-----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, QbiVGAtx28G8CbcL+UujVh0EXo271qnZ1qV3QhlZmS1v83z7vuLK9Lwn55krUg3m q4Dl3SXm5Xdt5nb5NP9siw== 0001005150-98-000931.txt : 19980915 0001005150-98-000931.hdr.sgml : 19980915 ACCESSION NUMBER: 0001005150-98-000931 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980716 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980914 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: 98708953 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 JULY 1, 1998 ----------------------- (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 2. ACQUISITION OR DISPOSITION OF ASSETS As previously reported, Sinclair Broadcast Group, Inc. (the "Company") entered into an agreement on December 2, 1997 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 12 television stations in 10 separate markets (the "Sullivan Acquisition"). The Company completed the Sullivan Acquisition on July 1, 1998 and completed the Max Media Acquisition on July 6,1998. The Company is filing with this Current Report on Form 8-K/A certain financial information. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS (A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED The Company has previously filed audited financial statements for Sullivan and Max Media required by this item on a Current Report on Form 8-K/A filed April 8, 1998. The following financial statements are filed as exhibits to this report and are incorporated herein by reference. SINCLAIR COMMUNICATIONS II, INC. AND SINCLAIR TELEVISION, INC. (successors to Sullivan Broadcast Holdings, Inc and Sullivan Broadcasting Company, Inc.) (Exhibit 99.1) Unaudited Financial Statements Consolidated Balance Sheet as of June 30, 1998 Consolidated Statements of Operations for the six months ended June 30, 1998 and 1997 Consolidated Statements of Cash Flows for the six months ended June 30, 1998 and 1997 Notes to Consolidated Financial Statements MAX MEDIA PROPERTIES LLC (EXHIBIT 99.2) Unaudited Financial Statements Consolidated Balance Sheet as of June 30, 1998 Consolidated Statements of Operations for the six months ended June 30, 1998 and 1997 Consolidated Statements of Cash Flows for the six months ended June 30, 1998 and 1997 Notes to Consolidated Financial Statements 1 (B) PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF SINCLAIR Pro Forma financial statements of the Company as of and for the year ended December 31, 1997 were filed on a Current Report on Form 8-K/A filed April 8, 1998. Pro Forma financial statements of the Company as of and for the six months ended June 30, 1998 are filed as exhibit 99.3 to this report and are incorporated herein by reference. (C) EXHIBITS Exhibit No. Description - ----------- ----------- 99.1 Financial Statements of Sinclair Communications II, Inc. and Sinclair Television, Inc. for the six months ended June 30, 1998 and 1997 (unaudited) 99.2 Financial Statements of Max Media Properties LLC for the six months ended June 30, 1998 and 1997 (unaudited) 99.3 Pro Forma financial statements of Sinclair Broadcast Group, Inc. as of and for the six months ended June 30, 1998 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SINCLAIR BROADCAST GROUP, INC. By: /s/ David B. Amy -------------------------- Name: David B. Amy TItle: Chief Financial Officer Dated: September 14, 1998 EX-99.1 2 EXHIBIT 99.1 EXHIBIT 99.1 SINCLAIR COMMUNICATIONS II, INC. AND ITS WHOLLY-OWNED SUBSIDIARY SINCLAIR TELEVISION COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands)
December 31, 1997 June 30, 1998 ----------------------------- ------------------------------- Sinclair Sinclair Sinclair Sinclair Television Communications Television Communications Company, Inc. II, Inc. Company, Inc. II, Inc. ------------ -------------- ------------- -------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 3,837 $ 3,840 $ 3,294 $ 3,345 Accounts receivable, net 34,990 34,990 31,494 31,494 Current portion of programming rights 22,850 22,850 16,197 16,197 Current deferred tax asset 3,588 4,310 3,589 4,309 Prepaid expenses and other current assets 941 941 2,014 2,082 ----------- ----------- ---------- ----------- Total current assets 66,206 66,931 56,588 57,427 Property and equipment, net 39,723 39,723 45,595 45,595 Programming rights, net of current portion 23,432 23,432 17,465 17,465 Deferred loan costs, net of accumulated amortization of $1,655, $2,120 $2,134 and $2,676 11,430 13,134 10,951 12,578 Intangible assets, net 567,209 567,096 570,077 569,964 ----------- ----------- ---------- -------- Total assets $ 708,000 $ 710,316 $ 700,676 $ 703,029 =========== =========== ========== ===========
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements. 1 SINCLAIR COMMUNICATIONS II, INC. AND ITS WHOLLY-OWNED SUBSIDIARY SINCLAIR TELEVISION COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONT.) (dollars in thousands)
December 31, 1997 June 30, 1998 ----------------------------- ------------------------------- Sinclair Sinclair Sinclair Sinclair Television Communications Television Communications Company, Inc. II, Inc. Company, Inc. II, Inc. ------------ -------------- ------------- -------------- (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of program- ming contracts payable $ 24,944 $ 24,944 $ 20,020 $ 20,020 Current portion of senior debt 23,562 23,562 26,333 26,333 Current income taxes payable 194 195 -- -- Current interest payable 3,882 3,882 563 563 Due to related parties 6,036 -- 80,377 75,000 Accounts payable 2,262 2,262 1,230 1,230 Accrued expenses 4,297 4,367 3,058 3,164 ----------- ---------- ----------- ---------- Total current liabilities 65,177 59,212 131,581 126,310 Senior debt, net of current portion 171,820 171,820 88,566 88,566 Borrowings under revolving line of credit 59,500 59,500 85,500 85,500 Subordinated debt 125,185 155,508 125,185 155,649 Interest payable -- 10,394 -- 13,385 Programming contracts payable, net of current portion 22,710 22,710 15,181 15,181 Deferred taxes and other liabilities 87,676 82,132 85,560 79,171 ----------- ---------- ----------- ---------- Total liabilities 532,068 561,276 531,573 563,762 15% Cumulative redeemable preferred stock, non-voting, $.001 par value - authorized 1,500,000 shares; 1,150,000 shares issued and outstanding -- 133,185 -- 145,708 ----------- -------- ----------- ---------- Commitments and contingencies Shareholders' equity (deficit): Common stock, $.01 par value; 800,000 shares authorized; 520,105 shares issued and outstanding 5 -- 5 --
