-----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, EKcp3AZqZT2f/LDhQ5Hign2bkhPdAEtKy6m9my4yS0jOXCabzCYf1zq2yFuKKhuK 9owE0Zu26LjtK7n7Ad925A== 0001005150-97-000619.txt : 19970814 0001005150-97-000619.hdr.sgml : 19970814 ACCESSION NUMBER: 0001005150-97-000619 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970702 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970813 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 SEC ACT: 1934 Act SEC FILE NUMBER: 000-26076 FILM NUMBER: 97659699 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 1 FORM 8-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF 1934 ------------------ DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) JULY 2, 1997 COMMISSION FILE NUMBER 0-26076 SINCLAIR BROADCAST GROUP, INC. (Exact name of registrant) ------------------------- MARYLAND 52-1494660 (State of organization) (I.R.S. Employer Identification No.) 2000 WEST 41ST STREET, BALTIMORE, MARYLAND 21211 (Address of principal executive offices and zip code) (410) 467-5005 (Registrant's telephone number) ================================================================================ ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS SINCLAIR BROADCAST GROUP, INC. (THE "COMPANY") IS FILING CERTAIN FINANCIAL INFORMATION ABOUT ITSELF RELATing to a $200 million private offering (the "Offering" or the "Debt Offering") of 9% Senior Subordinated Notes due 2007 (the "Notes"). USE OF PROCEEDS OF THE OFFERING Net proceeds of the Offering of approximately $195.5 million were used to reduce outstanding borrowings under the Bank Credit Agreement with the remainder retained for general corporate purposes. The Company repaid amounts outstanding of approximately $162.5 million and retained the remainder under its revolving credit facility under the Bank Credit Agreement (which amounts may be reborrowed) for general corporate purposes including acquisitions, or the repurchase of shares of Class A Common Stock. The interest rate on the revolving credit facility that will be repaid is variable and averaged 6.7% per year for the month ended July 31, 1997. Net proceeds of the offering of $200 aggregate liquidation value of High Yield Trust Offered Preferred Securities ("HYTOPS") by Sinclair Capital, a subsidiary trust of KDSM, Inc., an indirect wholly-owned subsidiary of the Company (the "Preferred Securities Offering") were approximately $194 million. The Company used approximately $135 million of the net proceeds of the Preferred Securities Offering to repay outstanding debt and utilized the remaining proceeds, approximately $59 million, for general corporate purposes including financing a portion of the acquisition of KUPN-TV. PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF SINCLAIR THE FOLLOWING PRO FORMA CONSOLIDATED FINANCIAL DATA INCLUDE THE UNAUDITED PRO FORMA CONSOLIDATED balance sheet as of June 30, 1997 (the "Pro Forma Consolidated Balance Sheet") and the unaudited pro forma consolidated statements of operations for the year ended December 31, 1996 and the six months ended June 30, 1997 (the "Pro Forma Consolidated Statements of Operations"). The unaudited Pro Forma Consolidated Balance Sheet is adjusted to give effect to the Offering as if it occurred on June 30, 1997 and assuming application of the proceeds of the Offering as set forth in "Use of Proceeds of the Offering" above. The unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 1996 is adjusted to give effect to the 1996 Acquisitions, the Preferred Securities Offering and the Offering as if each occurred at the beginning of such period and assuming application of the proceeds of the Preferred Securities Offering and the Offering as set forth in "Use of Proceeds of the Offering." The unaudited Pro Forma Consolidated Statement of Operations for the six months ended June 30, 1997 is adjusted to give effect to the Preferred Securities Offering and the Offering as if each occurred at the beginning of such period and assuming application of the proceeds of the Preferred Securities Offering and the Offering as set forth in "Use of Proceeds of the Offering." 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, 1996 and related notes thereto, the Company's unaudited consolidated financial statements for the six months ended June 30, 1997 and related notes thereto, the historical financial data of Flint T.V., Inc., the historical financial data of Superior, the historical financial data of KSMO and WSTR, and the historical financial data of River City, all of which have been filed with the Commission as part of (i) the Company's Annual Report on Form 10-K for the year ended December 31, 1996 (as amended), 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, 1997; or (iii) the Company's Current Reports on Form 8-K and Form 8-K/A filed May 10, 1996, May 13, 1996, May 17, 1996, May 29, 1996, August 30, 1996 and September 5, 1996. 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.The Pro Forma Consolidated Financial Data do not give effect to the acquisition of KUPN-TV, which was consummated on June 30, 1997. The Pro Forma Consolidated Financial Data reflect the repayment of $162.5 million which represents all amounts outstanding under the revolving credit facility as of June 30, 1997. As of July 31, 1997, $30 million was outstanding. Such additional amounts were incurred in part to finance the acquisition of KUPN-TV and in part as a result of the restructuring of the Bank Credit Facility. Page 2 of 10 SINCLAIR BROADCAST GROUP, INC. PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997
