SOURCE: Fisher Communications, Inc.

Fisher Communications, Inc.

May 10, 2011 07:00 ET

Fisher Communications, Inc. Reports First Quarter 2011 Financial Results

Net Television Revenue, Excluding Political, Increased 12.3%; EBITDA Increased 8.5%

SEATTLE, WA--(Marketwire - May 10, 2011) - Fisher Communications, Inc. (NASDAQ: FSCI) today reported its financial results for the first quarter ended March 31, 2011. Fisher's first quarter included solid core advertising growth, with net TV revenue increasing by 9.5%. Excluding political revenue, TV revenue increased 12.3%.

Total consolidated revenue, which includes Fisher Plaza, for the first quarter of 2011 was $37.9 million, an increase of 7.3% compared to the first quarter of 2010, primarily due to improvements in TV core advertising, retransmission revenue and internet revenue. Internet revenue increased 89% to $1.2 million for the first quarter 2011.

Direct operating costs and selling, general and administrative expenses for the quarter increased $2.2 million, or 7%, from the first quarter of 2010.

The increase in these operating costs included $0.8 million related to the ongoing proxy contest conducted by FrontFour Capital Group in connection with the Company's 2011 Annual Meeting of Shareholders and $1.5 million related to severance costs for reorganization, SERP costs, bad debt reserve, investments in the internet division, wind-down costs for KING FM and for the resumption of the Company's matching contributions to the 401(k) plan for employees. The first quarter results also include a $0.6 million credit resulting from the Company's revised vacation policy that was announced in 2010 and became effective January 1, 2011.

Excluding the impact of above costs, ongoing operating costs would have increased by 1.7% or $0.5 million compared to the first quarter of 2010.

EBITDA increased $149,000, or 8.5%, to $1.9 million in the first quarter of 2011.

The Company reported a net loss of $1.7 million in the quarter, compared to a net loss of $2.2 million in the first quarter of 2010, during which the Company recognized a pre-tax gain on exchange of broadcast equipment of $0.9 million and a $0.1 million gain from net insurance reimbursements relating to the Fisher Plaza insurance claim. The Company reported a first quarter 2011 loss-per-share of $0.20 compared to $0.25 for the first quarter 2010.

Fisher President and Chief Executive Officer Colleen B. Brown commented, "Fisher's successful execution of its strategic plan has continued our business growth by improving ratings, growing revenue share and adding new advertising categories and local solutions. The strong revenue and EBITDA growth we delivered in the first quarter reflects our market leading positions and the power of our brands, which has allowed Fisher to take full advantage of the early advertising recovery."

"We also remain very pleased with the growth of our internet portfolio, which focuses on delivering highly localized content and information across a number of platforms, including mobile devices and social media tools. We are combining these multi-platform offerings with innovative advertising solutions to better position Fisher to capture a larger share of the total market advertising spend. Our ability to leverage the strength of our core broadcasting assets with technological innovation has put Fisher at the forefront of redefining our industry for the future."

Financial Highlights for the First Quarter of 2011

(All comparisons are made to the first quarter of 2010 unless otherwise noted.)

Television:

--  TV net revenue increased 9% to $29.1 million.
--  Core advertising revenue (local and national excluding political) (net)
    increased 9% to $22.8 million.
--  Retransmission consent revenue increased 25% to $3.3 million.
--  Automotive and Pharmaceutical advertising revenue increased 27% and
    79%, respectively, while Professional Services increased 7%.
--  TV cash flow increased $1.5 million, or 47%, to $4.7 million; TV cash
    flow margin was 16%, up from 12% in this period last year.
--  Internet revenue (net) grew 89% to $1.2 million.  Internet revenue
    (including World Now revenue, which is reported in core advertising
    revenue) was 5.5% of net TV revenue.

Radio:

--  Radio net revenue decreased 1% to $5.2 million.
--  Radio cash flow declined $52,000 to $304,000 and cash flow margin was
    5.8%, down from 6.8%.
--  Radio cash flow was negatively impacted as a result of a format change
    at KVI-AM and the wind-down of the KING FM Joint Sales Agreement which
    expires in second quarter 2011.

Plaza:

--  Fisher Plaza revenue grew $179,000, or 5%.
--  Fisher Plaza EBITDA increased 14% to $2.2 million.