2
December 31, 1997 June 30, 1998 ----------------------------- ------------------------------- Sinclair Sinclair Sinclair Sinclair Television Communications Television Communications Company, Inc. II, Inc. Company, Inc. II, Inc. ------------ -------------- ------------- -------------- (Unaudited) Class B-1 common stock, $.001 par value; 5,000,000 shares authorized; 1,201,577 shares issued and outstanding -- 1 -- 1 Class B-2 common stock, $.001 par value; 7,000,000 shares authorized; 6,158,211 shares issued and outstanding -- 6 -- 6 Class C common stock, $.001 par value; 2,000,000 shares authorized; 853,854 and 1,021,872 shares issued and outstanding at December 31, 1997 and June 30, 1998, respectively -- 1 -- 1 Additional paid-in capital 206,797 55,117 206,797 48,289 Accumulated deficit (30,870) (39,270) (37,699) (54,738) ------------ ----------- ------------ ----------- Total shareholders' equity 175,932 15,855 169,103 (6,441) ------------ ----------- ----------- ----------- Total liabilities and shareholders' equity $ 708,000 $ 710,316 $ 700,676 $ 703,029 ============ =========== =========== ===========
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements. 3 SINCLAIR COMMUNICATIONS II, INC. AND ITS WHOLLY-OWNED SUBSIDIARY SINCLAIR TELEVISION COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited - dollars in thousands)
Three Months Ended June 30 --------------------------------------------------------- 1997 1998 ------------------------------ --------------------------- Sinclair Sinclair Sinclair Sinclair Television Communi- Television Communi- Company, Inc. cations II, Inc. Company, Inc. cations II, Revenues (excluding barter) $ 36,319 $ 36,319 $ 41,294 $ 41,294 Less - commissions (5,863) (5,863) (6,678) (6,678) -------- -------- -------- -------- Net revenues (excluding barter) 30,456 30,456 34,616 34,616 Barter revenues 4,480 4,480 4,520 4,520 -------- -------- -------- -------- Total net revenues 34,936 34,936 39,136 39,136 -------- -------- -------- -------- Expenses Operating expenses 4,323 4,323 5,472 5,472 Selling, general and administrative 6,826 7,258 7,786 8,808 Amortization of programming rights 7,607 7,607 7,194 7,194 Depreciation and amortization 11,736 11,736 11,650 11,650 -------- -------- -------- -------- 30,492 30,924 32,102 33,124 -------- -------- -------- -------- Operating income 4,444 4,012 7,034 6,012 Interest expense, including amortization of debt discount and deferred loan costs 9,046 10,694 7,513 9,114 Gain on sale of assets -- -- 466 466 Other expense (income) 48 47 (84) (85) -------- -------- -------- -------- Loss before benefit for income taxes (4,650) (6,729) 71 (2,551) Benefit for income taxes 1,123 1,955 (1) (1) -------- -------- -------- -------- Net loss $ (3,527) $ (4,774) $ 70 $ (2,552) ======== ======== ======== ========
Six Months Ended June 30 -------------------------------------------------------------- 1997 1998 ----------------------------- ------------------------------- Sinclair Sinclair Sinclair Sinclair Television Communi- Television Communi- Company, Inc. cations II,Inc Company, Inc. cations II, Inc. Revenues (excluding barter) $ 66,716 $ 66,716 $ 74,378 $ 74,378 Less - commissions (10,989) (10,989) (11,987) (11,987) -------- -------- -------- -------- Net revenues (excluding barter) 55,727 55,727 62,391 62,391 Barter revenues 8,642 8,642 9,017 9,017 -------- -------- -------- -------- Total net revenues 64,369 64,369 71,408 71,408 -------- -------- -------- -------- Expenses Operating expenses 8,991 8,991 10,656 10,656 Selling, general and administrative 13,221 13,765 15,616 21,698 Amortization of programming rights 14,615 14,615 15,106 15,106 Depreciation and amortization 23,991 23,991 23,032 23,032 -------- -------- -------- -------- 60,818 61,362 64,410 70,492 -------- -------- -------- -------- Operating income 3,551 3,007 6,998 916 Interest expense, including amortization of debt discount and deferred loan costs 17,914 21,169 16,022 19,220 Gain on sale of assets -- -- 466 466 Other expense (income) 9 8 52 52 -------- -------- -------- -------- Loss before benefit for income taxes (14,372) (18,170) (8,610) (17,890) Benefit for income taxes 4,276 5,795 1,781 2,422 -------- -------- -------- -------- Net loss $(10,096) $(12,375) $ (6,829) $(15,468) ======== ======== ======== ========
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements. 4 SINCLAIR COMMUNICATIONS II, INC. AND ITS WHOLLY-OWNED SUBSIDIARY SINCLAIR TELEVISION COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited - dollars in thousands)
Six Months Ended June 30, ------------------------------------ 1997 1998 Sinclair Sinclair Sinclair Sinclair Television Communi- Television Communi- Company, Inc. cations II, Inc. Company, Inc. cations II, Inc. ------------- ---------------- ------------- ---------------- Cash Flows from operating activities: Net Loss $(10,096) $(12,375) $ (6,829) $(15,468) Adjustments to reconcile net loss to net cash provided by operating activities: Compensation of stock issuance -- -- -- 4,878 Deferred income taxes (4,276) (5,795) (2,116) (3,961) Depreciation of property, plant And equipment 4,203 4,203 5,638 5,638 Amortization of intangible assets 19,788 19,788 17,394 17,394 Amortization of programming rights 6,669 6,669 6,702 6,702 Payments for programming rights (5,687) (5,687) (6,290) (6,290) Amortization of debt discount and Deferred loan costs 431 1,014 479 556 Changes in assets and liabilities: Decrease in accounts receivable 4,139 4,139 3,496 3,496 Decrease in prepaid expenses And other assets (414) (452) (1,073) (1,141) Increase (decrease) is due to related parties (630) -- 74,341 75,000 Decrease in income taxes payable (1,133) (1,133) (194) (195) Increase (decrease) in interest payable (2,262) 410 (3,319) (328) Decrease in accounts payable, accrued expenses and other liabilities (230) (257) (2,271) (1,091) -------- -------- -------- -------- Net cash provided by operating activities 10,502 10,524 85,958 85,190 Cash Flow from investing activities: Acquisition of Cascom stock (4,371) (4,371) -- -- Acquisition of KOKH -- -- (15,067) (15,067) Payment for purchase option -- -- (15,000) (15,000) Capital expenditures (1,645) (1,645) (1,706) (1,706) -------- -------- -------- -------- Net cash used for investing activities (6,016) (6,016) (31,773) (31,773) -------- -------- -------- -------- Cash flows from investing activities: Payment of principal amounts (12,262) (12,262) (80,483) (80,483) Proceeds from revolver borrowings 7,000 7,000 26,000 26,000 Proceeds from issuance of common stock -- 12 -- 816 Programming buydowns -- -- (245) (245) Repurchase of common stock -- (52) -- -- -------- -------- -------- -------- Net cash provided by (used for) financing activities (5,262) (5,302) (54,728) (53,912) Net increase (decrease ) in cash and cash equivalents (776) (794) (543) (495) Cash and cash equivalents, beginning of period 6,443 6,469 3,837 3,840 -------- -------- -------- -------- Cash and cash equivalents, end of Period $ 5,667 $ 5,675 $ 3,294 $ 3,345 ======== ======== ======== ========