POST DEBT CONSOLIDATED DEBT OFFERING OFFERING HISTORICAL ADJUSTMENTS(A) ADJUSTMENTS -------------- ---------------- ------------ (DOLLARS IN THOUSANDS) (UNAUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents .......................................... $ 2,740 $ 33,000 (b) $ 35,740 Accounts receivable, net of allowance for doubtful accounts ......... 102,093 102,093 Current portion of program contract costs ........................... 34,768 34,768 Prepaid expenses and other current assets ........................... 4,054 4,054 Deferred barter costs ................................................ 4,267 4,267 Deferred tax asset ................................................... 8,188 8,188 ---------- ------------ ---------- Total current assets ............................................. 156,110 33,000 189,110 PROGRAM CONTRACT COSTS, less current portion ........................ 30,778 30,778 LOANS TO OFFICERS AND AFFILIATES .................................... 11,241 11,241 PROPERTY AND EQUIPMENT, net .......................................... 156,681 156,681 NON-COMPETE AND CONSULTING AGREEMENTS, net ........................... 2,250 2,250 OTHER ASSETS ......................................................... 71,970 4,500 (c) 76,470 ACQUIRED INTANGIBLE BROADCASTING ASSETS, net ........................ 1,333,475 1,333,475 ---------- ------------- ---------- Total Assets ...................................................... $1,762,505 $ 37,500 $1,800,005 ========== ============= ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ................................................... $ 5,310 $ 5,310 Accrued liabilities ................................................ 39,023 39,023 Current portion of long-term liabilities- Notes payable and commercial bank financing ........................ 65,500 65,500 Capital leases payable ............................................. 11 11 Notes and capital leases payable to affiliates ..................... 1,370 1,370 Program contracts payable .......................................... 49,766 49,766 Deferred barter revenues ............................................. 4,458 4,458 ---------- ------------ ---------- Total current liabilities .......................................... 165,438 165,438 LONG-TERM LIABILITIES: Notes payable and commercial bank financing ........................ 1,097,000 $ 37,500 (d) 1,134,500 Capital leases payable ............................................. 30 30 Notes and capital leases payable to affiliates ..................... 11,872 11,872 Program contracts payable .......................................... 46,670 46,670 Other long-term liabilities ....................................... 4,960 4,960 ---------- -------------- ---------- Total liabilities ................................................ 1,325,970 37,500 1,363,470 ---------- ------------- ---------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES ......................................................... 3,897 3,897 ---------- ---------- COMMITMENTS AND CONTINGENCIES COMPANY OBLIGATED MANDATORILY REDEEMABLE SECU- RITY OF SUBSIDIARY TRUST HOLDING SOLELY KDSM SE- NIOR DEBENTURES 200,000 200,000 ---------- ---------- STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 10,000,000 shares authorized and 1,138,138 and 1,106,608 shares issued and outstanding, respectively. 11 11 Class A Common stock, $.01 par value, 100,000,000 shares authorized and 6,911,880 and 7,035,188 shares issued and outstanding, respec- tively 71 71 Class B Common stock, $.01 par value, 35,000,000 shares authorized and 27,850,581 and 27,656,581 shares issued and outstanding ...... 277 277 Additional paid-in capital .......................................... 234,812 234,812 Accumulated deficit ................................................ (24,754) (24,754) Additional paid-in capital - equity put options ..................... 23,117 23,117 Additional paid-in capital - deferred compensation .................. (896) (896) ---------- ------------- ---------- Total stockholders' equity ....................................... 232,638 232,638 ---------- ------------ ---------- Total Liabilities and Stockholders' Equity ........................ $1,762,505 $ 37,500 $1,800,005 ========== ============= ==========
