UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
for
the quarterly period ended June 30, 2009
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: 000-50478
NEXSTAR
BROADCASTING GROUP, INC.
(Exact
name of registrant as specified in its charter)
|
|
Delaware
|
23-3083125
|
(State
of Organization or Incorporation)
|
(IRS
Employer Identification No.)
|
|
|
5215
N. O’Connor Blvd., Suite 1400
Irving,
Texas 75039
|
(972)
373-8800
|
(Address
of Principal Executive Offices, including Zip Code)
|
(Registrant’s
Telephone Number, Including Area
Code)
|
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 it 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 checkmark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted 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 and post such
files). 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
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (check one):
|
|
|
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
|
|
|
|
Non-accelerated
filer
|
x (Do
not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨ No x
As of
July 31, 2009 the Registrant had outstanding:
15,013,839
shares of Class A Common Stock:
and
13,411,588 shares of Class B Common Stock
TABLE
OF CONTENTS
|
|
|
|
|
Page
|
PART I
|
FINANCIAL
INFORMATION
|
|
|
|
|
ITEM 1.
|
Financial
Statements (Unaudited)
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets at June 30, 2009 and December 31,
2008
|
2
|
|
|
|
|
Condensed
Consolidated Statements of Operations for the three and six months ended
June 30, 2009 and 2008
|
4
|
|
|
|
|
Condensed
Consolidated Statement of Changes in Stockholders’ Deficit for the six
months ended June 30, 2009
|
5
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows for the six months ended June 30,
2009 and 2008
|
6
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements
|
8
|
|
|
|
ITEM 2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
33
|
|
|
|
ITEM 3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
44
|
|
|
|
ITEM 4.
|
Controls
and Procedures
|
44
|
|
|
|
PART II
|
OTHER
INFORMATION
|
|
|
|
|
ITEM 1.
|
Legal
Proceedings
|
45
|
|
|
|
ITEM 1A.
|
Risk
Factors
|
45
|
|
|
|
ITEM 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
45
|
|
|
|
ITEM 3.
|
Defaults
Upon Senior Securities
|
45
|
|
|
|
ITEM 4.
|
Submission
of Matters to a Vote of Security Holders
|
45
|
|
|
|
ITEM 5.
|
Other
Information
|
45
|
|
|
|
ITEM 6.
|
Exhibits
|
45
|
|
|
EXHIBIT
INDEX
|
|
PART
I. FINANCIAL INFORMATION
ITEM 1.
|
Financial
Statements
|
NEXSTAR
BROADCASTING GROUP, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
thousands, except share information)
|
|
|
|
|
|
|
|
|
June
30,
2009
|
|
|
December 31,
2008
|
|
|
|
(Unaudited)
|
|
|
(Note
2)
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
14,286 |
|
|
$ |
15,834 |
|
Accounts
receivable, net of allowance for doubtful accounts of $725 and $832,
respectively
|
|
|
53,842 |
|
|
|
53,190 |
|
Current
portion of broadcast rights
|
|
|
9,426 |
|
|
|
14,273 |
|
Prepaid
expenses and other current assets
|
|
|
1,605 |
|
|
|
1,562 |
|
Deferred
tax asset
|
|
|
15
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
79,174 |
|
|
|
84,874 |
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
144,573 |
|
|
|
135,878 |
|
Broadcast
rights
|
|
|
10,414 |
|
|
|
9,289 |
|
Goodwill
|
|
|
116,419 |
|
|
|
115,632 |
|
FCC
licenses
|
|
|
136,291 |
|
|
|
125,057 |
|
Other
intangible assets, net
|
|
|
138,085 |
|
|
|
149,851 |
|
Other
noncurrent assets
|
|
|
4,206 |
|
|
|
5,400 |
|
Deferred
tax asset
|
|
|
598
|
|
|
|
606
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
629,760
|
|
|
$ |
626,587
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current
portion of debt
|
|
$ |
3,485 |
|
|
$ |
3,485 |
|
Current
portion of broadcast rights payable
|
|
|
8,961 |
|
|
|
14,745 |
|
Accounts
payable
|
|
|
6,517 |
|
|
|
9,433 |
|
Accrued
expenses
|
|
|
13,217 |
|
|
|
12,484 |
|
Taxes
payable
|
|
|
246 |
|
|
|
512 |
|
Interest
payable
|
|
|
4,029 |
|
|
|
8,591 |
|
Deferred
revenue
|
|
|
4,352 |
|
|
|
7,167 |
|
Other
liabilities
|
|
|
1,066
|
|
|
|
1,066
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
41,873 |
|
|
|
57,483 |
|
|
|
|
|
|
|
|
|
|
Debt
|
|
|
669,298 |
|
|
|
658,632 |
|
Broadcast
rights payable
|
|
|
10,205 |
|
|
|
10,953 |
|
Deferred
tax liabilities
|
|
|
41,170 |
|
|
|
38,664 |
|
Deferred
revenue
|
|
|
2,646 |
|
|
|
1,802 |
|
Deferred
gain on sale of assets
|
|
|
4,713 |
|
|
|
4,931 |
|
Deferred
representation fee incentive
|
|
|
5,891 |
|
|
|
6,003 |
|
Other
liabilities
|
|
|
13,575
|
|
|
|
13,275
|
|
Total
liabilities
|
|
|
789,371
|
|
|
|
791,743
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
deficit:
|
|
|
|
|
|
|
|
|
Preferred
stock - $0.01 par value, authorized 200,000 shares; no shares issued and
outstanding at both June 30, 2009 and December 31,
2008
|
|
|
— |
|
|
|
— |
|
Common
stock:
|
|
|
|
|
|
|
|
|
Class A
Common - $0.01 par value, authorized 100,000,000 shares; issued and
outstanding 15,013,839 at both June 30, 2009 and December 31,
2008
|
|
|
150 |
|
|
|
150 |
|
Class
B Common - $0.01 par value, authorized 20,000,000 shares; issued and
outstanding 13,411,588 at both June 30, 2009 and December 31,
2008
|
|
|
134 |
|
|
|
134 |
|
Class
C Common - $0.01 par value, authorized 5,000,000 shares; no shares issued
and outstanding at June 30, 2009 and December 31, 2008,
respectively
|
|
|
— |
|
|
|
— |
|
Additional
paid-in capital
|
|
|
399,321 |
|
|
|
398,586 |
|
Accumulated
deficit
|
|
|
(559,216 |
) |
|
|
(564,026 |
) |
Total
stockholders’ deficit
|
|
|
(159,611 |
) |
|
|
(165,156 |
) |
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ deficit
|
|
$ |
629,760
|
|
|
$ |
626,587
|
|
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
NEXSTAR
BROADCASTING GROUP, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
June 30,
|
|
|
Six
Months Ended
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Net
revenue
|
|
$ |
62,152
|
|
|
$ |
70,618
|
|
|
$ |
117,620
|
|
|
$ |
134,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating expenses (exclusive of depreciation and amortization shown
separately below)
|
|
|
19,086 |
|
|
|
19,283 |
|
|
|
38,141 |
|
|
|
38,779 |
|
Selling,
general, and administrative expenses (exclusive of depreciation and
amortization shown separately below)
|
|
|
21,181 |
|
|
|
21,839 |
|
|
|
44,652 |
|
|
|
42,724 |
|
Restructure
charge
|
|
|
314 |
|
|
|
— |
|
|
|
670 |
|
|
|
— |
|
Non-cash
contract termination fees
|
|
|
191 |
|
|
|
— |
|
|
|
191 |
|
|
|
7,167 |
|
Amortization
of broadcast rights
|
|
|
5,665 |
|
|
|
4,806 |
|
|
|
10,725 |
|
|
|
10,141 |
|
Amortization
of intangible assets
|
|
|
5,944 |
|
|
|
6,383 |
|
|
|
11,836 |
|
|
|
12,755 |
|
Depreciation
|
|
|
5,394 |
|
|
|
5,088 |
|
|
|
10,590 |
|
|
|
10,421 |
|
Gain
on asset exchange
|
|
|
(2,438 |
) |
|
|
(2,742 |
) |
|
|
(4,098 |
) |
|
|
(3,592 |
) |
Gain
on asset disposal, net
|
|
|
(2,229 |
) |
|
|
(205 |
) |
|
|
(2,820 |
) |
|
|
(170 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
53,108
|
|
|
|
54,452
|
|
|
|
109,887
|
|
|
|
118,225
|
|
Income
from operations
|
|
|
9,044 |
|
|
|
16,166 |
|
|
|
7,733 |
|
|
|
16,105 |
|
Interest
expense, including amortization of debt financing costs
|
|
|
(8,905 |
) |
|
|
(10,806 |
) |
|
|
(18,765 |
) |
|
|
(24,795 |
) |
Gain
on extinguishment of debt
|
|
|
— |
|
|
|
— |
|
|
|
18,567 |
|
|
|
— |
|
Interest
and other income
|
|
|
10
|
|
|
|
151
|
|
|
|
45
|
|
|
|
552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) before income taxes
|
|
|
149 |
|
|
|
5,511 |
|
|
|
7,580 |
|
|
|
(8,138 |
) |
Income
tax expense
|
|
|
(1,391 |
) |
|
|
(1,634 |
) |
|
|
(2,770 |
) |
|
|
(3,313 |
) |
Net
income (loss)
|
|
$ |
(1,242 |
) |
|
$ |
3,877
|
|
|
$ |
4,810
|
|
|
$ |
(11,451 |
) |
Net
income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
$ |
(0.04 |
) |
|
$ |
0.14 |
|
|
$ |
0.17 |
|
|
$ |
(0.40 |
) |
Weighted
average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
|
28,425 |
|
|
|
28,422 |
|
|
|
28,425 |
|
|
|
28,420 |
|
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
NEXSTAR
BROADCASTING GROUP, INC.
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
For
the Six Months Ended June 30, 2009
(in
thousands, except share information)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Additional
Paid-In
Capital
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders’
Deficit
|
|
|
|
Class
A
|
|
|
Class
B
|
|
|
Class
C
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
Balance
at January 1, 2009 (Note
2)
|
|
|
15,013,839 |
|
|
$ |
150 |
|
|
|
13,411,588 |
|
|
$ |
134 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
398,586 |
|
|
$ |
(564,026 |
) |
|
$ |
(165,156 |
) |
Stock-based
compensation expense
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
735 |
|
|
|
— |
|
|
|
735 |
|
Net
income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,810
|
|
|
|
4,810
|
|
Balance
at June 30, 2009 (unaudited)
|
|
|
15,013,839
|
|
|
$ |
150
|
|
|
|
13,411,588
|
|
|
$ |
134
|
|
|
|
—
|
|
|
$ |
—
|
|
|
$ |
399,321
|
|
|
$ |
(559,216 |
) |
|
$ |
(159,611 |
) |
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
NEXSTAR
BROADCASTING GROUP, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)
|
|
Six
Months Ended
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
4,810 |
|
|
$ |
(11,451 |
) |
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Deferred
income taxes
|
|
|
2,514 |
|
|
|
3,043 |
|
Provision
for bad debts
|
|
|
464 |
|
|
|
107 |
|
Depreciation
of property and equipment
|
|
|
10,590 |
|
|
|
10,421 |
|
Amortization
of intangible assets
|
|
|
11,836 |
|
|
|
12,755 |
|
Amortization
of debt financing costs
|
|
|
507 |
|
|
|
530 |
|
Amortization
of broadcast rights, excluding barter
|
|
|
4,875 |
|
|
|
4,303 |
|
Payments
for broadcast rights
|
|
|
(4,432 |
) |
|
|
(4,127 |
) |
Payment-in-kind
interest on debt
|
|
|
2,445 |
|
|
|
— |
|
Gain
on asset exchange
|
|
|
(4,098 |
) |
|
|
(3,592 |
) |
Gain
on asset disposal, net
|
|
|
(2,820 |
) |
|
|
(170 |
) |
Gain
on extinguishment of debt
|
|
|
(18,567 |
) |
|
|
— |
|
Deferred
gain recognition
|
|
|
(218 |
) |
|
|
(219 |
) |
Amortization
of debt discount
|
|
|
2,455 |
|
|
|
3,638 |
|
Amortization
of deferred representation fee incentive
|
|
|
(303 |
) |
|
|
(179 |
) |
Stock-based
compensation expense
|
|
|
735 |
|
|
|
1,291 |
|
Non-cash
contract termination fee
|
|
|
191 |
|
|
|
7,167 |
|
Changes
in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
857 |
|
|
|
245 |
|
Prepaid
expenses and other current assets
|
|
|
(302 |
) |
|
|
875 |
|
Taxes
receivable
|
|
|
— |
|
|
|
336 |
|
Other
noncurrent assets
|
|
|
287 |
|
|
|
(444 |
) |
Accounts
payable and accrued expenses
|
|
|
(3,438 |
) |
|
|
679 |
|
Taxes
payable
|
|
|
(266 |
) |
|
|
(241 |
) |
Interest
payable
|
|
|
(4,562 |
) |
|
|
3,735 |
|
Deferred
revenue
|
|
|
(1,971 |
) |
|
|
(161 |
) |
Other
noncurrent liabilities
|
|
|
307
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
|
|
1,896
|
|
|
|
28,841
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Additions
to property and equipment
|
|
|
(9,401 |
) |
|
|
(7,902 |
) |
Proceeds
from sale of assets
|
|
|
85 |
|
|
|
— |
|
Acquisition
of broadcast properties and related transaction costs
|
|
|
(20,751 |
) |
|
|
(7,923 |
) |
Proceeds
from insurance on casualty loss
|
|
|
2,003
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Net
cash used for investing activities
|
|
|
(28,064 |
) |
|
|
(15,825 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Repayment
of long-term debt
|
|
|
(154,024 |
) |
|
|
(98,649 |
) |
Proceeds
from revolver draws
|
|
|
54,000 |
|
|
|
50,000 |
|
Issuance
of senior subordinated PIK notes in debt exchange
|
|
|
142,321 |
|
|
|
— |
|
Consideration
paid to bond holders for debt exchange
|
|
|
(17,677 |
) |
|
|
— |
|
Proceeds
from senior subordinated PIK notes
|
|
|
— |
|
|
|
35,000 |
|
Proceeds
from issuance of common shares related to exercise of stock
options
|
|
|
—
|
|
|
|
38
|
|
Net
cash provided by (used for) financing activities
|
|
|
24,620
|
|
|
|
(13,611 |
) |
Net
decrease in cash and cash equivalents
|
|
|
(1,548 |
) |
|
|
(595 |
) |
Cash
and cash equivalents at beginning of period
|
|
|
15,834
|
|
|
|
16,226
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
$ |
14,286
|
|
|
$ |
15,631
|
|
|
|
|
|
|
|
|
|
|
Supplemental
schedule of cash flow information:
|
|
|
|
|
|
|
|
|
Cash
paid during the period for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$ |
17,750
|
|
|
$ |
16,732
|
|
|
|
|
|
|
|
|
|
|
Income
taxes, net
|
|
$ |
523
|
|
|
$ |
178
|
|
|
|
|
|
|
|
|
|
|
Non-cash
investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of software
|
|
$ |
—
|
|
|
$ |
4,968
|
|
Acquisition
of equipment in accounts payable
|
|
$ |
1,013
|
|
|
$ |
—
|
|
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.
|
Organization and Business
Operations
|
As of
June 30, 2009, Nexstar Broadcasting Group, Inc. (“Nexstar”) owned, operated,
programmed or provided sales and other services to 63 television stations
(inclusive of the digital multi-channels), which includes affilates
of NBC, ABC, CBS, Fox, MyNetworkTV and The CW in markets located in
New York, Pennsylvania, Illinois, Indiana, Missouri, Texas, Louisiana, Arkansas,
Alabama, Utah, Massachusetts, Florida, Montana and Maryland. Through various
local service agreements, Nexstar provided sales, programming and other services
to stations owned and/or operated by independent third parties. Nexstar operates
in one reportable television broadcasting segment. The economic characteristics,
services, production process, customer type and distribution methods for
Nexstar’s operations are substantially similar and are therefore aggregated as a
single reportable segment.
Nexstar
is highly leveraged, which makes it vulnerable to changes in general economic
conditions. Nexstar’s ability to repay or refinance its debt will depend on,
among other things, financial, business, market, competitive and other
conditions, many of which are beyond Nexstar’s control.
Disruptions
in the capital and credit markets, as have been experienced during 2008 and
2009, could adversely affect our ability to draw on our bank revolving credit
facilities. Our access to funds under the revolving credit facilities is
dependent on the ability of the banks that are parties to the facilities to meet
their funding commitments. Those banks may not be able to meet their funding
commitments to us if they experience shortages of capital and liquidity or if
they experience excessive volumes of borrowing requests from us and other
borrowers within a short period of time.
Liquidity
and Management Plans
Our
senior secured credit facility agreement contains covenants which require us to
comply with certain financial ratios, including: (a) maximum total and
senior leverage ratios, (b) a minimum interest coverage ratio, and
(c) a minimum fixed charge coverage ratio. The covenants, which are
calculated on a quarterly basis, include the combined results of Nexstar
Broadcasting and Mission Broadcasting, Inc. (“Mission”). Mission’s senior
secured credit facility agreement does not contain financial covenant ratio
requirements; however it does include an event of default if Nexstar does not
comply with all covenants contained in its credit agreement. The senior
subordinated notes and senior discount notes contain restrictive covenants
customary for borrowing arrangements of this type. As of June 30, 2009, we were
in compliance with all covenants contained in the credit agreements governing
our senior secured credit facility and the indentures governing the
publicly-held notes.
On
March 30, 2009, we closed an offer to exchange $143,600,000 of the 7%
senior subordinated notes due 2014 in exchange for $142,320,761 7% senior
subordinated PIK Notes due 2014 (the “PIK Notes”). Based on the financial
covenants in the senior secured credit facility, the PIK Notes are not included
in the debt amount used to calculate the total leverage ratio until January
2011. In addition to the debt exchange, we have undertaken certain actions as
part of our efforts to ensure we do not exceed the maximum total leverage and
senior leverage ratios including 1) the elimination of corporate bonuses for
2008 and 2009, 2) the consolidation of various back office processes in certain
markets , 3) the execution of a management services agreement whereby Nexstar
operates seven stations in exchange for a service fee , and 4) the consummation
of purchase agreements on March 12, 2009 and May 1, 2009 to acquire all the
assets of KARZ and WCWJ, respectively.
Debt
Covenants
In
addition to the above items, our plans for 2009 include certain other cost
containment measures, including one week Company furloughs for all employees and
reduction of discretionary operating expenses. We believe the consummation of
the exchange offer combined with the actions described above, will allow us to
maintain compliance with all covenants contained in the credit agreements
governing our senior secured facility and the indentures governing our publicly
held notes for a period of at least the next twelve months from June 30, 2009.
