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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DECEMBER 2, 1997
-----------------------
(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 5. OTHER EVENTS
As previously reported, Sinclair Broadcast Group, Inc. (the "Company")
entered into acquisition agreements on July 16, 1997 (the "Heritage Acquisition
Agreements") with The News Corporation Limited, Heritage Media Group, Inc. and
certain subsidiaries of Heritage Media Corporation (collectively "Heritage")
pursuant to which the Company has acquired or will acquire the assets of, or the
right to program pursuant to Local Marketing Agreements ("LMAs"), six television
stations in three markets and the assets of 24 radio stations in seven markets
(the "Heritage Acquisition"). On December 3, 1997, the Company entered into an
agreement to acquire, directly or indirectly, all of the equity interests of Max
Media Properties LLC ("Max Media"), pursuant to which the Company will acquire,
or acquire the right to program pursuant to LMA's, nine television stations and
eight radio stations in eight markets (the "Max Media Acquisition"). On February
23, 1998 the Company entered into an agreement to acquire 100% of the stock of
Sullivan Broadcast Holdings, Inc. and Subsidiaries ("Sullivan"), pursuant to
which the Company will acquire or provide programming services to 13 television
stations in 11 separate markets (the "Sullivan Acquisition" and together with
the Heritage Acquisition and the Max Media Acquisition, the "Significant
Acquisitions"). The Company is filing with this Current Report on Form 8-K/A pro
forma financial information for the Company showing the effect of the pending
offering by the Company of 6,000,000 shares of Class A Common Stock pursuant to
a $1 billion shelf registration statement filed by the Company on August 22,
1997 (the "Offering") as well as basic and diluted earnings per share and basic
and diluted earnings per share available to common shareholders. The effect of
the Company's issuances of debt, common and preferred stock and trust-offered
preferred securities and its repurchase of certain notes ("the 1997
Financings"), the Heritage Acquisition, the Max Media Acquisition, the Sullivan
Acquisition were included in a Form 8-K filed March 17, 1998.
ITEM 7. PRO FORMA FINANCIAL STATEMENTS
(A) PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF SINCLAIR
The following Pro Forma Consolidated Financial Data include the unaudited
pro forma consolidated balance sheet as of December 31, 1997 (the "Pro Forma
Consolidated Balance Sheet") and the unaudited pro forma consolidated statement
of operations for the year ended December 31, 1997 (the "Pro Forma Consolidated
Statement of Operations"). The unaudited Pro Forma Consolidated Balance Sheet is
adjusted to give effect to the Significant Acquisitions and the Offering at an
assumed offering price of $57 per share and application of the net proceeds
therefrom as set forth in "Use of Proceeds" in the Prospectus filed March 17,
1998 as if they occurred on December 31, 1997. The unaudited Pro Forma
Consolidated Statement of Operations for the year ended December 31, 1997 is
adjusted to give effect to the 1997 Financings, the Significant Acquisitions and
the Offering at an assumed offering price of $57 per share and assuming the net
proceeds of the Offering will be used by the Company to repay amounts
outstanding under the Company's existing credit facility under a bank credit
agreement (the "Bank Credit Agreement") as if each occurred at the beginning of
such period. 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, 1997
and related notes thereto, the historical financial data of Heritage Media
Services, Inc. -- Broadcasting Segment, the historical financial data of Max
Media Properties LLC, and the historical financial data of Sullivan Broadcast
Holdings, Inc. and Subsidiaries all of which have been filed with the Commission
as part of (i) its annual report on Form 10-K for the year ended December 31,
1997; or (ii) its periodic report on Form 8-K filed March 17, 1998. 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.
1
<PAGE>
SINCLAIR BROADCAST GROUP, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
CONSOLIDATED
HISTORICAL
-------------
<S> <C>
ASSETS
CURRENT ASSETS:
Cash, including cash equivalents ................................ $ 139,327
Accounts receivable, net of allowance for doubtful accounts ..... 123,018
Current portion of program contract costs ....................... 46,876
Prepaid expenses and other current assets ....................... 4,673
Deferred barter costs ........................................... 3,727
Refundable income taxes ......................................... 10,581
Deferred tax asset .............................................. 2,550
----------
Total current assets .......................................... 330,752
PROGRAM CONTRACT COSTS, less current portion ..................... 40,609
LOANS TO OFFICERS AND AFFILIATES ................................. 11,088
PROPERTY AND EQUIPMENT, net ...................................... 161,714
NON-COMPETE AND CONSULTING AGREEMENTS, net........................ 200
OTHER ASSETS ..................................................... 167,895
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net ..................... 1,321,976
----------
Total Assets .................................................. $2,034,234
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ................................................ $ 5,207
Accrued liabilities ............................................. 40,532
Current portion of long-term liabilities-
Notes payable and commercial bank financing .................... 35,215
Notes and capital leases payable to affiliation ................ 3,073
Program contracts payable ...................................... 66,404
