UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[X] SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the
transition period from ____________ to ____________.
Commission File Number : 333-26427-01
KDSM, INC.
(Exact name of Registrant as specified in its charter)
---------------------------
MARYLAND 52-1975792
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10706 BEAVER DAM ROAD
COCKEYSVILLE, MARYLAND 21093
(Address of principal executive offices)
(410) 568-1500
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal
year-if changed since last report)
SINCLAIR CAPITAL
(Exact name of Registrant as specified in its charter)
---------------------------
DELAWARE 52-2026076
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10706 BEAVER DAM ROAD
COCKEYSVILLE, MARYLAND 21093
(Address of principal executive offices)
(410) 568-1500
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal
year-if changed since last report)
1
<PAGE>
---------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No[ ]
As of August 13, 1999, there were 100 shares of Common Stock, $.01 par value of
KDSM, Inc., issued and outstanding and 2,000,000 shares of $200 million
aggregate liquidation value of 115/8% High Yield Trust Offered Preferred
Securities of Sinclair Capital, a subsidiary trust of KDSM, Inc., issued and
outstanding.
The registrants each meet the conditions for reduced disclosure set forth in
General Instruction H (1)(a) and (b) of Form 10-Q and are therefore filing this
form with the reduced disclosure format.
2
<PAGE>
KDSM, INC. AND SUBSIDIARIES
Form 10-Q
For the Six Months Ended June 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1998 and
June 30, 1999.................................................................. 4
Consolidated Statements of Operations for the Three Months and Six Months
Ended June 30, 1998 and 1999................................................... 5
Consolidated Statement of Stockholder's Equity for the Six Months
Ended June 30, 1999............................................................ 6
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1998 and 1999................................................... 7
Notes to Unaudited Consolidated Financial Statements.................................. 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................................... 9
Item 3. Quantitative and Qualitative Disclosure About Market Risk..................... 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................................... 12
Signature............................................................................. 13
</TABLE>
3
<PAGE>
KDSM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
--------------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash ......................................................... $ 7 $ 7
Accounts receivable, net of allowance for doubtful accounts .. 2,107 1,605
Dividends receivable from parent ............................. 1,085 1,085
Current portion of program contract costs .................... 910 506
Prepaid expenses and other current assets .................... 25 17
Deferred barter costs ........................................ 28 24
-------- --------
Total current assets ....................... 4,162 3,244
PROPERTY AND EQUIPMENT, net ........................................... 3,062 2,930
PROGRAM CONTRACT COSTS, less current portion .......................... 534 312
INVESTMENT IN PARENT PREFERRED SECURITIES ............................. 206,200 206,200
DUE FROM PARENT ....................................................... 6,652 9,029
OTHER ASSETS .......................................................... 6,532 6,212
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net .......................... 32,377 31,861
-------- --------
Total Assets ............................... $259,519 $259,788
======== ========
LIABILITIES AND STOCKHOLDERS'S EQUITY
CURRENT LIABILITIES:
Accounts payable ............................................. $ 17 $ 14
Accrued liabilities .......................................... 386 385
Current portion of program contracts payable ................. 1,920 1,090
Deferred barter revenues ..................................... 102 58
Subsidiary trust minority interest expense payable ........... 969 969
-------- --------
Total current liabilities .................. 3,394 2,516
PROGRAM CONTRACTS PAYABLE ............................................. 801 656
DEFERRED STATE TAXES .................................................. 846 1,127
-------- --------
Total liabilities .......................... 5,041 4,299
-------- -------
COMMITMENTS AND CONTINGENCIES
COMPANY OBLIGATED MANDATORILY REDEEMABLE SECURITIES OF SUBSIDIARY
TRUST HOLDING SOLELY KDSM SENIOR DEBENTURES ..................... 200,000 200,000
-------- -------
STOCKHOLDER'S EQUITY:
Common stock, $.01 par value, 1,000 shares authorized and 100
shares issued and outstanding ........................... -- --
Additional paid-in capital ................................... 51,149 51,149
Retained earnings ............................................ 3,329 4,340
-------- --------
Total stockholder's equity ................. 54,478 55,489
-------- --------
Total Liabilities and Stockholder's Equity . $259,519 $259,788
======== ========
</TABLE>
The accompanying notes are an integral part of
these unaudited consolidated statements.