However, no assurance can be provided that our actions will be successful or
that further adverse events outside of our control may arise that would result
in our inability to comply with the debt covenants. In such event, we
would consider a range of transactions or strategies to address any such
situation. For example, we might decide to divest non-core assets,
seek an amendment to our bank credit facility, refinance our existing debt or
obtain additional equity financing. There is no assurance that any
such transactions, or any other transactions, or strategies we might consider,
could be consummated on terms satisfactory to us or at all.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2.
|
Summary
of Significant Accounting Policies
|
Interim
Financial Statements
The
condensed consolidated financial statements as of June 30, 2009 and for the
three months and six months ended June 30, 2009 and 2008 are unaudited. However,
in the opinion of management, such financial statements include all adjustments
(consisting solely of normal recurring adjustments) necessary for the fair
statement of the financial information included herein in accordance with
accounting principles generally accepted in the United States of America (“U.S.
GAAP”) and pursuant to the rules and regulations of the Securities and Exchange
Commission (“SEC”). The preparation of the condensed consolidated financial
statements in conformity with U.S. GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenue and expenses during the period.
Actual results could differ from those estimates. Results of operations for
interim periods are not necessarily indicative of results for the full year.
These condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and related notes included in
Nexstar’s Annual Report on Form 10-K for the fiscal year ended December 31,
2008. The balance sheet at December 31, 2008 has been derived from the
audited financial statements at that date, but does not include all of the
information and footnotes required by U.S. GAAP for complete financial
statements.
Basis
of Presentation
During
the second quarter of 2009, the Company corrected depreciation expense and
certain balance sheet accounts for an error discovered during the quarter which
increased three and six months ended June 30, 2009 net loss by $0.2
million. The error related to the estimated fair values and
subsequent depreciation of certain fixed assets associated with the KTVE
acquisition in 2008 which had shortened useful lives due to the conversion from
analog to digital equipment as mandated by the FCC. The impact of
correcting this error in 2008 would have also increased net loss by $0.2 million
for the annual period and lesser amounts for each quarter during the
year. No periods prior to 2008 would have been impacted since the
assets were acquired in January 2008. We evaluated this error taking
into account both qualitative and quantitative factors and considered the impact
of this error in relation to the current period, which is when it was corrected,
as well as the period in which it originated. Management believes
this error is immaterial to both the consolidated three and six months ended
June 30, 2009 period and the annual financial statements as well as to 2008
quarterly and annual financial statements.
Certain
prior year amounts have been reclassified to conform to the current year
presentation. See Note 19 for reclassified amounts.
Principles
of Consolidation
The
condensed consolidated financial statements include the accounts of Nexstar and
its subsidiaries. Also included in the financial statements are the accounts of
independently-owned Mission Broadcasting, Inc. (“Mission”) (Nexstar and Mission
are collectively referred to as the “Company”) and may include certain other
entities where it is determined that the Company is the primary beneficiary of a
variable interest entity (“VIE”) in accordance with Financial Accounting
Standards Board (“FASB”) Interpretation No. 46 (revised 2003),
“Consolidation of Variable Interest Entities, an interpretation on Accounting
Research Bulletin No. 51” (“FIN No. 46R”).
All
intercompany account balances and transactions have been eliminated in
consolidation.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2.
|
Summary
of Significant Accounting Policies—(Continued)
|
Mission
Mission
is included in these condensed consolidated financial statements because Nexstar
is deemed to have a controlling financial interest in Mission for financial
reporting purposes in accordance with FIN No. 46R as a result of
(a) local service agreements Nexstar has with the Mission stations,
(b) Nexstar’s guarantee of the obligations incurred under Mission’s senior
credit facility and (c) purchase options (which expire on various dates
between 2011 and 2018) granted by Mission’s sole shareholder which will permit
Nexstar to acquire the assets and assume the liabilities of each Mission
station, subject to Federal Communications Commission (“FCC”) consent. The
Company expects these option agreements, if unexercised, will be renewed upon
expiration. As of June 30, 2009, the assets of Mission consisted of current
assets of $2.2 million (excluding broadcast rights), broadcast rights of $3.2
million, FCC licenses of $22.7 million, goodwill of $19.0 million, other
intangible assets of $28.1 million, property and equipment of $28.6 million and
other noncurrent assets of $0.5 million. Substantially all of Mission’s assets,
except for its FCC licenses, collateralize its secured debt obligation. See Note
19 for a presentation of condensed consolidating financial information of the
Company, which includes the accounts of Mission.
Nexstar
has entered into local service agreements with Mission to provide sales and/or
operating services to the Mission stations. The following table summarizes the
various local service agreements Nexstar had in effect with Mission as of June
30, 2009:
|
|
Service Agreements
|
Mission
Stations
|
TBA
Only(1)
|
WFXP
and KHMT
|
|
|
SSA & JSA (2)
|
KJTL,
KJBO-LP, KOLR, KCIT, KCPN-LP, KAMC, KRBC, KSAN, WUTR, WFXW, WYOU, KODE,
WTVO and KTVE
|
(1)
|
Nexstar
has a time brokerage agreement (“TBA”) with each of these stations which
allows Nexstar to program most of each station’s broadcast time, sell each
station’s advertising time and retain the advertising revenue generated in
exchange for monthly payments to
Mission.
|
(2)
|
Nexstar
has both a shared services agreement (“SSA”) and a joint sales agreement
(“JSA”) with each of these stations. Each SSA allows the Nexstar station
in the market to provide services including news production, technical
maintenance and security, in exchange for Nexstar’s right to receive
certain payments from Mission as described in the SSAs. Each JSA permits
Nexstar to sell and retain a percentage of the net revenue from the
station’s advertising time in return for monthly payments to Mission of
the remaining percentage of net revenue as described in the
JSAs.
|
Nexstar
does not own Mission or Mission’s television stations; however, Nexstar is
deemed to have a controlling financial interest in them under U.S. GAAP while
complying with the FCC’s rules regarding ownership limits in television markets.
In order for both Nexstar and Mission to comply with FCC regulations, Mission
maintains complete responsibility for and control over programming, finances,
personnel and operations of its stations.
Variable
Interest Entities
The
Company may determine that a station is a VIE as a result of local service
agreements entered into with the owner-operator of stations in markets in which
the Company owns and operates a station. The term local service agreements
generally refers to a contract between two separately owned television stations
serving the same market, whereby the owner-operator of one station contracts
with the owner-operator of the other station to provide it with administrative,
sales and other services required for the operation of its station.
Nevertheless, the owner-operator of each station retains control and
responsibility for the operation of its station, including ultimate
responsibility over all programming broadcast on its station.
VIEs in
connection with local service agreements entered into with stations in markets
in which the Company owns and operates a station are discussed
below.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2.
|
Summary
of Significant Accounting Policies—(Continued)
|
Nexstar
has determined that it has variable interests in WYZZ, the Fox affiliate in
Peoria, Illinois and WUHF, the Fox affiliate in Rochester, New York, each owned
by a subsidiary of Sinclair Broadcasting Group, Inc. (“Sinclair”), as a result
of outsourcing agreements it has entered into with Sinclair. Nexstar also had,
prior to January 16, 2008, a variable interest in KTVE, the NBC affiliate
in El Dorado, Arkansas, during the time it was owned by Piedmont Television of
Monroe/El Dorado LLC (“Piedmont”), as a result of a JSA and SSA entered into
with Piedmont. Nexstar’s JSA and SSA with Piedmont terminated upon Mission’s
acquisition of KTVE on January 16, 2008. Nexstar also has determined that
it has a variable interest in WHP, the CBS affiliate in Harrisburg,
Pennsylvania, which is owned by Clear Channel TV, Inc. (“Clear Channel”), as a
result of Nexstar becoming successor-in-interest to a TBA entered into by a
former owner of WLYH. Nexstar has evaluated its arrangements with Sinclair,
Piedmont and Clear Channel and has determined that it is not the primary
beneficiary of the variable interests, and therefore, has not consolidated these
stations under FIN No. 46R. Nexstar made payments to Sinclair under the
outsourcing agreements of $1.0 million for each of the three months ended June
30, 2009 and 2008, respectively and $1.4 million and $1.6 million for the six
months then ended.
Under the
outsourcing agreements with Sinclair, Nexstar pays for certain operating
expenses of WYZZ and WUHF, and therefore may have unlimited exposure to any
potential operating losses. Nexstar’s management believes that Nexstar’s minimum
exposure to loss under the Sinclair outsourcing agreements consists of the fees
paid to Sinclair. Additionally, Nexstar indemnifies the owners of WHP, WYZZ and
WUHF from and against all liability and claims arising out of or resulting from
its activities, acts or omissions in connection with the agreements. The maximum
potential amount of future payments Nexstar could be required to make for such
indemnification is undeterminable at this time.
Nexstar
entered into a management services agreement with Four Points Media Group
effective March 20, 2009. Four Points owns and operates seven
individual stations in four markets. Under this agreement, Nexstar
manages the stations for Four Points but does not have ultimate control over the
policies or operations of the stations. In return for managing the
stations, Nexstar receives a fixed annual management fee of $2.0 million per
year, as well as annual incentive compensation based on incremental broadcast
cash flow of the Four Points’ stations. Nexstar is also entitled to a
share of the equity profits if the stations are sold while the agreement is in
effect. The agreement provides for a minimum compensation of $10.0
million to Nexstar if the Four Points stations are sold during the initial three
year term of the agreement. Nexstar has concluded that this agreement
gives Nexstar a variable interest in Four Points. We have evaluated
the business arrangement with Four Points and concluded that Nexstar is not the
primary beneficiary of the variable interest and therefore, we do not
consolidate Four Points’ financial results into our own. Nexstar must
indemnify Four Points for any claim or liability that arises out of Nexstar’s
acts or omissions related to the agreement. For this reason,
the maximum exposure to loss as a result of our agreement with Four Points is
undeterminable.
Stock-Based
Compensation
The
Company accounts for Nexstar’s stock-based employee compensation plans in
accordance with Statement of Financial Accounting Standards No. 123
(revised 2004), “Share-Based Payment” (“SFAS No. 123(R)”), which requires
companies to expense the fair value of employee stock options and other forms of
stock-based employee compensation in the financial statements over the period
that an employee provides service in exchange for the award. Under SFAS
No. 123(R), the Company measures compensation cost related to stock options
based on the grant-date fair value of the award using the Black-Scholes
option-pricing model and recognizes it ratably, less estimated forfeitures, over
the vesting term of the award. The Company uses the Black-Scholes option-pricing
model to estimate the grant-date fair value of its employee stock
options.
The
Company recognized stock-based compensation expense of $0.3 million and $0.6
million for the three months ended June 30, 2009 and 2008, respectively, and
$0.7 million and $1.3 million for the six months then ended, which was included
in selling, general and administrative expenses in the Company’s condensed
consolidated statements of operations. The Company does not currently recognize
a tax benefit resulting from compensation costs expensed in the financial
statements because the Company provides a valuation allowance against the
deferred tax asset resulting from this type of temporary difference since it
expects that it will not have sufficient future taxable income to realize such
benefit. Accordingly, SFAS No. 123(R) has had no impact on income tax
expense reported in the financial statements.
At June
30, 2009, there was approximately $3.4 million of total unrecognized
compensation cost, net of estimated forfeitures, related to stock options that
is expected to be recognized over a weighted-average period of 3.1 years. There
were no stock options exercised during the six months ended June 30,
2009.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2.
|
Summary
of Significant Accounting Policies—(Continued)
|
Income
(loss) Per Share
Basic
income (loss) per share is computed by dividing the net income (loss) by the
weighted-average number of common shares outstanding during the period. Diluted
income (loss) per share is computed using the weighted-average number of common
shares and dilutive potential common shares outstanding during the period using
the treasury stock method. Potential common shares consist of stock options and
the unvested portion of restricted stock granted to employees. For the three
months and six months ended June 30, 2009 and 2008, there was no difference
between basic and diluted net income (loss) per share since the effect of
potential common shares were anti-dilutive, and therefore excluded from the
computation of diluted net income (loss) per share.
The
following table summarizes information about anti-dilutive potential common
shares (not presented in thousands):
|
|
Three
Months Ended
June
30,
|
|
|
Six
Months Ended
June
30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(weighted-average
shares outstanding)
|
|
|
(weighted-average
shares outstanding)
|
|
Stock
options excluded as the exercise price of the options was greater than the
average market price of the common stock
|
|
|
3,616,478 |
|
|
|
2,355,611 |
|
|
|
3,665,739 |
|
|
|
2,381,639 |
|
In-the-money
stock options excluded as the Company had a net loss during the
period
|
|
|
— |
|
|
|
1,743,078 |
|
|
|
— |
|
|
|
1,810,861 |
|
Nonmonetary Asset
Exchanges
In
connection with a spectrum allocation exchange ordered by the FCC within the 1.9
GHz band, Sprint Nextel Corporation (“Nextel”) is required to replace certain
existing analog equipment with comparable digital equipment. The Company has
agreed to accept the substitute equipment that Nextel will provide and in turn
must relinquish its existing equipment to Nextel. Neither party will have any
continuing involvement in the equipment transferred following the exchange. We
account for this arrangement as an exchange of assets in accordance with U.S.
GAAP requirements for exchanges of nonmonetary assets. The equipment
the Company receives under this arrangement is recorded at their estimated fair
market value and depreciated over estimated useful lives ranging from 5 to 15
years. Management’s determination of the fair market value is derived from the
most recent prices paid to manufacturers and vendors for the specific equipment
acquired. As equipment is exchanged, the Company records a gain to the extent
that the fair market value of the equipment received exceeds the carrying amount
of the equipment relinquished.
Recent
Accounting Pronouncements
SFAS No.
168, “The FASB Accounting Standards Codification™ and the Hierarchy of Generally
Accepted Accounting Principles” a replacement of SFAS No. 162, “Hierarchy of
Generally Accepted Accounting Principles” (“the Codification”). The Codification
is the official single source of authoritative U.S. generally accepted
accounting principles (“GAAP”). All existing accounting standards are
superseded. All other accounting guidance not included in the Codification will
be considered non-authoritative. The Codification also includes all relevant
Securities and Exchange Commission (“SEC”) guidance organized using the same
topical structure in separate sections within the Codification. The Codification
is effective for our third-quarter 2009 financial statements. The Codification
is not expected to change GAAP. The principal impact on our financial statements
from the Codification adoption is limited to disclosures as all future
references to authoritative accounting literature will be referenced in
accordance with the Codification.
SFAS No.
167, “Amendments to FASB Interpretation No. 46(R)” (“FAS 167”). FAS 167 amends
FASB Interpretation No. 46 (“FIN 46”) (revised December 2003), “Consolidation of
Variable Interest entities” (“FIN 46R”) to require an analysis to determine
whether a variable interest gives the entity a controlling financial interest in
a variable interest entity. This statement requires an ongoing reassessment and
eliminates the quantitative approach previously required for determining whether
an entity is the primary beneficiary. FAS 167 is effective for our fiscal year
beginning January 1, 2010. We are currently evaluating the impact of adopting
this standard on our consolidated financial statements.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2.
|
Summary of Significant Accounting
Policies—(Continued)
|
SFAS No.
166, “Accounting for Transfers of Financial Assets” (“FAS 166”). FAS 166 removes
the concept of a qualifying special-purpose entity from SFAS No. 140,
“Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities” (“FAS 140”) and removes the exception from applying FIN 46R.
This statement also clarifies the requirements for isolation and limitations on
portions of financial assets that are eligible for sale accounting. FAS 166 is
effective for our fiscal year beginning January 1, 2010. We are currently
evaluating the impact of adopting this standard on our consolidated financial
statements.
In May
2009, the FASB issued SFAS No. 165, “Subsequent Events” (“FAS 165”). FAS 165 is
intended to establish general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. It requires disclosure of the date
through which an entity has evaluated subsequent events and the basis for
selecting that date, that is, whether that date represents the date the
financial statements were issued or were available to be issued. FAS 165 is
effective for our second quarter ended June 30, 2009. We have
evaluated subsequent events through August 12, 2009, which is the date the
financial statements were issued.
In April
2009, the FASB issued FSP No. 107-1, Interim Disclosures about Fair Value
of Financial Instruments (FSP 107-1), which increases the frequency of fair
value disclosures from an annual to a quarterly basis. The guidance relates to
fair value disclosures for any financial instruments that are not currently
reflected on the balance sheet at fair value. The FSP is effective for interim
and annual periods ending after June 15, 2009. We adopted this
FSP in the second quarter of 2009. The adoption of this FSP did not
impact our financial position or results of operations. It did,
however, result in additional disclosures related to the fair value of our
debt. See Note 10 of these financial statements.
In April
2009, the FASB issued FSP No. FAS 157-4, Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly. This FSP provides guidance
for estimating fair values when there is no active market or where the price
inputs being used represent distressed sales and identifying circumstances that
indicate a transaction is not orderly. This FSP is effective for interim and
annual reporting periods ending after June 15, 2009. We adopted this FSP in
the second quarter of 2009. Adoption of the FSP did not have any
effect on the Company’s financial position or results of
operations.
In April
2008, the FASB issued FSP No. FAS 142-3, Determination of the Useful Life of
Intangible Assets. FSP No. FAS 142-3 amends the factors that should be
considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under FASB Statement No. 142,
Goodwill and Other Intangible Assets. This new guidance also provides additional
disclosure requirements related to recognized intangible assets. We adopted FSP
No. FAS 142-3 in January 2009 and it did not have a material impact on our
financial position or results of operations.
In
January 2008, we adopted SFAS No. 157, Fair Value Measurements. The
adoption did not have a material impact on our financial position or results of
operations. The statement established a framework for measuring fair value, and
it enhanced the disclosures for fair value measurements. The statement applies
when other accounting pronouncements require or permit fair value measurements,
but it does not require new fair value measurements. In February 2008, the FASB
issued a one-year deferral for nonfinancial assets and liabilities to comply
with SFAS No. 157. We adopted SFAS No. 157 for nonfinancial assets and
liabilities in the first quarter of 2009. There were no material effects on our
financial statements upon adoption of this new accounting pronouncement;
however, this pronouncement could have a material impact in future
periods.
In
December 2007, the FASB issued SFAS No. 141(R), Business Combinations, and
SFAS No. 160, Accounting and Reporting of Noncontrolling Interests in
Consolidated Financial Statements, an Amendment of Accounting Research Bulletin
No. 51. These new standards significantly change the accounting for and
reporting of business combination transactions and noncontrolling (minority)
interests in consolidated financial statements. We adopted SFAS Nos. 141(R) and
160 on January 1, 2009. The impact of adopting SFAS No. 141(R) will be
primarily limited to business combinations occurring on or after January 1,
2009. SFAS No. 160 had no impact on our financial position or results of
operations.
NEXSTAR BROADCASTING GROUP,
INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS—(Continued)
3.
|
Fair
Value Measurements
|
The
Company adopted SFAS No. 157 effective January 1, 2008 for financial
assets and financial liabilities measured on a recurring basis and
January 1, 2009 for non-financial assets and non-financial liabilities.
