SEC Info - Sinclair Broadcast Group Inc - ‘10-K/A’ for 12/31/96

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Sinclair Broadcast Group Inc – ‘10-K/A’ for 12/31/96

As of: Friday, 6/27/97 · For: 12/31/96 · Accession #: 1005150-97-477 · File #: 0-26076

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/27/97  Sinclair Broadcast Group Inc      10-K/A     12/31/96    2:122K                                   Rci Group Inc/FA

Amendment to Annual Report — Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K/A      Amendment to Annual Report                            41    233K 
 2: EX-23       Consent of Experts or Counsel                          1      5K

10-K/A — Amendment to Annual Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Exhibits, Financial Statement Schedules, and Reports on Form 8-K Index to Financial Statements Notes to Consolidated Financial Statements Preferred Securities Offering Schedule II
1	1st Page - Filing Submission
2	Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
"	Index to Financial Statements
15	Notes to Consolidated Financial Statements
36	Preferred Securities Offering
41	Schedule II

10-K/A 1st Page of 41 TOC ↑Top Previous Next ↓Bottom Just 1st
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K/A

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1996 COMMISSION FILE NUMBER : 0-26076

SINCLAIR BROADCAST GROUP, INC.
(Exact name of Registrant as specified in its charter)

Maryland 52-1494660
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

2000 WEST 41ST STREET
BALTIMORE, MARYLAND 21211
(Address of principal executive offices)

(410) 467-5005
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12 (b) of the Act: NONE

Securities registered pursuant to Section 12 (g) of the Act:

Class A Common Stock, par value $.01 per share

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent files pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Based on the closing sale price of $29.00 per share as of June 26, 1997, the
aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $203.4 million.

As of June 26, 1997, there were 7,035,188 shares of Class A Common Stock, $.01
par value, 27,656,581 shares of Class B Common Stock, $.01 par value and
1,106,608 shares of Series B Preferred Stock, $.01 par value, of the Registrant
issued and outstanding.

10-K/A 2nd Page of 41 TOC 1st Previous Next ↓Bottom Just 2nd
In order to provide additional information about certain of its subsidiaries
that no longer guarantee its indebtedness, Sinclair Broadcast Group, Inc. is
amending Note 19 to its financial statements for the year ended December 31,
1996.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) (1) Index to Financial Statements

The financial statements required by this item are submitted in a separate
section beginning on page F-1 of this report.

Index to Financial Statements

PAGE
-------
Index to Financial Statements...................................... F-1
Report of Arthur Andersen LLP, Independent Public Accountants ..... F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996 ...... F-3
Consolidated Statements of Operations for the Years Ended December
31, 1994, 1995 and 1996............................................ F-4
Consolidated Statements of Stockholders' Equity for the Years
Ended December 31, 1994, 1995 and 1996............................. F-5
Consolidated Statements of Cash Flows for the Years Ended December
31, 1994, 1995 and 1996............................................ F-6,7
Notes to Consolidated Financial Statements......................... F-8

(a) (2) Index to Financial Statement Schedules

The financial statement schedules required by this item are submitted on
pages S-1 through S-3 of this Report.

PAGE
------
Index to Schedules.......................................... S-1
Report of Arthur Andersen LLP, Independent Public
Accountants................................................. S-2
Schedule II - Valuation and Qualifying Account.............. S-3

All other schedules are omitted because they are not applicable or the
required information is shown in the Financial Statements of the notes thereto.

10-K/A 3rd Page of 41 TOC 1st Previous Next ↓Bottom Just 3rd
(a) (3) Index to Exhibits

[Download Table]

EXHIBIT
NUMBER DESCRIPTION
------ ------------

3.1 Amended and Restated Certificate of Incorporation (1)

3.2 By-laws (2)

4.2 Indenture, dated as of December 9, 1993, among Sinclair Broadcast
Group, Inc., its wholly-owned subsidiaries and First Union
National Banks of North Carolina, as trustee. (2)

4.2 Indenture, dated as of August 28, 1995, among Sinclair Broadcast
Group, Inc., its wholly-owned subsidiaries and the United States
Trust Company of New York as trustee. (2)

10.1 Asset Purchase Agreement dated as of April 10, 1996 by and between
River City Broadcasting, L.P. as seller and Sinclair Broadcast
Group, Inc. as buyer dated as of April 10, 1996. (3)

10.2 Option Agreement, dated as of April 10, 1996, by and among River
City Broadcasting, L.P., as sellers and Sinclair Broadcast Group,
Inc. dated as of April 10, 1996. (3)

10.3 Modification Agreement , dated as of April 10, 1996,by and between
River City Broadcast Group, L.P. as seller, and Sinclair Broadcast
Group, Inc. as buyer, with reference to Asset Purchase Agreement
(3)

10.4 Stock Option Agreement dated April 10 1996, by and between
Sinclair Broadcast Group, Inc. and Barry Baker.*

10.5 Employment Agreement, dated as of April 10, 1996, with Barry
Baker. (1)

10.6 Indemnification Agreement, dated as of April 10, 1996, with Barry
Baker. (1)

10.7 Time Brokerage Agreement, dated as of May 31, 1996, by and among
Sinclair Communications, Inc., River City Broadcasting, L.P. and
River City License Partnership and Sinclair Broadcast Group, Inc.
(1)

10.8 Registration Rights Agreement, dated as of May 31, 1996, by and
between Sinclair Broadcast Group, Inc. and River City
Broadcasting, L.P. (1)

10.9 Time Brokerage Agreement, dated as of August 3, 1995, by and
between River City Broadcasting, L.P. and KRRT, Inc. and
Assignment and Assumption Agreement dated as of May 31, 1996 by
and among KRRT, Inc., River City Broadcasting, L.P. and KABB, Inc.
(as Assignee of Sinclair Broadcast Group, Inc.). (1)

10.10 Loan Agreement, dated as of July 7, 1995, by and between Keymarket
of South Carolina, Inc. and River City Broadcasting, L.P. and
First Amendment to Loan Agreement dated as of May 24, 1996. (1)

10.11 Option Agreement, dated as of July 7, 1995, by and among Keymarket
of South Carolina, Kerby E. Confer and River City Broadcasting,
L.P. (1)

10.12 Letter Agreement, dated August 20, 1996, between Sinclair
Broadcast Group, Inc., River City Broadcasting, L.P. and Fox
Broadcasting Company. (4)

10.13 Asset Purchase Agreement, dated January 31, 1997, by and between
Channel 21, L.P. and KUPN, Inc.*

10.14 Promissory Note, dated as of May 17, 1990, in the principal amount
of $3,000,000 among David D. Smith, Frederick G. Smith, J. Duncan
Smith and Robert E. Smith (as makers) and Sinclair Broadcast
Group, Inc., Channel 63, Inc., Commercial Radio Institute, Inc.,
WTTE, Channel 28, Inc. and Chesapeake Television, Inc. (as
holders). (5)

10.15 Term Note, dated as of September 30, 1990, in the principal amount
of $7,515,000 between Sinclair Broadcast Group, Inc. (as borrower)
and Julian S. Smith (as lender). (6)

10-K/A 4th Page of 41 TOC 1st Previous Next ↓Bottom Just 4th
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.16 Replacement Term Note dated as of September 30, 1990 in the
principal amount of $6,700,000 between Sinclair Broadcast Group,
Inc. (as borrower) and Carolyn C. Smith (as lender) (2)

10.17 Note dated as of September 30, 1990 in the principal amount of
$1,500,000 between Frederick G. Smith, David D. Smith, J. Duncan
Smith and Robert E. Smith (as borrowers and Sinclair Broadcast
Group, Inc. (as lender) (5)

10.18 Amended and Restated Note dated as of June 30, 1992 in the
principal amount of $1,458,489 between Frederick G. Smith, David
D. Smith, J. Duncan Smith and Robert E. Smith (as borrowers) and
Sinclair Broadcast Group, Inc. (as lender) (5)

10.19 Term Note dated August 1, 1992 in the principal amount of $900,000
between Frederick G. Smith, David D. Smith, J. Duncan Smith and
Robert E. Smith (as borrowers) and Commercial Radio Institute,
Inc. (as lender) (5)

10.20 Management Agreement dated as of January 6, 1992 between Keyser
Communications, Inc. and WPGH,Inc. (5)

10.21 Promissory Note dated as of December 28, 1986 in the principal
amount of $6,421,483.53 between Sinclair Broadcast Group, Inc. (as
maker) and Frederick H. Himes, B. Stanley Resnick and Edward A.
Johnston (as representatives for the holders) (5)

10.22 Term Note dated as of March 1, 1993 in the principal amount of
$6,559,000 between Julian S. Smith and Carolyn C. Smith (as
makers-borrowers) and Commercial Radio Institute, Inc. (as
holder-lender) (5)

10.23 Restatement of Stock Redemption Agreement by and among Sinclair
Broadcast Group, Inc. and Chesapeake Television, Inc., et al.
dated June 19, 1990 (5)

10.24 Corporate Guaranty Agreement dated as of September 30, 1990 by
Chesapeake Television, Inc., Commercial Radio, Inc., Channel 63,
Inc. and WTTE, Channel 28, Inc. (as guarantors) to Julian S. Smith
and Carolyn C. Smith (as lenders) (5)

10.25 Security Agreement dated as of September 30, 1990 among Sinclair
Broadcast Group, Inc., Chesapeake Television, Inc., Commercial
Radio Institute, Inc., WTTE, Channel 28, Inc. and Channel 63, Inc.
(as borrowers and subsidiaries of the borrower) and Julian S.
Smith and Carolyn C. Smith (as lenders) (5)

10.26 Term Note dated as of September 22, 1993, in the principal amount
of $1,900,000 between Gerstell Development Limited Partnership (as
maker-borrower) and Sinclair Broadcast Group, Inc. (as
holder-lender) (5)

10.27 Second Amended and Restated Credit Agreement, dated as of May 31,
1996, by and among Sinclair Broadcast Group, Inc., Certain
Subsidiary Guarantors, Certain Lenders and the Chase Manhattan
Bank as Agent (1)

10.28 Amendment No. 1 dated as of July 24, 1996 to the Second Amended
and Restated Credit Agreement dated as of May 31, 1996 by and
among Sinclair Broadcast Group, Inc., Certain Subsidiary
Guarantors, Certain Lenders and the Chase Manhattan Bank as Agent*

10.29 Amendment No. 2 dated as of October 16, 1996 to the Second Amended
and Restated Credit Agreement dated as of May 31, 1996 by and
among Sinclair Broadcast Group, Inc., Certain Subsidiary
Guarantors, Certain Lenders and the Chase Manhattan Bank as Agent*

10.30 Amendment No. 3 dated as of December 18, 1996 to the Second
Amended and Restated Credit Agreement dated as of May 31, 1996 by
and among Sinclair Broadcast Group, Inc., Certain Subsidiary
Guarantors, Certain Lenders and the Chase Manhattan Bank as Agent*

10.31 Amendment No. 4 dated as of February 20, 1997 to the Second
Amended and Restated Credit Agreement dated as of May 31, 1996 by
and among Sinclair Broadcast Group, Inc., Certain Subsidiary
Guarantors, Certain Lenders and the Chase Manhattan Bank as Agent*

10-K/A 5th Page of 41 TOC 1st Previous Next ↓Bottom Just 5th
EXHIBIT
NUMBER DESCRIPTION
------ ------------
10.32 Incentive Stock Option Plan for Designated Participants (2)

10.33 Incentive Stock Option Plan of Sinclair Broadcast Group, Inc. (2)

10.34 First Amendment to Incentive Stock Option Plan of Sinclair
Broadcast Group, Inc., adopted April 10, 1996*

10.35 Second Amendment to Incentive Stock Option Plan of Sinclair
Broadcast Group, Inc., adopted May 31, 1996*

10.36 1996 Long Term Incentive Plan of Sinclair Broadcast Group, Inc.*

10.37 Employment Agreement by and between Sinclair Broadcast Group, Inc.
Robert E. Smith, dated as of June 12, 1995*

10.38 Employment Agreement by and between Sinclair Broadcast Group, Inc.
and J. Duncan Smith, dated as of June 12, 1995*

10.39 Employment Agreement by and between Sinclair Broadcast Group, Inc.
and Frederick G. Smith, dated as of June 12, 1995*

10.40 Employment Agreement by and between Sinclair Broadcast Group, Inc.
and David D. Smith, dated as of June 12, 1995*

10.41 Common Stock Option dated as of August 26, 1994 by and between
Communications Corporation of America (as optionee) and Sinclair
Broadcast Group, Inc. (as optionor) (2)

10.42 Common Non-Voting Capital Stock Option dated as of May 3, 1995 by
and between Sinclair Broadcast Group, Inc. and William Richard
Schmidt, as trustee (2)

10.43 Common Non-Voting Capital Stock Option dated as of May 3, 1995 by
and between Sinclair Broadcast Group, Inc. and C. Victoria
Woodward, as trustee (2)

10.44 Common Non-Voting Capital Stock Option dated as of May 3, 1995 by
and between Sinclair Broadcast Group, Inc. and Dyson Ehrhardt, as
trustee (2)

