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