SFAS No. 157 applies to all financial and non-financial assets and
financial and non-financial liabilities that are being measured and reported on
a fair value basis. There was no impact for adoption of SFAS No. 157 to the
Unaudited Condensed Consolidated Financial Statements as it relates to financial
and non-financial assets and financial and non-financial liabilities. SFAS
No. 157 requires disclosure that establishes a framework for measuring fair
value and expands disclosure about fair value measurements. The statement
requires fair value measurement be classified and disclosed in one of the
following three categories:
Level 1:
Unadjusted quoted prices in active markets that are accessible at the
measurement date for identical, unrestricted assets or liabilities;
Level 2:
Quoted prices in markets that are not active or inputs which are observable,
either directly or indirectly, for substantially the full term of the asset or
liability;
Level 3:
Prices or valuation techniques that require inputs that are both significant to
the fair value measurement and unobservable (i.e., supported by little or no
market activity).
The
Company invests in short-term interest bearing obligations with original
maturities less than 90 days, primarily money market funds. We do not enter into
investments for trading or speculative purposes. As of June 30, 2009 and
December 31, 2008, there were no investments in marketable
securities.
As of
June 30, 2009 and December 31, 2008, the Company had $7.4 million and $12.0
million, respectively invested in a money market investment. These investments
are required to be measured at fair value on a recurring basis. The Company has
determined that the money market investment is defined as Level 1 in the fair
value hierarchy. As of June 30, 2009 and December 31, 2008, the fair value
of the money market investment was an asset of $7.4 million and $12.0 million,
respectively.
4.
|
Pending Transaction with
Mission
|
On
April 11, 2006, Nexstar and Mission filed an application with the FCC for
consent to assignment of the license of KFTA Channel 24 (Ft. Smith, Arkansas)
from Nexstar to Mission. Consideration for this transaction is set at $5.6
million. On August 28, 2006, Nexstar and Mission entered into a local
service agreement whereby (a) Mission pays Nexstar $5 thousand per month
for the right to broadcast Fox programming on KFTA during the Fox network
programming time periods and (b) Nexstar pays Mission $20 thousand per
month for the right to sell all advertising time on KFTA within the Fox network
programming time periods. Also in 2006, Mission entered into an affiliation
agreement with the Fox network which provides Fox programming to KFTA. The local
service agreement between Nexstar and Mission will terminate upon assignment of
KFTA’s FCC license from Nexstar to Mission. Upon completing the assignment of
KFTA’s license, Mission plans to enter into a JSA and SSA with Nexstar-owned
KNWA in Fort Smith-Fayetteville-Springdale-Rogers, Arkansas, whereby KNWA will
provide local news, sales and other non-programming services to KFTA. Nexstar’s
KNWA, licensed to Rogers, Arkansas, has renewed its affiliation agreement for
KNWA to continue as the NBC affiliate in Ft.
Smith-Fayetteville-Springdale-Rogers, Arkansas through 2014. In March 2008, the
FCC granted the application to assign the license for KFTA from Nexstar to
Mission. The grant contained conditions which Nexstar is currently
appealing.
On
January 28, 2009, Nexstar entered into an agreement to acquire the assets
of WCWJ, the CW affiliate serving the Jacksonville, Florida market, for $18.0
million (base) subject to working capital adjustments. Nexstar viewed this
acquisition as an opportunity to leverage our management expertise and increase
profitability of the station by overlaying our existing retransmission
compensation contracts and incorporating our cost reduction
strategies. The transaction closed on May 1,
2009. Cash available on hand was used to make a $1.0 million down
payment in February 2009 and the remaining $16.2 million was paid upon
closing. Transaction costs such as legal, accounting, valuation and
other professional services were $0.3 million.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
5.
|
Acquisitions—(Continued)
|
The
following table summarizes the estimated fair values of the assets acquired and
liabilities assumed at the date of acquisition. The allocation of the WCWJ
purchase consideration to assets and liabilities acquired, including goodwill,
has not been concluded due to the pending completion of tangible and intangible
asset appraisals.
|
|
|
|
Accounts
receivable
|
|
|
1,320 |
|
Current
portion of broadcast rights
|
|
|
2,078 |
|
Prepaids
and other current assets
|
|
|
28 |
|
Property
and equipment
|
|
|
4,172 |
|
Long-term
portion of broadcast rights
|
|
|
3,371 |
|
FCC
license
|
|
|
8,561 |
|
Goodwill
|
|
|
96 |
|
Other
intangible assets
|
|
|
70
|
|
Total
assets acquired
|
|
|
19,696 |
|
Less:
current portion of broadcast rights payable
|
|
|
808 |
|
Less:
accounts payable
|
|
|
177 |
|
Less:
accrued expenses
|
|
|
65 |
|
Less:
long-term portion of broadcast rights payable
|
|
|
1,495 |
|
|
|
|
|
|
Net
assets acquired
|
|
$ |
17,151
|
|
Goodwill
of $0.1 million is expected to be deductible for tax purposes. The fair value
assigned to goodwill is attributable to future expense reductions utilizing
management’s leverage in programming and other station operating
costs.
WCWJ’s
revenue of $1.6 million and net income of $0.1 million for the period May 1,
2009 to June 30, 2009 have been included in the accompanying condensed
consolidated statement of operations for the three months and six months ended
June 30, 2009.
On
October 6, 2008, Nexstar entered into a purchase agreement to acquire
substantially all of the assets of KARZ (formerly KWBF), the MyNetworkTV
affiliate serving the Little Rock, Arkansas market for $4.0 million. The
acquisition gives Nexstar an opportunity to further utilize existing
retransmission compensation contracts and also to achieve duopoly synergies
within the KARZ market. In accordance with the purchase agreement,
Nexstar made a down payment of $0.4 million in 2008. This acquisition closed on
March 12, 2009 and the remaining $3.6 million was paid from available cash
on hand. Transaction costs such as legal, accounting, valuation and
other professional services were $0.1 million.
The
following table summarizes the estimated fair values of the assets acquired and
liabilities assumed at the date of acquisition. The allocation of the KARZ
purchase consideration to assets and liabilities acquired, including goodwill,
has not been concluded due to the pending completion of tangible and intangible
asset appraisals.
|
|
|
|
Current
portion of broadcast rights
|
|
|
263 |
|
Property
and equipment
|
|
|
878 |
|
Long-term
portion of broadcast rights
|
|
|
379 |
|
FCC
license
|
|
|
2,673 |
|
Goodwill
|
|
|
335
|
|
Total
assets acquired
|
|
|
4,528 |
|
Less:
current portion of broadcast rights payable
|
|
|
262 |
|
Less:
long-term portion of broadcast rights payable
|
|
|
266 |
|
|
|
|
|
|
Net
assets acquired
|
|
$ |
4,000
|
|
Goodwill
of $0.3 million is expected to be deductible for tax purposes. The fair value
assigned to goodwill is attributable to the synergies achieved by adding KARZ to
our pre-existing station in the Little Rock market, KARK.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
5.
|
Acquisitions—(Continued)
|
KARZ’s
revenue of $0.6 million and net income of $0.5 million for the period April 1,
2009 to June 30, 2009 and revenue of $0.7 million and net income of $0.7 million
for the period February 1, 2009 to June 30, 2009 (post TBA) have been included
in the accompanying condensed consolidated statement of operations for the three
months and six months ended June 30, 2009, respectively.
Unaudited
Pro Forma Information
The
following unaudited pro forma information has been presented as if the
acquisition of WCWJ and KARZ had occurred on January 1, 2009 and 2008,
respectively:
|
|
Three
Months Ended
June
30, 2009
|
|
|
Three
Months Ended
June
30, 2008
|
|
|
Six
Months Ended
June
30, 2009
|
|
|
Six
Months Ended
June
30, 2008
|
|
|
|
(in
thousands, except per share amounts)
|
|
|
(in
thousands, except per share amounts)
|
|
Net
revenue
|
|
$ |
62,942 |
|
|
$ |
73,563 |
|
|
$ |
120,460 |
|
|
$ |
140,280 |
|
Income
(loss) before income taxes
|
|
|
232 |
|
|
|
5,689 |
|
|
|
7,566 |
|
|
|
(7,815 |
) |
Net
income (loss)
|
|
|
(1,159 |
) |
|
|
4,055 |
|
|
|
4,796 |
|
|
|
(11,128 |
) |
The above
selected unaudited pro forma information is presented for illustrative purposes
only and is not necessarily indicative of results of operations in future
periods or results that would have been achieved had the Company owned the
acquired stations during the specified period.
6.
|
Intangible
Assets and Goodwill
|
Intangible
assets subject to amortization consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
useful
life
(years)
|
|
|
June 30,
2009
|
|
|
December 31,
2008
|
|
|
Gross
|
|
|
Accumulated
Amortization
|
|
|
Net
|
|
|
Gross
|
|
|
Accumulated
Amortization
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
Network
affiliation agreements
|
|
|
15 |
|
|
$ |
344,662 |
|
|
$ |
(210,532 |
) |
|
$ |
134,130 |
|
|
$ |
344,662 |
|
|
$ |
(199,159 |
) |
|
$ |
145,503 |
|
Other
definite-lived intangible assets
|
|
|
1-15 |
|
|
|
13,455
|
|
|
|
(9,500 |
) |
|
|
3,955
|
|
|
|
13,385
|
|
|
|
(9,037 |
) |
|
|
4,348
|
|
Total
intangible assets subject to amortization
|
|
|
|
|
|
$ |
358,117
|
|
|
$ |
(220,032 |
) |
|
$ |
138,085
|
|
|
$ |
358,047
|
|
|
$ |
(208,196 |
) |
|
$ |
149,851
|
|
Total
amortization expense from definite-lived intangibles was $5.9 million and $6.4
million for the three months ended June 30, 2009 and 2008, respectively and
$11.8 million and $12.8 million for the six months then ended. The Company’s
estimate of amortization expense for definite-lived intangible assets as of June
30, 2009 is approximately $23.5 million for each year for the years 2009 through
2011; $23.0 million for 2012; and $17.0 million for 2013.
The
aggregate carrying value of indefinite-lived intangible assets, consisting of
FCC licenses and goodwill, was $252.7 million and $240.7 million at June 30,
2009 and December 31, 2008, respectively. The Company expenses as incurred,
any costs to renew or extend its FCC licenses. Indefinite-lived intangible
assets are not subject to amortization, but are tested for impairment annually
or whenever events or changes in circumstances indicate that such assets might
be impaired. As of June 30, 2009, the Company did not identify any events that
would trigger an impairment assessment.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
6.
|
Intangible
Assets and Goodwill—(Continued)
|
The
change in the carrying amount of goodwill and FCC licenses for the six months
ended June 30, 2009 was as follows:
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
FCC Licenses
|
|
|
|
(in thousands)
|
|
|
(in thousands)
|
|
Beginning
balance
|
|
$ |
115,632 |
|
|
$ |
125,057 |
|
Acquisitions
|
|
|
431 |
|
|
|
11,234 |
|
Reclassification
of asset
|
|
|
356
|
|
|
|
—
|
|
Ending
balance
|
|
$ |
116,419
|
|
|
$ |
136,291
|
|
During
2009, the consummation of the acquisitions of KARZ and WCWJ increased goodwill
and FCC licenses by $0.4 million and $11.2 million,
respectively. During the six months ended June 30, 2009 the Company
reclassified certain amounts that totaled $0.4 million representing goodwill
that was improperly classified as property and equipment when recording the fair
value of KTVE assets, which were acquired in 2008.
In
February 2009, Nexstar began regionalizing certain accounting and traffic
functions. As a result, approximately 93 employees were notified they would be
terminated at various points in time through the end of May 2009. These
employees were offered termination benefits that aggregated to $0.7 million. To
receive any of the termination payments, the employees had to remain employed
through their respective termination dates, as specified in the termination
agreement. The Company recognized these costs ratably over the period of time
between the notice of termination and the termination date. The
liability, which has been paid in full, was recorded in accrued expenses on the
Company’s balance sheet. Nexstar estimates the restructuring will
save the Company approximately $2.2 million annually.
Accrued
expenses consisted of the following:
|
|
June
30,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(in
thousands)
|
|
Compensation
and related taxes
|
|
$ |
2,876 |
|
|
$ |
3,102 |
|
Sales
commissions
|
|
|
1,045 |
|
|
|
1,550 |
|
Employee
benefits
|
|
|
653 |
|
|
|
947 |
|
Property
taxes
|
|
|
721 |
|
|
|
444 |
|
Other
accruals related to operating expenses
|
|
|
7,922
|
|
|
|
6,441
|
|
|
|
$ |
13,217
|
|
|
$ |
12,484
|
|
9.
|
Customer Rebate
Program
|
In January 2009, Nexstar enacted a
rebate program for its television spot advertisers entitling them to receive a
20% cash rebate for every incremental dollar spent in the first half of 2009
over what they spent in the first half of 2008. To be eligible for
this incentive, customers had to sign a contractual agreement and their account
had to be paid current. As of June 30, 2009 the Company has accrued a
liability of $0.9 million related to the rebate program. This
liability is included in accrued expenses in the condensed consolidated balance
sheet. These rebates reduced the Company’s net sales by $0.8 million
and $0.9 million for the three months and six months ended June 30, 2009,
respectively.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS—(Continued)
Long-term
debt consisted of the following:
|
|
|
|
|
|
|
|
|
June
30,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(in
thousands)
|
|
Term
loans
|
|
$ |
323,431 |
|
|
$ |
325,174 |
|
Revolving
credit facilities
|
|
|
85,000 |
|
|
|
31,000 |
|
7%
senior subordinated notes due 2014, net of discount of $1,026 and
$1,708
|
|
|
46,884 |
|
|
|
190,778 |
|
7%
senior subordinated PIK notes due 2014, net of discount of
$14,832
|
|
|
127,669 |
|
|
|
— |
|
11.375%
senior discount notes due 2013
|
|
|
49,981 |
|
|
|
77,820 |
|
Senior
subordinated PIK notes due 2014, net of discount of $208 and
$416
|
|
|
39,818
|
|
|
|
37,345
|
|
|
|
|
672,783 |
|
|
|
662,117 |
|
Less:
current portion
|
|
|
(3,485 |
) |
|
|
(3,485 |
) |
|
|
$ |
669,298
|
|
|
$ |
658,632
|
|
The
Nexstar Senior Secured Credit Facility
The
Nexstar senior secured credit facility (the “Nexstar Facility”) consists of a
Term Loan B and a $82.5 million revolving loan. As of June 30, 2009 and
December 31, 2008, Nexstar had $157.2 million and $158.1 million,
respectively, outstanding under its Term Loan B and $78.0 million and $24.0
million, respectively, outstanding under its revolving loan.
The Term
Loan B, which matures in October 2012, is payable in consecutive quarterly
installments amortized at 0.25% quarterly, with the remaining 93.25% due at
maturity. During the six months ended June 30, 2009, repayments of Nexstar’s
Term Loan B totaled $0.9 million, all of which were scheduled maturities. The
revolving loan is not subject to incremental reduction and matures in April
2012. During the six months ended June 30, 2009, borrowings from Nexstar’s
revolving loan totaled $54.0 million.
The total
weighted-average interest rate of the Nexstar Facility was 2.63% and 3.35% at
June 30, 2009 and December 31, 2008, respectively. Interest is payable
periodically based on the type of interest rate selected. Additionally, Nexstar
is required to pay quarterly commitment fees on the unused portion of its
revolving loan commitment ranging from 0.375% to 0.50% per annum, based on
the consolidated senior leverage ratio of Nexstar Broadcasting and Mission for
that particular quarter.
The
Mission Senior Secured Credit Facility
The
Mission senior secured credit facility (the “Mission Facility”) consists of a
Term Loan B and a $15.0 million revolving loan. As of June 30, 2009 and
December 31, 2008, Mission had $166.2 million and $167.1 million,
respectively, outstanding under its Term Loan B and $7.0 million of borrowings
were outstanding under its revolving loan.
Terms of
the Mission Facility, including repayment, maturity and interest rates, are the
same as the terms of the Nexstar Facility described above. During the six months
ended June 30, 2009, repayments of Mission’s Term Loan B totaled $
0.9 million, all of which were scheduled maturities. The total weighted
average interest rate of the Mission Facility was 2.33% and 3.19% at June 30,
2009 and December 31, 2008, respectively.
Unused
Commitments and Borrowing Availability
Nexstar
and Mission had $12.5 million of total unused revolving loan commitments under
their respective credit facilities, $2.2 million of which was available for
borrowing, based on the covenant calculations as of June 30, 2009.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS—(Continued)
Exchange
of Senior Subordinated Notes for Senior Subordinated Payment-in-kind (“PIK”)
Notes
On
February 27, 2009, Nexstar Broadcasting, an indirect subsidiary of Nexstar,
announced the commencement of an offer to exchange up to $143,600,000 aggregate
principal amount of its outstanding $191,510,000 in aggregate principal amount
of 7% senior subordinated notes due 2014 (the “Old Notes”) in exchange for
(i) up to $142,320,761 in aggregate principal amount of Nexstar
Broadcasting’s 7% senior subordinated PIK Notes due 2014 (the “New Notes”), to
be guaranteed by each of the existing guarantors to the Old Notes and
(ii) cash. The total exchange price received by tendering holders of the
Old Notes in the exchange offer included an early participation payment of
$30.00 per $1,000 principal amount of Old Notes payable only to holders who
tendered their Old Notes at or before March 10, 2009, which is in addition
to the $93.10 per $1,000 principal amount of Old Notes payable to all holders
who validly tendered their Old Notes on March 26, 2009. The exchange closed
on March 30, 2009. The New Notes mature on January 15, 2014, unless earlier
redeemed or repurchased. The New Notes are general unsecured senior subordinated
obligations subordinated to all of Nexstar Broadcasting’s senior debt. Nexstar
Broadcasting will pay interest on the New Notes on January 15 and July 15 of
each year, commencing on July 15, 2009. Interest will be computed on the basis
of a 360-day year of twelve 30-day months. However, prior to January 15, 2011,
the interest on the New Notes will not be cash interest. From the date of
issuance through January 15, 2011, Nexstar Broadcasting will pay interest on the
New Notes entirely by issuing additional New Notes (the “PIK Interest”). PIK
Interest will accrue on the New Notes at a rate per annum equal to 0.5%,
calculated on a semi-annual bond equivalent basis. From and after January 15,
2011, all New Notes (including those received as PIK Interest) will accrue
interest in cash at a rate of 7% per annum, which interest will be payable
semi-annually in cash on each January 15 and July 15, commencing on July 15,
2011. As a result of the exchange offer and the subsequently accrued PIK
interest, Nexstar now has approximately $142.5 million in aggregate principal of
New Notes outstanding and approximately $47.9 million in aggregate principal
amount of Old Notes outstanding. Total cash consideration paid to tendering
bondholders was $17.7 million. The exchange transaction was accounted for as a
modification of existing debt. The Company incurred $2.9 million in fees
related to the transaction, including banking fees, legal fees and accounting
fees, which were charged to selling, general and administrative
expenses.
7%
Senior Subordinated Notes
On
January 15, 2009, Nexstar purchased approximately $1.0 million of its
outstanding 7% senior subordinated notes for $0.4 million, plus accrued interest
of $1 thousand.
11.375%
Senior Discount Notes
On
various dates throughout January and February 2009, Nexstar purchased some of
the outstanding 11.375% senior discount notes issued by Nexstar Finance
Holdings, Inc. with a total face value of $27.8 million for $9.6 million, plus
accrued interest of $1.0 million. These transactions resulted in total gains of
$18.0 million.
