-----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, FF7SZlpak+n2mCeJiR74Rzu4kRfyBrrRey/CAEQV35NVZEtpuWfMiv/azHXl6aG4 68hGP7jVVGOlb9oSr/Vnnw== 0001005150-98-000262.txt : 19980330 0001005150-98-000262.hdr.sgml : 19980330 ACCESSION NUMBER: 0001005150-98-000262 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971202 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980327 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SINCLAIR BROADCAST GROUP INC CENTRAL INDEX KEY: 0000912752 STANDARD INDUSTRIAL CLASSIFICATION: TELEVISION BROADCASTING STATIONS [4833] IRS NUMBER: 521494660 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-26076 FILM NUMBER: 98575659 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 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DECEMBER 2, 1997 ----------------------- (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 5. OTHER EVENTS As previously reported, Sinclair Broadcast Group, Inc. (the "Company") entered into acquisition agreements on July 16, 1997 (the "Heritage Acquisition Agreements") with The News Corporation Limited, Heritage Media Group, Inc. and certain subsidiaries of Heritage Media Corporation (collectively "Heritage") pursuant to which the Company has acquired or will acquire the assets of, or the right to program pursuant to Local Marketing Agreements ("LMAs"), six television stations in three markets and the assets of 24 radio stations in seven markets (the "Heritage Acquisition"). On December 3, 1997, the Company entered into an agreement to acquire, directly or indirectly, all of the equity interests of Max Media Properties LLC ("Max Media"), pursuant to which the Company will acquire, or acquire the right to program pursuant to LMA's, nine television stations and eight radio stations in eight markets (the "Max Media Acquisition"). On February 23, 1998 the Company entered into an agreement to acquire 100% of the stock of Sullivan Broadcast Holdings, Inc. and Subsidiaries ("Sullivan"), pursuant to which the Company will acquire or provide programming services to 13 television stations in 11 separate markets (the "Sullivan Acquisition" and together with the Heritage Acquisition and the Max Media Acquisition, the "Significant Acquisitions"). The Company is filing with this Current Report on Form 8-K/A pro forma financial information for the Company showing the effect of the pending offering by the Company of 6,000,000 shares of Class A Common Stock pursuant to a $1 billion shelf registration statement filed by the Company on August 22, 1997 (the "Offering") as well as basic and diluted earnings per share and basic and diluted earnings per share available to common shareholders. The effect of the Company's issuances of debt, common and preferred stock and trust-offered preferred securities and its repurchase of certain notes ("the 1997 Financings"), the Heritage Acquisition, the Max Media Acquisition, the Sullivan Acquisition were included in a Form 8-K filed March 17, 1998. ITEM 7. PRO FORMA FINANCIAL STATEMENTS (A) PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF SINCLAIR The following Pro Forma Consolidated Financial Data include the unaudited pro forma consolidated balance sheet as of December 31, 1997 (the "Pro Forma Consolidated Balance Sheet") and the unaudited pro forma consolidated statement of operations for the year ended December 31, 1997 (the "Pro Forma Consolidated Statement of Operations"). The unaudited Pro Forma Consolidated Balance Sheet is adjusted to give effect to the Significant Acquisitions and the Offering at an assumed offering price of $57 per share and application of the net proceeds therefrom as set forth in "Use of Proceeds" in the Prospectus filed March 17, 1998 as if they occurred on December 31, 1997. The unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 1997 is adjusted to give effect to the 1997 Financings, the Significant Acquisitions and the Offering at an assumed offering price of $57 per share and assuming the net proceeds of the Offering will be used by the Company to repay amounts outstanding under the Company's existing credit facility under a bank credit agreement (the "Bank Credit Agreement") as if each occurred at the beginning of such period. 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 as of and for the year ended December 31, 1997 and related notes thereto, the historical financial data of Heritage Media Services, Inc. -- Broadcasting Segment, the historical financial data of Max Media Properties LLC, and the historical financial data of Sullivan Broadcast Holdings, Inc. and Subsidiaries all of which have been filed with the Commission as part of (i) its annual report on Form 10-K for the year ended December 31, 1997; or (ii) its periodic report on Form 8-K filed March 17, 1998. The unaudited Pro Forma Consolidated Financial Data do not purport to represent what the Company's results of operations or financial position would have been had any of the above events occurred on the dates specified or to project the Company's results of operations or financial position for or at any future period or date. 1 SINCLAIR BROADCAST GROUP, INC. PRO FORMA CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 (DOLLARS IN THOUSANDS) (UNAUDITED)
CONSOLIDATED HISTORICAL ------------- ASSETS CURRENT ASSETS: Cash, including cash equivalents ................................ $ 139,327 Accounts receivable, net of allowance for doubtful accounts ..... 123,018 Current portion of program contract costs ....................... 46,876 Prepaid expenses and other current assets ....................... 4,673 Deferred barter costs ........................................... 3,727 Refundable income taxes ......................................... 10,581 Deferred tax asset .............................................. 2,550 ---------- Total current assets .......................................... 330,752 PROGRAM CONTRACT COSTS, less current portion ..................... 40,609 LOANS TO OFFICERS AND AFFILIATES ................................. 11,088 PROPERTY AND EQUIPMENT, net ...................................... 161,714 NON-COMPETE AND CONSULTING AGREEMENTS, net........................ 200 OTHER ASSETS ..................................................... 167,895 ACQUIRED INTANGIBLE BROADCASTING ASSETS, net ..................... 1,321,976 ---------- Total Assets .................................................. $2,034,234 ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ................................................ $ 5,207 Accrued liabilities ............................................. 