Nexstar Broadcasting Group Reports Fourth Quarter and Year-End 2003 Results.Business Editors IRVING Irving, city (1990 pop. 155,037), Dallas co., N Tex., a suburb of Dallas; inc. as a city 1952. Building supplies, chemicals, electronic equipment, and airplane parts are manufactured in Irving. , Texas--(BUSINESS WIRE)--March 25, 2004 Nexstar Broadcasting Group, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : NXST) today reported financial results for the quarter and fiscal year ended December December: see month. 31, 2003. Results for the 2003 and 2002 periods reflect contributions from the Company's December 2003 acquisition of Quorum A majority of an entire body; e.g., a quorum of a legislative assembly. A quorum is the minimum number of people who must be present to pass a law, make a judgment, or conduct business. Broadcast Holdings, L.L.C., comprised of 11 owned and operated television stations and five additional stations to which it provided management, sales and other services. The acquisition, which was structured as a merger of Quorum's direct subsidiaries with, and into, Nexstar Broadcasting Group, Inc., has subsequently been accounted for as a merger under common control in a manner similar to a pooling of interests Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. . Accordingly, Nexstar's financial results include the financial results of all Quorum subsidiaries for all periods presented in this announcement. 2003 Fourth Quarter Nexstar's net loss in the 2003 fourth quarter was $24.4 million, or $1.29 per share, compared to a net loss of $15.1 million in the fourth quarter of 2002. Net broadcast revenue for the quarter declined 9.2% to $52.4 million from $57.7 million in the fourth quarter of 2002. Political advertising revenue was $2.0 million in the fourth quarter of 2003, compared to $17.6 million in the fourth quarter of 2002 due to the biennial biennial, plant requiring two years to complete its life cycle, as distinguished from an annual or a perennial. In the first year a biennial usually produces a rosette of leaves (e.g., the cabbage) and a fleshy root, which acts as a food reserve over the winter. election cycle. The cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. decrease was partially offset by a 17.8% increase in local and national revenues to $54.8 million, from $46.5 million in the fourth quarter of 2002. The Company reported a loss from operations of $13.1 million in the fourth quarter of 2003, compared to income from operations of $12.6 million in the fourth quarter of 2002. Direct station operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and selling, general and administrative expenses, net of trade, increased 10.4% to $29.6 million for the fourth quarter 2003 from $26.8 million reported in the 2002 fourth quarter. Stations acquired by the Company in 2003 unrelated to the Quorum acquisition accounted for an increase in expenses of $4.0 million, which was partially offset by a decrease in expenses of $1.2 million at the remaining stations. The loss from operations reflects $11.8 million of non-recurring merger costs incurred during the period related to the Quorum merger and $4.1 million of costs related to completion of the Company's initial public offering of common stock in November November: see month. 2003. Fourth-quarter broadcast cash flow (operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. plus corporate expenses plus depreciation and amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. and program rights plus other non-recurring items minus cash program payments) was $20.2 million for the fourth quarter of 2003, compared to $27.8 million in the fourth quarter of 2002. The decline in broadcast cash flow was primarily due to the decrease in political advertising revenue during the quarter. Broadcast cash flow is a non-GAAP financial measure. Nexstar believes that the presentation of this non-GAAP measure is helpful to investors because it is used by lenders to measure the Company's ability to service debt and by industry analysts to determine the market value of stations and their operating performance. A reconciliation of this measure to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). information is presented in the tables below. Interest expense for the fourth quarter of 2003 was $25.2 million, compared to $20.6 million in 2002. Included in the 2003 amount are non-recurring items of $6.7 million related to call premiums and accelerated amortization on Quorum's senior discount notes and $3.9 million related to the adoption of Statement of Financial Accounting Standards No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 150") on July July: see month. 1, 2003. SFAS No. 150 requires the Company to account for the change in fair value of certain of its mandatorily redeemable Redeemable Eligible for redemption under the terms of an indenture. units from implementation date as an adjustment to interest expense. Full-Year Results The Company's net loss attributable to common shareholders for fiscal year 2003 was $87.1 million, or a net loss of $5.59 per share, compared to a net loss of $116.6 million in 2002. Net loss for 2003 included $8.9 million recorded as a cumulative effect of change in accounting principle as a result of adopting SFAS No. 150. Net loss in 2002 included a first quarter write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of $43.5 million, net of taxes, related to the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142") on January January: see month. 