014,500 real estate sites after giving effect
to our pending transactions, may be liable for the
substantial costs of remediating soil and groundwater contaminated by hazardous
wastes. For a discussion of our risks relating to environmental matters, see
"Environmental Matters" above.

OUR BUSINESS IS SUBJECT TO GOVERNMENT REGULATIONS AND CHANGES IN CURRENT OR
FUTURE LAWS OR REGULATIONS COULD RESTRICT OUR ABILITY TO OPERATE OUR BUSINESS
AS WE CURRENTLY DO.

We are subject to federal, state and local and foreign regulation of our
business. Both the FCC and the FAA regulate towers used for wireless
communications and radio and television antennae. In addition,antennae and, the FCC separately
regulates wireless communication devices operating on towers and
licenses and regulates television and radio stations broadcasting from towers. Similar
regulations exist in Mexico, CanadaBrazil and other foreign countries regarding
wireless communications and the operation of communications towers. FailureLocal
zoning authorities generally have been hostile to comply with applicable requirementsconstruction in their
communities and these regulations can delay or prevent new tower construction,
colocations or site upgrade projects, thereby limiting our ability to respond
to customer demand. Existing regulatory policies may lead to monetary penaltiesadversely affect the
timing or cost of new tower construction and may require us to indemnify our customers against any such failure to
comply. Newlocations and additional
regulations may imposebe adopted which increase delays or result in additional costly burdens on us, which maycosts
to us. These factors could adversely affect our revenuesconstruction program and
cause delays in our growth.

On January 16, 2001, the FCC issued a Notice of Apparent Liability for
Forfeiture against us for apparent violations of some FCC rules regarding the
registration of communication towers and, in one instance, the lighting
requirements for communication towers. This action involves a proposed fine of
$212,000. In addition, the FCC has ordered its Enforcement Division to conduct
a further investigation of our administrative compliance. At this time we are
unable to predict the outcome of the Notice of Apparent Liability for
Forfeiture or any further investigation.operations. For a more complete discussion of the regulatory risks affecting
the various aspects of our business, and a recent
FCC investigation of our towers,including the Consent Decree, see
"Regulatory Matters" above.

2117

OUR COSTS COULD INCREASE AND OUR REVENUES COULD DECREASE DUE TO PERCEIVED
HEALTH RISKS FROM RADIO EMISSIONS, ESPECIALLY IF THESE PERCEIVED RISKS ARE
SUBSTANTIATED.

Public perception of possible health risks associated with cellular and
other wireless communications media could slow the growth of wireless
companies, which could in turn slow our growth. In particular, negative public
perception of, and regulations regarding, these perceived health risks could
slow the market acceptance of wireless communications services.

If a connection between radio emissions and possible negative health
effects, including cancer, were established, our operations, costs and revenues
would be materially and adversely affected. We do not maintain any significant
insurance with respect to these matters.

CONTROL BY OUR PRINCIPAL STOCKHOLDERS COULD DETER MERGERS WHERE YOU COULD GET
MORE THAN CURRENT MARKET PRICE FOR YOUR STOCK.

Steven B. Dodge, together with his affiliates, owned approximately 26.0% of
our total voting power as of February 28, 2001. Control by Mr. Dodge and others
may discourage a merger or other takeover of our company in which holders of
common stock may be paid a premium for their shares over then-current market
prices. Mr. Dodge, together with a limited number of our directors, may be able
to control or block the vote on mergers and other matters submitted to the
common stockholders.

ITEM 2. PROPERTIES

Our corporate headquarters are at 116 Huntington Avenue, Boston,
Massachusetts, where we occupy approximately 40,00041,000 square feet of office space
in a building that we own. A description of the principal properties of each of
our business segments is as follows:

. our rental and management segment owns an aggregate of approximately
171,000 square feet and leases an aggregate of approximately 82,000
square feet of office space in Atlanta, the Chicago metropolitan area,
Houston, the San Francisco Bay area, San Paulo and Mexico City;

. our network development services segment owns approximately 817,000876,000
square feet and leases approximately 220,000330,000 square feet of commercial
property in several cities around the United States. These properties
include an aggregate of approximately 476,000472,000 square feet of space at
five locations that we use in our component part business to manufacture
and store inventory, and a 240,000 square foot steel fabrication
facility; and

. The primary properties of our satellite and fiber network access
services segment are the parcels of land on which the satellite dishes
and related facilities of our 11 SNAPs are located. In the aggregate, our
SNAPs occupy over 180310 acres of land, including 164304 owned acres that we own
and 19 acres that we lease.six
leased acres. All but one of these properties are located throughout the United
States, andexcept for one in Switzerland. The properties that the SNAPs
occupy range in size from two-two to seventy-acreone hundred-acre parcels. We also own one property in Switzerland.

Our interests in communications sites are comprised of a variety of fee and
leasehold interests created by long-term lease agreements, private easements
and easements, 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 monopole or
self-
supportingself-supporting tower structure of the kind typically used in metropolitan
areas. Land leases generally have 20 to 25-year terms, with three five-year
renewals, or are for five-year terms with automatic renewals unless we otherwise specify.renewals.

Pursuant to our credit facilities, the lenders have liens on, among other
things, all towers, leasehold interests, tenant leases, contracts relating to
the management of towers for others, cash, accounts receivable, the stock and
other equity interests of virtually all of our subsidiaries and all
inter-company debt, fixtures, inventory and other personal property, fixtures, including towers,
intellectual property, as
well as certain fee and leasehold interests, and the proceeds of the foregoing.

We believe that our owned and leased facilities are suitable and adequate to
meet our anticipated needs.

ITEM 3. LEGAL PROCEEDINGS

As previously disclosed in our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001, on April 23, 2001 the District Attorney for the County of
Santa Clara, California filed a civil complaint against us in the Superior
Court of California. The complaint alleged record keeping, registration,
hazardous materials management and filing violations under California
environmental laws. The complaint did not allege any contamination of the
environment occurred as a result of the alleged violations. We have taken
measures to ensure that these sites are in compliance with applicable
California environmental laws and believe that we are currently in compliance
with such laws. On December 5, 2001 a judgment was entered ending the lawsuit
and incorporating the terms of an agreement we negotiated previously with the
District Attorney's office. Under the judgment, we paid civil penalties of
$150,000, reimbursed the County for more than $25,000 in costs and attorney's
fees, and agreed to operate our facilities in the County in compliance with the
relevant environmental requirements in the future.

In addition, we periodically become involved in various claims and lawsuits
that are incidental to our business. We believe that no matters currently
pending would, in the event of an adverse outcome, have a material impact on
our consolidated financial position, results of operations or liquidity.

For information
regarding a recent FCC investigation of our towers, see "Business-Regulatory
Matters-Towers".

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of our security holders in the fourth
quarter of 2000.

23
2001.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Our Class A common stock commenced trading on the New York Stock Exchange (NYSE) on
June 5, 1998, (thethe day after we separated from American Radio).Radio. The following
table presents reported high and low sale prices of our Class A common stock on
the Composite Tape of the NYSE for the years 19992000 and 2000.2001.

19992000 High Low
---- ------ ------

Quarter ended March 31........................................ $30.25 $20.50
Quarter ended June 30......................................... 26.88 20.50
Quarter ended September 30.................................... 26.00 19.50
Quarter ended December 31..................................... 33.25 17.13

2000
----

Quarter ended March 31........................................31.... $55.50 $28.56
Quarter ended June 30.........................................30..... 50.44 36.31
Quarter ended September 30....................................30 47.63 27.63
Quarter ended December 31.....................................31. 42.44 28.75

2001
----
Quarter ended March 31.... 41.00 18.50
Quarter ended June 30..... 28.00 14.45
Quarter ended September 30 20.24 11.00
Quarter ended December 31. 16.27 5.98

On March 26, 2001,25, 2002, the closing price of our Class A common stock was $20.25$5.35
as reported on the NYSE.

The outstanding shares of common stock and number of registered holders as
of December 31, 20002001 were as follows:

Class
-------------------------------
A B C
----------- --------- ---------

Outstanding shares........................... 170,035,952 8,095,005shares 185,018,034 8,001,769 2,267,813
Registered holders........................... 662 64holders 881 65 1

Dividends19

DIVIDENDS

We have never paid a dividend on any class of common stock. We anticipate
that we will retain future earnings, if any, to fund the development and growth
of our business. We do not anticipate paying cash dividends on shares of common
stock in the foreseeable future. Our credit facilities and the indenture for
our senior notesnote
indenture restrict the payment of cash dividends by us and our subsidiaries.

Recent Sales of Unregistered Securities

In connection with acquisitions completed in 2000, we issued shares of our
Class A common stock in transactions exempt from the registration requirements
of the Securities Act of 1933 for the number of shares indicated on the
following dates: 523,113 shares on January 13, 2000; 766,666 shares on March
29, 2000; 1,115,151 shares and options to purchase 400,000 shares on June 7,
2000; 388,661 shares on October 2, 2000; 346,413 shares on October 26, 2000;
258,213 shares on November 15, 2000; and 1,124,475 shares on December 29, 2000.
The security holders of the acquired companies were the purchasers in each of
the foregoing instances.

On February 15, 2000, we completed a private placement of $450.0 million of
5.0% convertible notes to certain qualified institutional buyers. The notes are
convertible at any time on or before February 15, 2010 into shares of Class A
common stock at a conversion price of $51.50 per share. Upon conversion, we are
obligated to deliver 19.4175 shares of Class A common stock for each $1,000
principal amount of 5.0% notes.

During 2000, we also issued an aggregate of 3,576,145 shares of Class A
common stock pursuant to the exercise of conversion rights of holders of our
6.25% convertible notes. We originally issued these notes as a

private placement to qualified institutional buyers in October 1999. The 6.25%
notes are convertible at any time on or before October 15, 2009 at a conversion
price of $24.40 per share. Upon conversion, we are obligated to deliver 40.9836
shares of Class A common stock for each $1,000 principal amount of 6.25% notes.
During 2000, we also issued an aggregate of 2,148,035 shares of Class A common
stock pursuant to the exercise of conversion rights of holders of our 2.25%
convertible notes. We originally issued these notes as a private placement to
qualified institutional buyers in October 1999. The 2.25% notes are convertible
at any time on or before October 15, 2009 at a conversion price of $24.00 per
share. Upon conversion, we are obligated to deliver 29.3833 shares of Class A
common stock for each $1,000 principal amount of 2.25% notes. As an inducement
for the foregoing note conversions, we issued an aggregate of 402,414 shares of
Class A common stock to the holders of the notes in addition to the number of
shares of Class A common stock that they were entitled to receive upon
conversion.

We issued the securities referred to in the foregoing paragraphs in reliance
on the exemption from registration provided by Section 4(2) of the Securities
Act, or in the case of the conversions of convertible notes, Section 3(a)(9) of
the Securities Act. As a basis for doing so, we relied, in part, on the
following factors: (i) in each instance, we offered our securities to a limited
number of offerees without any general solicitation, (ii) we obtained
representations from the respective purchasers regarding their financial
suitability and investment intent, (iii) with respect to the exemption under
Section 3(a)(9), the converted securities were exchanged solely for Class A
common stock and no commission or remuneration (other than shares of Class A
common stock) was paid or given directly or indirectly for soliciting such
exchange and (iv) we issued all of the foregoing securities with restrictive
legends on the certificates to limit resales.

ITEM 6. SELECTED FINANCIAL DATA

The financial data set forth below has been derived from our audited
consolidated financial statements, certain of which are included in this Annual
Report on Form 10-K. The data should be read in conjunction with our audited
consolidated financial statements and with "Management's Discussion and
Analysis of Financial Condition and Results of Operations." Prior to the ATC
Separation on June 4,
1998, we operated as a subsidiary of American Radio
Systems (American Radio) and not as an independent
public company. Therefore, the results of operations and the financial
conditions shown below for such periods may be different from what they might
have been had we operated as a separate, independent public company.

We do not consider divisional cash flow and EBITDA as a substitute for other
measures of operating results or cash flow from operating activities or as a
measure of our profitability or liquidity. Divisional cash flow and EBITDA are
not calculated in accordance with generally accepted accounting principles.
However, we have included them because they are generally used in the
communications site industry as a measure of a company's operating performance.
More specifically, we believe they are a useful indicator of our ability to
meet debt service and capital expenditure requirements and can also assist in
comparing company performances on a consistent basis without regard to
depreciation and amortization. Our concern is that depreciation and
amortization can vary significantly among companies depending on accounting
methods, particularly where acquisitions are involved, or non-operating factors
such as historical cost bases. We believe divisional cash flow is useful
because it enables you to compare divisional performance before the effect of
tower separation,depreciation and amortization, and restructuring, development, and corporate
general and administrative, and tower separation expenses that do not relate
directly to such performance.

Year Ended December 31,
-------------------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997
1996
------------------- ---------- ---------- ---------- --------
-------- ------- -------
(in thousands, except per share data)thousands)

Statements of Operations Data:
Operating revenues...........revenues................................... $1,134,191 $ 735,275 $258,081 $103,544 $17,508 $ 2,897
---------258,081 $ 103,544 $ 17,508
---------- ---------- ---------- ---------- -------- -------- ------- -------
Operating expenses:
Operating expenses (1)................................... 848,042 524,074 155,857 61,751 8,713
1,362
Depreciation and amortization................amortization..................... 440,371 283,360 132,539 52,064 6,326
990
Tower separationRestructuring expense............................. 69,174
Development expense (2)......................... 12,772
Development expense (3)................................. 8,630 14,517 1,607
Corporate general and administrative expense...... 26,478 14,958 9,136 5,099 1,536
830
---------Tower separation expense (3)...................... 12,772
---------- ---------- ---------- ---------- -------- -------- ------- -------
Total operating expenses................expenses...................... 1,392,695 836,909 299,139 131,686 16,575
3,182
------------------- ---------- ---------- ---------- -------- -------- ------- -------
(Loss) income from operations..................operations........................ (258,504) (101,634) (41,058) (28,142) 933
(285)
Interest expense.............expense..................................... (282,291) (156,839) (27,492) (23,229) (3,040)
Interest income and other, net......................... 13,018 17,695net....................... 26,742 15,556 17,442 9,217 251 36
Interest income--TV Azteca, net (4)....................................... 14,377 12,679 1,856
Premium(Loss) gain on noteinvestments........................... (40,551) (2,538) 253
Note conversion expense (5)................................................... (26,336) (16,968)
Minority interest in net earnings of subsidiaries (6)......................... (318) (202) (142) (287) (193)
(185)
------------------- ---------- ---------- ---------- -------- -------- ------- -------
Loss before income taxes and extraordinary losses........losses.... (566,881) (249,946) (49,141) (42,441) (2,049)
(434)
Benefit (provision) for income taxes................taxes................. 116,787 59,656 (214) 4,491 473
(45)
------------------- ---------- ---------- ---------- -------- -------- ------- -------
Loss before extraordinary losses...................... $(190,290) $(49,355) $(37,950) $(1,576)losses..................... $ (479)
=========(450,094) $ (190,290) $ (49,355) $ (37,950) $ (1,576)
========== ========== ========== ========== ======== ======== ======= =======
Basic and diluted loss per common share before
extraordinary losses (7)............................... $ (2.35) $ (1.13) $ (0.33) $ (0.48) $ (0.03)
$ (0.01)
=================== ========== ========== ========== ======== ======== ======= =======
Weighted average common shares outstanding (7)............. 191,586 168,715 149,749 79,786 48,732
48,732
=================== ========== ========== ========== ======== ======== ======= =======

Other Operating Data:
Divisional cash flow (8).................................. $ 300,526 $ 223,880 $102,224$ 102,224 $ 41,793 $ 8,795
$ 1,535
EBITDA (9)................... 194,405 91,481........................................... 274,048 208,922 93,088 36,694 7,259
705
EBITDA margin (9)............ 26.4% 35.4%.................................... 24.2% 28.4% 36.1% 35.4% 41.5%

24.3%

26
December 31,
---------------------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997
1996---------- ---------- ---------- ---------- --------
-------
(in thousands)
Balance Sheet Data:
Cash and cash equivalents...........equivalents (including restricted
cash)........................................... $ 82,038130,029 $ 128,074 $ 25,212 $ 186,175 $ 4,596
$ 2,373
Property and equipment, net...................net....................... 3,287,573 2,296,670 1,092,346 449,476 117,618
19,710
Total assets...........assets...................................... 6,829,723 5,660,679 3,018,866 1,502,343 255,357
37,118
Long-term obligations, including current
portion...............portion......................................... 3,561,960 2,468,223 740,822 281,129 90,176
4,535
Total stockholders' equity................equity........................ 2,869,196 2,877,030 2,145,083 1,091,746 153,208 29,728

- --------
(1) Consists of operating expenses other than depreciation and amortization,
and tower separation,restructuring, development, and corporate general and administrative, and tower
separation expenses.

(2) Tower separation expense refers to the one-time expense incurred as a
result of our separation from American Radio.

(3) Development expense includes uncapitalized acquisition costs, costs to
integrate acquisitions, costs associated with new business initiatives,
abandoned acquisition costs and costs associated with tower site
inspections and related data gathering.gathering which are not capitalized in
accordance with generally accepted accounting principles. Development
expenses prior to 1999 were not material.
(3) Tower separation expense refers to the one-time expense incurred as a
result of our separation from American Radio.
(4) Interest income--TV Azteca, net of interest expense of $1.2 million in 2001
and $1.0 million in 2000.
(5) Premium on noteNote conversion expense represents the fair value of incremental stock
issued to encourage noteholders to induce them to convert their holdings prior to the
first scheduled redemption date.
(6) Represents the minority interest in net earnings of our non-wholly-owned
subsidiaries.
(7) We computed basic and diluted loss per common share before extraordinary
losses using the weighted average number of shares outstanding during each
period presented. Shares outstanding following the separation from American
Radio are assumed to be outstanding for all periods presented prior to June
4, 1998. We have excluded shares issuable upon exercise of options and
other common stock equivalents from the computations as their effect is
anti-dilutive.
(8) Divisional cash flow means (loss) income from operations before
depreciation and amortization and tower separation,restructuring, development, and corporate
general and administrative, and tower separation expenses, plus interest
income--TV Azteca, net for the yearyears ended December 31, 2001 and 2000.
(9) EBITDA means (loss) income from operations before depreciation and
amortization and restructuring, development, and tower separation expense,expenses,
plus interest income--TV Azteca, net for the yearyears ended December 31, 2001
and 2000. EBITDA margin, as used above, means EBITDA divided by operating
revenues.

2722

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

General

In early 1995, Steven B. Dodge, the then chairmanThe discussion and analysis of the board, presidentour financial condition and chief executive officerresults of
American Radio, and other members of American
Radio's management, recognized the opportunity in the communications site
industry as a consequence of American Radio's ownership and operation of
broadcast towers. Our company was formed to capitalize on this opportunity.
American Radio distributed its stock in our company to its securityholders in
connection with its merger with CBS in June 1998. As a result,operations that follows are based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets and liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities at the date of our financial
statements. Actual results may not reflectdiffer significantly from these estimates under
different assumptions or conditions. This discussion should be read in
conjunction with our results of operations orconsolidated financial position had we been an independent public company duringstatements and the period prior to
June 1998.

We are a leading wirelessaccompanying
notes and broadcast communications infrastructure company
operating in three business segments.

. Rental and management. We operate the largest network of wireless
communications towers in North America and areinformation set forth under the largest independent
operator of broadcast towers in North America, basedheading "Critical Accounting
Policies" on number of
towers.

. Network development services. We provide comprehensive network
development services and components for wireless service providers and
broadcasters.

. Satellite and fiber network access services. Our Verestar subsidiary is
a leading provider of integrated satellite and fiber network access
services based upon the number of teleport antennae and facilities. We
provide these services to telecommunications companies, ISPs,
broadcasters and maritime customers, both domestic and international. We
previously referred to our satellite and fiber network access services
segment as "Internet, voice, data and video transmission" or "IVDV".page 37.

During the years ended December 31, 2001, 2000, 1999, and 1998,1999, we acquired
various communications sites, service businesses and satellite and fiber
network access related businesses for aggregate purchase prices of
approximately $827.2 million, $1.8 billion, and $1.2 billion, respectively. Our
results of operations only reflect the acquired towers and $853.8businesses in the
periods following their respective dates of acquisition. As such, our results
of operations for the year ended December 31, 2001 are not comparable to the
year ended December 31, 2000, and the results for the year ended December 31,
2000 are not comparable to the year ended December 31, 1999.

RESULTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2001 AND 2000

As of December 31, 2001, we owned or operated approximately 14,500
communications sites, as compared to approximately 11,000 communications sites
as of December 31, 2000. The acquisitions and construction completed in 2001
and 2000 have significantly affected operations for the year ended December 31,
2001, as compared to the year ended December 31, 2000.

Year Ended December 31, Amount of Percent
---------------------- Increase Increase
2001 2000 (Decrease) (Decrease)
---------- --------- ---------- ----------
(in thousands)

Revenues:
Rental and management........................................ $ 444,560 $ 278,153 $166,407 60%
Network development services................................. 454,238 311,921 142,317 46
Satellite and fiber network access services.................. 235,393 145,201 90,192 62
---------- --------- --------
Total operating revenues.................................. 1,134,191 735,275 398,916 54
---------- --------- --------
Operating Expenses:
Rental and management........................................ 214,506 139,240 75,266 54
Network development services................................. 405,582 274,769 130,813 48
Satellite and fiber network access services.................. 227,954 110,065 117,889 107
---------- --------- --------
Total operating expenses excluding depreciation and
amortization, restructuring, development and corporate
general and administrative expenses..................... 848,042 524,074 323,968 62
---------- --------- --------
Depreciation and amortization................................ 440,371 283,360 157,011 55
Restructuring expense........................................ 69,174 69,174 N/A
Development expense.......................................... 8,630 14,517 (5,887) (41)
Corporate general and administrative expense................. 26,478 14,958 11,520 77
Interest expense............................................. 282,291 156,839 125,452 80
Interest income and other, net............................... 26,742 15,556 11,186 72
Interest income--TV Azteca, net of interest expense of $1,160
and $1,047 in 2001 and 2000, respectively.................. 14,377 12,679 1,698 13
Loss on investments.......................................... 40,551 2,538 38,013 1,498
Note conversion expense...................................... 26,336 16,968 9,368 55
Minority interest in net earnings of subsidiaries............ 318 202 116 57
Benefit for income taxes..................................... 116,787 59,656 57,131 96
Extraordinary losses on extinguishment of debt, net.......... 4,338 (4,338) N/A
---------- --------- --------
Net loss..................................................... $ (450,094) $(194,628) $255,466 131%
========== ========= ========

Rental and Management Revenue

Rental and management revenue for the year ended December 31, 2001 was
$444.6 million, respectively.an increase of $166.4 million from the year ended December 31,
2000. The increase is primarily attributable to several factors: the leasing
activity on towers acquired and constructed during 2001, the leasing activity
on towers acquired and constructed in 2000 for a full year in 2001, and an
increase in same tower revenue on towers that existed as of January 1, 2000.
Our acquisition, construction and leasing activity in 2001 has significantly
increased revenue, and the scope, depth and strength of our national and
international tower footprint, providing us with a much larger base of tower
revenue in 2001 as compared to 2000. Specifically, during 2001, we acquired
more than 2,400 towers and constructed more than 1,300 towers. Additionally,
during 2001, we added more than 4,600 broadband equivalent tenants to both
newly acquired/constructed and existing towers. We expectanticipate that the majority
of our leasing activity during 2002 will continue to come from broadband type
customers.

We continue to believe that leasing revenues from the rental of space on our
towers, which comprises our core business, are likely to grow at a more rapid
rate than revenues from our other segments because of increasing utilization of
existing tower capacity.

Network Development Services Revenue

Network development services revenue for the year ended December 31, 2001
was $454.2 million, an increase of $142.3 million from revenue for the year
ended December 31, 2000. The significant growth in revenues during 2001
resulted primarily from increased volume related to construction management,
antennae and line installation and related colocation services, and tower site
maintenance. The increase was also driven by a full year of revenue in 2001
related to acquisitions consummated in 2000. These acquisitions helped increase
revenue in 2001 related to date will havecomponent part sales and steel fabrication. These
increases were partially offset by decreases in revenue related to radio
frequency engineering services.

Satellite and Fiber Network Access Services Revenue

Satellite and fiber network access services revenue for the year ended
December 31, 2001 was $235.4 million, an increase of $90.2 million from revenue
for the year ended December 31, 2000. The majority of the increase resulted
from the consummation of several key acquisitions that occurred in 2001 and
2000 including: General Telecom, U.S. Electrodynamics, Publicom, Interpacket
Networks and a material impactSNAP facility in Switzerland. These acquisitions significantly
increased our service capabilities, revenue base, and geographical scope of
customers, leading to significant incremental revenues in 2001. This increase
in revenue was partially offset by the loss of many of its second and third
tier telecom customers and a decrease in demand for services in Latin America,
which we believe are attributable, at least in part, to the general worldwide
economic slowdown and the significant decrease in the activity of international
ISPs.

Rental and Management Expense

Rental and management expense for the year ended December 31, 2001 was
$214.5 million, an increase of $75.3 million from the year ended December 31,
2000. The majority of the increase resulted from incremental operating expenses
incurred in 2001 for the more than 3,700 towers that were acquired or
constructed during 2001 as discussed above. The remaining increase reflects
higher operating expenses related to towers that existed as of December 31,
2000 (due to a full year of inclusion in our results of operations in 2001).

Network Development Services Expense

Network development services expense for the year ended December 31, 2001
was $405.6 million, an increase of $130.8 million from the year ended December
31, 2000. The majority of the increase is due to overall increases in the
volume of services work performed, incremental expenses related to the
consummation of strategic acquisitions and increases in the overhead costs
necessary to support both internal construction and external sales.

Satellite and Fiber Network Access Services Expense

Satellite and fiber network access services expense for the year ended
December 31, 2001 was $228.0 million, an increase of $117.9 million from the
year ended December 31, 2000. The majority of the increase is due to
incremental expenses related to the consummation of the strategic acquisitions
discussed above. Other components of the increase include increased personnel
and infrastructure costs to help manage the growth of this segment, increased
overhead related to the development and marketing of new product lines and, to
a lesser extent, increased bad debt expense.

During the later stages of 2001 and into 2002, our satellite and fiber
network access services segment is focusing on future revenues, expensesimplementing cost reduction
measures aimed at reducing infrastructure costs, consolidating

transponder space and incomerenegotiating certain transponder agreements. These
inititives are designed to improve operating margins and position Verestar for
structural independence. Such initiatives could result in us recording a
restructuring charge in 2002 of between $5.0 million and $15.0 million.

Depreciation and Amortization

Depreciation and amortization for the year ended December 31, 2001 was
$440.4 million, an increase of $157.0 million from operations. In addition, certain historical financial
information presented below and elsewherethe year ended December 31,
2000. The principal component of the increase is an increase in this document does not reflect the
impactdepreciation
expense of $104.0 million. This is primarily a result of our purchase,
construction program to any significant extent because mostand acquisition of that activity isapproximately $1.4 billion of a more recent originproperty and
is expected to continueequipment during 2001 and thereafter.

28a full year of depreciation on aquisitions and
additions made in 2000. The other component of the increase is increased
amortization of $53.0 million, resulting from our recording and amortizing
approximately $184.1 million of goodwill and other intangible assets related to
acquisitions consummated during 2001, and a full year of amortization on
goodwill and other intangible assets related to acquisitions made in 2000.

Restructuring Expense

On November 6, 2001, we announced a restructuring of the organization to
include a reduction in the scope of our tower development activities and the
centralization of certain operating functions. As part of that operational
initiative, we are applying more selective criteria for evaluating construction
and acquisitions of towers. As a result, we abandoned a number of tower
construction sites, resulting in a non-cash charge in the fourth quarter of
2001 of approximately $62.6 million. In addition, we implemented an initiative
to consolidate operations in each of our business segments and, as a
consequence, incurred employee separation and office closing costs. As a result
of this initiative, we recorded approximately $6.6 million of restructuring
charges in the fourth quarter of 2001 and expect we will record approximately
$3.0 million of additional restructuring costs in the first quarter of 2002. No
similar charges were incurred in 2000.

Development Expense

Development expense for the year ended December 31, 2001 was $8.6 million, a
decrease of $5.9 million from the year ended December 31, 2000. This decrease
resulted primarily from reduced expenses related to tower site inspections,
data gathering and acquisition integration in 2001.

Corporate General and Administrative Expense

Corporate general and administrative expense for the year ended December 31,
2001 was $26.5 million, an increase of $11.5 million from the year ended
December 31, 2000. The majority of the increase is a result of increased
personnel and information technology costs to support our overall growth,
coupled with expenses incurred to implement a new company-wide Enterprise
Resource Planning (ERP) system.

Interest Expense

Interest expense for the year ended December 31, 2001 was $282.3 million, an
increase of $125.5 million from the year ended December 31, 2000. The majority
of the increase, $113.0 million, resulted primarily from increased borrowings
outstanding under our credit facilities and the issue of $1.0 billion of senior
notes in January 2001, offset by a decrease in interest rates under our credit
facilities. The remaining component of the increase represents increases in
interest on capital leases and other notes payable and incremental deferred
financing amortization.

Interest Income and Other, Net

Interest income and other, net for the year ended December 31, 2001 was
$26.7 million, an increase of $11.2 million from the year ended December 31,
2000. The increase resulted primarily from an increase in interest earned on
invested cash on hand, resulting principally from the sale of our senior notes
in January 2001, partially offset by losses on the fair value of certain
derivative instruments.

ResultsInterest Income--TV Azteca, Net

Interest income--TV Azteca, net for the year ended December 31, 2001 was
$14.4 million, an increase of Operations

Years Ended$1.7 million from the year ended December 31,
2000. The increase resulted from interest earned on the entire principal amount
of the note, $119.8 million, during 2001 as compared to 2000 when less than the
entire principal amount of the note was outstanding for the year.

Loss on Investments

Loss on investments for the year ended December 31, 2001 was $40.6 million,
an increase of $38.0 million from the year ended December 31, 2000. The
increase resulted primarily from the write off of our investment in US Wireless
of $23.4 million, coupled with additional investment impairment losses of $8.2
million and losses on equity investments of $9.0 million.

Note Conversion Expense

During the year ended December 31, 2001, we acquired a portion of our 2.25%
convertible notes in exchange for shares of our Class A common stock. As a
consequence of those negotiated exchanges with certain of our noteholders, we
recorded a non-cash charge of $26.3 million. In similar transactions during the
year ended December 31, 2000, we acquired a portion of our 6.25% and 2.25%
convertible notes in exchange for shares of our Class A common stock. As a
result, we recorded a non-cash charge of $17.0 million during that year. These
charges represent the fair value of incremental stock issued to noteholders to
encourage them to convert their holdings prior to the first scheduled
redemption date.

Benefit for Income Taxes

The income tax benefit for the year ended December 31, 2001 was $116.8
million, an increase of $57.1 million from the year ended December 31, 2000.
The primary reason for the increase is a result of an increase in our loss
before income taxes and extraordinary losses, partially offset by an increase
in amortization of non-deductible intangible assets arising from stock
acquisitions, non-deductible note conversion expense, and the valuation
allowance primarily related to our state net operating loss carryforwards. The
effective tax rate differs in both periods from the statutory rate due to state
and international taxes, the valuation allowance and the effect of
non-deductible items, principally the amortization of goodwill on certain stock
acquisitions and non-deductible note conversion expense.

Financial Accounting Standards Board (FASB) Statement No. 109, "Accounting
for Income Taxes," requires that we record a valuation allowance when it is
"more likely than not that some portion or all of the deferred tax assets will
not be realized." At December 31, 2001, we provided a valuation allowance
primarily related to our state net operating loss carryforwards of
approximately $56.3 million. We have not provided a valuation allowance for the
remaining deferred tax assets, primarily our federal net operating loss
carryforwards, as management believes that we will have sufficient time to
realize these assets during the carryforward period.

Extraordinary Losses on Extinguishment of Debt, Net

We incurred extraordinary losses on the extinguishment of debt, net in 2000
of $4.3 million. The losses were incurred as a result of an amendment and
restatement of our primary credit facilities ($3.0 million, net of a tax
benefit of $2.0 million) and our early retirement of debt assumed in the
UNISite, Inc. merger ($1.3 million, net of a tax benefit of $0.9 million). No
comparable losses were recorded in 2001.

