-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KXUlAfj7m19KV4GMu8q17n2PhnIse+b3WkAvD5OCfS3pw+qBOT3Mnrx38aRwz3vF dzCnlJo6ClozgnuIqI0yvQ== 0001005150-96-000133.txt : 19960625 0001005150-96-000133.hdr.sgml : 19960625 ACCESSION NUMBER: 0001005150-96-000133 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960228 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960513 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SINCLAIR BROADCAST GROUP INC CENTRAL INDEX KEY: 0000912752 STANDARD INDUSTRIAL CLASSIFICATION: 4833 IRS NUMBER: 521494660 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-26076 FILM NUMBER: 96562038 BUSINESS ADDRESS: STREET 1: 2000 WEST 41ST ST CITY: BALTIMORE STATE: MD ZIP: 21211 BUSINESS PHONE: 4104675005 MAIL ADDRESS: STREET 1: 2000 W 41ST ST CITY: BALTIMORE STATE: MD ZIP: 21211 8-K/A 1 FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A (Amendment No. 1) Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 February 28, 1996 ---------------------------- (Date of earliest event reported) SINCLAIR BROADCAST GROUP, INC. (Exact name of Registrant as specified in its charter) Maryland 33-69482 52-1494660 (State of incorporation) (Commission File Number) (IRS Employer Identification Number) 2000 W. 41st Street, Baltimore, Maryland 21211-1420 --------------------------------------------------- (Address of principal executive offices)(Zip code) Registrant's telephone number, including area code: (410) 467-5005 --------------- Item 7. Financial Statements and Exhibits (a) Financial Statements of Business Acquired The financial statements required by this item are submitted in a separate section beginning on page 1 of this report.
Page FLINT T.V., INC. Report of Independent Public Accountants............................................1 Balance Sheets as of December 31, 1995 and December 31, 1994........................2 Statements of Operations for the Years Ended December 31, 1995 and December 31, 1994..........................................................3 Statements of Changes in Stockholder's Equity for the Years Ended................... December 31, 1995 and December 31, 1994....................................4 Statements of Cash Flows for the Years Ended December 31, 1995 and December 31, 1994......................................................5 Notes to Financial Statements.......................................................6
(b) Pro Forma Financial Information The pro forma financial information required by this item is submitted on pages 9 through 13 of this report. (c) Exhibits 2.01 Asset Purchase Agreement dated as of May 9, 1995 among Flint T.V., Inc. (as seller) and Sinclair Broadcast Group, Inc. (as buyer) (exhibits and schedules have been omitted and the Registrant agrees to furnish copies thereof to the Securities and Exchange Commission upon its request) 2.02 Real Estate Purchase Agreement dated as of February 26, 1995 among Flint T.V., Inc. (as seller) and Sinclair Broadcast Group, Inc. (as buyer) (exhibits and schedules have been omitted and the Registrant agrees to furnish copies thereof to the Securities and Exchange Commission upon its request) PRO FORMA CONSOLIDATED FINANCIAL DATA The following Pro Forma Consolidated Financial Data includes the unaudited pro forma consolidated balance sheet as of December 31, 1995 (the "Pro Forma Consolidated Balance Sheet") and the unaudited pro forma consolidated statement of operations for the year ended December 31, 1995 (the "Pro Forma Consolidated Statement of Operations"). The unaudited Pro Forma Consolidated Balance Sheet and the unaudited Pro Forma Consolidated Statement of Operations are adjusted to give effect to the consummation of the acquisition of the assets of Flint T.V., Inc. ("Flint") (former owner of WSMH). The pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable. The Pro Forma Consolidated Financial Data should be read in conjunction with the Company's Consolidated Financial Statements and the related notes thereto and the financial statements and related notes thereto of Flint. The unaudited Pro Forma Consolidated Financial Data do not purport to represent what the Company's financial position or results of operations would have been had the above event occurred on the date specified or to project the Company's financial position or results of operations for or at any future period or date.
