CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | CONDENSED CONSOLIDATING FINANCIAL STATEMENTS: Sinclair Television Group, Inc. (STG), a wholly-owned subsidiary and the television operating subsidiary of Sinclair Broadcast Group, Inc. (SBG), is the primary obligor under the Bank Credit Agreement, the 5.375% Notes, the 5.625% Notes, 6.125% Notes, 5.875% Notes, 5.125% Notes, and until they were redeemed, the 6.375% Notes. Our Class A Common Stock and Class B Common Stock as of September 30, 2016 , were obligations or securities of SBG and not obligations or securities of STG. SBG is a guarantor under the Bank Credit Agreement, the 5.375% Notes, 5.625% Notes, 6.125% Notes, 5.875% Notes, 6.125% Notes, and until they were redeemed, the 6.375% Notes. As of September 30, 2016 , our consolidated total debt, net of deferred financing costs and debt discounts, of $4,206.3 million included $4,078.7 million related to STG and its subsidiaries of which SBG guaranteed $4,030.9 million . ` SBG, KDSM, LLC, a wholly-owned subsidiary of SBG, and STG’s wholly-owned subsidiaries (guarantor subsidiaries), have fully and unconditionally guaranteed, subject to certain customary automatic release provisions, all of STG’s obligations. Those guarantees are joint and several. There are certain contractual restrictions on the ability of SBG, STG or KDSM, LLC to obtain funds from their subsidiaries in the form of dividends or loans. The following condensed consolidating financial statements present the consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows of SBG, STG, KDSM, LLC and the guarantor subsidiaries, the direct and indirect non-guarantor subsidiaries of SBG and the eliminations necessary to arrive at our information on a consolidated basis. These statements are presented in accordance with the disclosure requirements under SEC Regulation S-X, Rule 3-10. CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 2016 (in thousands) (unaudited) Sinclair Sinclair Guarantor Non- Eliminations Sinclair Cash $ — $ 81,671 $ 4,550 $ 18,324 $ — $ 104,545 Accounts receivable — — 483,686 37,237 (1,261 ) 519,662 Other current assets 3,371 6,457 132,250 27,434 (3,629 ) 165,883 Total current assets 3,371 88,128 620,486 82,995 (4,890 ) 790,090 Property and equipment, net 2,086 17,710 566,633 130,309 (3,650 ) 713,088 Investment in consolidated subsidiaries 483,523 3,696,504 4,180 — (4,184,207 ) — Goodwill — — 1,985,299 4,279 — 1,989,578 Indefinite-lived intangible assets — — 137,416 15,709 — 153,125 Definite-lived intangible assets — — 1,816,553 227,351 (60,578 ) 1,983,326 Other long-term assets 52,116 782,850 105,247 160,180 (863,412 ) 236,981 Total assets $ 541,096 $ 4,585,192 $ 5,235,814 $ 620,823 $ (5,116,737 ) $ 5,866,188 Accounts payable and accrued liabilities $ 102 $ 55,484 $ 211,362 $ 28,427 $ (4,162 ) $ 291,213 Current portion of long-term debt — 55,500 1,803 107,935 — 165,238 Current portion of affiliate long-term debt 1,804 — 1,569 2,258 (2,032 ) 3,599 Other current liabilities — — 123,020 16,675 — 139,695 Total current liabilities 1,906 110,984 337,754 155,295 (6,194 ) 599,745 Long-term debt — 3,951,479 31,521 39,437 — 4,022,437 Affiliate long-term debt 479 — 12,977 384,174 (382,594 ) 15,036 Other liabilities 22,196 31,612 1,173,805 177,155 (662,464 ) 742,304 Total liabilities 24,581 4,094,075 1,556,057 756,061 (1,051,252 ) 5,379,522 Total Sinclair Broadcast Group equity (deficit) 516,515 491,117 3,679,757 (101,024 ) (4,069,849 ) 516,516 Noncontrolling interests in consolidated subsidiaries — — — (34,214 ) 4,364 (29,850 ) Total liabilities and equity (deficit) $ 