YEARS ENDED DECEMBER 31, 2000 AND 1999

As of December 31, 2000, we owned or operated approximately 11,000
communications sites, as compared to approximately 5,100 communications sites
as of December 31, 1999. The acquisitions and construction completed in 2000
and 1999 have significantly affected operations for the year ended December 31,
2000, as compared to the year ended December 31, 1999.

Year Ended December 31, Amount of Percent
----------------------------------------------- Increase Increase
2000 1999 (Decrease) (Decrease)
------------ ----------- --------- ----------------- ---------- ----------
(in thousands)

Revenues:
Rental and management.........management........................................... $ 278,153 $ 135,303$135,303 $142,850 106%
Network development services..services.................................... 311,921 90,416 221,505 245
Satellite and fiber network access services..............services..................... 145,201 32,362 112,839 349
------------ -------------------- -------- --------
Total operating revenues.....revenues................................. 735,275 258,081 477,194 185
------------ -------------------- -------- --------
Operating Expenses:
Rental and management.........management........................................... 139,240 62,441 76,799 123
Network development services..services.................................... 274,769 69,318 205,451 296
Satellite and fiber network access services..............services..................... 110,065 24,098 85,967 357
------------ -------------------- -------- --------
Total operating expenses excluding depreciation and
amortization, development and corporate general
and administrative expenses......expenses............................ 524,074 155,857 368,217 236
------------ -------------------- -------- --------
Depreciation and amortization.................amortization................................... 283,360 132,539 150,821 114
Development expense...........expense............................................. 14,517 1,607 12,910 803
Corporate general and administrative expense.......expense.................... 14,958 9,136 5,822 64
Interest expense..............expense................................................ 156,839 27,492 129,347 470
Interest income and other, net.......................... 13,018 17,695 (4,677) (26)net.................................. 15,556 17,442 (1,886) (11)
Interest income--TV Azteca, net of interest expense of $1,047 in
2000...............2000.......................................................... 12,679 1,856 10,823 583
Premium(Loss) gain on note conversion....investments...................................... (2,538) 253 (2,791) (1,103)
Note conversion expense......................................... 16,968 16,968 N/A
Minority interest in net earnings of subsidiaries.....subsidiaries............... 202 142 60 42
Income tax benefitBenefit (provision).................. for income taxes............................ 59,656 (214) 59,870 N/A27,977
Extraordinary losses on extinguishment of debt, net..net............. 4,338 1,372 2,966 216
------------ -------------------- -------- --------
Net loss...................... $ (194,628) $ (50,727)loss........................................................ $(194,628) $(50,727) $143,901 284%
============ ==================== ======== ========

Rental and Management Revenue

Rental and management revenue for the year ended December 31, 2000 was
$278.2 million, an increase of $142.9 million from the year ended December 31,
1999. The increase can beis primarily attributedattributable to two factors: the acquisition
and construction of towers in 2000 and the latter part of 1999 and increased
lease-
upslease-ups (utilization) of new and existing towers. During 2000, we continued
to implement our growth strategy by aggressively acquiring and building new
towers. With the consummation of the AirTouch, AT&T and other transactions, we
acquired more than 4,600 towers in 2000. This coupled with the construction of
over 1,600 towers in 2000, increased the scope, depth and strength of our
national and international tower footprint providing us with a much larger base
of towers generating revenue in 2000 as compared to 1999.

In the long-term, we believe that our leasing revenues are likely to grow at a
more rapid rate than revenues from other segments of our business because of
increasing utilization of existing tower capacity, recent and pending
acquisitions and build-to-suit and other construction activities.

Additionally, duringDuring 2000, we also focused on implementing an area management structure
that enhances sales and marketing, enabling us to increase the utilization of
both previously existing (prior to January 2000) and newly acquired/constructed
towers. Increased utilization resulted in increases in revenue in 2000 for
towers that were in our portfolio as of January 1, 2000.

Network Development Services Revenue

Network development services revenue for the year ended December 31, 2000
was $311.9 million, an increase of $221.5 million from revenue for the year
ended December 31, 1999. The significant growth in revenues during 2000
resulted from strategic acquisitions and increased demand for installation work
and component parts from major wireless carriers.

During 2000, we acquired several key services companies that added
additional revenue and expanded our in-house services capabilities. Among the
acquisitions were Galaxy Engineering Services, which enables us to perform an
array of radio frequency engineering and network design services, such as drive
testing, voice quality analysis and transport engineering, and Kline Iron &
Steel Co., a steel fabrication company with expertise in broadcast towers. In
addition, increased demand for some of our network development services, such
as equipment installation, maintenance and sales of component parts, also
created additional revenue in 2000. Much of this increased demand was a result
of aggressive network expansion programs initiated by major wireless
communications carriers during the year. In contrast, our revenues from site
acquisition and construction work for others, which are also part of our
network development services segment, have declined, and we believe will continue to decline, as a
percentage of our total revenues.declined. This decline is
attributable to the trend in the wireless communications industry to outsource
tower infrastructure needs. This trend means we are increasingly applying our
site acquisition and construction capabilities to our build-to-suit projects
and for other construction for our own account.

Satellite and Fiber Network Access Services Revenue

Satellite and fiber network access services revenue for the year ended
December 31, 2000 was $145.2 million, an increase of $112.8 million from
revenue for the year ended December 31, 1999. The majority of the increase can
be attributed to the consummation of several key acquisitions that occurred in
2000 and the fourth quarter of 1999 including: ICG Satellite Services, General
Telecom, U.S. Electrodynamics, and Publicom. These acquisitions significantly
increased our service capabilities, revenue base, and geographical scope of our
customers as well as providing significant incremental revenues in 2000. We
also experienced an increase in demand of the internetInternet and data requirements of
our internetInternet service provider customers in 2000.

Rental and Management Expense

Rental and management expense for the year ended December 31, 2000 was
$139.2 million, an increase of $76.8 million from the year ended December 31,
1999. A significant portion of the increase is attributable to incremental
operating expenses incurred in 2000 for towers that were acquired or
constructed during 2000 and the latter part of 1999 as discussed above. The
remaining component of the increase is primarily related to additional expenses
incurred by us in 2000 to implement our area management structure together
with, to a lesser extent, increases in operating expenses on certain towers that
existed in 1999.prior to January 1, 2000.

Network Development Services Expense

Network development services expense for the year ended December 31, 2000
was $274.8 million, an increase of $205.5 million from the year ended December
31, 1999. The significant increase in expense is primarily due to the strategic
acquisitions consummated in 2000 as discussed above. In addition, we incurred
expenses in 2000 to transition a portion of our Specialty Constructorsconstruction services unit from
tower construction work to equipment installation and other services. InThis
transition was related, in part, this transition is related to an ongoing process to decentralize some of
our tower construction capabilities and develop some of those capabilities at
our regional and area

30
locations. Remaining increases in expense are directly
related to a charge for a bad debt reserve of approximately $7.0 million
recorded in the fourth quarter and overall increases in the amount of services
and component sales to customers.

Satellite and Fiber Network Access Services Expense

Satellite and fiber network access services expense for the year ended
December 31, 2000 was $110.1 million, an increase of $86.0 million from the
year ended December 31, 1999. Substantially all of the increase can be
attributed to the strategic acquisitions discussed above, together with
additional expenses related to integrating those acquisitions. Remaining
increases are related to the building of infrastructure to help manage the
growth of this segment and overall increases in volume.

Depreciation and Amortization

Depreciation and amortization for the year ended December 31, 2000 was
$283.4 million, an increase of $150.8 million from the year ended December 31,
1999. AOne component of the increase is attributable to an increase in
depreciation expense of $74.8 million. This is a direct result of our purchase,
construction and acquisition of approximately $1.3 billion of property and
equipment during 2000.2000 and a full year of depreciation on acquisitions and
additions made in 1999. The remaining component of the increase is an increase
in amortization of $76.0 million, resulting from our recording and amortizing
approximately $1.3 billion of goodwill and other intangible assets related to
acquisitions consummated during 2000.2000, and a full year of amortizaton on
goodwill and other intangible assets related to acquisitions made in 1999.

Development Expense

Development expense for the year ended December 31, 2000 was $14.5 million,
an increase of $12.9 million from the year ended December 31, 1999. The
majority of the increase represents costs related to tower site inspections,
related data gathering and certain integration expenses related to acquisitions
consummated in 2000. The remaining component of the increase represents
expenses incurred in connection with abandoned acquisitions and other
acquisition related costs which are not capitalized in accordance with
generally accepted accounting principles.

Corporate General and Administrative Expense

Corporate general and administrative expense for the year ended December 31,
2000 was $15.0 million, an increase of $5.8 million from the year ended
December 31, 1999. The majority of the increase is a result of higher
personnel, marketing, professional services and information technology costs
associated with supporting our increasing number of towers, the growth of our
other businesses, our expanding revenue base and our growth strategy.

Interest Expense

Interest expense for the year ended December 31, 2000 was $156.8 million, an
increase of $129.3 million from the year ended December 31, 1999. This increase
is primarily related to increased borrowings to finance acquisitions and
construction. The net change, specifically, is attributable to increases in
interest incurred on our outstanding debt obligations of $131.7 million and
deferred financing amortization of $5.6 million. These interest increases were
offset by an increase in capitalized interest related to construction projects
of $8.0 million.

Interest Income and Other, Net

Interest income and other, net for the year ended December 31, 2000 was
$13.0$15.6 million, a decrease of $4.7$1.9 million from the year ended December 31,
1999. The decrease is primarily attributable to a decrease in interest earned
on invested cash on hand of $4.6 million as a consequence of such cash being used to finance
acquisitions and construction.

3130

Interest Income--TV Azteca, Net

Interest income--TV Azteca, net for the year ended December 31, 2000 was
$12.7 million, an increase of $10.8 million for the year ended December 31,
1999. Amounts included within this caption at December 31, 2000 represent
interest earned on our note receivable from TV Azteca of $13.7 million offset
by interest expense of $1.0 million.

Premium(Loss) Gain on Investments

Loss on investments for the year ended December 31, 2000 was $2.5 million,
an increase of $2.8 million from the year ended December 31, 1999. The increase
resulted primarily from losses on equity investments made in 2000.

Note Conversion Expense

During the year ended December 31, 2000, we acquired a portion of our 6.25%
and 2.25% convertible notes in exchange for shares of our Class A common stock.
As a consequence of those negotiated exchanges with certain of our noteholders,
we recorded an expense related to the premium on note conversion of approximately $17.0 million during the second quarter
of 2000, which represents the fair value of incremental stock issued to
noteholders to induceencourage them to convert their holdings prior to the first
scheduled redemption date.

Benefit (Provision) for Income Taxes

The income tax benefit for the year ended December 31, 2000 was $59.7
million, an increase of $59.9 million from the year ended December 31, 1999.
The primary reason for the increase is a result of an increase in our loss
before income taxes and extraordinary losses, partially offset by an increase
in amortization of non-deductible intangible assets arising from stock
acquisitions, consummated innon-deductible note conversion expense and the years ended December 31, 2000 and 1999.valuation
allowance primarily related to certain state net operating loss carryforwards.
The effective tax rate differs in both periods from the statutory rate due to
the effect of non-deductible items, principally the amortization of goodwill on
certain stock acquisitions and, for the year ended December 31, 2000, the
non-
deductiblenon-deductible note conversion expense on which we have recorded no tax benefit.

In assessing the realizabilityFASB Statement No. 109, Accounting for Income Taxes, requires that we record
a valuation allowance when it is "more likely than not that some portion or all
of the deferred tax asset,assets will not be realized". At December 31, 2001, we
analyzed our
forecast of future taxable income and concluded that, after recordingprovided a valuation allowance of approximately $6.0 million related tomillion. We have not
provided a portion ofvaluation allowance for the remaining deferred tax assets, primarily
our statefederal net operating loss carry-forwards, recoverability ofcarryforwards, as management believes that we
will have sufficient time to realize these assets during the remaining net deferred tax
asset is more likely than not. The realization of the deferred tax asset is not
dependent upon significant changes in the current relationship between income
reported for financial and tax purposes, or material asset sales or other
transactions not in the ordinary course of business.twenty-year
carryforward period.

Extraordinary Losses on Extinguishment of Debt, Net

We have incurred extraordinary losses on the extinguishment of debt in 2000 of
$4.3 million. The losses were incurred as a result of an amendment and
restatement of our primary credit facilities ($3.0 million, net of a tax
benefit of $2.0 million) and our early retirement of debt assumed in the
UNISite, Inc. merger ($1.3 million, net of a tax benefit of $0.9 million).

Years Ended December 31, 1999 and 1998

As of December 31, 1999, we operated approximately 5,100 communications
sites, as comparedLIQUIDITY AND CAPITAL RESOURCES

OVERVIEW

We plan to approximately 2,300 communications sites as of December
31, 1998. The acquisitions consummated in 1999 and 1998 significantly affected
operations for the year ended December 31, 1999 as compared to the year ended
December 31, 1998.

Year Ended December 31, Amount of Percent
------------------------ Increase Increase
1999 1998 (Decrease) (Decrease)
----------- ----------- --------- ---------
(in thousands)

Revenues:
Rental and management.......... $ 135,303 $ 60,505 $74,798 124%
Network development services... 90,416 23,315 67,101 288
Satellite and fiber network
access services............... 32,362 19,724 12,638 64
----------- ----------- --------
Total operating revenues...... 258,081 103,544 154,537 149
----------- ----------- --------
Operating Expenses:
Rental and management.......... 62,441 29,455 32,986 112
Network development services... 69,318 19,479 49,839 256
Satellite and fiber network
access services............... 24,098 12,817 11,281 88
----------- ----------- --------
Total operating expenses
excluding depreciation and
amortization, tower
separation, development and
corporate general and
administrative expenses....... 155,857 61,751 94,106 152
----------- ----------- --------
Depreciation and amortization.. 132,539 52,064 80,475 155
Tower separation expense....... 12,772 (12,772) N/A
Development expense............ 1,607 1,607 N/A
Corporate general and
administrative expense........ 9,136 5,099 4,037 79
Interest expense............... 27,492 23,229 4,263 18
Interest income and other,
net........................... 17,695 9,217 8,478 92
Interest income--TV Azteca..... 1,856 1,856 N/A
Minority interest in net
earnings of subsidiaries...... 142 287 (145) (51)
Income tax (provision)
benefit....................... (214) 4,491 (4,705) N/A
Extraordinary loss on
extinguishment of debt, net... 1,372 1,382 (10) (1)
Extraordinary loss on
redemption of preferred stock,
net........................... 7,510 (7,510) N/A
----------- ----------- --------
Net loss....................... $(50,727) $(46,842) $ 3,885 8%
=========== =========== ========

Rental and Management Revenue

Rental and management revenue for the year ended December 31, 1999 was $135.3
million, an increase of $74.8 million from the year ended December 31, 1998.
The majority of the increase, $56.4 million, is attributable to revenue
generated from acquisitions consummated and/or towers constructed subsequent to
December 31, 1998. The remaining factor contributing to the additional revenue
is an increase in comparable tower revenue of $18.4 million during 1999 for
towers that existed during 1998.

Network Development Services Revenue

Network development services revenue for the year ended December 31, 1999 was
$90.4 million, an increase of $67.1 million from the year ended December 31,
1998. The primary reason for the increase is due to the $66.7 million of
revenue earned after the mergerfund our current business plan with OmniAmerica, Inc. The remaining component
of the increase is attributable to revenuecash generated from our
existing services
business of approximately $0.4 million.

Satelliteoperations and Fiber Network Access Services Revenue

Satellite and fiber network access services revenue for the year ended
December 31, 1999 was $32.4 million, an increase of $12.6 million from the year
ended December 31, 1998. The primary reason for the increase is the
approximately $9.9 million of revenue earned during 1999 as a result of
acquisitions consummated in 1999. The remaining component of the increase, $2.7
million, is an increase in revenue from the satellite and fiber network access
services business that existed at December 31, 1998.

Rental and Management, Network Development Services and Satellite and Fiber
Network Access Services Expenses

Rental and management, network development services and satellite and fiber
network access services expenses for the year ended December 31, 1999 were
$62.4 million, $69.3 million and $24.1 million, respectively, an increase of
$33.0 million, $49.8 million and $11.3 million, respectively, from the year
ended December 31, 1998. The primary reasons for the increase in these expenses
are essentially the same as those discussed above under each respective revenue
segment.

Depreciation and Amortization

Depreciation and amortization for the year ended December 31, 1999 was $132.5
million, an increase of $80.5 million from the year ended December 31, 1998. A
component of the increase is attributable to an increase in depreciation
expense of $30.5 million resulting from our purchase, construction and/or
acquisition of approximately $693.4 million of property and equipment during
1999. The remaining component of the increase is an increase in amortization
expense of $50.0 million, resulting from our amortization of approximately
$751.7 million of goodwill and other intangible assets related to acquisitions
consummated during 1999.

Tower Separation Expense

We completed our separation from American Radio in 1998. No additional
expenses related to the separation were incurred in 1999, nor are any expected
to occur in the future. See note 1 of the consolidated financial statements for
a description of tower separation expense.

Corporate General and Administrative Expense

Corporate general and administrative expense for the year ended December 31,
1999 was $9.1 million, an increase of $4.0 million from the year ended December
31, 1998. The majority of this increase resulted from higher personnel and
marketing costs associated with our growing revenue base and market position.
The remaining component of the increase is the overall increases in other
administrative expenses incurred in supporting our growth.

Development Expense

Development expense for the year ended December 31, 1999 was $1.6 million.
These expenses include abandoned acquisition costs, costs to integrate
acquisitions and costs associated with new business initiatives.

Interest Expense

Interest expense for the year ended December 31, 1999 was $27.5 million, an
increase of $4.3 million from the year ended December 31, 1998. The increase is
primarily attributable to an increase of interest on our outstanding debt
obligations ($9.4 million) and amortization of deferred financing costs ($0.7
million). These interest increases were offset by a decrease of $3.1 million in
interest incurred during 1998 on our outstanding redeemable preferred stock
(which was redeemed in July 1998), as well as an increase in interest
capitalized during the year ended December 31, 1999.

Interest Income and Other, Net

Interest income and other, net for the year ended December 31, 1999 was $17.7
million, an increase of $8.5 million from the year ended December 31, 1998. The
increase is primarily related to an increase in interest earned on invested
cash on hand ($4.9 million), interest earned on notes receivable ($1.4 million)
and interest earned on security/escrow deposits ($2.2 million).

Interest Income--TV Azteca

Interest income--TV Azteca for the year ended December 31, 1999 was $1.9
million. Amounts included within this caption represent interest earned on our
notes receivable from TV Azteca.

Income Taxes

The income tax provision for the year ended December 31, 1999 was $0.2
million, a decrease of $4.7 million from the income tax benefit recorded for
the year ended December 31, 1998. The decrease in the tax benefit is due to an
increase in nondeductible permanent items (principally goodwill amortization).
The increase in nondeductible permanent items occurred as a result of the
consummation of several mergers and acquisitions in 1999.

As of December 31, 1999, we had a net deferred tax asset of $116.0 million.
In assessing the realizability of the deferred tax asset, we analyzed our
forecast of future taxable income and concluded that recoverability of the net
deferred tax asset is more likely than not. The realization of the deferred tax
asset is not dependent upon significant changes in the current relationship
between income reported for financial and tax purposes, or material asset sales
or other transactions not in the ordinary course of business.

Extraordinary Losses

We incurred an extraordinary loss on the extinguishment of debt in 1999 of
$1.4 million due to the early repayment of one of our term loans. We recorded
an extraordinary loss of $1.4 million in 1998 due to the refinancing of our
then existing credit facility. We also recorded an extraordinary loss of $7.5
million in 1998 due to the redemption of our interim preferred stock.

Liquidity and Capital Resources

Our liquidity needs arise from our acquisition-related activities, debt
service, working capital and capital expenditures associated principally with
our construction program. As of December 31, 2000, we had approximately $82.0
million in cash and cash equivalents, working capital of approximately $173.4
million, and had approximately $300.0 million of available borrowingsborrowing under our credit facilities. Historically, we have
met our operational liquidity needs and interest expense related to our debt
obligations primarily with internally generated funds andfunds. We have financed our
tower acquisitions and our
construction program, including related working capital needs,activities with a combination of capital
funds from sales of our equity and debt securities and bank borrowings.

In the latter half of 2001, major wireless carriers reduced their planned
capital expenditures for geographic network expansion. We expect that this trendwireless
carriers will continuemake capital expenditures in 2001.2002 primarily to increase the
density of their current network coverage and improve the quality of service to
existing subscribers while selectively investing to expand network coverage.
During the later part of the year we began to reduce our tower construction
program, and in November 2001 we announced new operational initiatives to
reduce significantly our tower development activities and to consolidate
operations in each of our business segments.

We expect that during 2003 we will become free cash flow positive, meaning
that our operating cash flows will be sufficient to meet our operational needs,
interest expense and capital expenditures. We believe we will have sufficient
liquidity and capital resources from our operating cash flows and borrowings
under our credit facilities to support our business plan until that occurs.

USES OF LIQUIDITY

Our 2001uses of liquidity include: operational needs; capital expenditures for
tower construction and acquisitions; and debt service.

Tower Construction and Acquisition Needs. We have significantly reduced our
planned level of tower construction and acquisitions for 2002. As a result, we
anticipate that our liquidity needs for new tower development and acquisitions
in 2002 will be significantly less than in previous years.

. Tower Construction. Our 2002 capital budget provides for total capital
expenditures of approximately $600.0$200.0 million to $225.0 million, which
includes towers to be built under existing build-to-suit agreements. In
addition, basedcontrast, we spent $568.0 million on the transactions executed to date, we expect
to close on pending transactions of approximately $800.0 million in 2001.
Lastly, we believe that debt service requirements will be significanttotal capital expenditures in
2001. We believe our current cashplan to build in 2002 between 400 and cash equivalents (which include proceeds from
our equity and senior note offerings500 towers, including
nine broadcast towers. In contrast, we built approximately 1,300
towers, including five broadcast towers, in 2001) and existing borrowing capacity
under our credit facilities will be sufficient to meet these above cash
requirements. If we were to effect more than one or possibly two major new
acquisitions in the next twelve months, we would likely require additional
funds from external sources.

For the year ended December 31, 2000, cash flows used for operating
activities were $25.0 million, as compared to cash flows provided by operating
activities of $97.0 million for the year ended December 31, 1999. The primary
reasons for the decrease are increased interest payments, the paydown of
current liabilities assumed through acquisitions and an increase in current
assets.

For the year ended December 31, 2000, cash flows used for investing
activities were $2.0 billion, as compared to $1.1 billion for the year ended
December 31, 1999. The increase in 2000 is primarily due to a net increase in
cash expended for mergers and acquisitions, coupled with an increase in
property and equipment expenditures.

For the year ended December 31, 2000, cash flows provided by financing
activities were $2.1 billion, as compared to $879.7 million for the year ended
December 31, 1999. The increase is primarily related to increased net
borrowings under our credit facilities, offset by a decrease in proceeds from
the issuance of debt and equity securities.2001.

. Tower Acquisitions. As of December 31, 2000,2001, we were committed to make
capital expenditures of approximately $30.0 million for pending
acquisitions, including $8.4 million for ALLTEL, which we closed in
January and February 2002. We spent approximately $809.6 million in
cash in 2001 for acquisitions.

Debt Service. We use a significant portion of our liquidity to service our
outstanding indebtedness. As of December 31, 2001, we had outstanding total
long-term debt of about $3.6 billion, consisting primarily of the indebtedness as described
below (under "Credit Facilities"following:

. our credit facilities-$1.45 billion;

. our senior notes-$1.0 billion; and

"Equity Offerings. our convertible notes, net of discount-$866.9 million

Our credit facilities, senior notes and Note Placements").convertible notes require us to make
significant principal payments at their respective maturity dates. In addition,
asin the case of our credit facilities, we must make scheduled amortization
payments of principal prior to maturity. Beginning March 31, 2003, our credit
facilities require amortization of the term loans in increasing annual amounts
designed to repay the loans by maturity. Interest on our senior notes is
payable semiannually on February 1 and August 1. Under our credit facilities,
we are required to maintain an interest reserve for our senior notes through
the August 2002 interest payment. These funds can only be used to make
scheduled interest payments on those notes. As of December 31, 2000,2001, we had
outstanding $212.7approximately $94.1 million principal amountof restricted cash related to that interest
reserve. Interest on our convertible notes is payable semi-annually. Prior to
maturity, there are no mandatory redemption provisions for cash in the senior
notes or the convertible notes. The holders of the convertible notes, however,
have the right to require us to repurchase their notes on specified dates prior
to maturity, but we may pay the repurchase price by issuing shares of our 6.25% convertible notes due October 15, 2009 and $258.2
million principal amountClass
A common stock. For a more complete description of our 2.25% convertible notes due October 15, 2009,outstanding
indebtedness, see "Contractual Commitments" below and other debt of approximately $197.3 million. See note 6 to our
consolidated financial statements.

SOURCES OF LIQUIDITY

Our primary sources of liquidity historically have been internally generated
funds from operations, borrowings under our credit facilities, proceeds from
equity and debt offerings and cash on hand.

Internally Generated Funds. Our operating revenues, divisional cash flow
and EBITDA for the year ended December 31, 2001 were $1.1 billion, $300.5
million and $274.0 million, respectively. Our tower leasing activities generate
the highest profit margins. We believe those activities are likely to grow more
rapidly than our other segments because of increased utilization of our
existing towers.

Credit Facilities. As of December 31, 2001, we had not drawn on the $650.0
million revolving line of credit under our credit facilities. As of December
31, 2001, based on financial covenants and giving effect to the repayment of
our Mexican credit facility described below, we had the ability to draw $555.0
million on this revolving line of credit. Because of existing cash on hand, our
anticipated borrowing needs and the unused capacity in our credit facilities,
in January 2002, we chose to cancel our incremental $250.0 million Term C Loan.
As a result, our maximum borrowing capacity under the credit facilities was
reduced from $2.25 billion to $2.0 billion.

Proceeds from Equity and Debt Offerings. Historically, we have been
successful at raising funds in the capital markets through equity and debt
offerings. We have used these proceeds mostly to fund new tower development and
acquisitions. For example, in January 2001, we completed a public offering of
10.0 million shares of our Class A common stock for total net proceeds of
approximately $360.8 million. We also completed in that month a private
placement of $1.0 billion of our senior notes for total net proceeds of $969.0
million.

Cash On Hand. As of December 31, 2001, we had approximately $130.0 million
in cash and cash equivalents. Approximately $94.1 million is restricted under
our credit facilities and can only be used to make scheduled interest payments
on the senior notes. As of December 31, 2001, we had approximately $179.5
million of working capital.

PLANS TO FUND OUR LIQUIDITY NEEDS

We plan to fund our operational liquidity needs through internally generated
funds from operations. We plan to fund our capital expenditures for new tower
construction and acquisitions and our interest expense through a combination of
internally generated funds and borrowings under our credit facilities. We
anticipate aggregate incremental borrowing needs for 2002 and 2003 of under
$200.0 million. During 2003, we expect that our operating cash flows will
become sufficient to fund both our capital expenditures for new tower
construction and acquisitions and the interest expense on our outstanding debt.

We may, in the future, need to raise cash from external sources to meet our
debt service obligations and to pay the principal amounts of our indebtedness
when due.

CONTRACTUAL COMMITMENTS

Below is a summary of our credit facilities, senior notes, convertible notes
and certain other contractual obligations. It is qualified in its entirety by
the terms of the actual agreements which are summarized. Also see note 6 and
note 8 of our consolidated financial statements for more information about the
terms of our indebtedness and our commitments and contingencies.

Credit Facilities. Our credit facilities provide us with a borrowing
capacity of up to $2.0 billion, with the option, subject to lender approval, to
increase the capacity up to an additional $500.0 million, subject to lender approval.million. Our principal
operating subsidiaries are the borrowers under our credit facilities.
Borrowings under the credit facilities are subject to compliance with certain
borrowing base restrictions, suchfinancial ratios as operating cash flow and construction cost levels.described below. Our credit facilities currently includeinclude:

. a $650.0 million revolving credit facility which was fully available,
(subjectsubject to the borrowing base restrictions)compliance with those financial ratios, on December 31,
2000,2001, maturing on June 30, 2007,2007;

. an $850.0 million multi-draw Term Loan A, which was fully drawn on
December 31, 2000,2001, maturing on June 30, 2007,2007; and

. a $500.0 million Term Loan B, which was fully drawn on December 31,
2000,2001, maturing on December 31, 2007.

The credit facilities are scheduled to amortize quarterly commencing in
March 2003. In January 2002, we terminated a $250.0 million multi-draw Term
Loan C facility, none of which facility had been drawn. As a result of this
termination, we will record a non-cash charge of $7.5 million to "other
expense" in the first quarter of 2002 related to the write-off of certain
deferred financing fees. We believe the $650.0 million revolving credit
facility remaining under the $2.0 billion of credit facilities will be
sufficient to finance our business plan.

Our credit facilities contain certain financial ratios and operational
covenants and other restrictions with which the borrower subsidiaries and the
restricted subsidiaries must comply. Any failure to comply whether orwith these covenants
would not there areonly prevent us from being able to borrow more funds, but would also
constitute a default. For more information about these covenants, see "Factors
Affecting Sources of Liquidity - Credit Facilities". They also restrict our
ability, as the parent company of the borrower subsidiaries, to incur any borrowings outstanding.debt
other than that presently outstanding and refinancings of that debt. We and theour
restricted subsidiaries have guaranteed all of the loans. We have secured the
loans by liens on substantially all assets of the borrower subsidiaries and the
restricted subsidiaries and substantially all outstanding capital stock and
other debt and equity interests of all of our direct and indirect subsidiaries.

Under our credit facilities, we are also required to maintain an interest
reserve for our convertiblesenior notes and our senior notes.through the August 2002 interest payment. These
funds can only be used to make scheduled interest payments on our outstanding convertible notes
and seniorthose notes. As
of December 31, 20002001 we had approximately $46.0$94.1 million of restricted cash
related to suchthat interest reserve.

ATC Mexico Loan Agreement.

In February 2001, our Mexican subsidiary American
Tower Corporation de Mexico, S. de R.L. de C.V., which we refer to as ATC
Mexico, and two of its subsidiaries
consummated a loan agreement with a group of banks providing a credit facility
of an initial aggregate amount of $95.0 million. If additional lenders are made party to the agreement, the size of the
facility may increase to $140.0 million. We have committed to ATC Mexico to
loan up to $45.0 million if additional lenders are not made party to the
agreement. Our committment will be reduced on a dollar-for-dollar basis if
additional lenders join the ATC Mexico loan agreement. This credit facility
requires maintenance of various financial covenants and ratios and is
guaranteed and collateralized by substantially all of the assets of ATC Mexico
and the assets of its subsidiaries. All amounts borrowed under this loan
agreement are due on September 30, 2003. The lenders' commitment to make loans
under the loan agreement expires on March 31, 2002. As of MarchDecember 31, 2001, an
aggregate of $95.0 million was outstanding under this loan agreement. 36In
February 2002 we repaid all of the loans with borrowings under our credit
facilities, and our Mexican subsidiaries became restricted subsidiaries under
our credit facilities. As a result of such repayment, we will recognize an
extraordinary loss on extinguishment of debt in the first quarter of 2002 of
approximately $1.3 million (net of an income tax benefit of $0.7 million).

9 3/8% Senior Notes. As of December 31, 2001, we had outstanding an
aggregate principal amount of $1.0 billion of 9 3/8 % senior notes. The senior
notes mature on February 1, 2009. Interest on the senior notes is payable
semiannually on February 1 and August 1. The indenture governing the senior
notes contains certain restrictive covenants, including restrictions on our
ability to incur more debt, guarantee debt, pay dividends and make certain
investments. For more information about these covenants, see "Factors Affecting
Sources of Liquidity - Senior Notes".

