EXHIBIT 99.3
Consolidated Pro Forma Financial Statements
of Sinclair Broadcast Group, Inc.
The following Pro Forma Consolidated Financial Data include the unaudited
Pro Forma consolidated balance sheet as of June 30, 1998 (the Pro Forma
Consolidated Balance Sheet) and the unaudited Pro Forma consolidated statement
of operations for the six months ended June 30, 1998 (the Pro Forma Consolidated
Statement of Operations). The unaudited Pro Forma Consolidated Balance Sheet and
the unaudited Pro Forma Consolidated Statement of Operations for the six months
ended June 30, 1998 are adjusted to give effect to the Max Media Acquisition and
the Sullivan Acquisition (collectively, the "Significant Acquisitions"). The Pro
Forma Consolidated Balance Sheet included herein reflects the application of the
Significant Acquisitions as if such transactions occurred at June 30, 1998. The
Pro Forma Consolidated Statement of Operations reflects the application of the
Significant Acquisitions as if such transactions occurred on January 1, 1998.
The Significant Acquisitions were completed utilizing existing cash balances and
available indebtedness under the Company's Bank Credit Agreement. The Pro Forma
adjustments are based upon available information and certain assumptions that
the Company believes are reasonable. The Pro Forma Consolidated Financial
Information included herein should be read in conjunction with the Company's
Consolidated Financial Statements as of and for the year ended December 31, 1997
and related notes thereto, the Company's unaudited consolidated financial
statements as of and for the six months ended June 30, 1998 and related notes
thereto and the historical financial data of Max Media Properties LLC, Sullivan
Broadcast Company, Inc., and subsidiaries (Formerly Act III Broadcasting, Inc.
successor by merger with A-3 Acquisitions, Inc. and Sullivan Broadcast Holdings,
Inc. and Subsidiaries, and Sinclair Communications II, Inc. and its wholly-owned
subsidiaries (successor to Sullivan Broadcast Holdings, Inc.) and Sinclair
Television Company, Inc. (successor to Sullivan Broadcasting Company, Inc.) all
of which have been filed with the Securities and Exchange Commission as part of
either (i) the Company's Annual Report on Form 10-K/A for the year ended
December 31, 1997 together with the report of Arthur Andersen LLP, independent
certified public accountants; (ii) the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998, (iii) the Current Report on Form 8-K filed
April 8, 1998 or (iv) as a separate exhibit to the report on Form 8-K/A of which
this exhibit is a apart. The unaudited Pro Forma Consolidated Financial Data do
not purport to represent what the Company's results of operations or financial
position would have been had any of above events occurred on the dates specified
or to project the Company's results of operations or financial positions for or
at any period or date.
2
SINCLAIR BROADCAST GROUP, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998
(DOLLARS IN THOUSANDS)
(UNAUDITED)
SIGNIFICANT ACQUISITIONS CONSOLIDATED
--------------------------------- HISTORICAL
CONSOLIDATED SULLIVAN MAX MEDIA
HISTORICAL MAX MEDIA(a) BROADCASTING(b) AND SULLIVAN
-------------- --------------- ----------------- --------------
ASSETS
CURRENT ASSETS:
Cash, including cash equivalents ................................ $ 320,133 $ (320,133) $ -
Accounts receivable, net of allowance for doubtful accounts ..... 129,088 129,088
Current portion of program contract costs ....................... 33,369 979 5,541 39,889
Prepaid expenses and other current assets ....................... 1,928 1,928
Deferred barter costs ........................................... 5,737 728 6,465
Refundable income taxes ......................................... 10,581 10,581
Broadcast Assets Held for Sale .................................. 30,639 30,639
Deferred tax asset .............................................. 520 520
---------- -------- --------- ----------
Total current assets .......................................... 531,995 1,707 (314,592) 219,110
PROGRAM CONTRACT COSTS, less current portion ..................... 28,228 364 5,823 34,415
LOANS TO OFFICERS AND AFFILIATES ................................. 10,645 10,645
PROPERTY AND EQUIPMENT, net ...................................... 195,100 36,983 56,450 288,533
NON-COMPETE AND CONSULTING AGREEMENTS, net........................ 150 150
DEFERRED TAX ASSET ............................................... - -