4
<PAGE>
KDSM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Station broadcast revenues, net of agency commissions... 1,938 $ 1,920 $ 4,071 $ 4,113
Revenues realized from station barter arrangements...... 128 175 274 296
-------- -------- -------- --------
Total revenues ............................. 2,066 2,095 4,345 4,409
-------- -------- -------- --------
OPERATING EXPENSES:
Program and production ................................ 287 308 580 637
Selling, general and administrative ................... 607 569 1,341 1,327
Expenses realized from station barter arrangements..... 110 139 210 211
Amortization of program contract costs and net
realizable value adjustments ...................... 303 164 854 605
Depreciation and amortization of property and
equipment........................................... 94 98 186 197
Amortization of acquired intangible broadcasting
assets and other asse............................... 979 418 1,422 836
-------- -------- -------- --------
Total operating expenses ..... 2,380 1,696 4,593 3,813
-------- -------- -------- --------
Broadcast operating income ... (314) 399 (248) 596
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Dividend and interest income .................. 6,605 6,618 13,216 13,236
Subsidiary trust minority interest expense...... (5,813) (5,813) (11,625) (11,625)
-------- -------- -------- --------
Income before allocation of consolidated
federal income taxes and state income taxes.... 478 1,204 1,343 2,207
ALLOCATION OF CONSOLIDATED FEDERAL INCOME TAXES ............... 164 424 461 915
STATE INCOME TAXES ............................................ 38 167 106 281
-------- -------- -------- --------
NET INCOME .................................................... $ 276 $ 613 $ 776 $ 1,011
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these
unaudited consolidated statements.
5
<PAGE>
KDSM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(in thousands)
<TABLE>
<CAPTION>
Additional Total
Common Paid-In Retained Stockholder's
Stock Capital Earnings Equity
-------- -------- --------- -------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1998 ........ $ - $ 51,149 $ 3,329 $ 54,478
Net income ............... - - 1,011 1,011
---------- ---------- ------------- -----------
BALANCE, June 30, 1999 ............ $ - $ 51,149 $ 4,340 $ 55,489
========== ========= ============= ===========
</TABLE>
The accompanying notes are an integral part of this
unaudited consolidated statement.
6
<PAGE>
KDSM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1999
----- -----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................... $ 776 $ 1,011
Adjustments to reconcile net income to net cash flows from
operating activities -..............................
Depreciation and amortization of property and ... 186 197
equipment
Amortization of acquired intangible broadcasting
assets and other assets .......................... 1,422 836
Amortization of program contract costs and net
realizable value adjustments....................... 854 605
Changes in assets and liabilities, net of effects of
acquisitions and dispositions-
Decrease in accounts receivable, net ............ 489 502
Decrease in prepaid expenses and other current
assets.............................................. 21 8
Increase (decrease) in accounts payable and
accrued liabilities ............................ 48 (4)
Increase in state deferred taxes ..................... 106 281
Net effect of change in deferred barter revenues
and deferred barter costs ................. 2 (40)
Payments on program contracts payable .................... (908) (953)
------- -------
Net cash flows from operating activities ................. 2,996 2,443
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment .................... (89) (66)
------- -------
Net cash flows used in investing activities .............. (89) (66)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in due from parent for securities
(2,914) (2,377)
------- -------
Net cash flows used in financing activities ..... (2,914) (2,377)
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS ............................................ (7) --
CASH AND CASH EQUIVALENTS, beginning of period .................... 11 7
------- -------
CASH AND CASH EQUIVALENTS, end of period .......................... $ 4 $ 7
======= ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Parent preferred stock dividends ......................... $13,016 $ 13,016
======= ========
Subsidiary trust minority interest payments .............. $11,625 $ 11,625
======= ========
</TABLE>
The accompanying notes are an integral part of these
unaudited consolidated statements.
