SOURCE: Fisher Communications, Inc.

Fisher Communications, Inc.

November 01, 2012 16:00 ET

Fisher Communications, Inc. Reports Third Quarter 2012 Financial Results

Net Television Revenue Increased 14% to $34.7 Million; TV Cash Flow Increased 55% to $10.5 Million; Earnings Per Diluted Share Increased 56% to $0.25; Declared Quarterly Cash Dividend of $0.15 Per Share

SEATTLE, WA--(Marketwire - Nov 1, 2012) - Fisher Communications, Inc. (NASDAQ: FSCI), a leader in local media innovation, today reported its financial results for the third quarter ended September 30, 2012. 

Management Commentary
"Fisher's positive momentum continued throughout the third quarter, led by the strength of our stations, strong political spending and new retransmission agreements," said Colleen B. Brown, Fisher's President and Chief Executive Officer. "Our stations delivered audience share and revenue growth, as we continue to leverage the Company's key set of multiplatform offerings to our competitive advantage."

"As we look ahead to 2013, we remain focused on expanding our trusted local news brands, as well as providing advertisers the highly effective broadcast and on-line mediums to better reach their customers. These are hallmarks of Fisher and the pillars that will enable us to deliver value to our audiences, business partners and shareholders." 

Third Quarter Financial Highlights
(All financial comparisons are made to the third quarter of 2011 unless otherwise noted.)

Fisher's consolidated revenue was $39.9 million, up slightly from the third quarter of 2011. Excluding Fisher Plaza revenues from the third quarter of 2011, Fisher's consolidated revenue increased 11% year-over-year.

Total consolidated direct operating, selling, general and administrative and programming expenses for the third quarter of 2012 increased 6%, or $2.0 million, compared to the third quarter of 2011. Last year's third quarter results included one-time savings of $0.9 million related to the Company's revised vacation policy and the third quarter of 2012 included Plaza rent expense of $1.4 million, $0.8 million of costs related to various strategic initiatives and $0.6 million of increased network fees. Excluding the items noted above, our remaining expenses were 5% lower year over year.

EBITDA was $5.4 million in the third quarter of 2012, which included $1.4 million of Fisher Plaza rent expense. This represents a decrease of 22% from $6.8 million in the prior year period, which included $2.3 million of Plaza EBITDA.

Adjusted EBITDA (excluding Plaza rent expense in 2012 and Plaza EBITDA in 2011) was $6.8 million in the third quarter of 2012, an increase of 48%, or $2.2 million, from the same period in 2011.

Highlights for the Company's television segment are as follows:

  • Net TV revenue, excluding political revenue, increased 5% to $31.0 million. 
  • Political revenue increased 285% to $3.6 million and retransmission revenue increased 83% to $6.3 million.
  • TV cash flow increased 55%, or $3.7 million, to $10.5 million.

Balance Sheet and Liquidity

  • Cash and short-term investments were $103.8 million at quarter-end, compared to $176.5 million at the end of 2011.
  • Cash used in operating activities for the year of $1.9 million consists of $23.1 million of cash generated from operations offset by $21.7 million in estimated 2011 tax payments, net of refunds received, $1.5 million of debt extinguishment costs and $1.8 million of interest payments on the Company's retired senior notes. In August, the Company announced a one-time special cash dividend of $10.00 per share payable on October 19, 2012. The Company will use its existing cash and short-term investments to fund the dividend, which totals approximately $89 million.
  • The Company remained debt-free, after using its strong cash position to redeem the remaining $61.8 million of outstanding principal for the Company's senior notes in the first quarter of 2012. 
  • In August, the Company announced it received a commitment letter from JPMorgan Chase Bank for a five-year $30 million senior secured revolving credit facility. The Company expects to establish the facility in the fourth quarter of 2012.

Quarterly Dividend
As previously announced, the Company's Board of Directors approved a quarterly dividend policy in August 2012. In accordance with the policy, the Company has declared a quarterly cash dividend of $0.15 per share on its common stock payable on December 17, 2012, to shareholders of record at the close of business on November 30, 2012.