OTHER ASSETS ..................................................... 174,602 (12,750) 161,852
ACQUIRED INTANGIBLE BROADCASTING ASSETS, net...................... 1,876,770 219,686 1,018,439 3,114,895
---------- -------- --------- ----------
Total Assets .................................................. $2,817,490 245,990 766,120 $3,829,600
========== ======== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ................................................ $ 9,858 $ 9,858
Income taxes payable ............................................ - -
Accrued liabilities ............................................. 51,069 51,069
Current portion of long-term liabilities-
Notes payable and commercial bank financing .................... 25,000 25,000
Notes and capital leases payable to affiliation ................ 2,878 2,878
Program contracts payable ...................................... 64,415 1,353 9,644 75,412
Deferred barter revenues ........................................ 6,111 1,064 7,175
---------- -------- --------- ----------
Total current liabilities ..................................... 159,331 2,417 9,644 171,392
LONG-TERM LIABILITIES: -
Notes payable and commercial bank financing .................... 1,475,972 242,250 (c) 679,867(d) 2,398,089
Notes and capital leases payable to affiliates ................. 18,495 18,495
Program contracts payable ...................................... 47,671 1,323 11,609 60,603
Deferred tax liability ......................................... 36,242 65,000 101,242
Other long-term liabilities .................................... 3,948 3,948
---------- -------- --------- ----------
Total liabilities ............................................. 1,741,659 245,990 766,120 2,753,769
---------- -------- --------- ----------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 3,661 - - 3,661
---------- -------- --------- ----------
COMMITMENTS AND CONTINGENCIES
COMPANY OBLIGATED MANDATORILY REDEEM-
ABLE SECURITY OF SUBSIDIARY TRUST HOLDING
SOLELY KDSM SENIOR DEBENTURES ................................... 200,000 - - 200,000
---------- -------- --------- ----------
STOCKHOLDERS' EQUITY:
Series B Preferred Stock, $.01 par value, 10,000,000 shares
authorized and 1,071,381 shares issued and outstanding ........ - -
Series D Preferred Stock, $.01 par value, 3,450,000 shares
authorized 3,450,000 shares issued and outstanding ............ 35 35
Series E Preferred Stock, $.01 par value, 3,450,000 shares
authorized 3,450,000 shares issued and outstanding ............ - -
Class A Common Stock, $.01 par value, 100,000,000 shares
authorized and 13,733,430 and 15,487,816 shares issued
and outstanding respectively .................................. 480 480
Class B Common Stock, $.01 par value, 35,000,000 shares
authorized and 25,436,432 shares issued and outstanding ....... 500 500
Additional paid-in capital ..................................... 897,048 897,048
Additional paid-in capital - equity put options ................ 23,117 23,117
Additional paid-in capital - deferred compensation ............. (7,419) (7,419)
Accumulated deficit ............................................ (41,591) (41,591)
---------- -------- --------- ----------
Total stockholders' equity .................................... 872,170 - - 872,170
---------- -------- --------- ----------
Total Liabilities and Stockholders' Equity .................... $2,817,490 $245,990 $ 766,120 $3,829,600
========== ======== ========= ==========
3
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(a) The Max Media Acquisition column reflects the assets and liabilities
acquired in connection with the $255,000 purchase of Max Media. Total
acquired intangibles are calculated as follows:
MAX MEDIA
------------
Purchase Price ............................................. $ 255,000
Add:
Liabilities acquired--
Current portion of program contracts payable ............ 1,353
Deferred barter revenues ................................ 1,064
Long-term portion of program contracts payable .......... 1,323
Less:
Assets acquired--
Current portion of program contract costs ............... (979)
Deferred barter costs ................................... (728)
Program contract costs, less current portion ............ (364)
Property and equipment .................................. (36,983)
---------
Acquired intangibles .................................... $ 219,686
=========
The acquired intangible assets are summarized as follows:
Useful Life (years)
-------------------
FCC licenses ............................................... $ 65,432 25