40,532 Current portion of long-term liabilities- Notes payable and commercial bank financing .................... 35,215 Notes and capital leases payable to affiliation ................ 3,073 Program contracts payable ...................................... 66,404 Deferred barter revenues ........................................ 4,273 ---------- Total current liabilities ..................................... 154,704 LONG-TERM LIABILITIES: Notes payable and commercial bank financing .................... 1,022,934 Notes and capital leases payable to affiliates ................. 19,500 Program contracts payable ...................................... 62,408 Deferred tax liability ......................................... 24,092 Other long-term liabilities .................................... 3,611 ---------- Total liabilities ............................................. 1,287,249 ---------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 3,697 ---------- COMMITMENTS AND CONTINGENCIES COMPANY OBLIGATED MANDATORILY REDEEM- ABLE SECURITY OF SUBSIDIARY TRUST HOLDING SOLELY KDSM SENIOR DEBENTURES ................................... 200,000 ---------- STOCKHOLDERS' EQUITY: Series B Preferred Stock, $.01 par value, 10,000,000 shares authorized and 1,071,381 and 512,426 shares issued and outstanding ................................................... 10 Series D Preferred Stock, $.01 par value, 3,450,000 shares authorized 3,450,000 shares issued and outstanding ............ 35 Class A Common Stock, $.01 par value, 100,000,000 shares authorized and 13,733,430, 15,487,816 and 23,520,379 re- spectively, shares issued and outstanding ..................... 137 Class B Common Stock, $.01 par value, 35,000,000 shares authorized and 25,436,432 shares issued and outstanding........ 255 Additional paid-in capital ..................................... 552,949 Additional paid-in capital - equity put options ................ 23,117 Additional paid-in capital - deferred compensation ............. (954) Accumulated deficit ............................................ (32,261) ---------- Total stockholders' equity .................................... 543,288 ---------- Total Liabilities and Stockholders' Equity .................... $2,034,234 ==========
SIGNIFICANT ACQUISITIONS ------------------------------------------------------- SULLIVAN HERITAGE(A) MAX MEDIA(B) BROADCASTING(C) ------------------ ------------------ ----------------- ASSETS CURRENT ASSETS: Cash, including cash equivalents ................................ $ (139,327) Accounts receivable, net of allowance for doubtful accounts ..... Current portion of program contract costs ....................... 1,462 $ 2,325 $ 22,850 Prepaid expenses and other current assets ....................... Deferred barter costs ........................................... 578 640 Refundable income taxes ......................................... Deferred tax asset .............................................. ----------- ----------- ----------- Total current assets .......................................... (137,287) 2,965 22,850 PROGRAM CONTRACT COSTS, less current portion ..................... 1,179 2,182 23,432 LOANS TO OFFICERS AND AFFILIATES ................................. PROPERTY AND EQUIPMENT, net ...................................... 32,859 25,556 39,723 NON-COMPETE AND CONSULTING AGREEMENTS, net........................ OTHER ASSETS ..................................................... (65,500) (12,817) ACQUIRED INTANGIBLE BROADCASTING ASSETS, net. .................... 368,336 229,490 1,135,309 ----------- ----------- ------------ Total Assets .................................................. $ 199,587 $ 247,376 $ 1,221,314 =========== =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ................................................ Accrued liabilities ............................................. Current portion of long-term liabilities- Notes payable and commercial bank financing .................... Notes and capital leases payable to affiliation ................ Program contracts payable ...................................... $ 1,788 $ 2,431 $ 24,944 Deferred barter revenues ........................................ 350 1,026 ----------- ----------- ----------- Total current liabilities ..................................... 2,138 3,457 24,944 LONG-TERM LIABILITIES: Notes payable and commercial bank financing .................... 196,673 (d) 242,183 (e) 900,000 (f) Notes and capital leases payable to affiliates ................. Program contracts payable ...................................... 776 1,736 22,710 Deferred tax liability ......................................... 173,660 Other long-term liabilities .................................... ----------- ----------- ------------ Total liabilities ............................................. 199,587 247,376 1,121,314 ----------- ----------- ------------ MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES -- -- -- ----------- ----------- ------------ COMMITMENTS AND CONTINGENCIES COMPANY OBLIGATED MANDATORILY REDEEM- ABLE SECURITY OF SUBSIDIARY TRUST HOLDING SOLELY KDSM SENIOR DEBENTURES ................................... -- -- -- ----------- ----------- ------------ STOCKHOLDERS' EQUITY: Series B Preferred Stock, $.01 par value, 10,000,000 shares authorized and 1,071,381 and 512,426 shares issued and outstanding ................................................... Series D Preferred Stock, $.01 par value, 3,450,000 shares authorized 3,450,000 shares issued and outstanding ............ Class A Common Stock, $.01 par value, 100,000,000 shares authorized and 13,733,430, 15,487,816 and 23,520,379 re- spectively, shares issued and outstanding ..................... 18 Class B Common Stock, $.01 par value, 35,000,000 shares authorized and 25,436,432 shares issued and outstanding........ Additional paid-in capital ..................................... 99,982 Additional paid-in capital - equity put options ................ Additional paid-in capital - deferred compensation ............. Accumulated deficit ............................................ Total stockholders' equity .................................... -- -- 100,000 ----------- ----------- ------------ Total Liabilities and Stockholders' Equity .................... $ 199,587 $ 247,376 $ 1,221,314 =========== =========== ============