10.45 Common Non-Voting Capital Stock Option dated as of May 3, 1995 by
and between Sinclair Broadcast Group, Inc. and Mark Knobloch, as
trustee (2)

10.46 Agreement and Plan of Merger of Keyser Communications, Inc. into
Sinclair Broadcast Group, Inc. dated May 4, 1995 and Articles of
Merger dated May 4, 1995 (2)

10.47 Amended and Restated Asset Purchase Agreement by and between River
City Broadcasting, L.P. and Sinclair Broadcast Group, Inc. dated
as of April 10, 1996 and amended and restated as of May 31, 1996
(7)

10.48 Group I Option Agreement by and among River City Broadcasting,
L.P. and Sinclair Broadcast Group, Inc. dated as of May 31, 1996
(7)

10.49 Columbus Option Agreement by and among River City Broadcasting,
L.P. and River City License Partnership and Sinclair Broadcast
Group, Inc. dated as of May 31, 1996 (7)

10.50 Option Agreement dated as of May 24, 1994 between Kansas City TV
62 Limited Partnership and the Individuals Named Herein, on Behalf
of an Entity To Be Formed (1)

10.51 Option Agreement dated as of May 24, 1994 between Cincinnati 64
Limited Partnership and the Individuals Named Herein, on Behalf of
an Entity To Be Formed (1)

10.52 Stock Purchase Agreement dated as of March 1, 1996 by and between
Sinclair Broadcast Group, Inc. and The Stockholders of Superior
Communications Group, Inc. (1)

10.53 Asset Purchase Agreement dated as of January 16, 1996 by and
between Bloomington Comco, Inc. And WYZZ, Inc. (1)

10.54 Asset Purchase Agreement dated as of June 10, 1996 by and between
WTTE, Channel 28, Inc. and WTTE, Channel 28 Licensee, Inc. and
Glencairn, Ltd. (1)

10.55 Asset Purchase Agreement dated April 10, 1996 by and between KRRT,
Inc. and SBGI, Inc. (8)

10-K/A 6th Page of 41 TOC 1st Previous Next ↓Bottom Just 6th
10.56 Agreememt for the purchase of assets dated as of January 16, 1996
and escrow agreement dated as of January 16, 1996 between
Bloomington Comco, Inc. and Sinclair Broadcast Group (6)

10.57 Stock Purchase Agreement dated as of March 1, 1996 by and among
Sinclair Broadcast Group, Inc. and PNC Capital Corp., Primus
Capital Fund II, Ltd., Albert M. Holtz, Perry A. Sook, Richard J.
Roberts, George F. Boggs, Albert M. Holtz, as Trustee for the
Irrevocable Deed of Trust for Tara Ellen Holtz, dated December 6,
1994, and Albert M. Holtz as trustee for the Irrevocable Deed of
Trust for Meghan Ellen Holtz, dated December 6, 1994 (6)

10.58 Exhibit withdrawn

10.59 Exhibit withdrawn

11 Computation of Earnings Per Share*

12 Computation of Ratio of Earnings to Fixed Charges*

21 Subsidiaries of the Company*

23 Consent of Independent Public Accountants

27 Financial Data Schedule*

----------

* Previously filed.

(1) Incorporated by reference from the Company's Report on Form 10-Q for the
quarterly period ended June 30, 1996

(2) Incorporated by reference from the Company's Registration Statement on Form
S-1, No. 33-90682

(3) Incorporated by reference from the Company's Report on Form 10-Q for the
quarterly period ended March 31, 1996

(4) Incorporated by reference from the Company's Report on Form 10-Q for the
quarterly period ended September 30, 1996.

(5) Incorporated by reference from the Company's Registration Statement on Form
S-1, No. 33-69482

(6) Incorporated by reference from the Company's Report on Form 10-K for the
annual period ended December 31, 1995.

(7) Incorporated by reference from the Company's Amended Current Report on Form
8-K/A, filed May 9, 1996.

(8) Incorporated by reference from the Company's Current Report on Form 8-K,
filed May 17, 1996.

(b) Reports on Form 8-K

There were no reports on Form 8-K filed by the Registrant during the fourth
quarter of the fiscal year ended December 31, 1996.

10-K/A 7th Page of 41 TOC 1st Previous Next ↓Bottom Just 7th
SIGNATURES

Pursuant to the requirements of Section 14 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K/A
to be signed on its behalf by the undersigned, thereto duly authorized on June
27, 1997.

SINCLAIR BROADCAST GROUP, INC.
By: /s/ David B. Amy
----------------------------------
David B. Amy
Chief Financial Officer
Principal Accounting Officer

Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant in the
capacities indicated on June 27, 1997.

[Download Table]

SIGNATURE TITLE
--------- -----

/s/ David D. Smith President, Chief Executive Officer, Director,
------------------------- Chairman and Principal Executive Officer
David D. Smith

/s/ Frederick G. Smith Vice President, Assistant Secretary and Director
-------------------------
Frederick G. Smith

/s/ J. Duncan Smith Vice President, Secretary and Director
-------------------------
J. Duncan Smith

/s/ Robert E. Smith Vice President, Treasurer and Director
-------------------------
Robert E. Smith

/s/ Basil A. Thomas Director
-------------------------
Basil A. Thomas

/s/ Lawrence E. McCanna Director
-------------------------
Lawrence E. McCanna

/s/ William E. Brock Director
-------------------------
William E. Brock

10-K/A 8th Page of 41 TOC 1st Previous Next ↓Bottom Just 8th
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

[Enlarge/Download Table]

PAGE
-------------

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
Report of Independent Public Accountants................................................ F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996............................ F-3
Consolidated Statements of Operations for the Years Ended December 31, 1994, 1995 and
1996................................................................................... F-4
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1994
1995 and 1996.......................................................................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and
1996................................................................................... F-6, F-7
Notes to Consolidated Financial Statements ............................................. F-8

F-1

10-K/A 9th Page of 41 TOC 1st Previous Next ↓Bottom Just 9th
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of
Sinclair Broadcast Group, Inc.:

We have audited the accompanying consolidated balance sheets of Sinclair
Broadcast Group, Inc. (a Maryland corporation) and Subsidiaries as of December
31, 1995 and 1996, and the related consolidated statements of operations,
stockholders' equity and cash flows for the years ended December 31, 1994, 1995
and 1996. 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 Sinclair Broadcast Group, Inc.
and Subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for the years ended December 31, 1994, 1995 and
1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP
Baltimore, Maryland,
February 7, 1997, except for Note 19,
as to which the date is March 12, 1997

F-2

10-K/A 10th Page of 41 TOC 1st Previous Next ↓Bottom Just 10th
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

[Enlarge/Download Table]

AS OF DECEMBER 31,
------------------
1995 1996
--------- ------------

ASSETS
CURRENT ASSETS:
Cash, including cash equivalents of $108,720 and $-0-, respectively................... $112,450 $ 2,341
Accounts receivable, net of allowance for doubtful accounts of $1,066 and $2,472,
respectively......................................................................... 50,022 112,313
Current portion of program contract costs............................................. 18,036 44,526
Prepaid expenses and other current assets............................................. 1,972 3,704
Deferred barter costs................................................................. 1,268 3,641
Deferred tax assets .................................................................. 4,565 1,245
---------- ------------
Total current assets................................................................. 188,313 167,770
PROGRAM CONTRACT COSTS, less current portion........................................... 19,277 43,037
LOANS TO OFFICERS AND AFFILIATES....................................................... 11,900 11,426
PROPERTY AND EQUIPMENT, net............................................................ 42,797 154,333
NON-COMPETE AND CONSULTING AGREEMENTS, net of accumulated amortization of $34,000 and
$54,236, respectively................................................................. 30,379 10,193
DEFERRED TAX ASSET..................................................................... 16,462 --
OTHER ASSETS........................................................................... 27,355 64,235
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net of accumulated amortization of $49,746
and $85,155, respectively............................................................. 268,789 1,256,303
---------- ------------
Total Assets.......................................................................... $605,272 $1,707,297
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable...................................................................... $ 2,187 $ 11,886
Income taxes payable.................................................................. 3,944 730
Accrued liabilities................................................................... 20,720 35,030
Current portion of long-term liabilities-
Notes payable and commercial bank financing.......................................... 1,133 62,144
Capital leases payable............................................................... 524 44
Notes and capital leases payable to affiliates....................................... 1,867 1,774
Program contracts payable............................................................ 26,395 58,461
Deferred barter revenues.............................................................. 1,752 3,576
---------- ------------
Total current liabilities............................................................ 58,522 173,645
LONG-TERM LIABILITIES:
Notes payable and commercial bank financing........................................... 400,644 1,212,000
Capital leases payable................................................................ 44 --
Notes and capital leases payable to affiliates........................................ 13,959 12,185
Program contracts payable............................................................. 30,942 56,194
Deferred tax liability................................................................ -- 463
Other long-term liabilities........................................................... 2,442 2,739
---------- ------------
Total liabilities.................................................................... 506,553 1,457,226
---------- ------------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES......................................... 2,345 3,880
---------- ------------
COMMITMENTS AND CONTINGENCIES
EQUITY PUT OPTIONS..................................................................... -- 8,938
---------- ------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000 and 10,000,000 shares authorized and -0-
and 1,138,318 issued and outstanding................................................. -- 11
Class A Common stock, $.01 par value, 35,000,000 and 100,000,000 shares authorized and
5,750,000 and 6,911,880 shares issued and outstanding, respectively.................. 58 70
Class B Common stock, $.01 par value, 35,000,000 shares authorized and 29,000,000 and
27,850,581 shares issued and outstanding............................................. 290 279
Additional paid-in capital............................................................ 116,089 231,170
Accumulated deficit................................................................... (20,063) (18,932)
Additional paid-in capital -- stock options........................................... -- 25,784
Deferred compensation................................................................. -- (1,129)
---------- ------------
Total stockholders' equity........................................................... 96,374 237,253
---------- ------------
Total Liabilities and Stockholders' Equity........................................... $605,272 $1,707,297
========== ============

The accompanying notes are an integral part of these consolidated balance sheets.

F-3

10-K/A 11th Page of 41 TOC 1st Previous Next ↓Bottom Just 11th
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)

[Enlarge/Download Table]

1994 1995 1996
--------- --------- ---------

REVENUES:
Station broadcast revenues, net of agency commissions of
$21,235, $31,797 and $56,040, respectively .................. $ 118,611 $ 187,934 $ 346,459
Revenues realized from station barter arrangements ........... 10,743 18,200 32,029
--------- --------- ---------
Total revenues .............................................. 129,354 206,134 378,488
--------- --------- ---------
OPERATING EXPENSES:
Program and production ....................................... 15,760 28,152 66,652
Selling, general and administrative .......................... 25,578 36,174 75,924
Expenses realized from station barter arrangements ........... 9,207 16,120 25,189
Amortization of program contract costs and net realizable
value adjustments ........................................... 22,360 29,021 47,797
Amortization of deferred compensation ........................ -- -- 739
Depreciation and amortization of property and equipment ...... 3,841 5,400 11,711
Amortization of acquired intangible broadcasting assets,
non-compete and consulting agreements and other assets ...... 29,386 45,989 58,530
Special bonuses to executive officers ........................ 3,638 -- --
Amortization of excess syndicated programming ................ -- -- 3,043
--------- --------- ---------
Total operating expenses .................................... 109,770 160,856 289,585
--------- --------- ---------
Broadcast operating income .................................. 19,584 45,278 88,903
--------- --------- ---------

OTHER INCOME (EXPENSE):
Interest and amortization of debt discount expense ........... (25,418) (39,253) (84,314)
Interest income .............................................. 2,033 3,942 3,136
Other income ................................................. 414 221 342
--------- --------- ---------
Income (loss) before provision (benefit) for income taxes and
extraordinary item ......................................... (3,387) 10,188 8,067

PROVISION (BENEFIT) FOR INCOME TAXES .......................... (647) 5,200 6,936
--------- --------- ---------
Net income (loss) before extraordinary item .................. (2,740) 4,988 1,131

EXTRAORDINARY ITEM:
Loss on early extinguishment of debt, net of related income
tax benefit of $3,357 ....................................... -- (4,912) --
--------- --------- ---------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS ............ $ (2,740) $ 76 $ 1,131
========= ========= =========
EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
Net income (loss) before extraordinary items ................. $ (.09) $ .15 $ .03
Extraordinary item ........................................... -- (.15) --
--------- --------- ---------
Net income (loss) per common and common equivalent share ..... $ (.09) $ -- $ .03
========= ========= =========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING ................................ 29,000 32,205 37,381
========= ========= =========

The accompanying notes are an integral part of these consolidated statements.