541,096 $ 4,585,192 $ 5,235,814 $ 620,823 $ (5,116,737 ) $ 5,866,188 CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2015 (in thousands) Sinclair Sinclair Guarantor Non- Eliminations Sinclair Cash $ — $ 115,771 $ 235 $ 33,966 $ — $ 149,972 Accounts receivable — 1,775 390,142 33,949 (1,258 ) 424,608 Other current assets 3,648 5,172 99,118 23,278 (4,033 ) 127,183 Total current assets 3,648 122,718 489,495 91,193 (5,291 ) 701,763 Property and equipment, net 2,884 20,336 559,042 143,667 (8,792 ) 717,137 Investment in consolidated subsidiaries 497,262 3,430,434 4,179 — (3,931,875 ) — Goodwill — — 1,926,814 4,279 — 1,931,093 Indefinite-lived intangible assets — — 114,841 17,624 — 132,465 Definite-lived intangible assets — — 1,602,454 206,975 (57,859 ) 1,751,570 Other long-term assets 52,128 673,915 110,507 140,910 (779,173 ) 198,287 Total assets $ 555,922 $ 4,247,403 $ 4,807,332 $ 604,648 $ (4,782,990 ) $ 5,432,315 Accounts payable and accrued liabilities $ 104 $ 49,428 $ 179,156 $ 27,462 $ (4,837 ) $ 251,313 Current portion of long-term debt — 57,640 1,611 106,358 (1,425 ) 164,184 Current portion of affiliate long-term debt 1,651 — 1,311 456 (252 ) 3,166 Other current liabilities — — 103,627 12,713 — 116,340 Total current liabilities 1,755 107,068 285,705 146,989 (6,514 ) 535,003 Long-term debt — 3,594,218 32,743 42,199 — 3,669,160 Affiliate long-term debt 1,857 — 14,240 366,042 (364,289 ) 17,850 Other liabilities 26,500 28,866 1,060,211 171,102 (576,055 ) 710,624 Total liabilities 30,112 3,730,152 1,392,899 726,332 (946,858 ) 4,932,637 Total Sinclair Broadcast Group equity (deficit) 525,810 517,251 3,414,433 (91,703 ) (3,839,981 ) 525,810 Noncontrolling interests in consolidated subsidiaries — — — (29,981 ) 3,849 (26,132 ) Total liabilities and equity (deficit) $ 555,922 $ 4,247,403 $ 4,807,332 $ 604,648 $ (4,782,990 ) $ 5,432,315 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016 (in thousands) (unaudited) Sinclair Sinclair Guarantor Non- Eliminations Sinclair Net revenue $ — $ — $ 655,778 $ 63,877 $ (25,820 ) $ 693,835 Media program and production expenses — — 234,474 33,556 (25,150 ) 242,880 Selling, general and administrative 1,275 16,969 124,352 3,153 (25 ) 145,724 Depreciation, amortization and other operating expenses 266 3,257 115,527 32,571 (384 ) 151,237 Total operating expenses 1,541 20,226 474,353 69,280 (25,559 ) 539,841 Operating (loss) income (1,541 ) (20,226 ) 181,425 (5,403 ) (261 ) 153,994 Equity in earnings of consolidated subsidiaries 51,113 114,060 51 — (165,224 ) — Interest expense (56 ) (50,364 ) (1,117 ) (8,256 ) 6,305 (53,488 ) Loss from extinguishment of debt — (23,699 ) — — — (23,699 ) Other income (expense) 1,157 469 (27 ) 613 — 2,212 Total other income (expense) 52,214 40,466 (1,093 ) (7,643 ) (158,919 ) (74,975 ) Income tax benefit (provision) 172 34,334 (64,535 ) 3,043 — (26,986 ) Net income (loss) 50,845 54,574 115,797 (10,003 ) (159,180 ) 52,033 Net income attributable to the noncontrolling interests — — — (1,180 ) (8 ) (1,188 ) Net income (loss) attributable to Sinclair Broadcast Group $ 50,845 $ 54,574 $ 115,797 $ (11,183 ) $ (159,188 ) $ 50,845 Comprehensive income (loss) $ 50,845 $ 54,574 $ 115,797 $ (10,003 ) $ (159,180 ) $ 52,033 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015 (in thousands) (unaudited) Sinclair Sinclair Guarantor Non- Eliminations Sinclair Net revenue $ — $ — $ 515,097 $ 53,845 $ (20,538 ) $ 548,404 Media program and production expenses — — 185,371 20,272 (18,470 ) 187,173 Selling, general and administrative 930 14,386 102,984 3,819 (33 ) 122,086 Depreciation, amortization and