Deferred barter revenues ........................................ 4,273
----------
Total current liabilities ..................................... 154,704
LONG-TERM LIABILITIES:
Notes payable and commercial bank financing .................... 1,022,934
Notes and capital leases payable to affiliates ................. 19,500
Program contracts payable ...................................... 62,408
Deferred tax liability ......................................... 24,092
Other long-term liabilities .................................... 3,611
----------
Total liabilities ............................................. 1,287,249
----------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 3,697
----------
COMMITMENTS AND CONTINGENCIES
COMPANY OBLIGATED MANDATORILY REDEEM-
ABLE SECURITY OF SUBSIDIARY TRUST HOLDING
SOLELY KDSM SENIOR DEBENTURES ................................... 200,000
----------
STOCKHOLDERS' EQUITY:
Series B Preferred Stock, $.01 par value, 10,000,000 shares
authorized and 1,071,381 and 512,426 shares issued and
outstanding ................................................... 10
Series D Preferred Stock, $.01 par value, 3,450,000 shares
authorized 3,450,000 shares issued and outstanding ............ 35
Class A Common Stock, $.01 par value, 100,000,000 shares
authorized and 13,733,430, 15,487,816 and 23,520,379 re-
spectively, shares issued and outstanding ..................... 137
Class B Common Stock, $.01 par value, 35,000,000 shares
authorized and 25,436,432 shares issued and outstanding........ 255
Additional paid-in capital ..................................... 552,949
Additional paid-in capital - equity put options ................ 23,117
Additional paid-in capital - deferred compensation ............. (954)
Accumulated deficit ............................................ (32,261)
----------
Total stockholders' equity .................................... 543,288
----------
Total Liabilities and Stockholders' Equity .................... $2,034,234
==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNIFICANT ACQUISITIONS
-------------------------------------------------------
SULLIVAN
HERITAGE(A) MAX MEDIA(B) BROADCASTING(C)
------------------ ------------------ -----------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash, including cash equivalents ................................ $ (139,327)
Accounts receivable, net of allowance for doubtful accounts .....
Current portion of program contract costs ....................... 1,462 $ 2,325 $ 22,850
Prepaid expenses and other current assets .......................
Deferred barter costs ........................................... 578 640
Refundable income taxes .........................................
Deferred tax asset ..............................................
----------- ----------- -----------
Total current assets .......................................... (137,287) 2,965 22,850
PROGRAM CONTRACT COSTS, less current portion ..................... 1,179 2,182 23,432
LOANS TO OFFICERS AND AFFILIATES .................................
PROPERTY AND EQUIPMENT, net ...................................... 32,859 25,556 39,723
NON-COMPETE AND CONSULTING AGREEMENTS, net........................
OTHER ASSETS ..................................................... (65,500) (12,817)
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net. .................... 368,336 229,490 1,135,309
----------- ----------- ------------
Total Assets .................................................. $ 199,587 $ 247,376 $ 1,221,314
=========== =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ................................................
Accrued liabilities .............................................
Current portion of long-term liabilities-
Notes payable and commercial bank financing ....................
Notes and capital leases payable to affiliation ................
Program contracts payable ...................................... $ 1,788 $ 2,431 $ 24,944
Deferred barter revenues ........................................ 350 1,026
----------- ----------- -----------
Total current liabilities ..................................... 2,138 3,457 24,944
LONG-TERM LIABILITIES:
Notes payable and commercial bank financing .................... 196,673 (d) 242,183 (e) 900,000 (f)
Notes and capital leases payable to affiliates .................
Program contracts payable ...................................... 776 1,736 22,710
Deferred tax liability ......................................... 173,660
Other long-term liabilities ....................................
----------- ----------- ------------
Total liabilities ............................................. 199,587 247,376 1,121,314
----------- ----------- ------------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES -- -- --
----------- ----------- ------------
COMMITMENTS AND CONTINGENCIES
COMPANY OBLIGATED MANDATORILY REDEEM-
ABLE SECURITY OF SUBSIDIARY TRUST HOLDING
SOLELY KDSM SENIOR DEBENTURES ................................... -- -- --
----------- ----------- ------------
STOCKHOLDERS' EQUITY:
Series B Preferred Stock, $.01 par value, 10,000,000 shares
authorized and 1,071,381 and 512,426 shares issued and
outstanding ...................................................
Series D Preferred Stock, $.01 par value, 3,450,000 shares
authorized 3,450,000 shares issued and outstanding ............
Class A Common Stock, $.01 par value, 100,000,000 shares
authorized and 13,733,430, 15,487,816 and 23,520,379 re-
spectively, shares issued and outstanding ..................... 18
Class B Common Stock, $.01 par value, 35,000,000 shares
authorized and 25,436,432 shares issued and outstanding........
Additional paid-in capital ..................................... 99,982
Additional paid-in capital - equity put options ................
Additional paid-in capital - deferred compensation .............
Accumulated deficit ............................................