F-4

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(IN THOUSANDS)

[Enlarge/Download Table]

ADDITIONAL
RETAINED PAID-IN
SERIES A SERIES B CLASS A CLASS B ADDITIONAL EARNINGS CAPITAL-
PREFERRED PREFERRED COMMON COMMON PAID-IN (ACCUMULATED STOCK
STOCK STOCK STOCK STOCK CAPITAL DEFICIT) OPTIONS

--------- --------- ------- ------- ---------- ----------- ----------

BALANCE, December 31, 1993..................... $ -- $ -- $ -- $ 290 $ 4,733 $(16,047) $ --
Realization of deferred gain.................. -- -- -- -- 41 -- --
Net loss...................................... -- -- -- -- -- (2,740) --
--------- --------- ------- ------- ---------- ----------- ----------
BALANCE, December 31, 1994..................... -- -- -- 290 4,774 (18,787) --
Issuance of common shares, net of related
expenses of $9,288........................... -- -- 58 -- 111,403 -- --
Non-cash distribution prior to KCI merger..... -- -- -- -- (109) (1,352) --
Realization of deferred gain.................. -- -- -- -- 21 -- --
Net income.................................... -- -- -- -- -- 76 --
--------- --------- ------- ------- ---------- ----------- ----------
BALANCE, December 31, 1995..................... -- -- 58 290 116,089 (20,063) --
Class B Common Stock converted into Class A
Common Stock................................. -- -- 11 (11) -- -- --
Issuance of Series A Preferred Stock.......... 12 -- -- -- 125,067 -- --
Series A Preferred Stock converted into Series
B Preferred Stock............................ (12) 12 -- -- -- -- --
Series B Preferred Stock converted into Class
A Common Stock............................... -- (1) 1 -- -- -- --
Repurchase of 30,000 shares of Class A Common
Stock........................................ -- -- -- -- (748) -- --
Stock option grants........................... -- -- -- -- -- -- 25,784
Income tax provision for deferred
compensation................................. -- -- -- -- (300) -- --
Equity put options............................ -- -- -- -- (8,938) -- --
Amortization of deferred compensation......... -- -- -- -- -- -- --
Net income.................................... -- -- -- -- -- 1,131 --
--------- --------- ------- ------- ---------- ----------- ----------
BALANCE, December 31, 1996..................... $ -- $ 11 $ 70 $ 279 $ 231,170 $(18,932) $25,784
========= ========= ======= ======= ========== =========== ==========

TOTAL
DEFERRED STOCKHOLDERS'
COMPENSATION EQUITY
------------ ---------------

BALANCE, December 31, 1993..................... $ -- $(11,024)
Realization of deferred gain.................. -- 41
Net loss...................................... -- (2,740)
------------ -------------
BALANCE, December 31, 1994..................... -- (13,723)
Issuance of common shares, net of related
expenses of $9,288........................... -- 111,461
Non-cash distribution prior to KCI merger..... -- (1,461)
Realization of deferred gain.................. -- 21
Net income.................................... -- 76
------------ -------------
BALANCE, December 31, 1995..................... -- 96,374
Class B Common Stock converted into Class A
Common Stock................................. -- --
Issuance of Series A Preferred Stock.......... -- 125,079
Series A Preferred Stock converted into Series
B Preferred Stock............................ -- --
Series B Preferred Stock converted into Class
A Common Stock............................... -- --
Repurchase of 30,000 shares of Class A Common
Stock........................................ -- (748)
Stock option grants........................... (1,868) 23,916
Income tax provision for deferred
compensation................................. -- (300)
Equity put options............................ -- (8,938)
Amortization of deferred compensation......... 739 739
Net income.................................... -- 1,131
------------ -------------
BALANCE, December 31, 1996..................... $(1,129) $237,253
============ =============

The accompanying notes are an integral part of these consolidated statements.

F-5

10-K/A 13th Page of 41 TOC 1st Previous Next ↓Bottom Just 13th
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(IN THOUSANDS)
PAGE 1 OF 2

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1994 1995 1996
---------- ---------- ----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ............................................... $ (2,740) $ 76 $ 1,131
Adjustments to reconcile net income (loss) to net cash flows from
operating activities-
Extraordinary loss ............................................. -- 8,269 --
Amortization of excess syndicated programming .................. -- -- 3,043
Gain on sales of assets ........................................ -- (221) --
Depreciation and amortization of property and equipment ........ 3,841 5,400 11,711
Amortization of acquired intangible broadcasting assets,
non-compete and consulting agreements and other assets ........ 29,386 45,989 58,530
Amortization of program contract costs and net realizable value
adjustments ................................................... 22,360 29,021 47,797
Amortization of deferred compensation .......................... -- -- 739
Deferred tax benefit ........................................... (9,177) (5,089) 2,330
Realization of deferred gain ................................... (152) (42) --
Changes in assets and liabilities, net of effects of acquisitions
and dispositions-
Increase in accounts receivable, net ........................... (19,726) (12,245) (41,310)
Increase in prepaid expenses and other current assets .......... (1,057) (273) (217)
(Increase) decrease in other assets and acquired intangible
broadcasting assets ........................................... 910 (77) (328)
Increase in accounts payable and accrued liabilities ........... 6,556 7,274 19,941
Increase (decrease) in income taxes payable .................... 5,481 (2,427) (3,214)
Net effect of change in deferred barter revenues and deferred
barter costs .................................................. 103 230 (908)
Increase in other long-term liabilities ........................ -- -- 297
Decrease in minority interest .................................. -- (38) (121)
Payments on program contracts payable ........................... (14,262) (19,938) (30,451)
Payments for consulting agreements .............................. (742) -- --
-------- -------- --------
Net cash flows from operating activities ...................... $ 20,781 $ 55,909 $ 68,970
-------- -------- --------

The accompanying notes are an integral part of these consolidated statements.

F-6

10-K/A 14th Page of 41 TOC 1st Previous Next ↓Bottom Just 14th
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(IN THOUSANDS)
PAGE 2 OF 2

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1994 1995 1996
----------- ----------- -----------

NET CASH FLOWS FROM OPERATING ACTIVITIES ....................... $ 20,781 $ 55,909 $ 68,970
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment ........................ (2,352) (1,702) (12,609)
Payments for acquisition of television stations .............. (160,795) (101,000) (74,593)
Payments related to the acquisition of the non-license assets
of River City Broadcasting .................................. -- -- (818,083)
Prepaid local marketing agreement fee ........................ (1,500) -- --
Payments for acquisition of certain other non-license assets . -- (14,283) (29,532)
Payments for the purchase of outstanding stock of Superior
Communications Group, Inc. .................................. -- -- (63,504)
Payments to exercise options to acquire certain FCC licenses . -- -- (6,894)
Purchase option extension payments relating to WSYX .......... -- -- (6,960)
Payments for purchase of investments ......................... (502) -- --
Payment for WSTR subordinated note ........................... (4,800) -- --
Payments for consulting and non-compete agreements ........... (59,970) (1,000) (50)
Payments for purchase options ................................ (17,500) (9,000) --
Payment to exercise purchase option .......................... -- (1,000) --
Distributions (investments) in joint ventures ................ -- 240 (380)
Proceeds from disposal of property and equipment ............. -- 3,330 --
Proceeds from assignment of license purchase options ......... -- 4,200 --
Payment for WPTT subordinated convertible debenture .......... -- (1,000) --
Loans to officers and affiliates ............................. (50) (205) (854)
Repayments of loans to officers and affiliates ............... 386 2,177 1,562
Payments for organization of new subsidiaries ................ (198) -- --
Fees paid relating to subsequent acquisitions ................ (2,500) -- --
----------- ----------- -----------
Net cash flows used in investing activities ................. (249,781) (119,243) (1,011,897)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable and commercial bank financing .... 224,985 138,000 982,500
Repayments of notes payable, commercial bank financing and
capital leases .............................................. (102,069) (362,928) (110,657)
Payments of costs related to debt offering ................... -- (824) --
Payments of costs related to financing ....................... (7,083) (3,200) (20,009)
Payments for interest rate derivative agreements ............. (1,137) -- (851)
Repurchases of the Company's Class A Common Stock ............ -- -- (748)
Prepayments of excess syndicated program contract liabilities -- -- (15,116)
Payments for costs related to preferred stock offering not yet
consummated ................................................. -- -- (434)
Release of cash in escrow .................................... 100,000 -- --
Proceeds from debt offering, net of $6,000 underwriters'
discount .................................................... -- 294,000 --
Repayments of notes and capital leases to affiliates ......... (1,286) (3,171) (1,867)
Net proceeds from issuance of common shares .................. -- 111,461 --
----------- ----------- -----------
Net cash flows from financing activities .................... 213,410 173,338 832,818
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........... (15,590) 110,004 (110,109)
CASH AND CASH EQUIVALENTS, beginning of period ................. 18,036 2,446 112,450
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period ....................... $ 2,446 $ 112,450 $ 2,341
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES:
Interest paid ................................................. $ 27,102 $ 24,770 $ 82,814
=========== =========== ===========
Income taxes paid ............................................. $ 4,921 $ 7,941 $ 6,837
=========== =========== ===========

The accompanying notes are an integral part of these consolidated statements.

F-7

10-K/A 15th Page of 41 TOC 1st Previous Next ↓Bottom Just 15th
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1994, 1995 AND 1996

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation

The accompanying consolidated financial statements include the accounts of
Sinclair Broadcast Group, Inc., Sinclair Communications, Inc. and all other
consolidated subsidiaries, which are collectively referred to hereafter as "the
Company, Companies or SBG." The Company owns and operates television and radio
stations throughout the United States. Additionally, included in the
accompanying consolidated financial statements are the results of operations of
certain television stations pursuant to local marketing agreements (LMAs) and
radio stations pursuant to joint sales agreements (JSAs).

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
all its wholly-owned and majority-owned subsidiaries. Minority interest
represents a minority owner's proportionate share of the equity in two of the
Company's subsidiaries. In addition, the Company uses the equity method of
accounting for 20% to 50% ownership investments. All significant intercompany
transactions and account balances have been eliminated.

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.

Cash Equivalents

Cash equivalents are stated at cost plus accrued interest, which approximates
fair value. Cash equivalents are highly liquid investment grade debt instruments
with an original maturity of three months or less and consist of time deposits
with a number of consumer banks with high credit ratings.

Programming

The Companies have agreements with distributors for the rights to television
programming over contract periods which generally run from one to seven years.
Contract payments are made in installments over terms that are generally shorter
than the contract period. Each contract is recorded as an asset and a liability
when the license period begins and the program is available for its first
showing. The portion of the program contracts payable within one year is
reflected as a current liability in the accompanying consolidated balance
sheets.

The rights to program materials are reflected in the accompanying consolidated
balance sheets at the lower of unamortized cost or estimated net realizable
value. Estimated net realizable values are based upon management's expectation
of future advertising revenues net of sales commissions to be generated by the
program material. 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 costs, estimated by
management to be amortized in the succeeding year, are classified as current
assets. Payments of program contract liabilities are typically paid on a
scheduled basis and are not affected by adjustments for amortization or
estimated net realizable value.

On August 21, 1996, the Company entered into an agreement (the "Fox Agreement")
with Fox Broadcasting Company, Inc. ("Fox") which, among other things, provides
that affiliation agreements between Fox would be amended to have new five-year
terms commencing on the date of the Fox Agreement.

F-8

10-K/A 16th Page of 41 TOC 1st Previous Next ↓Bottom Just 16th
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The Fox Agreement also provides that the Company will have the right to
purchase, for fair market value, any station Fox acquires in a market currently
served by a Company owned Fox affiliate if Fox determines to terminate the
affiliation agreement with the Company's station in that market and operate the
station acquired by Fox as a Fox affiliate.

In October 1996, WTTO did not renew its Fox affiliation and is now operated as a
WB affiliate. In addition, the Company has been notified by Fox of Fox's
intention to terminate WLFL's affiliation with Fox in the Raleigh-Durham market
and WTVZ's affiliation with Fox in the Norfolk market, effective August 31,
1998.

Barter Arrangements

Certain program contracts provide for the exchange of advertising air time in
lieu of cash payments for the rights to such programming. These contracts are
recorded as the programs are aired at the estimated fair value of the
advertising air time given in exchange for the program rights. Network
programming is excluded from these calculations.

The Company broadcasts certain customers' advertising in exchange for equipment,
merchandise and services. The estimated fair value of the equipment, merchandise
or services received is recorded as deferred barter costs and the corresponding
obligation to broadcast advertising is recorded as deferred barter revenues. The
deferred barter costs are expensed or capitalized as they are used, consumed or
received. Deferred barter revenues are recognized as the related advertising is
aired.

Other Assets

Other assets as of December 31, 1995 and 1996 consist of the following (in
thousands):
1995 1996
------- -------
Unamortized debt acquisition
costs $ 9,049 $26,453
Investments in limited
partnerships 2,435 3,039
Notes receivable 4,775 10,773
Purchase options 10,000 22,902
Offering costs -- 434
Other 1,096 634
------- -------
$27,355 $64,235
======= =======

Non-Compete and Consulting Agreements

The Company has entered into non-compete and consulting agreements with various
parties. These agreements range from two to three years. Amounts paid under
these agreements are amortized over the life of the agreement.