For supplemental disclosures of cash flow information see Note 5 to Consolidated Financial Statements (unaudited). The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements. 5 SINCLAIR COMMUNICATIONS II, INC. AND SINCLAIR TELEVISION COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION On January 4, 1996, all of the outstanding capital stock of Act III Broadcasting, Inc. ("Act III" or the "Predecessor") was purchased by and Act III was merged with and into A-3 Acquisition, Inc. ("A-3"), with Act III surviving such merger (the "Acquisition"). Act III then changed its name to Sullivan Broadcasting Company, Inc. (Sullivan). The Acquisition was accounted for by the purchase method of accounting. On July 1, 1998, all of the outstanding capital stock of Sullivan and Sullivan Broadcast Holdings, Inc. was acquired by Sinclair Broadcast Group, Inc. through a Plan of Merger. In connection with the Plan of Merger, Sullivan and Sullivan Broadcast Holdings, Inc. were the surviving entities and their names were changed to Sinclair Communications II, Inc. and Sinclair Television Company, Inc., respectively. The accompanying consolidated financial statements as of and for the six months ended June 30, 1998 have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. However, the Company believes that the disclosures herein are adequate and that the information presented is not misleading. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Companys' latest annual reports on Form 10-K for the year ended December 31, 1997 and the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1998. The information furnished reflects all adjustments (consisting only of normal, recurring adjustments) which are, in the opinion of management, necessary to make a fair statement of the results for the interim period. The results for these interim periods are not necessarily indicative of results to be expected for the full fiscal year, due to seasonal factors, among others. 2. LONG TERM DEBT On January 4, 1996, concurrent with the Acquisition, the Company borrowed $220,000,000 under a term loan and $4,000,000 under a revolving credit facility to finance the Acquisition. Both the term loan and the revolving credit facility bear interest at LIBOR plus an applicable margin determined quarterly based upon the Company's leverage ratio for the preceding quarter. The revolving credit facility provides for borrowings up to $30,000,000 for working capital purposes, and is due on December 31, 2003 or upon repayment of the term loan. In connection with the term loan and the revolving credit facility, the Company also has a $75,000,000 line of credit available for future acquisitions (collectively, the "Senior Credit Facility"). At June 30, 1998, $53,500,000 in borrowings were outstanding on the acquisition line of credit. The term loan is payable in varying quarterly installments beginning December 31, 1997 through 2003. The repayments of the term loan are as follows: (in thousands) 1998 $ 15,050 1999 31,518 2000 42,024 2001 42,970 2002 42,970 Thereafter 12,367 In addition, certain mandatory prepayments of the term loan are required if the Company achieves certain financial results at the end of the fiscal year. 6 SINCLAIR COMMUNICATIONS II, INC. AND SINCLAIR TELEVISION COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) In January 1996, the Company entered into various interest rate protection agreements based upon LIBOR rates and a notional value equal to the anticipated outstanding term debt levels through the year 2000. The Senior Credit Facility requires the Company to comply with certain covenants. At June 30, 1998, the Company was in compliance with all covenants. In connection with the Plan of Merger (described in Note 6), Sinclair Broadcast Group, Inc. completed a tender offer of all subordinated debt of Sinclair Television Company, Inc. and Sinclair Communications II, Inc. 3. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION The Company paid interest of $19,745,000 and $ 18,613,000 during the periods ending June 30, 1997 and June 30, 1998. During the periods ended June 30, 1997 and June 30, 1998, the Company paid approximately $1,134,000 and $974,000 respectively, for state and local income taxes. 4. RELATED PARTY TRANSACTIONS The Company reimburses ABRY Partners, Inc. ("ABRY"), an entity related through common ownership, approximately $6,300 per month, representing the Company's allocated share of rent paid by ABRY under its lease and other general expenses including utilities, property insurance and supplies. In addition, the Company has a management agreement with ABRY whereby the Company pays ABRY a management fee of $262,000 annually. Such amounts have been included in "Selling, general and administrative" expenses in the Company's consolidated statements of operations. In addition, certain liabilities were paid during the first six months of 1998 by Sinclair Communications II, Inc. 5. ACQUISITION OF KOKH On January 6, 1998, the Company executed a definitive purchase agreement to acquire certain assets of Channel 25 ("KOKH")in Oklahoma City, Oklahoma for a total purchase price of $60,000,000. Subsequent to FCC approval, this acquisition was consummated on February 1, 1998. Contemporaneously, the Company sold and option to acquire certain assets of KOKH to the seller for $45,000,000 and acquired an option to acquire certain assets of another television station for $15,000,000. 6. SUBSEQUENT EVENTS On February 23, 1998, Holdings entered into a Plan of Merger with Sinclair Broadcast Group, Inc. On July 1, 1998, under the terms of the Sinclair Merger, 100% of the issued and outstanding common stock of Holdings was acquired by Sinclair Broadcast Group, Inc. by means of a merger. 7 EX-99.2 3 EXHIBIT 99.2 MAX MEDIA PROPERTIES LLC Consolidated Balance Sheets