Debt
Covenants
The
Nexstar Facility contains covenants which require the Company to comply with
certain financial covenant ratios, including (1) a maximum total combined
leverage ratio of Nexstar Broadcasting and Mission of 6.50 times the last twelve
months operating cash flow (as defined in the credit agreement) at June 30,
2009, (2) a maximum combined senior leverage ratio of Nexstar Broadcasting
and Mission of 4.50 times the last twelve months operating cash flow at June 30,
2009, (3) a minimum combined interest coverage ratio of 1.50 to 1.00, and
(4) a fixed charge coverage ratio of 1.15 to 1.00. The covenants, which are
formally calculated on a quarterly basis, are based on the combined results of
Nexstar Broadcasting and Mission. Mission’s bank credit facility agreement does
not contain financial covenant ratio requirements, but does provide for default
in the event Nexstar does not comply with all covenants contained in its credit
agreement. As of June 30, 2009, we are in compliance with all of our
covenants.
Collateralization
and Guarantees of Debt
The bank
credit facilities described above are collateralized by a security interest in
substantially all the combined assets, excluding FCC licenses, of Nexstar and
Mission. Nexstar and its subsidiaries guarantee full payment of all obligations
incurred under the Mission Facility in the event of Mission’s default.
Similarly, Mission is a guarantor of the Nexstar Facility and the senior
subordinated notes issued by Nexstar Broadcasting.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS—(Continued)
In
consideration of Nexstar’s guarantee of Mission’s senior credit facility, the
sole shareholder of Mission has granted Nexstar a purchase option to acquire the
assets and assume the liabilities of each Mission station, subject to FCC
consent. These option agreements (which expire on various dates between 2011 and
2018) are freely exercisable or assignable by Nexstar without consent or
approval by the sole shareholder of Mission. The Company expects these option
agreements, if unexercised, will be renewed upon expiration.
Fair
Value of Debt
The
aggregate carrying amounts and estimated fair value of Nexstar and Mission’s
debt were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
Term
loans(1)
|
|
$ |
323,431 |
|
|
$ |
238,151 |
|
|
$ |
325,174 |
|
|
$ |
293,388 |
|
Revolving
credit facilities(1)
|
|
$ |
85,000 |
|
|
$ |
64,165 |
|
|
$ |
31,000 |
|
|
$ |
27,829 |
|
7%
senior subordinated notes(2)
|
|
$ |
46,884 |
|
|
$ |
17,347 |
|
|
$ |
190,778 |
|
|
$ |
78,219 |
|
7%
senior subordinated PIK notes(3)
|
|
$ |
127,669 |
|
|
$ |
35,747 |
|
|
$ |
— |
|
|
$ |
— |
|
Senior
discount notes(2)
|
|
$ |
49,981 |
|
|
$ |
12,495 |
|
|
$ |
77,820 |
|
|
$ |
26,264 |
|
Senior
subordinated PIK notes(3)
|
|
$ |
39,818 |
|
|
$ |
17,122 |
|
|
$ |
37,345 |
|
|
$ |
16,805 |
|
(1)
|
The
fair value of bank credit facilities is computed based on borrowing rates
currently available to Nexstar and Mission for bank loans with similar
terms and average maturities.
|
(2)
|
The
fair value of Nexstar’s 7% senior subordinated notes and 11.375% senior
discount notes is estimated based on actual trade prices reported to the
National Association of Securities Dealers,
Inc.
|
(3)
|
The
fair value of Nexstar’s 7% senior subordinated PIK notes and private
placement senior subordinated PIK notes is estimated based on bid prices
obtained from an investment banking
firm.
|
On
March 31, 2008, Nexstar signed a ten year agreement for national sales
representation with two units of Katz Television Group, a subsidiary of Katz
Media Group (“Katz”), transferring 24 stations in 14 of its markets from Petry
Television Inc. (“Petry”) and Blair Television Inc. (“Blair”). Nexstar, Blair,
Petry and Katz entered into a termination and mutual release agreement under
which Blair agreed to release Nexstar from its future contractual obligations in
exchange for payments totaling $8.0 million. The payments will be paid by Katz
on behalf of Nexstar as an inducement for Nexstar to enter into the new
long-term contract with Katz. Nexstar recognized a $7.2 million charge
associated with terminating the contracts, which is reflected as a non-cash
contract termination fees in the accompanying condensed consolidated statement
of operations. The $7.2 million charge was calculated as the present value of
the future payments to be made by Katz. The liability established as a result of
the termination represents an incentive received from Katz that will be
accounted for as a termination obligation, and will be recognized as a non-cash
reduction to operating expenses over the term of the agreement with
Katz. Effective May 1, 2009 we signed another agreement to
transfer the remaining Nexstar stations to Katz and its related
companies. Moving these contracts resulted in Nexstar cancelling
multiple contracts with Blair. As a result, Blair has sued the
Company for additional termination fees. Katz has indemnified the
Company for all expenses related to the settlement and defense of this
lawsuit. Termination of these contracts resulted in a non-cash
contract termination fee of $191 thousand. The associated termination
incentive will be recognized as a reduction in operating expenses over the ten
year contract term. As of June 30, 2009, the current portion of these
deferred amounts of approximately $0.7 million was included in other current
liabilities and the long-term portion in the amount of approximately $5.9
million was included in deferred representation fee incentive in the
accompanying condensed balance sheet. The Company recognized $0.2
million and $0.3 million of these incentives as a reduction of selling, general
and administrative expense for the three months and six months ended June 30,
2009, respectively. For the three months and six months ended June
30, 2008, the Company recognized $0.2 million of these
incentives.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS—(Continued)
12.
|
Other
Non-Current Liabilities
|
Other
non-current liabilities consist of the following:
|
|
|
|
|
|
|
|
|
June
30,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(in
thousands)
|
|
Deferred
rent
|
|
$ |
7,479 |
|
|
$ |
7,222 |
|
Software
agreement obligation
|
|
|
4,109 |
|
|
|
4,281 |
|
Other
|
|
|
1,987 |
|
|
|
1,772 |
|
|
|
$ |
13,575 |
|
|
$ |
13,275 |
|
13.
|
Stock-Based
Compensation Plans
|
Nexstar’s
employee compensation plans (the “Equity Plans”) provide for the granting of
stock options, stock appreciation rights, restricted stock and performance
awards to directors, employees of Nexstar or consultants. A maximum of 4,500,000
shares of Nexstar’s Class A common stock can be issued under the Equity
Plans and as of June 30, 2009, a total of 728,000 shares were available for
future grant. Employee stock options are granted with an exercise price at least
equal to the fair market value of the underlying shares of common stock on the
date of the grant, vest over five years and expire ten years from the date of
grant.
14.
|
Gain
on Asset Exchange
|
In 2004,
the FCC approved a spectrum allocation exchange between Sprint Nextel
Corporation (“Nextel”) and public safety entities to eliminate interference
being caused to public safety radio licensees by Nextel’s operations. As part of
this spectrum exchange, the FCC granted Nextel the right to certain spectrum
within the 1.9 GHz band that is currently used by television broadcasters. In
order to utilize this spectrum, Nextel is required to relocate the broadcasters
to new spectrum by replacing all analog equipment currently used by broadcasters
with comparable digital equipment. The Company has agreed to accept the
substitute equipment that Nextel will provide and in turn must relinquish its
existing equipment back to Nextel. This transition began on a market by market
basis beginning in the second quarter of 2007. The equipment the Company
receives under this arrangement is recorded at their estimated fair market value
and depreciated over estimated useful lives ranging from 5 to 15 years.
Management’s determination of the fair market value is derived from the most
recent prices paid to manufacturers and vendors for the specific equipment
acquired. As equipment is exchanged, the Company records a gain to the extent
that the fair market value of the equipment received exceeds the carrying amount
of the equipment relinquished. For the three months ended June 30, 2009 and
2008, the Company recognized gains of $2.4 million and $2.7 million,
respectively, and $4.1 million and $3.6 million, respectively for the six months
then ended, from the exchange of this equipment.
15.
|
Gain
on Casualty Loss
|
On
February 2, 2009, the building in Port Arthur, Texas suffered extensive fire
damage resulting in a total loss of the building. The operations previously
performed in this building had been moved to Little Rock, Arkansas prior to the
fire. The building was fully insured and the payout on the claim resulted in a
gain of $0.8 million.
On May 8,
2009, a transmission tower at KSNF collapsed, damaging a portion of the facility
and nearby property. The settlement of the claim resulted in a gain
of $2.2 million.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS—(Continued)
The
Company’s provision for income taxes is primarily comprised of deferred income
taxes created by an increase in the deferred tax liabilities position during the
year resulting from the amortization of goodwill and other indefinite-lived
intangible assets for income tax purposes which are not amortized for financial
reporting purposes. These deferred tax liabilities do not reverse on a scheduled
basis and are not used to support the realization of deferred tax assets. The
Company’s deferred tax assets primarily result from federal and state net
operating loss carryforwards (“NOLs”). The Company’s NOLs are available to
reduce future taxable income if utilized before their expiration. The Company
has provided a valuation allowance for certain deferred tax assets as it
believes they may not be realized through future taxable earnings.
As of
January 1, 2009, the Company had gross unrecognized tax benefits of
approximately $3.7 million, which did not materially change as of June 30, 2009.
If recognized, this amount would result in a favorable effect on the Company’s
effective tax rate excluding the impact on the Company’s valuation allowance. As
of June 30, 2009, the Company has not accrued interest on the unrecognized tax
benefits as an unfavorable outcome upon examination would not result in a cash
outlay but would reduce NOLs subject to a valuation allowance. The Company does
not expect the amount of unrecognized tax benefits to significantly change in
the next twelve months.
The
Company files income tax returns in the U.S. federal jurisdiction and various
state jurisdictions. The Company is subject to U.S. federal tax examinations for
years after 2004. Additionally, any NOLs that were generated in prior years and
will be utilized in the future may also be subject to examination by the
Internal Revenue Service. State jurisdictions that remain subject to examination
are not considered significant.
17.
|
FCC
Regulatory Matters
|
Television
broadcasting is subject to the jurisdiction of the FCC under the Communications
Act of 1934, as amended (the “Communications Act”). The Communications Act
prohibits the operation of television broadcasting stations except under a
license issued by the FCC, and empowers the FCC, among other things, to issue,
revoke, and modify broadcasting licenses, determine the location of television
stations, regulate the equipment used by television stations, adopt regulations
to carry out the provisions of the Communications Act and impose penalties for
the violation of such regulations. The FCC’s ongoing rule making proceedings
could have a significant future impact on the television industry and on the
operation of the Company’s stations and the stations it provides services to. In
addition, the U.S. Congress may act to amend the Communications
Act in a manner that could impact the Company’s stations, the stations it
provides services to and the television broadcast industry in
general.
Some of
the more significant FCC regulatory matters impacting the Company’s operations
are discussed below.
Digital
Television (“DTV”) Conversion
On June
12, 2009 all full-power television broadcasters were required to cease operating
in an analog format and operate exclusively in digital (DTV)
format. All of Nexstar’s and Mission’s stations have completed the
transition to digital operations except for KSNF, KQTV and KMID. KSNF
and KQTV hold construction permits issued by the FCC to build higher-power DTV
facilities by August 18, 2009, which permits may be extended by the FCC until
construction of the facilities is completed. Nexstar anticipates
completing construction of KQTV’s full-power DTV facilities by October 1, 2009
and KSNF’s full-power DTV facilities by November 1, 2009. Nexstar has
completed construction of KMID’s full-power DTV facilities and is working with
the FCC with respect to a grant of KMID’s authorization.
DTV
conversion expenditures were $6.3 million and $5.1 million, for the six months
ended June 30, 2009 and 2008, respectively. The Company will incur various
capital expenditures with respect to the completion of DTV facilities for KSNF,
KQTV and KMID. The Company anticipates these expenditures will be funded through
available cash on hand and cash generated from operations.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS—(Continued)
17.
|
FCC
Regulatory Matters—(Continued)
|
Media
Ownership
In 2006,
the FCC initiated a rulemaking proceeding which provides for a comprehensive
review of all of its media ownership rules, as required by the Communications
Act. The Commission considered rules relating to ownership of two or more TV
stations in a market, ownership of local TV and radio stations by daily
newspapers in the same market, cross-ownership of local TV and radio stations,
and changes to how the national TV ownership limits are calculated. In February
2008, the FCC adopted modest changes to its newspaper broadcast cross-ownership
rule while retaining the rest of its ownership rules then currently in
effect. Multiple challenges to this proceeding were filed with the
U.S. Courts of Appeal. The court proceedings remain
pending.
18.
|
Commitments
and Contingencies
|
Guarantee
of Mission Debt
Nexstar
and its subsidiaries guarantee full payment of all obligations incurred under
Mission’s senior secured credit facility agreement. In the event that Mission is
unable to repay amounts due under its credit facility, Nexstar will be obligated
to repay such amounts. The maximum potential amount of future payments that
Nexstar would be required to make under this guarantee would be generally
limited to the amount of borrowings outstanding under the Mission credit
facility. At June 30, 2009, Mission had $173.2 million outstanding under its
senior credit facility.
Indemnification
Obligations
In
connection with certain agreements that the Company enters into in the normal
course of its business, including local service agreements, business
acquisitions and borrowing arrangements, the Company enters into contractual
arrangements under which the Company agrees to indemnify the third party to such
arrangement from losses, claims and damages incurred by the indemnified party
for certain events as defined within the particular contract. Such
indemnification obligations may not be subject to maximum loss clauses and the
maximum potential amount of future payments the Company could be required to
make under these indemnification arrangements may be unlimited. Historically,
payments made related to these indemnifications have been immaterial and the
Company has not incurred significant costs to defend lawsuits or settle claims
related to these indemnification agreements.
Litigation
From time
to time, the Company is involved with claims that arise out of the normal course
of its business. In the opinion of management, any resulting liability with
respect to these claims would not have a material adverse effect on the
Company’s financial position or results of operations.
19.
|
Condensed
Consolidating Financial Information
|
The
following condensed consolidating financial information presents the financial
position, results of operations and cash flows of the Company, each of its 100%,
directly or indirectly, owned subsidiaries. This information is presented in
lieu of separate financial statements and other related disclosures pursuant to
Regulation S-X Rule 3-10 of the Securities Exchange Act of 1934, as amended,
“Financial Statements of Guarantors and Issuers of Guaranteed Securities
Registered or being Registered.”
The
Nexstar column presents the parent company’s financial information (not
including any subsidiaries). The Nexstar Holdings column presents its financial
information (not including any subsidiaries). The Nexstar Broadcasting column
presents the financial information of Nexstar Broadcasting. The Mission column
presents the financial information of Mission, an entity which Nexstar
Broadcasting is required to consolidate as a variable interest entity under FIN
46R (see Note 2).
Prior
periods have been reclassified to conform to current
presentation.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS—(Continued)
19.
|
Condensed
Consolidating Financial Information—(Continued)
|
The
Company and its subsidiaries have the following notes outstanding:
1.
|
Nexstar
Holdings, 100% of the shares are directly held by Nexstar has 11.375%
senior discount notes (“11.375% Notes”) due in 2013. The 11.375% Notes are
fully and unconditionally guaranteed by Nexstar but not guaranteed by any
other entities.
|
2.
|
Nexstar
Broadcasting, Inc., 100% of the shares are directly held by Nexstar
Holdings, has the following notes
outstanding:
|
(a)
|
7%
Senior Subordinated Notes (“7% Notes”) due 2014. The 7% Notes are fully
and unconditionally guaranteed by Nexstar and Mission. These notes are not
guaranteed by any other entities.
|
(b)
|
7%
Senior Subordinated PIK Notes due 2014 (“7% PIK Notes”). The 7% PIK Notes
are fully and unconditionally guaranteed by Nexstar and Mission. These
notes are not guaranteed by any other
entities.
|
(c)
|
Senior
Subordinated PIK Notes due 2014 (“Senior Subordinated PIK Notes”). The
Senior Subordinated PIK Notes currently bear interest at 12% subject to
increases over time. The Senior Subordinated PIK Notes are fully and
unconditionally guaranteed by Nexstar. The Senior Subordinated PIK Notes
are not guaranteed by Mission or any other
entity.
|
Neither
Mission nor Nexstar Broadcasting has any subsidiaries.