Acquired Intangible Broadcasting Assets

Acquired intangible broadcasting assets are being amortized over periods of 1 to
40 years. These amounts result from the acquisition of certain television and
radio station license and non-license assets (see Note 12). The Company monitors
the individual financial performance of each of the stations and continually
evaluates the realizability of intangible and tangible assets and the existence
of any impairment to its recoverability based on the projected undiscounted cash
flows of the respective stations.

F-9

10-K/A 17th Page of 41 TOC 1st Previous Next ↓Bottom Just 17th
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Intangible assets, at cost, as of December 31, 1995 and 1996, consist of the
following (in thousands):

AMORTIZATION
PERIOD 1995 1996
--------------- ---------- ------------
Goodwill...................... 40 years $109,772 $ 676,219
Intangibles related to LMAs .. 15 years 103,437 120,787
Decaying advertiser base ..... 1 -- 15 years 38,424 93,896
FCC licenses.................. 25 years 44,564 370,533
Network affiliations.......... 1 -- 25 years 17,482 55,966
Other......................... 1 -- 40 years 4,856 24,057
---------- ------------
318,535 1,341,458
Less- Accumulated
amortization.................. (49,746) (85,155)
---------- ------------
$268,789 $1,256,303
========== ============

Accrued Liabilities

Accrued liabilities consist of the following as of December 31, 1995 and 1996
(in thousands):

1995 1996
------- -------

Compensation ........................... $ 4,847 $10,850
Interest ............................... 11,104 11,915
Other .................................. 4,769 12,265
------- -------
$20,720 $35,030
======= =======

Non-Cash Transactions

During 1994, 1995 and 1996 the Company entered into the following non-cash
transactions (in thousands):

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1994 1995 1996
--------- --------- ---------

Purchase accounting adjustments related to deferred
taxes (Note 9)........................................... $ -- $ 3,400 $17,615
========= ========= =========
Program contract costs acquired.......................... $20,750 $26,918 $51,296
========= ========= =========
Distribution prior to KCI merger (Note 12)............... $ -- $ 1,461 $ --
========= ========= =========

Local Marketing Agreements

The Company generally enters into LMAs, JSAs and similar arrangements with
stations located in markets in which the Company already owns and operates a
station, and in connection with acquisitions, pending regulatory approval of
transfer of License Assets. Under the terms of these agreements, the Company
makes specified periodic payments to the owner-operator in exchange for the
grant to the Company of the right to program and sell advertising on a specified
portion of the station's inventory of broadcast time. Nevertheless, as the
holder of the FCC license, the owner-operator retains full control and
responsibility for the operation of the station, including control over all
programming broadcast on the station.

Included in the accompanying consolidated statements of operations for the years
ended December 31, 1994, 1995 and 1996, are net revenues of $25.0 million, $49.5
million and $153.0 million (including $103.3 million relating to River City),
respectively, that relate to LMAs, JSAs and time brokerage agreements ("TBAs").

F-10

10-K/A 18th Page of 41 TOC 1st Previous Next ↓Bottom Just 18th
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

In connection with the River City Acquisition, the Company entered into an LMA
in the form of TBAs with River City and the owner of KRRT with respect to each
of the nine television and 21 radio stations with respect to which the Company
acquired Non-License Assets. The TBAs are for a ten-year term, which corresponds
with the term of the option the Company holds to acquire the related River City
License Assets. The Company has filed applications with respect to the transfer
of the License Assets of seven of the nine television stations and the 21 radio
stations for which the Company acquired Non-License Assets in the River City
Acquisition. Such applications have been granted and the transfer of the License
Assets has been consummated with respect to 19 of the 21 radio stations. The
approval of the transfer of the two remaining radio licenses is subject to
waiver of FCC cross-ownership rules. Upon grant of FCC approval of the transfer
of License Assets with respect to these stations, the Company intends to acquire
the License Assets, and thereafter the LMAs will terminate and the Company will
own and operate the stations. With respect to the remaining two television
stations, Glencairn has applied for transfer of the License Assets of these
stations, and the Company intends to enter into LMAs with Glencairn Ltd.
("Glencairn", see Note 8) with respect to these stations upon FCC approval of
the transfer of the License Assets to Glencairn. Petitions to deny or informal
objections have been filed against certain of these applications by third
parties. Management believes the Company will ultimately prevail on these
petitions.

Reclassifications

Certain reclassifications have been made to the prior years' financial
statements to conform with the current year presentation.

2. PROPERTY AND EQUIPMENT:

Property and equipment are stated at cost, less accumulated depreciation.
Depreciation is computed under the straight-line method over the following
estimated useful lives:

Buildings and improvements.............................. 10 -- 35 years
Station equipment....................................... 5 -- 10 years
Office furniture and equipment.......................... 5 -- 10 years
Leasehold improvements.................................. 10 -- 31 years
Automotive equipment.................................... 3 -- 5 years
Shorter of 10 years
Property and equipment and autos under capital leases .. or the lease term

Property and equipment consisted of the following as of December 31, 1995 and
1996 (in thousands):

1995 1996
---------- ----------
Land and improvements.......................... $ 1,768 $ 9,795
Buildings and improvements..................... 17,515 39,008
Station equipment.............................. 36,949 112,994
Office furniture and equipment................. 3,451 10,140
Leasehold improvements......................... 2,564 3,377
Automotive equipment........................... 677 3,280
Construction in progress....................... -- 6,923
---------- ----------
62,924 185,517
Less- Accumulated depreciation and
amortization................................... (20,127) (31,184)
---------- ----------
$ 42,797 $154,333
========== ==========

F-11

10-K/A 19th Page of 41 TOC 1st Previous Next ↓Bottom Just 19th
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

3. INTEREST RATE DERIVATIVE AGREEMENTS:

The Company entered into interest rate derivative agreements to reduce the
impact of changing interest rates on its floating rate debt, primarily relating
to the Bank Credit Agreement. In May 1996, the Company amended its Bank Credit
Agreement. The agreement requires the Company to enter into Interest Rate
Protection Agreements at rates not to exceed 9.5% per annum as to a notional
principal amount at least equal to 66 2/3 % of the Tranche A term loans
scheduled to be outstanding from time to time and 9.75% per annum as to a
notional principal amount of 66 2/3 % of the aggregate amount of Tranche B term
loans scheduled to be outstanding from time to time.

At December 31, 1996, the Company had several interest rate swap agreements
relating to the Bank Credit Agreement which expire from March 31, 1997 to June
30, 2000. The swap agreements set rates in the range of 5.84% to 7.00%. The
notional amounts related to these agreements were $955.0 million at December 31,
1996, and decrease to $50.0 million through the expiration dates. The Company
has no intentions of terminating these instruments prior to their expiration
dates unless it were to prepay a portion of its bank debt.

The floating interest rates are based upon the three month London Interbank
Offered Rate (LIBOR) rate, and the measurement and settlement is performed
quarterly. Settlements of these agreements are recorded as adjustments to
interest expense in the relevant periods. Premiums paid under these agreements
were approximately $1.1 million in 1994 and $851,000 in 1996 and are amortized
over the life of the agreements. The counterparties to these agreements are
major national financial institutions. The Company estimates the aggregate cost
to retire these instruments at December 31, 1996 to be $2.3 million.

4. NOTES PAYABLE AND COMMERCIAL BANK FINANCING:

Bank Credit Agreement

In connection with the 1994 Acquisitions (see Note 12), the Company entered into
a Bank Credit Agreement. The Bank Credit Agreement consisted of three classes:
Facility A Revolving Credit and Term Loan, Facility B Credit Loan and Facility C
Term Loan. In August 1995, the Company utilized the net proceeds from the Public
Debt Offering mentioned below to repay amounts outstanding under the Bank Credit
Agreement.

The weighted average interest rates during 1994 and as of December 31, 1994 were
7.48% and 8.56%, respectively, and during 1995 while amounts were outstanding
and as of August 28, 1995, when outstanding indebtedness relating to Bank Credit
Agreement were repaid, were 8.44% and 7.63%, respectively. Interest expense
relating to the Bank Credit Agreement was $9.4 million, $15.6 million and $-0-
for the years ended December 31, 1994, 1995 and 1996, respectively.
Simultaneously with the acquisition of the non-license assets of River City, the
aforementioned Bank Credit Agreement was amended and replaced with new terms as
outlined below.

Bank Credit Agreement as Amended

In order to finance the acquisition of the non-license assets of River City and
potential future acquisitions, the Company amended its Bank Credit Agreement on
May 31, 1996. The Bank Credit Agreement consists of three classes: Tranche A
Term Loan, Tranche B Term Loan and a Revolving Credit Commitment.

The Tranche A Term Loan is a term loan in a principal amount not to exceed $550
million and is scheduled to be paid in quarterly installments beginning December
31, 1996 through December 31, 2002. The Tranche B Term Loan is a term loan in a
principal amount not to exceed $200 million and is scheduled to be paid in
quarterly installments beginning December 31, 1996 through November 2003. The
Revolving Credit Commitment is a revolving credit facility in a principal amount
not to exceed $250 million and is scheduled to have reduced availability
quarterly beginning March 31, 1999 through

F-12

10-K/A 20th Page of 41 TOC 1st Previous Next ↓Bottom Just 20th
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

November 30, 2003. As of December 31, 1996, outstanding indebtedness under the
Tranche A Term Loan, Tranche B Term Loan and the Revolving Credit Commitment
were $520 million, $198.5 million and $155 million, respectively. The Company
incurred debt acquisition costs of approximately $20 million associated with
this indebtedness which are being amortized over the life of the debt.

The applicable interest rate for the Tranche A Term Loan and the Revolving
Credit Tranche is either LIBOR plus 1.25% to 2.5% or the base rate plus zero to
1.25%. The applicable interest rate for the Tranche A Term Loan and the
Revolving Credit Tranche is adjusted based on the ratio of total debt to four
quarters trailing earnings before interest, taxes, depreciation and
amortization. The applicable interest rate for Tranche B is either LIBOR plus
2.75% or the base rate plus 1.75%. The weighted average interest rates for
outstanding indebtedness relating to the current Bank Credit Agreement during
1996 and as of December 31, 1996, were 8.08% and 8.12%, respectively. Interest
expense relating to the Bank Credit Agreement was $40.4 million for the year
ended December 31, 1996.

The fair value of the Company's outstanding indebtedness under the Bank Credit
Agreement approximated its carrying value at December 31, 1996.

The Company is required to maintain certain debt covenants in connection with
the Bank Credit Agreement. As of December 31, 1996, the Company is in compliance
with all debt covenants.

Public Debt Offering

In August 1995, the Company consummated the sale of $300.0 million of 10% Senior
Subordinated Notes (the 1995 Notes), due 2005, generating net proceeds to the
Company of $293.2 million. The net proceeds of this offering were utilized to
repay outstanding indebtedness under the then existing Bank Credit Agreement of
$201.8 million with the remainder being retained and eventually utilized to make
payments related to certain acquisitions consummated during 1996. In conjunction
with the repayment of outstanding indebtedness under the Bank Credit Agreement,
the Company recorded an extraordinary loss of $4.9 million, net of a tax benefit
of $3.4 million.

Interest on the 1995 Notes is payable semiannually on March 30 and September 30
of each year, commencing March 30, 1996. Interest expense for the year ended
December 31, 1995 and 1996, was $10.4 million and $30.0 million, respectively.
The 1995 Notes are issued under an indenture among SBG, its subsidiaries (the
guarantors) and the trustee. Costs associated with the offering totaled $6.8
million, including an underwriting discount of $6.0 million and are being
amortized over the life of the debt.

The Company has the option to redeem the 1995 Notes at any time on or after
September 30, 2000. Redemption prices are as follows:

REDEMPTION PRICE
(AS A % OF PRINCIPAL
REDEMPTION DATE AMOUNT)
------------------------------ --------------------------

On or after September 30, 2000................ 105%
2001................ 103%
2002................ 102%

Furthermore, at any time on or prior to September 30, 1998, the Company may
redeem up to 25% of the original principal amount of the 1995 Notes with the net
proceeds of a public equity offering at 110% of the principal amount. The 1995
Notes also may be redeemed by the holder at 101% of the principal amount upon
occurrence of a change of control, as defined in the Indenture.

Based upon the quoted market price, the fair value of the 1995 Notes as of
December 31, 1996 is $306 million.

F-13

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

Under the terms of the Indenture, the 1995 Notes are guaranteed by the Company
and substantially all of its subsidiaries (the guarantors). The guarantors are
wholly-owned, any non-guarantors are inconsequential to the consolidated
financial statements and the guarantees are full, unconditional, and joint and
several.

The Indenture contains covenants limiting indebtedness, transactions with
affiliates, liens, sales of assets, issuances of guarantees of, and pledges for,
indebtedness, transfer of assets, dividends, mergers and consolidations.

Senior Subordinated Notes

In December 1993, the Company raised $200.0 million through the issuance of 10%
senior subordinated notes (the 1993 Notes), due 2003. Subsequently, the Company
determined that a redemption of $100.0 million was required. This redemption and
a refund of $1.0 million of fees from the underwriters took place in the first
quarter of 1994. The remaining portion of the proceeds of the 1993 Notes was
used to repay a secured debt facility and for general corporate purposes.