CONSOLIDATED HISTORICAL AND SIGNIFICANT ACQUISITIONS ---------------- ASSETS CURRENT ASSETS: Cash, including cash equivalents ................................ $ -- Accounts receivable, net of allowance for doubtful accounts ..... 123,018 Current portion of program contract costs ....................... 73,513 Prepaid expenses and other current assets ....................... 4,673 Deferred barter costs ........................................... 4,945 Refundable income taxes ......................................... 10,581 Deferred tax asset .............................................. 2,550 ---------- Total current assets .......................................... 219,280 PROGRAM CONTRACT COSTS, less current portion ..................... 67,402 LOANS TO OFFICERS AND AFFILIATES ................................. 11,088 PROPERTY AND EQUIPMENT, net ...................................... 259,852 NON-COMPETE AND CONSULTING AGREEMENTS, net........................ 200 OTHER ASSETS ..................................................... 89,578 ACQUIRED INTANGIBLE BROADCASTING ASSETS, net...................... 3,055,111 ---------- Total Assets .................................................. $3,702,511 ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ................................................ $ 5,207 Accrued liabilities ............................................. 40,532 Current portion of long-term liabilities- Notes payable and commercial bank financing .................... 35,215 Notes and capital leases payable to affiliation ................ 3,073 Program contracts payable ...................................... 95,567 Deferred barter revenues ........................................ 5,649 ---------- Total current liabilities ..................................... 185,243 LONG-TERM LIABILITIES: Notes payable and commercial bank financing .................... 2,361,790 Notes and capital leases payable to affiliates ................. 19,500 Program contracts payable ...................................... 87,630 Deferred tax liability ......................................... 197,752 Other long-term liabilities .................................... 3,611 ---------- Total liabilities ............................................. 2,855,526 ---------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 3,697 ---------- COMMITMENTS AND CONTINGENCIES COMPANY OBLIGATED MANDATORILY REDEEM- ABLE SECURITY OF SUBSIDIARY TRUST HOLDING SOLELY KDSM SENIOR DEBENTURES ................................... 200,000 ---------- STOCKHOLDERS' EQUITY: Series B Preferred Stock, $.01 par value, 10,000,000 shares authorized and 1,071,381 and 512,426 shares issued and outstanding ................................................... 10 Series D Preferred Stock, $.01 par value, 3,450,000 shares authorized 3,450,000 shares issued and outstanding ............ 35 Class A Common Stock, $.01 par value, 100,000,000 shares authorized and 13,733,430, 15,487,816 and 23,520,379 re- spectively, shares issued and outstanding ..................... 155 Class B Common Stock, $.01 par value, 35,000,000 shares authorized and 25,436,432 shares issued and outstanding........ 255 Additional paid-in capital ..................................... 652,931 Additional paid-in capital - equity put options ................ 23,117 Additional paid-in capital - deferred compensation ............. (954) Accumulated deficit ............................................ (32,261) ---------- Total stockholders' equity .................................... 643,288 ---------- Total Liabilities and Stockholders' Equity .................... $3,702,511 ==========
2 SINCLAIR BROADCAST GROUP, INC. PRO FORMA CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 (DOLLARS IN THOUSANDS) (UNAUDITED)
CONSOLIDATED CONSOLIDATED HISTORICAL, HISTORICAL SIGNIFICANT AND SIGNIFICANT ACQUISITIONS, ACQUISITIONS OFFERING(G) AND OFFERING ----------------- ---------------- -------------- ASSETS CURRENT ASSETS: Cash, including cash equivalents ............................................... $ -- $ -- Accounts receivable, net of allowance for doubtful accounts .................... 123,018 123,018 Current portion of program contract costs ...................................... 73,513 73,513 Prepaid expenses and other current assets ...................................... 4,673 4,673 Deferred barter costs .......................................................... 4,945 4,945 Refundable income taxes ........................................................ 10,581 10,581 Deferred tax asset ............................................................. 2,550 2,550 ---------- --------- ---------- Total current assets ......................................................... 219,280 -- 219,280 PROGRAM CONTRACT COSTS, less current portion .................................... 67,402 67,402 LOANS TO OFFICERS AND AFFILIATES ................................................ 11,088 11,088 PROPERTY AND EQUIPMENT, net ..................................................... 259,852 259,852 NON-COMPETE AND CONSULTING AGREEMENTS, net ...................................... 200 200 OTHER ASSETS .................................................................... 89,578 89,578 ACQUIRED INTANGIBLE BROADCASTING ASSETS, net .................................... 3,055,111 3,055,111 ---------- --------- ---------- Total Assets ................................................................. $3,702,511 $ -- $3,702,511 ========== ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ............................................................... $ 5,207 $ 5,207 Accrued liabilities ............................................................ 40,532 40,532 Current portion of long-term liabilities- Notes payable and commercial bank financing ................................... 35,215 35,215 Notes and capital leases payable to affiliation ............................... 3,073 3,073 Program contracts payable ..................................................... 95,567 95,567 Deferred barter revenues ....................................................... 5,649 5,649 ---------- --------- ---------- Total current liabilities .................................................... 185,243 -- 185,243 LONG-TERM LIABILITIES: Notes payable and commercial bank financing ................................... 2,361,790 $(329,230) 2,032,560 Notes and capital leases payable to affiliates ................................ 19,500 19,500 Program contracts payable ..................................................... 87,630 87,630 Deferred tax liability ........................................................ 197,752 197,752 Other long-term liabilities ................................................... 