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
19. Condensed Consolidating Financial
Information—(Continued)
Balance
Sheet
June
30, 2009
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nexstar
|
|
|
Nexstar
Broadcasting
|
|
|
Mission
|
|
|
Nexstar
Holdings
|
|
|
Eliminations
|
|
|
Consolidated
Company
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
— |
|
|
$ |
13,483 |
|
|
$ |
803 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
14,286 |
|
Due
from Mission
|
|
|
— |
|
|
|
14,156 |
|
|
|
— |
|
|
|
— |
|
|
|
(14,156 |
) |
|
|
— |
|
Other
current assets
|
|
|
—
|
|
|
|
61,561
|
|
|
|
3,321
|
|
|
|
6
|
|
|
|
—
|
|
|
|
64,888
|
|
Total
current assets
|
|
|
— |
|
|
|
89,200 |
|
|
|
4,124 |
|
|
|
6 |
|
|
|
(14,156 |
) |
|
|
79,174 |
|
Investments
in subsidiaries eliminated upon consolidation
|
|
|
(58,914 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3,614 |
) |
|
|
62,528 |
|
|
|
— |
|
Amounts
due from parents eliminated upon consolidation
|
|
|
— |
|
|
|
2,075 |
|
|
|
— |
|
|
|
— |
|
|
|
(2,075 |
) |
|
|
— |
|
Property
and equipment, net
|
|
|
— |
|
|
|
116,001 |
|
|
|
28,572 |
|
|
|
— |
|
|
|
— |
|
|
|
144,573 |
|
Goodwill
|
|
|
— |
|
|
|
97,429 |
|
|
|
18,990 |
|
|
|
— |
|
|
|
— |
|
|
|
116,419 |
|
FCC
licenses
|
|
|
— |
|
|
|
113,596 |
|
|
|
22,695 |
|
|
|
— |
|
|
|
— |
|
|
|
136,291 |
|
Other
intangible assets, net
|
|
|
— |
|
|
|
109,994 |
|
|
|
28,091 |
|
|
|
— |
|
|
|
— |
|
|
|
138,085 |
|
Other
noncurrent assets
|
|
|
—
|
|
|
|
12,614
|
|
|
|
1,690
|
|
|
|
914
|
|
|
|
—
|
|
|
|
15,218
|
|
Total
assets
|
|
$ |
(58,914 |
) |
|
$ |
540,909
|
|
|
$ |
104,162
|
|
|
$ |
(2,694 |
) |
|
$ |
46,297
|
|
|
$ |
629,760
|
|
LIABILITIES AND
STOCKHOLDERS’
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
portion of debt
|
|
$ |
— |
|
|
$ |
1,758 |
|
|
$ |
1,727 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3,485 |
|
Due
to Nexstar Broadcasting
|
|
|
— |
|
|
|
— |
|
|
|
14,156 |
|
|
|
— |
|
|
|
(14,156 |
) |
|
|
— |
|
Other
current liabilities
|
|
|
—
|
|
|
|
32,483
|
|
|
|
4,484
|
|
|
|
1,421
|
|
|
|
—
|
|
|
|
38,388
|
|
Total
current liabilities
|
|
|
— |
|
|
|
34,241 |
|
|
|
20,367 |
|
|
|
1,421 |
|
|
|
(14,156 |
) |
|
|
41,873 |
|
Debt
|
|
|
— |
|
|
|
447,820 |
|
|
|
171,497 |
|
|
|
49,981 |
|
|
|
— |
|
|
|
669,298 |
|
Amounts
due to subsidiary eliminated upon consolidation
|
|
|
(2,741 |
) |
|
|
— |
|
|
|
— |
|
|
|
4,816 |
|
|
|
(2,075 |
) |
|
|
— |
|
Other
noncurrent liabilities
|
|
|
(3 |
) |
|
|
62,462
|
|
|
|
15,739
|
|
|
|
2
|
|
|
|
—
|
|
|
|
78,200
|
|
Total
liabilities
|
|
|
(2,744 |
) |
|
|
544,523
|
|
|
|
207,603
|
|
|
|
56,220
|
|
|
|
(16,231 |
) |
|
|
789,371
|
|
Stockholders’
equity (deficit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
284 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
284 |
|
Other
stockholders’ equity (deficit)
|
|
|
(56,454 |
) |
|
|
(3,614 |
) |
|
|
(103,441 |
) |
|
|
(58,914 |
) |
|
|
62,528
|
|
|
|
(159,895 |
) |
Total
stockholders’ equity (deficit)
|
|
|
(56,170 |
) |
|
|
(3,614 |
) |
|
|
(103,441 |
) |
|
|
(58,914 |
) |
|
|
62,528
|
|
|
|
(159,611 |
) |
Total
liabilities and stockholders’ equity (deficit)
|
|
$ |
(58,914 |
) |
|
$ |
540,909
|
|
|
$ |
104,162
|
|
|
$ |
(2,694 |
) |
|
$ |
46,297
|
|
|
$ |
629,760
|
|
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
19. Condensed Consolidating Financial
Information—(Continued)
BALANCE
SHEET
December 31,
2008
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nexstar
|
|
|
Nexstar
Broadcasting
|
|
|
Mission
|
|
|
Non-Guarantor
Subsidiary
|
|
|
Eliminations
|
|
|
Consolidated
Company
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
— |
|
|
$ |
14,408 |
|
|
$ |
1,426 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
15,834 |
|
Due
from Mission
|
|
|
— |
|
|
|
15,468 |
|
|
|
— |
|
|
|
— |
|
|
|
(15,468 |
) |
|
|
— |
|
Other
current assets
|
|
|
—
|
|
|
|
64,369
|
|
|
|
4,665
|
|
|
|
6
|
|
|
|
—
|
|
|
|
69,040
|
|
Total
current assets
|
|
|
— |
|
|
|
94,245 |
|
|
|
6,091 |
|
|
|
6 |
|
|
|
(15,468 |
) |
|
|
84,874 |
|
Investments
in subsidiaries eliminated upon consolidation
|
|
|
(65,164 |
) |
|
|
— |
|
|
|
— |
|
|
|
15,528 |
|
|
|
49,636 |
|
|
|
— |
|
Amounts
due from parents eliminated upon consolidation
|
|
|
— |
|
|
|
(33 |
) |
|
|
— |
|
|
|
— |
|
|
|
58 |
|
|
|
— |
|
Property
and equipment, net
|
|
|
— |
|
|
|
106,609 |
|
|
|
29,269 |
|
|
|
— |
|
|
|
— |
|
|
|
135,878 |
|
Goodwill
|
|
|
— |
|
|
|
96,997 |
|
|
|
18,635 |
|
|
|
— |
|
|
|
— |
|
|
|
115,632 |
|
FCC
licenses
|
|
|
— |
|
|
|
102,362 |
|
|
|
22,695 |
|
|
|
— |
|
|
|
— |
|
|
|
125,057 |
|
Other
intangible assets, net
|
|
|
— |
|
|
|
119,186 |
|
|
|
30,665 |
|
|
|
— |
|
|
|
— |
|
|
|
149,851 |
|
Other
noncurrent assets
|
|
|
1
|
|
|
|
11,261
|
|
|
|
2,723
|
|
|
|
1,310
|
|
|
|
—
|
|
|
|
15,295
|
|
Total
assets
|
|
$ |
(65,163 |
) |
|
$ |
530,627
|
|
|
$ |
110,078
|
|
|
$ |
16,844
|
|
|
$ |
34,226
|
|
|
$ |
626,587
|
|
LIABILITIES AND
STOCKHOLDERS’
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
portion of debt
|
|
$ |
— |
|
|
$ |
1,758 |
|
|
$ |
1,727 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3,485 |
|
Due
to Nexstar Broadcasting
|
|
|
— |
|
|
|
— |
|
|
|
15,468 |
|
|
|
— |
|
|
|
(15,468 |
) |
|
|
— |
|
Other
current liabilities
|
|
|
—
|
|
|
|
44,621
|
|
|
|
7,037
|
|
|
|
2,212
|
|
|
|
128
|
|
|
|
53,998
|
|
Total
current liabilities
|
|
|
— |
|
|
|
46,379 |
|
|
|
24,232 |
|
|
|
2,212 |
|
|
|
(15,340 |
) |
|
|
57,483 |
|
Debt
|
|
|
— |
|
|
|
408,452 |
|
|
|
172,360 |
|
|
|
77,820 |
|
|
|
— |
|
|
|
658,632 |
|
Amounts
due to subsidiary eliminated upon consolidation
|
|
|
(2,006 |
) |
|
|
— |
|
|
|
— |
|
|
|
1,973 |
|
|
|
33 |
|
|
|
— |
|
Other
noncurrent liabilities
|
|
|
(3 |
) |
|
|
60,243
|
|
|
|
15,513
|
|
|
|
3
|
|
|
|
(128 |
) |
|
|
75,628
|
|
Total
liabilities
|
|
|
(2,009 |
) |
|
|
515,074
|
|
|
|
212,105
|
|
|
|
82,008
|
|
|
|
(15,435 |
) |
|
|
791,743
|
|
Stockholders’
equity (deficit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
284 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
284 |
|
Other
stockholders’ equity (deficit)
|
|
|
(63,438 |
) |
|
|
15,528
|
|
|
|
(102,027 |
) |
|
|
(65,164 |
) |
|
|
49,661
|
|
|
|
(165,440 |
) |
Total
stockholders’ equity (deficit)
|
|
|
(63,154 |
) |
|
|
15,528
|
|
|
|
(102,027 |
) |
|
|
(65,164 |
) |
|
|
49,661
|
|
|
|
(165,156 |
) |
Total
liabilities and stockholders’ equity (deficit)
|
|
$ |
(65,163 |
) |
|
$ |
530,602
|
|
|
$ |
110,078
|
|
|
$ |
16,844
|
|
|
$ |
34,226
|
|
|
$ |
626,587
|
|
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
19. Condensed Consolidating Financial
Information—(Continued)
Statement
of Operations
For
the Three Months Ended June 30, 2009
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nexstar
|
|
|
Nexstar
Broadcasting
|
|
|
Mission
|
|
|
Nexstar
Holdings
|
|
|
Eliminations
|
|
|
Consolidated
Company
|
|
Net
broadcast revenue (including trade and barter)
|
|
$ |
— |
|
|
$ |
60,087 |
|
|
$ |
2,065 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
62,152 |
|
Revenue
between consolidated entities
|
|
|
—
|
|
|
|
1,800
|
|
|
|
6,140
|
|
|
|
—
|
|
|
|
(7,940 |
) |
|
|
—
|
|
Net
revenue
|
|
|
—
|
|
|
|
61,887
|
|
|
|
8,205
|
|
|
|
—
|
|
|
|
(7,940 |
) |
|
|
62,152
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating expenses (exclusive of depreciation and amortization shown
separately below)
|
|
|
— |
|
|
|
17,571 |
|
|
|
1,515 |
|
|
|
— |
|
|
|
— |
|
|
|
19,086 |
|
Selling,
general, and administrative expenses (exclusive of depreciation and
amortization shown separately below)
|
|
|
— |
|
|
|
20,584 |
|
|
|
597 |
|
|
|
— |
|
|
|
— |
|
|
|
21,181 |
|
Local
service agreement fees between consolidated entities
|
|
|
— |
|
|
|
6,140 |
|
|
|
1,800 |
|
|
|
— |
|
|
|
(7,940 |
) |
|
|
— |
|
Restructure
charge
|
|
|
— |
|
|
|
314 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
314 |
|
Non-cash
contract termination fees
|
|
|
— |
|
|
|
191 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
191 |
|
Amortization
of broadcast rights
|
|
|
— |
|
|
|
4,625 |
|
|
|
1,040 |
|
|
|
— |
|
|
|
— |
|
|
|
5,665 |
|
Amortization
of intangible assets
|
|
|
— |
|
|
|
4,657 |
|
|
|
1,287 |
|
|
|
— |
|
|
|
— |
|
|
|
5,944 |
|
Depreciation
|
|
|
— |
|
|
|
4,355 |
|
|
|
1,039 |
|
|
|
— |
|
|
|
— |
|
|
|
5,394 |
|
Gain
on asset exchange
|
|
|
— |
|
|
|
(2,189 |
) |
|
|
(249 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2,438 |
) |
Gain on
property and asset disposal, net
|
|
|
—
|
|
|
|
(2,228 |
) |
|
|
(1 |
) |
|
|
—
|
|
|
|
—
|
|
|
|
(2,229 |
) |
Total
operating expenses
|
|
|
—
|
|
|
|
54,020
|
|
|
|
7,028
|
|
|
|
—
|
|
|
|
(7,940 |
) |
|
|
53,108
|
|
Income
from operations
|
|
|
— |
|
|
|
7,867 |
|
|
|
1,177 |
|
|
|
— |
|
|
|
— |
|
|
|
9,044 |
|
Interest
expense, including amortization of debt financing costs
|
|
|
— |
|
|
|
(6,115 |
) |
|
|
(1,310 |
) |
|
|
(1,480 |
) |
|
|
— |
|
|
|
(8,905 |
) |
Equity
in loss of subsidiaries
|
|
|
(801 |
) |
|
|
— |
|
|
|
— |
|
|
|
679 |
|
|
|
122 |
|
|
|
— |
|
Other
income, net
|
|
|
—
|
|
|
|
8
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10
|
|
Income
(loss) before income taxes
|
|
|
(801 |
) |
|
|
1,760 |
|
|
|
(131 |
) |
|
|
(801 |
) |
|
|
122 |
|
|
|
149 |
|
Income
tax expense
|
|
|
—
|
|
|
|
(1,081 |
) |
|
|
(310 |
) |
|
|
—
|
|
|
|
—
|
|
|
|
(1,391 |
) |
Net
income (loss)
|
|
$ |
(801 |
) |
|
$ |
679
|
|
|
$ |
(441 |
) |
|
$ |
(801 |
) |
|
$ |
122
|
|
|
$ |
(1,242 |
) |
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
19. Condensed Consolidating Financial
Information—(Continued)
Statement
of Operations
For
the Three Months Ended June 30, 2008
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nexstar
|
|
|
Nexstar
Broadcasting
|
|
|
Mission
|
|
|
Non-Guarantor
Subsidiary
|
|
|
Eliminations
|
|
|
Consolidated
Company
|
|
Net
broadcast revenue (including trade and barter)
|
|
$ |
— |
|
|
$ |
68,988 |
|
|
$ |
1,630 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
70,618 |
|
Revenue
between consolidated entities
|
|
|
—
|
|
|
|
2,025
|
|
|
|
8,768
|
|
|
|
—
|
|
|
|
(10,793 |
) |
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
|
|
—
|
|
|
|
71,013
|
|
|
|
10,398
|
|
|
|
—
|
|
|
|
(10,793 |
) |
|
|
70,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating expenses (exclusive of depreciation and amortization shown
separately below)
|
|
|
— |
|
|
|
17,705 |
|
|
|
1,578 |
|
|
|
— |
|
|
|
— |
|
|
|
19,283 |
|
Selling,
general, and administrative expenses (exclusive of depreciation and
amortization shown separately below)
|
|
|
— |
|
|
|
21,206 |
|
|
|
633 |
|
|
|
— |
|
|
|
— |
|
|
|
21,839 |
|
Local
service agreement fees between consolidated entities
|
|
|
— |
|
|
|
8,768 |
|
|
|
2,025 |
|
|
|
— |
|
|
|
(10,793 |
) |
|
|
— |
|
Non-cash
contract termination fees
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Amortization
of broadcast rights
|
|
|
— |
|
|
|
3,683 |
|
|
|
1,123 |
|
|
|
— |
|
|
|
— |
|
|
|
4,806 |
|
Amortization
of intangible assets
|
|
|
— |
|
|
|
5,031 |
|
|
|
1,352 |
|
|
|
— |
|
|
|
— |
|
|
|
6,383 |
|
Depreciation
|
|
|
— |
|
|
|
4,257 |
|
|
|
831 |
|
|
|
— |
|
|
|
— |
|
|
|
5,088 |
|
Gain
on asset exchange
|
|
|
— |
|
|
|
(2,742 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,742 |
) |
Loss
on asset disposal, net
|
|
|
—
|
|
|
|
638
|
|
|
|
(843 |
) |
|
|
—
|
|
|
|
—
|
|
|
|
(205 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
—
|
|
|
|
58,546
|
|
|
|
6,699
|
|
|
|
—
|
|
|
|
(10,793 |
) |
|
|
54,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
|
|
— |
|
|
|
12,467 |
|
|
|
3,699 |
|
|
|
— |
|
|
|
— |
|
|
|
16,166 |
|
Interest
expense, including amortization of debt financing costs
|
|
|
— |
|
|
|
(6,378 |
) |
|
|
(1,985 |
) |
|
|
(2,443 |
) |
|
|
— |
|
|
|
(10,806 |
) |
Equity
in loss of subsidiaries
|
|
|
2,517 |
|
|
|
— |
|
|
|
— |
|
|
|
4,960 |
|
|
|
(7,477 |
) |
|
|
— |
|
Other
income, net
|
|
|
—
|
|
|
|
131
|
|
|
|
20
|
|
|
|
—
|
|
|
|
—
|
|
|
|
151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before income taxes
|
|
|
2,517 |
|
|
|
6,220 |
|
|
|
1,734 |
|
|
|
2,517 |
|
|
|
(7,477 |
) |
|
|
5,511 |
|
Income
tax expense
|
|
|
—
|
|
|
|
(1,259 |
) |
|
|
(375 |
) |
|
|
—
|
|
|
|
—
|
|
|
|
(1,634 |
) |
Net
loss
|
|
$ |
2,517
|
|
|
$ |
4,961
|
|
|
$ |
1,359
|
|
|
$ |
2,517
|
|
|
$ |
(7,477 |
) |
|
$ |
3,877
|
|
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
19. Condensed Consolidating Financial
Information—(Continued)
Statement
of Operations
For
the Six Months Ended June 30, 2009
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nexstar
|
|
|
Nexstar
Broadcasting
|
|
|
Mission
|
|
|
Nexstar
Holdings
|
|
|
Eliminations
|
|
|
Consolidated
Company
|
|
Net
broadcast revenue (including trade and barter)
|
|
$ |
— |
|
|
$ |
113,446 |
|
|
$ |
4,174 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
117,620 |
|
Revenue
between consolidated entities
|
|
|
—
|
|
|
|
3,825
|
|
|
|
12,228
|
|
|
|
—
|
|
|
|
(16,053 |
) |
|
|
—
|
|
Net
revenue
|
|
|
—
|
|
|
|
117,271
|
|
|
|
16,402
|
|
|
|
—
|
|
|
|
(16,053 |
) |
|
|
117,620
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating expenses (exclusive of depreciation and amortization shown
separately below)
|
|
|
— |
|
|
|
35,000 |
|
|
|
3,141 |
|
|
|
— |
|
|
|
— |
|
|
|
38,141 |
|
Selling,
general, and administrative expenses (exclusive of depreciation and
amortization shown separately below)
|
|
|
— |
|
|
|
43,310 |
|
|
|
1,342 |
|
|
|
— |
|
|
|
— |
|
|
|
44,652 |
|
Local
service agreement fees between consolidated entities
|
|
|
— |
|
|
|
12,228 |
|
|
|
3,825 |
|
|
|
— |
|
|
|
(16,053 |
) |
|
|
— |
|
Restructure
charge
|
|
|
— |
|
|
|
670 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
670 |
|
Non-cash
contract termination fees
|
|
|
— |
|
|
|
191 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
191 |
|
Amortization
of broadcast rights
|
|
|
— |
|
|
|
8,523 |
|
|
|
2,202 |
|
|
|
— |
|
|
|
— |
|
|
|
10,725 |
|
Amortization
of intangible assets
|
|
|
— |
|
|
|
9,262 |
|
|
|
2,574 |
|
|
|
— |
|
|
|
— |
|
|
|
11,836 |
|
Depreciation
|
|
|
— |
|
|
|
8,697 |
|
|
|
1,893 |
|
|
|
— |
|
|
|
— |
|
|
|
10,590 |
|
Gain
on asset exchange
|
|
|
— |
|
|
|
(3,601 |
) |
|
|
(497 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4,098 |
) |
(Gain)
loss on property and asset disposal, net
|
|
|
—
|
|
|
|
(2,822 |
) |
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,820 |
) |
Total
operating expenses
|
|
|
—
|
|
|
|
111,458
|
|
|
|
14,482
|
|
|
|
—
|
|
|
|
(16,053 |
) |
|
|
109,887
|
|
Income
from operations
|
|
|
— |
|
|
|
5,813 |
|
|
|
1,920 |
|
|
|
— |
|
|
|
— |
|
|
|
7,733 |
|
Interest
expense, including amortization of debt financing costs
|
|
|
— |
|
|
|
(12,858 |
) |
|
|
(2,716 |
) |
|
|
(3,191 |
) |
|
|
— |
|
|
|
(18,765 |
) |
Gain
on extinguishment of debt
|
|
|
— |
|
|
|
565 |
|
|
|
— |
|
|
|
18,002 |
|
|
|
— |
|
|
|
18,567 |
|
Equity
income (loss) of subsidiaries
|
|
|
6,224 |
|
|
|
— |
|
|
|
— |
|
|
|
(8,587 |
) |
|
|
2,363 |
|
|
|
— |
|
Other
income, net
|
|
|
—
|
|
|
|
42
|
|
|
|
3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
45
|
|
Income
(loss) before income taxes
|
|
|
6,224 |
|
|
|
(6,438 |
) |
|
|
(793 |
) |
|
|
6,224 |
|
|
|
2,363 |
|
|
|
7,580 |
|
Income
tax expense
|
|
|
—
|
|
|
|
(2,149 |
) |
|
|
(621 |
) |
|
|
—
|
|
|
|
—
|
|
|
|
(2,770 |
) |
Net
income (loss)
|
|
$ |
6,224
|
|
|
$ |
(8,587 |
) |
|
$ |
(1,414 |
) |
|
$ |
6,224
|
|
|
$ |
2,363
|
|
|
$ |
4,810
|
|
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
19. Condensed Consolidating Financial
Information—(Continued)
Statement
of Operations
For
the Six Months Ended June 30, 2008
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nexstar
|
|
|
Nexstar
Broadcasting
|
|
|
Mission
|
|
|
Non-Guarantor
Subsidiary
|
|
|
Eliminations
|
|
|
Consolidated
Company
|
|
Net
broadcast revenue (including trade and barter)
|
|
$ |
— |
|
|
$ |
131,165 |
|
|
$ |
3,165 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
134,330 |
|
Revenue
between consolidated entities
|
|
|
—
|
|
|
|
4,040
|
|
|
|
16,553
|
|
|
|
—
|
|
|
|
(20,593 |
) |
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue
|
|
|
—
|
|
|
|
135,205
|
|
|
|
19,718
|
|
|
|
—
|
|
|
|
(20,593 |
) |
|
|
134,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating expenses (exclusive of depreciation and amortization shown
separately below)
|
|
|
— |
|
|
|
35,672 |
|
|
|
3,107 |
|
|
|
— |
|
|
|
— |
|
|
|
38,779 |
|
Selling,
general, and administrative expenses (exclusive of depreciation and
amortization shown separately below)
|
|
|
1 |
|
|
|
41,454 |
|
|
|
1,269 |
|
|
|
— |
|
|
|
— |
|
|
|
42,724 |
|
Local
service agreement fees between consolidated entities
|
|
|
— |
|
|
|
16,553 |
|
|
|
4,040 |
|
|
|
— |
|
|
|
(20,593 |
) |
|
|
— |
|
Non-cash
contract termination fees
|
|
|
— |
|
|
|