Interest on the 1993 Notes is payable semiannually on June 15 and December 15 of
each year. Interest expense for the years ended December 31, 1994, 1995 and
1996, was $12.6 million, $10.0 million and $10.0 million, respectively. The 1993
Notes are issued under an Indenture among SBG, its subsidiaries (the guarantors)
and the trustee. Costs associated with the offering totaled $5.1 million,
including an underwriting discount of $4.0 million. These costs, less the $1.0
million refund related to the redemption, were capitalized and are being
amortized over the life of the debt.

The 1993 Notes may be redeemed by the holder at 101% of the principal amount
upon occurrence of a change of control, as defined in the Indenture. The Company
has the option to redeem the 1993 Notes any time after December 15, 1998.
Redemption prices are as follows:

REDEMPTION PRICE
(AS A % OF PRINCIPAL
REDEMPTION DATE AMOUNT)
----------------------------- ----------------
On or after December 15, 1998................. 105%
1999................. 104%
2000................. 103%
2001................. 100%

Based upon the quoted market price, the fair value of the 1993 Notes as of
December 31, 1996, is $102 million.

Under the terms of the Indenture, the 1993 Notes are guaranteed by the Company
and substantially all of its subsidiaries (the guarantors). The guarantors are
wholly-owned, any non-guarantors are inconsequential to the consolidated
financial statements and the guarantees are full, unconditional, and joint and
several.

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

Summary

Notes payable and commercial bank financing consisted of the following as of
December 31, 1995 and 1996 (in thousands):

[Enlarge/Download Table]

1995 1996
---------- ------------

Bank Credit Agreement, Tranche A Term Loan............................ $ -- $ 520,000
Bank Credit Agreement, Tranche B Term Loan............................ -- 198,500
Bank Credit Agreement, Revolving Credit Commitment.................... -- 155,000
Senior subordinated notes due 2003, interest at 10%................... 100,000 100,000
Senior subordinated notes due 2005, interest at 10%................... 300,000 300,000
Unsecured installment notes to former minority stockholders of CRI
and WBFF, interest at 18%............................................. 1,777 644
---------- ------------
401,777 1,274,144
Less: Current portion................................................. (1,133) (62,144)
---------- ------------

$400,644 $ 1,212,000
========== ============

The Revolving Credit Commitment is a revolving credit facility in a principal
amount not to exceed $250 million and is scheduled to have reduced availability
quarterly beginning March 31, 1999 through November 30, 2003. Indebtedness under
Tranche A and Tranche B of the Bank Credit Agreement and notes payable as of
December 31, 1996, mature as follows (in thousands):

1997 ................................................ $ 62,144
1998 ................................................ 71,500
1999 ................................................ 91,500
2000 ................................................ 101,500
2001 ................................................ 101,500
2002 and thereafter ................................. 691,000
----------
$1,119,144
==========

Substantially all of the Company's assets have been pledged as security for
notes payable and commercial bank financing. Further, Cunningham Communications,
Inc. (Cunningham), Keyser Investment Group, Inc. (KIG) and Gerstell Development
Limited Partnership (Gerstell), all businesses that are owned and controlled by
these Class B stockholders, were required to guarantee obligations to the
commercial bank.

In January 1997, the Company made the final payment of $644,000 repaying the
remaining indebtedness to the former minority stockholders.

F-15

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)

5. NOTES AND CAPITAL LEASES PAYABLE TO AFFILIATES:

Notes and capital leases payable to affiliates consisted of the following as of
December 31, 1995 and 1996 (in thousands):

[Enlarge/Download Table]

1995 1996
--------- ---------
Subordinated installment notes payable to former majority owners, interest
at 8.75%, principal payments in varying amounts due annually beginning
October 1991, with a balloon payment due at maturity in May 2005 ............ $11,442 $10,448
Capital lease for building, interest at 17.5%................................ 1,500 1,372
Capital leases for broadcasting tower facilities, interest rates averaging
10%.......................................................................... 632 249
Capital leases for building and tower, interest at 8.25%..................... 2,252 1,890
--------- ---------
15,826 13,959
Less: Current portion........................................................ (1,867) (1,774)
--------- ---------
$13,959 $12,185
========= =========

Notes and capital leases payable to affiliates, as of December 31, 1996, mature
as follows (in thousands):

1997.................................................... $ 2,856
1998.................................................... 2,654
1999.................................................... 2,666
2000.................................................... 2,540
2001.................................................... 1,920
2002 and thereafter..................................... 7,872
---------
Total minimum payments due.............................. 20,508
Less: Amount representing interest...................... (6,549)
---------
Present value of future notes and capital lease
payments................................................ $13,959
=========

6. PROGRAM CONTRACTS PAYABLE:

Future payments required under program contracts payable as of December 31,
1996, are as follows (in thousands):

1997 ....................................................... $ 58,461
1998 ....................................................... 33,216
1999 ....................................................... 18,331
2000 ....................................................... 3,665
2001 ....................................................... 430
2002 and thereafter ........................................ 552
---------
114,655
Less: Current portion ...................................... (58,461)
---------
Long-term portion of program contracts
payable .................................................... $ 56,194
=========

F-16

10-K/A 24th Page of 41 TOC 1st Previous Next ↓Bottom Just 24th
SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Included in the current portion amounts are payments due in arrears of $10.9
million. In addition, the Companies have entered into noncancelable commitments
for future program rights aggregating $60.5 million as of December 31, 1996.

The Company has estimated the fair value of its program contract payables and
noncancelable commitments at approximately $51.3 million and $29.0 million,
respectively, as of December 31, 1995, and $102.7 million and $43.1 million,
respectively, at December 31, 1996, based on future cash flows discounted at the
Company's current borrowing rate.

7. PREPAYMENT OF SYNDICATED PROGRAM CONTRACT LIABILITIES:

In connection with the 1996 Acquisitions (see Note 12), the Company assumed
certain syndicated program contracts payable for which the underlying value of
the associated syndicated program assets was determined, by management, to be of
little or no value. The Company negotiated the prepayment of syndicated program
contracts payable for certain of the 1996 Acquisitions, as well as certain other
of the Company's subsidiaries. The Company made cash payments totaling $15.1
million relating to these syndicated program contracts payable. For subsidiaries
owned prior to 1996, the Company recognized related amortization of excess
syndicated programming of $3.0 million.

8. RELATED PARTY TRANSACTIONS:

During 1990, WBFF sold certain station equipment to an affiliate for $512,000.
The sale is accounted for on an installment basis since the affiliate is in the
start-up phase. The note is to be paid over five years and earns annual interest
at 11%. In connection with the start-up of this affiliate, certain SBG Class B
Stockholders issued a note allowing them to borrow up to $3.0 million from the
Company. This note was amended and restated June 1, 1994, to a term loan bearing
interest of 6.88% with quarterly principal payments beginning March 31, 1996
through December 31, 1999. As of December 31, 1995 and 1996, the balance
outstanding was approximately $2.0 and $1.8 million, respectively.

During 1990, SBG lent $1.5 million to certain Class B Stockholders pursuant to a
note. The note bears interest at 6.88% per annum and is payable in monthly
principal and interest payments through September 2000 with a balloon payment in
September 2000. As of December 31, 1995 and 1996, the balance outstanding was
approximately $1.1 million and $1.0 million respectively.

During the year ended December 31, 1993, the Company loaned Gerstell Development
Limited Partnership (a partnership owned by Class B Stockholders) $2.1 million.
The note bears interest at 6.18%, with principal payments beginning on November
1, 1994, and a final maturity date of October 1, 2013. As of December 31, 1995
and 1996, the balance outstanding was approximately $2.0 million. In addition,
Gerstell has arranged for a $2.0 million loan from a commercial bank, which is
guaranteed by the Company.

During 1993, SBG lent $6.6 million to a former majority owner pursuant to a
note. The note bears interest at 7.21% per annum and requires payments of
interest only through September 2001. Monthly principal and interest payments
with respect to this note commence in November 2001 and end in September 2006.

During 1994, the Company assigned its options to purchase the license assets of
WNUV and WVTV to Glencairn for $4.2 million which was paid in 1995, and sold the
license assets of WRDC to Glencairn for $2.0 million. Subsequently, Glencairn
exercised its options to purchase the licenses of WNUV and WVTV. Glencairn is a
corporation of which a former shareholder of SBG, who is also the holder of the
$6.6 million note described above, and trusts established by this shareholder
hold the majority of the equity interests in Glencairn. The Company has entered
into five-year LMA agreements (with five-year renewal options) with Glencairn
for the right to program and sell advertising. During 1995 and 1996, the Company
made payments of $5.6 million and $5.4 million, respectively, to Glencairn under
these LMA agreements.

F-17

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Concurrently with the initial public offering (see Note 13), the Company
acquired options from certain stockholders of Glencairn that will grant the
Company the right to acquire, subject to applicable FCC rules and regulations,
up to 97% of the capital stock of Glencairn. The Glencairn options were
purchased by the Company for nominal consideration and will be exercisable only
upon payment of an aggregate price equal to Glencairn's cost for the underlying
stations, plus a 10% annual return.

During 1995 and 1996, the Company from time to time entered into charter
arrangements to lease airplanes owned by certain Class B Stockholders. During
1995 and 1996, the Company incurred expenses of approximately $489,000 and
$336,000 related to these arrangements, respectively.

In May 1996, the Company acquired certain assets from River City, obtained
options to acquire other assets from River City and entered into an LMA to
provide programming services to certain television and radio stations, of which
River City is the owner of the License Assets. Certain individuals who have
direct or indirect beneficial owners of equity interests in River City are
affiliates of the Company. During 1996, the Company made LMA payments of $1.4
million to River City.

In September 1996, the Company entered into a five-year agreement with River
City pursuant to which River City will provide to the Company certain production
services. Pursuant to this agreement, River City will provide certain services
to the Company in return for an annual fee of $416,000, subject to certain
adjustments on each anniversary date.

An individual who is an affiliate of the Company is the owner of 100% of the
common stock of Keymarket of South Carolina, Inc. ("KSC"), and the Company has
an option to acquire either (i) all of the assets of KSC for forgiveness of debt
in an aggregate principal amount of approximately $7.4 million, plus payment of
approximately $1.0 million, less certain adjustments or (ii) all of the stock of
KSC for $1.0 million, less certain adjustments. The Company is required to
purchase each of the properties during the term of the applicable lease for an
aggregate purchase price of approximately $1.75 million.

In May 1996, the Company, along with the Class B Stockholders, formed Beaver Dam
Limited Liability Company (BDLLC), of which the Company owns a 45% interest.
BDLLC was formed for the purpose of constructing and owning a building which may
be the site for the Company's corporate headquarters. The Company made capital
contributions of approximately $380,000.

Certain assets used by the Company's operating subsidiaries are leased from
Cunningham, KIG and Gerstell (entities owned by the Class B Stockholders). Lease
payments made to these entities were $1.2 million, $1.3 million, and $1.3
million for the years ended December 31, 1994, 1995 and 1996, respectively.

9. INCOME TAXES:

The Company files a consolidated federal income tax return and separate company
state tax returns. The provision (benefit) for income taxes consists of the
following as of December 31, 1994, 1995 and 1996 (in thousands):

[Enlarge/Download Table]

1994 1995 1996
--------- --------- --------

Provision (benefit) for income taxes before extraordinary
item......................................................... $ (647) $ 5,200 $6,936
Income tax effect of extraordinary item...................... -- (3,357) --
--------- --------- --------
$ (647) $ 1,843 $6,936
========= ========= ========
Current:
Federal..................................................... $ 7,090 $ 5,374 $ 127
State....................................................... 1,440 1,558 4,479
--------- --------- --------
8,530 6,932 4,606
--------- --------- --------
Deferred:
Federal .................................................... (7,650) (4,119) 2,065
State....................................................... (1,527) (970) 265
--------- --------- --------
(9,177) (5,089) 2,330
--------- --------- --------
$ (647) $ 1,843 $6,936
========= ========= ========

F-18

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following is a reconciliation of federal income taxes at the applicable
statutory rate to the recorded provision (benefit):

1994 1995 1996
--------- ------- -------
Statutory federal income taxes.............. (34.0)% 34.0% 34.0%
Adjustments-
State income taxes, net of federal effect.. 1.8 1.7 8.1
State franchise taxes, net of federal
effect.................................... 0.8 1.1 10.8
Non-deductible goodwill amortization....... 14.1 11.9 25.2
Non-deductible expense items .............. 6.3 3.0 6.4
Income of pooled S corporation (Note 12) .. (7.6) -- --
Other...................................... (0.5) (0.7) 1.5
--------- ------- -------
Provision (benefit) for income taxes....... (19.1)% 51.0% 86.0%
========= ======= =======

Temporary differences between the financial reporting carrying amounts and the
tax basis of assets and liabilities give rise to deferred taxes. The Company had
a net deferred tax asset of $21.0 million and $782,000 as of December 31, 1995
and 1996, respectively. The realization of deferred tax assets is contingent
upon the Company's ability to generate sufficient future taxable income to
realize the future tax benefits associated with the net deferred tax asset.
Management believes that deferred assets will be realized through future
operating results. This belief is based on taxable income for the year ended
December 31, 1996 and its projection of future years' results.