(unaudited) December 31 June 30 1997 1998 ------------- ------------- Assets (note 4) Current assets: Cash and cash equivalents $ 1,789,194 $ 2,277,935 Restricted cash (note 3) 512,856 -- Accounts receivable, net 11,484,849 11,230,969 Program contract rights, current portion 2,325,431 2,276,647 Deferred charges, primarily barter agreements 640,145 727,246 Prepaid expenses and other current assets 851,502 1,188,430 ------------- ------------- Total current assets 17,603,977 17,701,227 Property and equipment, net 25,709,048 23,330,692 Program contract rights, long-term portion 2,182,349 1,291,568 Intangible assets, net 82,137,183 78,402,585 Due from related party 1,800,370 1,951,758 Notes receivable 457,445 461,181 Other assets 92,667 75,297 ------------- ------------- $ 129,983,039 $ 123,214,308 ============= ============= Liabilities and Members' Capital Current liabilities: Current portion of long-term debt (note 4) $ 4,751,520 $ 5,251,704 Program contract rights payable, current portion 2,430,572 1,718,669 Accounts payable 717,748 301,756 Accrued compensation and benefits 2,043,859 6,981,339 Other accrued expenses 979,409 714,706 Deferred revenue, primarily barter agreements 1,026,238 1,063,250 ------------- ------------- Total current liabilities 11,949,346 16,031,424 Long-term debt, excluding current portion (note 4) 68,927,774 66,138,251 Program contract rights payable, long-term portion 1,736,102 983,680 ------------- ------------- Total liabilities 82,613,222 83,153,355 ------------- ------------- Members' capital (notes 4 and 5): Class A - 3,069,000 member units 21,346,430 21,346,430 Class B - 5,140,500 member units 6,738,406 6,738,406 Class C - 3,421,931member units 21,893,829 21,893,830 Accumulated deficit (2,608,848) (9,917,713) Total members' capital 47,369,817 40,060,953 ------------- ------------- $ 129,983,039 $ 123,214,308 ============= =============
See accompanying notes to consolidated financial statements. MAX MEDIA PROPERTIES LLC Consolidated Statements of Operations (unaudited)
Six months ended June 30, 1997 1998 ---- ---- Gross revenues $ 29,425,665 $ 33,452,910 Less agency commissions 3,534,017 3,961,790 ------------ ------------ Net revenues 25,891,648 29,491,120 Operating expenses: General and administrative 5,176,700 10,530,713 Sales 5,315,190 5,863,769 News 1,285,073 1,599,496 Programming and production: Program amortization 2,636,652 2,754,930 Operations 2,405,736 2,425,703 Promotions 1,647,228 1,685,829 Engineering 1,519,111 1,695,085 Depreciation and amortization of property and equipment 2,046,230 2,565,851 Amortization of intangible assets 3,739,586 4,131,524 Total operating expenses 25,771,506 33,252,900 ------------ ------------ Income (loss) from operations 120,142 (3,761,780) ------------ ------------ Other income (expenses): Interest expense (2,942,922) (3,003,458) Gain on station sale, net (note 3) 8,511,109 -- Other income (expense) (26,179) 140,751 ------------ ------------ Total other income (expenses), net 5,542,008 (2,862,707) ------------ ------------ Income (loss) $ 5,662,150 $ (6,624,487) ============ ============ Pro forma income data: Income (loss) $ 5,662,150 $ (6,624,487) Pro forma income tax expense (benefit) (note 6) 2,208,239 (2,583,550) ------------ ------------ Pro forma net income (loss) $ 3,453,911 $ (4,040,937) ============ ============
See accompanying notes to consolidated financial statements. MAX MEDIA PROPERTIES LLC Consolidated Statements of Cash Flows (unaudited)
Six months ended June 30, 1997 1998 ---- ---- Cash flows from operating activities: Income (loss) $ 5,662,150 $ (6,624,487) ------------ ------------ Reconciliation of income (loss) to net cash provided by operating activities: Depreciation and amortization of property and equipment 2,046,230 2,565,851 Amortization of intangible assets 3,739,586 4,131,524 Amortization of program contract rights 1,300,108 1,013,390 Barter program amortization 1,336,546 1,741,540 Barter program revenue (1,336,546) (1,741,540) Gain on station sale, net (8,511,109) -- (Gain) loss on disposal of equipment 44,609 27,745 Changes in assets and liabilities, net of effect of station acquisitions: Accounts receivable, net (1,235,182) 253,880 Deferred charges, primarily barter agreements (116,970) (87,101) Prepaid expenses and other current assets (121,891) (336,492) Accounts payable 167,200 (415,992) Accrued compensation and benefits (46,171) 4,937,480 Other accrued expenses (76,710) (264,703) Deferred revenue, primarily barter agreements 105,951 37,012 ------------ ------------ Net cash provided by operating activities 2,957,801 5,238,107 ------------ ------------ Cash flows from investing activities: Acquisition of stations, net of cash deposits (34,108,599) -- Payments for program contract rights (1,184,839) (1,538,150) Purchases of property and equipment (5,191,783) (606,864) Payment of organizational and start-up costs (452,749) (8,614) Restricted cash (deposited in) released from escrow (505,162) 512,856 Proceeds from sale of station 12,506,743 -- Proceeds from sale of property and equipment 510,000 845 Issuance of notes receivable -- (18,176) Other (3,700) (117,546) ------------ ------------ Net cash used in investing activities (28,430,089) (1,775,649) ------------ ------------
MAX MEDIA PROPERTIES LLC Consolidated Statements of Cash Flows, Continued
Six months ended June 30, 1997 1998 ---- ---- Cash flows from financing activities: Proceeds from issuance of long-term debt $ 38,100,000 $ -- Proceeds from issuance of Class C member units, net of expenses 21,200,000 -- Payment to cancel Class B member units (11,200,000) -- Repayment of long-term debt: Credit Facility (21,710,000) (2,220,000) Other (134,091) (69,339) Payments of loan, financing and equity issuance costs (336,232) -- Member distributions (89,750) (684,378) ------------ ------------ Net cash provided by (used in) financing activities 25,829,927 (2,973,717) ------------ ------------ Net increase in cash and cash equivalents 357,639 488,741 Cash and cash equivalents at beginning of period 1,175,542 1,789,194 ------------ ------------ Cash and cash equivalents at end of period $ 1,533,181 $ 2,277,935 ============ ============ Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 3,100,685 $ 3,002,839 ============ ============ Supplemental disclosure of noncash investing and financing activities: Noncash additions to program contract rights and program contract rights payable $ 206,638 $ 73,825 ============ ============ Noncash additions to long-term debt obligations (note 5) $ 829,071 $ -- ============ ============