7,167 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,167 |
|
Amortization
of broadcast rights
|
|
|
— |
|
|
|
7,838 |
|
|
|
2,303 |
|
|
|
— |
|
|
|
— |
|
|
|
10,141 |
|
Amortization
of intangible assets
|
|
|
— |
|
|
|
10,055 |
|
|
|
2,700 |
|
|
|
— |
|
|
|
— |
|
|
|
12,755 |
|
Depreciation
|
|
|
— |
|
|
|
8,723 |
|
|
|
1,698 |
|
|
|
— |
|
|
|
— |
|
|
|
10,421 |
|
Gain
on asset exchange
|
|
|
— |
|
|
|
(3,592 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,592 |
) |
Loss
on asset disposal, net
|
|
|
—
|
|
|
|
673
|
|
|
|
(843 |
) |
|
|
—
|
|
|
|
—
|
|
|
|
(170 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
1
|
|
|
|
124,543
|
|
|
|
14,274
|
|
|
|
—
|
|
|
|
(20,593 |
) |
|
|
118,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from operations
|
|
|
(1 |
) |
|
|
10,662 |
|
|
|
5,444 |
|
|
|
— |
|
|
|
— |
|
|
|
16,105 |
|
Interest
expense, including amortization of debt financing costs
|
|
|
— |
|
|
|
(13,807 |
) |
|
|
(4,959 |
) |
|
|
(6,029 |
) |
|
|
— |
|
|
|
(24,795 |
) |
Equity
in loss of subsidiaries
|
|
|
(11,223 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5,194 |
) |
|
|
16,417 |
|
|
|
— |
|
Other
income, net
|
|
|
—
|
|
|
|
507
|
|
|
|
45
|
|
|
|
—
|
|
|
|
—
|
|
|
|
552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before income taxes
|
|
|
(11,224 |
) |
|
|
(2,638 |
) |
|
|
530 |
|
|
|
(11,223 |
) |
|
|
16,417 |
|
|
|
(8,138 |
) |
Income
tax expense
|
|
|
—
|
|
|
|
(2,556 |
) |
|
|
(757 |
) |
|
|
—
|
|
|
|
—
|
|
|
|
(3,313 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(11,224 |
) |
|
$ |
(5,194 |
) |
|
$ |
(227 |
) |
|
$ |
(11,223 |
) |
|
$ |
16,417
|
|
|
$ |
(11,451 |
) |
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
19. Condensed Consolidating Financial
Information—(Continued)
Statement
of Cash Flows
For
the Six Months Ended June 30, 2009
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nexstar
|
|
|
Nexstar
Broadcasting
|
|
|
Mission
|
|
|
Nexstar
Holdings
|
|
|
Eliminations
|
|
|
Consolidated
Company
|
|
Cash
flows provided by (used for) operating activities
|
|
$ |
—
|
|
|
$ |
1,633
|
|
|
$ |
1,281
|
|
|
$ |
9,561
|
|
|
$ |
(10,579 |
) |
|
$ |
1,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
to property and equipment, net
|
|
|
— |
|
|
|
(8,360 |
) |
|
|
(1,041 |
) |
|
|
— |
|
|
|
— |
|
|
|
(9,401 |
) |
Acquisition
of broadcast properties and related transaction costs
|
|
|
— |
|
|
|
(20,751 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(20,751 |
) |
Other
investing activities
|
|
|
—
|
|
|
|
2,088
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,088
|
|
Net
cash used for investing activities
|
|
|
—
|
|
|
|
(27,023 |
) |
|
|
(1,041 |
) |
|
|
—
|
|
|
|
—
|
|
|
|
(28,064 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment
of long-term debt
|
|
|
— |
|
|
|
(143,600 |
) |
|
|
(863 |
) |
|
|
(9,561 |
) |
|
|
— |
|
|
|
(154,024 |
) |
Proceeds
from revolver draws
|
|
|
— |
|
|
|
54,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
54,000 |
|
Consideration
paid to bondholders for debt exchange
|
|
|
— |
|
|
|
(17,677 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(17,677 |
) |
Inter-company
dividends paid
|
|
|
— |
|
|
|
(10,579 |
) |
|
|
— |
|
|
|
— |
|
|
|
10,579 |
|
|
|
— |
|
Issuance
of senior subordinated PIK notes in debt exchange
|
|
|
—
|
|
|
|
142,321
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
142,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used for) financing activities
|
|
|
—
|
|
|
|
24,465
|
|
|
|
(863 |
) |
|
|
(9,561 |
) |
|
|
10,579
|
|
|
|
24,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
decrease in cash and cash equivalents
|
|
|
— |
|
|
|
(925 |
) |
|
|
(623 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,548 |
) |
Cash
and cash equivalents at beginning of period
|
|
|
—
|
|
|
|
14,408
|
|
|
|
1,426
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,834
|
|
Cash
and cash equivalents at end of period
|
|
$ |
—
|
|
|
$ |
13,483
|
|
|
$ |
803
|
|
|
$ |
—
|
|
|
$ |
—
|
|
|
$ |
14,286
|
|
NEXSTAR
BROADCASTING GROUP, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
19. Condensed Consolidating Financial
Information—(Continued)
Statement
of Cash flows
For
the Six Months Ended June 30, 2008
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nexstar
|
|
|
Nexstar
Broadcasting
|
|
|
Mission
|
|
|
Non-Guarantor
Subsidiary
|
|
|
Eliminations
|
|
|
Consolidated
Company
|
|
Cash
flows provided by (used for) operating activities
|
|
$ |
—
|
|
|
$ |
22,239
|
|
|
$ |
6,602
|
|
|
$ |
46,906
|
|
|
$ |
(46,906 |
) |
|
$ |
28,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
to property and equipment, net
|
|
|
— |
|
|
|
(5,763 |
) |
|
|
(2,139 |
) |
|
|
— |
|
|
|
— |
|
|
|
(7,902 |
) |
Acquisition
of broadcast properties and related transaction costs
|
|
|
— |
|
|
|
— |
|
|
|
(7,923 |
) |
|
|
— |
|
|
|
— |
|
|
|
(7,923 |
) |
Other
investing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net
cash used for investing activities
|
|
|
—
|
|
|
|
(5,763 |
) |
|
|
(10,062 |
) |
|
|
—
|
|
|
|
—
|
|
|
|
(15,825 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment
of long-term debt
|
|
|
— |
|
|
|
(50,880 |
) |
|
|
(863 |
) |
|
|
(46,906 |
) |
|
|
— |
|
|
|
(98,649 |
) |
Proceeds
from revolver draws
|
|
|
— |
|
|
|
50,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
50,000 |
|
Proceeds
from senior subordinated PIK Notes
|
|
|
— |
|
|
|
35,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
35,000 |
|
Inter-company
dividends paid
|
|
|
— |
|
|
|
(46,906 |
) |
|
|
— |
|
|
|
— |
|
|
|
46,906 |
|
|
|
— |
|
Other
financing activities
|
|
|
—
|
|
|
|
38
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used for) financing activities
|
|
|
—
|
|
|
|
(12,748 |
) |
|
|
(863 |
) |
|
|
(46,906 |
) |
|
|
46,906
|
|
|
|
(13,611 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
— |
|
|
|
3,728 |
|
|
|
(4,323 |
) |
|
|
— |
|
|
|
— |
|
|
|
(595 |
) |
Cash
and cash equivalents at beginning of period
|
|
|
—
|
|
|
|
6,310
|
|
|
|
9,916
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,226
|
|
Cash
and cash equivalents at end of period
|
|
$ |
—
|
|
|
$ |
10,038
|
|
|
$ |
5,593
|
|
|
$ |
—
|
|
|
$ |
—
|
|
|
$ |
15,631
|
|
ITEM 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
The
following discussion and analysis should be read in conjunction with the
unaudited condensed consolidated balance sheet as of June 30, 2009,
unaudited condensed consolidated statements of operations for the three months
and six months ended June 30, 2009 and 2008, unaudited condensed statement
of changes in stockholders’ deficit for the six months ended June 30, 2009,
unaudited condensed consolidated statements of cash flows for the six months
ended June 30, 2009 and 2008 and related notes included elsewhere in this
Quarterly Report on Form 10-Q and the financial statements contained in our
Annual Report on Form 10-K for the year ended December 31,
2008.
As used
in the report, unless the context indicates otherwise, “Nexstar” refers to
Nexstar Broadcasting Group, Inc. and its consolidated subsidiaries Nexstar
Finance Holdings, Inc. and Nexstar Broadcasting, Inc., and “Mission” refers to
Mission Broadcasting, Inc. All references to “we,” “our,” and “us” refer to
Nexstar. All references to the “Company” refer to Nexstar and Mission
collectively.
As a
result of our controlling financial interest in Mission under accounting
principles generally accepted in the United States of America (“U.S. GAAP”) and
in order to present fairly our financial position, results of operations and
cash flows, we consolidate the financial position, results of operations and
cash flows of Mission as if it were a wholly-owned entity. We believe this
presentation is meaningful for understanding our financial performance. As
discussed in Note 2 to our condensed consolidated financial statements in Part
I, Item 1 of this Quarterly Report on Form 10-Q, we have considered the
method of accounting under Financial Accounting Standards Board (“FASB”)
Interpretation No. 46, “Consolidation of Variable Interest Entities, an
interpretation on Accounting Research Bulletin No. 51” (“FIN No. 46”)
as revised in December 2003 (“FIN No. 46R”) and have determined that we are
required to continue consolidating Mission’s financial position, results of
operations and cash flows. Therefore, the following discussion of our financial
condition and results of operations includes Mission’s financial position and
results of operations.
Executive
Summary
Second
Quarter 2009 Highlights
·
|
Net
revenue decreased 12.0% during the second quarter of 2009 compared to the
same period in 2008, primarily from decreases in national, local and
political revenue, partially offset by increases in retransmission
compensation. Total revenue from the retransmission consent agreements was
approximately $7.9 million for the three months ended June 30, 2009
(which included approximately $6.3 million of retransmission compensation
and approximately $1.6 million of advertising revenue generated from the
retransmission consent agreements), compared to $4.7 million for the three
months ended June 30, 2008 (which included approximately $3.4 million
of retransmission compensation and approximately $1.3 million of
advertising revenue generated from the retransmission consent
agreements).
|
·
|
On
May 1, 2009, Nexstar closed on the acquisition of WCWJ, the CW affiliate
serving the Jacksonville, Florida market for $17.2 million, net of
purchase price adjustments.
|
·
|
In
May 2009, we completed regionalizing certain accounting and traffic
functions as part of our efforts to reduce the Company’s overhead
costs.
|
Overview
of Operations
We owned
and operated 34 television stations as of June 30, 2009. Through various
local service agreements, we programmed, provided sales or other services to 25
additional television stations (exclusive of digital multi-channels), including
16 television stations owned and operated by Mission as of June 30, 2009.
All of the stations we program or provide sales and other services to, including
Mission, are 100% owned by independent third parties.
The
following table summarizes the various local service agreements we had in effect
as of June 30, 2009 with Mission:
|
|
|
|
TBA
Only(1)
|
WFXP
and KHMT
|
|
|
SSA & JSA(2)
|
KJTL,
KJBO-LP, KOLR, KCIT, KCPN-LP, KAMC, KRBC, KSAN, WUTR,
WFXW,
WYOU, KODE, WTVO and KTVE
|
(1)
|
We
have a time brokerage agreement (“TBA”) with each of these stations which
allows us to program most of each station’s broadcast time, sell each
station’s advertising time and retain the advertising revenue generated in
exchange for monthly payments to
Mission.
|
(2)
|
We
have both a shared services agreement (“SSA”) and a joint sales agreement
(“JSA”) with each of these stations. The SSA allows us to provide certain
services including news production, technical maintenance and security, in
exchange for our right to receive certain payments from Mission as
described in the SSAs. The JSA permits us to sell and retain a percentage
of the net revenue from the station’s advertising time in return for
monthly payments to Mission of the remaining percentage of net revenue as
described in the JSAs.
|
Our
ability to receive cash from Mission is governed by these agreements. The
arrangements under the local service agreements have had the effect of us
receiving substantially all of the available cash, after Mission’s payments of
operating costs and debt service, generated by the stations listed above. We
anticipate that, through these local service agreements, we will continue to
receive substantially all of the available cash, after Mission’s payments of
operating costs and debt service, generated by the stations listed
above.
We also
guarantee all obligations incurred under Mission’s senior secured credit
facility. Similarly, Mission is a guarantor of our senior secured credit
facility and the senior subordinated notes we have issued. In consideration of
our guarantee of Mission’s senior credit facility, the sole shareholder of
Mission has granted us a purchase option to acquire the assets and assume the
liabilities of each Mission station, subject to FCC consent, for consideration
equal to the greater of (1) seven times the station’s cash flow, as defined
in the option agreement, less the amount of its indebtedness as defined in the
option agreement, or (2) the amount of its indebtedness. These option
agreements (which expire on various dates between 2011 and 2018) are freely
exercisable or assignable by us without consent or approval by the sole
shareholder of Mission. We expect these option agreements to be renewed upon
expiration.
We do not
own Mission or Mission’s television stations. However, as a result of our
guarantee of the obligations incurred under Mission’s senior credit facility,
our arrangements under the local service agreements and purchase option
agreements with Mission, we are deemed under U.S. GAAP to have a controlling
financial interest in Mission while complying with the FCC’s rules regarding
ownership limits in television markets. In order for both us and Mission to
comply with FCC regulations, Mission maintains complete responsibility for and
control over programming, finances, personnel and operations of its
stations.
Seasonality
Advertising
revenue is positively affected by strong local economies, national and regional
political election campaigns, and certain events such as the Olympic Games or
the Super Bowl. The stations’ advertising revenue is generally highest in the
second and fourth quarters of each year, due in part to increases in consumer
advertising in the spring and retail advertising in the period leading up to,
and including, the holiday season. In addition, advertising revenue is generally
higher during even-numbered years resulting from political advertising and
advertising aired during the Olympic Games.
Industry
Trends
Our net
revenue decreased 12.4% to $117.6 million for the six months ended June 30,
2009, compared to $134.3 million for the six months ended June 30, 2008
primarily due to decreases in national and local advertising which is
attributable to the overall slowdown in the economy and in particular, the
automotive industry, year-over-year.
Political
advertising revenue was $1.3 million for the six months ended June 30,
2009, a significant decrease from the $5.6 million for the six months ended
June 30, 2008. The demand for political advertising is generally higher in
even-numbered years, when congressional and presidential elections occur, than
in odd-numbered years when there are no federal elections scheduled. Since 2009
is a non-election year, we expect significantly less political advertising
revenue to be reported in 2009 in relation to the amount of political
advertising reported in 2008.
Automotive-related
advertising, our largest advertising category, represented approximately 15% and
22% of our core local and national advertising revenue for the six months ended
June 30, 2009 and 2008. Our automotive-related advertising decreased
approximately 43% for the six months ended June 30, 2009 as compared to the
same period in 2008. Automotive-related advertising on a quarter-to-quarter
comparison to the prior year has followed a consistent downward trend over the
last three years. This trend is primarily due to the current condition of the
automotive industry and resulting decline in the demand for advertising from
this business category. A continued pattern of deterioration in advertising
revenue from this source could materially affect our future results of
operations.
Pending
Transaction
On
April 11, 2006, we and Mission filed an application with the FCC for
consent to assignment of the license of KFTA Channel 24 (Ft. Smith, Arkansas)
from us to Mission. Consideration for this transaction is set at $5.6 million.
On August 28, 2006, we and Mission entered into a local service agreement
whereby (a) Mission pays us $5 thousand per month for the right to
broadcast Fox programming on KFTA during the Fox network programming time
periods and (b) we pay Mission $20 thousand per month for the right to sell
all advertising time on KFTA within the Fox network programming time periods.
The local service agreement between us and Mission will terminate upon
assignment of KFTA’s FCC license from us to Mission. Upon completing the
assignment of KFTA’s license, Mission plans to enter into a JSA and SSA with our
station KNWA in Fort Smith-Fayetteville-Springdale-Rogers, Arkansas, whereby
KNWA will provide local news, sales and other non-programming services to KFTA.
In March 2008, the FCC granted the application to assign the license for KFTA
from Nexstar to Mission. The grant contained conditions which Nexstar is
currently appealing.