October 1999 Convertible Notes. In October 1999, we issued 6.25% convertible
notes due 2009 in an aggregate principal amount of $300.0 million and 2.25%
convertible notes due 2009 at an issue price of $300.1 million, representing
70.52% of their principal amount at maturity of $425.5 million. The difference
between the issue price and the principal amount at maturity of the 2.25%
convertible notes will be accreted each year as interest expense in our
consolidated financial statements. The 6.25% convertible notes are convertible
into shares of Class A common stock at a conversion price of $24.40 per share.
The 2.25% convertible notes are convertible into shares of Class A common stock
at a conversion price of $24.00 per share. The indentures under which the
convertible notes are outstanding do not contain any restrictions on the
payment of dividends, the incurrence of debt or liens or the repurchase of our
equity securities or any financial covenants.

Equity OfferingsWe may not redeem the 6.25% convertible notes prior to October 22, 2002.
Thereafter, we can redeem the 6.25% convertible notes, at our option, in whole
or in part at a redemption price initially of 103.125% of the principal amount.
The redemption price declines ratably immediately after October 15 of each
following year to 100% of the principal amount in 2005. We may not redeem the
2.25% convertible notes prior to October 22, 2003. Thereafter, we can redeem
the 2.25% convertible notes, at our option, in whole or in part at increasing
redemption prices designed to reflect the original issue discount. We are also
required to pay accrued and Note Placements.unpaid interest in all redemptions of notes.

Holders may require us to repurchase all or any of their 6.25% convertible
notes on October 22, 2006 at their principal amount, together with accrued and
unpaid interest. Holders may require us to repurchase all or any of their 2.25%
convertible notes on October 22, 2003 at $802.93, which is its issue price plus
accreted original issue discount, together with accrued and unpaid interest. We
may, at our option, elect to pay the repurchase price of each series in cash or
shares of Class A common stock, or any combination thereof. Our credit
facilities restrict our ability to repurchase the convertible notes for cash.

In the third quarter of 2001, we acquired a portion of our outstanding
convertible notes. During this period, approximately $82.5 million in face
amount ($61.6 million carrying amount) of our 2.25% convertible notes was
converted into shares of Class A common stock. All of these conversions were
pursuant to exchange agreements that we negotiated with a limited number of
noteholders. Pursuant to these exchange agreements, we issued an aggregate of
approximately 2.4 million shares of Class A common stock that these noteholders
were entitled to receive based on the conversion price set forth in the
applicable indenture, plus an additional approximately 1.5 million shares of
Class A common stock to induce them to convert their holdings prior to the
first scheduled redemption date. As a result of these transactions, in the
third quarter of 2001 we recorded a non-cash charge of $26.3 million, which
represents the fair market value of the inducement shares. We may negotiate
similar exchanges for our outstanding convertible notes from time to time in
the future, subject to market conditions. To the extent that we issue
inducement shares as part of any future exchanges, we expect to record
additional non-cash charges.

As of December 31, 2001, the total amount outstanding under the 2.25%
convertible notes was $204.1 million and $212.8 million for the 6.25%
convertible notes.

February 2000 Convertible Notes. In February 2000, we consummated a public
offeringissued 5.0%
convertible notes due 2010 in an aggregate principal amount of 12.5 million$450.0 million.
The 5.0% convertible notes are convertible into shares of our Class A common
stock for total net
proceedsat a conversion price of approximately $513.9 million. In addition, we consummated a private
placement of $450.0 million of$51.50 per share. The indenture under which the
5.0% convertible notes issuedare outstanding does not contain any restrictions on the
payment of dividends, the incurrence of debt or the repurchase of our equity
securities or any financial covenants.

We may not redeem the 5.0% convertible notes prior to February 20, 2003.
Thereafter, we can redeem the 5.0% convertible notes, at our option, in whole
or in part, at a redemption price initially of 102.50% of the principal amount.
The redemption price declines ratably immediately after February 15 of each
following year to 100% of their
face amount. Thethe principal amount in 2006. We are also required to
pay accrued and unpaid interest in all redemptions of notes.

Holders may require us to repurchase all or any of the 5.0% convertible
notes matureon February 20, 2007 at their principal amount, together with accrued and
unpaid interest. We may, at our option, elect to pay the repurchase price in
February 2010 and require interest
payments semi-annually. We used the proceeds from these two transactions to
reduce borrowings under ourcash or shares of Class A common stock or any combination thereof. Our credit
facilities restrict our ability to finance acquisitions and
tower construction andrepurchase the notes for general working capital purposes.

In Januarycash.

The total amount outstanding under the 5.0% convertible notes as of December
31, 2001 was $450.0 million.

Other Long-Term Debt. As of December 31, 2001, we completed a public offeringhad approximately $250.1
million of 10.0 millionother long-term debt, including capital lease obligations and
mortgage indebtedness. See note 6 to our consolidated financial statements.

Liquidity Table For Contractual Obligations. The following table sets forth
information with respect to our long-term obligations payable in cash as of
December 31, 2001 (in thousands):

Cash Payments Due by Period
-------------------------------------------------------------
Contractual Obligations Less than 1 year 1-3 years 4-5 years After 5 years Total
----------------------- ---------------- --------- --------- ------------- ----------

Long-term debt*....................... $ 1,579 $345,450 $567,758 $2,470,201 $3,384,988
Capital lease obligations............. 11,006 22,458 22,204 121,304 176,972
Operating leases...................... 163,178 235,688 136,706 383,610 919,182
Pending acquisitions.................. 30,000 -- -- -- 30,000
--------- -------- -------- ---------- ----------
Total contractual cash obligations. $205,763 $603,596 $726,668 $2,975,115 $4,511,142
========= ======== ======== ========== ==========

- --------
* The holders of our convertible notes have the the right to require us to
repurchase their notes on specified dates prior to their maturity dates in
2009 and 2010, but we may pay the purchase price by issuing shares of our
Class A common stock for total net proceedsstock.

In addition, as of approximately $360.8 million. We
also completed a private placement of $1.0 billion of 9 3/8% senior notes that
mature in February 2009 for total net proceeds of $969.0 million. These notes
require interest payments semi-annually and contain certain financial and
operational covenants and other restrictions similarDecember 31, 2001, we were party to those in our credit
facilities. We expectvarious arrangements
relating to use the proceeds from these two transactions to
finance the construction of towers, fund pendingtower sites under existing build-to-suit
agreements. We expect that for the foreseeable future we will have substantial
leverage from our bank borrowings, other debt and future acquisitionscapitalized leases.

FACTORS AFFECTING SOURCES OF LIQUIDITY

Internally Generated Funds. The key factors affecting our internally
generated funds are the demand for antennae space on wireless communication
towers and for general corporate purposes.

ATC Separation. We continuerelated services, our ability to be obligated undermaximize the ATC Separation
agreement for certain tax liabilitiesutilization of our
existing towers and our ability to CBSminimize costs and American Radio.fully realize our
operating efficiencies.

Credit Facilities. Our credit facilities contain borrowing ratio covenants
that limit our ability to borrow funds. Our credit facilities contain four
financial tests:

. a leverage ratio (Total Debt to Annualized Operating Cash Flow). As of
December 31, 2000, no material matters covered under this indemnification have been
brought2001, we were required to our attention.

Acquisitionsmaintain a ratio of not greater
than 7.75 to 1.00, decreasing to 7.50 to 1.00 on January 1, 2002, to
7.00 to 1.00 on April 1, 2002, to 6.75 to 1.00 on July 1, 2002, to 6.50
to 1.00 at October 1, 2002, and Construction. We expect that the consummated acquisitions
and current and future construction activities will havewith additional reductions every six
months thereafter;

. a material impact on
liquidity. We believe that the acquisitions, once integrated, will havepro forma debt service test (Annualized Operating Cash Flow to Pro
Forma Debt Service) requires us to maintain a favorable impact on liquidity and will offset the initial effectsratio of the
funding requirements. We also believe that the construction activities may
initially havenot greater than
1.10 to 1.00;

. an adverse effect on our future liquidity as newly constructed
towers will initially decrease overall liquidity. However, as such sites become
fully operational and achieve higher utilization, we expect that they will
generate tower cash flow and, in the long-term, increase liquidity.interest coverage test (Annualized Operating Cash Flow to Interest
Expense). As of December 31, 2000,2001, we were required to maintain a partyratio
of not less than 1.50 to various agreements1.00 through June 30, 2002, increasing by 0.25
on July 1, 2002 and October 1, 2002, and by 0.50 on January 1, 2003 and
January 1, 2004; and

. a fixed charge coverage test (Annualized Operating Cash Flow to Fixed
Charges) which begins in 2003 and requires us to maintain a ratio of
not less than 1.0 to 1.0.

Since our credit facilities are with certain of our subsidiaries, our parent
company debt (the senior notes and the convertible notes) is not included in
the computations of any of the tests, except in the case of the pro forma debt
service test in which case interest includes the amount of funds that we will
require to be distributed by our subsidiaries to pay interest on our senior
notes and our convertible notes. Annualized Operating Cash Flow is based, among
other things, on four times the Operating Cash Flow for the most recent quarter
of our tower rental and management business and trailing 12 months for our
other businesses and corporate general and administrative expenses. In the case
of the leverage ratio, we may include the Operating Cash Flow from Brazil and
Mexico only to the extent of 10% of Annualized Operating Cash Flow and we
receive credit for only 75% of Annualized Operating Cash Flow from our services
and Verestar businesses.

As of December 31, 2001, we were in compliance with these borrowing ratio
covenants.

Senior Notes. Our senior note indenture restricts us from incurring
additional debt or issuing certain types of preferred stock unless our
Consolidated Debt is not greater than 7.5 times our Adjusted Consolidated Cash
Flow. However, we are permitted, even if we are not in compliance with the
ratio, to incur debt under our credit facilities, or renewals, refundings,
replacements or refinancings of them, up to the greater of $2.65 billion or a
formula based on the number of towers we own and our Non-Tower Cash Flow. Even
if not in compliance with the ratio, we are also permitted to, among other
things, have certain types of capital leases and to refund our convertible
notes. For these purposes, Consolidated Debt means all debt, including
guarantees, of our parent company and all of our restricted subsidiaries, which
presently include all of them, other than Verestar and its subsidiaries, and
the aggregate liquidation value of Disqualified Stock. Disqualified Stock means
capital stock maturing, mandatorily redeemable, or redeemable at the holder's
option, prior to 91 days after the maturity of the senior notes. Adjusted
Consolidated Cash Flow is substantially similar to the definition of Annualized
Operating Cash Flow, as defined in the credit facilities, except it applies to
our parent company and our restricted subsidiaries.

Capital Markets. Our ability to raise additional funds in the capital
markets depends on, among other things, general economic conditions, the
condition of the wireless industry, our financial performance and the state of
the capital markets.

CASH FLOWS SUMMARY

For the year ended December 31, 2001, cash flows provided by operating
activities were $26.1 million, as compared to $37.1 million used for operating
activities for the year ended December 31, 2000. This change is primarily
related to an overall reduction in our investment in working capital.

For the year ended December 31, 2001, cash flows used for investing
activities were $1.4 billion, as compared to $2.0 billion for the year ended
December 31, 2000. The decrease is primarily due to a decrease in cash expended
for mergers and acquisitions.

For the year ended December 31, 2001, cash flows provided by financing
activities were $1.4 billion, as compared to $2.1 billion for the year ended
December 31, 2000. The decrease is primarily related to a reduction in the
aggregate net cash inflows from bank borrowings and equity offerings, offset by
an increase in proceeds from the issue of debt securities.

CRITICAL ACCOUNTING POLICIES

In December 2001, the SEC requested that all registrants disclose their most
"critical accounting policies" in "Management's Discussion and Analysis of
Financial Condition and Results of Operations". The SEC indicated that a
"critical accounting policy" is one which is both important to the portrayal of
the company's financial condition and results and requires management's most
difficult, subjective or complex judgments, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain.
Further, "critical accounting policies" are those that are reflective of
significant judgments and uncertainties, and potentially result in materially
different results under different assumptions and conditions.

We believe that our accounting policies described below fit the definition
of "critical accounting policies".

. Revenue Recognition. A portion of our network development services
revenue is derived under contracts or arrangements with customers that
provide for billings on a fixed price basis. Revenues under these
contracts are recognized using the percentage-of-completion methodology.
Under the percentage-of-completion methodology, revenues are recognized
in accordance with the percentage of contract costs incurred to date
compared to the estimated total contract costs. Due to uncertainties and
estimates inherent within percentage-of-completion accounting it is
possible that estimates will be

revised as project work progresses. Changes to total estimated contract
costs or losses, if any, are recognized in the period in which they are
determined.

. Income Taxes. The company records a valuation allowance to reduce its
net deferred tax asset to the amount that management believes is more
likely than not to be realized. At December 31, 2001, we provided a
valuation allowance primarily related to our state operating loss
carryforwards of approximately $56.3 million. We have not provided a
valuation allowance for the remaining deferred tax assets, primarily our
federal net operating loss carryforwards, as management believes that we
will have sufficient time to realize these assets during the
carryforward period.

The ultimate realization of these deferred tax assets depends on our
ability to generate sufficient taxable income in the future. Based on
our current outlook of future taxable income during the carryforward
period, we believe our net deferred tax asset will be realized. If we
are unable to generate sufficient taxable income in the future, we will
be required to reduce our net deferred tax asset through a charge to
income tax expense, which would result in a corresponding decrease in
stockholders' equity.

. Impairment of Assets. We review long-lived assets, including
intangibles, for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. We
assess recoverability by determining whether the net book value of the
related assets will be recovered through projected undiscounted cash
flows. If we determine that the carrying value of an asset may not be
recoverable, we will measure any impairment based on the projected
future discounted cash flows to be provided from the asset as compared
to its carrying value. We record any related impairment losses in the
period in which we identify such impairment.

During the year ended December 31, 2001, we recorded impairment charges
relating to acquisitionsour long-lived assets of assetsapproximately $11.6 million. Those
charges are reflected in depreciation and amortization in our 2001
consolidated statement of operations.

. Investment Impairment Charges. Investments in those entities where we
own less than twenty percent of the voting stock of the individual
entity and do not exercise significant influence over operating and
financial policies of the entity are accounted for using the cost
method. Investments in entities where we own less than twenty percent
but have the ability to exercise significant influence over operating
and financial policies of the entity or businesses from various third partieswhere we own more than twenty
percent of the voting stock of the individual entity, but not in excess
of fifty percent, are accounted for using the equity method. As of
December 31, 2001, all of our investments were in companies that are not
publicly traded, and, were
involvedtherefore, no established market for their
securities exists. We have a policy in place to review the constructionfair value of
numerous towers, pursuantour investments on a regular basis to build-to-suit
agreementsevaluate the carrying value of the
investments in these companies. If we believe that the carrying value of
an investment is carried at an amount in excess of fair value, it is our
policy to record an impairment charge to adjust the carrying value to
the market value.

During the year ended December 31, 2001, we recorded impairment charges
on our investments of $31.6 million. These charges are reflected in loss
(gain) on investments in our consolidated statement of operations.

The above listing is not intended to be a comprehensive list of all of our
accounting policies. See our audited consolidated financial statements and
for other purposes.

Economic conditions. Anotes thereto which begin on page F-1 of this annual report where our
significant general slow down in the economy in 2001
or beyond could reduce consumer demand for wireless services, thereby causing
providers to delay implementation of new systems and technologies, and has
harmed, and may continue to harm, the financial condition of some wireless
service providers, as referred to elsewhere herein.

Recent Accounting Pronouncementsaccounting policies are discussed.

RECENT ACCOUNTING PRONOUNCEMENTS

On January 1, 2001, we adopted the provisions of SFASStatement of Financial
Accounting Standard (SFAS) No. 133 "Accounting for Derivative Instruments and
Hedging Activities.Activities," as amended. Our 2001 consolidated financial statements
were prepared in accordance with the provisions of SFAS No. 133. The 2000 and
1999 consolidated financial statements were prepared in accordance with the
applicable literature for derivatives and hedging instruments in effect at that
time. The cumulative effect of adopting this statement resulted in a charge to
other comprehensive loss of $7.9 million (net of a tax benefit of $4.2 million)

In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 supersedes
Accounting Principles Board (APB) Opinion No. 16 "Business Combinations" and
SFAS No. 38 "Accounting for Pre-acquisition Contingencies" and eliminates
pooling-of-interest accounting for business combinations. SFAS No. 141 also
includes enhanced criteria for identifying intangible assets separately from
goodwill. The requirements of SFAS No. 141 were effective for any business
combination consummated by us subsequent to June 30, 2001. We did not
consummate any acquisitions subsequent to June 30, 2001 that gave rise to
goodwill.

SFAS No. 142 supersedes APB Opinion No. 17, "Intangible Assets", and
requires that goodwill and intangible assets with indefinite lives will no
longer be amortized, but reviewed for impairment at least annually. Intangible
assets that are not deemed to have an indefinite life will continue to be
amortized over their useful lives.

The adoption of SFAS No. 142 is expected to reduce our annual amortization
of goodwill by approximately $90.0 million. We are in the process of assessing
the transitional impairment test and the related valuation of goodwill under
SFAS No. 142 for our company. However, upon completion of the transitional
impairment test, it is likely we will record a non-cash impairment charge in
our statement of operations related to Verestar. Although the amount of the
charge has not been determined, goodwill related to Verestar was approximately
$185.0 million as of December 31, 2001. We will reflect this charge, if
necessary, as a cumulative effect of a change in accounting principle in our
2002 statement of operations.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets". This statement establishessupersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of". The statement retains the previously existing accounting
requirements related to the recognition and measurement of the impairment of
long-lived assets to be held and used while expanding the measurement
requirements of long-lived assets to be disposed of by sale to include
discontinued operations. It also expands the previously existing reporting
standardsrequirements for derivative instruments. Specifically, it
requires that an entity recognize all derivatives as either assets or
liabilities on the balance sheet at fair value. The accounting for changes in
the fair value of a derivative (that is unrealized gains or losses) will be
recorded asdiscontinued operations to include a component of an entity's net incomeentity
that either has been disposed of or other comprehensive
income, depending upon designation (as defined in the statement). As a result
of adoptingis classified as held for sale. We
implemented SFAS No. 133, we expect to record a pre-tax non-cash loss from a
cumulative effect of change in accounting principle of approximately $12.0
million to $14.0 million in the first quarter of 2001.

During 2000, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition," which provides the
SEC staff's views in applying generally accepted accounting principles to
revenue recognition. SAB No. 101 was effective for the Company144 on OctoberJanuary 1, 2000.2002. The adoption of SAB No. 101this statement was
not material to our consolidated financial statements.

In March 2000, the Financial Accounting Standards Board issued Interpretation
No. 44 (FIN 44), "Accounting for Certain Transactions involving Stock
Compensation", an interpretationposition or results of APB No. 25. FIN 44 was effective July 1,
2000. The adoption of FIN 44 was not material to our consolidated financial
statements.

37operations.

Information Presented Pursuant to the Indenture for OurINFORMATION PRESENTED PURSUANT TO THE INDENTURE FOR OUR 9 3/8% Senior NotesSENIOR NOTES

The following table sets forth information that is presented solely to
address certain reporting requirements contained in the indenture for our 9
3/8% senior notes issued in January 2001.note indenture.
This information presents certain financial data for us on a consolidated basis
and on a restricted group basis, which means only for American Tower and its subsidiaries that compriseas defined in the restricted group under the indenture governing those senior notes.note indenture. All
of our subsidiaries are part of this restricted group, except our wholly-owned
subsidiary, Verestar, and its subsidiaries, whose operations constitute all of our satellite and fiber
network access services business segment. This restricted group data is not
intended to represent an alternative measure of operating results, financial
position or cash flow from operations, as determined in accordance with
generally accepted accounting principles.subsidiaries.

Consolidated Restricted Group(1)
------------------------- --------------------
Year Ended---------------------- ----------------------
Year Ended December 31, Year Ended December 31,
------------------------- ------------------------------------------ ----------------------
2001 2000 19992001 2000
1999
------------ ----------- ---------- ----------------- ---------- ---------
(in thousands)

Statement of Operations Data:
Operating revenues...........revenues............................... $1,134,191 $ 735,275 $ 258,081898,798 $ 590,074
$225,719
------------ ----------- ---------- ----------------- ---------- ---------
Operating expenses:
Operating expenses(2)........expenses excluding depreciation and
amortization and restructuring, development and
corporate general and administrative expenses.. 848,042 524,074 155,857620,088 414,009 131,759
Depreciation and amortization.................amortization.................... 440,371 283,360 132,539377,138 256,286
125,275Restructuring expense............................ 69,174 67,992
Development expense(3).......expense.............................. 8,630 14,517 1,6077,895 14,433 1,406
Corporate general and administrative expense......expense..... 26,478 14,958 9,13626,478 14,958
9,136
------------ ----------- ---------- ----------------- ---------- ---------
Total operating expenses..expenses......................... 1,392,695 836,909 299,1391,099,591 699,686
267,576
------------ ----------- ---------- ----------------- ---------- ---------
Loss from operations.........operations............................. (258,504) (101,634) (41,058)(200,793) (109,612)
(41,857)
Interest expense.............expense................................. (282,291) (156,839) (27,492)(271,098) (155,006) (27,487)
Interest income and other, net......................... 13,018 17,695 12,661 17,632net................... 26,742 15,556 26,125 15,199
Interest income--TV Azteca, net(4)......................net.................. 14,377 12,679 1,85614,377 12,679
1,856
PremiumLoss on note
conversion(5)...............investments.............................. (40,551) (2,538) (36,797) (2,538)
Note conversion expense.......................... (26,336) (16,968) (26,336) (16,968)
Minority interest in net earnings of subsidiaries(6).............subsidiaries (318) (202) (142)(318) (202)
(142)
------------ ----------- ---------- ----------------- ---------- ---------
Loss before income taxes and extraordinary losses........losses $ (249,946)(566,881) $(249,946) $ (49,141)(494,840) $(256,448)
$(49,998)
============ =========== ========== ================= ========== =========

December 31, 2000
-----------------------------2001
-----------------------
Restricted
Consolidated Restricted Group
------------ --------------------------
(in thousands)

Balance Sheet Data:
Cash and cash equivalents....................... $ 82,03835,958 $ 66,54733,113
Restricted cash................................. 94,071 94,071
Property and equipment, net..................... 2,296,670 2,013,2703,287,573 2,980,031
Total assets.................................... 5,660,679 5,019,7666,829,723 6,194,397
Long-term obligations, including current portion........................................ 2,468,223 2,355,911portion 3,561,960 3,436,324
Net debt(7)debt(2)..................................... 2,386,185 2,289,3643,431,931 3,309,140
Total stockholders' equity...................... 2,877,030 2,877,0302,869,196 2,869,196

- --------
(1) Corporate overhead allocable to Verestar and interest expense related to
intercompany borrowings to Verestar (unrestricted subsidiary) have not been
excluded from results shown for the restricted group.
(2) Consists of operating expenses other than depreciation and amortization,
and development and corporate general and administrative expenses.
(3) Development expense includes uncapitalized acquisition costs, costs to
integrate acquisitions, costs associated with new business initiatives,
abandoned acquisition costs and costs associated with tower site
inspections and related data gathering.
(4) Interest income--TV Azteca, net of interest expense of $1.0 million in
2000.
(5) Premium on note conversion represents the fair value of incremental stock
issued to noteholders to induce them to convert their holdings prior to
the first scheduled redemption date.
(6) Represents the minority interest in net earnings of our non-wholly-owned
subsidiaries.
(7) Net debt represents long-term obligations, including current portion, less
cash and cash equivalents.

38equivalents and restricted cash.

Tower Cash Flow, Adjusted Consolidated Cash Flow and Non-Tower Cash Flow for
the Company and its restricted subsidiaries, as defined in the Company
and its restricted subsidiaries, as defined in our senior note indenture, for
our 9 3/8% senior notes, are as follows:

Tower Cash Flow, for the three months ended December 31, 2000..... $47,164
========2001.......................... $ 71,690
=========
Consolidated Cash Flow, for the twelve months ended December 31, 2000............................................................. $173,7862001.................. $ 287,292
Less: Tower Cash Flow, for the twelve months ended December 31, 2000........................................................... (151,592)2001............... (244,431)
Plus: four times Tower Cash Flow, for the three months ended December 31, 2000.............................................. 188,656
--------2001..... 286,760
---------
Adjusted Consolidated Cash Flow, for the twelve months ended December 31, 2000................................................ $210,850
========2001......... $ 329,621
=========
Non-Tower Cash Flow, for the twelve months ended December 31, 2000............................................................. $7,761
========2001..................... $ 34,966
=========

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of and for the years ended December 31, 2000 and 1999, we wereWe are exposed to market risk from changes in interest rates on long-term
debt obligations. We attemptedattempt to reduce thosethese risks by utilizing derivative
financial instruments, namely interest rate caps, swaps, and collars and swaptions.pursuant
to our policies. All derivative financial instruments are for purposes other
than trading. During 2000,For the year ended December 31, 2001, we increased our borrowings
under our credit facilities by approximately $1.26 billion.$95.0 million. In addition, we
completed a private placement of $450.0 million$1.0 billion of 5.0% convertibleour senior notes issued at
100% of their face amount. We alsoThe proceeds from the above were used to finance
capital expenditures and acquisitions. In the short-term, we invested any
unused proceeds in marketable debt securities, commercial paper and cash and
cash equivalents. In June 2001 we entered into severalan interest rate cap, swap, collar
and swaption
agreements to reduce our risk with respect to the variable rate debt under our
credit facilities. Lastly, during 2000 we had interest rate capsagreement with a total notional amount of $66.9$47.5 million expire.expiring in June 2003.
In August 2001 we acquired an aggregate of $82.5 million face amount ($61.6
million carrying amount) of our 2.25% convertible notes for shares of our Class
A common stock. Lastly, in November 2001, we terminated an interest rate collar
agreement with a total notional amount of $185.0 million originally expiring in
May 2002, and simultaneously entered into an interest rate swap agreement with
a total notional amount of $185.0 million expiring in November 2003.

The following tables provide information as of December 31, 20002001 and 19992000
about our market risk exposure associated with changing interest rates. For
long-term debt obligations, the tables present principal cash flows by maturity
date and average interest rates related to outstanding obligations. For
interest rate caps, swaps, collars and swaptions, the tables present notional
principal amounts and weighted-average interest rates by contractual maturity
dates.

As of December 31, 2001
Principal Payments and Interest Rate Detail by Contractual Maturity Dates (In
thousands)

Long-Term Debt 2002 2003 2004 2005 2006 Thereafter Total Fair Value
- -------------- ------- -------- -------- -------- -------- ---------- ---------- ----------

Fixed Rate Debt(a)...... $12,585 $ 12,133 $ 12,775 $ 64,860 $ 26,352 $1,988,255 $2,116,960 $1,654,718
Average Interest Rate(a) 7.83% 7.82% 7.81% 7.78% 7.78% 7.78%
Variable Rate Debt(a)... $151,000 $192,000 $243,000 $255,750 $ 603,250 $1,445,000 $1,445,000
Average Interest Rate(a)

Aggregate Notional Amounts Associated with Interest Rate Caps, Swaps and
Collars in Place
As of December 31, 2001 and Interest Rate Detail by Contractual Maturity Dates
(In thousands)

Interest Rate CAPS 2002 2003 2004 2005 2006 Thereafter Total Fair Value
- ------------------ ---- ---- ---- ---- ---- ---------- ----- ----------

Notional Amount.................. $ 364,980(c)
Cap Rate......................... 9.00%

Interest Rate SWAPS
- -------------------
Notional Amount.................. $ 580,000(d) $ 550,000(e) $(21,601)
Weighted-Average Fixed Rate
Payable(b)...................... 5.86% 5.80%

Interest Rate COLLARS
- ---------------------
Notional Amount.................. $ 327,500(f) $ 232,500(g) $(13,579)
Weighted-Average Below Floor Rate
Payable, Above Cap
Rate Receivable(b).............. 5.96%, 8.27% 5.96%, 8.18%

As of December 31, 2000
Principal Payments and Interest Rate Detail by Contractual Maturity Dates (In
thousands)

Long-Term Debt 2001 2002 2003 2004 2005 Thereafter Total Fair Value
- -------------- ---- ---- ---- ---- ---- ---------- ---------- ---------- -------- -------- ---------- --------------- ----------

Fixed Rate Debt(a)...... $495 $591 $641 $696 $37,107 $936,582 $976,112 $1,243,860....... $11,178 $11,474 $10,493 $ 10,900 $ 46,953 $1,027,225 $1,118,223 $1,385,971
Average Interest Rate(a)................ 5.79% 5.79% 5.80% 5.80% 5.71% 5.71%. 6.29% 6.26% 6.22% 6.19% 6.07% 6.07%
Variable Rate Debt (a)..... $56,000 $192,000 $243,000 $859,000$ 859,000 $1,350,000 $1,350,000
Average Interest Rate (a)....................

Aggregate Notional Amounts Associated with Interest Rate Caps, Swaps, Collars
and Swaptions in Place
As of December 31, 2000 and Interest Rate Detail by Contractual Maturity Dates
(In thousands)

Interest Rate CAPS 2001 2002 2003 2004 2005 Thereafter Total Fair Value
- ------------------ ---- ---- ---- ---- ---- ---------- ---------- ---------- -------- -------- ---------- --------------- ----------

Notional Amount......... $364,980 $364,980(c)Amount....... $ 364,980 $ 364,980(c)
Cap Rate................Rate.............. 9.00% 9.00%

Interest Rate SWAPS
- -------------------
Notional Amount......... $395,000 $395,000(d) $365,000(e)Amount....... $ (7,680)395,000 $ 395,000(d) $ 365,000(h) $(7,680)
Weighted-Average Fixed
Rate
Payable (b)................. 6.69% 6.69% 6.67%

Interest Rate COLLARS
- ---------------------
Notional Amount......... $465,000 $465,000(f) $185,000(g)Amount....... $ (6,107)465,000 $ 465,000(i) $ 185,000(j) $(6,107)
Weighted-Average Below
Floor Rate Payable,
Above Cap Rate
Receivable (b)................ 6.35%,8.90% 6.35%,8.90% 6.46%,9.00%

Interest Rate SWAPTIONS
- -----------------------
Notional Amount......... $290,000(h)Amount....... $ 290,000(k) $ 1,707
Weighted-Average
Swaption Rate(b)............ 6.56%

As of December 31, 1999
Principal Payments and Interest Rate Detail by Contractual Maturity Dates (In
thousands)

Long-Term Debt 2000 2001 2002 2003 2004 Thereafter Total Fair Value
- -------------- ---------- ---------- ---------- -------- -------- ---------- ---------- ----------

Fixed Rate Debt(a)...... $270 $319 $347 $378 $411 $639,034 $640,759 $640,759
Average Interest
Rate(a)................ 6.38% 6.38% 6.37% 6.37% 6.37% 6.37%
Variable Rate Debt(a)... $6,750 $11,250 $13,500 $18,000 $40,500 $90,000 $90,000
Average Interest
Rate(a)................

Aggregate Notional Amounts Associated with Interest Rate Caps in Place As of
December 31, 1999
and Interest Rate Detail by Contractual Maturity Dates (In thousands)

Interest Rate CAPS 2000 2001 2002 2003 2004 Thereafter Total Fair Value
- ------------------ ---------- ---------- ---------- -------- -------- ---------- ---------- ----------

Notional Amount......... $66,860(i)
Weighted-Average Cap
Rate(b)................ 8.82%

- --------
(a) December 31, 2001 variable rate debt consists of our credit facilities
(including our Mexican credit facility) ($1.45 billion) and fixed rate debt
consists of the 2.25% convertible notes ($204.1 million), the 6.25%
convertible notes ($212.8 million), the 5.0% convertible notes ($450.0
million), the 9 3/8% senior notes ($1.0 billion), and other debt of $250.1
million. Interest on the credit facilities is payable in accordance with
the applicable London Interbank Offering Rate (LIBOR) agreement or
quarterly and accrues at our option either at LIBOR plus margin (as
defined) or the Base Rate plus margin (as defined). The average interest
rate in effect at December 31, 2001 for the credit facilities was 4.76%.
For the year ended December 31, 2001, the weighted average interest rate

under the credit facilities was 7.26%. The 2.25% and 6.25% convertible notes
each bear interest (after giving effect to the accretion of the original
discount on the 2.25% convertible notes) at 6.25% per annum, which is
payable semiannually on April 15 and October 15 of each year beginning April
15, 2000. The 5.0% convertible notes bear interest at 5.0% per annum, which
is payable semiannually on February 15 and August 15 of each year, beginning
August 15, 2000. The 9 3/8% senior notes bear interest at 9 3/8% per annum,
which is payable semiannually on February 1 and August 1 of each year
beginning August 1, 2001. Other debt consists of notes payable, capital
leases and other obligations bearing interest at rates ranging from 7.09% to
14.25%, payable monthly.

