Nexstar Broadcasting Group Stations (1)
Market Market Rank Market Station Affiliation Rank Market Station Affiliation
(2) 8 DC /Hagerstown, MD WHAG NBC 111 Ft. Wayne, IN WFFT FOX 11 Phoenix, AZ KASW CW 117 Peoria, IL WMBD CBS 34 Salt Lake City, UT KTVX ABC WYZZ FOX KUCW The CW 124 Lafayette, LA KADN FOX 41 Las Vegas, NV KLAS CBS KLAF-LD MyNetworkTV 45 Harrisburg, PA WLYH The CW 127 Bakersfield, CA KGET NBC 48 Jacksonville, FL WCWJ The CW KKEY-LP Telemundo 50 Memphis, TN WATN ABC 128 La Crosse, WI WLAX FOX WLMT The CW WEUX FOX 54 Fresno, CA KSEE NBC 130 Amarillo, TX KAMR NBC KGPE CBS KCIT FOX 55 Wilkes Barre-Scranton, PA WBRE NBC KCPN-LP MyNetworkTV WYOU CBS 135 Rockford, IL WQRF FOX 56 Little Rock, AR KARK NBC WTVO ABC KARZ MyNetworkTV 137 Monroe, LA KARD FOX KLRT FOX KTVE NBC KASN The CW 144 Lubbock, TX KLBK CBS 67 Roanoke, VA WFXR FOX KAMC ABC WWCW The CW 145 Wichita Falls, TX KFDX NBC 68 Green Bay, WI WFRV CBS KJTL FOX 72 Des Moines, IA WOI ABC KJBO-LP MyNetworkTV 75 Springfield, MO KOLR CBS 146 Odessa-Midland, TX KMID ABC KOZL MyNetworkTV KPEJ FOX 78 Rochester, NY WROC CBS 149 Sioux City, IA KCAU ABC 79 Huntsville, AL WZDX FOX 150 Erie, PA WJET ABC 83 Shreveport, LA KTAL NBC WFXP FOX &RPPLWWHH0HPEHUVKLS KMSS FOX 151 Joplin, MO KSNF NBC KSHV MyNetworkTV KODE ABC 84 Syracuse, NY WSYR ABC 154 Panama City, FL WMBB ABC 85 Champaign, IL WCIA CBS 155 Terre Haute, IN WTWO NBC WCIX MyNetworkTV WAWV ABC 86 Brownsville, TX KVEO NBC 159 Binghamton, NY WBGH NBC 87 Waco - Bryan, TX KWKT FOX WIVT ABC KYLE FOX 164 Abilene, TX KTAB CBS 91 El Paso, TX KTSM NBC KRBC NBC 93 Baton Rouge, LA WBRL-CD The CW 166 Billings, MT KSVI ABC WGMB FOX KHMT FOX KZUP-CD RTV 171 Utica, NY WFXV FOX WVLA NBC WPNY-LP MyNetworkTV 98 Burlington-Plattsburgh, VT WFFF FOX WUTR ABC WVNY ABC 173 Dothan, AL WDHN ABC 100 Quad Cities, IL and IA WHBF CBS 175 Elmira, NY WETM NBC KGCW The CW 176 Jackson, TN WJKT FOX KLJB FOX 177 Watertown, NY WWTI ABC/The CW 101 Northwest AR KFTA FOX/NBC 179 Alexandria, LA WNTZ FOXV KNWA FOX/NBC 180 Marquette, MI WJMN CBS 103 Evansville, IN WEHT ABC 185 Grand Junction, CO KREX/ CBS WTVW The CW KREG /KREY 104 Johnstown-Altoona, PA WTAJ CBS KGJT MyNetworkTV 108 Tyler-Longview, TX KETK NBC KFQX FOX KFXK FOX 198 San Angelo, TX KSAN NBC KFXL-LD FOX KLST CBS KLPN-LD MyNetworkTV 201 St. Joseph, MO KQTV ABC
(1) Stations that we own, operate, or provide services to under local service agreements including time brokerage agreements, shared services agreements, joint sales agreements and outsourcing agreements. (2) WHAG serves the Hagerstown, MD sub-market within the DMA. Its signal does not reach the entire Washington, DC market. April 30, 2015
Dear Fellow Shareholders: Key 2014 Highlights In 2014, Nexstar’s expanded broadcast and digital media Generated record financial platform and disciplined operating practices drove our third results by every metric consecutive year of record free cash flow. Over the last three Completed accretive years, we completed 13 accretive, value building transactions for acquisitions of 13 TV stations a total value of $1.1 billion, increasing the scale of our broadcast and two digital media platform by almost 50%. Our leading local news and content businesses franchises and broadcast television’s role as the most influential Renewed retransmission medium among consumers remain fundamental to Nexstar’s agreements with 200+ continued long-term growth. distribution partners, representing about 40% of Throughout Nexstar’s 19 year history, the core tenets of our our subscribers business strategies have focused on growth, value and vision. Over this period, our organization-wide commitment to Extended affiliation broadcasting excellence for local viewers and unparalleled agreement with a top four network affiliate marketing results for our advertisers has been integral to our success. Reflecting our commitment to Keeping it Local , Nexstar Promoted diversity of media and Mission Broadcasting, Inc. stations have garnered over 490 ownership through the sale broadcasting awards since 2009. We’ve also been market and operational support of leaders by innovating diversity in programming and addressing three television stations in three markets to a minority- the unique needs of the local communities where we operate. controlled media company
In 2014 we achieved outstanding operational growth while Maximized political revenue setting the stage for our fourth consecutive year of record free with over $64 million of full cash flow in 2015. year ad sales
NEXSTAR BROADCASTING GROUP 2014 HIGHLIGHTS Increased annual return of capital to shareholders Record financial results through higher dividend payouts - Net revenue rose 25.7% to $631.3 million
o Broadcast ad revenue -- inclusive of local, national and Managed the capital political -- grew 18.1% to $453.4 million structure and cost of capital o Retransmission fee revenue improved 53.3% to $155.0 to finance near- and long- million term growth
o Digital Media revenue increased 51.4% to $46.7 million (1) Entered into agreements to - Broadcast cash flow grew 39.8% to $269.9 million acquire stations in Phoenix, (1) - Adjusted EBITDA increased 40.8% to $234.7 million Las Vegas and Des Moines in - Free cash flow (1) rose 88.1% to $159.7 million accretive transactions. These (except Des Moines) as well as other significant pending transactions, have since been completed in 2015. Continued financial diversification - Non-TV spot revenue (excluding political) comprised 34.4% of total gross revenue in 2014 rising from 30.4% in 2013 and 25.5% in 2012 - Approximately 45% of 2014 EBITDA was generated by revenue sources other than broadcast advertising, up from 40% in 2013
Successful integration of 13 TV stations acquired in accretive transactions - The operating results from these stations are benefitting from Nexstar’s local community focus, group-wide retransmission consent agreements and hyper-local digital media strategies - Nexstar is realizing the anticipated synergies and efficiencies forecasted at the time the transactions were announced
Entered into accretive transactions to acquire three TV stations and two digital media businesses - The new stations mark Nexstar’s entrée to Phoenix and Las Vegas and will result in Nexstar’s sixth station in Iowa, an active market for political advertising - The digital media acquisitions expanded the range of “best of breed” content publishing and monetization tools and fully-integrated digital management solutions to power our clients’ digital media businesses and marked the Company’s entry into the profitable and fast-growing digital agency business
Pioneered transactions to promote diversity of media ownership among minority operators - The now completed transactions represent an innovative framework for introducing and developing a new, minority-controlled entrant to television broadcasting through the sale and operational support of three network affiliated stations in three markets to a minority-controlled media company while bringing additional news, information and specialized programming to the markets - Nexstar’s pioneering initiatives support the FCC’s goal of increasing minority television ownership
Effective renewal of multi-year retransmission consent agreements with our distribution partners - 2014 renewals represent approximately 40% of the cable, direct broadcast satellite or telco subscribers in Nexstar markets and all were concluded with no service interruptions, extending our record on this front to ten years - All renewals were at more favorable rates as we continue to close the value gap between audience viewership of the Company’s programming and content and the distribution revenue it receives
Further expansion of Nexstar’s production of local news, community and lifestyle programming - We now produce over 79,000 hours annually of local news, weather, sports and local lifestyle programming
Reduced weighted average cost of borrowings to approximately 4.8% at December 31, 2014 from approximately 5.2% at December 31, 2013
Reduced net leverage covenant ratio to 4.40x at December 31, 2014 from 5.84x at December 31, 2013
Increased quarterly cash dividend payout by 25% and returned $18.4 million of capital to shareholders in 2014
Keeping it Local + GROWTH , VALUE AND VISION TO DRIVE RECORD 2015 RESULTS Nexstar’s consistency in generating record results reflect our teams’ disciplined approach to the operation of our core television broadcast operations, revenue diversification initiatives and the success we are achieving in identifying, efficiently financing and integrating selective accretive station and digital media acquisitions. Our recently completed transactions bring further diversification and scale to our operations and very significant incremental free cash flow.
Early in 2015 we closed the largest acquisition in the Company’s history, adding the net operations of 18 stations in nine markets. This was followed by the completion of single station transactions in Phoenix and Las Vegas thereby bringing our TV station portfolio to 107 stations under ownership or management, making Nexstar the second largest operator of television stations in the United States. We now serve 58 separate DMAs and reach approximately 18% of all U.S. television households. These transactions further diversify our operating base, create new duopoly markets, and are financially accretive.
Nexstar is also one of the nation’s largest local media companies, and while part of what we do every day is distribute content on television, we are increasingly distributing content through social and mobile and digital media channels. Digital media leverages our core capabilities as broadcasters, as well as our local market positions, thereby allowing Nexstar to participate in the rapid growth rate of digital ad spending.
Since 2012, we’ve acquired a suite of proven digital technology platforms, digital publishing, and content management products and services which are complementary to our television operations and those of other broadcasters. We recently announced the formation of LAKANA which aggregates the services and technologies of three Nexstar digital publishing technology firms -- Internet Broadcasting, EndPlay and Inergize Digital. With a client roster that includes over 300 television stations, newspapers, magazines and brands that deliver six billion advertising impressions per month, LAKANA is a trusted digital solutions provider and a primary platform for Nexstar’s ongoing digital media growth.
We recently further broadened and diversified Nexstar’s digital video advertising offerings with highly- targeted optimization tools and programmatic capabilities through the acquisition of Yashi, Inc. Yashi’s targeting and programmatic technology further expands the innovative multi-platform marketing solutions that Nexstar offers to local and national advertisers, agencies and digital publishers while maximizing our multi-screen revenue opportunities.
Each day, my over 4,200 colleagues in the Nexstar Nation continue to advance our organization-wide commitment to serving the local markets where we operate with great local news, events and other local programming while making appropriate process and operating adjustments to ensure we remain the most efficient and competitive diversified media company in our industry. Our teams consistently leverage localism to bring new entertainment, information, services and value to consumers and advertisers through Nexstar’s television, digital and mobile media platforms and their dedication is reflected in our strong standings in the local communities where we operate as well as in our positive near- and long-term financial outlook.
We are confident that 2015 will see another period of record financial results as Nexstar benefits from its expanded scale, new operating efficiencies and synergies related to recently completed acquisitions, the renewal of a significant number of retransmission consent agreements in 2014 and the expansion of our digital media operations. Reflecting this activity, we project that Nexstar will generate pro-forma free cash flow of approximately $450 million during the 2015/2016 cycle, or average pro-forma free cash flow of approximately $7.25 per share per year. Furthermore, with the free cash flow generated from this base of operations, we expect Nexstar’s net leverage, absent additional strategic activity, to be in the mid 4x range at the end of 2015 and to decline to the low 3x range by the end of 2016.
Reflecting our prospects for continued free cash flow growth, in January 2015 the Board of Directors approved a 26.7% increase in our quarterly cash dividend to $0.19 per share effective with the dividend paid in February 2015. The increase supports our strategic goals of returning capital to shareholders while providing sufficient liquidity to reduce leverage, consider additional accretive acquisitions and other initiatives to enhance long-term shareholder value.
With expanded broadcast and digital media operations, significant and growing free cash flow, a stable capital position and solid visibility on 2015 growth, we are confident of our approach to enhancing long- term shareholder value. Thank you for your interest and support and we look forward to reporting on 2015’s growth and accomplishments.
Sincerely,
Perry A. Sook Chairman, President and Chief Executive Officer
(1) For additional information regarding non-GAAP financial measures Nexstar uses in investor communications, please see page i at the back of this Annual Report. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K _ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2014 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) (I.R.S. Employer Identification No.) 545 E. John Carpenter Freeway, Suite 700, Irving, Texas 75062 (Address of Principal Executive Offices) (Zip Code) (972) 373-8800 (Registrant’s Telephone Number, Including Area Code) Securities Registered Pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Class A Common Stock, $0.01 par value per share NASDAQ Global Market Securities Registered Pursuant to Section 12(g) of the Act: None ,QGLFDWHE\FKHFNPDUNLIWKH5HJLVWUDQWLVDZHOONQRZQVHDVRQHGLVVXHUDVGHILQHGLQ5XOHRIWKH6HFXULWLHV$FW TABLE OF CONTENTS Page PART I ,7(0 %XVLQHVV ,7(0$ 5LVN)DFWRUV ,7(0% 8QUHVROYHG6WDII&RPPHQWV ,7(0 3URSHUWLHV ,7(0 /HJDO3URFHHGLQJV ,7(0 0LQH6DIHW\'LVFORVXUHV PART II ,7(0 0DUNHWIRU5HJLVWUDQW¶V&RPPRQ(TXLW\5HODWHG6WRFNKROGHU0DWWHUVDQG,VVXHU3XUFKDVHVRI(TXLW\6HFXULWLHV ,7(0 6HOHFWHG)LQDQFLDO'DWD ,7(0 0DQDJHPHQW¶V'LVFXVVLRQDQG$QDO\VLVRI)LQDQFLDO&RQGLWLRQDQG5HVXOWVRI2SHUDWLRQV ,7(0$ 4XDQWLWDWLYHDQG4XDOLWDWLYH'LVFORVXUHV$ERXW0DUNHW5LVN ,7(0 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the stations we operate or provide services to which would require that station to cease operations. 7HOHYLVLRQEURDGFDVWOLFHQVHVDUHJUDQWHGIRUDPD[LPXPWHUPRIHLJKW\HDUVDQGDUHVXEMHFWWRUHQHZDOXSRQDSSOLFDWLRQWRWKH )&&7KH)&&LVUHTXLUHGWRJUDQWDQDSSOLFDWLRQIRUOLFHQVHUHQHZDOLIGXULQJWKHSUHFHGLQJWHUPWKHVWDWLRQVHUYHGWKHSXEOLF LQWHUHVWWKHOLFHQVHHGLGQRWFRPPLWDQ\VHULRXVYLRODWLRQVRIWKH&RPPXQLFDWLRQV$FWRUWKH)&&¶VUXOHVDQGWKHOLFHQVHHFR PPLWWHG QRRWKHUYLRODWLRQVRIWKH&RPPXQLFDWLRQV$FWRUWKH)&&¶VUXOHVZKLFKWDNHQWRJHWKHUZRXOGFRQVWLWXWHDSDWWHUQRIDEXVH$ PDMRULW\RIUHQHZDODSSOLFDWLRQVDUHURXWLQHO\JUDQWHGXQGHUWKLVVWDQGDUG,IDOLFHQVHHIDLOVWRPHHWWKLVVWDQGDUGWKH)&&PD\VWLOO JUDQWUHQHZDORQWHUPVDQGFRQGLWLRQVWKDWLWGHHPVDSSURSULDWHLQFOXGLQJDPRQHWDU\IRUIHLWXUHRUUHQHZDOIRUDWHUPOHVVWKDQWKH QRUPDOHLJKW\HDUSHULRG+RZHYHULQDQH[WUHPHFDVHWKH)&&PD\GHQ\DVWDWLRQ¶VOLFHQVHUHQHZDODSSOLFDWLRQUHVXOWLQJLQ WHUPLQDWLRQRIWKHVWDWLRQ¶VDXWKRULW\WREURDGFDVW8QGHUWKH&RPPXQLFDWLRQV$FWWKHWHUPRIDEURDGFDVWOLFHQVHLVDXWRPDWLFDOO\ 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implement its acquisition strategy. 7KH&RPSDQ\KDVDFKLHYHGPXFKRILWVJURZWKWKURXJKDFTXLVLWLRQV7KH&RPSDQ\LQWHQGVWRFRQWLQXHLWVJURZWKE\VHOHFWLYHO\ SXUVXLQJDFTXLVLWLRQVRIWHOHYLVLRQVWDWLRQV7KHWHOHYLVLRQEURDGFDVWLQGXVWU\LVXQGHUJRLQJFRQVROLGDWLRQZKLFKPD\UHGXFHWKH QXPEHURIDFTXLVLWLRQWDUJHWVDQGLQFUHDVHWKHSXUFKDVHSULFHRIIXWXUHDFTXLVLWLRQV6RPHRIWKH&RPSDQ\¶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³FRXQW´DVRZQHUVKLSE\WKHSDUW\ 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assets, and therefore the Company could suffer losses due to future asset impairment charges. $VRI'HFHPEHUPLOOLRQRURIWKH&RPSDQ\¶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¶VJRRGZLOODQGLQWDQJLEOHDVVHWVZRXOGEHDIIHFWHGE\DVLJQLILFDQW UHGXFWLRQLQRSHUDWLQJUHVXOWVRUFDVKIORZVDWRQHRUPRUHRIWKH&RPSDQ\¶VWHOHYLVLRQVWDWLRQVRUDIRUHFDVWRIVXFKUHGXFWLRQVD VLJQLILFDQWDGYHUVHFKDQJHLQWKHDGYHUWLVLQJPDUNHWSODFHVLQZ KLFKWKH&RPSDQ\¶VWHOHYLVLRQVWDWLRQVRSHUDWHWKHORVVRIQHWZRUN 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isks Related to Our Industry Our operating results are dependent on advertising revenue and as a result, we may be more vulnerable to economic downturns and other factors beyond our control than businesses not dependent on advertising. :HGHULYHUHYHQXHSULPDULO\IURPWKHVDOHRIDGYHUWLVLQJWLPHRQRXUVWDWLRQVDQGFRPPXQLW\SRUWDOZHEVLWHV2XUDELOLW\WRVHOO DGYHUWLVLQJWLPHGHSHQGVRQQXPHURXVIDFWRUVWKDWPD\EHEH\RQGRXUFRQWUROLQFOXGLQJ y 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$VKLIWLQYLHZHUSUHIHUHQFHVFRXOGFDXVHRXUSURJUDPPLQJQRWWRJDLQSRSXODULW\RUWRGHFOLQHLQSRSXODULW\ZKLFKFRXOGFDXVHRXU DGYHUWLVLQJUHYHQXHWRGHFOLQH,QDGGLWLRQZHDQGWKHSURJUDPPLQJSURYLGHUVXSRQZKLFKZHUHO\PD\QRWEHDEOHWRDQWLFLSDWHDQG HIIHFWLYHO\UHDFWWRVKLIWVLQYLHZHUWDVWHVDQGLQWHUHVWVLQRXUPDUNHWV Because a high percentage of our operating expense is fixed, a relatively small decrease in advertising revenue could have a significant negative impact on our financial results. 2XUEXVLQHVVLVFKDUDFWHUL]HGJHQHUDOO\E\KLJKIL[HGFRVWVSULPDULO\IRUGHEWVHUYLFHEURDGFDVWULJKWVDQGSHUVRQQHO2WKHU WKDQFRPPLVVLRQVSDLGWRRXUVDOHVVWDIIDQGRXWVLGHVDOHVDJHQFLHVRXUH[SHQVHVGRQRWYDU\VLJQLILFDQWO\ZLWKWKHLQFUHDVHRU GHFUHDVHLQDGYHUWLVLQJUHYHQXH$VDUHVXOWDUHODWLYHO\VPDOOFKDQJHLQDGYHUWLVLQJSULFHVFRXOGKDYHDGLVSURSRUWLRQDWHHIIHFWRQRXU ILQDQFLDOUHVXOWV$FFRUGLQJO\DPLQRUVKRUWIDOOLQH[SHFWHGUHYHQXHFRXOGKDYHDVLJQLILFDQWQHJDWLYHLPSDFWRQRXUILQDQFLDOUHVXOWV Preemption of regularly scheduled programming by news coverage may affect our revenue and results of operations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f we are unable to respond to changes in technology and evolving industry trends, our television businesses may not be able to compete effectively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he FCC can sanction us for programming broadcast on our stations which it finds to be indecent. 7KH)&&PD\LPSRVHVXEVWDQWLDOILQHVWRDPD[LPXPRISHUYLRODWLRQRQWHOHYLVLRQEURDGFDVWHUVIRUWKHEURDGFDVWRI 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Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with Item 6. “Selected Financial Data” and our Consolidated Financial Statements and related Notes included in Part IV, Item 15(a) of this Annual Report on Form 10-K. As a result of our deemed controlling financial interests in the consolidated VIEs in accordance with U.S. GAAP, we consolidate the financial position, results of operations and cash flows of these consolidated VIEs as if they were wholly-owned entities. We believe this presentation is meaningful for understanding our financial performance. Refer to Note 2 to our Consolidated Financial Statements for a discussion of our determination that we are required to consolidate these entities’ financial position, results of operations and cash flows under the authoritative guidance for variable interest entities. Therefore, the following discussion of our financial position and results of operations includes the consolidated VIEs’ financial position and results of operations. 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CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share information) Years Ended December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’ EQUITY (DEFICIT) For the Three Years Ended December 31, 2014 (in thousands, except share information) Noncontrolling interest in a Total Common Stock Additional consolidated Stockholders' Preferred Stock Class A Class B Class C Paid-In Treasury Stock Accumulated variable Equity Shares Amount Shares Amount Shares Amount Shares Amount Capital Shares Amount Deficit interest entity (Deficit) Balances as of December 31, 2011 6WRFNEDVHGFRPSHQVDWLRQ H[SHQVH ([HUFLVHRIVWRFNRSWLRQV &RQYHUVLRQRI&ODVV%FRPPRQ VWRFNWR&ODVV$FRPPRQ6WRFN ([FHVVWD[EHQHILWIURPVWRFN RSWLRQH[HUFLVHV 1HWLQFRPH Balances as of December 31, 2012 6WRFNEDVHGFRPSHQVDWLRQ H[SHQVH &RQYHUVLRQRI&ODVV%FRPPRQ VWRFNWR&ODVV$FRPPRQVWRFN 3XUFKDVHRIWUHDVXU\VWRFN ([HUFLVHRIVWRFNRSWLRQV &RPPRQVWRFNGLYLGHQGV GHFODUHG 1HWORVV Balances as of December 31, 2013 6WRFNEDVHGFRPSHQVDWLRQ H[SHQVH ([HUFLVHRIVWRFNRSWLRQV ([FHVVWD[EHQHILWIURPVWRFN RSWLRQH[HUFLVHV &RPPRQVWRFNGLYLGHQGV GHFODUHG &RQVROLGDWLRQRIDYDULDEOH LQWHUHVWHQWLW\ 1HWLQFRPH Balances as of December 31, 2014 7KHDFFRPSDQ\LQJ1RWHVDUHDQLQWHJUDOSDUWRIWKHVH&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV ) NEXSTAR BROADCASTING GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2014 2013 2012 Cash flows from operating activities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ash flows from investing activities: 3XUFKDVHVRISURSHUW\DQGHTXLSPHQW 'HSRVLWVDQGSD\PHQWVIRUDFTXLVLWLRQVQHWRIFDVKDFTXLUHG 3URFHHGVIURPGLVSRVDOVRISURSHUW\DQGHTXLSPHQW 3URFHHGVIURPGLVSRVDORIVWDWLRQ 1HWFDVKXVHGLQLQYHVWLQJDFWLYLWLHV Cash flows from financing activities: 3URFHHGVIURPORQJWHUPGHEW 5HSD\PHQWVRIORQJWHUPGHEW 3D\PHQWVIRUGHEWILQDQFLQJFRVWV 3XUFKDVHRIWUHDVXU\VWRFN 3URFHHGVIURPH[HUFLVHRIVWRFNRSWLRQV ([FHVVWD[EHQHILWIURPVWRFNRSWLRQH[HUFLVHV &RPPRQVWRFNGLYLGHQGVSDLG 3D\PHQWVIRUFDSLWDOOHDVHREOLJDWLRQV 1HWFDVKSURYLGHGE\ILQDQFLQJDFWLYLWLHV 1HWLQFUHDVH GHFUHDVH LQFDVKDQGFDVKHTXLYDOHQWV &DVKDQGFDVKHTXLYDOHQWVDWEHJLQQLQJRISHULRG &DVKDQGFDVKHTXLYDOHQWVDWHQGRISHULRG Supplemental information: ,QWHUHVWSDLG ,QFRPHWD[HVSDLGQHWRIUHIXQGV Non-cash investing and financing activities: $FFUXHGSXUFKDVHVRISURSHUW\DQGHTXLSPHQW 1RQFDVKSXUFKDVHVRISURSHUW\DQGHTXLSPHQW $FFUXHGGHEWILQDQFLQJFRVWV $PRXQWVSD\DEOHWRVHOOHUVIRUDFTXLVLWLRQRIVWDWLRQV 7KHDFFRPSDQ\LQJ1RWHVDUHDQLQWHJUDOSDUWRIWKHVH&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV ) NEXSTAR BROADCASTING GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. 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These financial measures are not defined under U.S. GAAP. We believe the presentation of these non-GAAP measures are useful to investors because they are used by lenders to measure the Company’s ability to service debt; by industry analysts to determine the market value of stations and their operating performance; by management to identify the cash available to service debt, make strategic acquisitions and investments, maintain capital assets and fund ongoing operations and working capital needs; and, because they reflect the most up-to-date operating results of the stations inclusive of pending acquisitions, TBAs or LMAs. Management believes they also provide an additional basis from which investors can establish forecasts and valuations for the Company’s business. Broadcast cash flow is calculated as income from operations, plus corporate expenses, depreciation, amortization of intangible assets and broadcast rights (excluding barter) and loss (gain) on asset disposal, net, minus broadcast rights payments. Adjusted EBITDA is calculated as broadcast cash flow less corporate expenses. Free cash flow is calculated as income from operations plus depreciation, amortization of intangible assets and broadcast rights (excluding barter), loss (gain) on asset disposal, net, and non-cash compensation expense, less payments for broadcast rights, cash interest expense, capital expenditures and net cash income taxes. In the following tables, we have provided reconciliations between our income from operations, a GAAP defined measure which is presented in our financial statements, and our non-GAAP measures. While many of these amounts are presented in our financial statements, these tables are unaudited. The amounts below are presented in thousands. Year Ended December 31, 2014 2013 Income from o perations: $ 173 ,237 $ 