(Continued on following page) Page 3 of 10 NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET (a) To reflect the proceeds of the Offering, net of offering costs and the application of the net proceeds therefrom as set forth in "Use of Proceeds of the Offering." (b) To record net proceeds of the Offering after giving effect to the repayment of the revolving credit facility under the Bank Credit Agreement as follows: Offering proceeds .......................................... $ 200,000 Underwriting discounts, commissions and estimated expenses (4,500) Repayment of revolving credit facility under the Bank Credit Agreement ................................................ (162,500) ---------- Pro forma adjustment ....................................... $ 33,000 ========== (c) To record underwriting discounts, commissions and estimated expenses of $4.5 million. (d) To reflect the repayment of the revolving credit facility under the Bank Credit Agreement as set forth in "Use of Proceeds of the Offering," as follows: Indebtedness incurred .................................... $ 200,000 Repayment of revolving credit facility under the Bank Credit Agreement ................................................ (162,500) ---------- Pro forma adjustment ....................................... $ 37,500 ========== Page 4 of 10 SINCLAIR BROADCAST GROUP, INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
SUPERIOR CONSOLIDATED FLINT COMMUNICATIONS HISTORICAL TV, INC.(A) GROUP, INC.(B) KSMO(C) WSTR(D) -------------- ------------- ---------------- ---------- ----------- (UNAUDITED) REVENUES: Station broadcast revenues, net of agency commis- sions .............................................. $ 346,459 $1,012 $4,431 $ 7,694 $ 7,488 Revenues realized from station barter arrange- ments .............................................. 32,029 -- -- 2,321 1,715 ---------- ------- ------ -------- --------- Total revenues .................................... 378,488 1,012 4,431 10,015 9,203 ---------- ------- ------ -------- --------- OPERATING EXPENSES: Program and production ........................... 66,652 101 539 1,550 961 Selling, general and administrative ............... 75,924 345 2,002 2,194 2,173 Expenses realized from barter arrangements ......... 25,189 2,276 1,715 Amortization of program contract costs and net realizable value adjustments ..................... 47,797 125 736 601 1,011 Amortization of deferred compensation ............ 739 Depreciation and amortization of property and equipment ....................................... 11,711 4 373 374 284 Amortization of acquired intangible broadcasting assets, non-compete and consulting agreements and other assets ................................. 58,530 -- 529 -- 39 Amortization of excess syndicated programming 3,043 -- -- -- -- ---------- ------- ------ -------- --------- Total operating expenses ........................ 289,585 575 4,179 6,995 6,183 ---------- ------- ------ -------- --------- Broadcast operating income (loss) ............... 88,903 437 252 3,020 3,020 ---------- ------- ------ -------- --------- OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense . (84,314) -- (457) (823) (1,127) Interest income .................................... 3,136 -- -- -- 15 Subsidiary trust minority interest expense ......... -- -- -- -- -- Other income (expense) ........................... 342 19 4 7 -- ---------- ------- ------ -------- --------- Income (loss) before provision (benefit) for income taxes .................................... 8,067 456 (201) 2,204 1,908 PROVISION (BENEFIT) FOR INCOME TAXES ............................................. 6,936 -- -- -- -- ---------- ------- ------ -------- --------- NET INCOME (LOSS) ................................. $ 1,131 $ 456 $ (201) $ 2,204 $ 1,908 ========== ======= ====== ======== ========= NET INCOME (LOSS) AVAILABLE TO COM- MON STOCKHOLDERS ................................... $ 1,131 ========== NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE ........................... $ 0.03 ========== WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING ........................................ 37,381 ========== RIVER CITY(E) 1996 POST ---------------------------- ACQUISITIONS 1996 RIVER CITY WSYX WYZZ(F) ADJUSTMENTS ACQUISITIONS ------------ --------------- --------- ------------------ -------------- REVENUES: Station broadcast revenues, net of agency commis- sions .............................................. $ 86,869 $ (10,783) $1,838 $ 445,008 Revenues realized from station barter arrange- ments .............................................. -- -- -- 36,065 ---------- ---------- ------- ------------- Total revenues .................................... 86,869 (10,783) 1,838 481,073 ---------- ---------- ------- ------------- OPERATING EXPENSES: Program and production ........................... 