December 31, 2000 variable rate debt consists of our credit facilities
($1.35 billion) and fixed rate debt consists of the 2.25% and 6.25%
convertible notes ($470.9 million), the 5.0% convertible notes ($450.0
million), and mortgage payables ($55.2 million). Interest on the credit
facilities is payable in accordance with the applicable London Interbank
Offering Rate (LIBOR) agreement or quarterly and accrues at the Company's
option either at LIBOR plus margin (as defined) or the Base Rate plus
margin (as defined).other debt of $197.3 million. The average interest rate in
effect at December 31, 2000 for the credit facilities was 9.65%. For the
year ended December 31, 2000, the weighted average interest rate under the
credit facilities was 9.56%. The 2.25%Other debt consists of notes payable, capital
leases and 6.25% convertible notes each bear interest (after
giving effect to the accretion of the original discount on the 2.25%
convertible notes) at 6.25%, which is payable semiannually on April 15 and
October 15 of each year beginning April 15, 2000. The 5.0% convertible
notes bear interest at 5.0% which is payable semiannually on February 15
and August 15 of each year. The mortgage payables bearother obligations bearing interest at rates ranging from 7.93%
to 8.42% and are14.25%, payable on a monthly basis.

December 31, 1999 variable rate debt consists of our credit facilities
existing at December 31, 1999 ($90.0 million) and fixed rate debt consists
of the 2.25% and 6.25% convertible notes ($602.3 million) and a mortgage
payable ($38.5 million). The interest rate in effect at December 31, 1999
for the then existing credit facilities was 9.25%. For the year ended
December 31, 1999, the weighted average interest rate under the credit
facilities was 7.94%. The mortgage payable bears interest at 8.42% and is
payable on a monthly basis.monthly.
(b) Represents the weighted-average fixed rate or range of interest based on
contract notional amount as a percentage of total notional amounts in a
given year.
(c) Includes notional amountsamount of $364,980 that will expireexpired in February 2002.
(d) Includes notional amount of $30,000 that expired in March 2002.
(e) Includes notional amounts of $30,000$75,000, $290,000 and $185,000 that will
expire in MarchJanuary, February and November 2003, respectively.
(f) Includes notional amount of $95,000 that will expire in July 2002.
(e)(g) Includes notional amounts of $185,000 and $47,500 that will expire in May
and June 2003, respectively.
(h) Includes notional amounts of $75,000 and $290,000 that will expire in
January and February 2003, respectively.
(f)(i) Includes notional amounts of $185,000 and $95,000 that will expire in May
and July 2002, respectively.
(g)(j) Includes notional amountsamount of $185,000 that will expire in May 2003.
(h)(k) Includes notional amountsamount of $290,000 that will expireexpired in August 2001.

(i) Includes notional amounts of $21,500, $23,750 and $21,610 that expired in
January, April and July 2000, respectively.

We maintain a portion of our cash and cash equivalents in short-term
financial instruments whichthat are subject to interest rate risks. Due to the
relatively short duration of such instruments, we believe fluctuations in
interest rates with respect to suchthose investments will not materially affect our
financial condition or results of operations.

Our foreign operations havein 2001 and 2000 were not been significant to date.significant. Accordingly,
foreign currency risk has not been material for the years ended December 31,
20002001 and 1999.2000.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Item 14(a).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

4143

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Our executive officers, and their respective ages and positions, as of February 29, 2001March
1, 2002 are set forth below:

Name Age Position
---- --- -----------------------------------------------------------------------------

Steven B. Dodge.................. 55Dodge.... .... 56 Chairman of the Board President and Chief Executive Officer
Justin D. Benincasa.............. 39Benincasa .... 40 Senior Vice President and Corporate Controller
Norman A. Bikales................ 65 Executive Vice President--Special
Counsel
Alan L. Box...................... 49 Executive Vice President and Director
James S. Eisenstein.............. 42Eisenstein .... 43 Executive Vice President--Corporate Development
David W. Garrison................ 45 Director, Chairman and Chief Executive
Officer of Verestar, Inc.
J. Michael Gearon, Jr. .......... 36 ExecutiveJr... 37 Vice President,Chairman, Director and President of American Tower International
Steven J. Moskowitz.............. 37Moskowitz..... 38 Executive Vice President--MarketingPresident--Tower Division
David J. Porte.......... 38 Executive Vice President--Technology and Vice President and General Manager
Northeast RegionStrategy
Bradley E. Singer................ 34 Executive Vice President--StrategySinger....... 35 Chief Financial Officer and ViceTreasurer
James D. Taiclet, Jr.... 41 President and General Manager,
Southeast Region
Douglas C. Wiest................. 48 Chief Operating Officer
Joseph L. Winn................... 49 Chief Financial Officer and TreasurerWinn.......... 50 Vice Chairman

Steven B. Dodge has served as our Chairman of the Board President and Chief Executive
Officer since our separation from American Radio in June 1998 (the "ATC
Separation"). He also served as our President until September 2001. Mr. Dodge
was the Chairman of the Board of Directors, President and Chief Executive
Officer of American Radio from its founding in November 1993 until the ATC
Separation. In 1988, Mr. Dodge founded Atlantic Radio, one of the predecessor
entities of American Radio. Mr. Dodge currently serves on the boardsas a director of
Citizens Financial Group, Inc., Nextel Partners, Inc., and Sothebys Holdings, Inc. and TD Waterhouse Group,
Inc.

Justin D. Benincasa is our Senior Vice President and Corporate Controller.
Mr. Benincasa was a Vice President and Corporate Controller of American Radio
from its founding in 1993 until the ATC Separation.

Norman A. Bikales is Executive Vice President--Special Counsel. Mr. Bikales
joined us in February 2000. Previously, he was a senior partner at the Boston
law firm of Sullivan & Worcester LLP acting as our outside legal counsel.

Alan L. Box has served as an Executive Vice President since March 1998 and
has been a director since our organization. Mr. Box served as Chief Operating
Officer from June 1997 to March 1998, at which time he assumed his present role
as the Executive Vice President responsible for our satellite and fiber network
access services business. Mr. Box also was an Executive Vice President and a
director of American Radio from April 1997 when EZ Communications ("EZ"),
merged into American Radio, until the ATC Separation. Prior to April 1997, Mr.
Box had been the Chief Executive Officer of EZ, a company he joined in 1974.

James S. Eisenstein is our Executive Vice President--Corporate Development. Mr.
Eisenstein has overall responsibility for seeking out acquisition and
development opportunities.
Mr. Eisenstein helped form our company in the summer of 1995. From 1990 to
1995, he was Chief Operating Officer for Amaturo Group Ltd., a broadcast
company operating 11 radio stations and four broadcasting towers, several of
which were purchased by American Radio. Mr. Eisenstein is a director of U.S.
Wireless Inc.

David W. Garrison is Chairman and Chief Executive Officer of Verestar, one of
our wholly owned subsidiaries, and a director. From February 1995 to July 1998,
Mr. Garrison served as Chairman, Chief Executive Officer, President and Chief
Operating Officer of NETCOM OnLine Communications Services, Inc., a pioneer
independent provider of internet services in four countries. Prior to that, Mr.
Garrison was President of Skytel

Communications, Inc., a leading provider of wireless mobile data services, and
Chairman and Chief Executive Officer of Dial Page, Inc., a regional paging
carrier based in the Southeast United States, which became part of Nextel
Communications, Inc. ("Nextel"). Mr. Garrison is currently a director of
Ameritrade Holding Corporation.

J. Michael Gearon, Jr. is Executiveone of our Vice PresidentChairmen and the President of
American Tower International, and has been a director since our acquisition of
Gearon Communications in January 1998. In addition, he hasFrom January 1998 until January 2002,
Mr. Gearon served as an Executive Vice President since January 1998.President. Prior to joining us, Mr.
Gearon had been the founder and Chief Executive Officer of Gearon
Communications since September 1991, which he developed into one of the fastest growing private
companies in the United States.1991.

Steven J. Moskowitz is our Executive Vice President--Marketing and Vice President
and General Manager of our Northeast Region.President--Tower Division. Mr.
Moskowitz joined us in January 1998, initially as a Vice President and General
Manager of our Northeast Region, and assumedwas Executive Vice President--Marketing
from March 1999 until his currentappointment to his present position in March 1999.January 2002.
From 1989 until 1998, Mr. Moskowitz served as a Vice President of The Katz
Media Group, the largest broadcast media representation firm in the United
States.

Bradley E. SingerDavid J. Porte is our Executive Vice President--StrategyPresident--Technology and Strategy. Mr.
Porte joined us in July 2001, prior to which time he had served as Chairman and
Chief Executive Officer of Telicor, a company providing operations and business
support systems solutions to the telecommunications industry. Prior to
organizing Telicor in 2000, Mr. Porte had been a Vice President and General
Manager Southeast Region.of the Internet service group of General Communications, a regional
integrated communications provider in the Pacific Northwest, since 1997 when it
acquired Astrolabe of which he had been President.

Bradley E. Singer is our Chief Financial Officer and Treasurer. Mr. Singer
joined us in September 2000 as Executive Vice President--Strategy, and was
appointed Vice President and General Manager of the Southeast region in
November 2000.2000, positions he held until July 2001. He was appointed Executive
Vice President--Finance in July 2001. Prior to joining us, Mr. Singer was an
investment banker with Goldman, Sachs & Co. focusing on the telecommunications
industry.

Douglas C. WiestJames D. Taiclet, Jr. is our President and Chief Operating Officer. Mr. Wiest joined us in
February 1998, initially as the Chief Operating Officer of Gearon
Communications, and assumed his current position in March 1998. Prior to
joining us in that capacity in September 2001, Mr. WiestTaiclet had been RegionalPresident
of Honeywell Aerospace Services, a part of Honeywell International since March
1999. Mr. Taiclet was with United Technologies from March 1996 until March
1999, serving as a Vice President of EngineeringPratt & Whitney Engine Services and Operations for Nextel's Southern Region since 1993.of
Military Programs, Pratt & Whitney Eagle Services.

Joseph L. Winn is one of our Vice Chairmen, a position he assumed in January
2002. Prior to that time he was our Chief Financial Officer and Treasurer. Mr.
Winn was Treasurer, Chief Financial Officer and a director of American Radio
from its founding in 1993 until the ATC Separation.

The information under "Election of Directors" and "Section 16(a) Beneficial
Ownership Reporting Compliance" from the Definitive Proxy Statement is hereby
incorporated by reference herein.

ITEM 11. EXECUTIVE COMPENSATION

The information under "Compensation and Other Information Concerning
Directors and Officers" from the Definitive Proxy Statement is hereby
incorporated by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information under "Securities Ownership of Certain Beneficial Owners and
Management" from the Definitive Proxy Statement is hereby incorporated by
reference herein.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information under "Certain Relationships and Related Transactions" from
the Definitive Proxy Statement is hereby incorporated by reference herein.

43
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8- K8-K

(a) Financial Statements and Schedules. See index to Financial Statements,
which appears on page F-1 hereof.

(b) Reports on Form 8-K.

Form 8-K (Items 5, 7 and 9)(Item 2) filed on October 4, 2001.
Form 8-K (Item 2) filed on December 20, 2000.
Form 8-K (Items 2 and 7) filed on December 15, 2000.
Form 8-K (Item 7) filed on November 13, 2000.
Form 8-K (Item 7) filed on October 30, 2000.2001.

4445

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on the 26th1st day of
March 2001.

American Tower CorporationApril 2002.

AMERICAN TOWER CORPORATION
(Registrant)

/s/ StevenSTEVEN B. DodgeDODGE
By: ________________________________________________________________
Steven B. Dodge
Chief Executive Officer
President
and Chairman

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been duly signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ Steven B. Dodge Chief Executive Officer, March 26, 2001
______________________________________ President and Chairman
Steven B. Dodge (Principal Executive
Officer)

/s/ Joseph L. Winn Chief Financial Officer March 26, 2001
______________________________________ and Treasurer
Joseph L. Winn (Principal Financial
Officer)

/s/ Justin D. Benincasa Senior Vice President and March 26, 2001
______________________________________ Corporate Controller
Justin D. Benincasa (Principal Accounting
Officer)

/s/ Alan L. Box Director March 26, 2001
______________________________________
Alan L. Box

/s/ Arnold L. Chavkin Director March 26, 2001
______________________________________
Arnold L. Chavkin

/s/ David W. Garrison Director March 26, 2001
______________________________________
David W. Garrison

/s/ J. Michael Gearon, Jr. Director March 26, 2001
______________________________________
J. Michael Gearon, Jr.

/s/ Fred R. Lummis Director March 26, 2001
______________________________________Signature Title Date
--------- ----- ----

/s/ STEVEN B. DODGE Chief Executive Officer and April 1, 2002
- ----------------------------- Chairman (Principal
Steven B. Dodge Executive Officer)

/s/ BRADLEY E. SINGER Chief Financial Officer and April 1, 2002
- ----------------------------- Treasurer (Principal
Bradley E. Singer Financial Officer)

/s/ JUSTIN D. BENINCASA Senior Vice President and April 1, 2002
- ----------------------------- Corporate Controller
Justin D. Benincasa (Principal Accounting
Officer)

/s/ ALAN L. BOX Director April 1, 2002
- -----------------------------
Alan L. Box

/s/ ARNOLD L. CHAVKIN Director April 1, 2002
- -----------------------------
Arnold L. Chavkin

/s/ DAVID W. GARRISON Director April 1, 2002
- -----------------------------
David W. Garrison

/s/ J. MICHAEL GEARON, JR Director April 1, 2002
- -----------------------------
J. Michael Gearon, Jr.

/s/ FRED R. LUMMIS Director April 1, 2002
- -----------------------------
Fred R. Lummis

Signature Title Date
--------- ----- ----

/s/ Thomas H. Stoner Director March 26, 2001
______________________________________/S/ PAMELA D. A. REEVE Director April 1, 2002
- -----------------------------
Pamela D. A. Reeve

/s/ THOMAS H. STONER Director April 1, 2002
- -----------------------------
Thomas H. Stoner

/s/ MAGGIE WILDEROTTER Director April 1, 2002
- -----------------------------
Maggie Wilderotter Director March 26, 2001
______________________________________
Maggie Wilderotter

AMERICAN TOWER CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
----

Independent Auditors' Report.............................................Report............................................................... F-2
Consolidated Balance Sheets as of December 31, 20002001 and 1999.............2000............................... F-3
Consolidated Statements of Operations for the Years Ended December 31, 2001, 2000 1999, and 1998....................................................1999. F-4
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2001, 2000
1999 and 1998........................................1999................................................................................. F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000 1999 and 1998 ....................................................1999. F-6
Notes to Consolidated Financial Statements...............................Statements................................................. F-7

F-1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
American Tower Corporation:

We have audited the accompanying consolidated balance sheets of American Tower
Corporation and subsidiaries (the "Company") as of December 31, 20002001 and 1999,2000,
and the related consolidated statements of operations, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
2000.2001. 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 of America. 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 provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31,
20002001 and 1999,2000, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 20002001 in conformity with
accounting principles generally accepted in the United States of America.

As discussed in notes 1 and 7 to the consolidated financial statements, in 2001
the Company adopted the provisions of Statement of Financial Accounting
Standard No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended.

/s/ Deloitte & Touche LLP

Boston, Massachusetts
February 27, 2001 (March 26, 2001 as to the first full paragraph in note 6)25, 2002

F-2

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 20002001 and 19992000
(In thousands, except share data)

2001 2000 1999
---------- ----------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................equivalents......................... $ 35,958 $ 82,038
$ 25,212
Restricted cash.......................................cash................................... 94,071 46,036
Accounts receivable, net..............................net.......................... 182,612 194,011 58,482
Prepaid and other current assets......................assets.................. 89,645 42,377
19,570
Inventories...........................................Inventories....................................... 49,332 47,872 11,262
Costs and earnings in excess of billings on
uncompleted contracts and unbilled receivables.......receivables... 46,453 43,652 13,363
Deferred income taxes.................................taxes............................. 24,136 15,166 1,718
---------- ----------
Total current assets................................assets............................ 522,207 471,152 129,607
---------- ----------
PROPERTY AND EQUIPMENT, net............................net.......................... 3,287,573 2,296,670 1,092,346
GOODWILL AND OTHER INTANGIBLE ASSETS, net..............net............ 2,507,911 2,505,681
1,403,897DEFERRED INCOME TAXES................................ 245,215 140,395
NOTES RECEIVABLE.......................................RECEIVABLE..................................... 120,554 123,945 118,802
DEPOSITS AND OTHER LONG-TERM ASSETS....................ASSETS.................. 110,598 73,298
144,368
INVESTMENTS............................................INVESTMENTS.......................................... 35,665 49,538 15,594
DEFERRED INCOME TAXES.................................. 140,395 114,252
---------- ----------
TOTAL..................................................TOTAL................................................ $6,829,723 $5,660,679 $3,018,866
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term obligations..............obligations.......... $ 11,17812,585 $ 4,736
Accounts payable...................................... 74,046 25,564
Accrued expenses...................................... 87,291 32,73211,178
Accrued tower construction costs......................costs.................. 39,618 45,315
37,671Accounts payable.................................. 50,125 74,046
Accrued interest...................................... 31,708 6,769expenses.................................. 124,796 87,291
Billings in excess of costs and earnings on
uncompleted contracts and unearned revenue...........revenue....... 56,098 48,248
17,515Accrued interest.................................. 59,492 31,708
---------- ----------
Total current liabilities...........................liabilities....................... 342,714 297,786 124,987
---------- ----------
LONG-TERM OBLIGATIONS..................................OBLIGATIONS................................ 3,549,375 2,457,045 736,086
OTHER LONG-TERM LIABILITIES............................LIABILITIES.......................... 54,501 12,472 4,057
---------- ----------
Total liabilities...................................liabilities............................... 3,946,590 2,767,303 865,130
---------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 7 and 14)(Note 8)

MINORITY INTEREST IN SUBSIDIARIES......................SUBSIDIARIES.................... 13,937 16,346 8,653
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred Stock; $0.01Stock: $.01 par value; 20,000,000
shares authorized; no shares issued or
outstanding..........outstanding......................................
Class A Common Stock;Stock: $.01 par value;
500,000,000 shares authorized; 170,180,549185,162,631
and 144,965,623170,180,549 shares issued, 170,035,952185,018,034
and 144,889,220170,035,952 shares outstanding,
respectively............................respectively..................................... 1,851 1,701 1,450
Class B Common Stock;Stock: $.01 par value;
50,000,000 shares authorized; 8,095,005 shares8,001,769 and
8,387,9108,095,005 shares issued and outstanding,
respectively..........respectively..................................... 80 81 84
Class C Common Stock;Stock: $.01 par value;
10,000,000 shares authorized; 2,267,813
shares and 2,422,804
shares issued and outstanding, respectively..........respectively...... 23 2423
Note receivable................................... (6,720)
Additional paid-in capital............................capital........................ 3,639,510 3,174,622
2,245,482
Accumulated deficit...................................other comprehensive loss.............. (16,057)
Accumulated deficit............................... (745,151) (295,057) (100,429)
Less: treasury stock (144,597 and 76,403 shares at cost)................................................. (4,340) (1,528)(4,340)
---------- ----------
Total stockholders' equity..........................equity...................... 2,869,196 2,877,030 2,145,083
---------- ----------
TOTAL..................................................TOTAL................................................ $6,829,723 $5,660,679 $3,018,866
========== ==========

See notes to consolidated financial statements.

F-3

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2001, 2000, 1999, and 19981999
(In thousands, except per share data)

2001 2000 1999
1998---------- --------- -------- --------

REVENUES:
Rental and management..........................management................................................ $ 444,560 $ 278,153 $135,303
$ 60,505
Network development services...................services......................................... 454,238 311,921 90,416 23,315
Satellite and fiber network access services....services.......................... 235,393 145,201 32,362
19,724---------- --------- -------- --------
Total operating revenues......................revenues......................................... 1,134,191 735,275 258,081
103,544---------- --------- -------- --------
OPERATING EXPENSES:
Operating expenses excluding depreciation and amortization,
tower separation,restructuring, development and corporate general and administrative
expenses:
Rental and management..........................management.............................................. 214,506 139,240 62,441
29,455
Network development services...................services....................................... 405,582 274,769 69,318 19,479
Satellite and fiber network access services....services........................ 227,954 110,065 24,098
12,817
Depreciation and amortization..................amortization........................................ 440,371 283,360 132,539
52,064
Tower separation expense....................... 12,772Restructuring expense................................................ 69,174
Development expense............................expense.................................................. 8,630 14,517 1,607
Corporate general and administrative expense...expense......................... 26,478 14,958 9,136
5,099---------- --------- -------- --------
Total operating expenses......................expenses......................................... 1,392,695 836,909 299,139
131,686---------- --------- -------- --------
LOSS FROM OPERATIONS............................OPERATIONS.................................................. (258,504) (101,634) (41,058)
(28,142)---------- --------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense...............................expense..................................................... (282,291) (156,839) (27,492) (23,229)
Interest income and other, net................. 13,018 17,695 9,217net....................................... 26,742 15,556 17,442
Interest income--TV Azteca, net of interest expense of $1,160 in 2001
and $1,047 in 2000 ....................2000................................................. 14,377 12,679 1,856
Premium(Loss) gain on note conversion.....................investments........................................... (40,551) (2,538) 253
Note conversion expense.............................................. (26,336) (16,968)
Minority interest in net earnings of subsidiaries..................................subsidiaries.................... (318) (202) (142)
(287)---------- --------- -------- --------
TOTAL OTHER EXPENSE.............................EXPENSE................................................... (308,377) (148,312) (8,083)
(14,299)---------- --------- -------- --------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY LOSSES.........................................LOSSES..................... (566,881) (249,946) (49,141) (42,441)
BENEFIT (PROVISION) FOR INCOME TAXES............TAXES.................................. 116,787 59,656 (214)
4,491---------- --------- -------- --------
LOSS BEFORE EXTRAORDINARY LOSSES................LOSSES...................................... (450,094) (190,290) (49,355) (37,950)
EXTRAORDINARY LOSSES ON EXTINGUISHMENT OF DEBT, NET
OF INCOME TAX BENEFIT OF $2,892 IN 2000, and $914 IN 1999 AND $921 IN 1998..................1999........... (4,338) (1,372)
(1,382)
EXTRAORDINARY LOSS ON REDEMPTION OF INTERIM
PREFERRED STOCK, NET OF INCOME TAX BENEFIT OF
$5,000......................................... (7,510)---------- --------- --------
--------
NET LOSS........................................LOSS.............................................................. $ (450,094) $(194,628) $(50,727)
$(46,842)========== ========= ======== ========
BASIC AND DILUTED LOSS PER COMMON SHARE AMOUNTS:
Loss before extraordinary losses...............losses..................................... $ (2.35) $ (1.13) $ (0.33)
$ (0.48)
Extraordinary losses...........................losses................................................. (0.02) (0.01)
(0.11)---------- --------- --------
--------
Net loss.......................................loss............................................................. $ (2.35) $ (1.15) $ (0.34)
$ (0.59)========== ========= ======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING......OUTSTANDING............................ 191,586 168,715 149,749
79,786========== ========= ======== ========

See notes to consolidated financial statements.

F-4

AMERICAN TOWER CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 2001, 2000, 1999 and 19981999
(In thousands, except share data)

Common Stock Common Stock Common Stock Treasury Stock
------------------- ----------------- ----------------------------------- ---------------- ---------------- -----------------
Class A Class B Class C
------------------- ----------------- ----------------- Additional------------------ ---------------- ----------------
Issued Issued Issued Notes Paid-in
Shares Amount Shares Amount Shares Amount Shares Amount
Receivable Capital
----------- ------------- --------- ------ --------- ------ -------- -------
---------- -----------

BALANCE, JANUARY 1, 1998......... 29,667,8831999.......................... 96,291,111 $ 297 4,670,626 $ 47 1,295,518 $ 13 $ 155,711
Contributions963 9,001,060 $90 3,002,008 $30

Cash contributions from ARS:
Cash............ 56,918
Non-cash........ 6,489
TransfersARS.......................
Adjustment to ARS:
Cash............ (51,858)
Issuance of
common stock
under stock
purchase
agreement, net
of issuance
costs of $630... 1,350,050 14 4,649,950 46 2,000,000 20 $(49,375) 79,290ATC separation tax liability........
Transfers/payments to ARS/CBS.....................
Issuance of common stock and options-
mergers......... 35,546,600 354 373,742
Reduction of
common stock
redemption
obligation...... 383,750 4 9,740
Exercise of
options......... 899,504 9 203,709 2 2,727
Repayment stock
purchase
agreement
notes........... 49,375
ATC Separation
tax liability... (61,715)
ATC Separation
working capital
adjustment...... (50,000)
ATC Separation
share
conversion...... 111,761 1 (347,159) (3) 2
Issuance of
common stock--
July offering,
net of issuance
costs of
$29,806......... 27,861,987 279 624,672
Share class
exchanges....... 469,576 5 (176,066) (2) (293,510) (3)
Accretion of
redeemable
stock........... (1,555)
Tax liability
from conversion
of CBS
securities...... (5,021)
Tax benefit of
stock options... 1,223
Net loss........
----------- ------- --------- ----- --------- ---- -------- -----------
BALANCE,
DECEMBER 31,
1998............ 96,291,111 $ 963 9,001,060 $ 90 3,002,008 $ 30 $ $ 1,140,365
----------- ------- --------- ----- --------- ---- -------- -----------
Cash
contributions
from ARS........ 507
Adjustment to
ATC separation
tax liability... 12,003
Transfers/payments
to ARS/CBS...... (1,070)
Issuance of
common stock and
options-
mergers.........options-mergers...... 20,691,428 207
446,035
Wauka escrow release--
treasury stock..release--treasury stock.............. (76,403) $(1,528)
Issuance of common stock
February
offerings, net
of issuance
costs of
$24,501.........stock--February offerings...... 26,200,000 262 630,889
Expiration of redeemable common stock....stock............. 336,250 3
9,937
Issuance of options--
acquisition..... 1,794options--acquisition..................
Exercise of options.........options............................... 254,480 3
3,573
Share class exchanges.......exchanges............................. 1,192,354 12 (613,150) (6) (579,204) (6)
Tax benefit of stock options... 1,449options......................
Net loss........loss..........................................

Total comprehensive loss.........................
----------- ------------- --------- -------- --------- ------- -------- ------- -----------
BALANCE, DECEMBER 31, 1999............1999........................ 144,965,623 $ 1,450$1,450 8,387,910 $ 84$84 2,422,804 $ 24$24 (76,403) $(1,528)
$ 2,245,482
----------- ------------- --------- -------- --------- ------- -------- ------- -----------
6.25% and 2.25% convertible notes exchanged for
common stock...........stock..................................... 6,126,594 61 153,306
Issuance of common stock--
June offering...stock--June offering........... 12,500,000 125 513,780
Issuance of common stock, options and warrants--
mergers.........mergers.......................................... 4,522,692 45 227,462
Issuance of common stock--
Employeestock--Employee Stock
Purchase Plan...Plan.................................... 33,794 865
Exercise of options.........options............................... 1,418,560 14 165,390 2
23,461
Share class exchanges.......exchanges............................. 613,286 6 (458,295) (5) (154,991) (1)
Treasury stock..stock.................................... (68,194) (2,812)
Tax benefit of stock options... 10,266options......................
Net loss........loss..........................................

Total comprehensive loss.........................
----------- ------------- --------- -------- --------- ------- -------- ------- -----------
BALANCE, DECEMBER 31, 2000............2000........................ 170,180,549 $ 1,701$1,701 8,095,005 $ 81$81 2,267,813 $ 23$23 (144,597) $(4,340)
$ 3,174,622
=========== ======= ========= ===== ========= ==== ======== ======= ===========----------- ------ --------- --- --------- --- -------- -------
2.25% convertible notes exchanged for common
stock............................................ 3,962,537 40
Issuance of common stock--January offering........ 10,000,000 100
Issuance of common stock, options and warrants--
mergers.......................................... 377,394 4
Issuance of common stock--Equity investment....... 100,000 1
Issuance of common stock--Employee Stock
Purchase Plan.................................... 231,257 2
Issuance of note to executive officer (secured by
Class A common stock)............................
Exercise of options............................... 217,658 2
Share class exchanges............................. 93,236 1 (93,236) (1)
Net change in fair value of cash flow hedges, net
of tax...........................................
Reclassification adjustment for realized losses on
derivative instruments, net of tax...............
Cumulative effect adjustment recorded upon
adoption of SFAS No. 133, net of tax.............
Foreign currency translation adjustment...........
Tax benefit of stock options......................
Net loss..........................................

Total comprehensive loss.........................
----------- ------ --------- --- --------- --- -------- -------
BALANCE, DECEMBER 31, 2001........................ 185,162,631 $1,851 8,001,769 $80 2,267,813 $23 (144,597) $(4,340)
----------- ------ --------- --- --------- --- -------- -------

Accumulated
Additional Other Total Total
Note Paid-in Comprehensive Accumulated Stockholders' Comprehensive
Receivable Capital Loss Deficit TotalEquity Loss
---------- ---------- ------------- ----------- ------------------------- -------------

BALANCE, JANUARY 1, 1998......... $ (2,860) $ 153,208
Contributions
from ARS:
Cash............ 56,918
Non-cash........ 6,489
Transfers to
ARS:
Cash............ (51,858)
Issuance of
common stock
under stock
purchase
agreement, net
of issuance
costs of $630... 29,995
Issuance of
common stock and
options-
mergers......... 374,096
Reduction of
common stock
redemption
obligation...... 9,744
Exercise of
options......... 2,738
Repayment stock
purchase
agreement
notes........... 49,375
ATC Separation
tax liability... (61,715)
ATC Separation
working capital
adjustment...... (50,000)
ATC Separation
share
conversion......
Issuance of
common stock--
July offering,
net of issuance
costs of
$29,806......... 624,951
Share class
exchanges.......
Accretion of
redeemable
stock........... (1,555)
Tax liability
from conversion
of CBS
securities...... (5,021)
Tax benefit of
stock options... 1,223
Net loss........ (46,842) (46,842)
----------- ------------
BALANCE,
DECEMBER 31,
1998............1999.......................... $1,140,365 $ (49,702) $ 1,091,746
----------- ------------$1,091,746

Cash contributions from ARS........ARS....................... 507 507
Adjustment to ATC separation tax liability...liability........ 12,003 12,003
Transfers/payments to ARS/CBS......CBS..................... (1,070) (1,070)
Issuance of common stock and options-
mergers.........options-mergers...... 446,035 446,242
Wauka escrow release--
treasury stock..release--treasury stock.............. (1,528)
Issuance of common stock
February
offerings, net
of issuance
costs of
$24,501.........stock--February offerings...... 630,889 631,151
Expiration of redeemable common stock....stock............. 9,937 9,940
Issuance of options--
acquisition.....options--acquisition.................. 1,794 1,794
Exercise of options.........options............................... 3,573 3,576
Share class exchanges.......exchanges.............................
Tax benefit of stock options...options...................... 1,449 1,449
Net loss........loss.......................................... (50,727) (50,727) ----------- ------------$ (50,727)
---------
Total comprehensive loss......................... $ (50,727)
------- ---------- -------- --------- ---------- =========
BALANCE, DECEMBER 31, 1999............1999........................ $2,245,482 $(100,429) $ 2,145,083
----------- ------------$2,145,083
------- ---------- -------- --------- ----------
6.25% and 2.25% convertible notes exchanged for
common stock...........stock..................................... 153,306 153,367
Issuance of common stock--
June offering...stock--June offering........... 513,780 513,905
Issuance of common stock, options and warrants--
mergers.........mergers.......................................... 227,462 227,507
Issuance of common stock--
Employeestock--Employee Stock
Purchase Plan...Plan.................................... 865 865
Exercise of options.........options............................... 23,461 23,477
Share class exchanges.......exchanges.............................
Treasury stock..stock.................................... (2,812)
Tax benefit of stock options...options...................... 10,266 10,266
Net loss........loss.......................................... (194,628) (194,628) ----------- ------------$(194,628)
---------
Total comprehensive loss......................... $(194,628)
------- ---------- -------- --------- ---------- =========
BALANCE, DECEMBER 31, 2000............2000........................ $3,174,622 $(295,057) $2,877,030
------- ---------- -------- --------- ----------
2.25% convertible notes exchanged for common
stock............................................ 86,403 86,443
Issuance of common stock--January offering........ 360,687 360,787
Issuance of common stock, options and warrants--
mergers.......................................... 8,454 8,458
Issuance of common stock--Equity investment....... 2,463 2,464
Issuance of common stock--Employee Stock
Purchase Plan.................................... 2,750 2,752
Issuance of note to executive officer (secured by
Class A common stock)............................ $(6,720) (6,720)
Exercise of options............................... 3,130 3,132
Share class exchanges.............................
Net change in fair value of cash flow hedges, net
of tax........................................... $(17,506) (17,506) $ 2,877,030
=========== ============(17,506)
Reclassification adjustment for realized losses on
derivative instruments, net of tax............... 9,405 9,405 9,405
Cumulative effect adjustment recorded upon
adoption of SFAS No. 133, net of tax............. (7,852) (7,852) (7,852)
Foreign currency translation adjustment........... (104) (104) (104)
Tax benefit of stock options...................... 1,001 1,001
Net loss.......................................... (450,094) (450,094) (450,094)
---------
Total comprehensive loss......................... $(466,151)
------- ---------- -------- --------- ---------- =========
BALANCE, DECEMBER 31, 2001........................ $(6,720) $3,639,510 $(16,057) $(745,151) $2,869,196
------- ---------- -------- --------- ----------

See notes to consolidated financial statements.