Historical
Performance
Revenue
The
following table sets forth the principal types of revenue earned by the
Company’s stations for the periods indicated and each type of revenue (other
than trade and barter) as a percentage of total gross revenue, as well as agency
commissions:
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands, except percentages)
|
|
|
(in
thousands, except percentages)
|
|
Local
|
|
$ |
40,207 |
|
|
|
62.8 |
|
|
$ |
45,689 |
|
|
|
61.4 |
|
|
$ |
76,096 |
|
|
|
62.8 |
|
|
$ |
87,605 |
|
|
|
62.0 |
|
National
|
|
|
12,178 |
|
|
|
19.0 |
|
|
|
17,757 |
|
|
|
23.9 |
|
|
|
24,287 |
|
|
|
20.0 |
|
|
|
33,921 |
|
|
|
24.0 |
|
Political
|
|
|
826 |
|
|
|
1.3 |
|
|
|
3,598 |
|
|
|
4.8 |
|
|
|
1,259 |
|
|
|
1.1 |
|
|
|
5,648 |
|
|
|
4.0 |
|
Retransmission
compensation
|
|
|
6,371 |
|
|
|
10.0 |
|
|
|
3,331 |
|
|
|
4.5 |
|
|
|
11,640 |
|
|
|
9.6 |
|
|
|
6,607 |
|
|
|
4.7 |
|
eMedia
revenue
|
|
|
2,965 |
|
|
|
4.6 |
|
|
|
2,609 |
|
|
|
3.5 |
|
|
|
5,321 |
|
|
|
4.4 |
|
|
|
4,612 |
|
|
|
3.3 |
|
Network
compensation
|
|
|
530 |
|
|
|
0.8 |
|
|
|
916 |
|
|
|
1.2 |
|
|
|
1,091 |
|
|
|
0.9 |
|
|
|
1,765 |
|
|
|
1.2 |
|
Other
|
|
|
929
|
|
|
|
1.5
|
|
|
|
545
|
|
|
|
0.7
|
|
|
|
1,437
|
|
|
|
1.2
|
|
|
|
1,102
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
gross revenue
|
|
|
64,006 |
|
|
|
100.0 |
|
|
|
74,445 |
|
|
|
100.0 |
|
|
|
121,131 |
|
|
|
100.0 |
|
|
|
141,260 |
|
|
|
100.0 |
|
Less:
Agency commissions
|
|
|
6,496
|
|
|
|
10.1
|
|
|
|
8,494
|
|
|
|
11.4
|
|
|
|
12,496
|
|
|
|
10.3
|
|
|
|
16,014
|
|
|
|
11.3
|
|
Net
broadcast revenue
|
|
|
57,510 |
|
|
|
89.9 |
|
|
|
65,951 |
|
|
|
88.6 |
|
|
|
108,635 |
|
|
|
89.7 |
|
|
|
125,246 |
|
|
|
88.7 |
|
Trade
and barter revenue
|
|
|
4,642
|
|
|
|
|
|
|
|
4,667
|
|
|
|
|
|
|
|
8,985
|
|
|
|
|
|
|
|
9,084
|
|
|
|
|
|
Net
revenue
|
|
$ |
62,152
|
|
|
|
|
|
|
$ |
70,618
|
|
|
|
|
|
|
$ |
117,620
|
|
|
|
|
|
|
$ |
134,330
|
|
|
|
|
|
Results
of Operations
The following table sets forth a
summary of the Company’s operations for the periods indicated and their
percentages of net revenue:
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands, except percentages)
|
|
|
(in
thousands, except percentages)
|
|
Net
revenue
|
|
$ |
62,152 |
|
|
|
100.0 |
|
|
$ |
70,618 |
|
|
|
100.0 |
|
|
$ |
117,620 |
|
|
|
100.0 |
|
|
$ |
134,330 |
|
|
|
100.0 |
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
expenses
|
|
|
3,701 |
|
|
|
6.0 |
|
|
|
3,588 |
|
|
|
5.1 |
|
|
|
10,468 |
|
|
|
8.9 |
|
|
|
6,811 |
|
|
|
5.1 |
|
Station
direct operating expenses, net of trade
|
|
|
17,682 |
|
|
|
28.4 |
|
|
|
17,583 |
|
|
|
24.9 |
|
|
|
35,490 |
|
|
|
30.2 |
|
|
|
35,659 |
|
|
|
26.5 |
|
Selling,
general and administrative expenses
|
|
|
17,480 |
|
|
|
28.1 |
|
|
|
18,251 |
|
|
|
25.8 |
|
|
|
34,184 |
|
|
|
29.1 |
|
|
|
35,913 |
|
|
|
26.7 |
|
Restructure
charge
|
|
|
314 |
|
|
|
0.5 |
|
|
|
— |
|
|
|
— |
|
|
|
670 |
|
|
|
0.6 |
|
|
|
— |
|
|
|
— |
|
Non-cash
contract termination fees
|
|
|
191 |
|
|
|
0.3 |
|
|
|
— |
|
|
|
|
|
|
|
191 |
|
|
|
0.2 |
|
|
|
7,167 |
|
|
|
5.3 |
|
Gain
on asset exchange
|
|
|
(2,438 |
) |
|
|
(3.9 |
) |
|
|
(2,742 |
) |
|
|
(3.9 |
) |
|
|
(4,098 |
) |
|
|
(3.5 |
) |
|
|
(3,592 |
) |
|
|
(2.7 |
) |
(Gain)
loss on asset disposal, net
|
|
|
(2,229 |
) |
|
|
(3.6 |
) |
|
|
(205 |
) |
|
|
(0.3 |
) |
|
|
(2,820 |
) |
|
|
(2.4 |
) |
|
|
(170 |
) |
|
|
(0.1 |
) |
Trade
and barter expense
|
|
|
4,288 |
|
|
|
6.9 |
|
|
|
4,449 |
|
|
|
6.3 |
|
|
|
8,500 |
|
|
|
7.2 |
|
|
|
8,958 |
|
|
|
6.7 |
|
Depreciation
and amortization
|
|
|
11,338 |
|
|
|
18.2 |
|
|
|
11,471 |
|
|
|
16.2 |
|
|
|
22,426 |
|
|
|
19.1 |
|
|
|
23,176 |
|
|
|
17.3 |
|
Amortization
of broadcast rights, excluding barter
|
|
|
2,781
|
|
|
|
4.5 |
|
|
|
2,057
|
|
|
|
2.9 |
|
|
|
4,876
|
|
|
|
4.1 |
|
|
|
4,303
|
|
|
|
3.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
|
$ |
9,044
|
|
|
|
|
|
|
$ |
16,166
|
|
|
|
|
|
|
$ |
7,733
|
|
|
|
|
|
|
$ |
16,105
|
|
|
|
|
|
Three
Months Ended June 30, 2009 Compared to Three Months Ended June 30,
2008.
Revenue
Gross
local advertising revenue was $40.2 million for the three months ended
June 30, 2009, a decrease of $5.5 million or 12.0% when compared to $45.7
million for the same period in 2008. Gross national advertising revenue was
$12.2 million for the three months ended June 30, 2009, compared to $17.8
million for the same period in 2008, a decrease of $5.6 million, or 31.4%.
Advertising revenue from Paid Programming, Automotive and Telecom business
categories decreased by approximately $0.9 million, $6.2 million and $1.0
million, respectively during the second quarter of 2009 compared to the prior
year.
Gross
political advertising revenue was $0.8 million for the three months ended
June 30, 2009, compared to $3.6 million for the same period in 2008, a
decrease of $2.8 million, or 77.0%. The decrease in gross political revenue was
mainly attributed to the presidential and statewide primary elections and to
statewide and/or local races that occurred during the three months ended
June 30, 2008 as compared to nominal political advertising during the three
months ended June 30, 2009.
Retransmission
compensation was $6.4 million for the three months ended June 30, 2009,
compared to $3.3 million for the same period in 2008, an increase of $3.1
million or 91.3%. The increase in retransmission compensation was primarily the
result of agreements with various cable companies being renegotiated at higher
rates in the fourth quarter of 2008.
eMedia
revenue, representing revenue generated from non-television web-based
advertising, was $3.0 million for the three months ended June 30, 2009,
compared to $2.6 million for the three months ended June 30, 2008. The
increase in eMedia revenue is attributable to the continued expansion of markets
and products offered in this area.
In January 2009, Nexstar enacted a
rebate program for its television spot advertisers entitling them to receive a
20% cash rebate for every incremental dollar spent in the first half of 2009
over what they spent in the first half of 2008. To be eligible for
this incentive, customers had to sign a contractual agreement and their account
had to be paid current. These rebates reduced the Company’s net sales
by $0.8 million for the three months ended June 30, 2009.
Net
revenue for the three months ended June 30, 2009 decreased 12.0% to $62.2
million compared to $70.6 million for the three months ended June 30,
2008.
Operating
Expenses
Corporate
expenses, related to costs associated with the centralized management of
Nexstar’s and Mission’s stations, were $3.7 and $3.6 million for the three month
periods ended June 30, 2009 and 2008, respectively.
Station
direct operating expenses, consisting primarily of news, engineering and
programming, net of trade, and selling, general and administrative expenses were
$35.2 million for the three months ended June 30, 2009, compared to $35.8
million for the same period in 2008, a decrease of $0.6 million, or 1.9%. This
decrease is primarily attributed to a decrease in national sales commissions of
$0.4 million related to a decrease in national and political
revenue.
In
February 2009, Nexstar began regionalizing certain accounting and traffic
functions. As a result, approximately 93 employees were notified they would be
terminated at various points in time through the end of May 2009. These
employees were offered termination benefits that aggregated to $0.7 million. The
Company recognized these costs ratably over the period of time between the
notice of termination and the termination date. Nexstar estimates the
restructuring will save the Company approximately $2.2 million annually. The
Company incurred a $0.3 million charge during the three months ended June 30,
2009 related to these benefits.
In May
2009, the Company incurred a non-cash charge of $0.2 million related to the
termination of national sales representation agreements at certain
stations.
Amortization
of intangible assets was $5.9 and $6.4 million for the three months ended
June 30, 2009 and 2008, respectively. The decrease in
amortization was primarily due to the reduction of the carrying value of network
affiliation agreements being amortized in 2009 as a result of impairments in the
second half of 2008 and one station changing networks at the beginning of
2009.
While
there are no known circumstances or events as of June 30, 2009 that indicate an
impairment might exist, any future significant adverse change in the advertising
marketplaces in which Nexstar and Mission operate could lead to an impairment
and reduction of the carrying value of the Company’s goodwill and intangible
assets, including FCC licenses. If such a condition were to occur, the resulting
non-cash charge could have a material adverse effect on Nexstar and Mission’s
financial position and results of operations.
Depreciation
of property and equipment was $5.4 million and $5.1 million for the three month
periods ended June 30, 2009 and 2008, respectively.
For the
three months ended June 30, 2009 and June 30, 2008, we recognized a
gain of $2.4 million and $2.7 million, respectively from the exchange of
equipment under an arrangement with Sprint Nextel Corporation.
The net
gain on asset disposal of $2.2 million for the three months ended June 30, 2009
included a $2.2 million gain related to the KSNF tower insurance
claim.
Income
from Operations
Income
from operations was $9.0 million for the three months ended June 30, 2009,
compared to $16.2 million for the same period in 2008, a decrease of $7.2
million, or 44.1%. The decrease was primarily due to the decrease in net revenue
of $8.4 million.
Interest
Expense
Interest
expense, including amortization of debt financing costs, was $8.9 million for
the three months ended June 30, 2009, compared to $10.8 million for the
same period in 2008, a decrease of $1.9 million or 17.6%. The decrease in
interest expense was primarily attributed to lower average interest rates in the
second quarter of 2009 compared to the same period in 2008 as well as reductions
in the outstanding 11.375% notes, period-over-period.
Income
Taxes
Income
tax expense was $1.4 million for the three months ended June 30, 2009,
compared to $1.6 million for the same period in 2008, a decrease of $0.2
million, or 14.9%. The decrease was primarily due to a reduction in deferred tax
expense associated with deferred tax liabilities representing the difference
between the book and tax basis of goodwill and other indefinite-lived intangible
assets. The impairment charges recorded in September 30 and December
31, 2008 reduced these deferred tax liabilities which resulted in a reduction in
deferred tax expense during this period.
Six
Months Ended June 30, 2009 Compared to Six Months Ended June 30,
2008.
Revenue
Gross
local advertising revenue was $76.1 million for the six months ended June 30,
2009 a decrease of $11.5 million or 13.1% when compared to $87.6 million for the
six months ended June 30, 2008. Gross national advertising
revenue was $24.3 million for the six months ended June 30, 2009, compared
to $33.9 million for the same period in 2008, a decrease of $9.6 million, or
28.4%. Advertising revenue from Paid Programming, Automotive, Fast
Foods/Restaurants, Furniture and Telecom business categories decreased by
approximately $1.6 million, $11.6 million, $0.9 million, $1.5 million and $1.0
million during the six months ended June 30, 2009 compared to the prior
year.
Gross
political advertising revenue was $1.3 million for the six months ended
June 30, 2009, compared to $5.6 million for the same period in 2008, a
decrease of $4.3 million, or 77.7%. The decrease in gross political revenue was
mainly attributed to presidential and statewide primary elections and to
statewide and/or local races that occurred during the six months ended
June 30, 2008 as compared to nominal political advertising during the six
months ended June 30, 2009.
Retransmission
compensation was $11.6 million for the six months ended June 30, 2009,
compared to $6.6 million for the same period in 2008, an increase of $5.0
million, or 76.2%. The increase in retransmission compensation was primarily the
result of agreements with various cable companies being renegotiated at higher
rates in the fourth quarter of 2008.
eMedia
revenue, representing revenue generated from non-television web-based
advertising, was $5.3 million for the six months ended June 30, 2009,
compared to $4.6 million for the six months ended June 30, 2008. The
increase in eMedia revenue was a result of the continued expansion of markets
and products offered in this area.
In
January 2009, Nexstar enacted a rebate program for its television spot
advertisers entitling them to receive a 20% cash rebate for every incremental
dollar spent in the first half of 2009 over what they spent in the first half of
2008. To be eligible for this incentive, customers had to sign a
contractual agreement and their account had to be paid current. These
rebates reduced the Company’s net sales by $0.9 million for the six months ended
June 30, 2009.
Net
revenue for the six months ended June 30, 2009 decreased 12.4% to $117.6
million compared to $134.3 million for the six months ended June 30,
2008.
Operating
Expenses
Corporate
expenses, related to costs associated with the centralized management of
Nexstar’s and Mission’s stations, were $10.5 million for the six months ended
June 30, 2009, compared to $6.8 million for the six months ended
June 30, 2008, an increase of $3.7 million, or 53.7%. The increase during
the six months ended June 30, 2009 was primarily attributed to $2.9 million
in fees associated with the March 2009 7% notes exchange offer, including bank,
legal and accounting fees combined with increases in payroll-related costs of
$0.7 million, partially offset by a decrease in stock-based compensation of $0.6
million.
Station
direct operating expenses, consisting primarily of news, engineering and
programming, net of trade, and selling, general and administrative expenses were
$69.7 million for the six months ended June 30, 2009, compared to $71.6
million for the same period in 2008, a decrease of $1.9 million, or 2.7%. This
decrease is primarily attributed to decreases in national and local sales
commissions which are due to decreases in national and local
revenue.
In
February 2009, Nexstar began regionalizing certain accounting and traffic
functions. As a result, approximately 93 employees were notified they would be
terminated at various points in time through the end of May 2009. These
employees were offered termination benefits that aggregated to $0.7 million. The
Company recognized these costs ratably over the period of time between the
notice of termination and the termination date. Nexstar estimates the
restructuring will save the Company approximately $2.2 million annually The
Company incurred a $0.7 million charge during the six months ended June 30, 2009
related to these benefits.
In May
2009, the Company incurred a non-cash charge of $0.2 million related to the
termination of national sales representation agreements at certain
stations. The Company incurred a similar type of charge in March 2008
in the amount of $7.2 million related to a different group of
stations.
Amortization
of intangible assets was $11.8 and $12.8 million for the six months ended
June 30, 2009 and 2008, respectively. The decrease in
amortization was primarily due to the reduction of the carrying value of network
affiliation agreements being amortized in 2009 as a result of impairments in the
second half of 2008 and one station changing networks at the beginning of
2009.
While
there are no known circumstances or events as of June 30, 2009 that indicate an
impairment might exist, any future significant adverse change in the advertising
marketplaces in which Nexstar and Mission operate could lead to an impairment
and reduction of the carrying value of the Company’s goodwill and intangible
assets, including FCC licenses. If such a condition were to occur, the resulting
non-cash charge could have a material adverse effect on Nexstar and Mission’s
financial position and results of operations.
Depreciation
of property and equipment was $10.6 million and $10.4 million for the six months
ended June 30, 2009, and 2008, respectively.
For the
six months ended June 30, 2009, and June, 30 2008 respectively, we
recognized a gain of $4.1 million and $3.6 million from the exchange of
equipment under an arrangement with Sprint Nextel Corporation.
The net
gain on asset disposal of $2.8 million for the six months ended June 30, 2009
included a $2.2 million gain related to the KSNF tower insurance
claim.
Income
from Operations
Income
from operations was $7.7 million for the six months ended June 30, 2009,
compared to income from operations of $16.1 million for the same period in 2008,
a decrease of $8.4 million, or 52.0%. The decrease was primarily the result of
the decrease in net revenue of $16.7 million combined with an increase of $3.7
million in corporate expenses, which includes the $2.9 million of fees related
to the debt exchange, partially offset by the decrease in non-cash contract
termination fees of $7.0 million.
Interest
Expense
Interest
expense, including amortization of debt financing costs, was $18.8 million for
the six months ended June 30, 2009, compared to $24.8 million for the same
period in 2008, a decrease of $6.0 million, or 24.3%. The decrease in interest
expense was primarily attributed to lower average interest rates during the six
months ended June 30, 2009 compared to the same period in 2008 as well as
reductions in the outstanding 11.375% notes,
period-over-period.
Gain
on Extinguishment of Debt
In the
first quarter of 2009, the Company purchased $27.9 million of its 11.375% notes
and $1.0 million of its 7% notes for a total of $10.0 million, plus accrued
interest of $1.0 million. These transactions resulted in combined
gains of $18.6 million for the six months ended June 30, 2009.
Income
Taxes
Income
tax expense was $2.8 million for the six months ended June 30, 2009,
compared to $3.3 million for the same period in 2008, a decrease of $0.5
million, or 16.4%. The decrease was primarily due to a reduction in deferred tax
expense associated with deferred tax liabilities representing the difference
between the book and tax basis of goodwill and other indefinite-lived intangible
assets. The impairment charges recorded in September 30 and December
31, 2008 reduced these deferred tax liabilities which resulted in a reduction in
deferred tax expense during this period.
Liquidity
and Capital Resources
We and
Mission are highly leveraged, which makes the Company vulnerable to changes in
general economic conditions. Our and Mission’s ability to meet the future cash
requirements described below depends on our and Mission’s ability to generate
cash in the future, which is subject to general economic, financial,
competitive, legislative, regulatory and other conditions, many of which are
beyond our and Mission’s control. Based on current operations and anticipated
future growth, we believe that our and Mission’s available cash, anticipated
cash flow from operations and available borrowings under the Nexstar and Mission
senior credit facilities will be sufficient to fund working capital, capital
expenditure requirements, interest payments and scheduled debt principal
payments for at least the next twelve months. In order to meet future cash needs
we may, from time to time, borrow under credit facilities or issue other long-
or short-term debt or equity, if the market and the terms of our existing debt
arrangements permit, and Mission may, from time to time, borrow under its
available credit facility. We will continue to evaluate the best use of
Nexstar’s operating cash flow among its capital expenditures, acquisitions and
debt reduction.