Total stockholders' equity .................................... -- -- 100,000
----------- ----------- ------------
Total Liabilities and Stockholders' Equity .................... $ 199,587 $ 247,376 $ 1,221,314
=========== =========== ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED
HISTORICAL
AND SIGNIFICANT
ACQUISITIONS
----------------
<S> <C>
ASSETS
CURRENT ASSETS:
Cash, including cash equivalents ................................ $ --
Accounts receivable, net of allowance for doubtful accounts ..... 123,018
Current portion of program contract costs ....................... 73,513
Prepaid expenses and other current assets ....................... 4,673
Deferred barter costs ........................................... 4,945
Refundable income taxes ......................................... 10,581
Deferred tax asset .............................................. 2,550
----------
Total current assets .......................................... 219,280
PROGRAM CONTRACT COSTS, less current portion ..................... 67,402
LOANS TO OFFICERS AND AFFILIATES ................................. 11,088
PROPERTY AND EQUIPMENT, net ...................................... 259,852
NON-COMPETE AND CONSULTING AGREEMENTS, net........................ 200
OTHER ASSETS ..................................................... 89,578
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net...................... 3,055,111
----------
Total Assets .................................................. $3,702,511
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ................................................ $ 5,207
Accrued liabilities ............................................. 40,532
Current portion of long-term liabilities-
Notes payable and commercial bank financing .................... 35,215
Notes and capital leases payable to affiliation ................ 3,073
Program contracts payable ...................................... 95,567
Deferred barter revenues ........................................ 5,649
----------
Total current liabilities ..................................... 185,243
LONG-TERM LIABILITIES:
Notes payable and commercial bank financing .................... 2,361,790
Notes and capital leases payable to affiliates ................. 19,500
Program contracts payable ...................................... 87,630
Deferred tax liability ......................................... 197,752
Other long-term liabilities .................................... 3,611
----------
Total liabilities ............................................. 2,855,526
----------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 3,697
----------
COMMITMENTS AND CONTINGENCIES
COMPANY OBLIGATED MANDATORILY REDEEM-
ABLE SECURITY OF SUBSIDIARY TRUST HOLDING
SOLELY KDSM SENIOR DEBENTURES ................................... 200,000
----------
STOCKHOLDERS' EQUITY:
Series B Preferred Stock, $.01 par value, 10,000,000 shares
authorized and 1,071,381 and 512,426 shares issued and
outstanding ................................................... 10
Series D Preferred Stock, $.01 par value, 3,450,000 shares
authorized 3,450,000 shares issued and outstanding ............ 35
Class A Common Stock, $.01 par value, 100,000,000 shares
authorized and 13,733,430, 15,487,816 and 23,520,379 re-
spectively, shares issued and outstanding ..................... 155
Class B Common Stock, $.01 par value, 35,000,000 shares
authorized and 25,436,432 shares issued and outstanding........ 255
Additional paid-in capital ..................................... 652,931
Additional paid-in capital - equity put options ................ 23,117
Additional paid-in capital - deferred compensation ............. (954)
Accumulated deficit ............................................ (32,261)
----------
Total stockholders' equity .................................... 643,288
----------
Total Liabilities and Stockholders' Equity .................... $3,702,511
==========
</TABLE>
2
<PAGE>
SINCLAIR BROADCAST GROUP, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
CONSOLIDATED
CONSOLIDATED HISTORICAL,
HISTORICAL SIGNIFICANT
AND SIGNIFICANT ACQUISITIONS,
ACQUISITIONS OFFERING(G) AND OFFERING
----------------- ---------------- --------------
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS:
Cash, including cash equivalents ............................................... $ -- $ --
Accounts receivable, net of allowance for doubtful accounts .................... 123,018 123,018
Current portion of program contract costs ...................................... 73,513 73,513
Prepaid expenses and other current assets ...................................... 4,673 4,673
Deferred barter costs .......................................................... 4,945 4,945
Refundable income taxes ........................................................ 10,581 10,581
Deferred tax asset ............................................................. 2,550 2,550
---------- --------- ----------
Total current assets ......................................................... 219,280 -- 219,280
PROGRAM CONTRACT COSTS, less current portion .................................... 67,402 67,402
LOANS TO OFFICERS AND AFFILIATES ................................................ 11,088 11,088
PROPERTY AND EQUIPMENT, net ..................................................... 259,852 259,852
NON-COMPETE AND CONSULTING AGREEMENTS, net ...................................... 200 200
OTHER ASSETS .................................................................... 89,578 89,578
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net .................................... 3,055,111 3,055,111
---------- --------- ----------
Total Assets ................................................................. $3,702,511 $ -- $3,702,511
========== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ............................................................... $ 5,207 $ 5,207
Accrued liabilities ............................................................ 40,532 40,532
Current portion of long-term liabilities-
Notes payable and commercial bank financing ................................... 35,215 35,215
Notes and capital leases payable to affiliation ............................... 3,073 3,073
Program contracts payable ..................................................... 95,567 95,567
Deferred barter revenues ....................................................... 5,649 5,649
---------- --------- ----------
Total current liabilities .................................................... 185,243 -- 185,243
LONG-TERM LIABILITIES:
Notes payable and commercial bank financing ................................... 2,361,790 $(329,230) 2,032,560
Notes and capital leases payable to affiliates ................................ 19,500 19,500
Program contracts payable ..................................................... 87,630 87,630