PRO FORMA CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1995 (DOLLARS IN THOUSANDS) (UNAUDITED) Consolidated Flint Pro Forma Historical TV, Inc Adjustments Pro Forma ---------- ----------- ----------- --------- ASSETS CURRENT ASSETS: Cash, including cash equivalents................................ $ 112,450 $ $ (34,400)(b) $ 78,050 Accounts receivable, net of allowance for doubtful accounts..................................................... 50,022 50,022 Current portion of program contract costs....................... 18,036 378 18,414 Deferred barter costs........................................... 1,268 1,268 Prepaid expenses and other current assets....................... 1,972 1,972 Deferred tax asset.............................................. 4,565 4,565 ----------- ----------- ---------- ----------- Total current assets.................................. 188,313 378 (34,400) 154,291 PROPERTY AND EQUIPMENT, net.......................................... 42,797 2,276 45,073 PROGRAM CONTRACT COSTS, less current portion......................... 19,277 744 20,021 LOANS TO OFFICERS AND AFFILIATES, net................................ 11,900 11,900 NON-COMPETE AND CONSULTING AGREEMENTS, net........................... 30,379 30,379 DEFERRED TAX ASSET................................................... 16,462 16,462 OTHER ASSETS......................................................... 27,355 (1,000)(b) 26,355 ACQUIRED INTANGIBLE BROADCASTING ASSETS, net......................... 268,789 33,905 302,694 =========== =========== ========== =========== Total Assets.......................................... $ 605,272 $ 37,303 $ (35,400) $ 607,175 =========== =========== ========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts Payable................................................ $ 2,187 $ $ $ 2,187 Income Taxes Payable............................................ 3,944 3,944 Accrued Liabilities............................................. 20,720 20,720 Current portion of long-term liabilities- Notes payable and commercial bank financing.................. 1,133 1,133 Capital leases payable....................................... 524 524 Notes and capital leases payable to affiliates............... 1,867 1,867 Program contracts payable.................................... 26,395 848 27,243 Deferred barter revenues........................................ 1,752 1,752 ----------- ----------- ---------- ----------- Total current liabilities............................. 58,522 848 - 59,370 LONG-TERM LIABILITIES Notes payable and commercial bank financing..................... 400,644 400,644 Capital leases payable.......................................... 44 44 Notes and capital leases payable to affiliates.................. 13,959 13,959 Program contracts payable....................................... 30,942 1,055 31,997 Other long-term liabilites...................................... 2,442 2,442 ----------- ----------- ---------- ----------- Total liabilities..................................... 506,553 1,903 - 508,456 ----------- ----------- ---------- ----------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY......................... 2,345 - - 2,345 ----------- ----------- ---------- ----------- COMMITMENTS AND CONTINGENCIES........................................ STOCKHOLDERS' EQUITY................................................. Preferred stock, $.01 par value, 5,000,000 shares authorized and -0- outstanding............................... - - Class A Common stock, $.01 par value, 35,000,000 shares authorized and -0- and 5,750,000 shares issued and outstanding, respectively......................... 58 58 Class B Common stock, $.01 par value, 35,000,000 shares authorized and 29,000,000 shares issued and outstanding.............................................. 290 290 Additional paid-in-capital...................................... 116,089 116,089 Accumulated deficit............................................. (20,063) (20,063) ----------- ----------- ---------- ----------- Total stockholders' equity............................ 96,374 - - 96,374 ----------- ----------- ---------- ----------- Total Liabilities and Stockholders' Equity............ $605,272 $ 1,903 $ - $ 607,175 =========== =========== ========== ===========
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET (Dollars in thousands) (a) The Flint TV, Inc. column reflects the assets and liabilities acquired in connection with the purchase of WSMH. Total acquired intangibles are calculated as follows: Purchase price ................................... $ 35,400 Add: Liabilities acquired - Current ................................ 848 Long - term ............................ 1,055 Less:Assets acquired Current portion of program contracts ... (378) Non-current portion of program contracts (744) Property and equipment ................. (2,276) -------- Acquired intangibles ................... $ 33,905 ======== (b) In July 1995, the Company exercised its option to purchase WSMH in Flint, Michigan for an option exercise price of $1 million. In February 1996, the Company consummated the acquisition for a purchase price of $35.4 million at which time the balance due of $34.4 million was paid from the Company's existing cash balance. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 (DOLLARS IN THOUSANDS) (UNAUDITED)