F-5

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2001, 2000, 1999 and 19981999
(In thousands)

2001 2000 1999
1998
----------- ----------- --------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................loss.......................................................... $ (450,094) $ (194,628) $ (50,727) $ (46,842)
Adjustments to reconcile net loss to cash provided by (used for)
operating activities:
Depreciation and amortization...........amortization................................... 440,371 283,360 132,539 52,064
Minority interest in net earnings of subsidiaries...........................subsidiaries............... 318 202 142
287
PremiumNote conversion expense......................................... 26,336 16,968
Loss (gain) on note conversion.............. 16,968investments...................................... 40,551 2,538 (253)
Restructuring expense--asset write down......................... 62,550
Amortization of deferred financing costs..................................costs........................ 11,959 6,945 1,466 1,629
Provision for losses on accounts receivable............................. 16,423receivable..................... 25,146 16,737 2,639 1,136
Extraordinary losses, net...............net....................................... 4,338 1,372 8,892
Amortization of debt discount...........and note receivable discount............... 7,286 8,712 2,642
261
Dividends on preferred stock............ 3,117
Deferred income taxes...................taxes........................................... (120,411) (60,876) (1,140) (4,491)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable..................... (108,159)receivable............................................. (11,132) (108,473) (17,368) (11,042)
Costs and earnings in excess of billings on uncompleteduncompleted.........
contracts and unbilled receivables............................ (2,801) (26,153) (5,919) (1,185)
Prepaid and other current assets........ (23,990) (5,503) (1,553)
Inventories.............................assets........................................ (48,110) (31,017) (9,497)
Inventories..................................................... 788 (18,643) (6,210)
Accounts payable accrued expenses and accrued construction costs............. 31,281 31,516 13,577expenses........................... 1,793 23,637 9,944
Accrued interest........................interest................................................ 27,784 24,631 5,436 (47)
Billings in excess of costs and earnings on uncompleteduncompleted.........
contracts and unearned revenue................................ (3,291) 9,135 3,981
1,311
Other long-term liabilities.............liabilities..................................... 17,027 5,413 2,145
1,315
----------- ----------- --------------------
Cash provided by (used for) provided by operating activities............................... (25,041) 97,011 18,429activities.................... 26,070 (37,174) 71,192
----------- ----------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property and equipment andand...............
construction activities... (548,991) (294,242) (126,455)activities.......................................... (568,158) (541,347) (272,670)
Payments for acquisitions, (net of cash acquired)................................................ (812,782) (1,368,024) (588,384) (208,717)
Advances of notes receivable.............receivable...................................... (10,179) (76,116) (119,282) (12,140)
Proceeds from notes receivable...........receivable.................................... 255 2,749 1,587
2,001Proceeds from sale of 8.7% of Mexican subsidiary.................. 1,680
Distributions to minority interest................................ (763) (667) (396)
Deposits, investments and other long-term assets.................................. (20,298) (137,379) (5,066)assets.................. (55,356) (15,809) (133,132)
----------- ----------- --------------------
Cash used for investing activities........ (2,010,680) (1,137,700) (350,377)activities.................................. (1,445,303) (1,999,214) (1,112,277)
----------- ----------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under notes payable and credit facilities..............................facilities.............. 181,500 1,777,000 224,779 205,500
Repayments of notes payable, credit facilities and credit
facilities..............................capital leases. (81,133) (584,155) (512,856) (156,667)
Proceeds from issuance of debt securities..............................securities......................... 1,000,000 450,000 600,063
Net proceeds from equity offerings, stock options and employee....
stock options...........................purchase plan.............................................. 366,671 535,435 634,727
707,059
Restricted cash..........................cash................................................... (48,035) (46,036)
Cash payments from (to) CBS..............CBS....................................... 5,735 (48,752)
(221,665)
Net proceeds from preferred stock........ 300,000
Redemption of preferred stock............ (303,117)
Contributions from ARS...................ARS............................................ 507 5,060
Distributions to minority interest....... (667) (396) (393)
Deferred financing costs.................costs.......................................... (45,850) (44,765) (18,346)
(22,250)
----------- ----------- --------------------
Cash provided by financing activities..... 2,092,547 879,726 513,527activities............................... 1,373,153 2,093,214 880,122
----------- ----------- --------------------
NET (DECREASE) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..............................EQUIVALENTS................ (46,080) 56,826 (160,963) 181,579
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR.....................................YEAR........................ 82,038 25,212 186,175
4,596
----------- ----------- --------------------
CASH AND CASH EQUIVALENTS, END OF YEAR....YEAR.............................. $ 35,958 $ 82,038 $ 25,212
$ 186,175
=========== =========== ====================

See notes to consolidated financial statements.

F-6

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business and Corporate Structure--AmericanBusiness--American Tower Corporation and subsidiaries (collectively, ATC or the
Company), is an independent owner, operator and developer of broadcastwireless and
wirelessbroadcast communications sites in North America, Mexico and Mexico.Brazil. The
Company's primary businesses, as discussed in note 15, are the leasing of
antenna space to a diverse range of wireless communications and broadcast
industries, providing network development services and components to wireless
service providers and broadcasters and providing satellite and fiber network
access services to telecommunication companies, internet service providers,
governmental organizations, broadcasters and maritime customers worldwide. The Company was a wholly-owned subsidiary of
American Radio Systems Corporation (ARS, American Radio or the Former Parent)
until consummation of the spin-off of the Company from American Radio on June
4, 1998 (the ATC Separation).

ATC Separation--On June 4, 1998, the merger of American Radio and a subsidiary
of CBS Corporation (CBS) was consummated. As a result of the merger, all of the
outstanding shares of the Company's common stock owned by American Radio were
distributed to American Radio common stockholders, and the Company ceased to be
a subsidiary of, or to be otherwise affiliated with, American Radio.
Furthermore, from that day forward the Company began operating as an
independent publicly traded company.

As part of the ATC Separation, the Company was required to reimburse CBS for
certain tax liabilities incurred by American Radio as a result of the
transaction. Upon completion of the final American Radio tax filings, a
calculation of the total tax payments due to CBS was performed and approved by
both the Company and CBS. The Company continues to be obligated to indemnify
CBS and American Radio for certain tax matters affecting American Radio prior
to the ATC Separation. As of December 31, 2000, no material matters covered
under this indemnification have been brought to the Company's attention.

Principles of Consolidation and Basis of Presentation--The accompanying
consolidated financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. Investments in those entities where the Company owns less than
twenty percent of the voting stock of the individual entity and does not
exercise significant influence over operating and financial policies of the
entity are accounted for using the cost method. Investments in entities where
the Company owns less than twenty percent but has the ability to exercise
significant influence over operating and financial policies of the entity or
where the Company owns more than twenty percent of the voting stock of the
individual entity, but not in excess of fifty percent, are accounted for using
the equity method. The Company consolidates those entities in which it owns greater
than fifty percent of the entity's voting stock.

For the period from January 1, 1998 to June 4, 1998, the Company effectively
operated as a stand-alone entity, with its own corporate staff and
headquarters, and received minimal assistance from personnel of American Radio.
Accordingly, the accompanying consolidated financial statements for the period
discussed above do not include any corporate general and administrative cost
allocations from American Radio. The consolidated financial statements may not
reflect the results of operations or financial position of the Company had it
been an independent public company during the periods presented prior to June
4, 1998.

Use of Estimates--The preparation of financial statements in conformity with
accounting principles generally accepted accounting principlesin the United States of America
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results may
differ from those estimates, and such differences could be material to the
accompanying consolidated financial statements. The significant estimates in
the accompanying consolidated financial statements include revenue recognition
under the percentage of completion method, impairment of investments,
impairment of long-lived assets and valuation allowances related to deferred
tax assets.

Revenue Recognition--Rental and management revenues are recognized on a monthly
basis under lease or management agreements when earned. Escalation clauses,
excluding those tied to the Consumer Price Index (CPI), and other incentives
present in lease agreements with the Company's customers are recognized on a
straight-line basis over the term of the lease. Amounts billed or received
prior to being earned are deferred until such time as the earnings process is
complete.

F-7

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Network development service revenues are derived under service contracts or
arrangements with customers that provide for billings on a time and materials,
cost plus profit or fixed price basis. Revenues are recognized as services are
performed with respect to the time and materials and cost plus profit
contracts. Revenues are recognized using the percentage-of-completion method
for fixed price contracts. Under the percentage-of-completion methodology,
revenues are recognized in accordance with the percentage of contract costs
incurred to date compared to estimated total contract costs. Costs and earnings
in excess of billings on uncompleted contracts represent revenues recognized in
excess of amounts billed. Billings in excess of costs and earnings on
uncompleted contracts represent billings in excess of revenues recognized.
Changes to total estimated contract costs or losses, if any, are recognized in
the period in which they are determined.

Revenue from the sale of component parts is reflected within network
development service revenue in the accompanying consolidated statements of
operations. Revenue from the sale of these components is recognized when
products are shipped. Provisions are recorded for estimated sales returns and
allowances at the time of shipment.

Satellite and fiber network access service revenues are recognized as such
services are provided. Amounts billed or received prior to services being
performed are deferred until such time as the earnings process is complete.

Development Expense--Development expense consists of uncapitalized acquisition
costs, costs to integrate acquisitions, costs associated with new business
initiatives, abandoned acquisition costs and costs associated with tower site
inspections and related data gathering. Such costs are expensed as incurred.

Tower Separation Expense--Tower separation expense consists of one-time costs
incurred in connection with the separation of the Company from its former
parent. Specifically, it includes legal, accounting, financial advisory and
consent solicitation fees. Such costs were expensed as incurred.F-7

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Corporate General and Administrative Expense--Corporate general and
administrative expense consists of corporate overhead costs not specifically
allocable to any of the Company's individual business segments.

Premium on Note Conversion--Premium on noteConversion Expense--Note conversion expense represents the fair value of
incremental stock issued to induce convertible noteholders to convert their
holdings prior to the first scheduled redemption date. Such amounts were
expensed as incurred in accordance with Statement of Financial Accounting
Standard (SFAS) No. 84 "Induced Conversions of Convertible Debt." (See note 6).

Concentrations of Credit Risk--Financial instruments that potentially subject
the Company to concentrations of credit risk are primarily cash and cash
equivalents, restricted cash, notes receivable, trade receivables and
trade receivables.derivative instruments. The Company mitigates its risk with respect to cash and
cash equivalents, and
restricted cash and derivative instruments by maintaining its
deposits and contracts at high quality credit financial institutions and monitoring
the credit ratings of those institutions.

The Company mitigates its concentrations of credit risk with respect to notes
and trade receivables by actively monitoring the creditworthiness of its
borrowers and customers. Accounts receivable are reported net of allowances for
doubtful accounts of $23,804,000, $19,809,000 $3,386,000 and $1,230,000$3,386,000 as of December 31,
2001, 2000 1999 and 1998,1999, respectively. Amounts charged against the allowance for
doubtful accounts for the years ended December 31, 2001, 2000, and 1999
approximated $23,613,000, $3,112,000 and 1998
approximated $3,112,000, $721,000, and $206,000, respectively. Bad debt
recoveries have not been significant infor the three year periodyears ended December 31, 2000.2001, 2000 and 1999 approximated
$2,462,000, $2,798,000 and $238,000, respectively.

Discount on Convertible Notes--The Company amortizes the discount on its
convertible notes using the effective interest method over the term of the
obligation. Such amortization is recorded as interest expense in the
accompanying consolidated statements of operations.

Derivative Financial Instruments--DuringInstruments--As part of the years ended December 31, 2000,
1999 and 1998,overall strategy to manage the
Company used derivative financial instruments as a meanslevel of hedging cash flow exposure related to variable interest rates on its credit
facilities. The Company's derivative instruments generally consistthe risk of interest rate swaps,fluctuations under its variable
rate credit facilities, the Company utilizes interest rate swaps, caps, collars
and interest rate cap agreements. These
instruments are matched with variable rate debt, and

F-8

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

payments thereon are recorded on a settlement basis as an adjustment to
interest expense. Premiums paid to purchase interest rate cap agreements are
amortized as an adjustment to interest expense over the life of the contract.swaptions. The Company does not hold derivative financial instruments for
trading purposes. See "Recent Accounting Pronouncements" below.(See note 7).

Foreign Currency Translation--The Company's foreign subsidiarysubsidiaries in Mexico hasand
Brazil have designated the U.S. dollar as itstheir functional currency. Monetary peso-based
assets and liabilities related to the Company's Mexican and Brazilian
operations are translatedremeasured from the local currency into U.S. dollars at the approximate rate
of currency exchange at the end of the applicable fiscal period. Non monetary
peso-basedNon-monetary
assets and liabilities are translatedremeasured at historical exchange rates. Revenues
and expenses if peso-based, are translatedremeasured at average monthly exchange rates. All
translationremeasurement gains and losses are included in the Company's consolidated
statement of operations within the caption interest income and other, net. Such
amounts were not material for the years ended December 31, 2001, 2000 and 1999.

There were no international operations duringThe Company also operates a teleport business within its satellite and fiber
network access services segment in Switzerland and has designated the year ended
December 31, 1998.Swiss
franc as its functional currency. Accordingly, assets and liabilities are
translated from the Swiss franc into U.S. dollars at the end of period exchange
rate, and revenues and expenses are translated at average monthly exchange
rates. Translation gains and losses are recorded in stockholders' equity and
reflected as a component of other comprehensive loss.

Cash and Cash Equivalents--Cash and cash equivalents include cash on hand,
demand deposits and short-term investments with remaining maturities (when
purchased) of three months or less.

Restricted Cash--RepresentsCash--Restricted cash represents amounts required to be held in
escrow under the Company's Amended Credit Facilities to pay interest on its
convertible and senior note obligations. The requirement to hold funds in
escrow expires in August 2002.

F-8

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Inventories--Inventories, which consist primarily of finished goods and raw
material component parts, are stated at the lower of cost or market, with cost
being determined on the first-in, first-out (FIFO) basis. The components of
inventories as of December 31, 20002001 and 19992000 are as follows (in thousands):

2001 2000
1999
------- ---------------

Raw materials.................................... $37,387 $20,887
Finished goods............................................... $25,947 $ 10,100
Raw materials................................................ 20,887 859goods................................... 11,300 25,947
Work in process..............................................process.................................. 645 1,038
303
------- --------
Total-------
Total......................................... $49,332 $47,872
$ 11,262
======= ===============

Property and Equipment--Property and equipment are recorded at cost or at
estimated fair value (in the case of acquired properties). Cost for
self-
constructedself-constructed towers includes direct materials and labor, indirect costs
associated with construction and capitalized interest. Approximately
$15,321,000, $11,365,000 $3,379,000 and $1,403,000$3,379,000 of interest was capitalized for the
years ended December 31, 2001, 2000 1999 and 1998,1999, respectively.

Depreciation is provided using the straight-line method over the assets'
estimated useful lives. Property and equipment acquired through capitalized
leases are amortized using the straight-line method over the shorter of the
lease term or the estimated useful life of the asset. Asset useful lives are as
follows:

Equipment.........................................................Equipment........................................ 3-15 years
Towers............................................................Towers........................................... 15 years
BuildingsBuildings........................................ 32 years
Building improvements and land improvements...................................improvements...... 15-32 years

Expenditures for repairs and maintenance are expensed as incurred. Betterments
and improvements that extend an asset's useful life or enhance capacity are
capitalized.

Goodwill and Other Intangible Assets--The consolidated financial statements
reflect the preliminary allocation of purchase prices for certain transactions
consummated in fiscal 2000,2001, as certain appraisals for these acquisitions have not been
finalized. Goodwill represents the excess of purchase price over the estimated
fair value of net assets acquired. The Company amortizes goodwill over an
estimated useful life of fifteen years. Other intangible assets primarily
represent acquired customer base, workforce, network locations, licenses,
non-competition agreements and certain deferred financing costs. The Company amortizes
these other intangible assets over periods ranging from two to fifteen years.
(See note 4).

F-9

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Income Taxes--The consolidated financial statements reflect provisions for
federal, state, local and foreign income taxes. However, the tax costs of
repatriating foreign subsidiary business earnings to the Company's domestic
subsidiaries have not been reflected in the tax provision, as the Company
intends to permanently reinvest the profits of its foreign subsidiaries within
those entities. The Company recognizes deferred
tax assets and liabilities for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases, as well as operating loss and
tax credit carryforwards. The Company measures deferred tax assets and
liabilities using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences and carryforwards are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. The Company provides valuation allowances if, based on the
weight of available evidence, it is more likely than not that some or all of
the deferred tax assets will not be realized. (See note 9)11).

Loss Per Common Share--Basic and diluted income or loss per common share has
been computed by dividing the Company's net loss by the weighted average number
of common shares outstanding during the period. Diluted per share
amounts are computed by adjusting the weighted average number of common shares
for dilutive potential common shares during the period, if any. In computing
diluted per share amounts, the Company uses the treasury stock method, whereby
unexercised options and warrants are assumed to be exercised at the beginning
of the period or at issuance, (if later). The assumed proceeds are then used
to purchase common shares at the average market price during the period. For the years ended December
31, 2001, 2000 1999 and 1998, dilutive1999, potential common shares, including options, warrants
and shares issuable upon conversion of the Company's convertible notes, have
been excluded from the computation of diluted

F-9

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

loss per common share, as the effect is anti-dilutive. Had these
dilutive potentialPotential common shares
been included inexcluded from the computation, shares for
the diluted computation would have increased bycalculation of loss per share were approximately 39.846.4
million, 11.552.4 million and 3.941.5 million for the years ended December 31, 2001,
2000 and 1999, and
1998, respectively.

For purposes of calculating earnings per share for the year ended December 31,
1998, shares outstanding upon consummation of the ATC Separation are assumed
to be outstanding for the entire period prior to June 4, 1998.

Impairment of Long-Lived Assets--TheAssets-- The Company reviews long-termlong-lived assets,
including identifiable intangibles, for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company assesses recoverability by determining whether the net
book value of the related assets will be recovered through projected
undiscounted future cash flows. If the Company determines that the carrying
value on an asset may not be recoverable, it measures any impairment based on
the projected future discounted cash flows to be provided from the asset as
compared to its carrying value. The Company records any related impairment losses in the
period in which it identifies such impairment.

During the year ended December 31, 2001, the Company recorded impairment
charges related to its long-lived assets of approximately $11.6 million. Such
charges are reflected in depreciation and amortization in the accompanying 2001
consolidated statement of operations.

Investments--Investments in those entities where the Company owns less than
twenty percent of the voting stock of the individual entity and does not
exercise significant influence over operating and financial policies of the
entity are accounted for using the cost method. Investments in entities where
the Company owns less than twenty percent but has the ability to exercise
significant influence over operating and financial policies of the entity or
where the Company owns more than twenty percent of the voting stock of the
individual entity, but not in excess of fifty percent, are accounted for using
the equity method. As of December 31, 2001, all of the Company's investments
were in companies that are not publicly traded, and, therefore, no established
market for their securities exists. The Company has a policy in place to review
the fair value of its investments on a regular basis to evaluate the carrying
value of the investments in these companies. If the Company believes that the
carrying value of an investment is carried at an amount in excess of fair
market value, it is the Company's policy to record an impairment charge to
adjust the carrying value to fair market value.

During the year ended December 31, 2001, the Company recorded impairment
charges on its cost and equity investments of approximately $31.6 million. In
addition, during the years ended December 31, 2001, 2000 and 1999, the Company
recorded losses (gains) on equity method investments of approximately $9.0
million, $2.5 million and $(0.3) million, respectively. Losses on equity method
investments are recorded in accordance with Emerging Issues Task Force No.
99-10 "Percentage Used to Determine the Amount of Equity Method Losses."

Stock-Based Compensation--The Company accounts for equity grants and awards to
employees, officers and directors using the intrinsic value method prescribed
by Accounting Principles Board Opinion (APB) No. 25 "Accounting For Stock
Issued To Employees," and related interpretations. In addition, the Company
also provides the required disclosures under SFAS No. 123, "Accounting For
Stock Based Compensation," as if the fair-value based method (defined in SFAS
No. 123) had been applied. (See note 10)12).

Fair Value of Financial Instruments--As of December 31, 20002001, the carrying
amount of the Company's 5.0% convertible notes, and the 2.25% and 6.25% convertible
notes and the senior notes was approximately $450.0 million, $416.9 million and
$470.9 million,$1.0 billion, respectively, and the fair value of such notes was $408.4$268.3
million, $331.3 million and $780.2$805.0 million, respectively,respectively. Fair values were
determined based on quoted market prices. See note 6 for fair
value of derivative instruments. The carrying values of all other
financial instruments reasonably approximate the related fair values as of
December 31, 2000.2001.

F-10

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Retirement Plan--The Company has a 401(k) plan covering substantially all
employees who meet certain age and employment requirements. Under the plan, the
Company matched 35% in 2001 and 2000 and 30% in 1999 of participants'
contributions up to a maximum 5% of a participant's compensation. Prior to the ATC Separation,
employees of the Company participated in a similar plan sponsored by ARS. The Company
contributed approximately $2,289,000, $1,875,000 $461,000, and $207,700$461,000 to the plans for
the years ended December 31, 2001, 2000 1999 and 1998,1999, respectively.

Recent Accounting Pronouncements--On January 1, 2001, the Company adopted the
provisions of SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities.Activities," This statement establishes accounting and reporting standards for
derivative instruments. Specifically, it requires that an entity recognize all
derivatives as either assets or liabilities onamended. The 2001 consolidated financial statements were
prepared in accordance with the balance sheet at fair value.
The accounting for changes in the fair valueprovisions of a derivative (that is
unrealized gains or losses) will be recorded as a component of an entity's net
income or other comprehensive income, depending upon designation (as defined in
the statement). As a result of adopting SFAS No. 133, the Company expects to
record a pre-tax non-cash loss from a cumulative effect of change in accounting
principle of approximately $12.0 million to $14.0 million in the first quarter
of 2001.

During133. The 2000 the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition," which provides the
SEC staff's views in applying generally accepted accounting principles to
revenue recognition. SAB No. 101 was effective for the Company on October 1,
2000. The adoption of SAB No. 101 was not material to the Company's1999
consolidated financial statements.statements were prepared in accordance with the
applicable professional literature for derivatives and hedging instruments in
effect at that time. (See note 7).

In March 2000,June 2001, the Financial Accounting Standards Board ("FASB") issued InterpretationSFAS No.
44 (FIN 44),141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 supersedes Accounting Principles Board ("APB") Opinion
No. 16 "Business Combinations" and SFAS No. 38 "Accounting for Certain Transactions involving Stock
Compensation",Pre-acquisition
Contingencies" and eliminates the pooling-of-interests method of accounting for
business combinations. SFAS No. 141 also includes enhanced criteria for
identifying intangible assets separately from goodwill. The requirements of
SFAS No. 141 were effective for any business combination consummated by the
Company subsequent to June 30, 2001. The Company did not consummate any
acquisitions subsequent to June 30, 2001 that gave rise to goodwill.

SFAS No. 142, supersedes APB Opinion No. 17, "Intangible Assets," and requires
that goodwill and intangible assets with indefinite lives no longer be
amortized, but reviewed for impairment at least annually. Intangible assets
that are not deemed to have an interpretation of APBindefinite life will continue to be amortized
over their useful lives.

The Company adopted SFAS No. 25. FIN 44 was effective July142 on January 1, 2000.2002. The adoption of FIN 44SFAS No.
142 is expected to reduce the Company's annual amortization of goodwill by
approximately $90.0 million. The Company is in the process of assessing the
transitional impariment test and the related valuation of goodwill under SFAS
No. 142 for the Company. However, upon completion of the transitional
impairment test, it is likely the Company will record a non-cash impairment
charge in its statement of operations related to its wholly owned subsidiary,
Verestar, Inc. (Verestar). Although the amount of the charge has not been
determined, goodwill related to Verestar was approximately $185.0 million as of
December 31, 2001. This charge, if necessary, will be reflected as a cumulative
effect of a change in accounting principle in the Company's 2002 statement of
operations.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement supercedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of." The statement retains the previously existing accounting
requirements related to the recognition and measurement of the impairment of
long-lived assets to be held and used while expanding the measurement
requirements of long-lived assets to be disposed of by sale to include
discontinued operations. It also expands the previously existing reporting
requirements for discontinued operations to include a component of an entity
that either has been disposed of or is classified as held for sale. The Company
implemented SFAS No. 144 on January 1, 2002. The adoption of this statement did
not have a material toimpact on the Company's consolidated financial statements.

Comprehensive Loss--The Company had no other componentposition or
results of comprehensive loss,
and accordingly, net loss is equal to comprehensive loss for each of the years
in the three year period ended December 31, 2000.operations.

Reclassifications--Certain reclassifications have been made to the 19992000 and
19981999 financial statements to conform with the 20002001 presentation.

F-11

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

2. COSTS AND EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS AND
UNBILLED RECEIVABLES

The Company derives a portion of its network development services revenue from
customer contracts that provide for billing only after certain milestones
within contracts have been achieved. As the Company recognizes revenue on these
contracts using the percentage-of-completion, and cost plus profit and time and
materials methodologies, such contracts give rise to revenue which has been
earned, but, as of a certain point in time, remains unbilled. Such amounts
(along with unbilled rental revenue) are included in costs and earnings in
excess of billings on uncompleted contracts and unbilled receivables in the
accompanying consolidated balance sheets.

The Company also enters into contracts within its network development services
segment that provide for progress billings as the Company fulfills its
obligation under the related contracts. These contracts may give rise to
billings that are in excess of amounts actually earned as of a certain point in
time. The excess of amounts billed over the amount earned on these contracts is
reflected (along with customer rent received in advance) in billings in excess
of costs and earnings on uncompleted contracts and unearned revenue in the
accompanying consolidated balance sheets.

F-11

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following are the components of costs and earnings in excess of billings on
uncompleted contracts and unbilled receivables and billings in excess of costs
and earnings on uncompleted contracts and unearned revenue as of December 31,
(in thousands):

2001 2000
1999
---------- ------------------- ---------

Costs incurred on uncompleted contracts............contracts.................................. $ 275,663 $ 165,982
Estimated earnings....................................................... 82,112 67,222
Unbilled receivables..................................................... 7,311 10,113
Billings to date......................................................... (374,731) (247,913)
--------- ---------
$ 20,783
Estimated earnings................................. 67,222 13,228
Unbilled receivables............................... 10,113 3,664
Less billings to date.............................. (247,913) (41,827)
---------- ----------(9,645) $ (4,596)
$ (4,152)
========== =================== =========
Included in the accompanying consolidated balance sheets:
Costs and earnings in excess of billings on uncompleted contracts and
unbilled receivables..receivables................................................ $ 43,65246,453 $ 13,36343,652
Billings in excess of costs and earnings on uncompleted contracts and
unearned revenue......revenue.................................................... (56,098) (48,248)
(17,515)
---------- ------------------- ---------
$ (9,645) $ (4,596)
$ (4,152)
========== =================== =========

3. PROPERTY AND EQUIPMENT

Property and equipment (including assets held under capital leases) consist of
the following as of December 31, (in thousands):

2001 2000 1999
---------- ----------

Towers.............................................Towers................................................ $2,588,616 $1,579,616
$ 672,039
Equipment..........................................Equipment............................................. 459,369 366,343 148,614
Buildings and improvements.........................improvements............................ 287,732 224,836
156,005Land and improvements................................. 182,260 115,151
Construction in progress...........................progress.............................. 180,042 206,069 127,171
Land and improvements.............................. 115,151 61,007
---------- ----------
Total..........................................Total.............................................. 3,698,019 2,492,015 1,164,836
Less accumulated depreciation and amortization.....amortization........ (410,446) (195,345) (72,490)
---------- ----------
Property and equipment, net........................net........................... $3,287,573 $2,296,670 $1,092,346
========== ==========

4. GOODWILL AND OTHER INTANGIBLE ASSETS

The Company's intangible assets consist of the following as of December 31,
(in thousands):

2000 1999
---------- ----------

Goodwill........................................... $1,372,399 $1,016,846
Acquired customer base and network locations....... 1,292,631 474,723
Acquired workforce, licenses, deferred financings
and other intangibles............................. 129,394 35,911
---------- ----------
Total.......................................... 2,794,424 1,527,480
Less accumulated amortization...................... (288,743) (123,583)
---------- ----------
Goodwill and other intangible assets, net.......... $2,505,681 $1,403,897
========== ==========

F-12

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. GOODWILL AND OTHER INTANGIBLE ASSETS

The Company's goodwill and other intangible assets consist of the following as
of December 31, (in thousands):

2001 2000
---------- ----------

Goodwill........................................................ $1,402,432 $1,372,399
Acquired customer base and network location intangibles......... 1,437,799 1,292,631
Deferred financing costs........................................ 104,957 60,996
Acquired workforce, licenses and other intangibles.............. 78,187 68,398
---------- ----------
Total........................................................ 3,023,375 2,794,424
Less accumulated amortization................................... (515,464) (288,743)
---------- ----------
Goodwill and other intangible assets, net....................... $2,507,911 $2,505,681
========== ==========

5. NOTES RECEIVABLE

In December 1999, the Company signed agreements to loan up to $120.0 million to
TV Azteca S.A. de C.V. (TV Azteca), the owner of a major national television
broadcast network in Mexico. In 2000, the Company loaned TV Azteca $119.8
million. The loan, which bears interest at 12.87%, payable quarterly, has beenwas
discounted by the Company, as the fair value interest rate at the date of the
loan was determined to be 14.25%. As of December 31, 20002001, approximately $119.8
million undiscounted ($108.9108.2 million discounted) was outstanding. The term of
the loan is seventy years. The loan may be prepaid by TV Azteca without penalty
during the last fifty years of the agreement. The discount recorded on the note
is being amortized to interest incomeincome-TV Azteca using the effective interest
method over the term of the loan.

Simultaneous with the signing of the loan agreement, the Company also entered
into an agreement with TV Azteca that entitles the Company to assume the
marketing responsibility and future economic rights for approximately 190
broadcasting towers owned by TV Azteca. Under the terms of the agreement the
Company pays TV Azteca $1.5 million annually and is entitled to receive 100% of
the revenues generated from leases with new tenants and is responsible for any
incremental operating expenses associated with those new leases during the term
of the loan.