7
<PAGE>
KDSM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of KDSM, Inc., Sinclair Capital (a subsidiary trust), and KDSM Licensee Inc.,
which are collectively referred to hereafter as "the Company or KDSM." KDSM,
Inc. is a television broadcaster serving the Des Moines, Iowa area through
station KDSM on Channel 17, a Fox affiliate. KDSM, Inc. is a wholly owned
subsidiary of Sinclair Broadcast Group, Inc. (the "Parent" or "Sinclair"). In
addition, KDSM, Inc. owns all of the issued and outstanding common stock of KDSM
Licensee, Inc. and all of the common trust interests of Sinclair Capital. All
intercompany amounts are eliminated in consolidation.
INTERIM FINANCIAL STATEMENTS
The consolidated financial statements for the six months ended June 30,
1999 are unaudited, but in the opinion of management, such financial statements
have been presented on the same basis as the audited consolidated financial
statements as of December 31, 1998 and for the year then ended and include all
adjustments, consisting only of normal recurring adjustments necessary for a
fair presentation of the financial position and results of operations, and cash
flows for these periods.
As permitted under the applicable rules and regulations of the
Securities and Exchange Commission, these financial statements do not include
all disclosures normally included with audited consolidated financial
statements, and, accordingly, should be read in conjunction with the December
31, 1998 consolidated balance sheet and related statements of operations and
cash flows for the year ended December 31, 1999 and the related notes thereto.
The results of operations presented in the accompanying financial statements are
not necessarily representative of operations for an entire year.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior period financial
statements to conform with the current period presentation.
2. CONTINGENCIES AND OTHER COMMITMENTS:
Lawsuits and claims are filed against the Company from time to time in the
ordinary course of business. These actions are in various preliminary stages,
and no judgments or decisions have been rendered by hearing boards or courts.
Management, after reviewing developments to date with legal counsel, is of the
opinion that the outcome of such matters will not have a material adverse effect
on the Company's financial position or results of operations.
3. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF TRUST:
In March 1997, the Company completed an offering of $200 million aggregate
liquidation value of 115/8% High Yield Trust Offered Preferred Securities (the
"HYTOPS") of Sinclair Capital, a subsidiary trust of the Company. The HYTOPS
were issued March 12, 1997, mature March 15, 2009, are mandatorily redeemable at
maturity, and provide for quarterly distributions to be paid in arrears
beginning June 15, 1997. The Company utilized the proceeds of the offering
combined with other capital contributions to acquire $206.2 million of 125/8%
Series C Preferred Stock (the "Parent Preferred Securities") of Sinclair.
4. PARENT PREFERRED SECURITIES:
In March 1997, the Company utilized the proceeds of the HYTOPS combined with
other capital contributions to acquire $206.2 million of 125/8% Parent Preferred
Securities, issued by Sinclair. The Parent Preferred Securities were issued
March 12, 1997, mature March 15, 2009, are mandatorily redeemable at maturity,
and provide for quarterly distributions to be paid in arrears beginning June 15,
1997.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
unaudited financial statements of KDSM, Inc. and related notes included
elsewhere in this Quarterly report and the audited financial statements and
Management's Discussion and Analysis contained in the Company's Form 10-K/A, for
the fiscal year ended December 31, 1998.
The matters discussed below include forward-looking statements. Such statements
are subject to a number of risks and uncertainties, such as the impact of
changes in national and regional economies, pricing fluctuations in local and
national advertising, availability of capital and volatility in programming
costs. Additional risk factors regarding the Company are set forth in the
Company's registration statement on Form S-4 filed with the Securities and
Exchange Commission on May 2, 1997.