Consolidated Flint Pro Forma Historical TV, Inc.(a) Adjustments Pro Forma ---------- -------- ----------- --------- REVENUES: Station broadcast revenues, net $ 187,934 $ 7,217 $ - $195,151 Revenues realized from station barter arrangements 18,200 18,200 --------- ------- --------- -------- Total revenues.......................... 206,134 7,217 - 213,351 --------- ------- --------- -------- OPERATING EXPENSES: Program and production........................ 22,563 511 23,074 Selling, general and administrative........... 41,763 2,114 43,877 Expenses realized from station barter arrangements 16,120 16,120 Amortization of program contract costs and net realizable value adjustments................ 29,021 897 29,918 Depreciation and amortization of property 5,400 21 171 (b) 5,592 Amortization of acquired intangible broadcasting assets, non-compete and consulting agreements and other assets............................ 45,989 12 991 (c) 46,992 --------- ------- --------- -------- Total operating expenses................ 160,856 3,555 1,162 165,573 --------- ------- --------- -------- Broadcast operating income (loss)....... 45,278 3,662 (1,162) 47,778 --------- ------- --------- -------- OTHER INCOME (EXPENSE): Interest and amortization of debt discount exp (39,253) (39,253) Interest (expense)............................ - - (1,924)(d) (1,924) Interest income............................... 3,942 81 (736)(d) 3,287 Other income.................................. 221 41 262 --------- ------- --------- -------- Income (loss) before (provision) benefit for income taxes and extraordinary items 10,188 3,784 (3,822) 10,150 (PROVISION) BENEFIT FOR INCOME TAXES............ (5,200) (1,514) 1,529 (e) (5,185) --------- ------- --------- -------- Net income (loss) before extraordinary items 4,988 2,270 (2,293) 4,965 EXTRAORDINARY ITEM: Loss on early extinguishment of debt, net of related income tax benefit.......................... (4,912) - - (4,912) NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDE $ 76 $ 2,270 $ (2,293) $ 53 ========= ======= ========= ======== EARNINGS PER COMMON SHARE Net income before extraordinary items... $ 0.15 $ 0.15 Extraordinary items..................... $ (0.15) $ (0.15) --------- ------- -------- -------- Net income per common share..................... $ - $ 0.00 ========= ======= ========= ======== WEIGHTED AVERAGE SHARES OUTSTANDING (in thousand 32,198 32,198 ========= ======= ========= ========
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in thousands) (a) The Flint TV, Inc. column reflects the results of operations for WSMH for the year ended December 31, 1995 as the purchase transaction was consummated in February 1996. (b) To record depreciation expense related to acquired tangible assets and eliminate depreciation expense recorded by WSMH. Tangible assets are to be depreciated over lives ranging from three to 35 years, calculated as follows: Depreciation expense on acquired assets................. $ 192 Less: Depreciation expense recorded by WSMH............. (21) -------- Pro forma adjustment.................................... $ 171 ======== (c) To record amortization expense related to acquired intangible assets and eliminate amortization expense recorded by WSMH. Intangible assets are to be amortized over lives ranging from 1 to 40 years, calculated as follows: FCC license............................................. $ 283 Non-compete agreement................................... 50 Goodwill................................................ 670 -------- 1,003 Less: Intangible amortization recorded by WSMH.......... (12) -------- Pro forma adjustment.................................... $ 991 ======== (d) To record interest expense on acquisition financing of $34,400 (in Credit Facility with commercial bank at 8.4% for 8 months), to eliminate interest income on public debt proceeds of $34,400 (with commercial bank at 5.7% for 4 months) and to eliminate interest expense and interest income recorded by WSMH. Interest Interest Expense Income ------- ------ Interest expense and interest income adjustment as noted above................................ $1,924 $ (655) Less: Interest expense and interest income recorded by WSMH....................................... - (81) ------ -------- Pro forma adjustment.......................... $1,924 $ (736) ====== ======== (e) To record tax benefit of pro forma adjustments at applicable statutory rates. FLINT TV, INC. FINANCIAL STATEMENTS AS OF DECEMBER 31, 1995 AND 1994 TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders of Sinclair Broadcast Group, Inc. and Subsidiaries: We have audited the accompanying balance sheets of Flint TV, Inc. (a Michigan corporation) as of December 31, 1995 and 1994, and the related statements of operations, changes in stockholder's equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the 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, the financial statements referred to above present fairly, in all material respects, the financial position of Flint TV, Inc. as of December 31, 1995 and 1994, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Baltimore, Maryland, March 29, 1996 FLINT TV, INC. -------------- BALANCE SHEETS -------------- AS OF DECEMBER 31, 1995 AND 1994 --------------------------------
1995 1994 ---- ---- ASSETS ------ CURRENT ASSETS: Cash and cash equivalents $ 108,900 $ 491,300 Short-term investments 1,247,900 956,300 Accounts receivable, net of allowance for doubtful accounts of $86,000 as of 1995 and 1994 1,999,700 1,682,200 Current portion of program contract costs 378,400 315,100 Other current assets 64,500 58,000 ---------- ----------- Total current assets 3,799,400 3,502,900 Property and equipment, net 34,000 52,300 Program contract costs, noncurrent portion 743,900 370,000 Intangible assets, net 210,000 221,500 Other assets 303,800 199,500 ---------- ----------- Total assets $ 5,091,100 $ 4,346,200 ========== =========== LIABILITIES AND STOCKHOLDER'S EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 12,500 $ 39,000 Accrued liabilities 256,800 354,200 Current portion of program contracts payable 848,000 457,700 Due to related parties 11,600 7,000 Unearned revenue 18,800 74,000 Deposit on sale 1,000,000 - ---------- ----------- Total current liabilities 2,147,700 931,900 LONG-TERM LIABILITIES: Program contracts payable, noncurrent portion 1,054,600 668,900 ---------- ----------- Total liabilities 3,202,300 1,600,800 COMMITMENTS AND CONTINGENCIES STOCKHOLDER'S EQUITY: Common stock, no par value; 500 shares authorized, issued and outstanding - - Additional paid-in capital 9,026,000 9,026,000 Accumulated deficit (7,137,200) (6,280,600) ---------- ----------- Total stockholder's equity 1,888,800 2,745,400 ---------- ----------- Total liabilities and stockholder's equity $ 5,091,100 $ 4,346,200 ========== ===========
The accompanying notes are an integral part of these balance sheets. FLINT TV, INC. -------------- STATEMENTS OF OPERATIONS ------------------------ FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994 ---------------------------------------------- 1995 1994 ---------- ---------- ADVERTISING REVENUES, net of agency commissions of $539,900 and $465,000, respectively $ 7,217,100 $ 6,390,000 ---------- ---------- OPERATING EXPENSES: Programming and production 511,100 1,684,700 Selling, general and administrative 2,114,900 1,858,500 Amortization of program contract rights 896,900 881,600 Depreciation and amortization of property and equipment 20,600 46,900 Amortization of intangible assets 11,500 11,500 ---------- ---------- Total operating expenses 3,555,000 4,483,200 ---------- ---------- Broadcast operating income 3,662,100 1,906,800 ---------- ---------- OTHER INCOME: Interest income 80,800 46,100 Other income 40,500 9,100 ---------- ---------- Total other income 121,300 55,200 ---------- ---------- Net income $ 3,783,400 $ 1,962,000 ========== ========== PRO FORMA NET INCOME AFTER IMPUTING AN INCOME TAX PROVISION: Net income, as reported $ 3,783,400 $ 1,962,000 Imputed income tax provision 1,475,500 765,200 ---------- ---------- Pro forma net income $ 2,307,900 $ 1,196,800 ========== ========== The accompanying notes are an integral part of these statements. FLINT TV, INC. -------------- STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY --------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994 ----------------------------------------------
Common Stock Additional Total ------------------------------------- Paid-In Accumulated Stockholder's Shares Value Capital Deficit Equity ------ ----- ------- ------- ------ BALANCE, December 31, 1993 - $ - $ 9,026,000 $ (6,636,730) $ 2,389,270 Cash dividends - - - (1,605,870) (1,605,870) Net income - - - 1,962,000 1,962,000 --------- ---------- ---------- ----------- ---------- BALANCE, December 31, 1994 - - 9,026,000 (6,280,600) 2,745,400 Cash dividends - - - (4,640,000) (4,640,000) Net income - - - 3,783,400 3,783,400 --------- ---------- ---------- ----------- ---------- BALANCE, December 31, 1995 - $ - $ 9,026,000 $ (7,137,200) $ 1,888,800 ========= ========== ========== =========== ==========
The accompanying notes are an integral part of these statements.