The Company assumed liabilities in 1997 in connection with station acquisitions as more fully described in note 3. See accompanying notes to consolidated financial statements. MAX MEDIA PROPERTIES LLC Notes to Consolidated Financial Statements (unaudited) (1) Basis of Presentation The accompanying interim financial statements of Max Media Properties LLC (the "Company") are unaudited. In the opinion of the Company's management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) which the Company considers necessary for the fair presentation of the Company's consolidated financial position as of June 30, 1998 and the consolidated results of its operations and its cash flows for the six-month periods ended June 30, 1997 and 1998. The consolidated interim financial statements included herein have been prepared in accordance with generally accepted accounting principles and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations. These consolidated interim financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 1997. Certain 1997 amounts have been reclassified for comparability with the 1998 financial statement presentation. Results for interim periods presented are not necessarily indicative of results that may be expected for the entire year. (2) Sale of the Company On December 2, 1997, the Class A member and one of the Class C members entered into agreements to sell all the issued and outstanding shares of each member to one buyer. Simultaneously, the Class B member and one of the other Class C members entered into agreements to sell their respective member units, equity interests in other members and limited partnership interests to this buyer. The Company is also a party to each of these purchase agreements. The aggregate purchase price is $255,000,000 plus the assumption of certain liabilities consisting primarily of program contract rights payable. A portion of this purchase price will be used to repay all long-term debt and make certain payments contingent on the closing of the transaction. Cash, accounts receivable, notes receivable and certain other immaterial assets are excluded from this transaction. The transaction closed July 3, 1998. (3) Acquisitions and Dispositions (a) Acquisitions On January 3, 1997, the Company acquired the assets of WMMP-TV, Charleston, South Carolina for approximately $3.4 million plus the assumption of approximately $612,000 of liabilities and paid $850,000 for a three-year agreement not to compete. On January 31, 1997, the Company acquired the assets of WFOG AM/FM and WPTE-FM, Norfolk, Virginia for approximately $15.2 million. MAX MEDIA PROPERTIES LLC Notes to Consolidated Financial Statements (unaudited) On March 14, 1997, the Company acquired the assets of KETK-TV, Tyler, Texas and substantially all the assets of KLSB-TV, Nacogdoches, Texas (other than FCC licenses and certain related assets) for approximately $16.9 million plus the assumption of certain immaterial liabilities. Simultaneously, the Company entered into a 10-year time brokerage agreement to operate KLSB-TV. The following is a summary of the assets acquired, liabilities assumed and consideration given for the above-stated acquisitions: Deferred charges, primarily barter agreements $ 225,177 Program contract rights 737,652 Property and equipment 7,023,608 FCC licenses 20,105,728 Goodwill 249,553 Other intangible assets 9,119,698 ----------- Total assets acquired 37,461,416 ----------- Less: Deferred revenue assumed, primarily barter agreements 225,177 Program contract rights payable assumed 510,858 Other liabilities assumed 32,714 ----------- Cash paid for acquisitions $36,692,667 ===========
The Company allocated the aggregate consideration to the tangible and intangible assets based on their respective fair values. Goodwill was recorded as the excess of the purchase price over the assets acquired. (b) Dispositions On January 28, 1997, the Company sold the assets of KKLZ-FM, Las Vegas, Nevada for approximately $12.5 million, net of commissions and other selling expenses, including a two-year agreement not to compete, which resulted in a gain of approximately $8.5 million. The Company agreed to indemnify and hold harmless the purchaser from certain losses, liabilities, damages, costs and expenses. The Company placed $500,000 in escrow for a period of one year to serve as security for the performance of the Company's indemnification obligations. The escrow fund is included in restricted cash in the accompanying consolidated financial statements at December 31, 1997. (4) Long-term Debt The Company maintains a $100 million Credit Facility consisting of a $36 million term facility, an $11.2 million term facility, a $47.8 million reducing revolving credit facility and a $5 million non-reducing revolving credit facility. Amounts outstanding under the $11.2 million term facility are guaranteed by the Class B member. MAX MEDIA PROPERTIES LLC Notes to Consolidated Financial Statements (unaudited) The Credit Facility is secured by all of the member units and assets of the Company. Outstanding principal under the Credit Facility bears interest at a floating rate based in part on the Company achieving certain operating cash flow ratios. Interest on outstanding borrowings was 7.66% and 8.16% at June 30, 1998 and December 31, 1997, respectively. The Company is obligated to pay a quarterly commitment fee on the average daily unused portion of the reducing and non-reducing revolving credit facilities at an annual rate of 0.375% to 0.50% depending on certain operating cash flow ratios and an annual agency fee of $30,000. Amounts outstanding under the term loans must be repaid over an eight-year period in quarterly installments beginning in 1997 with final payment required no later than June 30, 2004. The non-reducing revolving credit facility must be paid in full by June 30, 2004. The Credit Facility contains substantial restrictive covenants, including restrictions on the Company's ability to incur additional debt, acquire interests in other business entities, sell, mortgage, pledge or otherwise encumber any of its assets, make capital expenditures or make distributions to the members (other than distributions used to pay taxes attributable to the operations of the Company), without the prior written consent of the lenders. In addition, the Company is required, among other things, to maintain certain operating