The following table sets forth certain operating data for the three and six
months ended June 30, 1998 and 1999:
OPERATING DATA (dollars in thousands):
- -------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net broadcast revenues (a) ................... $ 1,938 $ 1,920 $ 4,071 $ 4,113
Barter revenues .............................. 128 175 274 296
-------- -------- -------- -------
Total revenues ............................... 2,066 2,095 4,345 4,409
-------- -------- -------- -------
Operating Costs (b) .......................... 894 877 1,921 1,964
Expenses from barter arrangements ............ 110 139 210 211
Depreciation and amortization ................ 1,376 680 2,462 1,638
-------- -------- -------- -------
Broadcast operating income (loss) ............ (314) 399 (248) 596
Dividend and interest income (d) ............. 6,605 6,618 13,216 13,236
Subsidiary trust minority interest expense (e) (5,813) (5,813) (11,625) (11,625)
-------- -------- -------- -------
Net income before income taxes ............... 478 1,204 1,343 2,207
Income taxes ................................. 202 591 567 1,196
-------- -------- -------- -------
Net income ................................... $ 276 $ 613 $ 776 $ 1,011
======== ======== ======== =======
Broadcast cash flow (BCF) (f) ................ $ 717 $ 718 $ 1,426 $ 1,407
BCF margin (g) ...................... 37.0% 37.4% 35.0% 34.2%
Adjusted EBITDA (h) ................. $ 670 $ 655 $ 1,306 $ 1,281
Adjusted EBITDA margin (g) .......... 34.6% 34.1% 32.1% 31.1%
Program contract payments ........... $ 392 $ 424 $ 908 $ 953
Corporate management fees ........... 47 63 120 126
</TABLE>
- --------------------------------------------------------------------------------
a) "Net broadcast revenue" is defined as broadcast revenue net of agency
commissions.
b) "Operating costs" include program and production expenses, selling, general
and administrative expenses and stock-based compensation.
c) Depreciation and amortization includes amortization of program contract
costs and net realizable value adjustments, depreciation and amortization
of property and equipment, and amortization of acquired intangible
broadcasting assets and other assets including amortization of deferred
financing costs.
d) Dividend and interest income primarily results from dividends on the Parent
Preferred Securities.
e) Subsidiary trust minority interest expense represents distributions on the
HYTOPS.
f) "Broadcast cash flow" is defined as broadcast operating income plus
corporate management fees, depreciation and amortization (including film
amortization), less cash payments for program rights. Cash program payments
represent cash payments made for current programs payable and do
9
<PAGE>
not necessarily correspond to program usage. The Company has presented
broadcast cash flow data, which the Company believes are comparable to the
data provided by other companies in the industry, because such data are
commonly used as a measure of performance for broadcast companies. However,
broadcast cash flow does not purport to represent cash provided by
operating activities as reflected in the Company's consolidated statements
of cash flows, is not a measure of financial performance under generally
accepted accounting principles and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance with
generally accepted accounting principles.
g) "Broadcast cash flow margin" is defined as broadcast cash flow divided by
net broadcast revenues. "Adjusted EBITDA margin" is defined as Adjusted
EBITDA divided by net broadcast revenues.
h) "Adjusted EBITDA" is defined as broadcast cash flow less corporate expenses
and is a commonly used measure of performance for broadcast companies.
Adjusted EBITDA does not purport to represent cash provided by operating
activities as reflected in the Company's consolidated statements of cash
flows, is not a measure of financial performance under generally accepted
accounting principles and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles.
Net broadcast revenues for the six months ended June 30, 1999 remained
consistent compared to the six months ended June 30, 1998.
Operating costs increased to $2.0 million for the six months ended June 30, 1999
from $1.9 million for the six months ended June 30, 1998. or 5.3%. The increase
in operating expenses for the six months ended June 30, 1999 as compared to the
six months ended June 30, 1998 was primarily related to an increase in promotion
and programming costs.