Balance Sheet:

--  Cash and short-term investments were $50.3 million at March 31, 2011,
    compared to $52.9 million at the end of 2010.  The decrease reflected
    $1.1 million of cash generated from operations, offset by the Company's
    repurchase of $2.6 million in principal amount of its senior notes and
    $743,000 in capital expenditures.
--  Total debt outstanding decreased from $101.4 million at the end of 2010
    to $98.8 million at March 31, 2011. Additionally, in the second quarter
    of 2011, the Company commenced the redemption of an additional $20
    million in principal amount of its senior notes which will further
    reduce total debt outstanding to $78.8 million.  As a result of
    improved operating results and our debt reduction strategy, our
    debt-to-operating cash flow ratio decreased from 2.9x to 2.8x as of
    March 31, 2011.

Key Operating and Strategic Highlights

--  Fisher television stations ranked either #1 or #2 in the key Adult
    25-54 demographic in early evening news in all six of its markets in
    the February 2011 ratings period.  Total Day share rank improved for
    four stations over last February.
--  In our audited television markets, Fisher's consolidated TV revenue
    beat consolidated market revenue growth by 750 basis points; excluding
    political, the TV revenue was 800 basis points better than market
    growth.  Fisher's share of consolidated TV market revenues improved 140
    basis points.
--  Fisher Radio in Seattle had 2 of the Top 10 stations in the market
    during Morning Drive for Adults age 25-54 share and cumulative audience
    in March 2011.  We have the #1 station in the market for Adults age
    25-54 total day cumulative audience (KPLZ-FM).
--  In our audited radio market, Fisher's radio revenue beat market revenue
    by 30 basis points and market share improved 10 basis points.
--  Fisher Plaza occupancy was 96%, which is unchanged from year end.

First 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 1-866-510-0676; confirmation code 58462724. A live audio webcast of the call will be accessible to the public on Fisher's Web site, www.fsci.com. A recording of the webcast will subsequently be archived on the Web site 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 14611265.

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, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Plaza 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 income (loss) from operations plus amortization of program rights, depreciation and amortization, non-cash charges, Internet and corporate expenses minus gain on asset exchange, net, payments for broadcast rights, amortization of non-cash benefit resulting from a change in national advertising representation firm and non-convergence Internet revenue.

Plaza EBITDA is calculated as Plaza income (loss) from operations plus depreciation, Plaza fire expenses (reimbursements), net, minus Plaza operating expenses allocated to the TV and Radio segments.

EBITDA is calculated as income from operations plus amortization of program rights; depreciation and amortization; stock-based compensation; Plaza fire expenses (reimbursements), net; gain on exchange of assets, net; and non-cash charges minus payments for broadcast rights and amortization of non-cash benefit resulting from a change in national advertising representation firm.

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/or operates 13 full power television stations, 7 low power television stations, and 8 radio stations in the Western United States. The Company also owns and operates Fisher Interactive Network, its online division (including over 120 online sites), Fisher Pathways, a satellite and fiber transmission provider, and Fisher Plaza, a media, telecommunications, and data center facility located near downtown Seattle. 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, concerning, among other things, 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, our ability to service and refinance our outstanding debt, 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, 2010, which we have filed with the Securities and Exchange Commission.

                 Fisher Communications, Inc. and Subsidiaries
               Condensed Consolidated Statements of Operations
                                 (Unaudited)

                                       Three months ended
(in thousands, except per-share             March 31,             %
 amounts)                               2011         2010       Change
                                    -----------  -----------  -----------
Revenue                             $    37,912  $    35,341            7%
                                    -----------  -----------  -----------
Operating expenses
  Direct operating costs                 17,757       17,017            4%
  Selling, general and
   administrative expenses               15,026       13,546           11%
  Amortization of broadcast rights        2,970        2,970            0%
  Depreciation and amortization           2,669        3,650          (27%)
  Plaza fire reimbursements, net            (78)         (91)          14%
  Gain on asset exchange, net                 -         (940)         100%
                                    -----------  -----------  -----------
  Total operating expenses               38,344       36,152            6%
                                    -----------  -----------  -----------
Loss from operations                       (432)        (811)          47%
Loss on extinguishment of senior
 notes, net                                (110)           -
Other income, net                            80           57
Interest expense                         (2,247)      (2,672)
                                    -----------  -----------
Loss before income taxes                 (2,709)      (3,426)
Benefit for income taxes                   (982)      (1,247)
                                    -----------  -----------
Net loss                            $    (1,727) $    (2,179)
                                    ===========  ===========


Net loss per share (basic and
 diluted)                           $     (0.20) $     (0.25)
                                    ===========  ===========

Weighted average shares outstanding
 (basic and diluted)                      8,809        8,786
                                    ===========  ===========



            Fisher Communications, Inc. and Subsidiaries
               Condensed Consolidated Balance Sheets
                            (Unaudited)