Deferred tax liability ........................................................ 197,752 197,752
Other long-term liabilities ................................................... 3,611 3,611
---------- --------- ----------
Total liabilities ............................................................ 2,855,526 (329,230) 2,526,296
---------- --------- ----------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES .................................. 3,697 -- 3,697
---------- --------- ----------
COMMITMENTS AND CONTINGENCIES
COMPANY OBLIGATED MANDATORILY REDEEMABLE SECURITY
OF SUBSIDIARY TRUST HOLDING SOLELY KDSM SENIOR DEBEN-
TURES .......................................................................... 200,000 -- 200,000
---------- --------- ----------
STOCKHOLDERS' EQUITY:
Series B Preferred Stock, $.01 par value, 10,000,000 shares authorized and
1,071,381 and 512,426 shares issued and outstanding .......................... 10 (5) 5
Series D Preferred Stock, $.01 par value, 3,450,000 shares authorized and
3,450,000 shares issued and outstanding ..................................... 35 35
Class A Common Stock, $.01 par value, 100,000,000 shares authorized and
13,733,430, 15,487,816 and 23,520,379 respectively, shares issued and out-
standing ..................................................................... 155 80 235
Class B Common Stock, $.01 par value, 35,000,000 shares authorized and
25,436,432 shares issued and outstanding ..................................... 255 255
Additional paid-in capital .................................................... 652,931 329,155 982,086
Additional paid-in capital - equity put options ............................... 23,117 23,117
Additional paid-in capital - deferred compensation ............................ (954) (954)
Accumulated deficit ........................................................... (32,261) (32,261)
---------- ----------- ----------
Total stockholders' equity ................................................... 643,288 329,230 972,518
---------- ----------- ----------
Total Liabilities and Stockholders' Equity ................................... $3,702,511 $ -- $3,702,511
========== =========== ==========
</TABLE>
3
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(a) The Heritage Acquisition column reflects the assets and liabilities
acquired in connection with the $630,000 purchase of Heritage. The Heritage
Acquisition column gives effect to the Company's definitive agreements to
sell radio stations KKSN-AM, KKSN-FM, and KKRH-FM serving the Portland,
Oregon market, radio stations, WBBF-AM, WBEE-FM, WKLX-FM, and WQRV-FM
serving the Rochester, New York market and television stations WPTZ-TV,
WNNE-TV and WFFF-TV serving the Burlington, Vermont and Plattsburgh, New
York markets (the "Dispositions"). Total acquired intangibles are
calculated as follows:
<TABLE>
<CAPTION>
HERITAGE
HERITAGE DISPOSITIONS ACQUISITION
------------ -------------- ------------
<S> <C> <C> <C>
Purchase Price ............................................ $ 630,000
Add:
Liabilities acquired--
Current portion of program contracts payable ........... $ 2,194 $ (406) 1,788
Deferred barter revenues ............................... 676 (326) 350
Long-term portion of program contracts payable ......... 857 (81) 776
Less:
Assets acquired--
Current portion of program contract costs .............. (1,704) 242 (1,462)
Deferred barter costs .................................. (880) 302 (578)
Program contract costs, less current portion ........... (1,323) 144 (1,179)
Property and equipment ................................. (45,840) 12,981 (32,859)
Proceeds from sale of stations ......................... (228,500)
----------
Acquired intangibles ................................... $ 368,336
==========
</TABLE>
(b) The Max Media Acquisition column reflects the assets and liabilities
acquired in connection with the $255,000 purchase of Max Media. The Max
Media Acquisition is subject to a number of conditions customary for
acquisitions of broadcasting properties. Total acquired intangibles are
calculated as follows:
<TABLE>
<CAPTION>
MAX MEDIA
------------
<S> <C>
Purchase Price ............................................. $ 255,000
Add:
Liabilities acquired--
Current portion of program contracts payable ............ 2,431
Deferred barter revenues ................................ 1,026
Long-term portion of program contracts payable .......... 1,736
Less:
Assets acquired--
Current portion of program contract costs ............... (2,325)
Deferred barter costs ................................... (640)
Program contract costs, less current portion ............ (2,182)
Property and equipment .................................. (25,556)
---------
Acquired intangibles .................................... $ 229,490
=========
</TABLE>
4
<PAGE>
(c) The Sullivan Broadcasting Acquisition column reflects the assets and
liabilities acquired in connection with the $1,000,000 purchase of 100% of
the outstanding capital stock of Sullivan Broadcast Holdings, Inc. and its
subsidiaries. Included in the total purchase price is $100,000 of Class A
Common Stock, which may be issued at the option of the Company pursuant to
the Sullivan Acquisition Agreement. The Sullivan Acquisition is subject to
a number of conditions customary for acquisitions of broadcasting
properties. Total acquired intangibles are calculated as follows:
SULLIVAN
-------------
Purchase Price ........................................... $1,000,000
Add:
Liabilities acquired--
Current portion of program contracts costs ............ 24,944
Long-term portion of program contract costs ........... 22,710
Deferred tax liability ................................ 173,660
Less:
Assets acquired--
Current portion of program contracts .................. (22,850)
Program contract costs, less current portion .......... (23,432)
Property and equipment ................................ (39,723)
----------
Acquired intangibles .................................. $1,135,309
==========
(d) To reflect indebtedness of $196,673 incurred in connection with the
Heritage Acquisition as follows:
Purchase Price ........................................... $ 630,000
Less:
Proceeds from dispositions ............................ (228,500)
Deposits .............................................. (65,500)
Cash utilized ......................................... (139,327)
----------
Indebtedness incurred ................................. $ 196,673
==========
(e) To reflect $242,183 incurred (net of a $12,817 deposit) under the Bank
Credit Agreement in connection with the Max Media Acquisition. The Company
will need to obtain an amendment or refinancing of the Bank Credit
Agreement in order to complete all pending acquisitions. See "Prospectus
Supplement Summary -- Recent Developments."