Depreciation and amortization decreased to $1.6 million for the six months ended
June 30, 1999 from $2.5 million for the six months ended June 30, 1998, or
36.0%. The decrease in depreciation and amortization for the six months ended
June 30, 1999 as compared to the six months ended June 30, 1998 was primarily
due to the write-off of deferred financing costs in May 1998.
Broadcast operating income for the six months ended June 30, 1999 increased to
$596,000 from a loss of $248,000 for the six months ended June 30, 1998, or
339.9%. The increase in broadcast operating income for the six months ended June
30, 1999 was primarily attributable to the decrease in depreciation and
amortization as noted above.
Income taxes increased to $591,000 for the three months ended June 30, 1999 from
$202,000 for the three months ended June 30, 1998. The increase in the income
taxes for the three months ended June 30, 1999 as compared to the three months
ended June 30, 1998 is attributable to deferred tax liabilities associated with
the HYTOPS. The Company's effective tax rate for the six months ended June 30,
1999 and June 30, 1998 was 54.2% and 42.2%, respectively. The increase in the
Company's effective tax rate primarily resulted from the deferred tax liability
associated with the HYTOPS.
Net income increased to $1.0 million for the six months ended June 30, 1999 from
$776,000 for the six months ended June 30, 1998. The increase in net income for
the six months ended June 30, 1999 as compared to the six months ended June 30,
1998 primarily resulted from a decrease in depreciation and amortization as
noted above.
Broadcast cash flow for the six months ended June 30, 1999 remained consistent
compared to the six months ended June 30, 1998
The Company's broadcast cash flow margin decreased to 34.2% for the six months
ended June 30, 1999 from 35.0% for the six months ended June 30, 1998. The
decrease in broadcast cash flow margin for the six months ended June 30, 1999 as
compared to the six months ended June 30, 1998 resulted primarily from increases
in program contract payments resulting from the addition of syndicated program
contracts during the third and fourth quarters of 1998. Adjusted EBITDA for the
six months ended June 30, 1999 remained consistent compared to the six months
ended June 30, 1998.
The Company's adjusted EBITDA margin decreased to 31.1% for the six months ended
June 30, 1999 from 32.1% for the six months ended June 30, 1998. The decrease in
adjusted EBITDA margin for the six months ended June 30, 1999 as compared to the
six months ended June 30, 1998 resulted primarily from increases in program
contract payments resulting from the addition of syndicated program contracts
during the third and fourth quarters of 1998.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1999, the Company had cash balances of approximately $7 million
and working capital of approximately $728,000. The Company's primary source of
liquidity is cash from operations which management believes to be sufficient to
meet operating cash requirements. Cash requirements or excess cash from
operations are funded by or deposited into Sinclair's centralized banking system
utilized by all of its wholly owned subsidiaries.
The Company does not anticipate capital expenditures in the coming year to
exceed historical capital expenditures, which were approximately $235,000 in
1998. If the Company is required to make capital expenditures to keep up with
emerging technologies, management believes it will be able to fund such
expenditures from its cash flow and from the proceeds of indebtedness or
financing that is allowed to be incurred or obtained under the Company's Senior
Debenture Indenture (provided that the Company's debt to Adjusted EBITDA ratio
is 4 to 1 or less) or from capital contributions from Sinclair to the extent
permitted under Sinclair's debt instruments. Under these instruments, Sinclair
would currently be able to make capital contributions to the Company in an
amount the Company believes is sufficient to cover such costs if it chose to do
so.
YEAR 2000 COMPLIANCE
The Company has commenced a process to assure Year 2000 compliance of all
hardware, software, broadcast equipment and ancillary equipment that are date
dependent. The process involves four phases:
Phase I - Inventory and Data Collection. This phase involves an identification
of all items that are date dependent. The Company commenced this phase in the
third quarter of 1998, and Management estimates it has completed approximately
50% of this phase as of the date hereof. The Company expects to complete this
phase by the end of the third quarter of 1999.