ratios. To reduce the impact of changes in interest rates, the Company is required to maintain interest rate protection on a minimum of 50% of the aggregate amount outstanding under the Credit Facility. At June 30, 1998, the Company has two outstanding interest rate cap agreements which expire on September 30, 1999 and October 1, 1999 and which limit the rate of interest to 8.50% and 7.50%, respectively. The principal amounts related to these agreements aggregate $40,512,500 at June 30, 1998. (5) Members' Capital The Company was organized under the Virginia Limited Liability Company Act and the members are generally not liable for any debts or other obligations of the Company. Under the terms of its January 1, 1996 Operating Agreement, the Company will cease to exist on December 31, 2045 unless earlier terminated. The Company has three classes of member units. With the exception of the right to elect the Company's Board of Managers, all units are identical. Holders of a majority of the Class A and Class B member units each have the right to elect four of the eight members of the Company's Board of Managers. Holders of Class C member units are not entitled to vote for members of the Board. Net profits and losses are allocated in proportion to the members' respective percentage interests. On February 14, 1997, the Operating Agreement was amended to admit additional members. The Company issued 3,321,931 Class C member units to the new members for net proceeds of approximately $21.2 million. On March 13, 1997, the Company paid $11.2 million and incurred transactions costs of approximately $455,000 and other long-term obligations of approximately $818,000 in connection with the cancellation of 1,690,500 Class B member units. MAX MEDIA PROPERTIES LLC Notes to Consolidated Financial Statements (unaudited) (6) Income Taxes The pro forma income tax expense (benefit) presented on the consolidated statements of operations represents the estimated taxes that would have been recorded had the Company been a C corporation for income tax purposes for each of the periods presented. The pro forma income tax expense (benefit) is as follows:
Pro forma Six months ended June 30, 1997 1998 ----------- ----------- Federal $ 1,925,131 $(2,252,326) State 283,108 (331,224) ----------- ----------- Total pro forma $ 2,208,239 $(2,583,550) =========== ===========
A reconciliation of the statutory federal income tax rate and the pro forma effective rate is as follows:
1997 1998 ---- ---- Statutory tax rate 34% 34% Effect of state income taxes, net of federal tax benefit 5% 5% -- -- Pro forma effective tax rate 39% 39% == ==
EX-99.3 4 EXHIBIT 99.3 EXHIBIT 99.3 Consolidated Pro Forma Financial Statements of Sinclair Broadcast Group, Inc. The following Pro Forma Consolidated Financial Data include the unaudited Pro Forma consolidated balance sheet as of June 30, 1998 (the Pro Forma Consolidated Balance Sheet) and the unaudited Pro Forma consolidated statement of operations for the six months ended June 30, 1998 (the Pro Forma Consolidated Statement of Operations). The unaudited Pro Forma Consolidated Balance Sheet and the unaudited Pro Forma Consolidated Statement of Operations for the six months ended June 30, 1998 are adjusted to give effect to the Max Media Acquisition and the Sullivan Acquisition (collectively, the "Significant Acquisitions"). The Pro Forma Consolidated Balance Sheet included herein reflects the application of the Significant Acquisitions as if such transactions occurred at June 30, 1998. The Pro Forma Consolidated Statement of Operations reflects the application of the Significant Acquisitions as if such transactions occurred on January 1, 1998. The Significant Acquisitions were completed utilizing existing cash balances and available indebtedness under the Company's Bank Credit Agreement. The Pro Forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable. The Pro Forma Consolidated Financial Information included herein 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 Company's unaudited consolidated financial statements as of and for the six months ended June 30, 1998 and related notes thereto and the historical financial data of Max Media Properties LLC, Sullivan Broadcast Company, Inc., and subsidiaries (Formerly Act III Broadcasting, Inc. successor by merger with A-3 Acquisitions, Inc. and Sullivan Broadcast Holdings, Inc. and Subsidiaries, and Sinclair Communications II, Inc. and its wholly-owned subsidiaries (successor to Sullivan Broadcast Holdings, Inc.) and Sinclair Television Company, Inc. (successor to Sullivan Broadcasting Company, Inc.) all of which have been filed with the Securities and Exchange Commission as part of either (i) the Company's Annual Report on Form 10-K/A for the year ended December 31, 1997 together with the report of Arthur Andersen LLP, independent certified public accountants; (ii) the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, (iii) the Current Report on Form 8-K filed April 8, 1998 or (iv) as a separate exhibit to the report on Form 8-K/A of which this exhibit is a apart. 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 above events occurred on the dates specified or to project the Company's results of operations or financial positions for or at any period or date. 2 SINCLAIR BROADCAST GROUP, INC. PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1998 (DOLLARS IN THOUSANDS) (UNAUDITED)
SIGNIFICANT ACQUISITIONS CONSOLIDATED --------------------------------- HISTORICAL CONSOLIDATED SULLIVAN MAX MEDIA HISTORICAL MAX MEDIA(a) BROADCASTING(b) AND SULLIVAN -------------- --------------- ----------------- -------------- ASSETS CURRENT ASSETS: Cash, including cash equivalents ................................ $ 320,133 $ (320,133) $ - Accounts receivable, net of allowance for doubtful accounts ..... 129,088 129,088 Current portion of program contract costs ....................... 33,369 979 5,541 39,889 Prepaid expenses and other current assets ....................... 1,928 1,928 Deferred barter costs ........................................... 5,737 728 6,465 Refundable income taxes ......................................... 10,581 10,581 Broadcast Assets Held for Sale .................................. 30,639 30,639 Deferred tax asset .............................................. 520 520 ---------- -------- --------- ---------- Total current assets .......................................... 