3,611 3,611 ---------- --------- ---------- Total liabilities ............................................................ 2,855,526 (329,230) 2,526,296 ---------- --------- ---------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES .................................. 3,697 -- 3,697 ---------- --------- ---------- COMMITMENTS AND CONTINGENCIES COMPANY OBLIGATED MANDATORILY REDEEMABLE SECURITY OF SUBSIDIARY TRUST HOLDING SOLELY KDSM SENIOR DEBEN- TURES .......................................................................... 200,000 -- 200,000 ---------- --------- ---------- STOCKHOLDERS' EQUITY: Series B Preferred Stock, $.01 par value, 10,000,000 shares authorized and 1,071,381 and 512,426 shares issued and outstanding .......................... 10 (5) 5 Series D Preferred Stock, $.01 par value, 3,450,000 shares authorized and 3,450,000 shares issued and outstanding ..................................... 35 35 Class A Common Stock, $.01 par value, 100,000,000 shares authorized and 13,733,430, 15,487,816 and 23,520,379 respectively, shares issued and out- standing ..................................................................... 155 80 235 Class B Common Stock, $.01 par value, 35,000,000 shares authorized and 25,436,432 shares issued and outstanding ..................................... 255 255 Additional paid-in capital .................................................... 652,931 329,155 982,086 Additional paid-in capital - equity put options ............................... 23,117 23,117 Additional paid-in capital - deferred compensation ............................ (954) (954) Accumulated deficit ........................................................... (32,261) (32,261) ---------- ----------- ---------- Total stockholders' equity ................................................... 643,288 329,230 972,518 ---------- ----------- ---------- Total Liabilities and Stockholders' Equity ................................... $3,702,511 $ -- $3,702,511 ========== =========== ==========
3 NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS) (a) The Heritage Acquisition column reflects the assets and liabilities acquired in connection with the $630,000 purchase of Heritage. The Heritage Acquisition column gives effect to the Company's definitive agreements to sell radio stations KKSN-AM, KKSN-FM, and KKRH-FM serving the Portland, Oregon market, radio stations, WBBF-AM, WBEE-FM, WKLX-FM, and WQRV-FM serving the Rochester, New York market and television stations WPTZ-TV, WNNE-TV and WFFF-TV serving the Burlington, Vermont and Plattsburgh, New York markets (the "Dispositions"). Total acquired intangibles are calculated as follows:
HERITAGE HERITAGE DISPOSITIONS ACQUISITION ------------ -------------- ------------ Purchase Price ............................................ $ 630,000 Add: Liabilities acquired-- Current portion of program contracts payable ........... $ 2,194 $ (406) 1,788 Deferred barter revenues ............................... 676 (326) 350 Long-term portion of program contracts payable ......... 857 (81) 776 Less: Assets acquired-- Current portion of program contract costs .............. (1,704) 242 (1,462) Deferred barter costs .................................. (880) 302 (578) Program contract costs, less current portion ........... (1,323) 144 (1,179) Property and equipment ................................. (45,840) 12,981 (32,859) Proceeds from sale of stations ......................... (228,500) ---------- Acquired intangibles ................................... $ 368,336 ==========
(b) The Max Media Acquisition column reflects the assets and liabilities acquired in connection with the $255,000 purchase of Max Media. The Max Media Acquisition is subject to a number of conditions customary for acquisitions of broadcasting properties. Total acquired intangibles are calculated as follows:
MAX MEDIA ------------ Purchase Price ............................................. $ 255,000 Add: Liabilities acquired-- Current portion of program contracts payable ............ 2,431 Deferred barter revenues ................................ 1,026 Long-term portion of program contracts payable .......... 1,736 Less: Assets acquired-- Current portion of program contract costs ............... (2,325) Deferred barter costs ................................... (640) Program contract costs, less current portion ............ (2,182) Property and equipment .................................. (25,556) --------- Acquired intangibles .................................... $ 229,490 =========
4 (c) The Sullivan Broadcasting Acquisition column reflects the assets and liabilities acquired in connection with the $1,000,000 purchase of 100% of the outstanding capital stock of Sullivan Broadcast Holdings, Inc. and its subsidiaries. Included in the total purchase price is $100,000 of Class A Common Stock, which may be issued at the option of the Company pursuant to the Sullivan Acquisition Agreement. The Sullivan Acquisition is subject to a number of conditions customary for acquisitions of broadcasting properties. Total acquired intangibles are calculated as follows: SULLIVAN ------------- Purchase Price ........................................... $1,000,000 Add: Liabilities acquired-- Current portion of program contracts costs ............ 24,944 Long-term portion of program contract costs ........... 22,710 Deferred tax liability ................................ 173,660 Less: Assets acquired-- Current portion of program contracts .................. (22,850) Program contract costs, less current portion .......... (23,432) Property and equipment ................................ (39,723) ---------- Acquired intangibles .................................. $1,135,309 ========== (d) To reflect indebtedness of $196,673 incurred in connection with the Heritage Acquisition as follows: Purchase Price ........................................... $ 630,000 Less: Proceeds from dispositions ............................ (228,500) Deposits .............................................. (65,500) Cash utilized ......................................... (139,327) ---------- Indebtedness incurred ................................. $ 196,673 ========== (e) To reflect $242,183 incurred (net of a $12,817 deposit) under the Bank Credit Agreement in connection with the Max Media Acquisition. The Company will need to obtain an amendment or refinancing of the Bank Credit Agreement in order to complete all pending acquisitions. See "Prospectus Supplement Summary -- Recent Developments." (f) To reflect $900,000 incurred (net of $100,000 of Class A Common Stock, which may be issued at the option of the Company pursuant to the Sullivan Acquisition) under the Bank Credit Agreement in connection with the Sullivan Acquisition. The Company will need to obtain an amendment or refinancing of the Bank Credit Agreement in order to complete all pending acquisitions. See "Prospectus Supplement Summary -- Recent Developments." (g) To reflect the net proceeds to the Company of the Offering at an assumed offering price of $57 per share, net of $12,770 underwriting discounts and commissions and estimated expenses and the application of the proceeds therefrom. 5 SINCLAIR BROADCAST GROUP, INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