(f) To reflect $900,000 incurred (net of $100,000 of Class A Common Stock,
which may be issued at the option of the Company pursuant to the Sullivan
Acquisition) under the Bank Credit Agreement in connection with the
Sullivan Acquisition. The Company will need to obtain an amendment or
refinancing of the Bank Credit Agreement in order to complete all pending
acquisitions. See "Prospectus Supplement Summary -- Recent Developments."
(g) To reflect the net proceeds to the Company of the Offering at an assumed
offering price of $57 per share, net of $12,770 underwriting discounts and
commissions and estimated expenses and the application of the proceeds
therefrom.
5
<PAGE>
SINCLAIR BROADCAST GROUP, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
CONSOLIDATED
HISTORICAL
----------
<S> <C>
REVENUES:
Station broadcast revenues, net of agency
commissions ........................................ $ 471,228
Revenues realized from station barter
arrangements ....................................... 45,207
---------
Total revenues .................................... 516,435
---------
OPERATING EXPENSES:
Program and production ............................. 92,178
Selling, general and administrative ................ 106,084
Expenses realized from barter arrangements ......... 38,114
Amortization of program contract costs and net
realized value adjustments ......................... 66,290
Amortization of deferred compensation .............. 1,636
Depreciation and amortization of property and
equipment .......................................... 18,040
Amortization of acquired intangible assets, non-
compete, consult, and other ........................ 67,840
---------
Total operating expenses .......................... 390,182
---------
Broadcast operating income (loss) ................. 126,253
---------
OTHER INCOME (EXPENSE):
Interest and amortization of debt discount
expense ............................................ (98,393)
Subsidiary trust minority interest expense ......... (18,600)
Interest income .................................... 2,174
Other income ....................................... 54
---------
Income (loss) before provision (benefit) for
income taxes ...................................... 11,488
PROVISION (BENEFIT) FOR INCOME
TAXES .............................................. 15,984
---------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM ................................. (4,496)
EXTRAORDINARY ITEM .................................. (6,070)
---------
NET INCOME (LOSS) ................................... $ (10,566)
=========
NET INCOME (LOSS) AVAILABLE TO COM-
MON SHAREHOLDERS ................................... $ (13,329)
=========
BASIC EARNINGS PER SHARE:
Income (loss) per share before extraordinary
item and preferred stock dividends.............. $ (0.13)
=========
Loss per share before extraordinary item avail-
able to common shareholders ........................ $ (0.20)
=========
Net loss per share ................................. $ (0.37)
=========
Average shares outstanding ......................... 35,951
=========
DILUTED EARNINGS PER SHARE:
Income (loss) per share before extraordinary
item and preferred stock dividends.................. $ (0.13)
=========
Loss per share before extraordinary item avail-
able to common shareholders ........................ $ (0.20)
=========
Net loss per share ................................. $ (0.37)
=========
Average shares outstanding ......................... 40,078
=========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1997 FINANCINGS
----------------------------------------------------------------------------
1997 COMMON TENDER OFFER
JULY 1997 AND AND
HYTOPS DEBT PREFERRED DECEMBER 1997
ISSUANCE ISSUANCE STOCK ISSUANCES DEBT ISSUANCE
------------------- ------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
REVENUES:
Station broadcast revenues, net of agency
commissions ........................................
Revenues realized from station barter
arrangements .......................................
Total revenues .................................... ---------- ---------- --------- ---------
-- -- -- --
---------- ---------- --------- ---------
OPERATING EXPENSES:
Program and production .............................
Selling, general and administrative ................
Expenses realized from barter arrangements .........
Amortization of program contract costs and net
realized value adjustments .........................
Amortization of deferred compensation ..............
Depreciation and amortization of property and
equipment ..........................................
Amortization of acquired intangible assets, non-
compete, consult, and other ........................ $ 133 (f) $ 249 (g)
----------- ----------- --------- ---------
Total operating expenses .......................... 133 249 -- --
----------- ----------- --------- ---------
Broadcast operating income (loss) ................. (133) (249) -- --
----------- ----------- --------- ---------
OTHER INCOME (EXPENSE):
Interest and amortization of debt discount
expense ............................................ 1,852 (i) (1,734) (j) $ 16,857 (k) $ (2,010)(l)
Subsidiary trust minority interest expense ......... (4,650)(o)
Interest income ....................................
Other income .......................................