FLINT TV, INC. -------------- STATEMENTS OF CASH FLOWS ------------------------ FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994 ---------------------------------------------- 1995 1994 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,783,400 $ 1,962,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,600 46,900 Provision for losses on accounts receivable - 24,100 Amortization of goodwill and other intangible assets 11,500 11,500 Amortization of program contract rights 896,900 881,600 Loss on disposal of fixed assets - 5,700 Changes in assets and liabilities: Increase in short-term investments (291,600) (258,000) Increase in accounts receivable (317,500) (204,600) Increase in other current assets (6,500) (1,500) Increase in other assets (104,300) (44,400) (Decrease) increase in accounts payable (26,500) 3,900 Increase in due to related parties 4,600 3,000 (Decrease) increase in accrued liabilities (97,400) 204,000 (Decrease) increase in unearned revenue (55,200) 48,000 Film rights payments (558,100) (623,500) --------- -------- Net cash provided by operating activities 3,259,900 2,058,700 --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property and equipment (2,300) (43,500) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long-term debt - (8,930) Dividends paid (4,640,000) (1,605,870) Increase in deposit on sale 1,000,000 - --------- -------- Net cash flows used in financing activities (3,640,000) (1,614,800) Net (decrease) increase in cash (382,400) 400,400 CASH, beginning of year 491,300 90,900 --------- -------- CASH, end of year $ 108,900 $ 491,300 ============ ============ SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Film contract rights and liabilities acquired $ 1,334,100 $ 593,670 ============ ============
The accompanying notes are an integral part of these statements. FLINT TV, INC. -------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- DECEMBER 31, 1995 AND 1994 -------------------------- 1. ORGANIZATION Flint TV, Inc., a Michigan corporation (the Company), owns and operates television station WSMH-TV, located in Flint, Michigan (the Station). The Company is a television broadcaster serving the mid-Michigan area through station WSMH on Channel 66, a Fox affiliate. (See Note 8 for information regarding sale of the Station) Fiscal Year - - ----------- The Company maintains its accounts on a fifty-two/fifty-three week year ending on the last Sunday of the calendar year. The fiscal years ended December 31, 1995 and 1994 contained 53 weeks and 52 weeks, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition - - ------------------- The Station recognizes revenue on the sale of advertising air time when the related advertising is broadcast. Cash and Cash Equivalents - - ------------------------- For purposes of these financial statements, all cash and cash equivalents consist of cash and money market accounts. The cost of these cash and cash equivalents approximates their market value. Short-Term Investments - - ---------------------- Short-term investments represent short-term maturity money market funds that can be readily purchased or sold using established markets. These investments are stated at cost plus accrued income which approximates market value. Program Contract Rights - - ----------------------- The Station has entered into agreements with program distributors granting it the right to broadcast programs over contract periods which generally run from one to seven years. The total cost of each contract is recorded as an asset and liability when the license period begins and the program is available for its first showing. Amortization of program contract costs is generally computed under either a four year accelerated method or based on usage, whichever yields the greater amortization for each program. Program contract rights are stated at the lower of unamortized cost or net realizable value as estimated periodically by management. Contract payments are generally made in installments over a term somewhat shorter than the contract period. Program contract rights expected to be amortized in the succeeding year and program contract rights payable due within one year are classified as current assets and current liabilities, respectively. Property and Equipment - - ---------------------- Property and equipment are stated at cost. The Company depreciates and amortizes property and equipment over the estimated useful lives of the assets, generally using accelerated methods. Intangible Assets - - ----------------- Intangible assets include value attributable to the license issued by the Federal Communications Commission (FCC) and goodwill representing the excess of the cost over the fair market value of