CONSOLIDATED HISTORICAL ---------- REVENUES: Station broadcast revenues, net of agency commissions ........................................ $ 471,228 Revenues realized from station barter arrangements ....................................... 45,207 --------- Total revenues .................................... 516,435 --------- OPERATING EXPENSES: Program and production ............................. 92,178 Selling, general and administrative ................ 106,084 Expenses realized from barter arrangements ......... 38,114 Amortization of program contract costs and net realized value adjustments ......................... 66,290 Amortization of deferred compensation .............. 1,636 Depreciation and amortization of property and equipment .......................................... 18,040 Amortization of acquired intangible assets, non- compete, consult, and other ........................ 67,840 --------- Total operating expenses .......................... 390,182 --------- Broadcast operating income (loss) ................. 126,253 --------- OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense ............................................ (98,393) Subsidiary trust minority interest expense ......... (18,600) Interest income .................................... 2,174 Other income ....................................... 54 --------- Income (loss) before provision (benefit) for income taxes ...................................... 11,488 PROVISION (BENEFIT) FOR INCOME TAXES .............................................. 15,984 --------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM ................................. (4,496) EXTRAORDINARY ITEM .................................. (6,070) --------- NET INCOME (LOSS) ................................... $ (10,566) ========= NET INCOME (LOSS) AVAILABLE TO COM- MON SHAREHOLDERS ................................... $ (13,329) ========= BASIC EARNINGS PER SHARE: Income (loss) per share before extraordinary item and preferred stock dividends.............. $ (0.13) ========= Loss per share before extraordinary item avail- able to common shareholders ........................ $ (0.20) ========= Net loss per share ................................. $ (0.37) ========= Average shares outstanding ......................... 35,951 ========= DILUTED EARNINGS PER SHARE: Income (loss) per share before extraordinary item and preferred stock dividends.................. $ (0.13) ========= Loss per share before extraordinary item avail- able to common shareholders ........................ $ (0.20) ========= Net loss per share ................................. $ (0.37) ========= Average shares outstanding ......................... 40,078 =========
1997 FINANCINGS ---------------------------------------------------------------------------- 1997 COMMON TENDER OFFER JULY 1997 AND AND HYTOPS DEBT PREFERRED DECEMBER 1997 ISSUANCE ISSUANCE STOCK ISSUANCES DEBT ISSUANCE ------------------- ------------------- ----------------- ------------------ REVENUES: Station broadcast revenues, net of agency commissions ........................................ Revenues realized from station barter arrangements ....................................... Total revenues .................................... ---------- ---------- --------- --------- -- -- -- -- ---------- ---------- --------- --------- OPERATING EXPENSES: Program and production ............................. Selling, general and administrative ................ Expenses realized from barter arrangements ......... Amortization of program contract costs and net realized value adjustments ......................... Amortization of deferred compensation .............. Depreciation and amortization of property and equipment .......................................... Amortization of acquired intangible assets, non- compete, consult, and other ........................ $ 133 (f) $ 249 (g) ----------- ----------- --------- --------- Total operating expenses .......................... 133 249 -- -- ----------- ----------- --------- --------- Broadcast operating income (loss) ................. (133) (249) -- -- ----------- ----------- --------- --------- OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense ............................................ 1,852 (i) (1,734) (j) $ 16,857 (k) $ (2,010)(l) Subsidiary trust minority interest expense ......... (4,650)(o) Interest income .................................... Other income ....................................... Income (loss) before provision (benefit) for ---------- ---------- ---------- ---------- income taxes ...................................... (2,931) (1,983) 16,857 (2,010) PROVISION (BENEFIT) FOR INCOME TAXES .............................................. (1,172) (q) (793) (q) 6,743 (q) (804)(q) ----------- ----------- --------- --------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM ................................. (1,759) (1,190) 10,114 (1,206) EXTRAORDINARY ITEM .................................. (69)(r) ----------- ----------- ---------- ---------- NET INCOME (LOSS) ................................... $ (1,759) $ (1,190) $ 10,114 $ (1,275) =========== =========== ========= ========= NET INCOME (LOSS) AVAILABLE TO COM- MON SHAREHOLDERS ................................... BASIC EARNINGS PER SHARE: Income (loss) per share before extraordinary item and preferred stock dividends.................. Loss per share before extraordinary item avail- able to common shareholders ........................ Net loss per share ................................. Average shares outstanding ......................... DILUTED EARNINGS PER SHARE: Income (loss) per share before extraordinary item ............................................... Loss per share before extraordinary item avail- able to common shareholders ........................ Net loss per share ................................. Average shares outstanding .........................