103 ,241 Add: De preciation 35 ,047 33 ,578 Amortization of intan gible assets 25 ,850 30 ,148 Amortization of broadcast ri ghts , excludin g barter 11 ,634 12 ,613 Loss on asset dis posal , net 638 1 ,280 Cor porate ex penses 35 ,174 26 ,339 Non-cash re presentation contract termination fee 353 - Less: Payments for broadcast rights 12,025 14,191 Broadcast cash flow $ 269,908 $ 193,008 Less: Corporate expenses 35,174 26,339 Adjusted EBITDA $ 234,734 $ 166,669 Income from o perations $ 173 ,237 $ 103 ,241 Add: De preciation 35 ,047 33 ,578 Amortization of intan gible assets 25 ,850 30 ,148 Amortization of broadcast ri ghts , excludin g barter 11 ,634 12 ,613 Loss on asset dis posal , net 638 1 ,280 Non-cash com pensation ex pense 7,598 2,080 Non-cash re presentation contract termination fee 353 - Less: Pa yments for broadcast ri ghts 12 ,025 14 ,191 Cash interest ex pense 59 ,167 62 ,963 Ca pital ex penditures 20 ,300 18 ,736 Cash income taxes, net of refunds 3,131 2,129 Free cash flow $ 159,734 $ 84,921 L Market Market Board of Directors Officers Perry A. Sook Perry A. Sook Chairman President & Chief Executive Officer Geoff Armstrong (1)( 2) Thomas E. Carter Chief Executive Officer Executive Vice President & Chief Financial Officer 310 Partners Timoth y C. Busch Jay M. Grossman (2)( 3) Executive Vice President, Co-Chief Operating Officer Managing Partner and Co-Chief Executive Officer ABRY Partners , LLC Brian Jones Executive Vice President , Co-Chief O peratin g Officer I. Martin Pompadur (1)( 3) Global Vice Chairman , Media & Entertainment Thomas O’Brien Mac quarie Ca pital Executive Vice President , Di gital Media and Chief Revenue Officer Dennis A. Miller (2) Investor Blake Russell Senior Vice President , Station O perations Lisbeth McNabb (1) President and Chief Executive Officer Elizabeth R yder Di giWorksCor pp Senior Vice President , General Counsel and Secretar y C. Thomas McMillen (3) Chairman and Chief Executive Officer Julie Pruett Washin gton Ca pital Advisors Senior Vice President and Re gional Mana ger &RPPLWWHH0HPEHUVKLS William Sall y (1) Audit Committee Senior Vice President and Re gional Mana ger (2) Compensation Committee (3) Nominatin g & Cor porate Governance Committee Theresa Underwood Senior Vice President and Re gional Mana ger Additional Information Cor porate Head quarters Stock Exchan ge Listin g Le gal Counsel Nexstar Broadcasting Group, Inc. NASDAQ Global Select Market Kirkland & Ellis LLP 545 E. John Carpenter Freeway Symbol: NXST New York, NY Suite 700 Irving, TX 75062 Stock Transfer Agent and Independent Registered Public (972) 373-8800 Phone Registrar Accounting Firm (972) 373-8888 Fax American Stock Transfer & PricewaterhouseCoopers LLP www.nexstar.tv Trust Company Dallas, TX Annual Meeting of Stockholders The 2015 Annual Meeting will be held on Thursday, June 11, 2014 at 10:00 a.m., CDT, at 545 E. John Carpenter Freeway, Suite 120, Irving, TX 75062.