Third Quarter Conference Call
Fisher will host a conference call today at 1:00 p.m. (PDT). Senior management will discuss the financial results and host a question and answer session. The dial-in number for the audio conference call is 1-866-730-5771; confirmation code 71674211#. A live audio webcast of the call will be accessible to the public on Fisher's website, www.fsci.com. A recording of the webcast will subsequently be archived on the website and available for replay for one week following the call. An audio replay of the call can be accessed for one week by dialing 1-888-286-8010 and entering confirmation code 61098661#.

Definitions and Disclosures Regarding Non-GAAP Financial Information
The Company reports and discusses its operating results using financial measures consistent with generally accepted accounting principles (GAAP) and believes this should be the primary basis for evaluating its performance.

The preceding discussion of our results includes a discussion of non-GAAP financial measures such as Television cash flow, Radio cash flow, Broadcast cash flow and Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA. These non-GAAP measures should not be viewed as alternatives or substitutes for GAAP reporting.

The Company believes the presentation of these non-GAAP measures is useful to investors because they are used by lenders to measure the Company's ability to service debt; by industry analysts to determine the market value of stations and their operating performance; and by management to identify the cash available to service debt, make strategic acquisitions and investments, maintain capital assets and fund ongoing operations and working capital needs; and, because they reflect the most up-to-date operating results of the stations inclusive of pending acquisitions, time brokerage agreements or local marketing agreements. Management believes they also provide an additional basis from which investors can establish forecasts and valuations for the Company's business.

Television and radio cash flow are calculated as television and radio segment income (loss) from operations plus amortization of broadcast rights, non-cash charges, Internet and trade expenses minus payments for broadcast rights and Internet revenue. Broadcast cash flow is calculated by adding the Television and radio cash flow.

EBITDA is calculated as income (loss) from operations plus amortization of broadcast rights; depreciation and amortization; stock-based compensation; loss on disposal of property, plant and equipment, net; proxy related costs; and non-cash charges minus payments for broadcast rights; gain on sale of real estate, net; Plaza fire reimbursements, net; and amortization of non-cash benefit resulting from a change in national advertising representation firm.

Adjusted EBITDA excludes Fisher Plaza rent expense in the third quarter of 2012 and Plaza EBITDA in the third quarter of 2011. Plaza EBITDA is calculated as Plaza segment income (loss) from operations. Management believes this presentation of Adjusted EBITDA is useful to investors because it provides investors with a comparable measure given the impact of the disposition of Fisher Plaza.

For a reconciliation of these non-GAAP financial measurements to the GAAP financial results cited in this press release, please see the supplemental tables at the end of this release.

About Fisher Communications, Inc.
Fisher Communications, Inc. is a Seattle-based communications Company that owns and operates 13 full power television stations, 7 low power television stations, 3 owned radio stations and one managed radio station in the Western United States. The Company also owns and operates Fisher Interactive Network, its online division (including over 120 online sites) and Fisher Pathways, a satellite and fiber transmission provider. For more information about Fisher Communications, Inc., go to www.fsci.com.

Forward-Looking Statements
This news release includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. Forward-looking statements include information preceded by, followed by, or that includes the words "guidance," "believes," "expects," "intends," "anticipates," "could," or similar expressions. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained in this news release, including, among other things, statements related to changes in revenue, cash flow and operating expenses, involve risks and uncertainties and are subject to change based on various important factors, including the impact of changes in national and regional economies, the competitiveness of political races and voter initiatives, successful integration of acquired television stations (including achievement of synergies and cost reductions), pricing fluctuations in local and national advertising, future regulatory actions and conditions in the television stations' operating areas, competition from others in the broadcast television markets served by the Company, volatility in programming costs, the effects of governmental regulation of broadcasting, industry consolidation, technological developments and major world news events. Unless required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this news release might not occur. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this release. For more details on factors that could affect these expectations, please see the risk factors in our Annual Report on Form 10-K for the year ended December 31, 2011, which we have filed with the Securities and Exchange Commission.

Fisher Communications, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
 
                         
(in thousands, except per-share amounts)  
 
Three months ended
September 30,
 
 
 
 
%  
 
 
 
Nine months ended
September 30,
 
 
 
 
%  
 
    2012     2011     Change     2012     2011     Change  
Revenue   $ 39,895     $ 39,700     0 %   $ 116,097     $ 117,602     (1 %)
Operating expenses                                            
  Direct operating costs     16,386       17,704     7 %     48,974       52,595     7 %
  Selling, general and administrative expenses     15,939       12,642     (26 %)     45,574       40,809     (12 %)
  Amortization of broadcast rights     2,479       2,449     (1 %)     7,372       8,324     11 %
  Depreciation and amortization     1,736       2,697     36 %     5,241       8,027     35 %
  Gain on sale of real estate, net     -       -     n/a       (164 )     (4,089 )   (96 %)
  Plaza fire reimbursements, net     -       (40 )   (100 %)     -       (223 )   (100 %)
  Total operating expenses     36,540       35,452     (3 %)     106,997       105,443     (1 %)
Income from continuing operations     3,355       4,248     (21 %)     9,100       12,159     (25 %)
Loss on extinguishment of senior notes, net     -       (298 )           (1,482 )     (1,356 )      
Other income, net     49       34             143       214        
Interest expense     (16 )     (1,572 )           (292 )     (5,697 )      
Income from continuing operations before income taxes     3,388       2,412             7,469       5,320        
Provision for income taxes     1,188       893             2,851       1,978        
Income from continuing operations, net of income taxes     2,200       1,519             4,618       3,342        
Loss from discontinued operations, net of income taxes     -       (75 )           -       (9 )      
Net income   $ 2,200     $ 1,444           $ 4,618     $ 3,333        
                                             
Net income (loss) per share:                                            
  From continuing operations   $ 0.25     $ 0.17           $ 0.52     $ 0.38        
  From discontinued operations     -       (0.01 )           -       -        
  Net income per share   $ 0.25     $ 0.16           $ 0.52     $ 0.38        
                                             
Net income (loss) per share assuming dilution:                                            
  From continuing operations   $ 0.25     $ 0.17           $ 0.52     $ 0.38        
  From discontinued operations     -       (0.01 )           -       (0.01 )      
  Net income per share assuming dilution   $ 0.25     $ 0.16           $ 0.52     $ 0.37        
                                             
Weighted average shares outstanding     8,878       8,836             8,866       8,827        
Weighted average shares outstanding assuming dilution     8,958       8,900             8,949       8,898        
                                             
Dividends declared per share   $ 10.00     $ -           $ 10.00     $ -        
                                             
 
Fisher Communications, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
         
    September 30,   December 31,
(in thousands)   2012   2011
ASSETS            
Current assets            
  Cash and cash equivalents   $ 31,316   $ 143,017
  Short-term debt security investments     72,532     33,481
  Receivables, net     28,240     32,402
  Income taxes receivable     -     117
  Deferred income taxes, net     1,825     1,825
  Prepaid expenses and other     1,972     3,062
  Broadcast rights     9,219     6,789
    Total current assets     145,104     220,693
Restricted cash     3,623     3,594
Cash surrender value of life insurance and annuity contracts     17,884     17,278
Goodwill, net     13,293     13,293
Intangible assets, net     40,131     40,307
Other assets     5,219     5,006
Deferred income taxes, net     3,303     3,367
Assets held for sale     -     658
Property, plant and equipment, net     39,344     40,921
Total assets   $ 267,901   $ 345,117
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current Liabilities            
  Current maturities of long-term debt   $ -   $ 61,834
  Accounts payable     2,009     3,754
  Accrued payroll and related benefits     4,558     4,660
  Interest payable     -     1,556
  Broadcast rights payable     8,936     6,541
  Income taxes payable     2,464     21,468
  Current portion of accrued retirement benefits     1,302     1,302
  Dividends payable     88,795     -
  Other current liabilities     9,415     8,708
    Total current liabilities     117,479     109,823
Deferred income     8,633     10,036
Accrued retirement benefits     20,385     20,525
Other liabilities     2,943     2,688
    Total liabilities     149,440     143,072
Total stockholders' equity     118,461     202,045
Total liabilities and stockholders' equity   $ 267,901   $ 345,117
             
Fisher Communications, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flow
(Unaudited)
             
    Nine months ended September 30,  
(in thousands)   2012     2011  
Operating activities                
  Net income   $ 4,618     $ 3,333  
  Adjustments to reconcile net income to net cash providedby (used in) operating activities                
    Depreciation and amortization     5,241       8,027  
    Deferred income taxes, net     64       31  
    Loss on extinguishment of senior notes, net     594       416  
    Loss in operations of equity investees     119       188  
    Loss on disposal of property, plant and equipment, net     101       75  
    Gain on sale of radio station, net     -       (48 )
    Gain on sale of real estate, net     (164 )     (4,089 )
    Amortization of deferred financing fees     19       235  
    Amortization of deferred gain on sale of Fisher Plaza     (569 )     -  
    Amortization of debt security investment premium     78       -  
    Amortization of non-cash contract termination fee     (1,096 )     (1,096 )
    Amortization of broadcast rights     7,372       8,324  
    Payments for broadcast rights     (7,421 )     (8,688 )
    Stock-based compensation     1,284       1,174  
  Change in operating assets and liabilities, net                
    Receivables     4,162       1,791  
    Prepaid expenses and other     1,091       791  
    Cash surrender value of life insurance and annuity contracts     (606 )     1,819  
    Other assets     125       203  
    Accounts payable, accrued payroll and related                
    benefits and other current liabilities     2,872       (1,593 )
    Interest payable     (1,556 )     (2,312 )
    Income taxes receivable and payable     (18,887 )     2,514  
    Accrued retirement benefits     (43 )     31  
    Other liabilities     675       (783 )
      Net cash provided by (used in) operating activities     (1,927 )     10,343  
Investing activities                
  Investment in equity investee     (50 )     (88 )
  Purchase of debt security investments     (82,733 )     -  
  Purchase of investment in a radio station     (750 )     -  
  Purchase of option to acquire a radio station     (615 )     -  
  Purchase of radio stations     -       (113 )
  Purchase of property, plant and equipment     (7,565 )     (5,070 )
  Proceeds from sale of debt security investments     7,628       -  
  Proceeds from maturity of debt security investments     35,967       -  
  Proceeds from sale of radio station     -       48  
  Proceeds from sale of real estate     825       4,164  
      Net cash used in investing activities     (47,293 )     (1,059 )
Financing activities                
  Repurchase of senior notes     (61,834 )     (34,606 )
  Repurchase of common stock     (86 )     -  
  Shares settled on vesting of stock rights     (441 )     (278 )
  Proceeds from exercise of stock options     25       75  
  Payments on capital lease obligations     (145 )     (134 )
      Net cash used in financing activities     (62,481 )     (34,943 )
Net decrease in cash and cash equivalents     (111,701 )     (25,659 )
Cash and cash equivalents, beginning of period     143,017       52,945  
Cash and cash equivalents, end of period   $ 31,316     $ 27,286  
                 
 
Fisher Communications, Inc. and Subsidiaries
GAAP to Non-GAAP Reconciliations
(Unaudited, in thousands)
 

The following table provides a reconciliation of income (loss) from operations (GAAP) to EBITDA (non-GAAP) and Adjusted EBITDA (non-GAAP) in each of the periods presented:

             
    Three months ended September 30,     Nine months ended September 30,  
    2012     2011     2012     2011  
                                 
Income from continuing operations   $ 3,355     $ 4,248     $ 9,100     $ 12,159  
                                 
  Adjustments:                                
    Amortization of broadcast rights     2,479       2,449       7,372       8,324  
    Payments for broadcast rights     (2,394 )     (2,631 )     (7,421 )     (8,688 )
    Depreciation and amortization     1,736       2,697       5,241       8,027  
    Stock-based compensation     458       441       1,284       1,174  
    Loss on disposal of property, plant and equipment, net     81       23       101       75  
    Gain on sale of real estate, net     -       -       (164 )     (4,089 )
    Plaza fire reimbursements, net     -       (40 )     -       (223 )
    Proxy related costs     -       15       79       1,639  
    Amortization of non-cash benefit resulting from change in national advertising representation firm     (365 )     (365 )     (1,096 )     (1,096 )
                                 