SIGNIFICANT ACQUISITIONS CONSOLIDATED ---------------------------------------------- HISTORICAL AND SULLIVAN 1997 FINANCINGS HERITAGE(A) MAX MEDIA(B) BROADCASTING(C) ----------------- ------------- -------------- ----------------- REVENUES: Station broadcast revenues, net of agency commissions ........................................ $ 471,228 $ 72,383 $ 51,351 $ 120,124 Revenues realized from station barter arrangements ....................................... 45,207 3,996 5,362 17,650 ---------- -------- -------- --------- Total revenues .................................... 516,435 76,379 56,713 137,774 ---------- -------- -------- --------- OPERATING EXPENSES: Program and production ............................. 92,178 27,645 10,662 17,301 Selling, general and administrative ................ 106,084 17,010 24,148 28,319 Expenses realized from barter arrangements ......... 38,114 3,474 2,334 16,999 Amortization of program contract costs and net realized value adjustments ......................... 66,290 1,974 5,546 13,198 Amortization of deferred compensation .............. 1,636 Depreciation and amortization of property and equipment .......................................... 18,040 4,246 4,713 9,464 Amortization of acquired intangible assets, non- compete, consult, and other ........................ 68,222 15,083 8,028 32,756 ---------- -------- -------- --------- Total operating expenses .......................... 390,564 69,432 55,431 118,037 ---------- -------- -------- --------- Broadcast operating income (loss) ................. 125,871 6,947 1,282 19,737 ---------- -------- -------- --------- OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense ............................................ (83,428) (5,940) (6,078) (40,711) Subsidiary trust minority interest expense ......... (23,250) Interest income .................................... 2,174 Other income ....................................... 54 8,636 8,795 12 ---------- -------- -------- --------- Income (loss) before provision (benefit) for income taxes ...................................... 21,421 9,643 3,999 (20,962) PROVISION (BENEFIT) FOR INCOME TAXES .............................................. 19,958 (q) 7,583 -- (5,488) ---------- -------- -------- --------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM ................................. 1,463 2,060 3,999 (15,474) EXTRAORDINARY ITEM .................................. (6,139) ---------- -------- -------- --------- NET INCOME (LOSS) ................................... $ (4,676) $ 2,060 $ 3,999 $ (15,474) ========== ======== ======== ========= NET INCOME (LOSS) AVAILABLE TO COM- MON SHAREHOLDERS ................................... $ (15,026) ========== BASIC EARNINGS PER SHARE: Income (loss) per share before extraordinary item ............................................... $ 0.04 ========== Loss per share before extraordinary item avail- able to common shareholders ........................ $ (0.23) ========== Net loss per share ................................. $ (0.38) ========== Average shares outstanding ......................... 39,112 (s) ========== DILUTED EARNINGS PER SHARE: Income (loss) per share before extraordinary item ............................................... $ 0.03 ========== Loss per share before extraordinary item avail- able to common shareholders ........................ $ (0.23) ========== Net loss per share ................................. $ (0.38) ========== Average shares outstanding ......................... 42,583 (s) ==========
CONSOLIDATED HISTORICAL, HISTORICAL, 1997 FINANCINGS, 1997 FINANCINGS SIGNIFICANT ACQUISITION AND SIGNIFICANT ACQUISITIONS ADJUSTMENTS ACQUISITIONS OFFERING AND OFFERING ------------------ ----------------- ------------------ ----------------- REVENUES: Station broadcast revenues, net of agency commissions ........................................ $ 715,086 $ 715,086 Revenues realized from station barter arrangements ....................................... 72,215 72,215 ---------- ---------- ---------- ---------- Total revenues .................................... -- 787,301 -- 787,301 ---------- ---------- ---------- ---------- OPERATING EXPENSES: Program and production ............................. 147,786 147,786 Selling, general and administrative ................ $ (9,401)(d) 166,160 166,160 Expenses realized from barter arrangements ......... 60,921 60,921 Amortization of program contract costs and net realized value adjustments ......................... 87,008 87,008 Amortization of deferred compensation .............. 1,636 1,636 Depreciation and amortization of property and equipment .......................................... (1,473)(e) 34,990 34,990 Amortization of acquired intangible assets, non- compete, consult, and other ........................ 17,098 (h) 141,187 141,187 ---------- ---------- ---------- ---------- Total operating expenses .......................... 6,224 639,688 -- 639,688 ---------- ---------- ---------- ---------- Broadcast operating income (loss) ................. (6,224) 147,613 -- 147,613 ---------- ---------- ---------- ---------- OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense ............................................ (59,477)(m) (195,634) $ 22,816 (n) (172,818) Subsidiary trust minority interest expense ......... (23,250) (23,250) Interest income .................................... (280)(p) 1,894 1,894 Other income ....................................... 17,497 17,497 ---------- ---------- --------- ---------- Income (loss) before provision (benefit) for income taxes ...................................... (65,981) (51,880) 22,816 (29,064) PROVISION (BENEFIT) FOR INCOME TAXES .............................................. (26,392)(q) (4,339) 9,126 (q) 4,787 --------- ---------- --------- ---------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM ................................. (39,589) (47,541) 13,690 (33,851) EXTRAORDINARY ITEM .................................. (6,139) (6,139) ---------- ---------- ---------- ---------- NET INCOME (LOSS) ................................... $ (39,589) $ (53,680) $ 13,690 $ (39,990) ========== ========== ========= ========== NET INCOME (LOSS) AVAILABLE TO COM- MON SHAREHOLDERS ................................... $ (64,030) $ (50,340) ========== ========== BASIC EARNINGS PER SHARE: Income (loss) per share before extraordinary item ............................................... $ (1.16) $ (0.69) ========== ========== Loss per share before extraordinary item avail- able to common shareholders ........................ $ (1.42) $ (0.90) ========== ========== Net loss per share ................................. $ (1.57) $ (1.03) ========== ========== Average shares outstanding ......................... 40,866 (t) 48,899 (u) ========== ========== DILUTED EARNINGS PER SHARE: Income (loss) per share before extraordinary item ............................................... $ (1.16) $ (0.69) ========== ========== Loss per share before extraordinary item avail- able to common shareholders ........................ $ (1.42) $ (0.90) ========== ========== Net loss per share ................................. $ (1.57) $ (1.03) ========== ========== Average shares outstanding ......................... 44,337 (t) 50,337 (u) ========== ==========
6 SINCLAIR BROADCAST GROUP, INC. NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (DOLLARS IN THOUSANDS) (a) The Heritage column reflects the results of operations for for the period from January 1, 1997 to December 31, 1997, less television and radio stations the Company has definitive agreements to sell. These dispositions include the Portland, Oregon and Rochester, New York radio stations and the Burlington, Vermont and Plattsburgh, New York television stations. (b) The Max Media column reflects the results of operations for Max Media for the period from January 1, 1997 to December 31, 1997. Included within "other income" is a one time gain on station sales of approximately $8,500. (c) The Sullivan column reflects the results of operations for Sullivan for the period from January 1, 1997 to December 31, 1997. (d) To adjust operating expenses for corporate overhead (net of integration costs the Company anticipates incurring as a result of the Significant Acquisitions) which the Company does not expect to incur upon consummation of the Heritage Acquisition, Max Media Acquisition and Sullivan Acquisition on a going-forward basis. (e) To record depreciation expense related to acquired tangible assets and eliminate depreciation expense recorded by Heritage, Max Media, and Sullivan from January 1, 1997 to December 31, 1997. Tangible assets are to be depreciated over lives ranging from three to 20 years, calculated as follows:
YEAR ENDED DECEMBER 31, 1997 ------------------------------------------------- HERITAGE MAX MEDIA SULLIVAN TOTAL ---------- ----------- ------------ ------------- Depreciation expense on acquired tangible assets ....................... $ 5,231 $ 4,637 $ 7,082 $ 16,950 Less: Depreciation expense recorded by Heritage, Max Media and Sullivan (4,246) (4,713) (9,464) (18,423) -------- -------- -------- --------- Pro forma adjustment ................................................... $ 985 $ (76) $ (2,382) $ (1,473) ======== ======== ======== =========
(f) To record amortization expense on other assets that relate to the HYTOPS Issuance for one year ($7,677 over 12 years). Amortization expense on other assets .................. $ 640 Amortization expense recorded by the Company .......... (507) ------ Pro Forma adjustment .................................. $ 133 ======
(g) To record amortization expense on other assets that relate to the July 1997 Notes Issuance for one year ($4,766 over 10 years). Amortization expense on other assets .................. $ 477 Amortization expense recorded by the Company .......... (228) ------ Pro Forma adjustment .................................. $ 249 ======
(h) To record amortization expense related to acquired intangible assets and deferred financing costs and eliminate amortization expense recorded by Heritage, Max Media and Sullivan from January 1, 1997 to December 31, 1997. Intangible assets are to be amortized over lives ranging from one to 40 years, calculated as follows:
YEAR ENDED DECEMBER 31, 1997 -------------------------------------------------- HERITAGE MAX MEDIA SULLIVAN TOTAL ------------ ----------- ------------ ------------ Amortization expense on acquired intangible assets ..................... $ 20,974 $ 12,357 $ 39,634 $ 72,965 Less: Amortization expense recorded by Heritage, Max Media and Sullivan (15,083) (8,028) (32,756) (55,867) --------- -------- --------- --------- Pro forma adjustment ................................................... $ 5,891 $ 4,329 $ 6,878 $ 17,098 ========= ======== ========= =========