Income (loss) before provision (benefit) for ---------- ---------- ---------- ----------
income taxes ...................................... (2,931) (1,983) 16,857 (2,010)
PROVISION (BENEFIT) FOR INCOME
TAXES .............................................. (1,172) (q) (793) (q) 6,743 (q) (804)(q)
----------- ----------- --------- ---------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM ................................. (1,759) (1,190) 10,114 (1,206)
EXTRAORDINARY ITEM .................................. (69)(r)
----------- ----------- ---------- ----------
NET INCOME (LOSS) ................................... $ (1,759) $ (1,190) $ 10,114 $ (1,275)
=========== =========== ========= =========
NET INCOME (LOSS) AVAILABLE TO COM-
MON SHAREHOLDERS ...................................
BASIC EARNINGS PER SHARE:
Income (loss) per share before extraordinary
item and preferred stock dividends..................
Loss per share before extraordinary item avail-
able to common shareholders ........................
Net loss per share .................................
Average shares outstanding .........................
DILUTED EARNINGS PER SHARE:
Income (loss) per share before extraordinary
item ...............................................
Loss per share before extraordinary item avail-
able to common shareholders ........................
Net loss per share .................................
Average shares outstanding .........................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNIFICANT ACQUISITIONS
CONSOLIDATED ----------------------------------------------
HISTORICAL AND SULLIVAN
1997 FINANCINGS HERITAGE(A) MAX MEDIA(B) BROADCASTING(C)
----------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
REVENUES:
Station broadcast revenues, net of agency
commissions ........................................ $ 471,228 $ 72,383 $ 51,351 $ 120,124
Revenues realized from station barter
arrangements ....................................... 45,207 3,996 5,362 17,650
---------- -------- -------- ---------
Total revenues .................................... 516,435 76,379 56,713 137,774
---------- -------- -------- ---------
OPERATING EXPENSES:
Program and production ............................. 92,178 27,645 10,662 17,301
Selling, general and administrative ................ 106,084 17,010 24,148 28,319
Expenses realized from barter arrangements ......... 38,114 3,474 2,334 16,999
Amortization of program contract costs and net
realized value adjustments ......................... 66,290 1,974 5,546 13,198
Amortization of deferred compensation .............. 1,636
Depreciation and amortization of property and
equipment .......................................... 18,040 4,246 4,713 9,464
Amortization of acquired intangible assets, non-
compete, consult, and other ........................ 68,222 15,083 8,028 32,756
---------- -------- -------- ---------
Total operating expenses .......................... 390,564 69,432 55,431 118,037
---------- -------- -------- ---------
Broadcast operating income (loss) ................. 125,871 6,947 1,282 19,737
---------- -------- -------- ---------
OTHER INCOME (EXPENSE):
Interest and amortization of debt discount
expense ............................................ (83,428) (5,940) (6,078) (40,711)
Subsidiary trust minority interest expense ......... (23,250)
Interest income .................................... 2,174
Other income ....................................... 54 8,636 8,795 12
---------- -------- -------- ---------
Income (loss) before provision (benefit) for
income taxes ...................................... 21,421 9,643 3,999 (20,962)
PROVISION (BENEFIT) FOR INCOME
TAXES .............................................. 19,958 (q) 7,583 -- (5,488)
---------- -------- -------- ---------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM ................................. 1,463 2,060 3,999 (15,474)
EXTRAORDINARY ITEM .................................. (6,139)
---------- -------- -------- ---------
NET INCOME (LOSS) ................................... $ (4,676) $ 2,060 $ 3,999 $ (15,474)
========== ======== ======== =========
NET INCOME (LOSS) AVAILABLE TO COM-
MON SHAREHOLDERS ................................... $ (15,026)
==========
BASIC EARNINGS PER SHARE:
Income (loss) per share before extraordinary
item ............................................... $ 0.04
==========
Loss per share before extraordinary item avail-
able to common shareholders ........................ $ (0.23)
==========
Net loss per share ................................. $ (0.38)
==========
Average shares outstanding ......................... 39,112 (s)
==========
DILUTED EARNINGS PER SHARE:
Income (loss) per share before extraordinary
item ............................................... $ 0.03
==========
Loss per share before extraordinary item avail-
able to common shareholders ........................ $ (0.23)
==========
Net loss per share ................................. $ (0.38)
==========
Average shares outstanding ......................... 42,583 (s)
==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED HISTORICAL,
HISTORICAL, 1997 FINANCINGS,
1997 FINANCINGS SIGNIFICANT
ACQUISITION AND SIGNIFICANT ACQUISITIONS
ADJUSTMENTS ACQUISITIONS OFFERING AND OFFERING
------------------ ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
REVENUES:
Station broadcast revenues, net of agency
commissions ........................................ $ 715,086 $ 715,086
Revenues realized from station barter
arrangements ....................................... 72,215 72,215
---------- ---------- ---------- ----------
Total revenues .................................... -- 787,301 -- 787,301
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Program and production ............................. 147,786 147,786
Selling, general and administrative ................ $ (9,401)(d) 166,160 166,160
Expenses realized from barter arrangements ......... 60,921 60,921
Amortization of program contract costs and net
realized value adjustments ......................... 87,008 87,008
Amortization of deferred compensation .............. 1,636 1,636
Depreciation and amortization of property and
equipment .......................................... (1,473)(e) 34,990 34,990
Amortization of acquired intangible assets, non-
compete, consult, and other ........................ 17,098 (h) 141,187 141,187
---------- ---------- ---------- ----------