In anticipation of the loan described above, the Company made an interim loan
of $60.0 million to TV Azteca in September 1999. The interim loan, which bore
interest at approximately 11%, matured at the closing of the loan described
above and was partially collateralized by the stock of TV Azteca. As of
December 31, 1999 the amount due to the Company in connection with this interim
loan was $60.0 million.above.

An executive officer and director of the Company became a director of TV Azteca
in December 1999.

As of December 31, 20002001 and 1999,2000, the Company also had several other notes
receivable outstanding totaling approximately $15.0$12.3 million and $58.8$15.0 million,
respectively. These notes bear interest at rates ranging from 7% to 15%14% and
mature in periods ranging from the earlier of two to three years or upon the
consummation of certain transactions.through 2011.

F-13

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

6. FINANCING ARRANGEMENTS

Outstanding amounts under the Company's long-term financing arrangements
consisted of the following as of December 31, (in thousands):

2001 2000
1999
---------- ------------------

Credit facilities.....................................facilities................................ $1,445,000 $1,350,000
$ 90,000Senior notes..................................... 1,000,000
Convertible notes, net of discount....................discount............... 866,852 920,908 602,259
Notes payable and capital leases and other obligations...leases................. 250,108 197,315
48,563
---------- --------
Total.................................................----------
Total............................................ 3,561,960 2,468,223 740,822
Less current portion..................................portion............................. (12,585) (11,178)
(4,736)
---------- ------------------
Long-term debt........................................debt................................... $3,549,375 $2,457,045
$736,086
========== ==================

The following is a description of the Company's outstanding long-term debt as
of December 31, 2000:2001:

Credit Facilities--In January 2000, the Company through certain of its
principal operating
subsidiaries (Principal Operating Subsidiaries) completed its amended and restated credit facilities (Amended
Credit Facilities). Under the Amended Credit Facilities, (as amended through March 26, 2001), the borrowing capacity
of the Company, giving effect to the termination of the term loan C facility
discussed below, is up to $2.0 billion, with the option to increase the
capacity up to an additional $500.0 million subject to lender approval. All
borrowings under the Amended Credit Facilities are subject to borrowing base
restrictions such asbased primarily on a multiple of operating cash flow and construction cost levels.

F-13

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Componentsflow.

As of December 31, 2001, components of the Amended Credit Facilities include:

. $650.0 million revolving credit facility maturing on June 30, 2007;

. $850.0 million multi-draw term loan A maturing on June 30, 2007;

and

. $500.0 million term loan B maturing December 31, 2007.2007; and

. $250.0 million multi-draw term loan C maturing June 30, 2008.

In January 2002, the Company terminated the $250.0 million multi-draw term loan
C facility, none of which facility had been drawn. As a result of this
termination, the Company will record a charge of $7.5 million to "other
expense" in the first quarter of 2002 related to the write-off of certain
deferred financing fees associated with this facility.

In February 2001, the Company's Mexican subsidiary, American Tower Corporation
de Mexico, S. de R.L. de C.V. (ATC Mexico) and two of its subsidiaries
consummated a loan agreement with a group of banks providing a credit facility
of an initial aggregate amount of $95.0 million (the "Mexican Credit
Facility"). As of December 31, 2001, an aggregate of $95.0 million was
outstanding under this loan agreement. In February 2002, the Company repaid all
loans outstanding under the ATC Mexico loan agreement with borrowings under the
Amended Credit Facilities and substantially all of the Mexican subsidiaries
became restricted subsidiaries under the Amended Credit Facilities. As a result
of such repayment, the Company will recognize an extraordinary loss on
extinguishment of debt in the first quarter of 2002 of approximately $1.3
million (net of an income tax benefit of $0.7 million).

The Amended Credit Facilities are scheduled to amortize quarterly commencing on
March 31, 2003 based on defined percentages of outstanding commitment and
principal balances. The Company may also be required to make additional
principal payments should operating cash flows exceed certain amounts. As of
December 31, 2000,2001, the Company hashad $850.0 million outstanding under the
multi-draw term loan A and $500.0 million

F-14

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

outstanding under the term loan B. Any amounts repaid under the multi-draw term
loan A and the term loan B will reduce future borrowing capacity under these
facilities to the extent of the amount repaid.

Interest rates for the revolving credit facility and the multi-draw term loan A
are determined at the option of the Company as(at a margin based on leverage) at
either 1.5% to 2.75% above the LIBOR Rate or 0.5% to 1.75% above the defined
Base Rate. Interest rates for the term loan B are determined (at a margin based
on leverage) at either 3.0% to 3.25% above LIBOR or 2.0% to 2.25% above the
defined Base Rate. The Company is required to pay quarterly commitment fees on
the undrawn portion of the facility, ranging from 0.5% to 1.0% per annum,
depending on the level of facility usage. In addition, the Amended Credit
Facilities require compliance with financial coverage ratios that measure
operating cash flow against total debt, interest expense,coverage, pro forma debt
service and fixed charges, as defined in the Amended Credit Facilities. The
Amended Credit Facilities also contain financial and operational covenants and
other restrictions which the Company must comply with, whether or not there are
borrowings outstanding. Such covenants and restrictions include restrictions on
certain types of acquisitions, indebtedness, liens, capital expenditures, and
the ability of the Company to pay dividends and make other distributions. The
borrowers under the Amended Credit Facilities areinclude the Company's Principal Operating Subsidiaries.principal
domestic operating subsidiaries. The Company and the restricted subsidiaries
(as defined in the Amended Credit Facilities) have guaranteed all of the loans
under ourthe Amended Credit Facilities. These loans are secured by liens on
substantially all assets of the Principal Operating SubsidiariesCompany, the borrowers and the restricted
subsidiaries. The Amended Credit Facilities also restrict the Principal Operating Subsidiariesborrowers' and
the restricted subsidiaries' ability to transfer funds to the Company.
Substantially all assets of the Company are held by the Principal Operating Subsidiaries.borrowers and the
restricted subsidiaries, giving effect to the repayment of the Mexican Credit
Facility.

Availability at December 31, 2001 under the revolving credit facilities
contained in our Amended Credit Facilities, after giving effect to the payoff
of the Mexican Credit Facility, was $555.0 million.

Prior to the consummation of the Amended Credit Facilities described above, the
Company maintained credit facilities that provided for total capacity of $925.0
million. Interest rates under the prior credit facilities were determined at
the option of the Company as either LIBOR plus margin (as defined) or the Base
Rate plus margin (as defined). As of December 31, 1999, the Company had $90.0
million outstanding under the prior credit facilities. All amounts outstanding
under the prior credit facilities were repaid in January 2000 with proceeds
from the Amended Credit Facilities. In connection with the repayment of
borrowings under the Company's prior credit facilities, the Company recognized
an extraordinary loss on extinguishment of debt of approximately $3.0 million,
net of a tax benefit of $2.0 million, in January 2000.

For the years ended December 31, 2001, 2000 1999 and 1998,1999, the combined weighted
average interest rate related to the Company's amended and prior credit facilities was 9.56%7.26%,
7.94%,9.56% and 7.97%7.94%, respectively. Commitment fees incurred by the Company related
to the amended and prior credit facilities aggregated approximately $7,478,000, $9,777,000 $1,504,000 and
$1,172,000$1,504,000 for the years ended December 31, 2001, 2000 1999 and 1998,1999, respectively.

As a result of a reduction in borrowing capacity under prior credit facilities
in October of 1999 associated with the issuance of the 2.25% and 6.25%
convertible notes, the Company recognized an extraordinary loss on
extinguishment of debt during the year ended December 31, 1999 of approximately
$1.4 million, net of an income tax benefit of $0.9 million.

9 3/8% Senior Notes--In January 2001, the Company completed a private notes
placement of $1.0 billion 9 3/8% senior notes (senior notes), issued at 100% of
their face amount. The Company also
incurred an extraordinary losssenior notes mature on extinguishmentFebruary 1, 2009. Interest on the
senior notes is payable semiannually on February 1 and August 1. The indenture
governing the senior notes contains certain restrictive covenants including
restrictions on the Company's ability to incur more debt, guarantee debt, pay
dividends and make certain investments. Proceeds from the senior notes
placement have and will be used to finance construction of debt of approximately $1.4
million, net of an income tax benefit of $0.9 million, in 1998 as a result of a
refinancingtowers, fund
acquisitions and for general corporate purposes. The senior notes rank equally
with the Company's 5%, 6.25% and 2.25% convertible notes and are structurally
and effectively junior to its previously existing credit facilities.

F-14indebtedness outstanding under the Company's Amended
Credit Facilities.

F-15

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

As of December 31, 2001, the Company has $1.0 billion outstanding under the
senior notes.

5% Convertible Notes--In February 2000, the Company completed a private
placement of $450.0 million 5% Convertible Notes (5% Notes), issued at 100% of
their face amount. The 5% Notes mature on February 15, 2010. Interest on the 5%
Notes is payable semiannually on February 15 and August 15 commencing August
15, 2000.of each year. The
indenture governing the 5% Notes does not contain any restrictive covenants.

The 5% Notes are convertible at any time into shares of the Company's Class A
common stock at a conversion price of $51.50 per share.share, subject to adjustment
in certain cases. The Company cannot redeem the 5% Notes prior to February 20,
2003 and the Company may be required to repurchase all or any of the 5% Notes
on February 20, 2007 at their principal amount, together with accrued and
unpaid interest. The Company may, at its option, elect to pay the repurchase
price in cash or shares of Class A common stock or any combination thereof. The
5% Notes rank equally with the 6.25% and 2.25% Notes described below and the
senior notes and are structurally and effectively junior to indebtedness
outstanding under the Amended Credit Facilities. Total net proceeds from the 5%
Notes were approximately $438.7 million.

A portion of
the proceeds was used to pay off amounts outstanding under the Amended Credit
Facilities. The remaining proceeds were used to finance acquisitions and
construction.

As of December 31, 2001 and 2000, the Company had $450.0 million outstanding
under the 5% Notes.

2.25% and 6.25% Convertible Notes--In October 1999, the Company completed a
private placement of $300.0 million 6.25% Convertible Notes (6.25% Notes),
issued at 100% of their face amount and $425.5 million 2.25% Convertible Notes
(2.25% Notes), issued at 70.52% of their face amount (collectively, the
"Notes"). The yield to maturity on the 2.25% Notes is 6.25%, giving effect to
the accrued original issue discount and accrued interest.discount. The Notes mature on October 15, 2009. Interest on the
Notes is payable semiannually on April 15 and October 15 of each year, beginning April 15, 2000.year.

The 6.25% Notes and 2.25% Notes are convertible at any time, at the option of
the holder, into the Company's Class A common stock at a conversion price of
$24.40 per share and $24.00 per share, respectively, subject to adjustment in
certain events. The Company may redeem the Notes at any time on or after
October 22, 2002. The initial redemption price on the 6.25% Notes is 103.125%
of the principal amount, subject to ratable declines immediately after October
15 of each following year to 100% of the principal amount in 2005. The 2.25%
Notes are redeemable incrementally at increasing prices designed to reflect the
accrued original issue discount. The holders have the option of requiring the
Company to repurchase all or a portion of the 6.25% Notes on October 22, 2006
at their principal amount, together with accrued and unpaid interest, and all
or a portion of the 2.25% Notes on October 22, 2003 at $802.93 (based on $1,000
face amount), plus accrued and unpaid interest. The Company may elect to pay
the repurchase price on the Notes in cash or shares of Class A common stock.
The Notes rank equally with one another, and the 5% Notes and the senior notes and
are structurally and effectively junior to indebtedness outstanding under the
Company's Amended Credit Facilities.

In MayAugust of 2000,2001, the Company acquired an aggregate of $87.3$82.5 million of the 6.25%
Notes and $73.1face
amount ($61.6 million (facecarrying amount) of the 2.25% Notes for an aggregate of
5,724,1802,424,123 shares of Class A common stock. As an inducement to the noteholders
to convert all or a portion of their holdings, the Company issued an aggregate
of 402,4141,538,414 shares of Class A common stock to such holders in addition to the
amounts issuable upon conversion of those notes as provided in the applicable
indentures. The Company made these exchanges pursuant to negotiated
transactions with a limited number of noteholders. As a consequence of those
exchanges, the Company recorded a premium on note conversion expense of approximately $17.0$26.3
million duringin the secondthird quarter of 2000.

As2001 which represents the fair market value of
December 31,the inducement shares.

In May 2000, and 1999 the Company had $470.9acquired an aggregate of $87.3 million of the 6.25%
Notes and $602.3$73.1 million outstanding respectively, underface amount of the Notes.2.25% Notes Payable--In connection withfor an aggregate of
5,724,180 shares of Class A common stock. As an inducement to the noteholders
to convert all or a numberportion of acquisitions consummated during
2000, 1999 and 1998,their holdings, the Company issued or assumed several notes payable. Such
notes approximated $57.2 million and $43.8 million asan aggregate
of December 31, 2000 and
1999, respectively. These notes bear interest at rates ranging from 7.9% to
12.0% and mature in periods ranging from approximately two to six years.

F-15402,414 shares

F-16

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

of Class A common stock to such holders in addition to the amounts issuable
upon conversion of those notes as provided in the applicable indentures. The
Company made these exchanges pursuant to negotiated transactions with a limited
number of noteholders. As a consequence of those exchanges, the Company
recorded note conversion expense of approximately $17.0 million during the
second quarter of 2000 which represents the fair market value of the inducement
shares.

As of December 31, 2001 and 2000, the Company had $416.9 million and $470.9
million outstanding respectively, under the Notes.

Capital Lease Obligations--The Company's capital lease obligations, which
approximate $177.0 and $139.9 million as of December 31, 2001 and 2000,
respectively, expire in periods ranging from less than one year to
approximately fiftyseventy years.

Future minimumNotes Payable--Notes payable approximated $73.1 million and $57.4 million as of
December 31, 2001 and 2000, respectively. These obligations bear interest at
rates ranging from 7.0% to 12.0% and mature in periods ranging from less than
one year to approximately five years.

Maturities--As of December 31, 2001, aggregate principal payments of long-term
debt, including capital lease paymentsleases, for the next five years and thereafter are
as followsestimated to be (in thousands):

Year Ending December 31,

2001...............................................................2002............................................. $ 20,977
2002............................................................... 20,387
2003............................................................... 18,830
2004............................................................... 18,227
2005............................................................... 16,898
Thereafter......................................................... 119,876
--------
Total minimum lease payments....................................... 215,195
Less amounts representing interest................................. (89,900)
--------
Present value of capital lease obligations......................... $125,295
========12,585
2003............................................. 163,133
2004............................................. 204,775
2005............................................. 307,860
2006............................................. 282,102
Thereafter....................................... 2,591,505
----------
Total......................................... $3,561,960
==========

7. DERIVATIVE FINANCIAL INSTRUMENTS

On January 1, 2001, the Company adopted the provisions of SFAS No. 133
"Accounting for Derivative Positions--UnderInstruments and Hedging Activities," as amended.
This statement establishes accounting and reporting standards for derivative
instruments. Specifically, it requires that an entity recognize all derivatives
as either assets or liabilities on the balance sheet at fair value. The
accounting for changes in the fair market value of a derivative (that is
unrealized gains or losses) is recorded as a component of an entity's net
income or other comprehensive income, depending upon designation and
qualification as part of a hedging relationship. The cumulative effect of
adopting this statement resulted in a charge to other comprehensive loss of
$7.9 million (net of a tax benefit of $4.2 million).

The Company is exposed to interest rate risk relating to variable interest
rates on its credit facilities. As part of its overall strategy to manage the
level of exposure to the risk of interest rate fluctuations, the Company uses
interest rate swaps, caps and collars, which qualify and are designated as cash
flow hedges. The Company also used swaptions to manage interest rate risk,
which were not designated as cash flow hedges. For derivative instruments that
are designated and qualify as a cash flow hedge, the effective portion of the
gain or loss on the derivative instrument is initially reported as a component
of other comprehensive loss and subsequently reclassified into the statement of
operations when the hedged transaction affects operations. The ineffective
portion of the gain or loss on the derivative instrument is immediately
recognized in the statement of operations. For derivative instruments not
designated as hedging instruments, the gain or loss is recognized in the
statement of operations in the period of change.

F-17

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Under the terms of the Amended Credit Facilities, the Company is required to
enter into interest rate protection agreements on at least 50% of its variable
rate debt. Under these agreements, the Company is exposed to credit risk to the
extent that a counterparty fails to meet the terms of a contract. Such exposure
is limited to the current value of the contract at the time the counterparty
fails to perform. The Company believes its contracts as of December 31, 20002001
are with credit worthy institutions. As of December 31, 2000,2001, the Company had
interest rate protection agreements outstanding as follows (in thousands):

Notional Interest Fair
Derivative Amount Interest Range Term Value
- ---------- --------- ------------------- -------------- -------------------------- ------------------

Interest rate caps...... $ 364,980 9.00% Expiring 2002
Interest rate swaps..... 395,000 6.19%$580,000 4.09%-7.00% Expiring 2002 through 2003 $ (7,680)$(21,601)
Interest rate collars... 465,000 5.95%$327,500 4.00%-9.00% Expiring 2002 through 2003 (6,107)(13,579)
Interest rate swaptions.............. 290,000 6.00%-6.60%caps...... $364,980 9.00% Expiring 2001 1,707
----------
Total.................................................................. $ (12,080)
==========2002
--------
Total................................................................. $(35,180)
========

As ofLiabilities related to these contracts, $35.2 million, are reflected in other
long-term liabilities in the accompanying December 31, 2000, aggregate principal payments of long-term debt,
including capital leases,2001 consolidated
balance sheet.

During the year ended December 31, 2001, the Company recorded an unrealized
loss, excluding the charge for the cumulative effect of adopting SFAS No. 133,
of approximately $17.5 million (net of a tax benefit of approximately $9.4
million) in other comprehensive loss for the change in fair value of cash flow
hedges and reclassified $9.4 million (net of a tax benefit of approximately
$5.1 million) into results of operations. Hedge ineffectiveness resulted in a
loss of approximately $2.2 million for the year ended December 31, 2001 and was
recorded in "interest income and other, net." The Company records the changes
in fair value of its derivative instruments that are not accounted for as
hedges in "interest income and other, net." The Company estimates that
approximately $16.7 million of derivative losses (net of tax benefit) included
in other comprehensive loss will be reclassified into the statement of
operations within the next five years and thereafter are estimated
to be (in thousands):

Year Ending December 31,

2001.............................................................. $ 11,178
2002.............................................................. 11,474
2003.............................................................. 66,493
2004.............................................................. 202,900
2005.............................................................. 289,953
Thereafter........................................................ 1,886,225
----------
Total........................................................... $2,468,223
==========

F-16

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

7.twelve months.

8. COMMITMENTS AND CONTINGENCIES

Lease Obligations--The Company leases certain land, office, tower and satellite
space under operating leases that expire over various terms. Many of the leases
also contain renewal options with specified increases in lease payments upon
exercise of the renewal option. Escalation clauses present in operating leases,
excluding those tied to CPI, are straight-lined over the initial term of the
lease.

Future minimum rental payments under noncancelable operating leases in effect
at December 31, 20002001 are as follows (in thousands):

Year Ending December 31,
2001................................................................ $165,994
2002................................................................ 134,033
2003................................................................ 94,917
2004................................................................ 65,418
2005................................................................ 43,023
Thereafter.......................................................... 200,129
--------
Total............................................................. $703,514
========2002............................................. $163,178
2003............................................. 132,617
2004............................................. 103,071
2005............................................. 79,116
2006............................................. 57,590
Thereafter....................................... 383,610
---------
Total......................................... $ 919,182
=========

Aggregate rent expense under operating leases for the years ended December 31,
2001, 2000 and 1999 approximated $180,692,000, $99,060,000 and 1998 approximated $99,060,000, $23,211,000,
and $10,818,000,
respectively.

F-18

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Future minimum payments under capital leases (see note 6) in effect at December
31, 2001 are as follows (in thousands):

2002............................................. $ 26,062
2003............................................. 25,577
2004............................................. 24,906
2005............................................. 23,526
2006............................................. 22,487
Thereafter....................................... 331,504
---------
Total minimum lease payments..................... 454,062
Less amounts representing interest............... (277,090)
---------
Present value of capital lease obligations....... $ 176,972
=========

Customer Leases--The Company's lease agreements with its customers vary
depending upon the industry. Television and radio broadcasters prefer long-term
leases, while wireless communications providers favor leases in the range of
five to ten years. Most leases contain renewal options. Escalation clauses
present in operating leases, excluding those tied to CPI, are straight-lined
over the initial term of the lease.

Future minimum rental receipts expected from customers under noncancelable
operating lease agreements in effect at December 31, 20002001 are as follows (in
thousands):

Year Ending December 31,
2001..............................................................2002............................................. $ 214,226
2002.............................................................. 201,835
2003.............................................................. 185,334
2004.............................................................. 165,630
2005.............................................................. 126,111
Thereafter........................................................ 588,722396,433
2003............................................. 368,089
2004............................................. 347,689
2005............................................. 312,696
2006............................................. 257,240
Thereafter....................................... 1,158,262
----------
Total........................................................... $1,481,858Total......................................... $2,840,409
==========

Acquisition Commitments--See notes 11Commitments--As of December 31, 2001, the Company was party to
various agreements relating to the acquisition of assets and 14.businesses from
third parties for an estimated aggregate purchase price of approximately $30.0
million (including $8.4 million for ALLTEL, which closed in January and
February 2002, see note 13). The Company may, on a selective limited basis,
pursue the acquisitions of other properties and businesses in new and existing
locations, although there are no definitive material agreements with respect
thereto.

Build-to-Suit Agreements--As of December 31, 2001, the Company was party to
various arrangements relating to the construction of tower sites under existing
build-to-suit agreements. Under the terms of the agreements, the Company is
obligated to construct up to 500 towers over a five year period. The Company is
in the process of renegotiating several of these agreements to reduce its
overall commitment; however, there can be no assurance that it will be
successful in doing so.

ATC Separation--See note 1.Separation--The Company was a wholly-owned subsidiary of American Radio
Systems Corporation (American Radio or ARS) until consummation of the spin-off
of the Company from American Radio on June 4, 1998 (the ATC Separation). On
June 4, 1998, the merger of American Radio and a subsidiary of CBS Corporation
(CBS) was consummated. As a result of the merger, all of the outstanding shares
of the Company's common stock owned by American Radio were distributed or
reserved for distribution to American Radio stockholders, and the Company
ceased to be a subsidiary of, or to be otherwise affiliated with, American
Radio. Furthermore, from that day forward the Company began operating as an
independent publicly traded company.

F-19

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

As part of the ATC Separation, the Company was required to reimburse CBS for
certain tax liabilities incurred by American Radio as a result of the
transaction. Upon completion of the final American Radio tax filings, a
calculation of the total tax payments due to CBS was performed and approved by
both the Company and CBS. The Company continues to be obligated through
September 2002 to indemnify CBS and American Radio for certain tax matters
affecting American Radio prior to the ATC Separation. As of December 31, 2001,
no material matters covered under this indemnification have been brought to the
Company's attention.

Litigation--The Company periodically becomes involved in various claims and
lawsuits that are incidental to its business. In the opinion of management,
after consultation with counsel, there are no matters currently pending which
would, in the event of adverse outcome, have a material impact on the Company's
consolidated financial position, the results of its operations or liquidity.

F-17

8.9. RELATED PARTY TRANSACTIONS

2000 and 1999JP Morgan Chase Manhattan Bank (Chase) is a lender under the Company's credit facilities
and had participation percentages ranging from 3.14%1.68% to 6.67% during 2001, 2000
and 1999. Chase is an affiliate of J.P. Morgan Partners, LLC (JPMP), which
indirectly controls J.P. Morgan Partners (BHCA), L.P. (JPLP) and J.P. Morgan
Partners (23ASBIC), LLC (JPSBIC), stockholders of the Company. A director of
the Company is an Executive Partner of JPMP. At December 31, 2001, 2000 and
1999 the aggregate principal amount outstanding under the credit facilities was
approximately $1.4 billion, $1.4 billion and $90.0 million, respectively.
Chase's participation in the credit facilities at December 31, 20002001 was 3.14%1.68%.
Chase's approximate share of interest and fees paid by the Company pursuant to
its various credit arrangements was approximately $1.5 million, $3.2 million
and $1.2 million in 2001, 2000 and $0.81999, respectively.

In March 2001, the Company purchased 78,432 shares of Class B Common Stock, par
value $0.01 per share, of America Connect, Inc., a Delaware corporation, from
JPSBIC, an affiliate of JPMP, for 100,000 shares of American Tower Class A
common stock.

During 2001, 2000 and 1999, the Company made demand loans to several executive
officers. At December 31, 2001, 2000 and 1999, amounts outstanding under the
loans approximated $1.0 million, $1.0 million and $1.1 million, respectively.

In October 2001, the Company consummated the sale of 8.7% of its Mexican
subsidiary, ATC Mexico Holding Corp. (ATC Mexico Holding), to J. Michael
Gearon, Jr., an executive officer and director, for $8.4 million. Mr. Gearon
paid $1.7 million in cash and delivered a 7% secured note due 2010 in the
principal amount of $6.7 million. The note, which accrues interest and is
payable quarterly, is secured by shares of our Class A common stock owned by
Mr. Gearon and his interest in ATC Mexico Holding. The purchase price
represented the fair market value of an 8.7% interest in ATC Mexico Holding on
the date of the sale as determined with the assistance of an independent
appraiser. Mr. Gearon may require the Company to purchase his interest in ATC
Mexico Holding, for its then fair market value, any time after the soonest to
occur of July 1, 2004, a Change in Control (as defined in a stockholder
agreement) of the Company or ATC Mexico Holding, or Mr. Gearon's death or
disability. The Company has the right to purchase Mr. Gearon's interest in ATC
Mexico Holding for its then fair market value after the soonest to occur of
July 1, 2005, Mr. Gearon's death or disability or on either a Gearon
Termination Event or a Forfeiture Event (each as defined in a stockholder
agreement).

During the years ended December 31, 2001, 2000 and 1999, the Company retained
several wholly-owned subsidiaries of Nordblom Co. Inc. to provide various real
estate services in connection with its acquisition, financing, ownership and
1998,leasing of several properties. Services rendered by those companies included
advice in connection with the acquisition and arranging mortgage financing of
the Company's corporate headquarters building in Boston and two other office
buildings in which it has regional offices; the management of those buildings;
and the leasing of certain of them. The Company paid the Nordblom companies,
including Nordic

F-20

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Properties, an affiliate of Nordblom, an aggregate of $772,000, $474,000 and
$142,000 in 2001, 2000 and 1999, respectively. Two brothers and the father of
the Company's Chairman and Chief Executive Officer's (Mr. Dodge) wife own the
controlling interest of Nordblom Co. Inc. and Nordic Properties. Mr. Dodge's
wife has no interest in Nordblom Co. Inc. or Nordic Properties and Mr. Dodge
was not involved in the negotiation of any of the arrangements. The Company
believes that all of the arrangements with the Nordblom companies are on terms
and conditions that are customary in the industry and at least as favorable to
it as could be obtained from other recognized real estate management companies.

In 1999, the Company owned 33 1/3% of the outstanding equity of Kline Iron &
Steel Co. (Kline). During 1999 the Company purchased approximately $7.4 million
of tower steel products from Kline. In 2000, the Company purchased the
remaining equity interest in Kline.

During 2000 and 1999,10. RESTRUCTURING

On November 6, 2001, the Company made demand loansannounced a restructuring of the organization
to two executive officers.
Atinclude a reduction in the scope of its tower development activities and the
centralization of certain operating functions. The reduction in tower
development activities will result in a significant decrease in new tower
construction in the near term and more selective criteria for evaluating tower
construction and acquisitions. As a result, the Company wrote-off certain
construction-in-progress to reflect the abandonment of tower sites, resulting
in a non-cash charge in the fourth quarter of 2001 of approximately $62.6
million. In addition, the Company implemented an initiative to consolidate
operations in each of its business segments, incurring employee separation
costs associated with the termination of approximately 675 employees (primarily
tower development and administrative employees) and facility closing costs
associated with the shut down of approximately 20 field office locations. As a
result of this initiative, the Company recorded approximately $6.6 million of
restructuring charges in the fourth quarter of 2001 and expects to record
approximately $3.0 million of additional restructuring charges in the first
quarter of 2002.

The following table displays the balance of the accrued restructuring liability
for the year ended December 31, 2000 and 1999 amounts outstanding under2001(in thousands). The accrued restructuring
liability is reflected in accrued expenses in the loans approximated
$1.0 million and $1.1 million respectively.

1998

In June 1998, American Radio contributed the majority of its corporate fixed
assets to the Company (with an American Radio net book value of approximately
$1.4 million). During the period that the Company was a majority owned
subsidiary of American Radio, the Company received revenues of approximately
$565,000 from American Radio for tower rentals at Company-owned sites for the
period ending June 4, 1998 (date of the ATC Separation).

In January 1998, American Radio contributed to the Company nineteen
communications sites used by American Radio and various third parties (with an
American Radio aggregate net book value of approximately $4.7 million), and
American Radio and the Company entered into leases or subleases of space on the
transferred towers. In May 1998, two additional communications sites were
transferred and leases were entered into following acquisition by American
Radio of the sites from third parties. These sites were contributed to the
Company at an aggregate ARS net book value of approximately $0.3 million.

In January 1998, the Company consummated the transactions contemplated by a
stock purchase agreement with certain related parties. (See note 10).

F-18

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

9.accompanying December 31,
2001 consolidated balance sheet.

Cash Non-Cash Liability as of
Total Payments Charges December 31, 2001
------- -------- -------- -----------------

Restructuring costs
Construction in progress write-off....................... $62,550 $62,550
Employee separations..................................... 3,371 $2,448 $ 923
Office closings (primarily real estate lease obligations) 3,253 549 2,704
------- ------ ------- ------
Total.................................................... $69,174 $2,997 $62,550 $3,627
======= ====== ======= ======

11. INCOME TAXES

The income tax benefit (provision) from continuing operations was comprised of
the following for the years ended December 31, (in thousands):

2001 2000 1999
1998-------- -------- ------- ------- ---------

Current:
Federal......................................... $(116,322)
State........................................... (18,866)
Foreign......................................... $(1,220)Foreign........................................................................... $ (3,624) $ (1,220)
Deferred:
Federal.........................................Federal........................................................................... 155,582 68,582 $ 1,029
(8,407)
State...........................................State............................................................................. 20,571 8,560 148
(841)
Foreign.........................................Foreign........................................................................... (4,475) 58
Add:
Deferred tax assets related to corporate tax
restructuring.................................. 150,150
Less:
Benefit from disposition of stock options recorded to additional paid-in capital.........capital.. (1,001) (10,266) (1,449)
(1,223)
Valuation allowance.............................allowance............................................................... (50,266) (6,000)
-------- -------- ------- ------- ---------
Income tax benefit (provision) ................... $59,656....................................................... $116,787 $ 59,656 $ (214)
$ 4,491
======= ======= ================= ======== =======

F-21

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

A reconciliation between the U.S. statutory rate from continuing operations and
the effective rate was as follows for the years ended December 31,

2001 2000 1999
1998
------- ------- ------------- ---- ----

Statutory tax rate................................rate................................................ 35% 35% 35%
State taxes, net of federal benefit...............benefit............................... 5 5 4
Non-deductible tower separation expenses.......... (11)5
Non-deductible intangible amortization and premium
on note conversion...............................conversion expense (8) (14) (42)
(16)
Other (including(primarily including valuation allowance)................................ (11) (2) 2
(1)
------- ------- ------------ ---- ----
Effective tax rate................................rate................................................ 21% 24% %
11%
======= ======= ============= ==== ====

Income (loss) from foreign operations before income taxes and extraordinary
losses approximated $15.3 million, $8.9 million and $(0.2) million in 2001,
2000 and 1999, respectively.