(i) To record the net interest expense reduction for the year ended December 31, 1997 related to the application of the HYTOPS Issuance proceeds to the outstanding balance under the revolving credit facility under the Bank Credit Agreement offset by an increase in commitment fees for the available but unused portion of the revolving credit facility. Interest on adjusted borrowings on the revolving credit facility for the period from January 1, 1997 to March 5, 1997 .................................................... $ 2,865 Commitment fee on available but unused borrowings of $250,000 for five months and $675,000 for seven months of revolving credit facility at 1/2 of 1%.................. (2,490) Commitment fee on available borrowings recorded by the Company ........................ 1,477 -------- Pro forma adjustment .................................................................. $ 1,852 ========
(j) To record the net interest expense reduction related to the application of the net proceeds of the July 1997 Debt Issuance to repay borrowings under the Bank Credit Agreement for the period from January 1, 1997 to June 27, 1997 offset by an increase in interest expense for the July 1997 Notes Issuance ($200,000 at 9%) net of interest recorded by the Company. (k) To record the interest expense reduction of $16,857 related to the application of the net proceeds of the 1997 Common Stock Issuance and the 1997 Preferred Stock Issuance to repay borrowings under the Bank Credit Agreement for the period from January 1, 1997 to September 17, 1997. 7 (l) To record adjustments related to the December 1997 Notes Issuance ($250,000 at 8.75%) and the Debt Repurchase as follows: Interest Adjustments: Interest on December Debt Issuance for one year .................................. $ 21,875 Interest recorded on the 1993 Notes .............................................. (9,646) Interest recorded on the December Debt Issuance .................................. (911) Interest expense reduction related to the application of the net proceeds from the December Debt Issuance .......................................................... (9,688) -------- 1,630 -------- Amortization Adjustments: Amortization of deferred financing costs and debt discount ....................... 678 Amortization recorded by the Company ............................................. (298) -------- 380 -------- Pro forma adjustment ............................................................. $ 2,010 ========
(m) To record interest expense for the year ended December 31, 1997 on acquisition financing relating to Heritage, Max Media and Sullivan of $401,500, $242,183 and $900,000 (under the Company's Bank Credit Agreement at 7.43%), and eliminate interest expense recorded.
YEAR ENDED DECEMBER 31, 1997 ----------------------------- HERITAGE MAX MEDIA -------------- -------------- Interest expense adjustment as noted above ............................... $ (28,956) $ (17,288) Less: Interest expense recorded by Heritage, Max Media and Sullivan ...... 5,940 6,078 ---------- ---------- Pro forma adjustment ..................................................... $ (23,016) $ (11,210) ========== ========== YEAR ENDED DECEMBER 31, 1997 ------------------------------ SULLIVAN TOTAL -------------- --------------- Interest expense adjustment as noted above ............................... $ (65,962) $ (112,206) Less: Interest expense recorded by Heritage, Max Media and Sullivan ...... 40,711 52,729 ---------- ----------- Pro forma adjustment ..................................................... $ (25,251) $ (59,477) ========== ===========
(n) To record the interest expense reduction of $24,462 related to the application of the Offering proceeds to repay borrowings under the Bank Credit Agreement offset by the increase in commitment fees of $1,646. (o) To record subsidiary trust minority interest expense for the year ended December 31, 1997 ($200,000 aggregate liquidation value of HYTOPS at 11.625%). Subsidiary trust minority interest expense ........................ $ 23,250 Subsidiary trust minority interest expense recorded by the Company (18,600) --------- Pro Forma adjustment .............................................. $ 4,650 =========
(p) To eliminate interest income for the year ended December 31, 1997 on proceeds from the December 1997 Notes Issuance due to assumed utilization of excess cash for the Significant Acquisitions. (q) To record tax provision (benefit) at the applicable tax rates. (r) To record an increase in the extraordinary loss, net of the tax effect related to the Debt Repurchase and the write-off of the deferred financing costs related to the 1993 Notes. (s) Weighted average shares outstanding on a pro forma basis assumes that the 4,345,000 shares of Class A Common Stock issued in the 1997 Common Stock Issuance were outstanding as of the beginning of the period. (t) Weighted average shares outstanding on a pro forma basis assumes that 1,754,386 shares of Class A Common Stock issuable at the option of the Company pursuant to the Sullivan Acquisition Agreement (assuming an average closing price of $57 per share at time of issuance) were outstanding as of the beginning of the period. (u) Weighted average shares outstanding on a pro forma basis assumes that the 6,000,000 shares of Class A Common Stock to be issued in the Offering and the 2,032,563 shares of Class A Common Stock to be issued upon conversion of approximately 558,955 shares Series B Preferred Stock to be sold by the Selling Stockholders were outstanding as of the beginning of the period. 8 -----END PRIVACY-ENHANCED MESSAGE-----