Total operating expenses .......................... 6,224 639,688 -- 639,688
---------- ---------- ---------- ----------
Broadcast operating income (loss) ................. (6,224) 147,613 -- 147,613
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest and amortization of debt discount
expense ............................................ (59,477)(m) (195,634) $ 22,816 (n) (172,818)
Subsidiary trust minority interest expense ......... (23,250) (23,250)
Interest income .................................... (280)(p) 1,894 1,894
Other income ....................................... 17,497 17,497
---------- ---------- --------- ----------
Income (loss) before provision (benefit) for
income taxes ...................................... (65,981) (51,880) 22,816 (29,064)
PROVISION (BENEFIT) FOR INCOME
TAXES .............................................. (26,392)(q) (4,339) 9,126 (q) 4,787
--------- ---------- --------- ----------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM ................................. (39,589) (47,541) 13,690 (33,851)
EXTRAORDINARY ITEM .................................. (6,139) (6,139)
---------- ---------- ---------- ----------
NET INCOME (LOSS) ................................... $ (39,589) $ (53,680) $ 13,690 $ (39,990)
========== ========== ========= ==========
NET INCOME (LOSS) AVAILABLE TO COM-
MON SHAREHOLDERS ................................... $ (64,030) $ (50,340)
========== ==========
BASIC EARNINGS PER SHARE:
Income (loss) per share before extraordinary
item ............................................... $ (1.16) $ (0.69)
========== ==========
Loss per share before extraordinary item avail-
able to common shareholders ........................ $ (1.42) $ (0.90)
========== ==========
Net loss per share ................................. $ (1.57) $ (1.03)
========== ==========
Average shares outstanding ......................... 40,866 (t) 48,899 (u)
========== ==========
DILUTED EARNINGS PER SHARE:
Income (loss) per share before extraordinary
item ............................................... $ (1.16) $ (0.69)
========== ==========
Loss per share before extraordinary item avail-
able to common shareholders ........................ $ (1.42) $ (0.90)
========== ==========
Net loss per share ................................. $ (1.57) $ (1.03)
========== ==========
Average shares outstanding ......................... 44,337 (t) 50,337 (u)
========== ==========
</TABLE>
6
<PAGE>
SINCLAIR BROADCAST GROUP, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
(a) The Heritage column reflects the results of operations for for the period
from January 1, 1997 to December 31, 1997, less television and radio
stations the Company has definitive agreements to sell. These dispositions
include the Portland, Oregon and Rochester, New York radio stations and the
Burlington, Vermont and Plattsburgh, New York television stations.
(b) The Max Media column reflects the results of operations for Max Media for
the period from January 1, 1997 to December 31, 1997. Included within
"other income" is a one time gain on station sales of approximately $8,500.
(c) The Sullivan column reflects the results of operations for Sullivan for the
period from January 1, 1997 to December 31, 1997.
(d) To adjust operating expenses for corporate overhead (net of integration
costs the Company anticipates incurring as a result of the Significant
Acquisitions) which the Company does not expect to incur upon consummation
of the Heritage Acquisition, Max Media Acquisition and Sullivan Acquisition
on a going-forward basis.
(e) To record depreciation expense related to acquired tangible assets and
eliminate depreciation expense recorded by Heritage, Max Media, and
Sullivan from January 1, 1997 to December 31, 1997. Tangible assets are to
be depreciated over lives ranging from three to 20 years, calculated as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-------------------------------------------------
HERITAGE MAX MEDIA SULLIVAN TOTAL
---------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Depreciation expense on acquired tangible assets ....................... $ 5,231 $ 4,637 $ 7,082 $ 16,950
Less: Depreciation expense recorded by Heritage, Max Media and Sullivan (4,246) (4,713) (9,464) (18,423)
-------- -------- -------- ---------
Pro forma adjustment ................................................... $ 985 $ (76) $ (2,382) $ (1,473)
======== ======== ======== =========
</TABLE>
(f) To record amortization expense on other assets that relate to the HYTOPS
Issuance for one year ($7,677 over 12 years).
<TABLE>
<S> <C>
Amortization expense on other assets .................. $ 640
Amortization expense recorded by the Company .......... (507)
------
Pro Forma adjustment .................................. $ 133
======
</TABLE>
(g) To record amortization expense on other assets that relate to the July 1997
Notes Issuance for one year ($4,766 over 10 years).
<TABLE>
<S> <C>
Amortization expense on other assets .................. $ 477
Amortization expense recorded by the Company .......... (228)
------
Pro Forma adjustment .................................. $ 249
======
</TABLE>
(h) To record amortization expense related to acquired intangible assets and
deferred financing costs and eliminate amortization expense recorded by
Heritage, Max Media and Sullivan from January 1, 1997 to December 31, 1997.
Intangible assets are to be amortized over lives ranging from one to 40
years, calculated as follows:
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
--------------------------------------------------
HERITAGE MAX MEDIA SULLIVAN TOTAL
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Amortization expense on acquired intangible assets ..................... $ 20,974 $ 12,357 $ 39,634 $ 72,965
Less: Amortization expense recorded by Heritage, Max Media and Sullivan (15,083) (8,028) (32,756) (55,867)
--------- -------- --------- ---------
Pro forma adjustment ................................................... $ 5,891 $ 4,329 $ 6,878 $ 17,098
========= ======== ========= =========
</TABLE>
(i) To record the net interest expense reduction for the year ended December
31, 1997 related to the application of the HYTOPS Issuance proceeds to the
outstanding balance under the revolving credit facility under the Bank
Credit Agreement offset by an increase in commitment fees for the available
but unused portion of the revolving credit facility.