531,995 1,707 (314,592) 219,110 PROGRAM CONTRACT COSTS, less current portion ..................... 28,228 364 5,823 34,415 LOANS TO OFFICERS AND AFFILIATES ................................. 10,645 10,645 PROPERTY AND EQUIPMENT, net ...................................... 195,100 36,983 56,450 288,533 NON-COMPETE AND CONSULTING AGREEMENTS, net........................ 150 150 DEFERRED TAX ASSET ............................................... - - OTHER ASSETS ..................................................... 174,602 (12,750) 161,852 ACQUIRED INTANGIBLE BROADCASTING ASSETS, net...................... 1,876,770 219,686 1,018,439 3,114,895 ---------- -------- --------- ---------- Total Assets .................................................. $2,817,490 245,990 766,120 $3,829,600 ========== ======== ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ................................................ $ 9,858 $ 9,858 Income taxes payable ............................................ - - Accrued liabilities ............................................. 51,069 51,069 Current portion of long-term liabilities- Notes payable and commercial bank financing .................... 25,000 25,000 Notes and capital leases payable to affiliation ................ 2,878 2,878 Program contracts payable ...................................... 64,415 1,353 9,644 75,412 Deferred barter revenues ........................................ 6,111 1,064 7,175 ---------- -------- --------- ---------- Total current liabilities ..................................... 159,331 2,417 9,644 171,392 LONG-TERM LIABILITIES: - Notes payable and commercial bank financing .................... 1,475,972 242,250 (c) 679,867(d) 2,398,089 Notes and capital leases payable to affiliates ................. 18,495 18,495 Program contracts payable ...................................... 47,671 1,323 11,609 60,603 Deferred tax liability ......................................... 36,242 65,000 101,242 Other long-term liabilities .................................... 3,948 3,948 ---------- -------- --------- ---------- Total liabilities ............................................. 1,741,659 245,990 766,120 2,753,769 ---------- -------- --------- ---------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 3,661 - - 3,661 ---------- -------- --------- ---------- COMMITMENTS AND CONTINGENCIES COMPANY OBLIGATED MANDATORILY REDEEM- ABLE SECURITY OF SUBSIDIARY TRUST HOLDING SOLELY KDSM SENIOR DEBENTURES ................................... 200,000 - - 200,000 ---------- -------- --------- ---------- STOCKHOLDERS' EQUITY: Series B Preferred Stock, $.01 par value, 10,000,000 shares authorized and 1,071,381 shares issued and outstanding ........ - - Series D Preferred Stock, $.01 par value, 3,450,000 shares authorized 3,450,000 shares issued and outstanding ............ 35 35 Series E 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 and 15,487,816 shares issued and outstanding respectively .................................. 480 480 Class B Common Stock, $.01 par value, 35,000,000 shares authorized and 25,436,432 shares issued and outstanding ....... 500 500 Additional paid-in capital ..................................... 897,048 897,048 Additional paid-in capital - equity put options ................ 23,117 23,117 Additional paid-in capital - deferred compensation ............. (7,419) (7,419) Accumulated deficit ............................................ (41,591) (41,591) ---------- -------- --------- ---------- Total stockholders' equity .................................... 872,170 - - 872,170 ---------- -------- --------- ---------- Total Liabilities and Stockholders' Equity .................... $2,817,490 $245,990 $ 766,120 $3,829,600 ========== ======== ========= ==========
3 NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS) (a) The Max Media Acquisition column reflects the assets and liabilities acquired in connection with the $255,000 purchase of Max Media. Total acquired intangibles are calculated as follows:
MAX MEDIA ------------ Purchase Price ............................................. $ 255,000 Add: Liabilities acquired-- Current portion of program contracts payable ............ 1,353 Deferred barter revenues ................................ 1,064 Long-term portion of program contracts payable .......... 1,323 Less: Assets acquired-- Current portion of program contract costs ............... (979) Deferred barter costs ................................... (728) Program contract costs, less current portion ............ (364) Property and equipment .................................. (36,983) --------- Acquired intangibles .................................... $ 219,686 =========
The acquired intangible assets are summarized as follows: Useful Life (years) ------------------- FCC licenses ............................................... $ 65,432 25 Network affiliation agreements.............................. 62,802 25 Goodwill.................................................... 84,822 40 Other miscellaneous intangible assets ...................... 6,630 5-15 --------- Acquired intangibles .................................... $ 219,686 =========
4 (b) The Sullivan Broadcasting Acquisition column reflects the assets and liabilities acquired in connection with the purchase of 100% of the outstanding capital stock of Sullivan Broadcast Holdings, Inc. and subsidiaries. Total acquired intangibles are calculated as follows:
SULLIVAN ------------- Purchase Price (Subject to certain adjustments) .......... 1,000,000 Add: Liabilities acquired-- Current portion of program contracts costs ............ 9,644 Long-term portion of program contract costs ........... 11,609 Deferred tax liability ................................ 65,000 Less: Assets acquired-- Current portion of program contracts .................. (5,541) Program contract costs, less current portion .......... (5,823) Property and equipment ................................ (56,450) ---------- Acquired intangibles .................................. $1,018,439 ==========
The acquired intangible assets are summarized as follows: Useful Life (years) ------------------- FCC licenses ............................................... $ 97,228 25 Network affiliation agreement............................... 253,601 25 Goodwill.................................................... 646,327 40 Other miscellaneous intangible assets ...................... 21,283 5-15 --------- Acquired intangibles .................................... $1,018,439 =========