The Company has total available federal NOL's of approximately $15.0 million as
of December 31, 1996, which expire during various years from 2004 to 2011.
Certain NOL's are limited to use within a specific entity, and certain NOL's are
subject to annual limitations under Internal Revenue Code Section 382 and
similar state provisions.

Total deferred tax assets and deferred tax liabilities as of December 31, 1995
and 1996, including the effects of businesses acquired, and the sources of the
difference between financial accounting and tax bases of the Company's assets
and liabilities which give rise to the deferred tax assets and deferred tax
liabilities and the tax effects of each are as follows (in thousands):

1995 1996
--------- ---------
Deferred Tax Assets:
Accruals and reserves ......................... $ 1,110 $ 2,195
Loss on disposal of fixed
assets ....................................... 619 --
Net operating losses .......................... 2,676 4,829
Program contracts ............................. 4,575 2,734
Fixed assets and intangibles .................. 14,500 --
Other ......................................... 373 713
------- -------
$23,853 $10,471
======= =======
Deferred Tax Liabilities:
FCC license ................................... $ 1,656 $ 2,613
Hedging instruments ........................... -- 188
Fixed assets and intangibles .................. -- 4,430
Capital lease accounting ...................... 988 1,304
Affiliation agreement ......................... -- 691
Investment in partnerships .................... -- 209
Other ......................................... 182 254
------- -------
$ 2,826 $ 9,689
======= =======

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

During 1995, the Company made a $3.4 million deferred tax adjustment to decrease
its deferred tax asset and increase goodwill under the purchase accounting
guidelines of APB 16 and in accordance with SFAS 109 related to the opening
deferred tax asset balances of certain 1994 acquisitions. During 1996, the
Company made a $1.1 million deferred tax adjustment to decrease its deferred tax
asset and increase goodwill under the purchase accounting guidelines of APB 16
and in accordance with SFAS 109 related to the opening deferred tax asset
balances of certain 1995 acquisitions.

10. EMPLOYEE BENEFIT PLAN:

The Sinclair Broadcast Group, Inc. 401(k) profit sharing plan and trust (the SBG
Plan) covers eligible employees of the Company. Contributions made to the SBG
Plan include an employee elected salary reduction amount, company matching
contributions and a discretionary amount determined each year by the Board of
Directors. The Company's 401(k) expense for the years ended December 31, 1994,
1995 and 1996, was $274,000, $271,000 and $657,000, respectively. There were no
discretionary contributions during these periods.

11. CONTINGENCIES AND OTHER COMMITMENTS:

LITIGATION

Lawsuits and claims are filed against the Company from time to time in the
ordinary course of business. These actions are in various preliminary stages,
and no judgments or decisions have been rendered by hearing boards or courts.
Management, after reviewing developments to date with legal counsel, is of the
opinion that the outcome of such matters will not have a material adverse effect
on the Company's financial position or results of operations.

OPERATING LEASES

The Company has entered into operating leases for certain property and equipment
under terms ranging from three to ten years. The rent expense under these
leases, as well as certain leases under month-to-month arrangements, for the
years ended December 31, 1994, 1995 and 1996, aggregated approximately $625,000,
$1.1 million and $3.1 million, respectively.

Future minimum payments under the leases are as follows (in thousands):

1997 .................................................. $ 3,672
1998 .................................................. 3,055
1999 .................................................. 2,244
2000 .................................................. 1,789
2001 .................................................. 1,206
2002 and thereafter ................................... 5,430
-------
$17,396
=======

CERTAIN AFFILIATION AGREEMENTS

The Company generally operates its television stations under affiliation
agreements with Fox, ABC, UPN, WB and CBS. These agreements range in terms from
one to five years and in certain circumstances have renewable options. The
Company has the option to acquire the FCC licenses of certain stations being
operated as LMAs. The networks affiliated with these stations, other than Fox
and ABC, have the right to terminate the affiliations upon transfer of the
license.

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

12. ACQUISITIONS:

1994 ACQUISITIONS

In May 1994, the Company acquired WCGV and WTTO for an aggregate purchase price
of $60.0 million. The acquisition was accounted for under the purchase method of
accounting whereby the purchase price was allocated to the fair market value of
the assets purchased and the liabilities assumed. Based upon an independent
appraisal, $11.7 million was allocated to property and programming costs and
$29.9 million was allocated to acquired broadcasting assets. The excess of the
purchase price over the acquired assets of $18.4 million was allocated to other
intangible assets, and is being amortized over 40 years. The Company made an
additional investment of $56.0 million for covenants not-to-compete and
consulting agreements in these and the Company's current markets, which are
being amortized over the lives of the respective agreements.

Simultaneous with the acquisition of WCGV and WTTO, the Company acquired the
non-license assets of WNUV and WVTV for approximately $66.8 million and entered
into LMAs with the owner of the licenses of WNUV and WVTV. The acquisition was
accounted for under the purchase method of accounting whereby $14.8 million of
the purchase price was allocated to property and programming costs and $700,000
of the purchase price was allocated to deferred tax liabilities, with the
remainder being allocated to other intangible assets. The intangible assets are
being amortized over 15 years.

Simultaneous with the acquisitions of the non-license assets of WNUV and WVTV,
the Company acquired the options to purchase the license assets of these
stations for $8.0 million and intangible assets related to the LMAs for $9.5
million, for a total purchase price of $17.5 million. The Company subsequently
assigned the options to Glencairn for $4.2 million. The Company is amortizing
the difference between the total amount paid for the options by the Company and
the amount allocated to the value of the options over the estimated life of the
LMA, which is 15 years.

In August 1994, the Company acquired 100% of the non-voting stock representing a
98% ownership interest in F.S.F. Acquisition Corporation (FSFA), the corporate
parent of WRDC, for $34.0 million. The investment also includes a controlling
interest in a joint venture which owns the studio and office building and a
minority interest in a partnership that owns the TV broadcast tower. The joint
venture has been consolidated, with the other owners' share of equity shown as a
minority interest, while the partnership interest has been presented as an
investment and is included in other assets. The purchase was accounted for under
the purchase method of accounting whereby the purchase price was allocated to
property and programming assets, acquired intangible broadcasting assets and
other intangible assets for $10.0 million, $7.0 million and $17.0 million,
respectively, based upon an independent appraisal. Intangible assets are being
amortized over periods of 10 to 15 years. Simultaneous with the purchase of the
nonvoting stock of FSFA, the Company acquired an option to acquire the voting
common stock of FSFA. Additionally, the Company entered into two year consulting
and non-compete agreements with the former owner of the voting common stock of
FSFA for $4.0 million.

1995 ACQUISITIONS AND DISPOSITIONS

In January and May 1995, the Company acquired the non-license and license
assets, respectively, of WTVZ in Norfolk, Virginia for a purchase price of $49.0
million. The acquisition was accounted for under the purchase method of
accounting whereby the purchase price was allocated to property and programming
assets, acquired intangible broadcasting assets and other intangible assets for
$1.4 million, $12.6 million and $35.0 million, respectively, based upon an
independent appraisal. Intangible assets are being amortized over 1 to 40 years.

In January 1995, the Company acquired the license and non-license assets of the
Paramount Station Group of Raleigh/Durham, Inc. which owned and operated WLFL in
Raleigh-Durham, North Carolina for $55.5 million, plus the assumption of $3.7
million in liabilities. The acquisition was accounted for

F-21

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

under the purchase method of accounting whereby the purchase price was allocated
to property and programming assets, acquired intangible broadcasting assets and
other intangible assets for $8.6 million, $15.9 million and $34.7 million,
respectively, based upon an independent appraisal. Intangible assets are being
amortized over periods of 1 to 40 years.

On March 31, 1995, the Company exercised its option to acquire 100% of the
voting stock of FSFA for the exercise price of $100. FSFA was merged into WLFL,
Inc. and became a wholly-owned subsidiary of the Company. Simultaneously, the
Company sold the license assets of FSFA to Glencairn for $2.0 million, and
entered into a five-year LMA (with a five-year renewal option) with Glencairn
(see Note 8).

On May 5, 1995, Keyser Communications, Inc. (KCI), an affiliated entity
wholly-owned by the stockholders of the Company, was merged into the Company for
common stock. Certain assets and liabilities of KCI (other than programming
items, an LMA agreement and consulting agreements), were distributed to the KCI
shareholders immediately prior to the merger. The merger of KCI is being treated
as a reorganization and has been accounted for as a pooling of interests
transaction. Accordingly, the consolidated financial statements for all periods
presented have been restated to include the accounts of KCI.

Combined and separate results of the Company and KCI (through May 5, 1995,
merger date) during the period presented are as follows (in thousands):

COMPANY KCI COMBINED
---------- --------- ----------
Twelve months ended December 31, 1994:
Net broadcast revenues........................ $113,728 $4,883 $118,611
Income (loss) before provision for income
taxes........................................ (4,147) 760 (3,387)
Net income (loss)............................. (3,500) 760 (2,740)
Twelve months ended December 31, 1995:
Net broadcast revenues........................ $186,031 $1,903 $187,934
Income (loss) before provision for income
taxes........................................ 10,592 (404) 10,188
Net income (loss)............................. 480 (404) 76

In July 1995, the Company acquired the non-license assets of WABM in Birmingham,
Alabama for a purchase price of $2.5 million. The acquisition was accounted for
under the purchase method of accounting whereby $1.1 million of the purchase
price was allocated to property and program assets, based upon an independent
appraisal. The excess of the purchase price over the acquired assets of
approximately $1.4 million was allocated to other intangible assets and is being
amortized over 15 years. Simultaneously with the purchase, the Company entered
into a five-year LMA agreement (with a five-year renewal option) with Glencairn.

In November 1995, the Company acquired the non-license assets of WDBB in
Tuscaloosa, Alabama for a purchase price of $400,000. In addition, the Company
made "Option Grant Payments" of $11.3 million to certain parties for options to
purchase the issued and outstanding stock of WDBB, Inc., which holds the license
assets of WDBB. The option agreement further provides for the payment of option
grant installments of $2.6 million over five years and a final option exercise
price of $100,000. The acquisition was accounted for under the purchase method
of accounting whereby $1.3 million was allocated to the property and program
assets based upon an independent appraisal. The total of Option Grant Payments
paid and grant installments accrued of $13.1 million was allocated to other
intangible assets and is being amortized over 15 years.

F-22

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

1996 ACQUISITIONS

RIVER CITY ACQUISITION

In April 1996, the Company entered into an agreement to purchase certain
non-license assets of River City. In May 1996, the Company closed the
transaction for a purchase price of $967.1 million, providing as consideration
1,150,000 shares of Series A Convertible Preferred Stock with a fair market
value of $125.1 million, 1,382,435 stock options with a fair market value of
$23.9 million and cash payments totaling $818.1 million. The Company utilized
indebtedness under its Bank Credit Agreement to finance the transaction. The
acquisition was accounted for under the purchase method of accounting whereby
the purchase price was allocated to property and programming assets, acquired
intangible broadcasting assets and other intangible assets for $82.8 million,
$375.6 million and $508.7 million, respectively, based upon an independent
appraisal. Intangible assets are being amortized over 1 to 40 years.

Simultaneously, the Company entered into option agreements to purchase certain
license assets for an aggregate option exercise price of $20 million. In
September 1996, after receiving FCC approval for license transfer, the Company
made a cash payment of $6.9 million to acquire certain of the radio station FCC
licenses.

Also, simultaneously with the acquisition, the Company entered into an option
agreement to purchase the license and non-license assets of WSYX in Columbus,
Ohio, for the option purchase price of $130 million plus the amount of River
City indebtedness secured by the WSYX assets on the exercise date (not to exceed
the amount at the date of closing of $105 million). Pursuant to the WSYX option
agreement, the Company is required to make certain "Option Extension Fees", as
defined. These fees are required to begin quarterly beginning with December 31,
1996, through the earlier of the "Option Grant Date" or the expiration date of
June 30, 1999. The Option Extension Fees are calculated as 8% per annum of the
option purchase price through the first anniversary of the Option Grant Date,
15% per annum of the option purchase price through the second anniversary of the
Option Grant Date and 25% per annum of the option purchase price through the
expiration of the WSYX option agreement. On December 31, 1996, the Company made
an Option Extension Fee payment of $7.0 million which was recorded within Other
Assets in the accompanying balance sheets.

In conjunction with the River City acquisition, the Company entered into an
agreement to purchase the non-license assets of KRRT, Inc., a television station
in San Antonio, Texas, for a purchase price of $29.5 million. The acquisition
was accounted for under the purchase method of accounting whereby the purchase
price was allocated to property and programming assets, acquired intangible
broadcasting assets and other intangible assets for $3.8 million, $0.4 million
and $25.3 million, respectively, based upon an independent appraisal. Intangible
assets are being amortized over 1 to 15 years.