<TABLE>
<S> <C>
Interest on adjusted borrowings on the revolving credit facility for the period from
January 1, 1997 to March 5, 1997 .................................................... $ 2,865
Commitment fee on available but unused borrowings of $250,000 for five months and
$675,000 for seven months of revolving credit facility at 1/2 of 1%.................. (2,490)
Commitment fee on available borrowings recorded by the Company ........................ 1,477
--------
Pro forma adjustment .................................................................. $ 1,852
========
</TABLE>
(j) To record the net interest expense reduction related to the application of
the net proceeds of the July 1997 Debt Issuance to repay borrowings under
the Bank Credit Agreement for the period from January 1, 1997 to June 27,
1997 offset by an increase in interest expense for the July 1997 Notes
Issuance ($200,000 at 9%) net of interest recorded by the Company.
(k) To record the interest expense reduction of $16,857 related to the
application of the net proceeds of the 1997 Common Stock Issuance and the
1997 Preferred Stock Issuance to repay borrowings under the Bank Credit
Agreement for the period from January 1, 1997 to September 17, 1997.
7
<PAGE>
(l) To record adjustments related to the December 1997 Notes Issuance ($250,000
at 8.75%) and the Debt Repurchase as follows:
<TABLE>
<S> <C>
Interest Adjustments:
Interest on December Debt Issuance for one year .................................. $ 21,875
Interest recorded on the 1993 Notes .............................................. (9,646)
Interest recorded on the December Debt Issuance .................................. (911)
Interest expense reduction related to the application of the net proceeds from the
December Debt Issuance .......................................................... (9,688)
--------
1,630
--------
Amortization Adjustments:
Amortization of deferred financing costs and debt discount ....................... 678
Amortization recorded by the Company ............................................. (298)
--------
380
--------
Pro forma adjustment ............................................................. $ 2,010
========
</TABLE>
(m) To record interest expense for the year ended December 31, 1997 on
acquisition financing relating to Heritage, Max Media and Sullivan of
$401,500, $242,183 and $900,000 (under the Company's Bank Credit Agreement
at 7.43%), and eliminate interest expense recorded.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-----------------------------
HERITAGE MAX MEDIA
-------------- --------------
<S> <C> <C>
Interest expense adjustment as noted above ............................... $ (28,956) $ (17,288)
Less: Interest expense recorded by Heritage, Max Media and Sullivan ...... 5,940 6,078
---------- ----------
Pro forma adjustment ..................................................... $ (23,016) $ (11,210)
========== ==========
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
------------------------------
SULLIVAN TOTAL
-------------- ---------------
<S> <C> <C>
Interest expense adjustment as noted above ............................... $ (65,962) $ (112,206)
Less: Interest expense recorded by Heritage, Max Media and Sullivan ...... 40,711 52,729
---------- -----------
Pro forma adjustment ..................................................... $ (25,251) $ (59,477)
========== ===========
</TABLE>
(n) To record the interest expense reduction of $24,462 related to the
application of the Offering proceeds to repay borrowings under the Bank
Credit Agreement offset by the increase in commitment fees of $1,646.
(o) To record subsidiary trust minority interest expense for the year ended
December 31, 1997 ($200,000 aggregate liquidation value of HYTOPS at
11.625%).
<TABLE>
<S> <C>
Subsidiary trust minority interest expense ........................ $ 23,250
Subsidiary trust minority interest expense recorded by the Company (18,600)
---------
Pro Forma adjustment .............................................. $ 4,650
=========
</TABLE>
<PAGE>
(p) To eliminate interest income for the year ended December 31, 1997 on
proceeds from the December 1997 Notes Issuance due to assumed utilization
of excess cash for the Significant Acquisitions.
(q) To record tax provision (benefit) at the applicable tax rates.
(r) To record an increase in the extraordinary loss, net of the tax effect
related to the Debt Repurchase and the write-off of the deferred financing
costs related to the 1993 Notes.
(s) Weighted average shares outstanding on a pro forma basis assumes that the
4,345,000 shares of Class A Common Stock issued in the 1997 Common Stock
Issuance were outstanding as of the beginning of the period.
(t) Weighted average shares outstanding on a pro forma basis assumes that
1,754,386 shares of Class A Common Stock issuable at the option of the
Company pursuant to the Sullivan Acquisition Agreement (assuming an average
closing price of $57 per share at time of issuance) were outstanding as of
the beginning of the period.
(u) Weighted average shares outstanding on a pro forma basis assumes that the
6,000,000 shares of Class A Common Stock to be issued in the Offering and
the 2,032,563 shares of Class A Common Stock to be issued upon conversion
of approximately 558,955 shares Series B Preferred Stock to be sold by the
Selling Stockholders were outstanding as of the beginning of the period.
8