                                                   March 31,   December 31,
(in thousands)                                        2011         2010
                                                  ------------ ------------
ASSETS
Current Assets
  Cash and cash equivalents                       $     50,292 $     52,945
  Receivables, net                                      27,903       30,807
  Income taxes receivable                                1,624        1,353
  Deferred income taxes, net                             1,649        1,649
  Prepaid expenses and other                             3,546        2,863
  Cash surrender value of annuity contracts                  -        2,397
  Television broadcast rights                            5,040        7,855
                                                  ============ ============
    Total current assets                                90,054       99,869
Cash surrender value of life insurance and
 annuity contracts                                      16,682       16,499
Goodwill, net                                           13,293       13,293
Intangible assets, net                                  40,484       40,543
Other assets                                             7,229        7,376
Property, plant and equipment, net                     141,411      143,312
                                                  ------------ ------------
Total Assets                                      $    309,153 $    320,892
                                                  ============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
  Accounts payable                                $      3,382 $      4,044
  Accrued payroll and related benefits                   6,079        7,896
  Interest payable                                         355        2,552
  Television broadcast rights payable                    4,815        7,849
  Current portion of accrued retirement benefits         1,117        1,117
  Other current liabilities                              5,215        4,388
                                                  ============ ============
    Total current liabilities                           20,963       27,846
Long-term debt                                          98,830      101,440
Accrued retirement benefits                             18,981       18,982
Deferred income taxes, net                                 428          417
Other liabilities                                        6,409        6,981
                                                  ============ ============
    Total liabilities                                  145,611      155,666
                                                  ------------ ------------
Total Stockholders' Equity                             163,542      165,226
                                                  ------------ ------------
Total Liabilities and Stockholders' Equity        $    309,153 $    320,892
                                                  ============ ============



              Fisher Communications, Inc. and Subsidiaries
             Condensed Consolidated Statements of Cash Flow
                             (Unaudited)

                                                     Three months ended
                                                          March 31,
(in thousands)                                        2011         2010
                                                  -----------  -----------
Operating activities
  Net loss                                        $    (1,727) $    (2,179)
  Adjustments to reconcile net loss to net cash
   provided by operating activities
      Depreciation and amortization                     2,669        3,650
      Deferred income taxes                                10            5
      Loss in operations of equity investees               50            -
      Loss on disposal of property, plant and
       equipment                                           34          161
      Amortization of deferred financing fees              91          111
      Amortization of broadcast rights                  2,970        2,970
      Payments for broadcast rights                    (3,193)      (3,050)
      Loss on extinguishment of senior notes, net         110            -
      Gain on exchange of assets, net                       -         (940)
      Amortization of non-cash contract
       termination fee                                   (365)        (365)
      Stock-based compensation                            300          232
  Change in operating assets and liabilities, net
    Receivables                                         2,904        2,191
    Prepaid expenses and other                           (682)       1,886
    Cash surrender value of life insurance and
     annuity contracts                                  2,214         (200)
    Other assets                                           (1)          90
    Trade accounts payable, accrued payroll and
     related benefits and other current
     liabilities                                       (1,675)       2,979
    Interest payable                                   (2,197)      (2,719)
    Income taxes receivable and payable                  (272)      (1,190)
    Accrued retirement benefits                            18           16
    Other liabilities                                    (158)        (140)
                                                  -----------  -----------
        Net cash provided by operating activities       1,100        3,508
                                                  -----------  -----------
Investing activities
  Contribution to equity investee                          (4)           -
  Net cash in consolidation of equity investee              -           75
  Purchases of property, plant and equipment             (743)      (3,259)
                                                  -----------  -----------
        Net cash used in investing activities            (747)      (3,184)
                                                  -----------  -----------
Financing activities
  Repurchase of senior notes                           (2,685)           -
  Shares settled on vesting of stock rights              (349)        (104)
  Payments on capital lease obligations                   (44)         (41)
  Proceeds from exercise of stock options                  72            -
                                                  -----------  -----------
        Net cash used in financing activities          (3,006)        (145)
                                                  ===========  ===========
Net increase (decrease) in cash and cash
 equivalents                                           (2,653)         179
Cash and cash equivalents, beginning of period         52,945       43,982
                                                  -----------  -----------
Cash and cash equivalents, end of period          $    50,292  $    44,161
                                                  ===========  ===========



                Fisher Communications, Inc. and Subsidiaries
                    GAAP to Non-GAAP Reconciliations
                       (Unaudited, in thousands)

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

                                                     Three months ended
                                                          March 31,
                                                  ------------------------
                                                      2011         2010
                                                  -----------  -----------