1, 2002, which required the Company to test goodwill and FCC (1) (Federal Communications Commission, Washington, DC, www.fcc.gov) The U.S. government agency that regulates interstate and international communications including wire, cable, radio, TV and satellite. The FCC was created under the U.S. licenses for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. , as of January 1, 2002. Net broadcast revenue for 2003 was $193.5 million compared to $188.1 million in 2002. Loss from operations was $4.0 million for 2003, compared to income from operations of $21.3 million in 2002. Broadcast cash flow in 2003 was $70.8 million, a 7.7% decrease from $76.7 million in 2002. The decline in broadcast cash flow was primarily due to a decrease in political advertising revenue during 2003 compared to 2002. Interest expense in 2003 was $68.3 million, compared to $67.4 million in 2002. Interest expense for 2003 includes $6.7 million related to call premiums and accelerated amortization on Quorum's senior discount notes and $3.9 million related to the adoption of FAS No. 150. CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Comment Commenting on the results, Perry A. Sook, Nexstar Broadcasting Group President and Chief Executive Officer, said, "The year of 2003 was one of tremendous accomplishment and achievement for Nexstar Broadcasting Group, Inc. We more than doubled the size of our company through strategic and opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. acquisitions. We also strengthened our capital structure by completing two bond offerings, two senior debt financings Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay and our Initial Public Offering. The Company's fourth quarter 2003 revenue results, excluding political revenue comparisons, demonstrate growth in our "core" revenue categories, which we think underscores our focus on revenue generation, as well as the generally improving confidence of our advertisers. "Our strong mid-market presence and experienced management team positions the Company to deliver strong returns to its shareholders in the periods ahead," continued Mr. Sook. "Many of our stations are situated in markets to benefit from 2004 political advertising as well as the 2004 Summer Olympics Olympics Sports medicine An international competition among (traditionally) nonprofessional athletes trained in a particular summer or winter sport, which is held every 4 yrs in a selected city. See Paralympics, Special Olympics, World Medical Games. , which will air on our 14 NBC NBC in full National Broadcasting Co. Major U.S. commercial broadcasting company. It was formed in 1926 by RCA Corp., General Electric Co. (GE), and Westinghouse and was the first U.S. company to operate a broadcast network. affiliates. We have substantially completed the integration of our newly acquired stations and are realizing the benefit of our expense reductions. We are also working quickly to implement new revenue initiatives at the stations. These developments, combined with a continued focus on reducing leverage and improving our balance sheet, should contribute to improved financial results in 2004 and beyond." Balance Sheet Total debt outstanding on December 31, 2003 was $598.9 million and cash balances were $10.8 million at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . A subsidiary of the company is the borrower under a senior secured credit facility. The subsidiary's consolidated total debt, less cash on hand, of $474.6 million at December 31, 2003 resulted in a leverage ratio as defined per the credit agreement at the end of the quarter of 6.4x, compared to a permitted leverage covenant of 7.0x. Nexstar had 28.4 million common shares outstanding on December 31, 2003. Weighted average shares outstanding were 19.0 million for the quarter and 15.6 million for the full year 2003. Capital expenditures were $1.9 million in the fourth quarter of 2003, compared to $3.8 million for the fourth quarter of 2002, while totaling $10.3 million for full year 2003, compared to $11.5 million for 2002. Fourth Quarter Conference Call The Company will host a conference call and webcast today, March 25, 2004 at 10:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy to review the results and the Company's 2004 prospects and strategies. To access the conference call by telephone, interested parties may dial 800/915-4836. A replay will be available through March 29, 2004 by dialing 800/428-6051 and entering access code 339224. Participants can also listen to a live webcast of the call through the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of Nexstar's website at www.nexstar.tv. Please call five minutes in advance to ensure that you are connected. Questions and answers will be taken only from participants on the conference call. For the webcast, please allow 15 minutes to register and download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary software. Note Regarding Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This release contains