other operating expenses 266 1,040 105,427 34,336 (1,530 ) 139,539 Total operating expenses 1,196 15,426 393,782 58,427 (20,033 ) 448,798 Operating (loss) income (1,196 ) (15,426 ) 121,315 (4,582 ) (505 ) 99,606 Equity in earnings of consolidated subsidiaries 43,480 88,687 100 — (132,267 ) — Interest expense (93 ) (45,784 ) (1,140 ) (7,721 ) 6,172 (48,566 ) Other income (expense) 957 (407 ) 3 (349 ) — 204 Total other income (expense) 44,344 42,496 (1,037 ) (8,070 ) (126,095 ) (48,362 ) Income tax benefit (provision) 107 20,235 (30,126 ) 2,574 — (7,210 ) Net income (loss) 43,255 47,305 90,152 (10,078 ) (126,600 ) 44,034 Net income attributable to the noncontrolling interests — — — (799 ) 20 (779 ) Net income (loss) attributable to Sinclair Broadcast Group $ 43,255 $ 47,305 $ 90,152 $ (10,877 ) $ (126,580 ) $ 43,255 Comprehensive income (loss) $ 44,044 $ 47,315 $ 90,152 $ (10,078 ) $ (127,389 ) $ 44,044 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (in thousands) (unaudited) Sinclair Sinclair Guarantor Non- Eliminations Sinclair Net revenue $ — $ — $ 1,828,407 $ 178,164 $ (67,313 ) $ 1,939,258 Media program and production expenses — — 679,337 88,378 (65,338 ) 702,377 Selling, general and administrative 3,277 53,189 360,793 7,641 (59 ) 424,841 Depreciation, amortization and other operating expenses 798 5,666 340,974 96,560 (1,365 ) 442,633 Total operating expenses 4,075 58,855 1,381,104 192,579 (66,762 ) 1,569,851 Operating (loss) income (4,075 ) (58,855 ) 447,303 (14,415 ) (551 ) 369,407 Equity in earnings of consolidated subsidiaries 124,536 289,593 170 — (414,299 ) — Interest expense (192 ) (147,635 ) (3,417 ) (24,258 ) 18,683 (156,819 ) Loss from the extinguishment of debt — (23,699 ) — — — (23,699 ) Other income 3,386 736 583 439 — 5,144 Total other income (expense) 127,730 118,995 (2,664 ) (23,819 ) (395,616 ) (175,374 ) Income tax benefit (provision) 749 75,470 (150,436 ) 8,446 — (65,771 ) Net income (loss) 124,404 135,610 294,203 (29,788 ) (396,167 ) 128,262 Net income attributable to the noncontrolling interests — — — (3,341 ) (517 ) (3,858 ) Net income (loss) attributable to Sinclair Broadcast Group $ 124,404 $ 135,610 $ 294,203 $ (33,129 ) $ (396,684 ) $ 124,404 Comprehensive income (loss) $ 124,404 $ 135,610 $ 294,203 $ (29,788 ) $ (396,167 ) $ 128,262 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (in thousands) (unaudited) Sinclair Sinclair Guarantor Non- Eliminations Sinclair Net revenue $ — $ — $ 1,514,173 $ 153,757 $ (60,584 ) $ 1,607,346 Media program and production expenses — — 535,098 61,949 (56,493 ) 540,554 Selling, general and administrative 3,432 40,598 302,962 10,919 (138 ) 357,773 Depreciation, amortization and other operating expenses 799 2,624 316,934 92,667 (2,498 ) 410,526 Total operating expenses 4,231 43,222 1,154,994 165,535 (59,129 ) 1,308,853 Operating (loss) income (4,231 ) (43,222 ) 359,179 (11,778 ) (1,455 ) 298,493 Equity in earnings of consolidated subsidiaries 114,176 238,635 — — (352,811 ) — Interest expense (301 ) (134,626 ) (3,481 ) (21,898 ) 17,428 (142,878 ) Other income (expense) 3,250 (116 ) 269 3,222 — 6,625 Total other income (expense) 117,125 103,893 (3,212 ) (18,676 ) (335,383 ) (136,253 ) Income tax benefit (provision) 430 60,435 (113,403 ) 5,567 — (46,971 ) Net income (loss) 113,324 121,106 242,564 (24,887 ) (336,838 ) 115,269 Net income attributable to the noncontrolling interests — — — (1,999 ) 54 (1,945 ) Net income (loss) attributable to Sinclair Broadcast Group $ 113,324 $ 121,106 $ 242,564 $ (26,886 ) $ (336,784 ) $ 113,324 Comprehensive income (loss) $ 115,447 $ 121,132 $ 242,713 $ (24,885 ) $ (338,960 ) $ 115,447 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (in thousands) (unaudited) Sinclair Sinclair Guarantor Non- Eliminations Sinclair NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES $ (4,060 ) $ (152,724 ) $ 451,804 $ 17,138 $ 18,102 $ 330,260 CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES: Acquisition of property and equipment (7 ) (3,626 ) (61,758 ) (3,842 ) 632 (68,601 ) Acquisition of businesses, net of cash acquired — — (415,481 ) (10,375 ) — (425,856 ) Purchase of alarm monitoring contracts — — — (29,143 ) — (29,143 ) Proceeds from sale of assets — — 7,263 9,133 — 16,396 Investments in equity and cost method investees (2,945 ) (10,840 ) (34 ) (20,405 ) — (34,224 ) Loans to affiliates — (19,500 ) — — — (19,500 ) Other, net 1,714 (1,828 ) (86 ) 3,601 — 3,401 Net cash flows (used in) from investing activities (1,238 ) (35,794 ) (470,096 ) (51,031 ) 632 (557,527 ) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES: Proceeds from notes payable, commercial bank financing — 995,000 — 16,312 — 1,011,312 Repayments of notes payable, commercial bank financing and capital leases — (636,547 ) (1,171 ) (16,269 ) — (653,987 ) Dividends paid on Class A and Class B Common Stock (49,667 ) — — — — (49,667 ) Repurchase of outstanding Class A Common Stock (101,164 ) — — — — (101,164 ) Increase (decrease) in intercompany payables 158,574 (189,022 ) 22,603 26,764 (18,919 ) — Other, net (2,445 ) (15,013 ) 1,175 (8,556 ) 185 (24,654 ) Net cash flows from (used in) financing activities 5,298 154,418 22,607 18,251 (18,734 ) 181,840 NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS — (34,100 ) 4,315 (15,642 ) — (45,427 ) CASH AND CASH EQUIVALENTS, beginning of period — 115,771 235 33,966 — 149,972 CASH AND CASH EQUIVALENTS, end of period $ — $ 81,671 $ 4,550 $ 18,324 $ — $ 104,545 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (in thousands) (unaudited) Sinclair Sinclair Guarantor Non- Eliminations Sinclair NET CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES $ (6,476 ) $ (66,929 ) $ 390,101 $ (21,156 ) $ 18,181 $ 313,721 CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES: Acquisition of property and equipment — (7,687 ) (64,693 ) (1,603 ) 1,507 (72,476 ) Payments for acquisition of television stations — — (15,514 ) — — (15,514 ) Purchase of alarm monitoring contracts — — — (31,340 ) — (31,340 ) Proceeds from sale of assets — — 23,650 — — 23,650 Investments in equity and cost method investees — (7,486 ) (27 ) (35,555 ) — (43,068 ) Other, net 3,776 539 530 6,370 — 11,215 Net cash flows (used in) from investing activities 3,776 (14,634 ) (56,054 ) (62,128 ) 1,507 (127,533 ) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES: Proceeds from notes payable, commercial bank financing and capital leases — 349,559 — 29,922 — 379,481 Repayments of notes payable, commercial bank financing and capital leases (473 ) (370,011 ) (937 ) (3,683 ) — (375,104 ) Dividends paid on Class A and Class B Common Stock (47,104 ) — — — — (47,104 ) Repurchase of outstanding Class A Common Stock (28,823 ) — — — — (28,823 ) Increase (decrease) in intercompany payables 82,410 200,108 (335,447 ) 72,757 (19,828 ) — Other, net (3,310 ) (3,491 ) 847 (7,117 ) 140 (12,931 ) Net cash flows (used in) from financing activities 2,700 176,165 (335,537 ) 91,879 (19,688 ) (84,481 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS — 94,602 (1,490 ) 8,595 — 101,707 CASH AND CASH EQUIVALENTS, beginning of period — 3,394 1,749 12,539 — 17,682 CASH AND CASH EQUIVALENTS, end of period $ — $ 97,996 $ 259 $ 21,134 $ — $ 119,389 |