In connection with the River City acquisition, the Company consummated the
following transactions concurrent with or subsequent to the closing:

1. In June 1996, the Board of Directors of the Company adopted, upon approval
of the stockholders by proxy, an amendment to the Company's amended and restated
charter. This amendment increased the number of Class A Common Stock shares
authorized to be issued by the Company from 35,000,000 shares to 100,000,000
shares. The amendment also increased the number of shares of preferred stock
authorized from 5,000,000 shares to 10,000,000 shares.

2. Series A Preferred Stock -- As partial consideration for the acquisition
of the non-license assets of River City, the Company issued 1,150,000 shares of
Series A Preferred Stock. In June 1996, the Board of Directors of the Company
adopted, upon approval of the stockholders by proxy, an amendment to the
Company's amended and restated charter at which time Series A Preferred Stock
was exchanged for and converted into Series B Preferred Stock. The Company

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

recorded the issuance of Series A Preferred Stock based on the fair market value
at the date the River City acquisition was announced at the exchange rate of
3.64 shares of Class A Common Stock for each share of Series A Preferred Stock.

3. Series B Preferred Stock -- Shares of Series B Preferred Stock are
convertible at any time into shares of Class A Common Stock, with each share of
Series B Preferred Stock convertible into approximately 3.64 shares of Series A
Common Stock. The Company may redeem shares of Series B Preferred Stock only
after the occurrence of certain events. If the Company seeks to redeem shares of
Series B Preferred Stock and the stockholder elects to retain the shares, the
shares will automatically be converted into common stock on the proposed
redemption date. All shares of Series B Preferred stock remaining outstanding as
of May 31, 2001, will automatically convert into Class A Common Stock. Series B
Preferred Stock is entitled to 3.64 votes on all matters with respect to which
Class A Common Stock has a vote.

4. Stock Options and Awards:

Long-Term Incentive Plan-

In June 1996, the Board of Directors adopted, upon approval of the stockholders
by proxy, the 1996 Long-Term Incentive Plan of the Company (the "LTIP"). The
purpose of the LTIP is to reward key individuals for making major contributions
to the success of the Company and its subsidiaries and to attract and retain the
services of qualified and capable employees. A total of 2,073,673 shares of
Class A Common Stock is reserved and available for awards under the plan. In
connection with the River City acquisition, 244,500 options were granted to
certain employees and 1,382,435 were granted to Barry Baker (see Executive
Employment Agreement below) under this plan with an exercise price of $30.11 per
share.

The Company recorded deferred compensation of $1.9 million as additional paid-in
capital at the stock option grant date. During the year ended December 31, 1996,
compensation expense of $739,000 was recorded relating to the options issued
under the LTIP. The remaining deferred compensation of approximately $1.2
million will be recognized as expense on a straight-line basis over the vesting
period.

Incentive Stock Option Plan-

In June 1996, the Board of Directors adopted, upon approval of the stockholders
by proxy, certain amendments to the Company's Incentive Stock Option Plan. The
purpose of the amendments was (i) to increase the number of shares of Class A
Common Stock approved for issuance under the plan from 400,000 to 500,000, (ii)
to delegate to Barry Baker the authority to grant certain options, (iii) to
lengthen from two years to three the period after date of grant before options
become exercisable, (iv) and to provide immediate termination and three-year
ratable vesting of options in certain circumstances. In connection with the
River City acquisition, the Company granted 287,000 options to key management
employees at an exercise price of $37.75, the fair market value at the date of
grant.

5. Executive Employment Agreement

In connection with the acquisition of River City, the Company entered into a
five-year employment agreement (the "Baker Employment Agreement") with Barry
Baker, pursuant to which Mr. Baker will become President and Chief Executive
Officer of SCI and Executive Vice President of the Company, at such time as Mr.
Baker is able to hold those positions consistent with applicable FCC
regulations. Until such time as Mr. Baker is able to become an officer of the
Company, he serves as a consultant to the Company pursuant to a consulting
agreement and received compensation that he would be entitled to as an officer
under the Baker Employment Agreement. If the Baker Employment Agreement is
terminated by the Company other than for

F-24

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Cause (as defined) or by Mr. Baker for good cause (constituting certain
occurrences specified in the agreement), Mr. Baker shall be entitled to certain
termination payments entitling him to his salary and bonuses which would have
been paid under the agreement, to purchase certain television or radio assets
acquired by the Company from River City at fair market value, and all stock
options held by Mr. Baker shall vest immediately.

OTHER ACQUISITIONS

In May 1995, the Company entered into option agreements to acquire all of the
license and non-license assets of WSMH-TV in Flint, Michigan (WSMH). In July
1995, the Company paid the $1.0 million option exercise price to exercise its
option and in February 1996, the Company consummated the acquisition for a
purchase price of $35.4 million. The acquisition was accounted for under the
purchase method of accounting whereby the purchase price was allocated to
property and programming assets, acquired intangible broadcasting assets and
other intangible assets for $1.9 million, $6.0 million and $27.5 million,
respectively, based upon an independent appraisal. Intangible assets are being
amortized over 1 to 40 years.

In March 1996, the Company entered into an agreement to acquire the outstanding
stock of Superior Communications Group, Inc. (Superior) which owns the license
and non-license assets of television stations KOCB in Oklahoma City, Oklahoma
and WDKY in Lexington, Kentucky. In May 1996, the Company consummated the
acquisition for a purchase price of $63.5 million. The acquisition was accounted
for under the purchase method of accounting whereby the purchase price was
allocated to property and programming assets, acquired intangible broadcasting
assets and other intangible assets for $7.3 million, $20.4 million and $35.8
million, respectively, based upon an independent appraisal. Intangible assets
are being amortized over 1 to 40 years.

In January 1996, the Company entered into an agreement to acquire license and
non-license assets of television station WYZZ in Peoria, Illinois. In July 1996,
the Company consummated the acquisition for a purchase price of $21.1 million.
The acquisition was accounted for under the purchase method of accounting
whereby the purchase price was allocated to property and programming assets,
acquired intangible broadcasting assets and other intangible assets for $2.2
million, $4.3 million and $14.6 million, respectively, based upon an independent
appraisal. Intangible assets are being amortized over 1 to 40 years.

In July 1996, the Company entered into an agreement to acquire license and
non-license assets of television station KSMO in Kansas City, Missouri through
the exercise of its options described in Note 13 for a total purchase price of
$10.0 million. The acquisition was accounted for under the purchase method of
accounting whereby the purchase price was allocated to property and programming
assets and acquired intangible broadcasting assets for $4.6 million and $5.4
million, respectively, based upon an independent appraisal. Intangible assets
are being amortized over 1 to 25 years.

In August 1996, the Company acquired the license and non-license assets of
television station WSTR in Cincinnati, Ohio for a total purchase price of $8.7
million. The acquisition was accounted for under the purchase method of
accounting whereby the purchase price was allocated to property and programming
assets and acquired intangible broadcasting assets for $6.2 million and $2.5
million, respectively, based upon an independent appraisal. Intangible assets
are being amortized over 1 to 25 years.

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

13. INITIAL PUBLIC OFFERING:

In June 1995, the Company consummated an initial public offering of 5,750,000
shares of Class A Common Stock at an initial public offering price of $21.00 per
share realizing net proceeds of approximately $111.5 million. The net proceeds
to the Company from this offering were used to reduce long-term indebtedness.

The Company consummated the following transactions concurrent with or prior to
the offering:

1. The Company purchased the options to acquire the partnership interests of
KSMO in Kansas City, Missouri and WSTR in Cincinnati, Ohio ("Option Stations")
from the stockholders for an aggregate purchase price was $9.0 million. The
stockholders also assigned to the Company their rights and obligations under an
option agreement among the stockholders and a commercial bank which held secured
debt of KSMO and WSTR.

2. The stockholders assigned the subordinated convertible debenture relating
to the sale of WPTT to the Company in exchange for $1.0 million, a portion of
which was used to retire the outstanding balance of a note due from the
controlling stockholders.

3. The Company acquired options from certain stockholders of Glencairn that
will grant the Company the right to acquire, subject to applicable FCC rules and
regulations, up to 97% of the capital stock of Glencairn.

4. The Board of Directors of the Company adopted Amended and Restated
Articles of Incorporation to authorize up to 35,000,000 shares of Class A Common
Stock, par value $.01 per share, 35,000,000 shares of Class B Common Stock, par
value $.01 per share and 5,000,000 shares of Preferred Stock, par value $.01 per
share; completed a reclassification and conversion of its outstanding common
stock into shares of Class B Common Stock; and effected an approximately 49.1
for 1 stock split of the Company's common stock (resulting in 29,000,000 shares
of Class B Common Stock outstanding). The reclassification, conversion and stock
split have been retroactively reflected in the accompanying consolidated balance
sheets and statements of stockholders' equity. In June 1996, the Company amended
its charter, increasing the number of shares of Class A Common Stock authorized
to be issued from 35,000,000 to 100,000,000 (see Note 12).

5. The Board of Directors of the Company adopted an Incentive Stock Option
Plan for Designated Participants (the Designated Participants Stock Option Plan)
pursuant to which options for shares of Class A Common Stock will be granted to
certain designated employees of the Company upon adoption.

6. On March 27, 1995, the Board of Directors of the Company adopted an
Incentive Stock Option Plan (the Stock Option Plan) pursuant to which options
for shares of Class A Common Stock may be granted to certain designated classes
of employees of the Company. The Stock Option Plan provides that the maximum
number of shares of Class A Common Stock reserved for issuance under the Stock
Option Plan is 500,000, as amended, and that options to purchase Class A Common
Stock may be granted under the plan until the tenth anniversary of its adoption.

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

14. STOCK-BASED COMPENSATION PLANS:

As permitted under SFAS 123, "Accounting for Stock-Based Compensation," the
Company measures compensation expense for its stock-based employee compensation
plans using the intrinsic value method prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and provides pro
forma disclosures of net income and earnings per share as if the fair
value-based method prescribed by SFAS 123 had been applied in measuring
compensation expense.

A summary of changes in outstanding stock options follows:

[Download Table]

WEIGHTED-
WEIGHTED- AVERAGE
AVERAGE EXERCISE
OPTIONS EXERCISE PRICE EXERCISABLE PRICE
----------- --------------- -------------- -----------

Outstanding at end of
1994...................... -- $ -- -- $ --
1995 Activity:
Granted.................. 68,000 21.00 -- $ --
----------- --------------- -------------- -----------
Outstanding at end of
1995..................... 68,000 21.00 -- --
1996 Activity:
Granted.................. 1,904,785 31.50 736,218 --
Exercised................ -- -- -- --
Forfeited................ (3,750) 21.00 -- --
----------- --------------- -------------- -----------
Outstanding at end of
1996..................... 1,969,035 $ 31.16 736,218 $ 30.11
=========== =============== ============== ===========

Additional information regarding stock options outstanding at December 31, 1996,
follows:

[Enlarge/Download Table]

WEIGHTED- WEIGHTED-
AVERAGE AVERAGE
REMAINING REMAINING WEIGHTED-
VESTING CONTRACTUAL AVERAGE
RANGE OF EXERCISE PERIOD LIFE EXERCISE
EXERCISE PRICES OUTSTANDING PRICE (IN YEARS) (IN YEARS) EXERCISABLE PRICE
---------------- -------------- ----------- ------------ -------------- -------------- ------------

$21.00.......... 64,250 $21.00 0.71 8.43 -- $ --
30.11.......... 1,562,435 30.11 1.53 9.41 736,218 30.11
37.75.......... 342,350 37.85 2.41 9.41 -- --
-------------- ----------- ------------ -------------- -------------- ------------
$21.00 to
37.75........... 1,969,035 $31.16 1.66 9.38 736,218 $ 30.11
============== =========== ============ ============== ============== ============

Had compensation cost for the Company's 1995 and 1996 grants for stock-based
compensation plans been determined consistent with SFAS 123, the Company's net
income, net income applicable to common share before extraordinary items, and
net income per common share for 1995 and 1996 would approximate the pro forma
amounts below (in thousands except per share data):

[Enlarge/Download Table]

1995 1996
------------------------- --------------------------
AS REPORTED PRO FORMA AS REPORTED PRO FORMA
------------- ----------- ------------- ------------

Net income (loss) before extraordinary item ......... $4,988 $4,799 $1,131 $(1,639)
============= =========== ============= ============
Net income (loss) available to common shareholders .. $ 76 $ (113) $1,131 $(1,639)
============= =========== ============= ============
Net income (loss) per share before extraordinary
item................................................. $ .15 $ .15 $ .03 $ (.04)
============= =========== ============= ============
Net income (loss) per share.......................... $ -- $ -- $.03 $(.04)
============= =========== ============= ============

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. EQUITY PUT AND CALL OPTIONS:

During December 1996, the Company entered into physically settled Put and Call
Options related to the Company's common stock. These option arrangements were
entered into for the purpose of hedging the dilution of the Company's common
stock upon the exercise of stock options granted. The Company entered into
250,000 call options for common stock and 320,600 put options for common stock,
with a strike price of $37.75 and $27.61 per common share, respectively. Upon
the exercise of Put and Call Options, sales and purchases will be recorded as a
component of stockholders' equity. Subsequent changes in the fair value of the
option contracts are not recognized. To the extent that the Company entered into
Put Options, the additional paid-in capital amounts have been adjusted
accordingly and amounts are reflected as Equity Put Options in the accompanying
balance sheets. All Equity Put and Call Options expire May 31, 1999.