10,001 (736) 214 79,282 Selling, general and administrative ............... 39,786 (3,950) 702 $ (3,577)(g) 115,599 Expenses realized from barter arrangements ......... 29,180 Amortization of program contract costs and net realizable value adjustments ..................... 9,721 (458) 123 -- 59,656 Amortization of deferred compensation ............ 194(h) 933 Depreciation and amortization of property and equipment ....................................... 6,294 (1,174) 6 (943)(i) 16,929 Amortization of acquired intangible broadcasting assets, non-compete and consulting agreements and other assets ................................. 14,041 (3,599) 3 4,034 (j) 73,577 Amortization of excess syndicated programming -- -- -- -- 3,043 ---------- ---------- ------- ------------- ------------- Total operating expenses ........................ 79,843 (9,917) 1,048 (292) 378,199 ---------- ---------- ------- ------------- ------------- Broadcast operating income (loss) ............... 7,026 (866) 790 292 102,874 ---------- ---------- ------- ------------- ------------- OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense . (12,352) -- -- (17,409)(k) (116,482) Interest income .................................... 195 -- -- (1,636)(l) 1,710 Subsidiary trust minority interest expense ......... -- -- -- -- -- Other income (expense) ........................... (149) (8) -- -- 215 ---------- ---------- ------- ------------- ------------- Income (loss) before provision (benefit) for income taxes .................................... (5,280) (874) 790 (18,753) (11,683) PROVISION (BENEFIT) FOR INCOME TAXES ............................................. -- -- -- (7,900)(m) (964) ---------- ---------- ------- ------------- ------------- NET INCOME (LOSS) ................................. $ (5,280) $ (874) $ 790 $ (10,853) $ (10,719) ========== ========== ======= ============= ============= NET INCOME (LOSS) AVAILABLE TO COM- MON STOCKHOLDERS ................................... $ (10,719) ============= NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE ........................... $ (0.27) ============= WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING ........................................ 39,058 (n) ============= PREFERRED SECURITIES POST PREFERRED SECURITIES DEBT OFFERING OFFERING AND 1996 OFFERING ADJUSTMENTS ACQUISITIONS ADJUSTMENTS ---------------------- --------------------------- -------------------- REVENUES: Station broadcast revenues, net of agency commis- sions .............................................. $ 445,008 Revenues realized from station barter arrange- ments .............................................. 36,065 ------------- Total revenues .................................... 481,073 ------------- OPERATING EXPENSES: Program and production ........................... 79,282 Selling, general and administrative ............... 115,599 Expenses realized from barter arrangements ......... 29,180 Amortization of program contract costs and net realizable value adjustments ..................... 59,656 Amortization of deferred compensation ............ 933 Depreciation and amortization of property and equipment ....................................... 16,929 Amortization of acquired intangible broadcasting assets, non-compete and consulting agreements and other assets ................................. $ 500 (o) 74,077 $ 450 (r) Amortization of excess syndicated programming -- 3,043 ------------- ------------- Total operating expenses ........................ 500 378,699 450 ------------- ------------- ------------- Broadcast operating income (loss) ............... (500) 102,374 (450) ------------- ------------- ------------- OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense 11,820 (p) (104,662) (18,000)(s) Interest income .................................... 1,710 Subsidiary trust minority interest expense ......... (23,250)(q) (23,250) Other income (expense) ........................... -- 215 ------------- ------------- Income (loss) before provision (benefit) for income taxes .................................... (11,930) (23,613) (18,450) PROVISION (BENEFIT) FOR INCOME TAXES ............................................. (4,772)(m) (5,736) (7,380)(m) ------------- ------------- ------------- NET INCOME (LOSS) ................................. $ (7,158) $ (17,877) $ (11,070) ============= ============= ============= NET INCOME (LOSS) AVAILABLE TO COM- MON STOCKHOLDERS ................................... $ (17,877) ============= NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE ........................... $ (0.46) ============= WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING ........................................ 