both historical and forward-looking statements. All statements, other than statements of historical fact, are or may be deemed to be, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, such as our management's expectations of revenues and broadcast cash flows for future periods. Such forward-looking statements involve a number of risks and uncertainties, including, among other factors, general economic conditions, demand for advertising, competition for audience and programming, government regulations and new technologies, and should be considered in light of these and other risk factors described in Nexstar's filings with the Securities and Exchange Commission, including its registration statement on Form S-1. Such factors may cause actual results to differ materially from the forward-looking statements. Nexstar undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, unless otherwise required by law. About Nexstar Broadcasting Nexstar Broadcasting Group owns, operates, programs or provides sales and other services to 44 television stations in 27 markets in the states of Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). , Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. , Montana Montana (mŏntăn`ə), Rocky Mt. state in the NW United States. It is bounded by North Dakota and South Dakota (E), Wyoming (S), Idaho (W), and the Canadian provinces of British Columbia, Alberta, and Saskatchewan (N). , Texas,
Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York , Louisiana Louisiana (ləwē'zēăn`ə, l ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. , Arkansas Arkansas, river, United StatesArkansas (ärkăn`zəs, är`kənsô'), river, c.1,450 mi (2,330 km) long, rising in the Rocky Mts., central Colo. , Alabama Alabama, indigenous people of North America Alabama (ăləbăm`ə), indigenous people of North America whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). and New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . Nexstar's television station group includes affiliates of NBC, CBS (Cell Broadcast Service) See cell broadcast. , ABC ABC in full American Broadcasting Co. Major U.S. television network. It began when the expanding national radio network NBC split into the separate Red and Blue networks in 1928. , FOX and UPN UPN User Principal Name (Microsoft Windows 2000) UPN United Paramount Network UPN Unión del Pueblo Navarro (Navarrese People Union) UPN Umgekehrte Polnische Notation , and reaches approximately 7.4% of all U.S. television households. The following is a list of the Company's owned properties, as well as those with which it has local service agreements:
Market
Rank Market Station Affiliation Status (1)
--------------------------------------------------------------------
8 Washington, DC/Hagerstown, WHAG NBC O&O
MD(2)
53 Wilkes Barre-Scranton, PA WBRE NBC O&O
WYOU CBS LSA
56 Little Rock-Pine Bluff, AR KARK NBC O&O
75 Rochester, NY WROC CBS O&O
78 Springfield, MO KOLR CBS LSA
KDEB Fox O&O
81 Shreveport, LA KTAL NBC O&O
Champaign-Springfield- WCIA CBS O&O
82 Decatur, IL WCFN UPN O&O
99 Evansville, IN WTVW Fox O&O
105 Ft. Wayne, IN WFFT Fox O&O
Ft. Smith - Fayetteville - KPOM/ NBC Acq. Pending
108 Springdale - Rogers, AR KFAA
117 Peoria-Bloomington, IL WMBD CBS O&O
WYZZ Fox LSA
129 Amarillo, TX KAMR NBC O&O
KCIT Fox LSA
KCPN-LP -- LSA
133 Rockford, IL WQRF Fox O&O
135 Monroe, LA-El Dorado, AR KARD Fox O&O
138 Beaumont-Port Arthur, TX KBTV NBC O&O
141 Erie, PA WJET ABC O&O
WFXP Fox LSA
Wichita Falls, TX- Lawton, KFDX NBC O&O
143 OK
KJTL Fox LSA
KJBO-LP UPN LSA
146 Joplin, MO-Pittsburg, KS KSNF NBC O&O
KODE ABC LSA
147 Lubbock, TX KLBK CBS O&O
KAMC ABC LSA
148 Terre Haute, IN WTWO NBC O&O
WBAK Fox Acq. Pending
157 Odessa-Midland, TX KMID ABC O&O
163 Abilene-Sweetwater, TX KTAB CBS O&O
KRBC NBC LSA
167 Utica, NY WUTR (3) ABC Acq. Pending
WFXV Fox O&O
WPNY-LP UPN O&O
170 Billings, MT KSVI ABC O&O
KHMT Fox LSA
171 Dothan, AL WDHN ABC O&O
195 San Angelo, TX KSAN NBC LSA
201 St. Joseph, MO KQTV ABC O&O
(1) O&O refers to stations that we own and operate. LSA LSA - Link State Advertisement , or local service agreement, is the general term we use to refer to a contract under which we provide services to a station owned and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. operated by an independent third party. Local service agreements include time brokerage agreements, shared services shared services, n.pl the administrative, clinical, or other service functions that are common to two or more hospitals or their health care facilities and used jointly or cooperatively by them. agreements, joint sales agreements, and outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. agreements. (2) Although WHAG WHAG could refer to two broadcast stations in the Hagerstown, Maryland area:
(2) (Document Management Alliance) A specification that provides a common interface for accessing and searching document databases. , its signal does not reach the entire Washington, DC metropolitan area. WHAG serves the Hagerstown, MD sub-market within the DMA. (3) The company expects to close on this acquisition and begin operating the station on April 1, 2004 Nexstar Broadcasting Group, Inc. Consolidated Statements of Operations (dollars in thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
