================================================================================
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)
================================================================================
<PAGE>
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
<PAGE>
SINCLAIR BROADCAST GROUP, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
POST DEBT
CONSOLIDATED DEBT OFFERING OFFERING
HISTORICAL ADJUSTMENTS(A) ADJUSTMENTS
-------------- ---------------- ------------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C>
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
========== ============= ==========
</TABLE>
(Continued on following page)
Page 3 of 10
<PAGE>
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
<PAGE>
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)
<TABLE>
<CAPTION>
SUPERIOR
CONSOLIDATED FLINT COMMUNICATIONS
HISTORICAL TV, INC.(A) GROUP, INC.(B) KSMO(C) WSTR(D)
-------------- ------------- ---------------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
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
==========
<PAGE>
<CAPTION>
RIVER CITY(E) 1996 POST
---------------------------- ACQUISITIONS 1996
RIVER CITY WSYX WYZZ(F) ADJUSTMENTS ACQUISITIONS
------------ --------------- --------- ------------------ --------------
<S> <C> <C> <C> <C> <C>
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)
=============
<PAGE>
<CAPTION>
PREFERRED SECURITIES POST PREFERRED SECURITIES DEBT
OFFERING OFFERING AND 1996 OFFERING
ADJUSTMENTS ACQUISITIONS ADJUSTMENTS
---------------------- --------------------------- --------------------
<S> <C> <C> <C>
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)
=============
<PAGE>
<CAPTION>
POST DEBT AND
PREFERRED SECURITIES
OFFERINGS AND 1996
ACQUISITIONS
---------------------
<S> <C>
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
===========
</TABLE>
(Continued on following page)
Page 5 of 10
<PAGE>
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)
<TABLE>
<CAPTION>
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
<PAGE>
<CAPTION>
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
<PAGE>
<CAPTION>
POST DEBT AND
PREFERRED SECURITIES
OFFERINGS AND 1996
ACQUISITIONS
---------------------
REVENUES:
<S> <C>
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
</TABLE>
(Continued on following page)
Page 6 of 10
<PAGE>
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:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
---------------------------------
FLINT-TV SUPERIOR KSMO
---------- ---------- -----------
<S> <C> <C> <C>
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)
===== ====== =======
<CAPTION>
WSTR RIVER CITY WYZZ TOTAL
--------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
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)
======= ========= ====== =========
</TABLE>
- ----------
(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:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------------------
FLINT-TV SUPERIOR KSMO
---------- ---------- -------
<S> <C> <C> <C>
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
====== ======= ======
<CAPTION>
WSTR RIVER CITY WYZZ TOTAL
------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
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
===== ========== ===== ==========
</TABLE>
Page 7 of 10
<PAGE>
(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.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-------------------------------------------------------------------------
SUPERIOR KSMO WSTR RIVER CITY WYZZ TOTAL
----------- --------- ----------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
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)
========= ======= ======= ========= ======= ==========
</TABLE>
(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.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-------------------------------------------------------------------
FLINT-TV KSMO WSTR RIVER CITY WYZZ TOTAL
---------- --------- --------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C>
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)
======= ======= ======= ======= ======= =========
</TABLE>
(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.
<TABLE>
<S> <C>
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
========
</TABLE>
(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).
<TABLE>
<S> <C>
Amortization expense on other assets ............... $ 250
Amortization expense recorded by the Company ...... (162)
------
Pro forma adjustment .............................. $ 88
======
</TABLE>
Page 8 of 10
<PAGE>
(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.
<TABLE>
<S> <C>
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
======
</TABLE>
(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%).
<TABLE>
<S> <C>
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)
=========
</TABLE>
(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
<PAGE>
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