39,058 (n) ============= POST DEBT AND PREFERRED SECURITIES OFFERINGS AND 1996 ACQUISITIONS --------------------- REVENUES: Station broadcast revenues, net of agency commis- sions ............................................. $ 445,008 Revenues realized from station barter arrange- ments ............................................. 36,065 ----------- Total revenues .................................... 481,073 ----------- OPERATING EXPENSES: Program and production ........................... 79,282 Selling, general and administrative ............... 115,599 Expenses realized from barter arrangements ......... 29,180 Amortization of program contract costs and net realizable value adjustments ..................... 59,656 Amortization of deferred compensation ............ 933 Depreciation and amortization of property and equipment ....................................... 16,929 Amortization of acquired intangible broadcasting assets, non-compete and consulting agreements and other assets ................................. 74,527 Amortization of excess syndicated programming ..... 3,043 ----------- Total operating expenses ........................ 379,149 ----------- Broadcast operating income (loss) ............... 101,924 ----------- OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense . (122,662) Interest income .................................... 1,710 Subsidiary trust minority interest expense ......... (23,250) Other income (expense) ........................... 215 ----------- Income (loss) before provision (benefit) for income taxes .................................... (42,063) PROVISION (BENEFIT) FOR INCOME TAXES ............................................. (13,116) ----------- NET INCOME (LOSS) ................................. $ (28,947) =========== NET INCOME (LOSS) AVAILABLE TO COM- MON STOCKHOLDERS ................................... $ (28,947) =========== NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE ........................... $ (0.74) =========== WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING ........................................ 39,058 ===========
(Continued on following page) Page 5 of 10 SINCLAIR BROADCAST GROUP, INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
PREFERRED SECURITIES CONSOLIDATED OFFERING HISTORICAL ADJUSTMENTS -------------- ---------------------- REVENUES: Station broadcast revenues, net of agency commissions ......... $ 219,701 Revenues realized from station barter arrangements ............ 19,870 ---------- Total revenues ............................................. 239,571 ---------- OPERATING EXPENSES: Program and production ....................................... 46,760 Selling, general and administrative ........................... 51,634 Expenses realized from station barter arrangements ............ 16,303 Amortization of program contract costs and net realizable value adjustments ................................................... 30,918 Amortization of deferred compensation ........................ 233 Depreciation and amortization of property and equipment ...... 8,340 Amortization of acquired intangible broadcasting assets, non- compete and consulting agreements and other assets ............ 37,392 $ 88 (t) ---------- ------------ Total operating expenses .................................... 191,580 88 ---------- ------------ Broadcast operating income (loss) ........................... 47,991 (88) ---------- ------------ OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense ............ (51,993) 2,894 (u) Interest income ................................................ 1,040 Subsidiary trust minority interest expense ..................... (7,007) (4,618)(v) Other income ................................................... 47 -- ---------- ------------ Loss before provision (benefit) for income taxes ............ (9,922) (1,812) BENEFIT FOR INCOME TAXES ....................................... (4,100) (725)(m) ---------- ------------ NET LOSS ...................................................... $ (5,822) $ (1,087) ========== ============ NET LOSS AVAILABLE TO COMMON STOCKHOLDERS ................................................... $ (5,822) ========== NET LOSS PER COMMON AND COMMON EQUIVALENT SHARE ......................................................... $ (0.17) ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 34,746 POST PREFERRED SECURITIES DEBT OFFERING AND 1996 OFFERING ACQUISITIONS ADJUSTMENTS --------------------------- ----------------- REVENUES: Station broadcast revenues, net of agency commissions ......... $ 219,701 Revenues realized from station barter arrangements ............ 19,870 ---------- Total revenues ............................................. 239,571 ---------- OPERATING EXPENSES: Program and production ....................................... 46,760 Selling, general and administrative ........................... 51,634 Expenses realized from station barter arrangements ............ 16,303 Amortization of program contract costs and net realizable value adjustments ................................................... 