SINCLAIR BROADCAST GROUP INC Form 10-Q Quarterly Report Filed
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SECURITIES AND EXCHANGE COMMISSION FORM 10-Q Quarterly report pursuant to sections 13 or 15(d) Filing Date: 2021-05-10 | Period of Report: 2021-03-31 SEC Accession No. 0000912752-21-000039 (HTML Version on secdatabase.com) FILER SINCLAIR BROADCAST GROUP INC Mailing Address Business Address 10706 BEAVER DAM ROAD 10706 BEAVER DAM ROAD CIK:912752| IRS No.: 521494660 | State of Incorp.:MD | Fiscal Year End: 1231 HUNT VALLEY MD 21030 HUNT VALLEY MD 21030 Type: 10-Q | Act: 34 | File No.: 000-26076 | Film No.: 21908011 4105681500 SIC: 4833 Television broadcasting stations Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ 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 office, zip code) (410) 568-1500 (Registrant’s telephone number, including area code) None (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Class A Common Stock, par value $ 0.01 per share SBGI The NASDAQ Stock Market LLC 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. Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such file). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date. Number of shares outstanding as of Title of each class May 6, 2021 Class A Common Stock 51,554,363 Class B Common Stock 23,775,056 Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents SINCLAIR BROADCAST GROUP, INC. FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2021 TABLE OF CONTENTS Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document PART I. FINANCIAL INFORMATION 3 ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) 3 CONSOLIDATED BALANCE SHEETS 4 CONSOLIDATED STATEMENTS OF OPERATIONS 5 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 6 CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) AND REDEEMABLE NONCONTROLLING INTERESTS 7 CONSOLIDATED STATEMENTS OF CASH FLOWS 9 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 10 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 36 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 53 ITEM 4. CONTROLS AND PROCEDURES 54 PART II. OTHER INFORMATION 56 ITEM 1. LEGAL PROCEEDINGS 56 ITEM 1A. RISK FACTORS 56 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 56 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 56 ITEM 4. MINE SAFETY DISCLOSURES 56 ITEM 5. OTHER INFORMATION 56 ITEM 6. EXHIBITS 57 SIGNATURE 58 Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2 Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS 3 Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents SINCLAIR BROADCAST GROUP, INC. CONSOLIDATED BALANCE SHEETS (in millions, except share and per share data) (Unaudited) Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document As of March 31, As of December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 941 $ 1,259 Accounts receivable, net of allowance for doubtful accounts of $4 and $5, respectively 1,058 1,060 Income taxes receivable 235 230 Prepaid sports rights 542 498 Prepaid expenses and other current assets 194 170 Total current assets 2,970 3,217 Property and equipment, net 804 823 Operating lease assets 189 197 Deferred tax assets 202 197 Restricted cash 4 3 Goodwill 2,091 2,092 Indefinite-lived intangible assets 150 171 Customer relationships, net 4,189 4,286 Other definite-lived intangible assets, net 1,311 1,338 Other assets 1,222 1,058 Total assets (a) $ 13,132 $ 13,382 LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND EQUITY Current liabilities: Accounts payable and accrued liabilities $ 469 $ 533 Current portion of notes payable, finance leases, and commercial bank financing 58 58 Current portion of operating lease liabilities 30 34 Current portion of program contracts payable 77 92 Other current liabilities 288 317 Total current liabilities 922 1,034 Notes payable, finance leases, and commercial bank financing, less current portion 12,482 12,493 Operating lease liabilities, less current portion 194 198 Program contracts payable, less current portion 26 30 Other long-term liabilities 506 622 Total liabilities (a) 14,130 14,377 Commitments and contingencies (See Note 6) Redeemable noncontrolling interests 188 190 Shareholders' equity: Class A Common Stock, $.01 par value, 500,000,000 shares authorized, 51,118,350 and 49,252,671 shares issued and outstanding, respectively 1 1 Class B Common Stock, $.01 par value, 140,000,000 shares authorized, 24,217,682 and 24,727,682 shares issued and outstanding, respectively, convertible into Class A Common Stock — — Additional paid-in capital 735 721 Copyright © 2021 www.secdatabase.com. All Rights Reserved. Accumulated deficit Please Consider the Environment Before Printing This Document (2,013) (1,986) Accumulated other comprehensive loss (2) (10) Total Sinclair Broadcast Group shareholders’ deficit (1,279) (1,274) Noncontrolling interests 93 89 Total deficit (1,186) (1,185) Total liabilities, redeemable noncontrolling interests, and deficit $ 13,132 $ 13,382 The accompanying notes are an integral part of these unaudited consolidated financial statements. (a) Our consolidated total assets as of March 31, 2021 and December 31, 2020 include total assets of variable interest entities (VIEs) of $241 million and $233 million, respectively, which can only be used to settle the obligations of the VIEs. Our consolidated total liabilities as of March 31, 2021 and December 31, 2020 include total liabilities of VIEs of $57 million and $60 million, respectively, for which the creditors of the VIEs have no recourse to us. See Note 9. Variable Interest Entities. 4 Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents SINCLAIR BROADCAST GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except share and per share data) (Unaudited) Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Three Months Ended March 31, 2021 2020 REVENUES: Media revenues $ 1,497 $ 1,574 Non-media revenues 14 35 Total revenues 1,511 1,609 OPERATING EXPENSES: Media programming and production expenses 1,023 828 Media selling, general and administrative expenses 213 210 Amortization of program contract costs 23 23 Non-media expenses 17 30 Depreciation of property and equipment 28 24 Corporate general and administrative expenses 61 49 Amortization of definite-lived intangible and other assets 125 150 Gain on asset dispositions and other, net of impairment (14) (32) Total operating expenses 1,476 1,282 Operating income 35 327 OTHER INCOME (EXPENSE): Interest expense including amortization of debt discount and deferred financing costs (151) (180) Gain on extinguishment of