----------------------------------------
2002 2003 2002 2003
----------------------------------------
Revenue (excluding trade and
barter) $67,636 $60,245 $218,401 $222,427
Less: commissions (9,906) (7,812) (30,283) (28,884)
----------------------------------------
Net broadcast revenue
(excluding trade and barter) 57,730 52,433 188,118 193,543
Trade and barter revenue 5,125 6,591 18,159 20,789
----------------------------------------
Total Net Revenue 62,855 59,024 206,277 214,332
----------------------------------------
Operating Expenses:
Station direct operating
expenses, net of trade 12,721 14,158 47,493 54,310
Selling, general and
administrative 14,084 15,435 52,176 57,768
Trade and barter expense 5,653 6,445 18,511 20,576
Corporate Expense 2,999 4,377 9,934 12,607
Merger expenses - 11,754 - 11,754
IPO related expenses - 4,058 - 4,058
Amortization of broadcast
rights, excluding barter 3,014 3,605 12,056 11,822
Amortization of intangible
assets 5,702 7,226 21,755 24,934
Depreciation 6,049 5,115 23,086 20,467
----------------------------------------
Total operating
expenses 50,222 72,173 185,011 218,296
----------------------------------------
Income (loss) from operations 12,633 (13,149) 21,266 (3,964)
Interest expense, including
amortization of debt
financing costs (20,635) (25,221) (67,419) (68,342)
Interest income 57 135 152 606
Loss on extinguishment of debt - (5,025) (227) (10,767)
Other income (expense), net 764 1,013 (1,216) 3,860
----------------------------------------
Loss before income taxes and
cumulative effect of change
in accounting principle (7,181) (42,247) (47,444) (78,607)
Income tax benefit (expense) (7,907) 17,344 (8,179) 14,920
----------------------------------------
Loss before cumulative effect
of change in accounting
principle and minority
interest in consolidated
entity (15,088) (24,903) (55,623) (63,687)
Cumulative effect of change in
accounting principle - - (43,470) (8,898)
Minority interest in
consolidated entity - 523 - 786
----------------------------------------
Net loss $(15,088) $(24,380) $(99,093)$(71,799)
----------------------------------------
Other comprehensive income:
Change in market value of
derivative instrument 968 - 3,731 -
----------------------------------------
Net loss and other
comprehensive income (loss) $(14,120) $(24,380) $(95,363)$(71,799)
========================================
Net loss (15,088) (24,380) (99,093) (71,799)
Accretion of preferred
interests (4,345) - (17,481) (15,319)
----------------------------------------
Net loss attributable to
common unit and share holders $(19,433) $(24,380) $(116,574)$(87,118)
========================================
Basic and diluted loss per
unit:
Net loss attributable to
common unit holders (3.12) - (18.75) -
Cumulative effect of change
in accounting principle - - (6.99) -
Weighted average number of
units outstanding:
Basic and diluted 6,225 - 6,216 -
Basic and diluted net loss per
share:
Net loss attributable to
common shareholders - (1.29) - (5.59)
Cumulative effect of change
in accounting principle - - - (0.57)
Weighted average number of
shares outstanding:
Basic and diluted - 18,971 - 15,576
Nexstar Broadcasting Group, Inc. Supplemental Financial Data (dollars in thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
-------------------- --------------------
2002 2003 2002 2003
---------- --------- --------- ----------
Debt Outstanding - - 471,280 598,938
Cash and cash equivalents - - 29,201 10,848
Cash Interest 15,857 26,487 42,858 51,406
Cash taxes 33 30 814 210
Capital expenditures 3,853 1,897 11,649 10,311
Program rights payments 2,636 3,948 11,386 12,221
- Program buyouts and
accelerated program
payments - 1,152 - 1,152
Corporate overhead expenses
related to Quorum 1,185 1,680 5,253 5,658
Nexstar Broadcasting Group, Inc. Unaudited Reconciliation Between Actual Consolidated Statements Of Operations And Broadcast Cash Flow (Non-GAAP Measure) (dollars in thousands)
Three Months Ended Year Ended
December 31, December 31,
--------------------------------------
2002 2003 2002 2003
--------------------------------------
Income (loss) from operations 12,633 (13,149) 21,266 (3,964)
Add:
Depreciation 6,049 5,115 23,086 20,647
Amortization of intangible
assets 5,702 7,226 21,755 24,934
Amortization of program
license rights, net of
barter 3,014 3,605 12,056 11,822
Merger expenses - 11,754 - 11,754
IPO related expenses - 4,058 - 4,058
Corporate overhead 2,999 4,377 9,934 12,607
Program buyouts and
accelerated
Program payments - 1,152 - 1,152
Less:
Payments for program license
liabilities 2,636 3,948 11,386 12,221
--------------------------------------
Broadcast cash flow 27,761 20,190 76,711 70,789
--------------------------------------
- Broadcast cash flow is a non-GAAP financial measure. Broadcast cash flow is calculated as operating income plus corporate expenses plus depreciation and amortization of intangible assets and program rights plus other non-recurring items minus cash program payments. Nexstar believes that the presentation of this non-GAAP measure is helpful to investors because it is used by lenders to measure the company's ability to service debt and by industry analysts to determine the market value of stations and their operating performance. |
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