30,918 Amortization of deferred compensation ........................ 233 Depreciation and amortization of property and equipment ...... 8,340 Amortization of acquired intangible broadcasting assets, non- compete and consulting agreements and other assets ............ 37,480 $ 225 (w) ---------- ------------ Total operating expenses .................................... 191,668 225 ---------- ------------ Broadcast operating income (loss) ........................... 47,903 (225) ---------- ------------ OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense ............ (49,099) (9,000)(x) Interest income ................................................ 1,040 Subsidiary trust minority interest expense ..................... (11,625) Other income ................................................... 47 ---------- Loss before provision (benefit) for income taxes ............ (11,734) (9,225) BENEFIT FOR INCOME TAXES ....................................... (4,825) (3,690)(m) ---------- ------------ NET LOSS ...................................................... $ (6,909) $ (5,535) ========== ============ NET LOSS AVAILABLE TO COMMON STOCKHOLDERS ................................................... $ (6,909) ========== NET LOSS PER COMMON AND COMMON EQUIVALENT SHARE ......................................................... $ (0.20) ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 34,746 POST DEBT AND PREFERRED SECURITIES OFFERINGS AND 1996 ACQUISITIONS --------------------- REVENUES: Station broadcast revenues, net of agency commissions ......... $ 219,701 Revenues realized from station barter arrangements ............ 19,870 ---------- Total revenues ............................................. 239,571 ---------- OPERATING EXPENSES: Program and production ....................................... 46,760 Selling, general and administrative ........................... 51,634 Expenses realized from station barter arrangements ............ 16,303 Amortization of program contract costs and net realizable value adjustments ................................................... 30,918 Amortization of deferred compensation ........................ 233 Depreciation and amortization of property and equipment ...... 8,340 Amortization of acquired intangible broadcasting assets, non- compete and consulting agreements and other assets ............ 37,705 ---------- Total operating expenses .................................... 191,893 ---------- Broadcast operating income (loss) ........................... 47,678 ---------- OTHER INCOME (EXPENSE): Interest and amortization of debt discount expense ............ (58,099) Interest income ................................................ 1,040 Subsidiary trust minority interest expense ..................... (11,625) Other income ................................................... 47 ---------- Loss before provision (benefit) for income taxes ............ (20,959) BENEFIT FOR INCOME TAXES ....................................... (8,515) ---------- NET LOSS ...................................................... $ (12,444) ========== NET LOSS AVAILABLE TO COMMON STOCKHOLDERS ................................................... $ (12,444) ========== NET LOSS PER COMMON AND COMMON EQUIVALENT SHARE ......................................................... $ (0.36) ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 34,746
(Continued on following page) Page 6 of 10 SINCLAIR BROADCAST GROUP, INC. NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (DOLLARS IN THOUSANDS) (a) The Flint T.V., Inc. ("Flint-TV") column reflects the results of operations for WSMH for the period from January 1, 1996 to February 28, 1996, the date the Flint Acquisition was consummated. (b) The Superior Communications Group, Inc. column reflects the results of operations for Superior for the period from January 1, 1996 to May 7, 1996, the date the Superior Acquisition was consummated. (c) The KSMO column reflects the results of operations for the period from January 1, 1996 to June 30, 1996 as the transaction was consummated in July 1996. (d) The WSTR column reflects the results of operations for the period from January 1, 1996 to July 31, 1996 as the transaction was consummated in August 1996. (e) The River City column reflects the results of operations for River City (including KRRT, Inc.) for the period from January 1, 1996 to May 31, 1996, the date the River City Acquisition was consummated. The WSYX column removes the results of WSYX from the results of River City for the period. (f) The WYZZ column reflects the results of operations for the period from January 1, 1996 to June 30, 1996 as the purchase transaction was consummated in July 1996. (g) To adjust River City operating expenses for non-recurring LMA payments made to KRRT, Inc. for KRRT, Inc. debt service and to adjust River City and Superior Communications operating expenses for employment contracts and other corporate overhead expenses not assumed at the time of the 1996 Acquisitions. (h) To record compensation expense related to options granted under the Long-Term Incentive Plan: YEAR ENDED DECEMBER 31, 1996 ------------- Compensation expense related to the Long-Term Incentive Plan on a pro forma basis .............................. $ 933 Less: Compensation expense recorded by the Company re- lated to the Long-Term Incentive Plan (739) ------ $ 194 ====== - ---------- (i) To record depreciation expense related to acquired tangible assets and eliminate depreciation expense recorded by Flint-TV, Superior, KSMO, WSTR, River City(e) and WYZZ from the period of January 1, 1996 through date of acquisition. Tangible assets are to be depreciated over lives ranging from 5 to 29.5 years, calculated as follows:
YEAR ENDED DECEMBER 31, 1996 --------------------------------- FLINT-TV SUPERIOR KSMO ---------- ---------- ----------- Depreciation expense on acquired tangible assets ... $ 32 $ 315 $ 240 Less: Depreciation expense recorded by Flint-TV, Superior, KSMO, WSTR, River City(e) and WYZZ (4) (373) (374) ----- ------ ------- Pro forma adjustment ................................. $ 28 $ (58) $ (134) ===== ====== ======= WSTR RIVER CITY WYZZ TOTAL --------- ------------ ----------- ----------- Depreciation expense on acquired tangible assets ... $ 507 $ 3,965 $ 159 $ 5,218 Less: Depreciation expense recorded by Flint-TV, Superior, KSMO, WSTR, River City(e) and WYZZ (284) (5,120) (6) (6,161) ------- --------- ------ --------- Pro forma adjustment ................................. $ 223 $ (1,155) $ 153 $ (943) ======= ========= ====== =========
- ---------- (j) To record amortization expense related to acquired intangible assets and deferred financing costs and eliminate amortization expense recorded by Flint-TV, Superior, KSMO, WSTR, River City(e) and WYZZ from the period of January 1, 1996 through date of acquisition. Intangible assets are to be amortized over lives ranging from 1 to 40 years, calculated as follows:
YEAR ENDED DECEMBER 31, 1996 ----------------------------- FLINT-TV SUPERIOR KSMO ---------- ---------- ------- Amortization expense on acquired intangible assets ... $ 167 $ 827 $ 180 Deferred financing costs .............................. Less: Amortization expense recorded by Flint-TV, Su- perior, KSMO, WSTR, River City(e) and WYZZ . -- (529) -- ------ ------- ------ Pro forma adjustment ................................. $ 167 $ 298 $ 180 ====== ======= ====== WSTR RIVER CITY WYZZ TOTAL ------- ------------ ---------- ------------ Amortization expense on acquired intangible assets ... $ 285 $ 12,060 $ 99 $ 13,618 Deferred financing costs .............................. 1,429 1,429 Less: Amortization expense recorded by Flint-TV, Su- perior, KSMO, WSTR, River City(e) and WYZZ . (39) (10,442) (3) (11,013) ----- ---------- ----- ---------- Pro forma adjustment ................................. $ 246 $ 3,047 $ 96 $ 4,034 ===== ========== ===== ==========
Page 7 of 10 (k) To record interest expense for the year ended December 31, 1996 on acquisition financing relating to Superior of $59,850 (under the Bank Credit Agreement at 8.0% for four months), KSMO and WSTR of $10,425 and $7,881, respectively (both under the Bank Credit Agreement at 8.0% for six months), River City (including KRRT) of $868,300 (under the Bank Credit Agreement at 8.0% for five months) and of $851 for hedging agreements related to the River City financing and WYZZ of $20,194 (under the Bank Credit Agreement at 8.0% for six months) and eliminate interest expense recorded. No interest expense has been recorded for Flint-TV as it has been assumed that the proceeds from the 1995 Notes were used to purchase Flint-TV.
YEAR ENDED DECEMBER 31, 1996 ------------------------------------------------------------------------- SUPERIOR KSMO WSTR RIVER CITY WYZZ TOTAL ----------- --------- ----------- ------------ ----------- -------------- Interest expense adjustment as noted above ...... $ (1,596) $ (417) $ (315) $ (29,032) $ (808) $ (32,168) Less: Interest expense recorded by, Superior, KSMO, WSTR, River City (e) and WYZZ .................. 457 823 1,127 12,352 -- 14,759 --------- ------- ------- --------- ------- ---------- Pro forma adjustment ........................... $ (1,139) $ 406 $ 812 $ (16,680) $ (808) $ (17,409) ========= ======= ======= ========= ======= ==========
(l) To eliminate interest income for the year ended December 31, 1996 on public debt proceeds relating to Flint-TV, KSMO and WSTR and WYZZ of $34,400 (with a commercial bank at 5.7% for two months), $10,425 and $7,881 (both with a commercial bank at 5.7% for six months) and $20,194 (with a commercial bank at 5.7% for six months), respectively due to assumed utilization of excess cash for those acquisitions.