EBITDA (Non-GAAP)   $ 5,350     $ 6,837     $ 14,496     $ 17,302  
                                 
    Fisher Plaza rent expense     1,409       -       3,933       -  
    Plaza EBITDA     -       (2,285 )     -       (6,937 )
                                 
Adjusted EBITDA (Non-GAAP)   $ 6,759     $ 4,552     $ 18,429     $ 10,365  
                                 

The following table provides a reconciliation of television income (loss) from operations (GAAP) to television cash flow (non-GAAP) in each of the periods presented:

             
    Three months ended September 30,     Nine months ended September 30,  
    2012     2011     2012     2011  
                                 
Television segment income from continuing operations   $ 10,178     $ 6,783     $ 27,630     $ 18,213  
                                 
  Adjustments:                                
    Amortization of broadcast rights     2,479       2,449       7,372       8,324  
    Payments for broadcast rights     (2,394 )     (2,631 )     (7,421 )     (8,688 )
    Net trade and internet loss     262       185       773       474  
                                 
Television broadcast cash flow (Non-GAAP)   $ 10,525     $ 6,786     $ 28,354     $ 18,323  
                                 
Television broadcast cash flow as a percentage of television segment revenue     30.4 %     22.2 %     28.2 %     20.2 %
                                 
Television segment revenue   $ 34,663     $ 30,522     $ 100,600     $ 90,557  
                                 

The following table provides a reconciliation of radio income (loss) from operations (GAAP) to radio cash flow (non-GAAP) in each of the periods presented:

             
    Three months ended September 30,     Nine months ended September 30,  
    2012     2011     2012     2011  
                                 
Radio segment income from continuing operations   $ 1,387     $ 1,476     $ 4,020     $ 3,358  
                                 
  Adjustments:                                
    Net trade loss     (11 )     1       77       31  
                                 
Radio broadcast cash flow (Non-GAAP)   $ 1,376     $ 1,477     $ 4,097     $ 3,389  
                                 
Radio broadcast cash flow as a percentage of radio segment revenue     26.3 %     27.6 %     26.4 %     21.3 %
                                 
Radio segment revenue   $ 5,225     $ 5,344     $ 15,524     $ 15,876  
                                 

The following table provides television net revenue comparisons in each of the periods presented:

                             
    Three months ended September 30,   %     Nine months ended September 30,   %  
    2012   2011   Change     2012   2011   Change  
Core advertising (local and national)   $ 21,760   $ 22,775   (4 %)   $ 69,917   $ 69,578   0 %
Political     3,648     947   285 %     5,110     1,301   293 %
Internet     1,220     1,408   (13 %)     3,800     3,958   (4 %)
Retransmission     6,271     3,420   83 %     16,117     10,037   61 %
Trade, barter and other     1,764     1,972   (11 %)     5,656     5,683   (0 %)
Television segment net revenue   $ 34,663   $ 30,522   14 %   $ 100,600   $ 90,557   11 %
                                     
Television segment net revenue, excluding political   $ 31,015   $ 29,575   5 %   $ 95,490   $ 89,256   7 %
                                     

The following table provides radio net revenue comparisons in each of the periods presented:

                             
    Three months ended September 30,   %     Nine months ended September 30,   %  
    2012   2011   Change     2012   2011   Change  
Core advertising (local and national)   $ 4,849   $ 5,059   (4 %)   $ 14,591   $ 14,951   (2 %)
Political     122     22   455 %     180     149   21 %
Trade, barter and other     254     263   (3 %)     753     776   (3 %)
Radio segment net revenue   $ 5,225   $ 5,344   (2 %)   $ 15,524   $ 15,876   (2 %)
                                     
Radio segment net revenue, excluding political   $ 5,103   $ 5,322   (4 %)   $ 15,344   $ 15,727   (2 %)
                                     

Contact Information

  • Contacts:
    Sard Verbinnen & Co
    Ron Low or David Isaacs
    (415) 618-8750