Network affiliation agreements.............................. 62,802 25
Goodwill.................................................... 84,822 40
Other miscellaneous intangible assets ...................... 6,630 5-15
---------
Acquired intangibles .................................... $ 219,686
=========
4
(b) The Sullivan Broadcasting Acquisition column reflects the assets and
liabilities acquired in connection with the purchase of 100% of the
outstanding capital stock of Sullivan Broadcast Holdings, Inc. and
subsidiaries. Total acquired intangibles are calculated as follows:
SULLIVAN
-------------
Purchase Price (Subject to certain adjustments) .......... 1,000,000
Add:
Liabilities acquired--
Current portion of program contracts costs ............ 9,644
Long-term portion of program contract costs ........... 11,609
Deferred tax liability ................................ 65,000
Less:
Assets acquired--
Current portion of program contracts .................. (5,541)
Program contract costs, less current portion .......... (5,823)
Property and equipment ................................ (56,450)
----------
Acquired intangibles .................................. $1,018,439
==========
The acquired intangible assets are summarized as follows:
Useful Life (years)
-------------------
FCC licenses ............................................... $ 97,228 25
Network affiliation agreement............................... 253,601 25
Goodwill.................................................... 646,327 40
Other miscellaneous intangible assets ...................... 21,283 5-15
---------
Acquired intangibles .................................... $1,018,439
=========
(c) To reflect indebtedness of $242,250 incurred (net of a $12,750 deposit)
under the Company's Bank Credit Agreement in connection with the Max Media
Acquisition.
(d) To reflect $679,867 (net of utilization of $320,133 in existing cash
balances) under the Company's Bank Credit Agreement in connection with the
Sullivan Acquisition.
5
SINCLAIR BROADCAST GROUP, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
Consolidated
Historical,
Consolidated Acquisition Max Media and
Historical Max Media(a) Sullivan (b) Adjustments Sullivan
------------ -------------- ------------ ------------ ---------------
REVENUES:
Station broadcast revenues, net of
agency commissions .............. $ 266,265 $ 26,780 $ 62,857 $ 355,902
Revenues realized from station barter
arrangements ..................... 25,099 2,711 9,017 36,827
-------- -------- ------- -------- -----------
Total revenues 291,364 29,491 71,874 --- 392,729
OPERATING EXPENSES:
Program and production ............. 56,068 4,751 10,656 71,475
Selling general and adminstrative... 59,708 16,395 12,681 (8,139)(c) 80,645
Expenses realized from barter
arrangements .................... 20,962 2,655 9,017 --- 32,634
Amortization of program contract
costs and net realiz. value adj. 30,543 2,755 15,106 48,404
Stock-based compensation 1,371 --- --- 1,371
Depreciation and amortization of
property and equipment .......... 10,266 2,566 5,638 (2,185)(d) 16,285
Amort. of acq. intangible assets,
non-compete, consult, and other 35,171 4,131 17,394 2,771 (e) 59,467
-------- ------- ------- ------- ------
Total operating expenses 214,089 33,253 70,492 (7,554) 310,280
-------- ------- ------- ------- ------
Broadcast operating income
(loss) .................... 77,275 (3,762) 1,382 7,554 82,449
-------- ------- ------- ------ -------
Interest and amortization of debt
discount expense ................. (54,901) (3,003) (19,220) (24,296)(f) (101,420)
Subsidiary trust minority interest
expense .......................... (11,625) --- --- (11,625)
Interest income .................... 3,217 --- --- --- 3,217
Net gain on sale of assets 5,238 5,238
Other income 104 141 (52) 193
------- ------- ------- -------- -------
Income (loss) before provision
(benefit) for income taxes ... 19,308 (6,624) (17,890) (16,742) (21,948)
PROVISION (BENEFIT) FOR INCOME TAXES.. (12,400) 4,254(g) 11,489(g) 10,752(g) (14,095)
------ ------- ------- ------- -------
NET INCOME (LOSS) BEFORE EXTRA-
ORDINARY ITEM .................... 6,908 (2,370) (6,401) (5,990) (7,853)
NET INCOME (LOSS) BEF.EX.ITEM AVAILABLE
TO COMMON SHAREHOLDERS ........... $ 1,733 (13,028)
BASIC EARNINGS PER SHARE: ======== ========
Net income (loss) before extra-
ordinary item per shares ...... $ 0.02 $ (0.13)
======== ========
Basic average shares outstanding .... 91,480 97,911(h)
======== ========
DILUTED EARNINGS PER SHARE: ..........