(c) To reflect indebtedness of $242,250 incurred (net of a $12,750 deposit) under the Company's Bank Credit Agreement in connection with the Max Media Acquisition. (d) To reflect $679,867 (net of utilization of $320,133 in existing cash balances) under the Company's Bank Credit Agreement in connection with the Sullivan Acquisition. 5 SINCLAIR BROADCAST GROUP, INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998
Consolidated Historical, Consolidated Acquisition Max Media and Historical Max Media(a) Sullivan (b) Adjustments Sullivan ------------ -------------- ------------ ------------ --------------- REVENUES: Station broadcast revenues, net of agency commissions .............. $ 266,265 $ 26,780 $ 62,857 $ 355,902 Revenues realized from station barter arrangements ..................... 25,099 2,711 9,017 36,827 -------- -------- ------- -------- ----------- Total revenues 291,364 29,491 71,874 --- 392,729 OPERATING EXPENSES: Program and production ............. 56,068 4,751 10,656 71,475 Selling general and adminstrative... 59,708 16,395 12,681 (8,139)(c) 80,645 Expenses realized from barter arrangements .................... 20,962 2,655 9,017 --- 32,634 Amortization of program contract costs and net realiz. value adj. 30,543 2,755 15,106 48,404 Stock-based compensation 1,371 --- --- 1,371 Depreciation and amortization of property and equipment .......... 10,266 2,566 5,638 (2,185)(d) 16,285 Amort. of acq. intangible assets, non-compete, consult, and other 35,171 4,131 17,394 2,771 (e) 59,467 -------- ------- ------- ------- ------ Total operating expenses 214,089 33,253 70,492 (7,554) 310,280 -------- ------- ------- ------- ------ Broadcast operating income (loss) .................... 77,275 (3,762) 1,382 7,554 82,449 -------- ------- ------- ------ ------- Interest and amortization of debt discount expense ................. (54,901) (3,003) (19,220) (24,296)(f) (101,420) Subsidiary trust minority interest expense .......................... (11,625) --- --- (11,625) Interest income .................... 3,217 --- --- --- 3,217 Net gain on sale of assets 5,238 5,238 Other income 104 141 (52) 193 ------- ------- ------- -------- ------- Income (loss) before provision (benefit) for income taxes ... 19,308 (6,624) (17,890) (16,742) (21,948) PROVISION (BENEFIT) FOR INCOME TAXES.. (12,400) 4,254(g) 11,489(g) 10,752(g) (14,095) ------ ------- ------- ------- ------- NET INCOME (LOSS) BEFORE EXTRA- ORDINARY ITEM .................... 6,908 (2,370) (6,401) (5,990) (7,853) NET INCOME (LOSS) BEF.EX.ITEM AVAILABLE TO COMMON SHAREHOLDERS ........... $ 1,733 (13,028) BASIC EARNINGS PER SHARE: ======== ======== Net income (loss) before extra- ordinary item per shares ...... $ 0.02 $ (0.13) ======== ======== Basic average shares outstanding .... 91,480 97,911(h) ======== ======== DILUTED EARNINGS PER SHARE: .......... Net income (loss) before extra- ordinary item per share ....... $ 0.02 $ (0.13) ======== ======== Diluted average shares outstanding ............... 93,645 100,077(h) ======== ======== xx Recalculated at 40%
6 SINCLAIR BROADCAST GROUP, INC. NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (DOLLARS IN THOUSANDS) (a) The Max Media column reflects the results of operations for Max Media for the period from January 1, 1998 to June 30, 1998. (b) The Sullivan Broadcasting column reflects the results of operations for Sullivan Broadcasting for the period from January 1, 1998 to June 30, 1998. (c) 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 Max Media Acquisition and the Sullivan Acquisition on a going-forward basis. In addition, the adjustment included stock appreciation rights of $5,000 related to bonuses paid to Max Media management in connection with the sale of the Company. (d) To record depreciation expense related to acquired tangible assets and eliminate depreciation expense recorded by Max Media, and Sullivan from January 1, 1998 to June 30, 1998. Tangible assets are to be depreciated over lives ranging from three to 20 years, calculated as follows:
SIX MONTHS ENDED JUNE 30, 1998 ------------------------------------- MAX MEDIA SULLIVAN TOTAL ---------- ----------- ------------ Depreciation expense on acquired tangible assets ....................... $ 2,329 $ 3,690 $ 6,019 Less: Depreciation expense recorded by Max Media and Sullivan (2,566) (5,638) (8,204) -------- -------- -------- Pro Forma adjustment ................................................... $ (237) $ (1,948) $ (2,185) ======== ======== ========= (e) To record amortization expense related to acquired intangible assets and deferred financing costs and eliminate amortization expense recorded by Max Media and Sullivan from January 1, 1998 to June 30, 1997. Intangible assets are to be amortized over lives ranging from one to 40 years. Goodwill is the only intangible asset amortized over 40 years. Intangible assets are amortized on a straight-line basis and the amortization is calculated as follows: SIX MONTHS ENDED JUNE 30, 1998 --------------------------------------- MAX MEDIA SULLIVAN TOTAL ------------ ----------- ------------ Amortization expense on acquired intangible assets ..................... $ 5,335 $ 18,961 $ 24,296 Less: Amortization expense recorded by Max Media and Sullivan (4,131) (17,394) (21,525) -------- --------- --------- Pro Forma adjustment ................................................... $ 1,204 $ 1,567 $ 2,771 ======== ========= =========
7 (f) To record interest expense for the six months ended June 30, 1998 on acquisition financing relating to Max Media and Sullivan of $242,250 and $679,867 (under the Company's bank credit facility at 7.43%), and eliminate interest expense recorded.
SIX MONTHS ENDED JUNE 30, 1998 ---------------------------------------- MAX MEDIA SULLIVAN TOTAL -------------- -------- -------- Interest expense adjustment as noted above ......................... $ ( 9,000) $(37,519) $(46,519) Less: Interest expense recorded by Max Media and Sullivan 3,003 19,220 22,223 ---------- -------- ---------- Pro Forma adjustment ............................................... $ ( 5,997) $(18,299) $ (24,296) ========== ======== ==========
(g) To record tax provision (benefit) at the applicable tax rates. (h) Weighted average shares outstanding on a Pro Forma basis assumes that the 12,000,000 shares of Class A Common Stock issued by the Company on April 8, 1998 were outstanding for the entire period. 8 -----END PRIVACY-ENHANCED MESSAGE-----