Overview
The
following tables present summarized financial information management believes is
helpful in evaluating the Company’s liquidity and capital
resources:
|
|
|
|
|
|
|
|
|
Six
Months Ended
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(in
thousands)
|
|
Net
cash provided by operating activities
|
|
$ |
1,896 |
|
|
$ |
28,841 |
|
Net
cash used for investing activities
|
|
|
(28,064 |
) |
|
|
(15,825 |
) |
Net
cash provided by (used for) financing activities
|
|
|
24,620
|
|
|
|
(13,611 |
) |
|
|
|
|
|
|
|
|
|
Net
decrease in cash and cash equivalents
|
|
$ |
(1,548 |
) |
|
$ |
(595 |
) |
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$ |
17,750 |
|
|
$ |
16,732 |
|
Cash
paid for income taxes, net
|
|
$ |
523 |
|
|
$ |
178 |
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2009
|
|
|
December 31,
2008
|
|
|
|
(in
thousands)
|
|
Cash
and cash equivalents
|
|
$ |
14,286 |
|
|
$ |
15,834 |
|
Long-term
debt including current portion
|
|
$ |
672,783 |
|
|
$ |
662,117 |
|
Unused
commitments under senior credit facilities
(1)
|
|
$ |
12,500 |
|
|
$ |
66,500 |
|
(1)
|
As
of June 30, 2009, there was $12.5 million of total unused revolving loan
commitments under the Nexstar and Mission credit
facilities. Based on covenant calculations, as of June 30,
2009, $2.2 million was available for
borrowing.
|
Cash
Flows – Operating Activities
The
comparative net cash flows provided by operating activities decreased by $26.9
million during the six months ended June 30, 2009 compared to the same
period in 2008. The decrease was primarily due to a decrease in net revenue of
$16.7 million combined with an increase of $1.8 million in operating expenses,
an increase in cash interest paid of $1.0 million, and decreases due to 1) a
change in the timing of receipts for deferred revenue of $1.8 million and 2) a
change in the timing of payments of accounts payable of $4.1
million.
Cash paid
for interest increased by $1.0 million during the six months ended June 30,
2009 compared to the same period in 2008. The increase was primarily due to cash
interest payments on the 11.375% notes in 2009, which did not begin until the
fourth quarter of 2008, partially offset by a reduction in interest payments on
the bank debt due to lower overall interest rates.
Nexstar
and its subsidiaries file a consolidated federal income tax return. Mission
files its own separate federal income tax return. Additionally, Nexstar and
Mission file their own state and local tax returns as are required. Due to our
and Mission’s recent history of net operating losses, we and Mission currently
do not pay any federal income taxes. These net operating losses may be carried
forward, subject to expiration and certain limitations, and used to reduce
taxable earnings in future years. Through the use of available loss
carryforwards, it is possible that we and Mission may not pay significant
amounts of federal income taxes in the foreseeable future.
Cash
Flows – Investing Activities
The
comparative net cash used for investing activities increased by $12.2 million
during the six months ended June 30, 2009 compared to the same period in
2008. The increase was primarily due to an increase in acquisitions of new
stations.
Acquisition-related
payments for the six months ended June 30, 2009 consisted of the
acquisitions of KARZ for $3.6 million and the acquisition of WCWJ for $17.2
million.
Capital
expenditures were $9.4 million for the six months ended June 30, 2009,
compared to $7.9 million for the six months ended June 30, 2008. The
increase was primarily attributable to DTV conversions.
We
project that 2009 full-year capital expenditures will be approximately $14.4
million, which is expected to include approximately $7.3 million of digital
conversion expenditures. We expect to conclude our digital conversion
expenditures during 2009.
Cash
Flows – Financing Activities
The
comparative net cash from financing activities increased by $38.2 million during
the six months ended June 30, 2009 compared to the same period in 2008, due
primarily to an increase in net borrowings under the revolving credit facility
of $54.0 million, partially offset by consideration of $17.7 million paid to
bondholders in the exchange of the 7% senior subordinated notes.
During
the six months ended June 30, 2009, there were $54.0 million of revolving
loan borrowings under our and Mission’s senior secured credit facilities,
compared to $50.0 million of borrowings and $50.0 million of repayments under
the revolving credit facility for the six months ended June 30,
2008.
During
the six months ended June 30, 2009, there were $1.7 million of repayments
under our and Mission’s senior secured credit facilities, all consisting of
scheduled term loan maturities. Additionally, we purchased $27.9 million and
$1.0 million (both face amounts) of our 11.375% notes and 7% notes,
respectively, for a total of $10.0 million.
Although
the Nexstar and Mission senior credit facilities allow for the payment of cash
dividends to common stockholders, we and Mission do not currently intend to
declare or pay a cash dividend.
Future
Sources of Financing and Debt Service Requirements
As of
June 30, 2009, Nexstar and Mission had total combined debt of $672.8
million, which represented 131.1% of Nexstar and Mission’s combined
capitalization. Our and Mission’s high level of debt requires that a substantial
portion of cash flow be dedicated to pay principal and interest on debt which
reduces the funds available for working capital, capital expenditures,
acquisitions and other general corporate purposes.
The
following table summarizes the approximate aggregate amount of principal
indebtedness scheduled to mature for the periods referenced as of June 30,
2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010-2011
|
|
|
|
2012-2013
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
Nexstar
senior credit facility
|
|
$ |
235,208 |
|
|
$ |
879 |
|
|
$ |
3,516 |
|
|
$ |
230,813 |
|
|
$ |
— |
|
Mission
senior credit facility
|
|
|
173,224 |
|
|
|
864 |
|
|
|
3,454 |
|
|
|
168,906 |
|
|
|
— |
|
Senior
subordinated PIK notes due 2014
|
|
|
42,628 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
42,628 |
|
7%
senior subordinated notes due 2014
|
|
|
47,910 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
47,910 |
|
7%
senior subordinated PIK notes due 2014
|
|
|
143,600 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
143,600 |
|
11.375%
senior discount notes due 2013
|
|
|
49,981
|
|
|
|
—
|
|
|
|
—
|
|
|
|
49,981 |
|
|
|
—
|
|
|
|
$ |
692,551
|
|
|
$ |
1,743
|
|
|
$ |
6,970
|
|
|
$ |
449,700
|
|
|
$ |
234,138
|
|
We make
semiannual interest payments on our 7% (non-PIK) Notes of on
January 15th and
July 15th of each
year. The 11.375% Notes began to accrue cash interest on April 1, 2008. We
make semiannual interest payments on our 11.375% Notes on April 1st and
October 1st. Our
senior subordinated PIK notes due 2014 will begin paying cash interest in 2010
and our 7% senior subordinated PIK notes due 2014 will begin paying cash
interest in 2011. Interest payments on our and Mission’s senior credit
facilities are generally paid every one to three months and are payable based on
the type of interest rate selected.
The terms
of the Nexstar and Mission senior credit facilities, as well as the indentures
governing our publicly-held notes, limit, but do not prohibit us or Mission from
incurring substantial amounts of additional debt in the future.
We do not
have any rating downgrade triggers that would accelerate the maturity dates of
our debt. However, a downgrade in our credit rating could adversely affect our
ability to renew existing, or obtain access to new, credit facilities or
otherwise issue debt in the future and could increase the cost of such
facilities.
Debt
Covenants
Our
senior secured credit facility agreement contains covenants which require us to
comply with certain financial ratios, including: (a) maximum total and senior
leverage ratios, (b) a minimum interest coverage ratio, and (c) a minimum fixed
charge coverage ratio. The covenants, which are calculated on a quarterly basis,
include the combined results of Nexstar Broadcasting and Mission. Mission’s
senior secured credit facility agreement does not contain financial covenant
ratio requirements; however it does include an event of default if Nexstar does
not comply with all covenants contained in its credit agreement. The senior
subordinated notes and senior discount notes contain restrictive covenants
customary for borrowing arrangements of this type.
As of
June 30, 2009, we were in compliance with all covenants contained in the credit
agreements governing our senior secured credit facility and the indentures
governing the publicly-held notes. For a discussion of the financial ratio
requirements of these covenants, we refer you to Note 9 of our condensed
consolidated financial statements in Part I, Item 1 of this Quarterly Report on
Form 10-Q.
On March
30, 2009, we closed an offer to exchange $143,600,000 of the 7% senior
subordinated notes due 2014 in exchange for $142,320,761 7% senior subordinated
PIK Notes due 2014 (the “PIK Notes”). Based on the financial covenants in the
senior secured credit facility, the PIK Notes are not included in the debt
amount used to calculate the total leverage ratio until January 2011. In
addition to the debt exchange, we have undertaken certain actions as part of our
efforts to ensure we do not exceed the maximum total leverage and senior
leverage ratios including 1) the elimination of corporate bonuses for 2008 and
2009, 2) the consolidation of various back office processes in certain markets,
3) the execution of a management services agreement whereby Nexstar operates
seven stations in exchange for a service fee, and 4) the consummation of a
purchase agreement on March 12, 2009 to acquire all the assets of KARZ and the
consummation of a purchase agreement on May 1, 2009 to acquire all the assets of
WCWJ.
In
addition to the above items, our plans for 2009 include certain other cost
containment measures, including one week Company furloughs for all employees and
reduction of discretionary operating expenses. We believe the consummation of
the exchange offer combined with the actions described above, will allow us to
maintain compliance with all covenants contained in the credit agreements
governing our senior secured facility and the indentures governing our publicly
held notes for a period of at least the next twelve months from June 30, 2009.
However, no assurance can be provided that our actions will be successful or
that further adverse events outside of our control may arise that would result
in our inability to comply with the debt covenants. In such event, we
would consider a range of transactions or strategies to address any such
situation. For example, we might decide to divest non-core assets,
seek an amendment to our bank credit facility, refinance our existing debt or
obtain additional equity financing. There is no assurance that any
such transactions, or any other transactions, or strategies we might consider,
could be consummated on terms satisfactory to us or at all.
Cash
Requirements for Digital Television (“DTV”) Conversion
On June
12, 2009 all full-power television broadcasters were required to cease operating
in an analog format and operate exclusively in digital (DTV)
format. All of Nexstar’s and Mission’s stations have completed the
transition to digital operations except for KSNF, KQTV and KMID. KSNF
and KQTV hold construction permits issued by the FCC to build higher-power DTV
facilities by August 18, 2009, which permits may be extended by the FCC until
construction of the facilities is completed. Nexstar anticipates
completing construction of KQTV’s full-power DTV facilities by October 1, 2009
and KSNF’s full-power DTV facilities by November 1, 2009. Nexstar has
completed construction of KMID’s full-power DTV facilities and is working with
the FCC with respect to a grant of KMID’s authorization.
DTV
conversion expenditures were $6.3 million and $5.1 million, respectively, for
the six months ended June 30, 2009 and 2008, respectively. The Company will
incur various capital expenditures with respect to the completion of DTV
facilities for KSNF, KQTV and KMID. The Company anticipates these expenditures
will be funded through available cash on hand and cash generated from
operations.
No
Off-Balance Sheet Arrangements
At
June 30, 2009, we did not have any relationships with unconsolidated
entities or financial partnerships, such as entities often referred to as
structured finance or variable interest entities, which would have been
established for the purpose of facilitating off-balance sheet arrangements or
other contractually narrow or limited purposes. All of our arrangements with
Mission are on-balance sheet arrangements. We are, therefore, not materially
exposed to any financing, liquidity, market or credit risk that could arise if
we had engaged in such relationships.
Critical
Accounting Policies and Estimates
Our
condensed consolidated financial statements have been prepared in accordance
with U.S. GAAP which requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the condensed consolidated financial
statements and reported amounts of revenue and expenses during the period. On an
ongoing basis, we evaluate our estimates, including those related to goodwill
and intangible assets, bad debts, broadcast rights, trade and barter, income
taxes, commitments and contingencies. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from those
estimates. Results of operations for interim periods are not necessarily
indicative of results for the full year.
Information
with respect to our critical accounting policies which we believe could have the
most significant effect on our reported results and require subjective or
complex judgments by management is contained on pages 52 through 57 in Part II,
Item 7, Management’s Discussion and Analysis of Financial Condition and
Results of Operations, of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2008. Management believes that as of June 30, 2009
there has been no material change to this information.
Recent
Accounting Pronouncements
Refer to
Note 2 of our condensed consolidated financial statements in Part I, Item 1
of this Quarterly Report on Form 10-Q for a discussion of recently issued
accounting pronouncements, including our expected date of adoption and effects
on results of operations and financial position.
Cautionary
Note Regarding Forward-Looking Statements
This
Quarterly Report on Form 10-Q contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934. All statements other
than statements of historical fact are “forward-looking statements” for purposes
of federal and state securities laws, including: any projections or expectations
of earnings, revenue, financial performance, liquidity and capital resources or
other financial items; any assumptions or projections about the television
broadcasting industry; any statements of our plans, strategies and objectives
for our future operations, performance, liquidity and capital resources or other
financial items; any statements concerning proposed new products, services or
developments; any statements regarding future economic conditions or
performance; any statements of belief; and any statements of assumptions
underlying any of the foregoing. Forward-looking statements may include the
words “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,”
“continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,”
“estimates” and other similar words.
Although
we believe that the expectations reflected in any of our forward-looking
statements are reasonable, actual results could differ from this projection or
assumption in any of our forward-looking statements. Our future financial
position and results of operations, as well as any forward-looking statements,
are subject to change and inherent risks and uncertainties, including those
described in our Annual Report on Form 10-K for the year ended December 31,
2008 and in our other filings with the Securities and Exchange Commission. The
forward-looking statements made in this Quarterly Report on Form 10-Q are made
only as of the date hereof, and we do not have or undertake any obligation to
update any forward-looking statements to reflect subsequent events or
circumstances unless otherwise required by law.
ITEM 3. Quantitative
and Qualitative Disclosures About Market Risk
Interest
Rate Risk
Our
exposure to market risk for changes in interest rates relates primarily to our
long-term debt obligations.
The term
loan borrowings at June 30, 2009 under the senior credit facilities bear
interest at a weighted average interest rate of 2.56%, which represented the
base rate, or LIBOR, plus the applicable margin, as defined. The revolving loan
borrowings at June 30, 2009 under the senior credit facilities bear
interest at a weighted average interest rate of 2.28%, which represented the
base rate, or LIBOR, plus the applicable margin, as defined. Interest is payable
in accordance with the credit agreements.
The
following table estimates the changes to cash flow from operations as of
June 30, 2009 if interest rates were to fluctuate by 100 or 50 basis
points, or BPS (where 100 basis points represents one percentage point), for a
twelve-month period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate
decrease
|
|
|
Interest
rate
increase
|
|
|
|
100 BPS
|
|
|
50
BPS
|
|
|
50
BPS
|
|
|
100
BPS
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
Senior
credit facilities
|
|
$ |
4,084 |
|
|
$ |
2,042 |
|
|
$ |
(2,042 |
) |
|
$ |
(4,084 |
) |
Our 7%
notes, our two senior subordinated PIK notes due 2014, and our 11.375% senior
discount notes due 2013 are fixed rate debt obligations and therefore do not
result in a change in our cash flow from operations. As of June 30, 2009,
we have no financial instruments in place to hedge against changes in the
benchmark interest rates on this fixed rate debt.
Impact
of Inflation
We
believe that our results of operations are not affected by moderate changes in
the inflation rate.
ITEM 4. Controls
and Procedures
Evaluation
of Disclosure Controls and Procedures
Nexstar’s
management, with the participation of its President and Chief Executive Officer
along with its Chief Financial Officer, conducted an evaluation as of the end of
the period covered by this report of the effectiveness of the design and
operation of Nexstar’s disclosure controls and procedures as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934.
Based
upon that evaluation, Nexstar’s President and Chief Executive Officer and its
Chief Financial Officer concluded that as of the end of the period covered by
this report, Nexstar’s disclosure controls and procedures were effective in
ensuring that information required to be disclosed in the reports that it files
or submits under the Securities Exchange Act of 1934 (i) is recorded,
processed, summarized and reported within the time periods specified in the
SEC’s rules and forms and (ii) is accumulated and communicated to Nexstar’s
management, including its President and Chief Executive Officer and its Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.
Changes
in Internal Control over Financial Reporting
During
the quarterly period as of the end of the period covered by this report, there
have been no changes in Nexstar’s internal control over financial reporting that
have materially affected, or are reasonably likely to materially affect, its
internal control over financial reporting.
PART
II. OTHER INFORMATION
ITEM 1.
|
Legal
Proceedings
|
From time
to time, Nexstar and Mission are involved in litigation that arises from the
ordinary operations of business, such as contractual or employment disputes or
other general actions. In the event of an adverse outcome of these proceedings,
Nexstar and Mission believe the resulting liabilities would not have a material
adverse effect on Nexstar’s and Mission’s financial condition or results of
operations.
There are
no material changes from the risk factors previously disclosed in Part I,
Item 1A in our Annual Report on Form 10-K for the year ended
December 31, 2008.
ITEM 2.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds
|
None.
ITEM 3.
|
Defaults
Upon Senior Securities
|
None.
ITEM 4.
|
Submission
of Matters to a Vote of Security
Holders
|
Nexstar Broadcasting Group, Inc.
held its 2009 Annual Meeting of Stockholders on May 28, 2009. Each of the
following matters were approved by the stockholders by the following
votes:
Proposal 1 – The election of ten
members to the Board of Directors to serve as directors until the next meeting
of stockholders.
|
|
|
|
Perry
A. Sook
|
143,994,266
|
1,388,668
|
0
|
Blake
R. Battaglia
|
140,718,177
|
4,664,757
|
0
|
Erik
Brooks
|
143,928,134
|
1,454,800
|
0
|
Jay
M. Grossman
|
143,813,619
|
1,569,315
|
0
|
Brent
Stone
|
140,719,606
|
4,663,328
|
0
|
Royce
Yudkoff
|
143,813,658
|
1,569,276
|
0
|
Geoff
Armstrong
|
145,208,023
|
174,911
|
0
|
Michael
Donovan
|
141,613,719
|
3,769,215
|
0
|
I.
Martin Pompadur
|
145,207,923
|
175,011
|
0
|
Lisbeth
McNabb
|
145,202,032
|
180,902
|
0
|
Proposal 2 – The ratification of the
selection of PricewaterhouseCoopers LLP as Nexstar Broadcasting Group, Inc.’s
independent registered public accounting firm for the fiscal year ending
December 31, 2009.
|
|
|
145,318,738
|
48,965
|
15,230
|
ITEM 5.
|
Other
Information
|
None.
|
|
Exhibit No.
|
Exhibit
Index
|
|
|
10.1
|
Thomas
E. Carter employment agreement.*
|
|
|
31.1
|
Certification
of Perry A. Sook pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.*
|
|
|
31.2
|
Certification
of Thomas E. Carter pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.*
|
|
|
32.1
|
Certification
of Perry A. Sook pursuant to 18 U.S.C. ss. 1350.*
|
|
|
32.2
|
Certification
of Thomas E. Carter pursuant to 18 U.S.C. ss.
1350.*
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
|
|
|
|
NEXSTAR BROADCASTING GROUP, INC.
|
|
|
|
|
/S/ PERRY A. SOOK
|
|
|
By:
|
Perry
A. Sook
|
|
Its:
|
President
and Chief Executive Officer
(Principal
Executive Officer)
|
|
|
|
|
/s/ Thomas
E. Carter
|
|
|
By:
|
Thomas
E. Carter
|
|
Its:
|
Chief
Financial Officer
(Principal
Financial Officer)
|
Dated:
August 12, 2009