YEAR ENDED DECEMBER 31, 1996 ------------------------------------------------------------------- FLINT-TV KSMO WSTR RIVER CITY WYZZ TOTAL ---------- --------- --------- ------------ --------- ------------- Interest income adjustment as noted above ...... $ (327) $ (297) $ (226) $ -- $ (576) $ (1,426) Less: Interest income recorded by Flint-TV, KSMO, WSTR, River City(e) and WYZZ .................. -- -- (15) (195) -- (210) ------- ------- ------- ------- ------- --------- Pro forma adjustment ........................... $ (327) $ (297) $ (241) $ (195) $ (576) $ (1,636) ======= ======= ======= ======= ======= =========
(m) To record tax provision (benefit) for the 1996 Acquisitions, the Preferred Securities Offering and the Debt Offering adjustments at the applicable statutory tax rates. (n) Weighted average shares outstanding on a pro forma basis assumes that the 1,150,000 shares of Series B Convertible Preferred Stock were converted to 4,181,818 shares of $.01 par value Class A Common Stock and the Incentive Stock Options and Long-Term Incentive Plan Options were outstanding as of the beginning of the period. (o) To record amortization expense on other assets for one year ($6 million over 12 years). (p) To record the net interest expense reduction for 1996 related to application of the Preferred Securities Offering proceeds to the outstanding balance under the revolving credit facility offset by an increase in commitment fees for the available but unused portion of the revolving credit facility for the year ended December 31, 1996. Interest on adjusted borrowing on term loans .................................... $ 12,600 Commitment fee on available but unused borrowings of $250,000 of revolving credit facility at 1/2 of 1% for 12 months ............................................. (1,250) Commitment fee on available borrowings recorded by the Company .................. 470 -------- Pro forma adjustment ............................................................ $ 11,820 ========
(q) To record subsidiary trust minority interest expense for the year ended December 31, 1996 ($200 million aggregate Liquidation Value of Preferred Securities at a distribution rate of 11.625%). (r) To record amortization expense on other assets for one year ($4.5 million over 10 years). (s) To record interest expense on the Notes for one year ($200 million at 9%) (t) To record amortization expense on other assets for six months ($6 million over 12 years). Amortization expense on other assets ............... $ 250 Amortization expense recorded by the Company ...... (162) ------ Pro forma adjustment .............................. $ 88 ======
Page 8 of 10 (u) To record the net interest expense reduction for 1997 related to application of the Preferred Securities Offering proceeds to the outstanding balance under the revolving credit facility offset by an increase in commitment fees for the available but unused portion of the revolving credit facility for the quarter ended June 30, 1997. Interest on adjusted borrowing on term loans .................................... $3,235 Commitment fee on available but unused borrowings of $250,000 of revolving credit facility at 1/2 of 1% for six months .......................................... (625) Commitment fee on available borrowings recorded by the Company .................. 284 ------ Pro forma adjustment ............................................................ $2,894 ======
(v) To record subsidiary trust minority interest expense for the quarter ended June 30, 1997 ($200 million aggregate Liquidation Value of Preferred Securities at a distribution rate of 11.625%). Subsidiary trust minority interest expense for six months ........................ $ (11,625) Subsidiary trust minority interest expense made by the Company during the quarter 7,007 --------- Pro forma adjustment ............................................................... $ (4,618) =========
(w) To record amortization expense on other assets for six months ($4.5 million over 10 years). (x) To record interest expense on the Notes for six months ($200 million at 9%). Page 9 of 10 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 ------------------------------------ David B. Amy Chief Financial Officer/ Principal Accounting Officer Dated: August 13, 1997 Page 10 of 10 -----END PRIVACY-ENHANCED MESSAGE-----