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UNITED STATES SECURITIES

AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-Q/A (No. 1)



|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------

| |  | for the quarterly period ended June 30, 2002
| |  | --------------------------------------------



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: 333-62916



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Nexstar Finance, L.L.C.



Nexstar Finance, Inc.

(Exact name of registrant as specified in its charter)



|DELAWARE (State of incorporation)                                                                                     |  | 23-3063155 23-3063152 (I.R.S. Employer Identification
No.)         
|--------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------
|                                                                                                                     
|909 Lake Carolyn Parkway, Suite 1450 Irving, Texas 75039 (Address of Principal Executive Offices, including Zip Code) |  | (972) 373-8800 (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 the registrant 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 check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule

12b-2).    Yes ̈No x



As of June 30,
2002, Nexstar Finance, L.L.C. had one member, Nexstar Finance Holdings, L.L.C., and Nexstar Finance, Inc. had 1,000 shares of common stock outstanding.



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TABLE OF CONTENTS



|                                                                                                                                                |  | Page
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|PART I.    FINANCIAL INFORMATION                                                                                                                |  |     
|Item 1.    Financial Statements (Unaudited)                                                                                                     |  | 3   
|Consolidated Balance Sheets  December 31, 2001 and June 30, 2002                                                                               |  | 3   
|Consolidated Statements of Operations and Other Comprehensive Loss for the three months and six months ended June 30, 2001 and 2002             |  | 4   
|Consolidated Statement of Changes in Members Interest for the year ended December 31, 2001 and for the six months ended June 30, 2001 and 2002 |  | 5   
|Consolidated Statements of Cash Flows for the six months ended June 30, 2001 and 2002                                                           |  | 6   
|Notes to Consolidated Financial Statements                                                                                                      |  | 7   
|Item 2.    Managements Discussion and Analysis of Financial Condition and Results of Operations                                                |  | 21  
|Item 3.    Quantitative and Qualitative Disclosures about Market Risk                                                                           |  | 29  
|                                                                                                                                               
|PART II.    OTHER INFORMATION                                                                                                                   |  |     
|Item 1.    Legal Proceedings                                                                                                                    |  | 30  
|Item 2.    Changes in Securities and Use of Proceeds                                                                                            |  | 30  
|Item 3.    Defaults Upon Senior Securities                                                                                                      |  | 30  
|Item 4.    Submission of Matters to a Vote of Security Holders                                                                                  |  | 30  
|Item 5.    Other Information                                                                                                                    |  | 30  
|Item 6.    Exhibits and Reports on Form 8-K                                                                                                     |  | 30  
|                                                                                                                                               
|SIGNATURES                                                                                                                                      |  | 31  





1



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As more fully
discussed in Note 10 to the Consolidated Financial Statements, the Company is restating its consolidated financial statements. In conjunction with the refinancing of the Companys senior credit facilities in June 1999, the Company expensed
certain debt financing costs. The Company subsequently determined that a portion of those costs, specifically, those related to the revolving credit facility, should not have been expensed, but should have remained capitalized and subsequently
amortized. As a result, the 1999, 2000, and 2001 financial statements have been restated.



In addition, the following Report on Form 10-Q/A incorporates expanded disclosures on various matters including the disclosure of the financial position, results of operations and cash flows of Nexstar
Finance, L.L.C., Bastet Broadcasting, Inc. and Mission Broadcasting of Wichita Falls, Inc. on a consolidating basis (see Note 9).



2



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PART I



ITEM 1.    FINANCIAL STATEMENTS



NEXSTAR FINANCE, L.L.C.



CONSOLIDATED BALANCE SHEETS



|                                                                                           |  | December 31, 2001      |         |   | June 30, 2002 |  
|------------------------------------------------------------------------------------------ |  | ---------------------- | ------- | - | ------------- | -
|                                                                                           |  | (Restated)             |         |   |               |  
|                                                                                           |  | (Unaudited)            |         |   | (Unaudited)   |  
|                                                                                           |  | (dollars in thousands) |        
|Assets                                                                                     |  |                        |         |   |               |  
|Current assets:                                                                            |  |                        |         |   |               |  
|Cash and cash equivalents                                                                  |  | $                      | 5,802   |   |               | $
|Accounts receivable, net of allowance for doubtful accounts of $490 and $594,
respectively |  |                        | 25,442  |   |               |  
|Current portion of broadcast rights                                                        |  |                        | 10,062  |   |               |  
|Prepaid expenses and other current assets                                                  |  |                        | 993     |   |               |  
|Deferred tax assets                                                                        |  |                        | 276     |   |               |  
|Taxes receivable                                                                           |  |                        | 233     |   |               |  
|                                                                                           |  |                        |         |   |               |  
|Total current assets                                                                       |  |                        | 42,808  |   |               |  
|                                                                                          
|Property and equipment, net                                                                |  |                        | 57,383  |   |               |  
|Broadcast rights                                                                           |  |                        | 3,685   |   |               |  
|Due from parent entities                                                                   |  |                        | 2,782   |   |               |  
|Other noncurrent assets                                                                    |  |                        | 8,240   |   |               |  
|Goodwill, net                                                                              |  |                        | 87,464  |   |               |  
|Intangible assets, net                                                                     |  |                        | 224,772 |   |               |  
|                                                                                           |  |                        |         |   |               |  
|Total assets                                                                               |  | $                      | 427,134 |   |               | $
|                                                                                           |  |                        |         |   |               |  
|Liabilities and Members Interest                                                          |  |                        |         |   |               |  
|Current liabilities:                                                                       |  |                        |         |   |               |  
|Current portion of debt                                                                    |  | $                      | 488     |   |               | $
|Current portion of capital lease obligations                                               |  |                        | 23      |   |               |  
|Current portion of broadcast rights payable                                                |  |                        | 10,242  |   |               |  
|Accounts payable                                                                           |  |                        | 3,732   |   |               |  
|Accrued expenses                                                                           |  |                        | 3,986   |   |               |  
|Interest payable                                                                           |  |                        | 6,041   |   |               |  
|Deferred revenue                                                                           |  |                        | 335     |   |               |  
|                                                                                           |  |                        |         |   |               |  
|Total current liabilities                                                                  |  |                        | 24,847  |   |               |  
|                                                                                          
|Debt                                                                                       |  |                        | 283,342 |   |               |  
|Broadcast rights payable                                                                   |  |                        | 3,770   |   |               |  
|Deferred tax liabilities                                                                   |  |                        | 6,892   |   |               |  
|Other liabilities                                                                          |  |                        | 4,022   |   |               |  
|                                                                                           |  |                        |         |   |               |  
|Total liabilities                                                                          |  |                        | 322,873 |   |               |  
|                                                                                           |  |                        |         |   |               |  
|Commitments and contingencies (Note 8)                                                     |  |                        |         |   |               |  
|Members interest:                                                                         |  |                        |         |   |               |  
|Contributed capital                                                                        |  |                        | 171,479 |   |               |  
|Accumulated deficit                                                                        |  |                        | (63,487 | ) |               |  
|Accumulated other comprehensive loss on derivative instruments                             |  |                        | (3,731  | ) |               |  
|                                                                                           |  |                        |         |   |               |  
|Total members interest                                                                    |  |                        | 104,261 |   |               |  
|                                                                                           |  |                        |         |   |               |  
|Total liabilities and members interest                                                    |  | $                      | 427,134 |   |               | $
|                                                                                           |  |                        |         |   |               |  

The accompanying notes are an integral part of these consolidated financial
statements



3



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NEXSTAR FINANCE, L.L.C.



CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS



|                                                                                                              |  | Three Months Ended June 30,        |        |   | Six Months Ended June 30,          |  
|------------------------------------------------------------------------------------------------------------- |  | ---------------------------------- | ------ | - | ---------------------------------- | -
|                                                                                                              |  | 2001                               |        |   | 2002                               |  
|                                                                                                              |  |                                    |        |   |                                    |  
|                                                                                                              |  | (Unaudited) (dollars in thousands) |        |   | (Unaudited) (dollars in thousands) |  
|Revenue (excluding trade and barter)                                                                          |  | $                                  | 29,643 |   |                                    | $
|Less: commissions                                                                                             |  |                                    | (4,064 | ) |                                    |  
|                                                                                                              |  |                                    |        |   |                                    |  
|Net broadcast revenue (excluding trade and barter)                                                            |  |                                    | 25,579 |   |                                    |  
|Trade and barter revenue                                                                                      |  |                                    | 2,467  |   |                                    |  
|                                                                                                              |  |                                    |        |   |                                    |  
|Total net revenue                                                                                             |  |                                    | 28,046 |   |                                    |  
|                                                                                                              |  |                                    |        |   |                                    |  
|Operating expenses:                                                                                           |  |                                    |        |   |                                    |  
|Direct operating expenses (excluding depreciation and amortization shown separately
below)                    |  |                                    | 7,727  |   |                                    |  
|Selling, general and administrative expenses (excluding depreciation and amortization
shown separately below) |  |                                    | 6,740  |   |                                    |  
|Amortization of broadcast rights                                                                              |  |                                    | 3,722  |   |                                    |  
|Amortization of intangible assets                                                                             |  |                                    | 5,124  |   |                                    |  
|Depreciation                                                                                                  |  |                                    | 3,256  |   |                                    |  
|                                                                                                              |  |                                    |        |   |                                    |  
|Total operating expenses                                                                                      |  |                                    | 26,569 |   |                                    |  
|                                                                                                              |  |                                    |        |   |                                    |  
|Income (loss) from operations                                                                                 |  |                                    | 1,477  |   |                                    |  
|Interest expense, including amortization of debt financing costs                                              |  |                                    | (9,355 | ) |                                    |  
|Interest income                                                                                               |  |                                    | 109    |   |                                    |  
|Other expenses, net                                                                                           |  |                                    | (423   | ) |                                    |  
|                                                                                                              |  |                                    |        |   |                                    |  
|Loss before income taxes                                                                                      |  |                                    | (8,192 | ) |                                    |  
|Income tax benefit                                                                                            |  |                                    | 145    |   |                                    |  
|                                                                                                              |  |                                    |        |   |                                    |  
|Net loss                                                                                                      |  | $                                  | (8,047 | ) |                                    | $
|                                                                                                              |  |                                    |        |   |                                    |  
|Other comprehensive loss:                                                                                     |  |                                    |        |   |                                    |  
|Cumulative effect of change in accounting principle                                                           |  | $                                  |       |   |                                    | $
|Change in market value of derivative instrument                                                               |  |                                    | (92    | ) |                                    |  
|                                                                                                              |  |                                    |        |   |                                    |  
|Net loss and other comprehensive loss                                                                         |  | $                                  | (8,139 | ) |                                    | $
|                                                                                                              |  |                                    |        |   |                                    |  





The accompanying notes are an integral part of these consolidated financial statements



4



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NEXSTAR FINANCE, L.L.C.



CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS INTEREST



|                                                    |  | Contributed Capital    |         |   | Accumulated Deficit |   |         | Other Comprehensive Loss |  |   | Total Members Interest |  
|--------------------------------------------------- |  | ---------------------- | ------- | - | ------------------- | - | ------- | ------------------------ |  | - | ----------------------- | -
|                                                    |  | (dollars in thousands) |        
|Balance at December 31, 2000 (Restated)             |  | $                      | 61,531  |   |                     | $ | (28,842 | )                        |  | $ |                        |  
|Contributions                                       |  |                        | 105,003 |   |                     |   |        |                          |  |   |                        |  
|Distributions                                       |  |                        | (30,054 | ) |                     |   |        |                          |  |   |                        |  
|Net loss (Restated)                                 |  |                        |        |   |                     |   | (17,852 | )                        |  |   |                        |  
|Cumulative effect of change in accounting principle |  |                        |        |   |                     |   |        |                          |  |   | (241                    | )
|Change in market value of derivative instrument     |  |                        |        |   |                     |   |        |                          |  |   | (2,057                  | )
|                                                    |  |                        |         |   |                     |   |         |                          |  |   |                         |  
|Balance at June 30, 2001 (Restated) (Unaudited)     |  |                        | 136,480 |   |                     |   | (46,694 | )                        |  |   | (2,298                  | )
|Contributions                                       |  |                        | 35,002  |   |                     |   |        |                          |  |   |                        |  
|Distributions                                       |  |                        | (3      | ) |                     |   |        |                          |  |   |                        |  
|Net loss (Restated)                                 |  |                        |        |   |                     |   | (16,793 | )                        |  |   |                        |  
|Change in market value of derivative instrument     |  |                        |        |   |                     |   |        |                          |  |   | (1,433                  | )
|                                                    |  |                        |         |   |                     |   |         |                          |  |   |                         |  
|Balance at December 31, 2001 (Restated)             |  |                        | 171,479 |   |                     |   | (63,487 | )                        |  |   | (3,731                  | )
|Contributions                                       |  |                        | 3       |   |                     |   |        |                          |  |   |                        |  
|Distributions                                       |  |                        | (1,416  | ) |                     |   |        |                          |  |   |                        |  
|Net loss                                            |  |                        |        |   |                     |   | (10,773 | )                        |  |   |                        |  
|Change in market value of derivative instrument     |  |                        |        |   |                     |   |        |                          |  |   | 1,920                   |  
|                                                    |  |                        |         |   |                     |   |         |                          |  |   |                         |  
|Balance at June 30, 2002 (Unaudited)                |  | $                      | 170,066 |   |                     | $ | (74,260 | )                        |  | $ | (1,811                  | )
|                                                    |  |                        |         |   |                     |   |         |                          |  |   |                         |  







The accompanying notes are an integral part of these
consolidated financial statements



5



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NEXSTAR FINANCE, L.L.C.



CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                               |  | Six Months EndedJune 30, |         
|------------------------------------------------------------------------------ |  | ------------------------ | --------
|                                                                               |  | 2001                     |         
|                                                                               |  | (Restated)               |         
|                                                                               |  | (Unaudited)              |         
|                                                                               |  | (dollars in thousands)   |         
|Cash flows from operating activities:                                          |  |                          |         
|Net loss                                                                       |  | $                        | (17,852 
|Adjustments to reconcile net loss to net cashprovided by operating
activities: |  |                          |         
|Deferred income taxes                                                          |  |                          | (447    
|Depreciation of property and equipment                                         |  |                          | 6,182   
|Amortization of intangible assets                                              |  |                          | 10,556  
|Amortization of debt financing costs                                           |  |                          | 2,366   
|Amortization of broadcast rights, excluding barter                             |  |                          | 3,899   
|Payments for broadcast rights                                                  |  |                          | (4,008  
|Loss (gain) on asset disposal, net                                             |  |                          | 347     
|Amortization of debt discount                                                  |  |                          | 171     
|Effect of accounting for derivative instruments                                |  |                          |        
|Changes in assets and liabilities:                                             |  |                          |         
|Increase in accounts receivable and due from parent entities                   |  |                          | (965    
|Increase in prepaid expenses and other current assets                          |  |                          | (213    
|Decrease in other noncurrent assets                                            |  |                          | 10      
|Increase (decrease) in accounts payable and accrued expenses                   |  |                          | (826    
|Increase in taxes receivable                                                   |  |                          | (463    
|Increase (decrease) in interest payable                                        |  |                          | 6,061   
|Increase in deferred revenue                                                   |  |                          | 186     
|Decrease in due to Midwest Television, Inc.                                    |  |                          | (2,256  
|                                                                               |  |                          |         
|Net cash provided by operating activities                                      |  |                          | 2,748   
|                                                                               |  |                          |         
|Cash flows from investing activities:                                          |  |                          |         
|Additions to property and equipment                                            |  |                          | (3,951  
|Proceeds from sale of assets                                                   |  |                          | 7       
|Acquisition of broadcast properties and related transaction costs              |  |                          | (107,956
|                                                                               |  |                          |         
|Net cash used for investing activities                                         |  |                          | (111,900
|                                                                               |  |                          |         
|Cash flows from financing activities:                                          |  |                          |         
|Proceeds from debt issuance                                                    |  |                          | 580,094 
|Repayment of loans                                                             |  |                          | (532,341
|Proceeds from revolver draws                                                   |  |                          | 12,500  
|Payments for debt finance costs                                                |  |                          | (15,920 
|Cash escrowed for debt service                                                 |  |                          | (10,500 
|Capital contributions                                                          |  |                          | 105,003 
|Distributions                                                                  |  |                          | (30,054 
|                                                                               |  |                          |         
|Net cash provided by (used for) financing activities                           |  |                          | 108,782 
|                                                                               |  |                          |         
|Net decrease in cash and cash equivalents                                      |  |                          | (370    
|Cash and cash equivalents at beginning of period                               |  |                          | 2,750   
|                                                                               |  |                          |         
|Cash and cash equivalents at end of period                                     |  | $                        | 2,380   
|                                                                               |  |                          |         



The
accompany notes are an integral part of these consolidated financial statements



6



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NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.    Organization and Business Operations



Nexstar Finance, L.L.C. (Nexstar) owns, operates and programs, through its subsidiaries, six NBC-affiliated television stations, three ABC-affiliated television stations, four
CBS-affiliated television stations and one UPN-affiliated television station in the United States of America. Nexstar has an outsourcing agreement to provide services for a FOX affiliate owned by a subsidiary of Sinclair Broadcast Group, Inc.
Through various local service agreements, Nexstar (i) programs one FOX-affiliated television station under a Time Brokerage Agreement (TBA), (ii) has a Shared Services Agreement (SSA) with a CBS-affiliated television station
and (iii) has an SSA and a Joint Sales Agreement (JSA) with a FOX-affiliated television station and a low-power UPN-affiliated television station. Additionally, Mission Broadcasting of Joplin, Inc. (Mission of Joplin)
provides most of the programming to an ABC-affiliated television station under a TBA and intends to purchase the underlying licenses and assets in September 2002. Nexstar entered into an SSA with Mission of Joplin on April 1, 2002. The television
stations described above are located in New York, Pennsylvania, Illinois, Indiana, Missouri, Texas and Louisiana.



2.    Summary of Significant Accounting Policies



Basis of presentation



The consolidated financial statements include the accounts of Nexstar and its wholly-owned subsidiaries and
independently-owned Bastet Broadcasting, Inc. (Bastet) and Mission Broadcasting of Wichita Falls, Inc. (Mission) and its subsidiary (collectively, the Company). Bastet and Mission (collectively, the Mission
Group) are separate entities 100% owned by an independent third party. Collectively, the Mission Group owns and operates the following television stations: WYOU, WFXP, KJTL and KJBO-LP. Additionally, through a TBA, Mission of Joplin, a
subsidiary of Mission, provides most of the programming and administrative services for KODE pending the purchase of the assets in September 2002. Nexstar does not own the Mission Group television stations; however, under U.S. generally accepted
accounting principles (U.S. GAAP), Nexstar is deemed to have a controlling financial interest in them due to Nexstars guarantee of Mission Groups debt and the service and purchase option agreements described below. In order
for both Nexstar and the Mission Group to continue to comply with FCC regulations, the Mission Group must maintain complete responsibility for and control over programming, finances, personnel and operations of its stations. Nexstar has entered into
various service agreements with all of the Mission Group stations. Nexstar has a TBA with WFXP, which allows Nexstar to program most of the stations broadcasting time, sell the stations advertising time and retain the advertising revenue
generated by WFXP. Nexstar has an SSA with KJTL and KJBO-LP, which allows the sharing of services including news production, technical maintenance and security, in exchange for Nexstars right to receive certain payments from the Mission Group
as described in the SSAs. These payments have had the effect of Nexstar receiving substantially all of the available cash, after payment of debt service costs, generated by KJTL and KJBO-LP. Nexstar anticipates that the payments required by the SSAs
with KJTL and KJBO-LP will continue to have the effect of Nexstar receiving substantially all of the available cash, after payment of debt service costs, generated by KJTL and KJBO-LP. Through a JSA, Nexstar has also acquired the right to sell and
receive the revenue from the advertising time on KJTL and KJBO-LP in return for monthly payments to the Mission Group. Nexstar has an SSA with each of WYOU and KODE, which have terms substantially similar to the terms of the SSAs with KJTL and
KJBO-LP. Nexstars ability to receive cash from the Mission Group is governed by the agreements described above.



In addition to providing certain services to the television stations, Nexstar is also the guarantor of the Mission Groups debt (Note
6). The Mission Group is a guarantor of the senior credit facility entered into and the senior subordinated notes issued by Nexstar (Note 6).





7



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NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In connection with its proposed public offering, Nexstar Broadcasting Group, Inc.
requested the FCC to review and reconfirm compliance with the FCCs rules and published policies of Nexstars local service agreements with the Mission Group and the purchase options granted by the owner of the Mission Group. As a result
of its review, the FCC requested certain revisions to the purchase options. Under the revised purchase options, the owner of the Mission Group has granted to Nexstar a purchase option on each Mission Group television station to acquire the assets
and liabilities of each station for consideration equal to the greater of (i) seven times the stations broadcast cash flow less the amount of its indebtedness, as defined in the option agreement or (ii) its indebtedness. Broadcast cash
flow is defined as income (loss) from operations, plus depreciation and amortization (including amortization of broadcast rights), interest income, non-cash trade and barter expenses, non-recurring expenses (including time brokerage agreement fees),
network compensation payments received or receivable and corporate management fees, less payments for broadcast rights, non-cash trade and barter revenue and network compensation revenue. These option agreements are freely exercisable or assignable
by Nexstar without consent or approval by the owner of the Mission Group.



As a result of the service arrangements, the debt guarantees and the option agreements with the Mission Group, Nexstar is deemed to have a controlling financial interest in the Mission Group under U.S. GAAP while complying
with the FCCs rules regarding ownership limits in television markets. As a result of Nexstars controlling financial interest in the Mission Group under U.S. GAAP, Nexstar consolidates the financial position, results of operations and
cash flows of the Mission Group with Nexstar as if it were a wholly-owned entity of Nexstar in order to provide a more meaningful presentation of Nexstars performance. Because the Mission Group has a net asset deficit and because there is no
binding obligation on the owner of the Mission Group to make capital contributions to cover the deficit, Nexstar recognizes 100% of the Mission Group losses.



The financial statements as of June 30, 2002 and for the three months and six months ended June 30, 2001 and 2002 are unaudited. However,
in the opinion of management, such statements include all adjustments (consisting solely of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with U.S. GAAP and pursuant to the
rules and regulations of the Securities and Exchange Commission. The preparation of 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 disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues 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. The financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Companys Annual
Report on Form 10-K/A for the year ended December 31, 2001. The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements.



All intercompany account balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to current period presentation. Unless otherwise noted, all dollars are
in thousands.



Goodwill and other
intangible assets



Intangible assets
include FCC licenses, network affiliations and goodwill. On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS No. 142). SFAS No. 142 requires companies to
cease amortizing certain intangible assets including goodwill and



8



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NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



FCC licenses. The amortization of existing goodwill and FCC licenses resulting from acquisitions completed prior to June 30, 2001 ceased on
December 31, 2001. Any goodwill and FCC licenses resulting from acquisitions completed after June 30, 2001 were not and will not be amortized. SFAS No. 142 established a new method of testing goodwill and FCC licenses for impairment on an annual
basis or on an interim basis if an event occurs or circumstances change which would reduce the fair value of a reporting unit below its carrying value.



SFAS No. 142 requires that goodwill be tested for impairment using a two-step process. The first step is to identify a potential
impairment by comparing the fair value of a station with its carrying amount and, in transition, this step must be measured as of the beginning of the fiscal year. However, a company has six months from the date of adoption to complete the first
step. The second step of the goodwill impairment test measures the amount of the impairment loss (measured as of the beginning of the year of adoption), if any, and must be completed by the end of the Companys fiscal year. The Company
completed the first step of the impairment test during the quarter ended June 30, 2002 using the discounted cash flow method to estimate the fair value of each of the Nexstar and Mission Group stations. The valuation assumptions used in the
discounted cash flow model reflected anticipated future operating results and cash flows based on its business plans. As a result of this test, the Company identified three stations that require additional testing for impairment of goodwill. The net
carrying amount of goodwill for these three stations at January 1, 2002 was $40.1 million. The second step measures the amount of the impairment loss and will be completed by December 31, 2002. FCC licenses have been tested for impairment using a
one-step process, which compares the fair value to the carrying amount of the asset on a station by station basis as of January 1, 2002. The fair value of each station was determined using the discounted cash flow valuation method that excludes
network compensation payments, assuming a hypothetical startup whose only asset is the FCC license. The test resulted in no impairment being identified. During the year ended December 31, 2001, the Company incurred goodwill amortization expense of
$2.8 million.



The following table presents
certain financial information assuming that amortization expense associated with goodwill and FCC licenses was excluded for all periods presented:



|                                                      |  | Three Months Ended June 30, |        |   | Six Months EndedJune 30, |  
|----------------------------------------------------- |  | --------------------------- | ------ | - | ------------------------ | -
|                                                      |  | 2001                        |        |   | 2002                     |  
|                                                      |  |                             |        |   |                          |  
|                                                      |  | (Unaudited)                 |        |   | (Unaudited)              |  
|                                                     
|Net loss                                              |  | $                           | (8,047 | ) |                          | $
|Add:                                                  |  |                             |        |   |                          |  
|Goodwill amortization, net of tax                     |  |                             | 675    |   |                          |  
|Indefinite-lived intangibles amortization, net of tax |  |                             | 1,255  |   |                          |  
|                                                      |  |                             |        |   |                          |  
|Net lossas adjusted                                  |  | $                           | (6,117 | ) |                          | $
|                                                      |  |                             |        |   |                          |  



The
Company tests the impairment of its goodwill annually or whenever events or changes in circumstances indicate that goodwill might be impaired. The first step of the goodwill impairment test compares the fair value of a station with its carrying
amount, including goodwill. The fair value of a station is determined through the use of a discounted cash flow analysis. If the fair value of the station exceeds its carrying amount, goodwill is not considered impaired. If the carrying amount of
the station exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of goodwill with the
carrying amount of that goodwill. The implied fair value of goodwill is determined by performing an assumed purchase price allocation using the stations fair value (as determined in Step 1) as the purchase price. If the carrying amount of
goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess.



9



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NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





An
impairment assessment of goodwill and FCC licenses could be triggered by a significant reduction in operating results or cash flows at one or more of the Companys televisions stations, or a forecast of such reductions, a significant adverse
change in the advertising marketplaces in which the Companys television stations operate, or by adverse changes to Federal Communications Commission ownership rules, amongst others.



Long-lived assets



On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets (SFAS No. 144). SFAS No. 144 supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of and the accounting and reporting provisions relating
to the disposal of a segment of a business described in Accounting Principles Board Opinion No. 30. The adoption did not have a material impact on the Companys financial statements.



Recently issued accounting standards



In April 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards
No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections (SFAS No. 145), which is effective for fiscal years beginning after May 15, 2002. SFAS No. 145 rescinds SFAS No. 4
and SFAS No. 64, which addressed the accounting for gains and losses from extinguishment of debt. SFAS No. 145 amends SFAS No. 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be
accounted for in the same manner as sale-leaseback transactions. SFAS No. 145 also makes technical corrections to certain existing pronouncements that are not substantive in nature. Nexstar adopted SFAS No. 145 effective for the year ended December
31, 2002 and as a result has reclassified $1.4 million of extraordinary loss from refinancing of credit facilities to interest expense for the six months ended June 30, 2001.



3.    Acquisitions



WCIA/WCFN and WMBD



On January 12, 2001, Nexstar acquired substantially all of the assets of WCIA/WCFN and WMBD from Midwest
Television, Inc. (Midwest) for approximately $108.0 million, exclusive of transaction costs. Included in the purchase price was $0.5 million, which was paid directly to the owner of Midwest for the building that houses WCIA. The
acquisition has been accounted for under the purchase method and, accordingly, the purchase price was allocated to assets acquired and liabilities assumed based on their estimated fair value on the acquisition date. TBA fees in the amount of $2.25
million were paid to Midwest at the time of closing.



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NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





The
selected unaudited pro forma consolidated information for the six months ended June 30, 2001 and 2002, determined as if the Midwest acquisition, described above, had occurred on January 1 of each period is as follows:



|                                                   |  | Six Months Ended |        
|-------------------------------------------------- |  | ---------------- | -------
|                                                   |  | June 30, 2001(1) |        
|                                                   |  | As reported      |        
|                                                   |  | (Restated)       |        
|                                                   |  | (Unaudited)      |        
|Net broadcast revenue (excluding trade and barter) |  | $                | 48,659 
|Total net revenue                                  |  |                  | 53,651 
|Income (loss) from operations                      |  |                  | (300   
|Net loss                                           |  | $                | (17,852
|                                                   |  |                  |        

---

|(1) |  | The June 30, 2001 pro forma amounts do not include the results of Midwest for the 12 days prior to acquisition on January 12, 2001 because the amounts are de
minimis.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

The 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 and the acquired stations been combined during the specified periods.



4.    Related Party Transactions



GuarantyChief Executive Officer



Pursuant to a continuing guaranty
agreement dated June 16, 2001 with Nexstars primary lender, Nexstar has entered into an agreement to guarantee up to a $3.0 million non-revolving line of credit to its President and Chief Executive Officer to enable him, among other uses, to
purchase equity units of Nexstar. The line of credit is full-recourse to the officer. However, if the officer does not repay some or all of the loan then Nexstar may be required to pay up to the maximum amount of $3.0 million. As of June 30, 2002,
approximately $3.0 million in principal amount of loans were outstanding and is due on December 31, 2004.



5.    Intangible Assets



|                                                   |  | Estimated useful life (years) |  | December 31, 2001 |         |   | June 30, 2002 |  
|-------------------------------------------------- |  | ----------------------------- |  | ----------------- | ------- | - | ------------- | -
|                                                   |  |                               |  | (Restated)        |         |   |               |  
|                                                   |  |                               |  |                   |         |   | (Unaudited)   |  
|Network affiliation agreements                     |  | 15                            |  | $                 | 171,957 |   |               | $
|FCC licenses                                       |  | indefinite                    |  |                   | 77,113  |   |               |  
|Debt financing costs                               |  | term of debt                  |  |                   | 16,359  |   |               |  
|Other intangibles                                  |  | 1-15                          |  |                   | 11,154  |   |               |  
|                                                   |  |                               |  |                   |         |   |               |  
|                                                   |  |                               |  |                   | 276,583 |   |               |  
|Less: accumulated amortization                     |  |                               |  |                   | (51,811 | ) |               |  
|                                                   |  |                               |  |                   |         |   |               |  
|Intangible assets, net of accumulated amortization |  |                               |  |                   | 224,772 |   |               |  
|Goodwill                                           |  |                               |  |                   | 87,464  |   |               |  
|                                                   |  |                               |  |                   |         |   |               |  
|Intangible assets and goodwill                     |  |                               |  | $                 | 312,236 |   |               | $
|                                                   |  |                               |  |                   |         |   |               |  



11



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NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Total
amortization expense from definite-lived intangibles (excluding debt financing costs) for the year ended December 31, 2001 and six months ended June 30, 2002 was $15.4 million and $7.8 million, respectively. The estimated useful life of network
affiliations contemplates renewals of the underlying agreements based on Nexstars historical ability to renew such agreements without significant cost or modifications to the conditions from which the value of the affiliations was derived.
These renewals can result in estimated useful lives of individual affiliations ranging from 12 to 20 years. Management has determined that 15 years is a reasonable estimate within the range of such estimated useful lives. The carrying value of
indefinite-lived intangibles, excluding goodwill, at December 31, 2001 and June 30, 2002 was $64.3 million. The use of an indefinite life for FCC licenses contemplates the Companys historical ability to renew their licenses, that such renewals
generally may be obtained indefinitely and at little cost, and that the technology used in broadcasting is not expected to be replaced in the foreseeable future. Therefore, cash flows derived from the FCC licenses are expected to continue
indefinitely. The following table presents the Companys estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangibles recorded on our books as of December 31, 2001:



|Year ending December 31, |  |       
|------------------------ |  | ------
|2002                     |  | 15,610
|2003                     |  | 15,610
|2004                     |  | 15,610
|2005                     |  | 15,600
|2006                     |  | 15,584



6.    Debt



Long term debt consists of the following:



|                                                        |  | December 31, 2001 |         |   | June 30, 2002 |  
|------------------------------------------------------- |  | ----------------- | ------- | - | ------------- | -
|                                                        |  |                   |         |   | (Unaudited)   |  
|Term loan                                               |  | $                 | 82,000  |   |               | $
|Revolving credit facility                               |  |                   | 46,143  |   |               |  
|12% Senior subordinated notes due 2008, net of discount |  |                   | 154,097 |   |               |  
|SFAS No. 133 hedge accounting adjustment                |  |                   | 1,590   |   |               |  
|                                                        |  |                   |         |   |               |  
|                                                        |  |                   | 283,830 |   |               |  
|Less: current portion                                   |  |                   | (488    | ) |               |  
|                                                        |  |                   |         |   |               |  
|                                                        |  | $                 | 283,342 |   |               | $
|                                                        |  |                   |         |   |               |  



Bank Debt



Bank Debt Facility Agreements



The Nexstar Senior Secured Credit
Facilities



On January 12, 2001, Nexstar
entered into senior secured credit facilities with a group of commercial banks. The terms of the credit agreement provided for a revolving credit facility (the Nexstar revolver) in the amount of $122.0 million and a term loan facility
(the Nexstar term loan) in the amount of $110.0 million. The revolving credit facility was subsequently reduced to $72.0 million after the issuance of the Senior Subordinated Notes discussed below. The credit facilities were subsequently
amended on June 14, 2001 to allow for a $50.0 million Term A facility, a $75.0 million Term B facility and a $57.0 million revolving facility. On November 14, 2001, the credit facilities were further amended to adjust financial covenants effective
for the period ended September 30, 2001 and future periods because Nexstar was not in compliance with the consolidated total leverage ratio as of September 30, 2001, due in large part to the negative impact on advertising revenues resulting from the
events of September 11, 2001 and Nexstar anticipated non-compliance in future periods. The



12



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NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



amendment also reduced the revolving facility to $42.0 million. Prepayments have been made under Term A, which has effectively reduced the
commitment to $32.0 million. Interest rates associated with the Nexstar revolver and term loans are based, at the option of Nexstar, on the prevailing prime rate plus an applicable margin or the LIBOR rate plus an applicable margin, as defined
(ranging from 5.41% to 6.14% at June 30, 2002). Interest is fixed for a period ranging from one month to 12 months, depending on availability of the interest basis selected, except if Nexstar selects a prime-based loan, in which case the
interest rate will fluctuate during the period as the prime rate fluctuates. Interest is payable periodically based on the type of interest rate selected. In addition, Nexstar is required to pay quarterly commitment fees based on the Companys
leverage ratio for that particular quarter on the unused portion of the Nexstar revolver loan commitment. The Nexstar term loans are subject to scheduled mandatory repayments and the Nexstar revolver is subject to scheduled mandatory reductions
commencing in 2003. The Nexstar revolving and Term A facilities mature on January 12, 2007. The Term B facility matures on July 12, 2007. Any excess amount outstanding at the time of a mandatory reduction is payable at that time. The borrowings
under the Nexstar senior secured credit facilities are guaranteed, jointly and severally, by Nexstar, Bastet and Mission, and by each existing and subsequently acquired or organized subsidiary of Nexstar.



The Bastet/Mission Senior Secured Credit Facility



On January 12, 2001, Bastet and Mission
entered into a credit agreement (the Bastet/Mission credit facility) with a group of commercial banks. The terms provided for the banks to make revolving loans to Bastet and Mission, not to exceed the aggregate commitment of $43.0
million. On November 14, 2001, the credit facility was amended to increase the revolving facility to $58.0 million. Bastet and Mission are jointly and severally liable for the outstanding amount of the loan. Nexstar has entered into a guarantor
agreement, whereby Nexstar guarantees full payment of any obligations outstanding in the event of Bastet and/or Missions default. Interest rates associated with the Bastet/Mission credit facility are based, at the option of Bastet and Mission,
on the prevailing prime rate plus an applicable margin or the LIBOR rate plus an applicable margin, as defined (ranging from 5.34% to 5.38% at June 30, 2002). Interest is fixed for a period ranging from one month to 12 months, depending on
availability of the interest basis selected, except if Bastet or Mission selects a prime-based loan, in which case the interest rate will fluctuate during the period as the prime rate fluctuates. Interest is payable periodically based on the type of
interest rate selected. In addition, Bastet and Mission are required to pay quarterly commitment fees based on the Companys leverage ratio for that particular quarter on the unused portion of the Bastet/Mission credit facility loan commitment.
The Bastet/Mission credit facility is due and payable on the maturity date, January 12, 2007. Any excess amount outstanding at the time of a mandatory reduction is payable at that time.



Based on borrowing rates currently available to the Company for bank loans with similar terms and average
maturities, the fair value of the Companys credit facilities approximates carrying value.



Senior Subordinated Notes



On March 16, 2001, Nexstar issued $160.0 million of 12% Senior Subordinated Notes (the notes) at a price of 96.012%. The notes mature on April 1, 2008. Interest is payable every six months
in arrears on April 1 and October 1. The notes are guaranteed by all of the domestic existing and future restricted subsidiaries of Nexstar and by Bastet and Mission. They are general unsecured senior subordinated obligations subordinated to all of
the the Companys senior debt. The notes are redeemable on or after April 1, 2005, at declining premiums, and Nexstar may redeem, at a premium, up to 35.0% of the aggregate principal amount of the notes before April 1, 2004 with the net cash
proceeds from qualified equity offerings. The notes are not redeemable by either the issuer or the note holder between April 1, 2004 and March 31, 2005. The proceeds of the offering were used to partially refinance existing indebtedness of Nexstar
and fund working capital needs.



13



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NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Debt
Covenants



The bank debt agreements and
the notes described above contain covenants, which require the Company to comply with certain financial ratios, capital expenditures, cash film payments, and other limits. The Company was in compliance with all covenants at June 30, 2002.



Debt Financing Costs



In conjunction with the refinancing of the credit facilities
in January 2001, the Company expensed $1,417 in the first quarter of 2001 related to certain debt financing costs. The amount, net of tax benefit, has been included in interest expense pursuant to the adoption of SFAS No. 145.



7.    Income Taxes



The Companys income tax benefit for the six months
ended June 30, 2001 was $383, compared to the income tax benefit for the six months ended June 30, 2002 of $1,079. The Companys effective tax rate benefit was 2% for the six months ended June 30, 2001 as compared to 9% for the six months ended
June 30, 2002. The significant differences from the statutory tax rate and the effective tax rate for the six months ended June 30, 2002 include an increase in the valuation allowance, income earned by entities not subject to corporate income tax,
and state taxes, net of the federal benefit.



8.    Commitments and Contingencies



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 condition or results of operations.



9.    Condensed Consolidating Financial Information



As a result of the service agreements, options and debt guarantees between Nexstar and the Mission Group, as described in Note 2 and Note
6, the financial position, results of operations and cash flows of Nexstar and the Mission Group are consolidated.



The notes and borrowings under amounts drawn against the senior secured credit facilities are guaranteed on a joint and several, full and
unconditional basis, by Nexstar, its wholly-owned subsidiaries and the Mission Group (Note 6).



Nexstar has no independent assets or operations. All of its subsidiaries are wholly-owned by Nexstar and are guarantors of Nexstars debt. Therefore, Nexstar has included consolidated information
with respect to its subsidiaries in the column entitled Nexstar.



14



---

NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





The
following condensed consolidating financial information presents the financial position, results of operations and cash flows of Nexstar, Bastet, Mission as well as the consolidating entries needed to arrive at the information for the Company on a
consolidated basis.



BALANCE SHEET



JUNE 30, 2002

|                                        |  | Nexstar |         | Bastet |   |         | Mission |  |   | Consolidating Entries |   |  | Consolidated Company
|--------------------------------------- |  | ------- | ------- | ------ | - | ------- | ------- |  | - | --------------------- | - |  | --------------------
|ASSETS                                  |  |         |         |        |   |         |         |  |   |                       |   |  |                     
|Current assets                          |  | $       | 40,716  |        | $ | 3,178   |         |  | $ | 1,365                 |   |  | $                   
|Property and equipment, net             |  |         | 51,481  |        |   | 1,959   |         |  |   | 1,526                 |   |  |                     
|Other noncurrent assets                 |  |         | 8,838   |        |   | 493     |         |  |   | 6,000                 |   |  |                     
|Intangible assets, net                  |  |         | 280,359 |        |   | 13,393  |         |  |   | 12,033                |   |  |                     
|                                        |  |         |         |        |   |         |         |  |   |                       |   |  |                     
|Total assets                            |  | $       | 381,394 |        | $ | 19,023  |         |  | $ | 20,924                |   |  | $                   
|                                        |  |         |         |        |   |         |         |  |   |                       |   |  |                     
|LIABILITIES AND MEMBERS INTEREST       |  |         |         |        |   |         |         |  |   |                       |   |  |                     
|Current liabilities                     |  | $       | 19,680  |        | $ | 6,836   |         |  | $ | 2,130                 |   |  | $                   
|Debt                                    |  |         | 238,305 |        |   | 46,143  |         |  |   | 46,143                |   |  |                     
|Other liabilities                       |  |         | 12,834  |        |   | 514     |         |  |   | 110                   |   |  |                     
|Members interest                       |  |         | 110,575 |        |   | (34,470 | )       |  |   | (27,459               | ) |  |                     
|                                        |  |         |         |        |   |         |         |  |   |                       |   |  |                     
|Total liabilities and members interest |  | $       | 381,394 |        | $ | 19,023  |         |  | $ | 20,924                |   |  | $                   
|                                        |  |         |         |        |   |         |         |  |   |                       |   |  |                     



BALANCE SHEET



DECEMBER
31, 2001



|                                        |  | Nexstar |         | Bastet |   |         | Mission |  |   | Consolidating Entries |   |  | Consolidated Company
|--------------------------------------- |  | ------- | ------- | ------ | - | ------- | ------- |  | - | --------------------- | - |  | --------------------
|                                        |  |         |         |        |   |         |         |  |   |                       |   |  | (Restated)          
|ASSETS                                  |  |         |         |        |   |         |         |  |   |                       |   |  |                     
|Current assets                          |  | $       | 45,209  |        | $ | 3,333   |         |  | $ | 483                   |   |  | $                   
|Property and equipment, net             |  |         | 53,349  |        |   | 2,328   |         |  |   | 1,706                 |   |  |                     
|Other noncurrent assets                 |  |         | 7,696   |        |   | 937     |         |  |   | 6,074                 |   |  |                     
|Intangible assets, net                  |  |         | 287,527 |        |   | 13,682  |         |  |   | 12,311                |   |  |                     
|                                        |  |         |         |        |   |         |         |  |   |                       |   |  |                     
|Total assets                            |  | $       | 393,781 |        | $ | 20,280  |         |  | $ | 20,574                |   |  | $                   
|                                        |  |         |         |        |   |         |         |  |   |                       |   |  |                     
|LIABILITIES AND MEMBERS INTEREST       |  |         |         |        |   |         |         |  |   |                       |   |  |                     
|Current liabilities                     |  | $       | 22,826  |        | $ | 6,844   |         |  | $ | 1,656                 |   |  | $                   
|Debt                                    |  |         | 237,199 |        |   | 46,143  |         |  |   | 46,143                |   |  |                     
|Other liabilities                       |  |         | 13,569  |        |   | 965     |         |  |   | 150                   |   |  |                     
|Members interest                       |  |         | 120,187 |        |   | (33,672 | )       |  |   | (27,375               | ) |  |                     
|                                        |  |         |         |        |   |         |         |  |   |                       |   |  |                     
|Total liabilities and members interest |  | $       | 393,781 |        | $ | 20,280  |         |  | $ | 20,574                |   |  | $                   
|                                        |  |         |         |        |   |         |         |  |   |                       |   |  |                     



15



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NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|STATEMENT OF OPERATIONS  FOR THE THREE MONTHS ENDED JUNE 30, 2002 | 
|----------------------------------------------------------------- | 
|                                                                  | 
|Net revenue                                                       | 
|Operating expenses                                                | 
|                                                                  | 
|Income from operations                                            | 
|Interest expense                                                  | 
|Interest income and other income (expense), net                   | 
|                                                                  | 
|Loss before income taxes                                          | 
|Income tax benefit (expense)                                      | 
|                                                                  | 
|Net loss                                                          | 
|                                                                  | 



STATEMENT OF OPERATIONS



FOR THE THREE MONTHS ENDED JUNE 30, 2001



|                                                                |  | Nexstar |         |   | Bastet |   |        | Mission |  |   | Consolidating Entries |   |  | Consolidated Company |       
|--------------------------------------------------------------- |  | ------- | ------- | - | ------ | - | ------ | ------- |  | - | --------------------- | - |  | -------------------- | ------
|Net revenue                                                     |  | $       | 26,875  |   |        | $ | 2,079  |         |  | $ | 608                   |   |  | $                    | (1,516
|Operating expenses                                              |  |         | 25,158  |   |        |   | 2,308  |         |  |   | 619                   |   |  |                      | (1,516
|                                                                |  |         |         |   |        |   |        |         |  |   |                       |   |  |                      |       
|Income (loss) from operations                                   |  |         | 1,717   |   |        |   | (229   | )       |  |   | (11                   | ) |  |                      |      
|Interest expense                                                |  |         | (8,488  | ) |        |   | (867   | )       |  |   | (867                  | ) |  |                      | 867   
|Interest income and other income (expense), net                 |  |         | (3      | ) |        |   | (326   | )       |  |   | 15                    |   |  |                      |      
|                                                                |  |         |         |   |        |   |        |         |  |   |                       |   |  |                      |       
|Loss before income taxes                                        |  |         | (6,774  | ) |        |   | (1,422 | )       |  |   | (863                  | ) |  |                      | 867   
|Income tax benefit (expense)                                    |  |         | 148     |   |        |   | (3     | )       |  |   |                      |   |  |                      |      
|                                                                |  |         |         |   |        |   |        |         |  |   |                       |   |  |                      |       
|Net loss                                                        |  | $       | (6,626  | ) |        | $ | (1,425 | )       |  | $ | (863                  | ) |  | $                    | 867   
|                                                                |  |         |         |   |        |   |        |         |  |   |                       |   |  |                      |       
|                                                               
|STATEMENT OF OPERATIONS  FOR THE SIX MONTHS ENDED JUNE 30, 2002
|                                                                |  | Nexstar |         |   | Bastet |   |        | Mission |  |   | Consolidating Entries |   |  | Consolidated Company |       
|Net revenue                                                     |  | $       | 55,377  |   |        | $ | 3,987  |         |  | $ | 3,448                 |   |  | $                    | (2,968
|Operating expenses                                              |  |         | 50,245  |   |        |   | 4,024  |         |  |   | 2,801                 |   |  |                      | (2,968
|                                                                |  |         |         |   |        |   |        |         |  |   |                       |   |  |                      |       
|Income (loss) from operations                                   |  |         | 5,132   |   |        |   | (37    | )       |  |   | 647                   |   |  |                      |      
|Interest expense                                                |  |         | (15,933 | ) |        |   | (1,457 | )       |  |   | (1,457                | ) |  |                      | 1,457 
|Interest income and other income (expense), net                 |  |         | (208    | ) |        |   | 4      |         |  |   |                      |   |  |                      |      
|                                                                |  |         |         |   |        |   |        |         |  |   |                       |   |  |                      |       
|Loss before income taxes                                        |  |         | (11,009 | ) |        |   | (1,490 | )       |  |   | (810                  | ) |  |                      | 1,457 
|Income tax benefit (expense)                                    |  |         | 1,225   |   |        |   | (11    | )       |  |   | (135                  | ) |  |                      |      
|                                                                |  |         |         |   |        |   |        |         |  |   |                       |   |  |                      |       
|Net loss                                                        |  | $       | (9,784  | ) |        | $ | (1,501 | )       |  | $ | (945                  | ) |  | $                    | 1,457 
|                                                                |  |         |         |   |        |   |        |         |  |   |                       |   |  |                      |       



16



---

NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





STATEMENT OF OPERATIONS



FOR THE SIX MONTHS ENDED JUNE 30, 2001



|                                                |  | Nexstar |         |   | Bastet |   |        | Mission |  |   | Consolidating Entries |   |  | Consolidated Company |       
|----------------------------------------------- |  | ------- | ------- | - | ------ | - | ------ | ------- |  | - | --------------------- | - |  | -------------------- | ------
|                                                |  |         |         |   |        |   |        |         |  |   |                       |   |  | (Restated)           |       
|Net revenue                                     |  | $       | 51,727  |   |        | $ | 3,742  |         |  | $ | 1,297                 |   |  | $                    | (3,115
|Operating expenses                              |  |         | 51,094  |   |        |   | 4,714  |         |  |   | 1,258                 |   |  |                      | (3,115
|                                                |  |         |         |   |        |   |        |         |  |   |                       |   |  |                      |       
|Income (loss) from operations                   |  |         | 633     |   |        |   | (972   | )       |  |   | 39                    |   |  |                      |      
|Interest expense                                |  |         | (15,350 | ) |        |   | (2,140 | )       |  |   | (1,982                | ) |  |                      | 1,816 
|Interest income and other income (expense), net |  |         | 26      |   |        |   | (323   | )       |  |   | 18                    |   |  |                      |      
|                                                |  |         |         |   |        |   |        |         |  |   |                       |   |  |                      |       
|Loss before income taxes                        |  |         | (14,691 | ) |        |   | (3,435 | )       |  |   | (1,925                | ) |  |                      | 1,816 
|Income tax benefit (expense)                    |  |         | 388     |   |        |   | (5     | )       |  |   |                      |   |  |                      |      
|                                                |  |         |         |   |        |   |        |         |  |   |                       |   |  |                      |       
|Net loss                                        |  | $       | (14,303 | ) |        | $ | (3,440 | )       |  | $ | (1,925                | ) |  | $                    | 1,816 
|                                                |  |         |         |   |        |   |        |         |  |   |                       |   |  |                      |       



STATEMENT OF CASH FLOWS



FOR THE SIX MONTHS ENDED JUNE 30, 2002



|                                                                  |  | Nexstar |        |   | Bastet |   |      | Mission |  |   | Consolidating Entries |   | Consolidated Company |  
|----------------------------------------------------------------- |  | ------- | ------ | - | ------ | - | ---- | ------- |  | - | --------------------- | - | -------------------- | -
|Net cash provided by (used for) operating activities              |  | $       | 4,124  |   |        | $ | (252 | )       |  | $ | 154                   |   |                      | $
|                                                                  |  |         |        |   |        |   |      |         |  |   |                       |   |                      |  
|Cash flows from investing activities:                             |  |         |        |   |        |   |      |         |  |   |                       |   |                      |  
|Additions to property and equipment, net                          |  |         | (3,890 | ) |        |   | (21  | )       |  |   | (60                   | ) |                      |  
|Acquisition of broadcast properties and related transaction costs |  |         |       |   |        |   |     |         |  |   |                      |   |                      |  
|                                                                  |  |         |        |   |        |   |      |         |  |   |                       |   |                      |  
|Net cash used for investing activities                            |  |         | (3,890 | ) |        |   | (21  | )       |  |   | (60                   | ) |                      |  
|                                                                  |  |         |        |   |        |   |      |         |  |   |                       |   |                      |  
|Cash flows from financing activities:                             |  |         |        |   |        |   |      |         |  |   |                       |   |                      |  
|Repayment of loans                                                |  |         | (2,671 | ) |        |   |     |         |  |   |                      |   |                      |  
|Proceeds from revolver draws                                      |  |         | 2,500  |   |        |   |     |         |  |   |                      |   |                      |  
|Payments for debt finance costs                                   |  |         | (123   | ) |        |   | (4   | )       |  |   | (35                   | ) |                      |  
|Capital contributions, net                                        |  |         | (1,413 | ) |        |   |     |         |  |   |                      |   |                      |  
|                                                                  |  |         |        |   |        |   |      |         |  |   |                       |   |                      |  
|Net cash used for financing activities                            |  |         | (1,707 | ) |        |   | (4   | )       |  |   | (35                   | ) |                      |  
|                                                                  |  |         |        |   |        |   |      |         |  |   |                       |   |                      |  
|Net increase (decrease) in cash and cash equivalents              |  |         | (1,473 | ) |        |   | (277 | )       |  |   | 59                    |   |                      |  
|Cash and cash equivalents at beginning of period                  |  |         | 5,218  |   |        |   | 544  |         |  |   | 40                    |   |                      |  
|                                                                  |  |         |        |   |        |   |      |         |  |   |                       |   |                      |  
|Cash and cash equivalents at end of period                        |  | $       | 3,745  |   |        | $ | 267  |         |  | $ | 99                    |   |                      | $
|                                                                  |  |         |        |   |        |   |      |         |  |   |                       |   |                      |  



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NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





STATEMENT OF CASH FLOWS



FOR THE SIX MONTHS ENDED JUNE 30, 2001



|                                                                  |  | Nexstar |          |   | Bastet |   |         | Mission |  |   | Consolidating Entries |   | Consolidated Company |  
|----------------------------------------------------------------- |  | ------- | -------- | - | ------ | - | ------- | ------- |  | - | --------------------- | - | -------------------- | -
|Net cash provided by operating activities                         |  | $       | 1,883    |   |        | $ | 349     |         |  | $ | 516                   |   |                      | $
|                                                                  |  |         |          |   |        |   |         |         |  |   |                       |   |                      |  
|Cash flows from investing activities:                             |  |         |          |   |        |   |         |         |  |   |                       |   |                      |  
|Additions to property and equipment, net                          |  |         | (3,611   | ) |        |   | (333    | )       |  |   |                      |   |                      |  
|Acquisition of broadcast properties and related transaction costs |  |         | (107,956 | ) |        |   |        |         |  |   |                      |   |                      |  
|                                                                  |  |         |          |   |        |   |         |         |  |   |                       |   |                      |  
|Net cash used for investing activities                            |  |         | (111,567 | ) |        |   | (333    | )       |  |   |                      |   |                      |  
|                                                                  |  |         |          |   |        |   |         |         |  |   |                       |   |                      |  
|Cash flows from financing activities:                             |  |         |          |   |        |   |         |         |  |   |                       |   |                      |  
|Proceeds from debt issuance                                       |  |         | 499,808  |   |        |   | 47,774  |         |  |   | 32,512                |   |                      |  
|Repayment of loans                                                |  |         | (453,131 | ) |        |   | (47,134 | )       |  |   | (32,076               | ) |                      |  
|Proceeds from revolver draws                                      |  |         | 12,500   |   |        |   |        |         |  |   |                      |   |                      |  
|Payments for debt finance costs                                   |  |         | (14,160  | ) |        |   | (736    | )       |  |   | (1,024                | ) |                      |  
|Cash escrowed for debt service                                    |  |         | (10,500  | ) |        |   |        |         |  |   |                      |   |                      |  
|Capital contributions, net                                        |  |         | 74,949   |   |        |   |        |         |  |   |                      |   |                      |  
|                                                                  |  |         |          |   |        |   |         |         |  |   |                       |   |                      |  
|Net cash provided by (used for) financing activities              |  |         | 109,466  |   |        |   | (96     | )       |  |   | (588                  | ) |                      |  
|                                                                  |  |         |          |   |        |   |         |         |  |   |                       |   |                      |  
|Net decrease in cash and cash equivalents                         |  |         | (218     | ) |        |   | (80     | )       |  |   | (72                   | ) |                      |  
|Cash and cash equivalents at beginning of period                  |  |         | 2,530    |   |        |   | 144     |         |  |   | 76                    |   |                      |  
|                                                                  |  |         |          |   |        |   |         |         |  |   |                       |   |                      |  
|Cash and cash equivalents at end of period                        |  | $       | 2,312    |   |        | $ | 64      |         |  | $ | 4                     |   |                      | $
|                                                                  |  |         |          |   |        |   |         |         |  |   |                       |   |                      |  



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NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





10.    Effects of Restatement



On June 1, 1999, the existing Nexstar credit agreements were amended and restated to include a term loan for an aggregate maximum amount of $125.0 million, a revolving credit facility of $80.0 million and an available
incremental revolving credit facility not to exceed $75.0 million. On January 12, 2001, the debt outstanding was repaid with the proceeds from new senior secured credit facilities.



On June 1, 1999, the Mission Group existing credit facility was amended to increase the aggregate maximum
amount to $45.0 million. On January 12, 2001, the debt outstanding was repaid with the proceeds from a new senior secured credit facility.



In conjunction with the above refinancing of its senior credit facilities, the Company expensed certain debt financing costs. Management
subsequently determined that a portion of those costs, specifically, those related to the revolving credit facility, should not have been expensed, but should have remained capitalized and subsequently amortized.



As a result, the Company has restated its 1999 financial
statements and reversed the related tax effect. The financial statement as of and for the year ended December 31, 2001, the financial statement for the six months ended June 30, 2001 and the financial statement as of June 30, 2002 have also been
restated to reflect the carryover effect of the change.



|                                                                               |  | Intangible Assets, Net |         |   | Interest Expense, Including Amortization of Debt Financing
Costs |   |         | Other Income (Expense), Net |  |   | Income Tax Benefit (Expense) |   | Net Loss |  
|------------------------------------------------------------------------------ |  | ---------------------- | ------- | - | ---------------------------------------------------------------- | - | ------- | --------------------------- |  | - | ---------------------------- | - | -------- | -
|Balance at June 30, 2001                                                       |  |                        |         |   |                                                                  |   |         |                             |  |   |                              |   |          |  
|As previously reported                                                         |  |                        |         |   |                                                                  | $ | (16,218 | )                           |  | $ | (420                         | ) |          | $
|Reclassification upon adoption of SFAS No. 145                                 |  |                        |         |   |                                                                  |   | (263    | )                           |  |   |                              |   |          |  
|Adjustment to interest expense, including amortization of debt financing
costs |  |                        |         |   |                                                                  |   | (1,175  | )                           |  |   | (15                          | ) |          |  
|                                                                               |  |                        |         |   |                                                                  |   |         |                             |  |   |                              |   |          |  
|As revised                                                                     |  |                        |         |   |                                                                  | $ | (17,656 | )                           |  | $ | (435                         | ) |          | $
|                                                                               |  |                        |         |   |                                                                  |   |         |                             |  |   |                              |   |          |  
|                                                                               |  |                        |         |   |                                                                  |   |         |                             |  |   |                              |   |          |  
|Balance at December 31, 2001                                                   |  |                        |         |   |                                                                  |   |         |                             |  |   |                              |   |          |  
|As previously reported                                                         |  | $                      | 224,782 |   |                                                                  | $ | (33,945 | )                           |  |   |                              |   |          |  
|Reclassification upon adoption of SFAS No. 145                                 |  |                        |         |   |                                                                  |   | (335    | )                           |  |   |                              |   |          |  
|Adjustment to interest expense, including amortization of debt financing
costs |  |                        | (10     | ) |                                                                  |   | (1,175  | )                           |  |   |                              |   |          |  
|                                                                               |  |                        |         |   |                                                                  |   |         |                             |  |   |                              |   |          |  
|As revised                                                                     |  | $                      | 224,772 |   |                                                                  | $ | (35,455 | )                           |  |   |                              |   |          |  
|                                                                               |  |                        |         |   |                                                                  |   |         |                             |  |   |                              |   |          |  



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NEXSTAR FINANCE, L.L.C.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)





11.    Initial Public Offering



On April 24, 2002, Nexstar Broadcasting Group, Inc., filed for an initial public offering with the SEC. Nexstar Broadcasting Group, L.L.C., Nexstars indirect parent, will undertake a
reorganization in connection with the consummation of the initial public offering whereby Nexstar Broadcasting Group, L.L.C. and certain of its direct and indirect subsidiaries will be merged with and into, Nexstar Broadcasting Group, Inc., which
will become the surviving corporation.



12.    Subsequent Event



On August 13, 2002, Nexstar terminated the $60.0 million swap agreement for a payment of $5.25 million.



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NEXSTAR FINANCE, L.L.C.



|ITEM 2.    MANAGEMENTS |  | DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|----------------------- |  | ------------------------------------------------------------------------



Forward-Looking and Cautionary Statements



The following discussion and analysis should be read in conjunction with the Unaudited Consolidated Balance
Sheet as of June 30, 2002, Unaudited Consolidated Statement of Operations and Other Comprehensive Loss and other unaudited financial statements for the six months ended June 30, 2001 and 2002 and notes to related financial statements elsewhere in
this report. The forward-looking statements in this discussion regarding the television broadcasting industry, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in the
discussion are subject to numerous risks and uncertainties, including those described in Nexstars Annual Report on Form 10-K/A for the year ended December 31, 2001. Forward-looking statements may include the words may,
will, estimate, intend, continue, believe, expect or anticipate and other similar words. Our actual results may differ materially from those contained in any
forward-looking statements.



We make references
throughout our Managements Discussion and Analysis of Financial Condition and Results of Operations to comparisons on a same station basis. These comparisons refer to stations that we have owned or provided services to
at the beginning and end of a particular period. In particular, references to a comparison on a same station basis for the six months ended June 30, 2001 versus the six months ended June 30, 2002 include the following stations: WYOU, KQTV, WTWO,
WBRE, KFDX, KSNF, KBTV, WJET, WFXP, WROC, KJTL, KJBO, KTAB, KMID, KTAL, WCIA and WMBD. As used in the report, unless the context indicated otherwise, Nexstar refers to Nexstar Finance, L.L.C. and its consolidated subsidiaries including
Nexstar Finance, Inc., Mission Group refers to Bastet Broadcasting, Inc. and Mission Broadcasting of Wichita Falls, Inc., and all of their respective subsidiaries; and all references to we, our, and us
refer, collectively, to Nexstar and the Mission Group.



Introduction



Nexstar
owns and operates, through our subsidiaries, 14 television stations. Through various local service agreements with the Mission Group, we provide various management, sales or other services to additional television stations. The Mission Group
entities are 100% owned by an independent third party. Collectively, these entities own and operate the following television stations: WYOU, WFXP, KJTL and KJBO-LP. Additionally, through a time brokerage agreement, Mission of Joplin, a subsidiary of
Mission, provides most of the programming and administrative services for KODE pending the purchase of KODEs assets in September 2002. Nexstar does not own the Mission Group television stations. In order for both Nexstar and the Mission Group
to continue to comply with FCC regulations, the Mission Group must maintain complete responsibility for and control over programming, finances, personnel and operations of its stations. However, as a result of Nexstar Finances guarantee of the
Mission Groups debt and our arrangements under the local service agreements and purchase option agreements with the Mission Group, we are deemed under U.S. generally accepted accounting principles (U.S. GAAP) to have a controlling
financial interest in the Mission Group. Nexstar has entered into various service agreements with all of the Mission Group stations. Nexstar has a time brokerage agreement with WFXP, which allows us to program most of the stations broadcasting
time, sell the stations advertising time and retain the advertising revenue generated by WFXP. Nexstar has a shared services agreement with KJTL and KJBO-LP, which allows the sharing of services including news production, technical maintenance
and security, in exchange for Nexstars right to receive certain payments from the Mission Group as described in the shared services agreements. These payments have had the effect of Nexstar receiving substantially all of the available cash,
after payment of debt service costs, generated by KJTL and KJBO-LP. Nexstar anticipates that the payments required by the shared services agreements with KJTL and KJBO-LP will continue to have the effect of Nexstar receiving substantially all of the
available cash, after payment of debt service costs, generated by KJTL and KJBO-LP. Through a joint sales agreement, Nexstar has also acquired the rights to sell and receive the



21



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NEXSTAR FINANCE, L.L.C.



revenue from the advertising time on KJTL and KJBO-LP in return for monthly payments to the Mission Group. Nexstar has a shared services
agreement with each of WYOU and KODE, which have terms substantially similar to the terms of the shared services agreements with KJTL and KJBO-LP. Nexstars ability to receive cash from the Mission Group is governed by the agreements described
above.



In addition to providing certain services
to the Mission Group television stations, Nexstar also guarantees the debt of the Mission Group. The Mission Group is a guarantor of the senior credit facility entered into and the senior subordinated notes issued by Nexstar.



The owner of the Mission Group has granted to Nexstar a
purchase option on each Mission Group entity to acquire the assets and liabilities of each entity for consideration equal to the greater of (1) seven times the stations broadcast cash flow less the amount of indebtedness as defined in the
option agreement or (2) the amount of its indebtedness. These option agreements are freely exercisable or assignable by Nexstar without consent or approval by the owner of the Mission Group.



Nexstar does not own the Mission Group or the Mission
Groups television stations. However, as a result of Nexstar Finances guarantee of the Mission Groups debt and our arrangements under the local service arrangements and purchase option agreements with the Mission Group, we are
deemed under U.S. GAAP to have a controlling financial interest in the Mission Group while complying with the FCCs rules regarding ownership limits in television markets. In order for both Nexstar and the Mission Group to continue to comply
with FCC regulations, the Mission Group must maintain complete responsibility for and control over programming, finances, personnel and operations of its stations. As a result of our controlling financial interest in the Mission Group under 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 the Mission Group as if it were a wholly-owned entity. We believe this
presentation is meaningful for understanding our financial performance. Therefore, the following discussion of our financial condition and results of operations includes the Mission Groups financial statements.



In addition, pursuant to an outsourcing agreement with a
subsidiary of Sinclair Broadcast Group, Inc. that became effective December 1, 2001, Nexstar provides engineering, production, sales and administrative services for WYZZ, the FOX affiliate in the Peoria-Bloomington, IL market. The parties share the
combined broadcast cash flow generated by WYZZ and Nexstar-owned, WMBD. The outsourcing agreement expires in December 2008. It is non-cancelable until May 2003, at which time it may be canceled by either party upon 180 days written notice.



The operating revenue of our stations is derived
primarily from advertising revenue, which in turn depends on the economic conditions of the markets in which we operate, the demographic makeup of those markets and the marketing strategy we employ in each market. Our primary operating expenses
consist of commissions on advertising revenue, employee compensation and related benefits, newsgathering and programming costs. A large percentage of the costs involved in the operation of our stations remain relatively fixed.



Each of our stations has a network affiliation agreement
pursuant to which the network provides programming to the station during specified time periods, including prime time. Each of NBC, CBS and ABC compensates our affiliated stations for distributing the networks programming over the air and for
allowing the network to keep a portion of advertising inventory during those time periods. Each station acquires licenses to broadcast programming in non-news time periods during the remainder of the day. The licenses are either purchased from a
program distributor for cash and/or the program distributor is allowed to retain some of the advertising inventory as compensation to eliminate or reduce the cash cost for the license, the latter is referred to as barter broadcast rights. The
station records the estimated fair market value of the licenses, including any advertising inventory given to the program distributor, as a broadcast right asset and liability. The assets are amortized as a component of amortization of broadcast
rights. Amortization is computed using the straight-line method based on the license period or usage, whichever is greater. The cash broadcast rights liabilities are reduced by monthly payments while the barter liability is amortized over the life
of the contract as a component of trade and barter revenue.



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NEXSTAR FINANCE, L.L.C.





Advertising rates are based upon 1) a programs popularity among the viewers that an advertiser wishes to target, 2) the number of advertisers competing for the available time, 3) the size and the demographic composition of the
market served by the station, 4) the availability of alternative advertising media in the market area and 5) the effectiveness of the stations sales force. Advertising rates are also determined by a stations overall ability to attract
viewers in its market area, as well as the stations ability to attract viewers among particular demographic groups that an advertiser may be targeting. 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. Because television broadcast stations rely on advertising revenue, declines in advertising budgets, particularly in recessionary periods, adversely affect
the broadcast industry, and as a result may contribute to a decrease in the revenue of broadcast television stations.



Most advertising contracts are short-term and generally run for a few weeks. Excluding political revenue, 62.2% and 65.6% of our spot
revenue for the six months ended June 30, 2001 and 2002, respectively, was generated from local advertising. The remainder of our advertising revenue represents inventory sold for national or political advertising. Each station has an agreement with
a national representative firm that provides for representation outside the particular stations market. National commission rates vary within the industry and are governed by each stations agreement. All national and political revenue
derived from advertisements is placed by advertising agencies. The agencies receive a commission rate of 15.0% for the gross amount of revenue related to the advertising schedules placed by them. While the majority of local spot revenue is placed by
local agencies, some advertisers place their advertisements directly with our stations local sales staff, thereby eliminating the agency commission.



The advertising revenue of our stations 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 as a result of political advertising and
advertising aired during the Olympic Games.



On
April 1, 2002, Nexstar entered into a shared services agreement with Mission Broadcasting of Joplin, Inc. to provide news production, technical maintenance and security, in exchange for monthly fees paid to Nexstar. The services provided by Nexstar
resulted in higher miscellaneous revenues and operating expenses for Nexstar-owned KSNF, the station providing the services.



The local service agreements which were entered into during the fiscal year ended December 31, 2001, affect the year-to-year comparability
of the operating results discussed below. Additionally, on April 1, 2002, we converted WCFN from a satellite station of WCIA to a UPN-affiliated station. At that time WCFN became a full-power station capable of generating revenues of its own. For
discussion purposes on a same station basis, we have excluded WCFNs revenues and expenses.



In conjunction with the refinancing of our senior credit facilities in June 1999, we expensed certain debt financing costs. We subsequently determined that a portion of those costs, specifically, those
related to the revolving credit facility, should not have been expensed, but should have remained capitalized and subsequently amortized. As a result, the 1999, 2000 and 2001 financial statements have been restated. See Note 10 of our financial
statements for a further explanation.



Recent Developments



On April 24, 2002, Nexstar Broadcasting
Group, Inc., filed for an initial public offering with the SEC. Nexstar Broadcasting Group, L.L.C., Nexstars indirect parent, will undertake a reorganization in connection with the consummation of the initial public offering whereby Nexstar
Broadcasting Group, L.L.C. and certain of its direct and indirect subsidiaries will be merged with and into, Nexstar Broadcasting Group, Inc., which will become the surviving corporation.



On August 13, 2002, we terminated the $60.0 million swap agreement for a payment of $5.25 million.



Critical accounting policies and estimates



In the normal course of business, we are party to various
claims and legal proceedings. We record a reserve for these matters when an adverse outcome is probable and we can reasonably estimate our potential liability.



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NEXSTAR FINANCE, L.L.C.





Although
the ultimate outcome of these matters is currently not determinable, we do not believe that the resolution of these matters in a manner adverse to our interest will have a material effect upon our financial condition, results of operations or cash
flows for an interim or annual period.



Historical
Performance



Revenue



The following table sets forth the principal types of revenue
received by our 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 and national sales representative commissions:



|                                                     |  | Three Months Ended June 30, |        | Six Months Ended June 30,
|---------------------------------------------------- |  | --------------------------- | ------ | -------------------------
|                                                     |  | 2001                        |        | 2002                     
|                                                     |  | Amount                      |        | %                        
|                                                     |  | (dollars in thousands)      |        | (dollars in thousands)   
|Local                                                |  | $                           | 16,480 |                          
|National                                             |  |                             | 10,298 |                          
|Political                                            |  |                             | 532    |                          
|Network compensation                                 |  |                             | 1,758  |                          
|Other                                                |  |                             | 575    |                          
|                                                     |  |                             |        |                          
|Total gross revenue                                  |  |                             | 29,643 |                          
|Less: Agency and national representative commissions |  |                             | 4,064  |                          
|                                                     |  |                             |        |                          
|Net broadcast revenue                                |  |                             | 25,579 |                          
|Trade and barter revenue                             |  |                             | 2,467  |                          
|                                                     |  |                             |        |                          
|Total net revenue                                    |  | $                           | 28,046 |                          
|                                                     |  |                             |        |                          



Results of Operations



The following table sets forth a summary of
our operations for the periods indicated and their percentages of total net revenue:



|                                                   |  | Three Months Ended June 30, |        | Six Months Ended June 30,
|-------------------------------------------------- |  | --------------------------- | ------ | -------------------------
|                                                   |  | 2001                        |        | 2002                     
|                                                   |  | Amount                      |        | %                        
|                                                   |  | (dollars in thousands)      |        | (dollars in thousands)   
|Total net revenue                                  |  | $                           | 28,046 |                          
|Operating expenses:                                |  |                             |        |                          
|Corporate expenses                                 |  |                             | 571    |                          
|Station direct operating expenses, net of trade    |  |                             | 7,034  |                          
|Selling, general and administrative expenses       |  |                             | 6,169  |                          
|Trade and barter expense                           |  |                             | 2,528  |                          
|Depreciation and amortization                      |  |                             | 8,380  |                          
|Amortization of broadcast rights, excluding barter |  |                             | 1,887  |                          
|                                                   |  |                             |        |                          
|Income (loss) from operations                      |  | $                           | 1,477  |                          
|                                                   |  |                             |        |                          



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NEXSTAR FINANCE, L.L.C.





Three Months Ended June
30, 2002 Compared to Three Months Ended June 30, 2001



Net broadcast revenue for the three months ended June 30, 2002 was $29.0 million, an increase of $3.4 million, compared to $25.6 million for the three months ended June 30, 2001. An increase in net broadcast revenue of $2.1
million was attributed to stations for which a local service arrangement was initiated after January 1, 2001 and WCFN. On a same station basis, net broadcast revenue for the three months ended June 30, 2002 was $26.9 million as compared to
$25.6 million for June 30, 2001, an increase of 5.1%. Of this increase, $0.9 million was political revenue resulting from election campaigns in most of our markets, $1.3 million was attributed to an increase in local demand, offset, in part, by a
decline in national revenue of $0.4 million and the renewals of network affiliation agreements at five of our stations which resulted in a decrease in network compensation of $0.5 million, on a same station basis.



Station direct operating expenses, consisting primarily of
news, engineering and programming, and selling, general and administrative expenses, net of trade, for the three months ended June 30, 2002 were $15.3 million, compared to $13.2 million for the three months ended June 30, 2001, an increase of $2.1
million. Of this increase, $1.9 million was attributed to stations for which a local service arrangement was initiated after January 1, 2001 and WCFN. On a same station basis, operating expenses for the three months ended June 30, 2002 were $13.4
million as compared to $13.2 million for the three months ended June 30, 2001, a 1.5% increase. This increase was attributed to additional expense incurred by KSNF to accommodate the shared services agreement in Joplin that began on April 1, 2002.



Corporate expenses, related to costs associated
with the centralized management of our stations, for the three months ended June 30, 2002 were $0.9 million, compared to $0.6 million for the three months ended June 30, 2001, an increase of $0.3 million. The increase was primarily
attributed to an increase in professional fees and the accrual of bonuses.



Amortization of broadcast rights, excluding barter, for the three months ended June 30, 2002 was $1.9 million, compared to $1.9 million for the three months ended June 30, 2001, flat with the
prior year. The stations for which a local service arrangement was initiated after January 1, 2001 and WCFN had no material affect on film amortization.



Depreciation of property and equipment was $3.3 million for the three months ended June 30, 2002, compared to $3.3 million for the three
months ended June 30, 2001, flat to the prior year. The stations for which a local service arrangement was initiated after January 1, 2001 and WCFN had no material effect on depreciation. The amortization of intangibles was $3.2 million for the
three months ended June 30, 2002, compared to $5.1 million for the same period in 2001. The decrease in amortization was attributed to the elimination of amortization of indefinite-lived intangible assets, including goodwill.



Income from operations for the three months ended June 30,
2002 was $4.4 million, compared to $1.5 million for the three months ended June 30, 2001, an increase of $2.9 million. The stations for which a local service arrangement was initiated after January 1, 2001 and WCFN had no material affect on income
from operations.



Interest expense for the three
months ended June 30, 2002 was $8.7 million, compared to $9.4 million for the same period in 2001. The decrease was primarily attributed to lower cost of funds attributed to the effect of a hedge instrument and lower prevailing interest rates.



As a result of the factors discussed above, our
net loss was $4.2 million for the three months ended June 30, 2002, compared to $8.0 million for the same period in 2001, a decrease in net loss of $3.8 million.





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NEXSTAR FINANCE, L.L.C.



Six Months Ended June 30, 2002 Compared to Six Months Ended June 30, 2001



Net broadcast revenue for the six months ended June 30, 2002
was $54.9 million, an increase of $6.2 million, compared to $48.7 million for the six months ended June 30, 2001. An increase in net broadcast revenue of $3.9 million was attributed to stations for which a local service arrangement was
initiated after January 1, 2001 and WCFN. On a same station basis, net broadcast revenue for the six months ended June 30, 2002 was $51.0 million as compared to $48.7 million for June 30, 2001, an increase of 4.7%. Of this increase, $2.8 million was
political revenue resulting from election campaigns in most of our markets, $1.4 million was attributed to an increase in local demand, offset, in part, by a decline in national revenue of $0.8 million and the renewals of network affiliation
agreements at five of our stations which resulted in a decrease in network compensation of $1.1 million, on a same station basis.



Station direct operating expenses, consisting primarily of news, engineering and programming, and selling, general and administrative
expenses, net of trade, for the six months ended June 30, 2002 were $30.8 million, compared to $26.9 million for the six months ended June 30, 2001, an increase of $3.9 million. Of the $3.9 million increase in operating expenses, $3.6 million was
attributed to stations for which a local service arrangement was initiated after January 1, 2001 and WCFN. On a same station basis, operating expenses for the six months ended June 30, 2002 were $27.2 million as compared to $26.9 million for the six
months ended June 30, 2001, an increase of 1.1%.



Corporate expenses, related to costs associated with the centralized management of our stations, for the six months ended June 30, 2002 were $1.9 million, compare to $1.4 million for the six months ended June 30, 2001, an increase of
$0.5 million. The increase was primarily attributed to an increase in professional fees and the accrual of bonuses.



Amortization of broadcast rights, excluding barter, for the six months ended June 30, 2002 was $3.8 million, compared to $3.9 million
for the six months ended June 30, 2001, relatively flat with the prior year. The stations for which a local service arrangement was initiated after January 1, 2001 and WCFN had no material effect on amortization of broadcast rights.



Depreciation of property and equipment was $6.4 million for
the six months ended June 30, 2002, compared to $6.2 million for the six months ended June 30, 2001, an increase of $0.2 million. The increase in depreciation was attributed to the depreciation of ongoing capital expenditures at the stations. The
stations for which a local service arrangement was initiated after January 1, 2001 and WCFN had no material effect on depreciation. The amortization of intangibles was $6.3 million for the six months ended June 30, 2002, compared to $10.6 million
for the same period in 2001. The decrease in amortization was attributed to the elimination of amortization of indefinite-lived intangible assets, including goodwill.



Income from operations for the six months ended June 30, 2002 was $5.7 million, compared to a loss from
operations of $0.3 million for the six months ended June 30, 2001. Of the $6.0 million improvement, approximately $0.3 million was attributed to income from operations from stations for which a local service arrangement was initiated after January
1, 2001 and WCFN. On a same station basis, income from operations for the six months ended June 30, 2002 was $5.6 million, as compared to a loss from operations of $0.3 million for the six months ended June 30, 2001. The $5.7 million improvement in
income from operations is primarily a result of the elimination of approximately $4.0 million of amortization for indefinite-lived intangible assets, including goodwill, and higher net revenues from political advertising.



Interest expense, including amortization of debt financing
cost, for the six months ended June 30, 2002 was $17.4 million, compared to $17.7 million for the same period in 2001. Interest expense for the six months ended June 30, 2001 includes a reclassification of $1.4 million previously classified as an
extraordinary loss from refinancing the credit facilities. Excluding the reclassification the increase was primarily attributed to the increase in the cost of funds as a result of the issuance of the senior subordinated notes.



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NEXSTAR FINANCE, L.L.C.





As a
result of the factors discussed above, our net loss was $10.8 million for the six months ended June 30, 2002, compared to $17.9 million for the same period in 2001, a decrease in net loss of $7.1 million.



Liquidity and Capital Resources



As of June 30, 2002, cash and cash equivalents were $4.1
million compared to $2.4 million as of June 30, 2001.



Our primary sources of liquidity are cash flows from operating activities, borrowings from our senior credit facilities and capital contributions. Cash flows provided by operating activities were $4.0 million for the six months ended
June 30, 2002, as compared to $2.7 million for the six months ended June 30, 2001. The comparative increase in cash flows provided by operations of $1.3 million is primarily due to the timing of payments made or received on operating assets and
liabilities along with improved operating results for the six months ended June 30, 2002 compared to the same period in 2001.



Cash flows used for investing activities was $4.0 million for the six months ended June 30, 2002, as compared to $111.9 million for the
six months ended June 30, 2001. Investing activities for the six months ended June 30, 2002 was associated with ongoing equipment purchases. Investing activities for the same period in 2001 was associated with purchasing WCIA and WMBD for
approximately $108.0 million and ongoing equipment purchases.



Cash flows used for financing activities were $1.7 million for the six months ended June 30, 2002, as compared to cash flows provided by financing activities of $108.8 million for the six months ended June 30, 2001. The change in
cash flows from financing activities for the six months ended June 30, 2002 was primarily the result of revolver borrowings of $2.5 million, less repayments of loans of $2.7 million and a distribution to Nexstars direct parent company, Nexstar
Finance Holdings, L.L.C. of $1.4 million. For the six months ended June 30, 2001, the change in cash flows from financing activities was the result of (1) borrowings under the senior credit facilities of $278.8 million with a subsequent borrowing
and repayment of $160.1 million as a result of the amendment on June 14, 2001 on the credit agreement governing our senior credit facilities, (2) borrowings of $153.6 million under the senior subordinated notes issued in March 2001, (3) additional
equity proceeds of $75.0 million (net of a $30.0 million distribution), which were used to assist in financing the January 2001 acquisition, less the repayment of the existing senior credit facility, and (4) transaction and financing costs of
approximately $15.9 million. As of June 30, 2002, there were $68.9 million of unused commitments under the senior credit facilities, of which $15.0 million was available on the Term A facility. However, of the $68.9 million of unused commitments,
approximately $7.0 million could be drawn in compliance with the financial covenants under the senior credit facilities. We were in compliance with all covenants contained in the credit agreements and indentures governing our senior credit
facilities and the senior subordinated notes at June 30, 2002.



We are highly leveraged, which makes us vulnerable to changes in general economic conditions. Our ability to repay or refinance our debt will depend on, among other things, financial, business, market, competitive and

other conditions, many of which are beyond our control. We believe that, taken together, our current cash balances, internally generated cash flow and
availability under our credit facilities should result in our having adequate cash resources to meet our future requirements for working capital, capital expenditures and debt service.



Digital Conversion



FCC regulations required us to commence digital operations by
May 1, 2002, in addition to continuing our analog operations, unless an extension of time was granted. We received an extension of time, through December 1, 2002, to begin digital operations at all of our stations except WCIA and WCFN, which
met the



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May 1, 2002 deadline. Nexstar and the Mission Group have received further extensions of time until May 1, 2003 for the seven
Nexstar-owned stations and three Mission-owned stations which did not meet the December 1, 2002 deadline. Our most recent estimate is that the digital conversion will require an average initial capital expenditure of $0.2 million per station for
low-power transmission of a digital signal and an average additional capital expenditure of $0.7 million per station to modify the transmitter for full-power digital signal transmission. There were no expenditures for digital conversion in 2001 and
$0.3 million for the six months ended June 30, 2002. We anticipate that digital conversion expenditures will be funded through available cash on hand and cash generated from operations.



Recently Issued Accounting Standards



In July 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS No. 142. Goodwill and Other
Intangible Assets. On January 1, 2002, we adopted SFAS No. 141 and SFAS No. 142. SFAS No. 141 prospectively prohibits the pooling of interest method of accounting for business combinations initiated after June 30, 2001. SFAS No. 142 requires
companies to cease amortizing certain intangible assets including goodwill and FCC licenses. The amortization of existing goodwill and FCC licenses resulting from acquisitions completed prior to June 30, 2001 ceased on December 31, 2001. Any
goodwill and FCC licenses resulting from acquisitions completed after June 30, 2001 were not and will not be amortized. SFAS No. 142 also establishes a new method of testing goodwill and FCC licenses for impairment on an annual basis or on an
interim basis if an event occurs or circumstances change which would reduce the fair value of a reporting unit below its carrying value. The adoption of SFAS No. 142 has resulted in the discontinuation of amortization of goodwill and FCC licenses;
however, we will be required to test goodwill and FCC licenses for impairment under the new standard during 2002, which could have an adverse effect on the future results of operations if an impairment occurs.



SFAS No. 142 requires that goodwill be tested for impairment
using a two-step process. The first step is to identify a potential impairment by comparing the fair value of a station with its carrying amount and, in transition, this step must be measured as of the beginning of the fiscal year. However, a
company has six months from the date of adoption to complete the first step. The second step of the goodwill impairment test measures the amount of the impairment loss (measured as of the beginning of the year of adoption), if any, and must be
completed by the end of our fiscal year. We completed the first step of the impairment test during the quarter ended June 30, 2002 using the discounted cash flow method to estimate the fair value of each station. The valuation assumptions used in
the discounted cash flow model reflected anticipated future operating results and cash flow based on its business plans. As a result of this test, we identified three stations that require additional testing for impairment of goodwill. The net
carrying amount of goodwill for these three stations at January 1, 2002 was $40.1 million. We have begun, but not completed, the second step to measure the amount of the impairment loss, which will be completed by December 31, 2002. FCC licenses
have been tested for impairment using a one-step process, which compares the fair value to the carrying amount of the asset on a station by station basis as of January 1, 2002. The fair value of the station was determined using the discounted cash
flow valuation method that excludes network compensation payments, assuming a hypothetical startup whose only asset is the FCC license. The test resulted in no impairment being identified. During the year ended December 31, 2001, we incurred
goodwill amortization expense of $2.8 million.



On January 1, 2002, we adopted Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144). SFAS No. 144 supersedes SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of  and the accounting and reporting provisions relating to the disposal of a segment of a business described in Accounting Principles Board Opinion No. 30. The
adoption did not have a material impact on our financial statements.



In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections, which is effective for fiscal years beginning after May
15, 2002. SFAS No. 145 rescinds SFAS No. 4 and SFAS No. 64, which addressed the



NEXSTAR FINANCE, L.L.C.



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NEXSTAR FINANCE, L.L.C.



accounting for gains and losses from extinguishment of debt. SFAS No. 145 amends SFAS No. 13 to require that certain lease modifications that
have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. SFAS No. 145 also makes technical corrections to certain existing pronouncements that are not substantive in nature.
Nexstar adopted SFAS No. 145 effective for the year ended December 31, 2002, and as a result has reclassified $1.4 million of extraordinary loss from the refinancing of credit facilities to interest expense for the six months ended June 30, 2001.



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.



At June 30, 2002, we had in effect three interest rate swap
agreements, with commercial banks, with notional amounts of $93.3 million, $20.0 million and $60.0 million. Our $93.3 million and $20.0 million interest rate swap agreements require us to pay a fixed rate and receive a floating rate thereby creating
fixed rate debt. The $60.0 million swap agreement required us to pay a floating rate and receive a fixed rate. The differential to be paid or received on the swaps is accrued as an adjustment to interest expense. We are exposed to credit loss in the
event of nonperformance by the counter-party. The net fair value of the interest rate swap agreements, which represent the cash that we would pay to settle the agreements, was approximately $0.5 million and $2.4 million at June 30, 2002 and December
31, 2001, respectively. On August 13, 2002, we terminated the $60.0 million swap agreement for a payment of $5.25 million.



The following table estimates the changes to cash flow from operations 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 time horizon after giving effect to the interest rate swap agreements described above:



|                                       |  | Interest Rate Decrease |        | No Change to Interest Rate |   | Interest Rate Increase
|-------------------------------------- |  | ---------------------- | ------ | -------------------------- | - | ----------------------
|                                       |  | 100 bps                |        | 50 bps                     |   |                       
|                                       |  | (dollars in thousands)
|Senior credit facilities(1)            |  | $                      | 6,580  |                            | $ | 6,653                 
|12% senior subordinated notes due 2008 |  |                        | 19,200 |                            |   | 19,200                
|                                       |  |                        |        |                            |   |                       
|Total                                  |  | $                      | 25,780 |                            | $ | 25,853                
|                                       |  |                        |        |                            |   |                       

| | 
| | 

(1) Excludes effect of applicable margin as defined
in the senior credit agreements.



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PART II



ITEM 1.    LEGAL PROCEEDINGS



Not applicable.



ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS



Not applicable.



ITEM 3.    DEFAULTS UPON SENIOR SECURITIES



Not applicable.



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



Not applicable.



ITEM 5.    OTHER INFORMATION



Not applicable.



ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K



(a)    The following exhibits are filed with this report and made a part hereof.



| | 99.1    Certification |  | of Perry A. Sook pursuant to 18 U.S.C. §1350.
| | --------------------- |  | ---------------------------------------------



| | 99.2    Certification |  | of G. Robert Thompson pursuant to 18 U.S.C. §1350.
| | --------------------- |  | --------------------------------------------------



(b)    Reports on Form 8-K.



None.



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SIGNATURES



Pursuant
to the requirements 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 FINANCE, L.L.C.

NEXSTAR FINANCE, INC.



/S/    PERRY A. SOOK



By: Perry A. Sook

Its: President and Chief Executive Officer



/S/    G. ROBERT THOMPSON



By: G. Robert Thompson

Its: Chief Financial Officer



Dated:  May 20, 2003



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I, Perry A. Sook, President and Chief Executive Officer of Nexstar Finance, L.L.C. and Nexstar Finance, Inc., certify that:



1.    I have reviewed
this quarterly report on Form 10-Q/A of Nexstar Finance, L.L.C. and Nexstar Finance, Inc.;



2.    Based on my knowledge, this quarterly report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and



3.    Based on my
knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report.



Date: May 20, 2003



|   
|---
|By:
|   



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I, G. Robert Thompson, Chief Financial Officer of Nexstar Finance, L.L.C. and Nexstar Finance, Inc., certify that:



1.    I have reviewed
this quarterly report on Form 10-Q/A of Nexstar Finance, L.L.C. and Nexstar Finance, Inc.;



2.    Based on my knowledge, this quarterly report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and



3.    Based on my
knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report.



Date: May 20, 2003



|   
|---
|By:
|   



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