Net income (loss) before extra-
ordinary item per share ....... $ 0.02 $ (0.13)
======== ========
Diluted average shares
outstanding ............... 93,645 100,077(h)
======== ========
xx Recalculated at 40%
6
SINCLAIR BROADCAST GROUP, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
(a) The Max Media column reflects the results of operations for Max Media for
the period from January 1, 1998 to June 30, 1998.
(b) The Sullivan Broadcasting column reflects the results of operations for
Sullivan Broadcasting for the period from January 1, 1998 to June 30, 1998.
(c) To adjust operating expenses for corporate overhead (net of integration
costs the Company anticipates incurring as a result of the Significant
Acquisitions) which the Company does not expect to incur upon consummation
of the Max Media Acquisition and the Sullivan Acquisition on a
going-forward basis. In addition, the adjustment included stock
appreciation rights of $5,000 related to bonuses paid to Max Media
management in connection with the sale of the Company.
(d) To record depreciation expense related to acquired tangible assets and
eliminate depreciation expense recorded by Max Media, and Sullivan from
January 1, 1998 to June 30, 1998. Tangible assets are to be depreciated
over lives ranging from three to 20 years, calculated as follows:
SIX MONTHS ENDED
JUNE 30, 1998
-------------------------------------
MAX MEDIA SULLIVAN TOTAL
---------- ----------- ------------
Depreciation expense on acquired tangible assets ....................... $ 2,329 $ 3,690 $ 6,019
Less: Depreciation expense recorded by Max Media and Sullivan (2,566) (5,638) (8,204)
-------- -------- --------
Pro Forma adjustment ................................................... $ (237) $ (1,948) $ (2,185)
======== ======== =========
(e) To record amortization expense related to acquired intangible assets and
deferred financing costs and eliminate amortization expense recorded by Max
Media and Sullivan from January 1, 1998 to June 30, 1997. Intangible assets
are to be amortized over lives ranging from one to 40 years. Goodwill is
the only intangible asset amortized over 40 years. Intangible assets are
amortized on a straight-line basis and the amortization is calculated as
follows:
SIX MONTHS ENDED
JUNE 30, 1998
---------------------------------------
MAX MEDIA SULLIVAN TOTAL
------------ ----------- ------------
Amortization expense on acquired intangible assets ..................... $ 5,335 $ 18,961 $ 24,296
Less: Amortization expense recorded by Max Media and Sullivan (4,131) (17,394) (21,525)
-------- --------- ---------
Pro Forma adjustment ................................................... $ 1,204 $ 1,567 $ 2,771
======== ========= =========
7
(f) To record interest expense for the six months ended June 30, 1998 on
acquisition financing relating to Max Media and Sullivan of $242,250 and
$679,867 (under the Company's bank credit facility at 7.43%), and eliminate
interest expense recorded.
SIX MONTHS ENDED
JUNE 30, 1998
----------------------------------------
MAX MEDIA SULLIVAN TOTAL
-------------- -------- --------
Interest expense adjustment as noted above ......................... $ ( 9,000) $(37,519) $(46,519)
Less: Interest expense recorded by Max Media and Sullivan 3,003 19,220 22,223
---------- -------- ----------
Pro Forma adjustment ............................................... $ ( 5,997) $(18,299) $ (24,296)
========== ======== ==========
(g) To record tax provision (benefit) at the applicable tax rates.
(h) Weighted average shares outstanding on a Pro Forma basis assumes that the
12,000,000 shares of Class A Common Stock issued by the Company on April 8,
1998 were outstanding for the entire period.
8