The components of the net deferred tax asset and related valuation allowance
are as follows (in thousands):

2001 2000
1999
-------- ----------------- ---------

Current assets:
Allowances, accruals and other items not currently non-
deductible...............................................deductible.. $ 24,136 $ 15,166
$ 1,718
======== ========--------- ---------
Long-term items:
Assets:
Basis step-up from corporate restructuring...............restructuring.................. 108,030 120,042 $133,380
Net operating loss carry-forwards........................carryforwards............................ 328,085 175,859
63,070
Other....................................................Items not currently deductible and other.................... 33,280 716 152
Liabilities:
Depreciation and amortization............................amortization............................... (159,906) (150,222)
(82,350)
-------- --------
Subtotal................................................... $146,395 $114,252Other....................................................... (8,008)
--------- ---------
Subtotal.......................................................... $ 301,481 $ 146,395
Less: Valuation allowance.................................allowance...................................... (56,266) (6,000)
-------- ----------------- ---------
Net long-term deferred tax assets........................ $140,395 $114,252
======== ========assets........................... $ 245,215 $ 140,395
========= =========

F-19Basis step-up from corporate restructuring represents the tax effects of
increasing the basis for tax purposes of certain of the Company's assets in
conjunction with its spin-off from American Radio.

At December 31, 2001, the Company had net federal and state operating loss
carryforwards available to reduce future taxable income of $816.0 million. For
federal purposes, these loss carryforwards, if not utilized, expire between
2008 and 2021. For state purposes, carryforwards expire on varying dates from
2003 to 2021.

SFAS No. 109, "Accounting for Income Taxes," requires that companies record a
valuation allowance when it is "more likely than not that some portion or all
of the deferred tax assets will not be realized." At December 31, 2001, the
Company has provided a valuation allowance of approximately $56.3 million
primarily related to state net operating loss carryforwards. The Company has
not provided a valuation allowance for the remaining net deferred tax assets,
primarily its federal net operating loss carryforwards, as management believes
the Company will have sufficient time to realize these assets during the
twenty-year carryforward period.

The ultimate realization of the net deferred tax assets depends on the
Company's ability to generate sufficient taxable income in the future. Based on
its current outlook of future taxable income during the carryforward period,
management believes that its net deferred tax asset will be realized. If the
Company is unable to generate sufficient taxable income in the future, it will
be required to reduce its net deferred tax asset through a charge to income tax
expense, which would result in a corresponding decrease in stockholders' equity.

F-22

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

At December 31, 2000, the Company has net federal and state operating loss
carry-forwards available to reduce future taxable income of $437.7 million.
These loss carry-forwards, if not utilized, expire at various dates through
2020.

During 2000, the Company recorded a $6.0 million deferred tax asset valuation
allowance related to a portion of its state net operating loss carry-forward.
Management believes that sufficient uncertainty exists regarding the
realizability of these items to warrant such allowance. In the opinion of
management, all other deferred tax assets are more likely than not recoverable.

10.12. STOCKHOLDERS' EQUITY

Preferred Stock

As of December 31, 20002001 the Company was authorized to issue up to 20.0 million
shares of $0.01$.01 par value preferred stock. As of December 31, 20002001 and 19992000
there were no preferred shares issued or outstanding.

Common Stock

As of December 31, 20002001 the Company was authorized to issue up to 500.0 million
shares of its $.01 par value per share Class A common stock, 50.0 million
shares of its $.01 par value per share Class B common stock and 10.0 million
shares of its $.01 par value per share Class C common stock. The Class A and B
common stockholders are entitled to one and ten votes per share, respectively.
The Class C common stock is non-voting. In addition, holders of Class B and C
common stock may exchange their shares on a one-to-one basis for shares of
Class A common stock. During the years ended December 31, 2001, 2000 1999 and 1998,1999,
holders of Class B and Class C common stock exchanged 93,236, 613,286 1,192,354 and
469,5761,192,354 of their shares, respectively, for shares of Class A common stock.

The following is a summary of the Company's principal equity transactions
during the years ended December 31, 2001, 2000 1999 and 1998. See note 111999.

2001

In January 2001, the Company completed a public offering of 10,000,000 shares
of its Class A common stock, at $36.50 per share. The Company's net proceeds of
the consolidated financial statementsoffering (after deduction of the offering expenses) were approximately
$360.8 million. The Company used the proceeds to finance acquisitions and the
construction of towers, as well as for issuances of common stock in connection
with the Company's acquisitions.general working capital purposes.

2000

In June 2000, the Company completed a public offering of 12,500,000 shares of
its Class A common stock at $41.125 per share. The Company's net proceeds of
the offering (after deduction of the offering expenses) were approximately
$513.9 million. The Company used the proceeds to reduce borrowings under the
Amended Credit Facilities and to finance acquisitions and the construction of
towers, as well as for general working capital purposes.

1999

In February 1999, the Company completed a public offering of 25,700,000 shares
of Class A common stock, (including 1,700,000 shares sold by the Company
pursuant to the exercise in full of the underwriters' over-allotment option) at
$25.00 per share. The Company's net proceeds of the offering (after deduction
of the underwriting discount and offering expenses) were approximately $618.0 million. The Company used
such proceeds, together with borrowings under its prior credit facilities, to
fund acquisitions and construction activities.

In February 1999, the Company consummated the sale of 500,000 shares of Class A
common at $26.31 per share. The Company's net proceeds of the offering were
approximately $13.2 million. The Company used such proceeds, together with
borrowings under its prior credit facilities, to fund acquisitions and
construction activities.

1998

In July, 1998,On June 5, 1999, a Put Agreement requiring the Company completed its initial public offering of 27,861,987to purchase 336,250
shares of Class A common stock (including 2,361,987 shares sold byat the Company
pursuant to the exercise in full of the underwriters'

F-20

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

over-allotment option) at $23.50 per share. The Company's net proceeds of the
offering (after deduction of the underwriting discount and offering expenses)
were approximately $625.0 million. On July 9, 1998, the Company used
approximately $306.1 million of the net proceeds from the offering to redeem
all of the outstanding shares of the Interim Preferred Stock described below.
The balance was used, together with borrowings under the prior credit
facilities, to fund acquisitions and construction activities.

In June 1998, the Company merged with a company owning a broadcasting tower in
the Boston, Massachusetts area andcurrent market price issued 720,000 shares of Class A common
stock valued at approximately $18.0 million. Under a put agreement that was
executed in connection
with thea merger the sellers had the right to require
the Company to purchase, at any time prior to June 5, 1999, any or all shares
of Class A common stock received pursuant to consummation of the merger for a
purchase price equal to the then current market price. On June 5, 1999, the
sellers' right to require the Company to purchase shares of common stock expired. Accordingly, all unsoldthese shares as of that date (336,250) were reclassified from
Redeemable Class A common stock to common stock and additional paid in capital.

In June 1998, the Company entered into a stock purchase agreement (the Interim
Financing Agreement) with respect to a preferred stock financing, which
provided for the issuance and sale by the Company of up to $400.0 million of
Series A Redeemable Pay-In-Kind Preferred Stock (the Interim Preferred Stock)
to finance the Company's obligation to CBS with respect to tax reimbursement.
The Company issued $300.0 million of Interim Preferred Stock, which accrued
dividends at a rate equal to the three-month LIBOR then in effect
(approximately 5.69%) plus an agreed upon adjustable spread (5.0% for the
period in which the obligation was outstanding). Due to the short term nature
of the issue, accrued dividends were recorded as interest expense in the
accompanying consolidated financial statements. Such interest expense
approximated $3.1 million for the year ended December 31, 1998. The Interim
Preferred Stock was redeemed in July 1998 at a redemption price equal to $1,010
per share plus accrued and unpaid dividends for an aggregate redemption value
of $306.1 million. The Company incurred an extraordinary loss of approximately
$7.5 million, net of a tax benefit of $5.0 million, during the third quarter of
1998, representing the write-off of certain commitment, deferred financing and
redemption fees.

In January 1998, the Company consummated the transactions contemplated by the
stock purchase agreement (the ATC Stock Purchase Agreement), dated as of
January 8, 1998, with Steven B. Dodge, Chairman of the Board, President and
Chief Executive Officer of American Radio and the Company, and certain other
officers and directors of American Radio (or their affiliates or family members
or family trusts), pursuant to which those persons purchased 8.0 million shares
of the Company's common stock at a purchase price of $10.00 per share for an
aggregate purchase price of approximately $80.0 million, including 4.0 million
shares by Mr. Dodge for $40.0 million. Payment of the purchase price was in the
form of cash aggregating approximately $30.6 million and in the form of notes
aggregating approximately $49.4 million which were repaid upon the consummation
of the ATC Separation.F-23

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Stock Issued for Acquisitions and Subsequent events--SeeAcquisitions--See note 1113 of the consolidated financial
statements for issuances of warrants, options and common stock in connection
with the Company's acquisitions and note 14 for a description of
common stock issued in connection with the equity offering consummated in
January 2001.acquisitions.

Stock Option Plans--The Company maintains a stock option plan for directors,
officers and employees (the Plan), which provides for non qualified and
incentive stock options. Exercise prices in the case of incentive stock options
are not less than the fair market value of the underlying common stock on the
date of grant. Exercise prices in the case of non-qualified stock options are
set at the discretion of the Company's Board of Directors (which to date has
not been less than the fair market value on the date of grant).

F-21

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The option pool under the Plan consists of an aggregate of 24,000,00027,000,000 shares of
common stock. In addition to the 24,000,000 shares authorized under the Plan, options to
purchase approximately 2,300,0002,100,000 shares of common stock were outstanding as of
December 31, 20002001 outside of the Plan. Options outside the Plan are the result
of the exchange of certain American Radio options that occurred pursuant to the
ATC Separation and the assumption of certain options that occurred pursuant to
the mergers of OmniAmerica, Inc, and American Tower Corporation (Old ATC) as
described in note 11.13. Each unexercised option to purchase shares of American
Radio, Omni America, Inc. and Old ATC common stock held by persons who became
directors or employees of the Company were exchanged or converted into the
Company's options. All options were exchanged or converted in a manner that
preserved the spread in such options between the option exercise price and the
fair market value of the common stock and the ratio of the spread to the
exercise price prior to such conversion.

Option grants generally vest ratably over various periods, generally three to
five years, commencing one year from the date of grant. Option grants generally
expire ten years from the date of grant.

The following table summarizes the Company's option activity for the periods
presented:

Weighted Average Options
Options Exercise Price Exercisable
--------------------- ---------------- -----------

Outstanding as of January 1, 1998... 931,332 $ 4.16 252,640
-----------
Granted............................. 8,371,700 16.16
Transferred -- American Radio (a)... 1,862,806 6.21
Transferred -- Old ATC Merger (a)... 1,252,364 2.29
Exercised........................... (1,103,213) 2.48
Cancelled........................... (226,894) 8.80
-----------1999...... 11,088,095 $13.43 1,513,639
----------
Granted................................ 5,391,450 22.72
Transferred--OmniAmerica Merger-options
outside the plan..................... 971,850 13.83
Exercised.............................. (254,480) 13.43
Cancelled.............................. (479,673) 20.72
----------
Outstanding as of December 31, 1998............................... 11,088,095 13.43 1,513,639
-----------
Granted............................. 5,391,450 22.72
Transferred -- OmniAmerica Merger
(a)................................ 971,850 13.83
Exercised........................... (314,305) 13.43
Cancelled........................... (419,848) 20.72
-----------1999.... 16,717,242 16.23 4,132,562
----------
Granted................................ 7,092,350 32.77
Exercised.............................. (1,583,950) 15.45
Cancelled.............................. (627,503) 27.72
----------
Outstanding as of December 31, 1999............................... 16,717,242 16.23 4,132,562
-----------
Granted............................. 7,092,350 32.77
Exercised........................... (1,517,928) 15.45
Cancelled........................... (693,525) 27.72
-----------2000.... 21,598,139 21.35 5,781,018
----------
Granted................................ 2,482,100 14.66
Exercised.............................. (217,658) 14.20
Cancelled.............................. (5,914,028) 29.72
----------
Outstanding as of December 31, 2000............................... 21,598,139 $21.35 5,781,018
===========
(a) Represents options outside the
Plan2001.... 17,948,553 $17.77 8,620,691
==========

F-22F-24

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following table sets forth information regarding options outstanding at
December 31, 2000:2001:

Options Outstanding Options Exercisable
- ----------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------
Outstanding Weighted Average
Number of Range of Exercise Weighted Average Remaining Life Options Weighted Average
Options Price Per Share Exercise Price Per Share (Years) Exercisable Exercise Price Per Share
- ----------- ----------------- ------------------------ ---------------- ----------- ------------------------

2,617,762 $2.05-2,326,944 $ 2.05-$ 5.98 $ 4.23 6.26 1,484,849 $ 3.25
1,095,225 6.30- 9.09 8.57 4.99 900,442 8.58
2,676,432 10.00- 10.00 10.00 6.01 1,602,511 10.00
2,095,600 10.83- 17.00 13.60 7.34 819,286 13.44
2,418,170 17.04- 21.13 20.36 7.08 1,004,142 20.61
2,330,521 21.20- 23.75 22.94 7.11 1,169,331 23.13
1,946,721 23.81- 23.81 23.81 7.86 789,900 23.81
338,122 24.25- 30.38 26.50 8.28 89,265 26.00
2,281,493 30.63- 30.63 30.63 8.72 665,500 30.63
439,325 30.69- 48.88 37.91 8.56 95,465 37.67
========== ---------
17,948,553 $ 5.47 5.53 2,160,246 2.05-$ 4.99
2,798,132 10.00-10.00 10.00 7.01 1,085,050 10.00
4,083,784 10.91-21.13 17.82 7.56 1,185,201 16.61
2,577,231 21.38-23.75 22.89 8.10 748,731 23.23
2,361,250 23.81-23.81 23.81 8.86 462,010 23.81
424,480 24.31-30.38 26.75 8.93 64,780 25.74
4,930,400 30.63-30.63 30.63 9.72 75,000 30.62
1,785,600 30.69-46.38 37.87 9.48
19,500 46.75-48.87 48.83 9.20
- ---------- ---------
21,598,139 $2.05-$48.87 $21.35 8.13 5,781,018 $12.7448.88 $17.77 7.08 8,620,691 $15.36
========== =========

Voluntary Option Exchange--As a result of a voluntary option exchange program
in the fourth quarter of 2001, the Company accepted for surrender options to
purchase an aggregate of 3,471,211 shares of Class A common stock and agreed to
issue options to purchase 2,314,140 shares of Class A common stock in the
second quarter of 2002 with an exercise price equal to the fair market value of
the Class A common stock on the date of the grant. The program, which was
offered to both full and part-time employees, excluding most of the Company's
executive officers, called for the grant (at least six months and one day from
the surrender date) of new options exercisable for two shares of Class A common
stock for every three shares of Class A common stock issuable upon exercise of
a surrendered option.

ATC Teleports Stock Option Plan--During 1999, Verestar, Inc.'s (Verestar,
formerly ATC Teleports, Inc.) Board of Directors approved the formation of the
ATC Teleports Stock Option Plan (ATC Teleports Plan) whichthat provides for the
issuance of options to officers, employees, directors and consultants of the
Company's wholly owned subsidiary, Verestar. The ATC Teleports Plan limits the
number of shares of common stock which may be granted to an aggregate of
1,000,000 shares. During 2000, Verestar granted 809,400 options to purchase
shares of Verestar common stock to officers, directors and employees. Such
options were issued at one time with an exercise price of $7.75 per share. The
exercise price per share was at fair market value based on an independent
appraisal performed at the Company's request. The fair value of ATC Teleports
Plan options granted during 2000 were $1.97 per share.share as determined by using
the Black-Scholes option pricing model. Options granted vest based on the
discretion of Verestar's Board of Directors and expire ten years from the date
of grant. No options were granted and 340,800 options were terminated under the
ATC Teleports Plan in 2001. No options under the ATC Teleports Plan were
exercised in 2001 or 2000 and none150,520 options (of the 468,600 options
outstanding) were exercisable as of December 31, 2001. No options were
exercisable as of December 31, 2000.

Pro Forma Disclosure--As described in note 1, the Company uses APB. No. 25 to
account for equity grants and awards to employees. Accordingly, there is no
compensation cost related to option grants reflected in the accompanying
consolidated financial statements. Had the Company used the fair value method,
as prescribed in SFAS No. 123, to measure compensation for grants under all
plans made in 2001, 2000 1999 and 1998,1999, the reported net loss and basic and diluted
loss per common share would have been as follows (in thousands, except per
share amounts):

2001 2000 1999
1998
--------- ----------------- --------

Net loss.....................................loss.................................... $(500,634) $(245,814) $(87,221) $(62,439)
Basic and diluted earnings per share.........share........ $ (1.46)(2.61) $ (0.58)(1.46) $ (0.78)(0.58)

F-25

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The "fair value" of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model. The weighted average fair values of the
Company's options granted during 2001, 2000 and 1999 were $9.04, $18.19 and
1998 were $18.19, $13.14
and $15.50 per share, respectively. Key assumptions used to apply this pricing
model are as follows:

2001 2000 1999 1998
------- ------- -------

Approximate risk-free interest rate (both the Company and ATC
Teleports plans)............................................................ 4.97% 5.95% 5.7% 5.5%
Expected life of option grants (both the Com-
panyCompany and ATC
Teleports plans)............................................................... 5 years 5 years 5 years
Expected volatility of underlying stock (the Company plan)....................................... 77.9% 68.0% 72.0% 177.5%
Expected volatility of underlying stock (ATC Teleports plans)................................. N/A N/A N/A
Expected dividends (both the Company and ATC Teleports plans)................................. N/A N/A N/A

F-23

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Employee Stock Purchase Plan--During 2000, the Company established an employee
stock purchase plan for all eligible employees. Under the plan, shares of the
Company's common stock may be purchased at six-month intervals at 85% of the
lower of the fair market value on the first or the last day of each offering
period. Employees may purchase shares having a value not exceeding 15% of their
gross compensation during an offering period and may not purchase more than
$25,000 worth of stock in a calendar year (based on market values at the
beginning of each offering period). During 2001 and 2000, employees purchased
231,257 and 33,794 shares at a weighted average price per share of $11.90 and
$25.61, per share.respectively. At December 31, 2000, 4,966,2062001, 4,734,949 shares remain reserved
for future issuance.

11.issuance under the plan.

13. ACQUISITIONS

General--The acquisitions consummated during 2001, 2000 1999 and 19981999 have been
accounted for under the purchase method of accounting. The aggregate purchase price hasprices have
been allocated to the net assets acquired (principally tangible and intangible
assets), and the liabilities assumed based on their estimated fair values at the
date of acquisition. The Company has recorded the excess of purchase price over
the estimated fair value of the net assets acquired as goodwill and other
intangible assets. For certain acquisitions, the consolidated financial
statements reflect preliminary allocations of purchase price, as appraisals of
the net assets acquired have not been finalized. The Company does not expect
any changes in depreciation and amortization resulting from the finalization of these
appraisals to be material to its consolidated results of operations.

During the years ended December 31, 2001, 2000 and 1999, the Company has
primarily acquired its tower assets from third parties in one of three ways:

- - the purchase of assets,

- - the purchase of a business; or

- - a capital lease.

The structure of the transaction affects the way the Company allocates purchase
price within the consolidated financial statements. Specifically, in the case
of an asset purchase, the Company allocates a portion of the purchase price to
property and equipment for the appraised value of the tower (replacement cost),
intangible assets for existing customer base and any other identifiable
intangibles (if applicable). Any remaining purchase price is then recorded
within intangible assets as a "network/location intangible."

F-26

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

In the case of tower assets acquired through the purchase of a business, the
allocation is similar to the above except that the remaining purchase price
after valuing all assets (including towers and identifiable intangibles) and
liabilities is recorded, in accordance with APB No. 16 "Business Combinations,"
as goodwill. For tower assets acquired through capital lease, which as of
December 31, 2001, represented only the ALLTEL transaction (as discussed
below), the entire asset value is recorded as "assets held under capital lease"
and is reflected in property and equipment in the accompanying consolidated
financial statements.

Property and equipment, network/location intangibles and assets held under
capital lease related to tower acquisitions are all amortized over a
fifteen-year period.

2001 Acquisitions--During the year ended December 31, 2001, the Company
consummated more than 30 transactions involving the acquisition of various
communications sites and related businesses and satellite and fiber network
access services assets for a purchase price of approximately of $ 827.2
million. This purchase price includes approximately $809.6 million in cash, the
issuance of approximately 0.4 million shares of Class A common stock valued at
approximately $8.5 million and the assumption of certain liabilities. Total
purchase price allocated to goodwill was approximately $30.7 million. The
principal transaction was as follows:

ALLTEL transaction--In December 2000, the Company entered into an agreement to
acquire the rights from ALLTEL to up to 2,193 communications towers through a
fifteen-year sublease agreement. Under the agreement, the Company will sublease
these towers for cash consideration of up to $657.9 million. The Company has
the option under the agreement to purchase the towers at the end of the
fifteen-year term. The purchase price per tower will be $27,500 plus interest
accrued at 3% per annum or 769 shares of the Company's Class A common stock at
ALLTEL's option.

As of December 31, 2001, the Company subleased 1,748 towers and paid ALLTEL
approximately $524.4 million in cash. Through February 2002, the Company closed
on an additional 28 towers and paid ALLTEL approximately $8.4 million in cash.
The Company will not close on the remaining 417 towers under the sublease
agreement, as permitted by the agreement. The Company has accounted for the
ALLTEL transaction as a capital lease.

2000 Acquisitions--During the year ended December 31, 2000, the Company
consummated more than 60 transactions involving the acquisition of various
communications sites and related businesses and several satellite and fiber
network access services businesses for a purchase price of approximately of
$1.8 billion. This purchase price includes approximately $1.4 billion in cash,
the issuance of approximately 4.5 million shares of Class A common stock and
options valued at approximately $164.0 million, warrants to purchase
approximately 3.0 million shares of Class A common stock valued at $63.5
million and the assumption of $59.2 million of debt. Total purchase price
allocated to goodwill was approximately $426.8 million. The principal
transactions were as follows:

AirTouch transaction--In August 1999, the Company agreed to lease on a
long-
termlong-term basis (99 years) up to 2,100 towers located throughout the United
States from AirTouch Communications, Inc. (now part of Verizon Wireless Inc.)
(AirTouch). The Company's cumulative lease payments, based on 2,100 towers,
aggregate $800.0 million in cash payable in part upon each closing and the
issuance of five-year warrants to purchase 3.0 million shares of Class A common
stock at $22.00 per share. At various closings in 2000, the Company leased
1,801 towers, paid AirTouch approximately $686.1 million in cash and issued
warrants for approximately 3.0 million shares of its Class A common stock. It is expected
thatIn
2001, the Company leased 61 towers and paid AirTouch approximately $23.3
million in cash. The Company will not close on approximately 150the balance of the towers
included in the initial agreement. The remaining closings are expected to occur in the
first and second quarters of 2001, as the initial term of the agreement was
extended through April 2001. The Company has accounted for the AirTouch
transaction as a purchase of assets.

F-27

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

AT&T transaction--In September 1999, the Company agreed to purchase up to 1,942
towers from AT&T. These towers are located throughout the United States and
were constructed by AT&T for its microwave operations. The purchase price is
$260.0 million in cash, subject to adjustment if all towers are not purchased.
At various closings in 2000, the Company acquired 1,929 towers and paid AT&T
$258.1 million. It is expected thatIn 2001, the Company willacquired two towers and paid AT&T
approximately $0.1 million. The Company did not close on any remaining
towers in the first quarter of 2001.

Management has concluded that a portionbalance of the
towers acquiredincluded in the AT&T
transaction will not be marketable for wireless colocation and has recorded
those towers at net realizable value. Accordingly,initial agreement.

During 2000, the Company has committed to
a plan to dispose of these towers, which it is currently in the process of
implementing. In connection with this Plan, the Company hashad recorded a liability of approximately $2.0 million
related primarily to the dispositioncontractual obligations assumed in its acquisition of
these towers.towers from AT&T. For the year ended December 31, 2000, the Company had charged
approximately $0.8 million has been charged
against this accrual.

F-24

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)liability. During the year ended
December 31, 2001, the Company recorded charges of approximately $0.6 million
against this liability and reversed the remaining $0.6 million against other
intangible assets.

UNISite merger--In January 2000, the Company consummated its merger with
UNISite, Inc. (UNISite). The purchase price was approximately $196.4 million,
which included payment of $147.7 million in cash and the assumption of $48.7
million of debt. In February 2000, the Company repaid the debt assumed in
connection with the UNISite transaction. Such repayment was at a premium of the
outstanding principal balance. Accordingly, the Company recognized an
extraordinary loss of $1.3 million (net of an income tax benefit of $0.9
million) from the extinguishment of this debt in the first quarter of 2000.

USEI merger--In June 2000, the Company consummated its merger with U.S.
Electrodynamics, Inc. (USEI). The purchase price consisted of approximately 1.1
million shares of Class A common stock, $33.2 million in cash and vested
options to purchase 0.4 million shares of Class A common stock. The acquisition
involved around-the-clock teleport facilities in the Pacific Northwest, the
Southwest and the Northeast, with a total of 52 antennae that access satellites
covering the continental United States and Pacific Ocean region.

General Telecom acquisition--In June 2000, the Company consummated the stock
purchase of General Telecom, Inc. (General Telecom). The purchase price
consisted of approximately $28.8 million in cash. The Company's acquisition of
General Telecom provides it with independent partition voice switching
capabilities and network management services at three major voice
communications gateways in New York, Miami and Los Angeles.

Publicom transaction--In October 2000, the Company consummated the purchase of
Publicom Corporation (Publicom) and its affiliates. The aggregate purchase
price was approximately $31.4 million, which included a payment of
approximately $14.5 million in cash and the issuance of approximately 0.4
million shares of Class A common stock. Publicom and its affiliates distribute
satellite and telecommunications equipment via strategic vendor relationships
with established equipment providers. Publicom also provides wholesale Internet
Service Provider (ISP) services.

InterPacket Networks merger--In December 2000, the Company consummated its
merger with InterPacket Networks, Inc. (InterPacket). Total merger
consideration was approximately $63.5 million and included approximately $21.4
million in cash and the issuance of approximately 1.1 million shares of Class A
common stock.

In connection with its acquisition of InterPacket, isthe Company recorded a
leader in providing international ISPs low-
cost Internet access vialiability of approximately $7.4 million related to contractual obligations
assumed. During the year ended December 31, 2001, the Company recorded charges
against this liability of approximately $0.8 million. In addition, as a global satellite overlay network. InterPacket's
customer base includes companies primarily in Africa,result
of finalizing its purchase price allocation, the Middle East, Latin
America and Asia.Company reversed approximately
$3.8 million related to this liability against goodwill. As of December 31,
2001, the Company has a remaining liability related to these assumed
contractual obligations of approximately $2.8 million.

F-28

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

1999 Acquisitions--During the year ended December 31, 1999, the Company
consummated more than 60 transactions involving the acquisition of various
communications sites, service providers and satellite and fiber network access
services assets for an estimated purchase price of approximately $1.2 billion.
This purchase price includes the issuance of approximately 20.7 million shares
of Class A common stock valued at $430.8 million. The principal transactions
were as follows:

OmniAmerica merger--In February 1999, the Company consummated its merger with
Omni America Inc. (Omni). Omni owned or co-owned 223 towers in 24 states. Omni
also offered nationwide turnkey tower construction and installation services
and manufactured wireless infrastructure components. Total merger consideration
was $462.0 million, consisting of the issuance of 16.8 million shares of Class
A common stock and the assumption of $96.6 million of debt. The Company also
assumed certain Omni employee stock options that were converted into options to
purchase approximately 1.0 million shares of the Company's Class A common stock.

TeleCom merger--In February 1999, the Company consummated its merger with
TeleCom Towers, LLC (TeleCom). TeleCom owned or co-owned approximately 271
towers and managed 121 revenue-generating sites in 27 states. The aggregate
merger consideration was $194.6 million, consisting of the payment of $63.1
million in cash, the issuance of 3.9 million shares of Class A common stock and
the assumption of $48.4 million in debt.

Triton PCS acquisition--In September 1999, the Company acquired 187 wireless
communications towers from Triton PCS for $70.7 million in cash.

F-25

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

ICG transaction--In December 1999, the Company acquired ICG Satellite Services
and its subsidiary, Maritime Telecommunications Network, Inc., (collectively,
ICG), for $100.0 million in cash. The acquisition involved a major
around-the-
clockaround-the-clock teleport facility in New Jersey and a global maritime
telecommunications network headquartered in Miramar, Florida. ICG provides
Internet, voice, data and compressed video satellite services to major cruise
lines, the U.S. military, Internet-related companies and international
telecommunications customers.

1998 Acquisitions--During the year ended December 31, 1998, the Company
acquired various communications sites and a major site acquisition business for
an aggregate purchase price of approximately $853.8 million, including the
issuance of approximately 36.3 million shares of Class A common stock valued at
approximately $382.6 million. The principal transactions were as follows:

Gearon merger--In January 1998, the Company acquired all of the outstanding
stock of Gearon & Co. Inc. (Gearon), for an aggregate purchase price of
approximately $80.0 million. Gearon was engaged in site acquisition,
development and construction and facility management of wireless network
communication facilities. The purchase price consisted of approximately $32.0
million in cash and the issuance of approximately 5.3 million shares of Class A
common stock .

OPM merger--In January 1998, the Company acquired OPM-USA-INC. (OPM), a company
that owned and developed communications towers, for approximately $70.0 million
in cash.

ATC merger--On June 8, 1998, the Company consummated its merger with American
Tower Corporation (ATC merger). The total purchase price was approximately
$425.8 million. At the time of closing, the acquired company owned
approximately 775 communications towers and managed approximately 125
communications towers. In conjunction with the ATC merger, the Company issued
28.8 million shares of Class A common stock valued at approximately
$287.8 million (excluding 1,252,364 shares of common stock reserved for options
held by former employees of the acquired company valued at approximately $9.7
million) and assumed approximately $4.5 million of redeemable preferred stock
(which was paid at closing) and $122.7 million of debt (of which approximately
$118.3 million, including interest and associated fees, was paid at closing).
Upon consummation of the ATC merger, the Company changed its name from American
Tower Systems Corporation to American Tower Corporation.

Grid/Wauka/other transactions--In October 1998, the Company acquired
approximately 300 towers and certain tower related assets in six transactions
for an aggregate purchase price of approximately $100.2 million. These
transactions included the acquisition of Wauka Communications, Inc. and the
assets of Grid Site Services, Inc.

Unaudited Pro Forma Operating Results--The operating results of the
2000acquisitions consummated in 2001 and 1999 acquisitions2000 have been included in the Company's
consolidated results of operations from the date of acquisition. The following
unaudited pro forma summary presents the consolidated results of operations as
if the acquisitions had occurred as of January 1, 1999,2000, after giving effect to
certain adjustments, including depreciation and amortization of assets and
interest expense on debt incurred to fund the acquisitions. This unaudited pro
forma information has been prepared for comparative purposes only and does not
purport to be indicative of what would have occurred had the acquisitions been
made as of January 1 of each of the periods presented or results which may
occur in the future.

2001 2000
1999
---------- --------------- ----
(In thousands, except per
share data-
unaudited)data-unaudited)

Operating revenues................................... $860,672 $625,598revenues..................... $1,157,202 $ 909,901
Loss before extraordinary losses..................... (239,241) (206,158)losses....... (474,552) (299,468)
Net loss............................................. (243,579) (207,530)loss............................... (474,552) (303,806)
Basic and diluted loss per common share.............. (1.42) (1.32)share (2.48) (1.80)

F-26F-29

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

12.14. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information and noncashnon-cash investing and financing
activities are as follows (in thousands):

2001 2000 1999
1998
-------- ------- --------------- --------

Supplemental cash flow information:
Cash paid during the period for interest (including amounts capitalized)............................... $243,856 $140,251 $22,160 $23,011$ 22,160
Cash paid during the period for income taxes (including amounts paid to CBS)...................(net of refunds)............ 3,349 4,335 2,242
212,196
NoncashNon-cash investing and and financing activities:
Issuance of common stock, options and warrants and assumption of
options for acquisitions.......................acquisitions............................................... 8,458 227,507 448,036
392,226
Treasury stock transactions........................stock........................................................... 2,812 1,528
Conversion of convertible notes....................notes (excluding note conversion expense)...... 60,107 136,399
Capital leases.....................................leases........................................................... 47,426 77,427 4,518
Corporate tax restructuring........................ 150,150
(Decrease) increaseNote receivable converted to CBS Corporationinvestment.................................. 7,772
Note receivable from sale of 8.7% of Mexican subsidiary.................. 6,720
Issuance of common stock for equity investment........................... 2,464
Decrease to estimated remaining tax liabilities......................... (12,003) 66,736
Property, equipment and other assets transferred
from American Radio............................... 6,489
Accrual for final payment for OPM Merger........... 21,914liabilities to CBS Corporation....... 12,003
Non-cash derivative liability (net of tax benefit of $8,590)............. 15,953

F-27

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

13.15. BUSINESS SEGMENTS

The Company operates in three business segments: rental and management (RM),
network development services (Services), and satellite and fiber network access
services (formerly internet, voice, data and video transmission services) (SFNA). The RM segment provides for the leasing and subleasing of
antennae sites on multi-tenant towers and other properties for a diverse range
of customers in the wireless communication and broadcast and other industries.
The Services segment offers a broad range of services, including network
design, radio frequency engineering, network design, site acquisition, zoning, and other regulatory
approvals, construction,
component part salesparts, antenna and antennae installation.line installation, maintenance, tower monitoring
and steel fabrication. The SFNA segment offers satellite and fiber network
services to telecommunications companies, internet service providers,
governmental organizations, broadcasters and maritime customers.