16. REGISTRATION STATEMENTS:

In September 1996, the Company filed and in November 1996 obtained effectiveness
of a registration statement on Form S-3 with the Securities and Exchange
Commission with respect to the sale by certain selling stockholders of 5,564,253
shares of Class A Common Stock. These shares represent 4,181,818 shares of Class
A Common Stock issuable upon conversion of Series B Preferred Stock and
1,382,435 shares of Class A Common Stock issuable upon exercise of options held
by Barry Baker.

In September 1996, the Company filed a registration statement on Form S-3 with
the Securities and Exchange Commission with respect to the sale of up to
5,750,000 shares of Class A Common Stock by the Company, and subsequently
amended the registration statement to increase the number of shares that may be
sold by the Company to 5,937,500 shares and to cover the sale of 1,250,000
shares by certain selling stockholders. On November 1, 1996, the Company
announced that it was withdrawing the offering and that it intended to
reconsider an offering in the future when market conditions are more favorable.
The Company also announced that it was considering purchasing outstanding shares
of its Class A Common Stock pursuant to previous authorization by the Board of
Directors.

17. FINANCIAL INFORMATION BY SEGMENT:

Prior to the River City Acquisition in May 1996, the Company did not own or
operate radio stations. As of December 31, 1996 the Company consisted of two
principal business segments -- television broadcasting and radio broadcasting.
The television segment included 13 television stations for which the Company is
the licensee and 15 stations which are operated under local marketing
agreements. These 28 stations operate in 20 different markets in the continental
United States.

The radio segment included 19 stations for which the Company is the licensee and
two stations operated under local marketing agreements. These 21 stations
operate in seven different markets. Substantially all revenues represent income
from unaffiliated companies.

[Enlarge/Download Table]

1996
(IN THOUSANDS)
TELEVISION RADIO CONSOLIDATED
------------ ---------- ---------------

Total revenues......................................... $ 338,467 $ 40,021 $ 378,488
Station operating expenses............................. 142,231 25,534 167,765
Depreciation, program amortization and deferred
compensation........................................... 56,420 3,827 60,247
Amortization of intangibles and other assets .......... 55,063 3,467 58,530
Amortization of excess syndicated programming ......... 3,043 -- 3,043
------------ ---------- ---------------
Station broadcast operating income..................... $ 81,710 $ 7,193 $ 88,903
============ ========== ===============
Total assets........................................... $1,400,521 $306,776 $1,707,297
============ ========== ===============
Capital expenditures................................... $ 12,335 $ 274 $ 12,609
============ ========== ===============

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. UNAUDITED PRO FORMA SUMMARY RESULTS OF OPERATIONS:

The unaudited pro forma summary consolidated results of operations for the years
ended December 31, 1995 and 1996, assuming the 1995 and 1996 acquisitions had
been consummated on January 1, 1995, are as follows (in thousands, except per
share data):

(UNAUDITED) (UNAUDITED)
1995 1996
------------ ------------
Revenues, net............................... $430,762 $481,073
============ ============
Net loss before extraordinary item.......... $(34,345) $(10,719)
============ ============
Net loss available to common shareholders .. $(39,257) $(10,719)
============ ============
Net loss per share before extraordinary
item........................................ $ (0.94) $ (0.27)
============ ============
Net loss per share.......................... $ (1.08) $ (0.27)
============ ============

19. SUBSEQUENT EVENTS:

KUPN Acquisition

In January 1997, the Company entered into a purchase agreement to acquire the
license and non-license assets of KUPN-TV, the UPN affiliate in Las Vegas,
Nevada, for a purchase price of $87 million. Upon entering into this agreement,
the Company made a cash deposit payment of $5 million. The Company plans to
consummate the transaction following FCC approval.

Preferred Securities Offering

In March 1997, the Company completed a private placement (the "Preferred
Securities Offering") of $200 million aggregate liquidation value of 11 5/8%
High Yield Trust Offered Preferred Securities (the "Preferred Securities") of
Sinclair Capital, a subsidiary trust of the Company. The Preferred Securities
were issued March 12, 1997, mature March 15, 2009, and provide for quarterly
distributions to be paid in arrears beginning June 15, 1997. The Company
utilized $135 million of the approximately $194 million in net proceeds of the
Preferred Securities Offering to repay outstanding indebtedness under the Bank
Credit Agreement and retained the remainder for general corporate purposes,
which may include acquisitions and repurchases of the Company's Class A Common
Stock.

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The Company's payment of obligations under the 1993 Notes and the 1995 Notes
were guaranteed prior to the Preferred Securities Offering by all of the
Company's subsidiaries other than Cresap Enterprises, Inc. The Company believes
that Cresap Enterprises, Inc. is inconsequential to the operations of the
Company. In conjunction with the Preferred Securities Offering, KDSM, Inc., KDSM
Licensee, Inc. and Sinclair Capital (the "Non-Guarantor Subsidiaries") are no
longer guarantors of indebtedness under the 1993 Notes or the 1995 Notes. The
following supplemental financial information sets forth on a condensed basis the
balance sheet and statement of operations as of and for the year ended December
31, 1996 for Sinclair Broadcast Group, Inc. (without its subsidiaries, the
"Parent"), the Non-Guarantor Subsidiaries, and the subsidiaries (the "Guarantor
Subsidiaries") that continue to guarantee indebtedness under the 1993 Notes and
the 1995 Notes. Certain reclassifications have been made to provide for uniform
disclosure of all periods presented. The Company believes that these
reclassifications are not material.

[Enlarge/Download Table]

Guarantor Non-Guarantor Elimination
Parent Subsidiaries Subsidiaries Entries Total

Cash, including cash equivalents $ 256 $ 2,082 $ 3 $ - $ 2,341
Accounts receivable, net 158 110,103 2,052 - 112,313
Other current assets 6,848 45,272 996 - 53,116

--------- ---------- ------------- ------------ -----------
Total current assets 7,262 157,457 3,051 - 167,770

Other long-term assets, net 1,514,627 195,056 4,092 (1,430,551) 283,224
Acquired intangible broadcasting
assets, net 22,823 1,199,950 33,530 - 1,256,303

--------- ---------- ------------- ------------ ----------
Total assets $1,544,712 $ 1,552,463 $ 40,673 $ (1,430,551) $1,707,297
========== =========== ============= ============ ==========

Accounts payable and accrued
expenses $ 20,471 $ 26,474 $ 701 $ - $ 47,646
Notes payable and commercial
bank financing 61,500 - - - 61,500
Other current liabilities 1,068 1,364,259 1,505 (1,302,333) 64,499

--------- ---------- ------------- ------------ -----------
Total current liabilities 83,039 1,390,733 2,206 (1,302,333) 173,645

Notes payable and commercial bank
financing 1,212,000 - - - 1,212,000
Other long-term liabilities 7,702 62,927 952 - 71,581

--------- ---------- ------------- ------------ -----------
Total liabilities 1,302,741 1,453,660 3,158 (1,302,333) 1,457,226

Minority interest in consolidated
subsidiaries 3,880 - - - 3,880

Equity put options 8,938 - - - 8,938

Stockholders' equity 229,153 98,803 37,515 (128,218) 237,253

--------- ---------- ------------- ------------ -----------
Total liabilities and stockholders'
equity $1,544,712 $1,552,463 $ 40,673 $(1,430,551) $ 1,707,297
========== =========== ============= ============ ===========

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[Enlarge/Download Table]

Guarantor Non-Guarantor Elimination
Parent Subsidiaries Subsidiaries Entries Total

Total revenues $ - $ 373,629 $ 4,859 $ - $ 378,488

Progam and production, including
barter expenses - 91,087 754 - 91,841

Selling, general and administrative 5,462 69,145 1,317 - 75,924

Amortization of program contract
costs and net realizable value
adjustments - 46,933 864 - 47,797

Amortization of acquired intangible
broadcasting assets, non-compete
and consulting agreements and
other assets 7,976 50,010 544 - 58,530

Other depreciation and amortization 809 14,493 191 - 15,493

----------- ------------ ------------ ---------- ------------
Broadcast operating income (14,247) 101,961 1,189 - 88,903

Interest and amortization of debt
discount expense (83,814) (84,314) - 83,814 (84,314)

Interest and other income (expense) 87,592 (300) - (83,814) 3,478

Income (loss) before provision ----------- ------------ ------------ ---------- ------------
(benefit) for income taxes (10,469) 17,347 1,189 - 8,067

Provision (benefit) for income
taxes (422) 6,873 485 - 6,936

---------- ------------ ------------ ---------- ------------
Net income (loss) $ (10,047) $ 10,474 $ 704 $ - $ 1,131
========== ============ ============ ========== ============

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SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
INDEX TO SCHEDULES

Schedule II -- Valuation and Qualifying Accounts ... S-3

All schedules except those listed above are omitted as not applicable or not
required or the required information is included in the consolidated financial
statements or in the notes thereto.

S-1

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of
Sinclair Broadcast Group, Inc.:

We have audited in accordance with generally accepted auditing standards, the
consolidated balance sheets, statements of operations, changes in stockholders'
equity and cash flows of Sinclair Broadcast Group, Inc. and Subsidiaries
included in this Form 10K/A and have issued our report thereon dated February 7,
1997 except for Note 19, as to which the date is March 12, 1997. Our audit was
made for the purpose of forming an opinion on the basic financial statements
taken as a whole. The schedule listed in the accompanying index is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commissions rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

ARTHUR ANDERSEN LLP

Baltimore, Maryland,
February 7, 1997, except for Note 19,
as to which the date is March 12, 1997

S-2

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SCHEDULE II

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(IN THOUSANDS)

[Enlarge/Download Table]

BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
------------------------------- ------------- ------------- ----------- ------------- ------------

1994
Allowance for doubtful accounts... $ 505 $ 445 $ -- $ 95 $ 855
1995
Allowance for doubtful accounts... 855 978 -- 767 1,066
1996
Allowance for doubtful accounts... 1,066 1,563 575((1)) 732 2,472

(1) Amount represents allowance for doubtful account balances purchased in
connection with the acquisition of certain television stations during 1996.

S-3

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-K/A’ Filing	Date	First	Last	Other Filings

	10/1/13	24
	3/15/09	36
	11/30/03	20	22
	12/31/02	19		10-K, 10-K/A, 11-K, 8-K
	5/31/01	31
	9/30/00	20		10-Q
	6/30/00	19		10-Q
	12/31/99	24		10-K, 11-K
	6/30/99	30		10-Q
	5/31/99	35
	3/31/99	19	22	10-Q
	12/15/98	21
	9/30/98	20		10-Q
	8/31/98	16
Filed on:	6/27/97	7		8-K
	6/26/97	1
	6/15/97	36
	3/31/97	19		10-Q
	3/12/97	9	40
	2/20/97	4
	2/7/97	9	40
	1/31/97	3		SC 13G
For Period End:	12/31/96	1	41	10-K, 10-K/A
	12/18/96	4
	11/1/96	35
	10/16/96	4
	9/30/96	6		10-Q, 10-Q/A
	8/21/96	15
	8/20/96	3
	7/24/96	4		SC 13D
	6/30/96	6		10-Q, 10-Q/A
	6/10/96	5
	5/31/96	3	19
	5/24/96	3
	5/17/96	6		8-K, PRE 14A
	5/9/96	6		8-K, 8-K/A
	4/10/96	3	5
	3/31/96	6	24	10-Q
	3/30/96	20
	3/1/96	5	6
	1/16/96	5	6
	12/31/95	2	41
	8/28/95	3	19
	8/3/95	3
	7/7/95	3		SC 13G
	6/12/95	5
	5/5/95	29
	5/4/95	5
	5/3/95	5
	3/31/95	29
	3/27/95	33
	1/1/95	36
	12/31/94	2	41
	12/6/94	6
	11/1/94	24
	8/26/94	5
	6/1/94	24
	5/24/94	5
	12/31/93	12	24
	12/9/93	3
	9/22/93	4
	3/1/93	4
	8/1/92	4
	6/30/92	4
	1/6/92	4
				List all Filings

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Filing Submission 0001005150-97-000477 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Sinclair Broadcast Group Inc – ‘10-K/A’ for 12/31/96

As of: Friday, 6/27/97 · For: 12/31/96 · Accession #: 1005150-97-477 · File #: 0-26076

Previous ‘10-K’: ‘10-K/A’ on 4/16/97 for 12/31/96 · Next: ‘10-K’ on 3/17/98 for 12/31/97 · Latest: ‘10-K’ on 2/29/24 for 12/31/23

Amendment to Annual Report — Form 10-KFiling Table of Contents

10-K/A — Amendment to Annual ReportDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Amendment to Annual Report — Form 10-K
Filing Table of Contents

10-K/A — Amendment to Annual Report
Document Table of Contents