the assets purchased and the liabilities assumed. These assets are amortized using the straight-line method over their estimated useful lives. The Company monitors the individual financial performance of the station and continually evaluates the realizability of goodwill and the existence of any impairment to its recoverability based on the projected future net income of the station. Use of Estimates - - ---------------- The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements and in the disclosures of contingent assets and liabilities. While actual results could differ from those estimates, management believes that actual results will not be materially different from amounts provided in the accompanying consolidated financial statements. Reclassifications - - ----------------- Certain reclassifications have been made to the prior year's financial statements to conform with the current year presentation. 3. PROPERTY AND EQUIPMENT Property and equipment consist of the following at December 31, 1995 and 1994:
1995 1994 ---------- ---------- Broadcasting equipment $ 2,604,500 $ 3,004,500 Machinery and equipment 20,100 20,000 Furniture and fixtures 110,000 111,000 ---------- ---------- 2,734,600 3,135,500 Less: Accumulated depreciation and amortization (2,700,600) (3,083,200) ---------- ---------- Property and equipment, net $ 34,000 $ 52,300 ========== ==========
4. INTANGIBLE ASSETS Intangible assets consist of the following at December 31, 1995 and 1994:
Amortization Period 1995 1994 ------------ ---------- ---------- FCC license 25 years $ 225,000 $ 225,000 Goodwill 40 years 100,000 100,000 ---------- --------- 325,000 325,000 Less: Accumulated amortization (115,000) (103,500) ---------- --------- Intangible assets, net $ 210,000 $ 221,500 ========== =========
5. RELATED PARTY TRANSACTIONS An entity in which the majority shareholder of Flint TV, Inc. has ownership interests owns the building in which the Station operates. Rent expense paid in 1995 and 1994 was $102,000 and $25,500, respectively. Two other entities in which the majority shareholder of Flint TV, Inc. has ownership interests provide administrative services to the Station. Payments for these services totaled $455,600 and $212,600 for 1995 and 1994, respectively. During 1994, another entity in which the majority shareholder of Flint TV, Inc. had ownership interests provided programming services to the Station in the amount of $1,151,500, which is included in programming and production expenses in the accompanying statement of operations. This entity was sold by the majority shareholder in 1994 and, accordingly, no services were performed by this entity during 1995. In addition, an entity partially owned by an affiliate of Flint TV, Inc. provides local radio advertising and administrative management services to the Station. Advertising expenses paid to this entity in 1995 and 1994 were $246,000 and $226,800, respectively. Administrative management expenses paid to this entity in 1995 and 1994 were $106,000 and $161,800, respectively. 6. COMMITMENTS AND CONTINGENCIES Program Contracts Payable Future payments acquired under program contracts payable as of December 31, 1995, are as follows: 1996 $ 848,000 1997 709,800 1998 305,200 1999 39,600 2000 - 2001 and thereafter - ---------- 1,902,600 Less - Current portion (848,000) ---------- Long-term portion of program contracts payable $ 1,054,600 ========== In addition, the Station has entered into noncancelable commitments for future program rights aggregating $204,200 and $1,109,000 as of December 31, 1995 and 1994, respectively. 7. INCOME TAXES Flint TV, Inc. operates as an S corporation for income tax purposes and as a result, is generally not subject to Federal income taxes. Such income taxes are the obligation of the stockholders of Flint TV, Inc. In accordance with Company policy, Flint TV, Inc. does not record deferred income taxes. A pro forma income tax provision, along with the related pro forma effect on net income, is presented in the accompanying statement of operations. These pro forma income taxes are the product of multiplying the estimated blended Federal and State effective rate of 39% by net income as reported in the statement of operations. 8. SALE OF THE STATION In May 1995, the Company entered into an option agreement with Sinclair Broadcast Group, Inc. (SBG) to acquire all of the license and non-license assets of the Company. The option purchase price was $1.0 million. In July 1995, SBG paid $1.0 million to exercise its option upon FCC consent. In February 1996, SBG consummated the acquisition for a purchase price of $35.4 million, at which time the balance of $34.4 million was paid. -----END PRIVACY-ENHANCED MESSAGE-----