The accounting policies applied in compiling segment information below are
similar to those described in note 1. In evaluating financial performance,
management focuses on Operating Profit (Loss), excluding depreciation and
amortization, tower separation,restructuring, development and corporate general and
administrative expenses. This measure of Operating Profit (Loss) is also before
interest expense, interest income and other, net, premiumloss (gain) on investments,
note conversion expense, minority interest in net earnings of subsidiaries,
income taxes and extraordinary losses. For reporting purposes the RM segment
includes interest income-TV Azteca, net for the yearyears ended December 31, 2001
and 2000.

The Company's reportable segments are strategic business units that offer
different services. They are managed separately because each segment requires
different resources, skill sets and marketing strategies. Summarized financial
information concerning the Company's reportable segments as of and for the
years ended December 31, 2001, 2000 1999 and 19981999 is shown in the following table.
The "Other" column below represents amounts excluded from specific segments,
such as income taxes, extraordinary losses, corporate general and administrative
expense, tower separation expense, development expense, depreciation and amortization, restructuring, development and corporate
and general administrative expenses, interest expense, interest income and
other, net, premiumloss (gain) on investments, note conversion andexpense, minority
interest in net earnings of subsidiaries.subsidiaries, income taxes and extraordinary
losses. In addition, the Other column also includes corporate assets such as
cash and cash equivalents, certain tangible and intangible assets and income
tax accounts which have not been allocated to specific segments. All amounts
shown are in thousands.

RM Services SFNA Other Total
--------- -------- -------- --------- ----------

2000
Revenues................... $ 278,153 $311,921 $145,201 $ 735,275
Operating profit (loss).... 151,592 37,152 35,136 $(418,508) (194,628)
Assets..................... 3,861,060 723,262 640,913 435,444 5,660,679
Capital expenditures....... 491,343 19,402 25,560 12,686 548,991
Depreciation and
amortization.............. 211,432 41,018 27,074 3,836 283,360

1999
Revenues................... $ 135,303 $ 90,416 $32,362 $ 258,081
Operating profit (loss).... 72,862 21,098 8,264 $(152,951) (50,727)
Assets..................... 1,847,847 505,018 229,260 436,741 3,018,866
Capital expenditures....... 271,231 4,588 15,835 2,588 294,242
Depreciation and
amortization.............. 98,011 25,991 7,264 1,273 132,539

1998
Revenues................... $ 60,505 $ 23,315 $ 19,724 $ 103,544
Operating profit (loss).... 31,050 3,836 6,907 $ (88,635) (46,842)
Assets..................... 1,031,426 91,444 64,359 315,114 1,502,343
Capital expenditures....... 118,926 61 3,405 4,063 126,455
Depreciation and
amortization.............. 39,568 7,038 4,887 571 52,064

F-28F-30

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
RM Services SFNA Other Total
---------- -------- -------- --------- ----------

2001
Revenues.......................... $ 444,560 $454,238 $235,393 $1,134,191
Operating profit (loss)........... 244,431 48,656 7,439 $(750,620) (450,094)
Assets............................ 4,813,374 761,347 635,326 619,676 6,829,723
Capital expenditures.............. 464,258 30,735 38,782 34,383 568,158
Depreciation and amortization..... 314,214 54,852 63,233 8,072 440,371

2000
Revenues.......................... $ 278,153 $311,921 $145,201 $ 735,275
Operating profit (loss)........... 151,592 37,152 35,136 $(418,508) (194,628)
Assets............................ 3,861,060 723,262 640,913 435,444 5,660,679
Capital expenditures.............. 483,699 19,402 25,560 12,686 541,347
Depreciation and amortization..... 211,432 41,018 27,074 3,836 283,360

1999
Revenues.......................... $ 135,303 $ 90,416 $ 32,362 $ 258,081
Operating profit (loss)........... 72,862 21,098 8,264 $(152,951) (50,727)
Assets............................ 1,847,847 505,018 229,260 436,741 3,018,866
Capital expenditures.............. 249,659 4,588 15,835 2,588 272,670
Depreciation and amortization..... 98,011 25,991 7,264 1,273 132,539

Summarized geographical information related to the Company's operating revenues
and long-lived assets as of and for the year ended December 31 is as follows
(in thousands):

2001 2000 1999
---------- ---------- ----------
Operating Revenues:
United States..........................................States.................... $1,076,732 $ 729,161 $ 258,081
Mexico.................................................International.................... 57,459 6,114
---------- ---------- ----------
Total operating revenues.............................revenues..... $1,134,191 $ 735,275 $ 258,081
========== ========== ==========
Long-Lived Assets:
United States..........................................States.................... $5,535,918 $4,685,754 $2,489,870
Mexico.................................................International.................... 259,566 116,597 6,373
---------- ---------- ----------
Total long-lived assets..............................assets...... $5,795,484 $4,802,351 $2,496,243
========== ========== ==========

The Company did not maintain operations or long-lived assets internationally
prior to 1999.

For the year ended December 31, 1999, one customer within the rental and
management and services segments accounted for approximately 17% of the
Company's consolidated operating revenues. No single customer accounted for
more than 10% of consolidated operating revenues for the years ended December
31, 2000 or 1998.

14. SUBSEQUENT EVENTS

The following is a description of significant transactions involving the
Company subsequent to December 31, 2000:

Financing Transactions:

Equity offering--In January 2001 the Company completed a public offering of
10.0 million shares of its Class A common stock at $36.50 per share. The net
proceeds of the offering (after deduction of offering expenses) were
approximately $360.8 million. Proceeds from the offering will be used to
finance the construction of towers, fund pending and future acquisitions and
for general corporate purposes.

9 3/8% Senior Notes offering--In January 2001, the Company completed a private
notes placement of $1.0 billion 9 3/8% Senior Notes (Senior Notes), issued at
100% of their face amount. The Senior Notes mature on February 1, 2009.
Interest on the Senior Notes is payable semiannually on February 1 and August
1, commencing on August 1, 2001. The indenture governing the Senior Notes
contains certain restrictive convenants including restrictions on the Company's
ability to incur more debt, guarantee debt, pay dividends and make certain
investments. Proceeds from the Senior Notes placement will be used to finance
construction of towers, fund pending and future acquisitions and for general
corporate purposes.

Mexican credit facility--In February 2001, the Company's Mexican subsidiary
consummated a loan agreement that will provide for borrowings of $95.0 million
(U.S. Dollars). If additional lenders are made party to the agreement, the size
of the facility may increase to $140.0 million. The Company has committed to
loan its Mexican subsidiary up to $45.0 million if additional lenders are not
made party to the agreement. The Company's committment will be reduced on a
dollar-for-dollar basis if additional lenders join the loan agreement. This
facility requires the maintenance of various covenants and ratios and is
guaranteed and collateralized by all of the assets of the Mexican subsidiary.
Interest rates on the loan are determined at the Mexican subsidiary's option at
either LIBOR plus margin or the Base Rate plus margin (as defined in the
agreement). Amounts borrowed under the loan will be due in 2003.

F-292000.

F-31

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Pending Transactions:

ALLTEL transaction--In December 2000, the Company entered into an agreement to
acquire the rights from ALLTEL to up to 2,193 communications towers through a
15-year sublease agreement. Under the agreement, the Company will sublease
these towers for consideration of up to $657.9 million in cash. ALLTEL also
granted the Company the option to acquire the rights through sublease
agreements, to approximately 200 additional towers to be selected by the
Company on a site-by-site basis for cash consideration of up to $300,000 per
tower. As the anchor tenant on the towers, ALLTEL will pay a site maintenance
fee of $1,200 per tower per month, escalating at a rate equal to the lower of
5% per annum or the increase in the Consumer Price Index plus 4% per annum.

Under the agreement with ALLTEL, the Company will have the option to purchase
the towers at the end of the 15-year sublease term. The purchase price per
tower will be $27,500 plus interest accrued at 3% per annum. At ALLTEL's
option, this price will be payable in cash or with 769 shares of the Company's
Class A common stock in the case of approximately 1,900 of the towers. In the
case of the approximately 300 other towers and any of the 200 additional towers
that the Company subleases, the per tower purchase price at the end of the
sublease term is subject to adjustment based on the cash consideration paid for
the sublease and the Company's Class A common stock price on the date the
Company agrees to the tower sublease terms. The Company expects the transaction
to close incrementally beginning in the second quarter of 2001.

Other transactions--In addition to the above, the Company is party to various
agreements relating to the acquisition of assets and businesses from third
parties (including certain remaining portions of the AirTouch and AT&T
transactions) for an estimated aggregate purchase price of approximately $211.0
million. The Company is also pursuing the acquisitions of other properties and
businesses in new and existing locations, although there are no definitive
material agreements with respect thereto.

F-30

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

15.16. INFORMATION PRESENTED PURSUANT TO THE INDENTURE FOR THE 9 3/8% SENIOR NOTES
(UNAUDITED)

The following table sets forth information that is presented solely to address
certain reporting requirements contained in the indenture for our Senior Notes.senior notes.
This information presents certain financial data of the Company on a
consolidated basis and on a restricted group basis, as defined in the indenture
governing the Senior Notes.senior notes. All of the Company's subsidiaries are part of the
restricted group, except its wholly owned subsidiary Verestar.

Consolidated Restricted Group
------------------- -------------------
Year EndedGroup(1)
---------------------- ----------------------
Year Ended December 31, Year Ended December 31,
------------------- ----------------------------------------- ----------------------
2001 2000 1999 2000(1) 1999(1)2001 2000
---------- --------- ------------------ --------- --------
(in thousands)
Statement of Operations Data:

Operating revenues...................revenues.................................... $1,134,191 $ 735,275 $258,081$ 898,798 $ 590,074
$225,719---------- --------- ------------------ --------- --------
Operating expenses:
Operating expenses excluding depreciation and
amortization, restructuring, development and
corporate general and administrative expenses....... 848,042 524,074 155,857620,088 414,009 131,759
Depreciation and amortization......amortization......................... 440,371 283,360 132,539377,138 256,286
125,275Restructuring expense................................. 69,174 67,992
Development expense................expense................................... 8,630 14,517 1,6077,895 14,433 1,406
Corporate general and administrative expense............expense.......... 26,478 14,958 9,13626,478 14,958
9,136---------- --------- ------------------ --------- --------
Total operating expenses.............expenses.............................. 1,392,695 836,909 299,1391,099,591 699,686
267,576---------- --------- ------------------ --------- --------
Loss from operations.................operations.................................. (258,504) (101,634) (41,058)(200,793) (109,612)
(41,857)
Interest expense.....................expense...................................... (282,291) (156,839) (27,492)(271,098) (155,006) (27,487)
Interest income and other, net....... 13,018 17,695 12,661 17,632net........................ 26,742 15,556 26,125 15,199
Interest income-TV Azteca, net of
interest expense of $1,047 in 2000..net........................ 14,377 12,679 1,85614,377 12,679
1,856
PremiumLoss on note conversion...........investments................................... (40,551) (2,538) (36,797) (2,538)
Note conversion expense............................... (26,336) (16,968) (26,336) (16,968)
Minority interest in net earnings of subsidiaries........................subsidiaries..... (318) (202) (142)(318) (202)
(142)---------- --------- ------------------ --------- --------
Loss before income taxes and extraordinary losses.losses..... $ (566,881) $(249,946) $(49,141)$ (494,840) $(256,448)
$(49,998)========== ========= ================== ========= ========

December 31, 20002001
-----------------------
Restricted
Consolidated Group
------------ ----------
(in thousands)
Balance Sheet Data:

Cash and cash equivalents..............................equivalents............................. $ 82,03835,958 $ 66,54733,113
Restricted cash....................................... 94,071 94,071
Property and equipment, net............................ 2,296,670 2,013,270net........................... 3,287,573 2,980,031
Total assets........................................... 5,660,679 5,019,766assets.......................................... 6,829,723 6,194,397
Long-term obligations, including current portion....... 2,468,223 2,355,911portion...... 3,561,960 3,436,324
Net debt(2)............................................ 2,386,185 2,289,364........................................... 3,431,931 3,309,140
Total stockholders' equity............................. 2,877,030 2,877,030equity............................ 2,869,196 2,869,196

- --------
(1) Corporate overhead allocable to Verestar Inc. and interest expense related to
intercompany borrowings to Verestar Inc. (unrestricted subsidiary) have not been
excluded from results shown for the restricted group.
(2) Net debt represents long-term obligations, including current portion, less
cash and cash equivalents.

F-31equivalents and restricted cash.

F-32

AMERICAN TOWER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

16.17. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Selected quarterly financial data for the years ended December 31, 20002001 and
19992000 is as follows:

Three Months Ended
-------------------------------------------------------------------------------------------------------
March 31, June 30, September 30, December 31,(1),(2)
--------- ----------------- ------------- ----------------------------------
(in thousands, except per share data)

2001:
Operating revenues............................... $262,468 $ 262,968 $ 296,196 $ 312,559
Loss from operations............................. (38,804) (47,383) (51,358) (120,959)
Loss before extraordinary losses................. (71,507) (103,940) (124,938) (149,709)
Net loss......................................... (71,507) (103,940) (124,938) (149,709)
Basic and diluted loss per common share amounts:
Loss before extraordinary losses.............. $ (0.38) $ (0.54) $ (0.65) $ (0.77)
Net loss...................................... $ (0.38) $ (0.54) $ (0.65) $ (0.77)

2000:
Operating revenues.........revenues............................... $115,517 $167,047 $208,958 $243,753
Gross profit...............$ 167,047 $ 208,958 $ 243,753
Loss from operations............................. (23,808) (26,985) (20,904) (29,937)
Loss before extraordinary losses....................losses................. (37,660) (58,632) (39,527) (54,471)
Net loss...................loss......................................... (41,998) (58,632) (39,527) (54,471)
Basic and diluted loss per common share amounts:
Loss before extraordinary losses.................. ($0.24) ($0.36) ($0.22) ($0.30)losses.............. $ (0.24) $ (0.36) $ (0.22) $ (0.30)
Net loss................. ($0.27) ($0.36) ($0.22) ($0.30)

1999:
Operating revenues.........loss...................................... $ 42,408(0.27) $ 59,153(0.36) $ 67,539(0.22) $ 88,981
Gross profit .............. (9,271) (10,136) (10,332) (11,319)
Loss before extraordinary
losses.................... (9,500) (9,883) (13,091) (16,881)
Net loss................... (9,500) (9,883) (13,091) (18,253)
Basic and diluted loss per
common share amounts:
Loss before extraordinary
losses.................. ($0.07) ($0.06) ($0.08) ($0.11)
Net loss................. ($0.07) ($0.06) ($0.08) ($0.12)(0.30)

- --------
(1) During the fourth quarter of 2001, the Company recorded a restructuring
charge of approximately $69.2 million.
(2) During the fourth quarter of 2000, the Company recorded a specific charge
for a bad debt reserve of approximately $7.0 million.

* * * *

F-32F-33

EXHIBIT INDEX

Below are the exhibits which are included, either by being filed herewith or
by incorporation by reference, as part of this Annual Report on Form 10-K10-K.
Exhibits are identified according to the number assigned to them in Item 601 of
Regulation S-K. Documents that are incorporated by reference are identified by
their Exhibit number as set forth in the filing from which they are
incorporated by reference. With respect to documents filed under Exhibit 2,
copies of schedules and exhibits have not been filed herewith, but will be
furnished supplementally to the Commission upon request. The filings of the
Registrant from which various exhibits are incorporated by reference into this
Annual Report are indicated by parenthetical numbering which correspondencecorresponds to the
following key:

(1) Quarterly Report Form 10-Q (File No. 001-14195) filed on August 16,
1999;

(2) Registration Statement on Form S-3 (File No. 333-37988) filed on May
26, 2000;

(3) Registration Statement on Form S-3 (File No. 333-89345) filed on
October 20, 1999;

(4) Current Report on Form 8-K (File No. 001-14195) filed on February 24,
2000;

(5) Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-
50111) filed on May 8, 1998;

(6) Amendment No. 2 to Registration Statement on Form S-1 (File No. 333-
52481) filed on June 30, 1998;

(7) Registration Statement on Form S-4 (File No. 333-70683) filed on
January 15, 1999;

(8) Amendment No. 1 to Current Report on Form 8-K (File No. 001-14195)
filed on March 18, 1999.

(9) Annual Report on Form 10-K (File No. 001-14195) filed on March 19,
1999;

(10) Registration Statement on Form S-4 (File No. 333-46025) filed on
February 10, 1998;

(11) Current Report on Form 8-K (File No. 001-14195) filed on January 28,
2000;

(12) Annual Report on Form 10-K (File No. 001-14195) filed on March 29,
2000;

(13) Quarterly Report on Form 10-Q (File No. 001-14195) filed on August 14,
1998;

(14) Current Report on Form 8-K (File No. 001-14195) filed on September 17,
1999;

(15) Registration Statement on Form S-4 (File No. 333-39030) filed on
August 31, 2000; and

(16) Quarterly Report on Form 10-Q (File No. 001-14195) filed on November
13, 2000.

(1) Registration Statement on Form S-4 (File No. 333-46001) filed on February 10, 1998;

(2) Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-50111) filed on May 8, 1998;

(3) Amendment No. 2 to Registration Statement on Form S-1 (File No. 333-52481) filed on June 30, 1998;

(4) Quarterly Report on Form 10-Q (File No. 001-14195) filed on August 14, 1998;

(5) Registration Statement on Form S-4 (File No. 333-70683) filed on January 15, 1999;

(6) Annual Report on Form 10-K (File No. 001-14195) filed on March 19, 1999;

(7) Quarterly Report Form 10-Q (File No. 001-14195) filed on August 16, 1999;

(8) Current Report on Form 8-K (File No. 001-14195) filed on September 17, 1999;

(9) Registration Statement on Form S-3 (File No. 333-89345) filed on October 20, 1999;

(10) Current Report on Form 8-K (File No. 001-14195) filed on January 28, 2000;

(11) Current Report on Form 8-K (File No. 001-14195) filed on February 24, 2000;

(12) Annual Report on Form 10-K (File No. 001-14195) filed on March 29, 2000;

(13) Quarterly Report on Form 10-Q (File No. 001-14195) filed on November 13, 2000;

(14) Currently Report on Form 8-K (File No. 001-14195) filed on January 22, 2001;

(15) Annual Report on Form 10-K (File No. 001-14195) filed on April 2, 2001;

(16) Registration Statement on Form S-4 (File No. 333-59852) filed April 30, 2001;

(17) Quarterly Report on Form 10-Q (File No. 001-14195) filed August 14, 2001; and

(18) Quarterly Report on Form 10-Q (File No. 001-14195) filed November 14, 2001.

Exhibit
No. Description of Document Exhibit File No.
- ------- ----------------------- ---------------------------------

1.1 Underwriting Agreement, dated January 18, 2001, between American Tower
Corporation and Goldman, Sachs & Co............................................. 1.1(14)

1.2 Terms Agreement, dated January 18, 2001, between American Tower Corporation and
Goldman, Sachs & Co............................................................. 1.2(14)

2.1 Lease and Sublease by and among ALLTEL Communications, Inc. and the other
entities named therein and American Towers, Inc. and American Filed herewith as
TowersTower Corporation,
dated , 2000............. Exhibit 2.12000........................................................ 2.1(15)

2.2 Agreement to Sublease by and among ALLTEL Communications, Inc. the ALLTEL
entities and American Towers, Inc. and American Towers Filed herewithTower Corporation, dated
December 19, 2000............... as2000............................................................... 2.2(15)

Exhibit
2.2No. Description of Document Exhibit File No.
- ------- ----------------------- ----------------

2.3 Build to Suit Agreement by and among ALLTEL Communications, Inc. the ALLTEL
entities named therein, American Towers, Inc. and American Towers Filed herewithTower Corporation,
dated December 19, 2000...............2000............................................................ 2.3(15)

2.4 Agreement to Sublease, dated as Exhibit 2.3of August 6, 1999 by and between AirTouch
Communications, Inc., the other parties named therein as Sublessors, ATC and
American Tower, L.P................................................................ 10.1(7)

2.5 Purchase and Sale Agreement, dated as of September 10, 1999, by and among ATC
and AT&T Corp., a New York corporation............................................. 10.1(8)

3.1 Restated Certificate of Incorporation, as amended, of the Company as filed with the
Secretary of State of the State of Delaware on June 4, 1999...........1999........................ 3(i)(1)(7)

3.2 By-Laws, as amended as of March 15, 2001, of the Filed herewith
Company............................................ as Exhibit 3.2

Exhibit Exhibit File
No. Description of Document No.
------- ----------------------- ---------------

Company........................... 3.2(15)

4.1 Indenture, by and between the Company and The Bank of New York as Trustee, for
the 6.25% Convertibles Notes due 2009, dated as of October 4, 1999, including form
of 6.25% Note........................ 4.1(3)Note...................................................................... 4.1(9)

4.2 Indenture by and between the Company and The Bank of New York as Trustee, for the
2.25% Convertibles Notes due 2009, dated as of October 4, 1999, including the form
of 2.25% Note.................... 4.2(3)Note...................................................................... 4.2(9)

4.3 Form of 6.25% Note (included in Exhibit 4.1)........ 4.1(3)....................................... 4.1(9)

4.4 Form of 2.25% Note (included in Exhibit 4.2)........ 4.4(3)....................................... 4.4(9)

4.5 Registration Rights Agreement, by and between the
Company and the Initial Purchasers named therein,
dated as of October 4, 1999......................... 4.5(3)

4.6 Indenture, by and between the Company and The Bank of New York as Trustee, for
the 5.0% Convertibles Notes due 2010, dated as of February 15, 2000, including form
of 5.0% Note......................... 4.1(4)

4.7Note....................................................................... 4.1(11)

4.6 Form of 5.0% Note (included in Exhibit 4.6)......... 4.2(4)

4.8 Registration Rights Agreement, by and between the
Company and the Initial Purchasers named therein,
dated as of February 15, 2000....................... 4.3(4)

4.94.5)........................................ 4.2(11)

4.7 Indenture, by and between the Company and The Bank of New York as Trustee,
for the 9 3/8% Senior Notes due 2009, dated January 31, 2001, including the form Filed herewith
of
9 3/8% Senior Note............................... as Exhibit 4.9

4.10 Registration Rights Agreement, by and between the
Company and the Initial Purchasers named therein Filed herewith
dated January 31, 2001.............................. as Exhibit 4.10Note................................................................. 4.9(15)

10.1 American Tower Systems Corporation 1997 Stock Option Plan, dated as of
November 5, 1997, as amended and restated on April 27, 1998.......................... 10.26(5)

10.1A1998........................ 10.26(2)*

10.2 Amendment to the Amended and Restated American Tower Systems Corporation
1997 Stock Option Plan, dated March 9, 2000........................................ 10.1A(12)*

10.3 Amended and Restated American Tower Systems Corporation 1997 Stock Option
Plan, as Amendedamended May 17, 2001...................................................... 10.1(17)*

10.4 ATC Teleports Corporation 1999 Stock Option Plan................................... 10.16(12)*

10.5 American Tower Corporation 2000 Employee Stock Purchase Plan....................... 10.18(12)*

10.6 Employment Agreement, dated as of January 22, 1998, by and Restated onbetween ATI and
J. Michael Gearon, Jr.............................................................. 10.28(1)*

10.7 Letter of Agreement, dated as of April 27, 1998.......................... 10.1A(12)13, 1998, by and between ATC and Douglas
Wiest.............................................................................. 10.22(5)*

10.210.8 American Tower Systems Corporation Stock Purchase Agreement, dated as of
January 8, 1998, by and among ATC and the Purchasers.............................. 10.27(10)

10.3 Employment Agreement, dated as of January 22, 1998,
by and between ATC by and between ATI and J. Michael
Gearon, Jr.......................................... 10.28(10)**

10.4 Letter of Agreement, dated as of April 13, 1998, by
and between ATC and Douglas Wiest................... 10.22(7)**

10.5Purchasers............................... 10.27(1)

10.9 ARS-ATS Separation Agreement, dated as of June 4, 1998 by and among American
Radio Systems Corporation, ("ARS'('ARS'), ATC and CBS Corporation....... 10.30(6)

10.6Corporation........................ 10.30(3)

10.10 Securities Purchase Agreement, dated as of June 4, 1998 by and among ATC, Credit
Suisse First Boston Corporation and each of the Purchasers named therein............................................. 10.31(6)

10.7therein........... 10.31(3)

Exhibit
No. Description of Document Exhibit File No.
- ------- ----------------------- ----------------

10.11 Registration Rights Agreement, dated June 4, 1998, by and among ATC, Credit Suisse
First Boston Corporation and each of the Parties named therein... 10.32(6)

10.8therein.................... 10.32(3)

10.12 Registration Rights Agreement, dated as of January 22, 1998, by and among ATC and
each of the Parties named therein....................................... 10.3(13)

Exhibit Exhibit
No. Description of Document File No.
------- ----------------------- -----------------

10.9therein................................................. 10.3(4)

10.13 Stock Purchase Agreement, dated as of February 4, 1999, by and among ATC and
Credit Suisse First Boston Corporation................................. 10.13(9)

10.10Corporation............................................ 10.13(6)

10.14 Registration Rights Agreement, dated as of February 4, 1999, by and among ATC and
Credit Suisse First Boston Corporation................................. 10.14(9)

10.11Corporation............................................ 10.14(6)

10.15 Amended and Restated Registration Rights Agreement, dated as of February 25, 1999,
by and among ATC and each of the Parties named therein.................. 10.1(8)

10.12herein............................. 10.1(15)

10.16 Purchase Agreement, to Sublease, dated as of August 6, 1999,January 24, 2001, by and among the Company and
the Purchasers Named therein with respect to the 9 3/8% Senior Notes.............. 10.21(15)

10.17 Registration Rights Agreement, dated January 31, 2001, by and between AirTouch Communications, Inc., the other partiesCompany
and the Initial Purchasers named therein as Sublessors, ATC and
American Tower, L.P................................ 10.1(1)

10.13therein.......................................... 4.10(15)

10.18 Stock Purchase Agreement, dated as of August 11, 1999, between ATC Teleports,
Inc., ICG Holdings, Inc. and ICG Satellite Services.................... 10.2(1)

10.14 Purchase and Sale Agreement, dated as of September
10, 1999, by and among ATC and AT&T Corp., a New
York corporation................................... 10.1 (14)

10.15Services............................... 10.2(7)

10.19 Amended and Restated Loan Agreement, dated as of January 6, 2000, among
American Tower, L.P., American Towers, Inc. and ATC Teleports, Inc., as Borrowers
and Toronto Dominion (Texas) Inc., as Administrative Agent, and the banks party
thereto.. 10.1 (11)

10.16thereto........................................................................... 10.1(10)

10.20 First Amendment and Waiver Agreement, dated as of February 9, 2000, by and among
American Towers,Tower L.P., American Towers,Tower Inc., and ATC Teleports, Inc., as Borrowers
and Toronto Dominion (Texas) Inc., as Administrative Agent, and the banks party
thereto............................................ 10.1(16)

10.17thereto........................................................................... 10.1(13)

10.21 Second Amendment to Amended and Restated Loan Agreement, dated as of May 11,
2000, by and among American Towers,Tower L.P., American Towers, Inc., and ATC
Teleports, Inc., as Borrowers and Toronto Dominion (Texas) Inc., as Administrative
Agent, and the banks party thereto............................ 10.2(16)

10.18thereto................................................ 10.2(13)

10.22 Waiver and Third Amendment to Amended and Restated Loan Agreement, dated as of
October 13, 2000, by and among American Towers,Tower L.P., American Towers, Inc., and
ATC Teleports, Inc., as Borrowers and Toronto Dominion (Texas) Inc., as
Administrative Agent, and the banks party thereto................. 10.3(16)

10.19 ATC Teleports Corporation 1999 Stock Option Plan... 10.16(12)*

10.20 American Tower Corporation 2000 Employee Stock
Purchase Plan...................................... 10.18(12)*

10.21 Purchasethereto................................. 10.3(13)

10.23 Fourth Amendment to Amended and Restated Loan Agreement, dated as of
January 24,23, 2000, by and among American Tower, L.P., American Towers, Inc. and
Verestar, Inc., as Borrowers, and Toronto Dominion (Texas) Inc., as Administrative
Agent, and the banks party thereto................................................ 10.5(16)

10.24 Fifth Amendment and Waiver to Amended and Restated Loan Agreement, dated as of
March 26, 2001, by and among the CompanyAmerican Tower, L.P., American Towers, Inc. and
Verestar, Inc., as Borrowers, and Toronto Dominion (Texas) Inc., as Administrative
Agent, and the Purchasers namedbanks party thereto................................................ 10.6(16)

10.25 Sixth Amendment to Amended and Restated Loan Agreement, dated as of October 26,
2001, by and among American Tower, L.P., American Towers, Inc., Verestar, Inc. and
Towersites Monitoring, Inc., as Borrowers and Toronto Dominion (Texas) Inc., as
Administrative Agent, and the banks party thereto................................. 10.8(18)

Exhibit
No. Description of Document Exhibit File No.
- ------- ----------------------- ----------------

10.26 Notice of Incremental Facility Commitment, dated as of October 26, 2001, by and
among American Towers, Inc., American Tower, L.P., Verestar, Inc., Towersites
Monitoring, Inc. and American Tower International, Inc., as Borrowers and Toronto
Dominion (Texas) Inc., as Administrative Agent, and the banks party thereto........ 10.9(18)

10.27 Credit Agreement, dated December 22, 2000, by and among American Tower
Corporation de Mexico, S. de R.L. de C.V., MATC Holdings Mexico, S. de R.L. de
C.V., MATC TV, S. de R.L. de C.V. and Toronto Dominion (Texas), Inc................ 10.7(16)

10.28 Stockholder/Optionee Agreement, dated as of October 11, 2001, by and among ATC
Mexico Holding Corp., American Tower Corporation, American Tower International,
Inc., J. Michael Gearon, Jr., and the Persons who from time to time execute a Filed herewith
counterpart of the Agreement....................................................... as therein with respect to the 93/8% Senior Notes..... Exhibit 10.2110.28

10.29 Noncompetition and Confidentiality Agreement, dated as of October 11, 2001, by and Filed herewith
between American Tower Corporation and J. Michael Gearon, Jr....................... as Exhibit 10.29

10.30 Pledge Agreement, dated as of October 11, 2001, by and among J. Michael Gearon, Jr. Filed herewith
and ATC Mexico Holding Corp........................................................ as Exhibit 10.30

10.31 Secured Note, dated October 11, 2001, by and among J. Michael Gearon, Jr. and ATC Filed herewith
Mexico Holding Corp................................................................ as Exhibit 10.31

Filed herewith
12 Statement Regarding Computation of Ratios of Filed herewith as
Earnings to Fixed Charges..........................Charges............. as Exhibit 12

Filed herewith
21 Subsidiaries of ATC................................ Filed herewithATC................................................................ as Exhibit 21

Filed herewith
23 Independent Auditors' Consent--Deloitte & Touche Filed herewithLLP............................... as
LLP................................................ Exhibit 23

- --------
* Compensatory Plan
** Management Contractcontracts and compensatory plans and arrangements required to be
filed as exhibits to this Form 10-K pursuant to Item 14(c).