Loss from operations                              $      (432) $      (811)

  Add:
    Amortization of broadcast rights                    2,970        2,970
    Depreciation and amortization                       2,669        3,650
    Stock-based compensation                              300          232
    Loss on disposal of property, plant and
     equipment                                             34          161

  Subtract:
    Gain on exchange of assets, net                         -          940
    Plaza fire reimbursements, net                         78           91
    Payments for broadcast rights                       3,193        3,050
    Amortization of non-cash benefit resulting
     from change in national advertising
     representation firm                                  365          365

                                                  -----------  -----------
EBITDA (Non-GAAP)                                 $     1,905  $     1,756
                                                  ===========  ===========
EBITDA as a percentage of Revenue                         5.0%         5.0%
                                                  -----------  -----------

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

                                                    Three months ended
                                                         March 31,
                                                  ------------------------
                                                      2011         2010
                                                  -----------  -----------

Television segment income from operations         $     2,327  $       715

  Add:
    Amortization of broadcast rights                    2,970        2,970
    Depreciation and amortization                       1,552        2,382
    Corporate and internet expenses                     2,506        2,045
    Loss on disposal of property, plant and
     equipment                                             34           36

  Subtract:
    Gain on exchange of assets, net                         -          940
    Payments for broadcast rights                       3,193        3,050
    Amortization of non-cash benefit resulting
     from change in national advertising
     representation firm                                  365          365
    Non-convergence internet revenue                    1,178          623

                                                  -----------  -----------
Television Broadcast Cash Flow (Non-GAAP)         $     4,653  $     3,170
                                                  ===========  ===========

Television Broadcast Cash Flow as a percentage of
 Television Segment Revenue                              16.0%        11.9%
                                                  ===========  ===========

Television Segment Revenue                        $    29,101  $    26,585
                                                  ===========  ===========

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

                                                     Three months ended
                                                          March 31,
                                                  ------------------------
                                                      2011         2010
                                                  -----------  -----------

Radio segment loss from operations                $      (152) $      (107)

  Add:
    Depreciation and amortization                         135          194
    Corporate expenses and other                          321          269

                                                  -----------  -----------
Radio Broadcast Cash Flow (Non-GAAP)              $       304  $       356
                                                  ===========  ===========

Radio Broadcast Cash Flow as a percentage of
 Radio Segment Revenue                                    5.8%         6.8%
                                                  ===========  ===========

Radio Segment Revenue                             $     5,218  $     5,255
                                                  ===========  ===========

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

                                                    Three months ended
                                                          March 31,
                                                  ------------------------
                                                      2011         2010
                                                  -----------  -----------

Plaza segment income from operations              $     2,058  $     1,571

  Add:
    Depreciation                                          764          780
    Loss on disposal of property, plant and
     equipment                                              -          125

  Subtract:
    Plaza fire reimbursements, net                         78           91
    Operating expense allocated to TV and Radio
     segments                                             543          449

                                                  -----------  -----------
Plaza EBITDA (Non-GAAP)                           $     2,201  $     1,936
                                                  ===========  ===========

Plaza EBITDA as a percentage of Plaza Segment
 Revenue                                                 59.5%        55.0%
                                                  ===========  ===========

Plaza Segment Revenue                             $     3,697  $     3,518
                                                  ===========  ===========

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

                                       Three months ended
                                             March 31,             %
                                    ------------------------- -----------
                                        2011         2010       Change
                                    ------------ ------------ -----------
Core advertising (local and
 national)                          $     22,751 $     20,952           9%
Political                                     88          752         (88%)
Internet                                   1,178          623          89%
Retransmission                             3,302        2,644          25%
Trade, barter and other                    1,782        1,614          10%
                                    ------------ ------------ -----------
TV segment net revenue              $     29,101 $     26,585           9%
                                    ============ ============ ===========

Net television revenue, excluding
 political                          $     29,013 $     25,833          12%

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

                                        Three months ended
                                             March 31,             %
                                    ------------------------- -----------
                                        2011         2010       Change
                                    ------------ ------------ -----------
Core advertising (local and
 national)                          $      4,918 $      4,909           0%
Political                                     34           49         (31%)
Trade, barter and other                      266          297         (10%)
                                    ------------ ------------ -----------
Radio segment net revenue           $      5,218 $      5,255          (1%)
                                    ============ ============ ===========

Net radio revenue, excluding
 political                          $      5,184 $      5,206          (0%)

Contact Information

  • Contacts:
    Sard Verbinnen & Co
    Paul Kranhold or Ron Low
    (415) 618-8750
    Robin Weinberg
    (212) 687-8080