Phase II - Compliance Requests. This phase involves requests to information
technology systems vendors for verification that the systems identified in Phase
I are Year 2000 compliant. The Company will identify and begin to replace items
that cannot be updated or certified as compliant. Sinclair has completed the
compliance request phase of its plan as of the date hereof. In addition, the
Company has verified that its accounting, traffic, payroll, and local and wide
area network hardware and software systems are compliant. In addition, the
Company is currently in the process of ascertaining that all of its personal
computers and PC applications are compliant. The Company is currently reviewing
its news-room systems, building control systems, security systems and other
miscellaneous systems. The Company expects to complete this phase by the end of
the third quarter of 1999.
Phase III - Test, Fix and Verify. This phase involves testing all items that are
date dependent and upgrading all non-compliant devices. The Company expects to
complete this phase during the third quarter of 1999.
Phase IV - Final Testing, New Item Compliance. This phase involves review of all
inventories for compliance and retesting as necessary. During this phase, all
new equipment will be tested for compliance. The Company expects to complete
this phase by the end of the third quarter of 1999.
The Company has developed a contingency/emergency plan to address Year 2000
worst case scenarios. The contingency plan includes, but is not limited to,
addressing (i) regional power facilities, (ii) interruption of satellite
delivered programming, (iii) replacement or repair of equipment not discovered
or fixed during the year 2000 compliance process and (iv) local security
measures that may become necessary relating to the Company's properties. The
contingency plan involves obtaining alternative sources if existing sources of
these goods and services are not available. Although the contingency plan is
designed to reduce the impact of disruptions from these sources, there is no
assurance that the plan will avoid material disruptions in the event one or more
of these events occur.
To date, the Company believes that its major systems are Year 2000 compliant.
This substantial compliance has been achieved without the need to acquire new
hardware, software or systems other than in the ordinary course of replacing
such systems. The Company is not aware of any non-compliance that would be
material to repair or
11
<PAGE>
replace or that would have a material effect on the Company's business if
compliance were not achieved. The Company does not believe that non-compliance
in any systems that have not yet been reviewed would result in material costs or
disruption. Neither is the Company aware of any non-compliance by its customers
or suppliers that would have a material impact on Sinclair's business.
Nevertheless, there can be no assurance that unanticipated non-compliance will
not occur, and such non-compliance could require material costs to repair or
could cause material disruptions if not repaired.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK
NOT APPLICABLE
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
NONE.
12
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-Q to be signed on its behalf
by the undersigned thereunto duly authorized in the city of Baltimore, Maryland
on the 15th day of August.
KDSM, INC.
by: /s/ David B. Amy
-----------------
David B. Amy
Chief Financial Officer
Principal Accounting Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 7
<SECURITIES> 0
<RECEIVABLES> 1,617
<ALLOWANCES> 12
<INVENTORY> 0
<CURRENT-ASSETS> 3,244
<PP&E> 4,052
<DEPRECIATION> 1,122
<TOTAL-ASSETS> 259,788
<CURRENT-LIABILITIES> 2,516
<BONDS> 0
200,000
0
<COMMON> 0
<OTHER-SE> 55,489
<TOTAL-LIABILITY-AND-EQUITY> 259,788
<SALES> 0
<TOTAL-REVENUES> 4,409
<CGS> 0
<TOTAL-COSTS> 3,813
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,207
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,011
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,011
<EPS-BASIC> 10,011<F1>
<EPS-DILUTED> 10,011<F1>
<FN>
<F1> This information has been prepared in accordance with SFAS No.128, Earnings
Per Share. The basic and diluted EPS calculations have been entered in
place of primary and diluted, respectively.
</FN>
</TABLE>
