SINCLAIR BROADCAST GROUP INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

		For the quarterly period ended September 30, 2003

		OR

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

		For the transition period from to .

Commission File Number: 000-26076

SINCLAIR BROADCAST GROUP, INC.

(Exact Name of Registrant as specified in its charter)

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

10706 Beaver Dam Road Hunt Valley, Maryland 21030
(address of principal executive offices)

(410) 568-1500
(Registrant’s telephone number, including area code)

None
(Former name, former address and former fiscal year – if changed since last report)

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 ý

No o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes ý

No o

As of November 3, 2003, there were 44,033,453 share of Class A Common Stock, $0.01 par value; 41,691,878 shares of Class B Common Stock, $0.01 par value; and 3,450,000 shares of Series D Preferred Stock; $0.01 par value, convertible into 7,561,644 shares of Class A Commons Stock at a conversion price of $22.813 per share; of the Registrant issued and outstanding.

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2003

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION

ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS
	Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002
	Consolidated Statements Of Operations for the Three and Nine Months Ended September 30, 2003 and 2002
	Consolidated Statement Of Shareholders’ Equity for the Nine Months Ended September 30, 2003
	Consolidated Statement Of Cash Flows for the Nine Months Ended September 30, 2003 and 2002
	Notes To Unaudited Consolidated Financial Statements

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

ITEM 4.	CONTROLS AND PROCEDURES

PART II.	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K

	SIGNATURE

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)

	September 30, 2003			December 31, 2002
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	12,907		$	5,327
Accounts receivable, net of allowance for doubtful accounts	133,255			147,002
Current portion of program contract costs	73,577			76,472
Refundable income taxes	1,384			38,906
Prepaid expenses and other current assets	9,406			20,807
Deferred barter costs	3,726			2,539
Deferred tax assets	7,627			6,001
Total current assets	241,882			297,054

PROGRAM CONTRACT COSTS, less current portion	42,196			51,229
LOANS TO AFFILIATES	1,417			1,489
PROPERTY AND EQUIPMENT, net	354,556			337,250
OTHER ASSETS	112,644			91,119
GOODWILL	1,120,123			1,123,403
BROADCAST LICENSES	429,507			429,507
DEFINITE-LIVED INTANGIBLE ASSETS, net	262,113			275,722
Total Assets	$	2,564,438		$	2,606,773
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	6,025		$	15,573
Accrued liabilities	60,266			64,165
Notes payable, capital leases and commercial bank financing, current portion	37,716			292
Notes and capital leases payable to affiliates, current portion	4,413			4,157
Current portion of program contracts payable	127,352			121,396
Deferred barter revenues	3,954			2,971
Total current liabilities	239,726			208,554
LONG-TERM LIABILITIES:
Notes payable, capital leases and commercial bank financing, less current portion	1,671,883			1,518,690
Notes and capital leases payable to affiliates, less current portion	25,904			28,831
Program contracts payable, less current portion	106,209			124,658
Deferred tax liability	181,804			173,209
Other long-term liabilities	124,598			138,905
Total liabilities	2,350,124			2,192,847
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES	2,691			2,746
COMMITMENTS AND CONTINGENCIES
COMPANY OBLIGATED MANDATORILY REDEEMABLE SECURITIES OF SUBSIDIARY TRUST HOLDING SOLELY KDSM SENIOR DEBENTURES	—			200,000
SHAREHOLDERS’ EQUITY
Series D Preferred Stock, $0.01 par value, 3,450,000 shares authorized, issued and outstanding, liquidation preference of $172,500,000	35			35
Class A Common Stock, $0.01 par value, 500,000,000 shares authorized and 43,990,041 and 43,866,259 shares issued and outstanding	440			439
Class B Common Stock, $0.01 par value, 140,000,000 shares authorized and 41,691,878 and 41,705,678 shares issued and outstanding	417			417
Additional paid-in capital	761,680			760,478
Additional paid-in capital deferred compensation	(173		)	(551		)
Retained deficit	(549,936		)	(547,958		)
Accumulated other comprehensive loss	(840		)	(1,680		)
Total shareholders’ equity	211,623			211,180
Total Liabilities and Shareholders’ Equity	$	2,564,438		$	2,606,773

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

SINCLAIR BROADCAST GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands) (Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2003		2002		2003		2002
REVENUES:
Station broadcast revenues, net of agency commissions	$	161,290	$	162,905	$	488,687	$	481,123
Revenues realized from station barter arrangements	15,725		14,664		46,229		45,244
Other operating divisions’ revenue	2,422		998		10,973		3,249
Total revenues	179,437		178,567		545,889		529,616
OPERATING EXPENSES: