Fisher Communications, Inc. (NASDAQ: FSCI) today reported its
financial results for the second quarter ended June 30, 2011.
Fisher's second quarter net television revenue, excluding political
revenue, increased 4% over the same period last year. Fisher's
total consolidated revenue for the quarter, which includes Fisher
Plaza, was $40.4 million, equal to the second quarter of 2010.
Increases in TV core advertising, retransmission revenue and
internet revenue offset the expected decrease in political revenue.
During the quarter, internet revenue increased 66% to $1.4 million
and TV core revenue increased 3%.
The Company reported net income of $3.6 million in the quarter,
compared to $328,000 in the second quarter of 2010. The quarter's
net income included a $4.1 million pre-tax gain on the sale of
non-essential real estate in Seattle. The 2010 results included a
pre-tax gain on the exchange of broadcast equipment of $0.8 million
and a $0.3 million gain from net insurance reimbursements relating
to the 2009 Fisher Plaza fire insurance claim. Earnings per share
were $0.41, compared to $0.04 for the second quarter of 2010.
Direct operating costs and selling, general and administrative
expenses for the quarter decreased $1.2 million, or 4%, from the
second quarter of 2010.
The decrease in operating costs for the second quarter included
$0.8 million of additional costs related to the proxy contest
conducted by FrontFour Capital Group in connection with the
Company's 2011 Annual Meeting of Shareholders. This cost was fully
offset by a $1.1 million credit resulting from the Company's
revised employee vacation policy that was announced in 2010 and
became effective January 1, 2011. In addition, the Company had $0.5
million in compensation cost savings and $0.3 million in Local
Marketing Agreement fee savings related to the wind down of the
Company's KING-FM Joint Sales Agreement, which expired in the
second quarter. During the first half of 2011, the Company incurred
$1.6 million of costs related to the proxy contest.
Excluding the impact of proxy contest costs, ongoing operating
costs would have decreased by 6%, or $2.0 million, compared to the
second quarter of 2010.
EBITDA increased $1.5 million, or 27%, to $6.9 million in the
second quarter of 2011.
Fisher President and Chief Executive Officer Colleen B. Brown
commented, "Fisher performed well in the second quarter, with a
steady increase in net television revenue and robust EBITDA growth.
The Company's results reflect our broadcast properties' increasing
popularity and growth from our digital platform, combined with our
on-going multiplatform success. Through the successful execution of
our strategic plan, we have increased station market share,
developed innovative digital distribution channels to better serve
an increasingly mobile audience, strengthened our brand and
deepened our community ties, all of which enables Fisher to capture
a larger share of the local advertising spend."
Financial Highlights for the Second Quarter of 2011
(All comparisons are made to the second quarter of 2010 unless
otherwise noted.)
Television:
-- TV net revenue was flat at $30.9 million.
-- Core advertising revenue (local and national excluding political)
(net) increased 3% to $24.1 million.
-- Retransmission consent revenue increased 1% to $3.3 million.
-- Telecom and Retail advertising revenue increased 9% and 1%,
respectively, while Automotive decreased 2% and Professional Services
stayed flat.
-- TV cash flow increased $460,000, or 7%, to $6.9 million; TV cash flow
margin was 22%, up from 21% in this period last year.
-- Internet revenue (net) grew 66% to $1.4 million. Internet revenue
(including convergence revenue, which is reported in core advertising
revenue) was 6% of net TV revenue.
Radio:
-- Radio net revenue decreased 5% to $5.7 million.
-- Radio cash flow increased $654,000 to $1.7 million and cash flow margin
was 29.1%, up from 16.7%.
-- Radio results reflected the wind-down of the KING-FM Joint Sales
Agreement which was not renewed during the quarter.
Plaza:
-- Fisher Plaza revenue grew $336,000, or 10%.
-- Fisher Plaza EBITDA increased 13% to $2.5 million.
Balance Sheet:
-- Cash and short-term investments were $33.3 million at June 30, 2011,
compared to $52.9 million at the end of 2010. The decrease reflected
$6.2 million of cash generated from operations during the first half of
2011, offset by the Company's repurchase and redemption of $25.9
million in principal amount of its senior notes, $4.2 million of
proceeds from the sale of non-essential real estate and $3.0 million in
capital expenditures.
-- Total debt outstanding decreased from $101.4 million at the end of 2010
to $75.6 million at June 30, 2011. As a result of improved operating
results and the Company's debt reduction strategy, its
debt-to-operating cash flow ratio decreased from 2.8x at the end of the
first quarter to 1.9x at the end of the second quarter.
-- Additionally, in July 2011, the Company completed the redemption of an
additional $6.3 million in principal amount of its senior notes, which
further reduces total debt outstanding to $69.3 million.
Key Operating and Strategic Highlights
-- Fisher television stations ranked either #1 or #2 in the key Adult
25-54 demographic in total day share in all six of its markets in the
May 2011 ratings period.
-- In its audited television markets, Fisher's consolidated TV revenue was
in line with the consolidated market revenue decline of 290 basis
points; excluding political, Fisher's TV revenue was 280 basis points
better than market growth. Fisher's share of consolidated TV market
revenues improved 40 basis points from the first quarter.
-- Fisher Radio in Seattle had two of the Top 10 stations in the market
during Morning Drive for Adults age 25-54 in average share and
cumulative audience in June 2011. Fisher has the #1 station in the
market for Adults age 25-54 total day cumulative audience (KPLZ-FM).
-- Fisher Plaza occupancy was 96%, which is unchanged from year-end.
Second 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 1-866-203-2528; confirmation code 22814503. 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 89436540.
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 (FSCI) is an innovative local media
company with television, radio, internet and mobile operations
throughout the western United States. Fisher operates 18 television
stations, which include network affiliations with ABC, CBS, FOX,
Univision and CW that reach 3.5% of U.S. television households, and
three radio stations targeting a full range of audience
demographics. Fisher Interactive produces more than 120 local and
hyper-local websites and delivers comprehensive multiplatform
advertising solutions to local businesses. The Company is
headquartered at Fisher Plaza, a 300,000 square foot media,
telecommunications and data center facility in Seattle, WA. More
information about Fisher Communications, Inc. is available at
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)
(in thousands, Three months ended Six months ended
except per-share June 30, % June 30, %
amounts) 2011 2010 Change 2011 2010 Change
-------- -------- ------ -------- -------- ------
Revenue $ 40,350 $ 40,396 (0%) $ 77,902 $ 75,396 3%
-------- -------- ------ -------- -------- ------
Operating
expenses
Direct
operating
costs 17,217 17,453 (1%) 34,891 34,393 1%
Selling,
general and
administrative
expenses 13,417 14,360 (7%) 28,167 27,620 2%
Amortization of
broadcast
rights 2,905 2,963 (2%) 5,875 5,933 (1%)
Depreciation
and
amortization 2,672 3,682 (27%) 5,330 7,318 (27%)
Gain on sale of
real estate,
net (4,089) - n/a (4,089) - n/a
Plaza fire
reimbursements,
net (105) (309) 66% (183) (400) 54%
Gain on asset
exchange, net - (842) 100% - (1,782) 100%
-------- -------- ------ -------- -------- ------
Total operating
expenses 32,017 37,307 (14%) 69,991 73,082 (4%)
-------- -------- ------ -------- -------- ------
Income from
operations 8,333 3,089 170% 7,911 2,314 242%
Loss on
extinguishment
of senior notes,
net (948) (72) (1,058) (72)
Other income, net 100 106 180 163
Interest expense (1,878) (2,590) (4,125) (5,262)
-------- -------- -------- --------
Income (loss)
from continuing
operations
before income
taxes 5,607 533 2,908 (2,857)
Provision
(benefit) for
income taxes 2,065 252 1,085 (983)
-------- -------- -------- --------
Income (loss)
from continuing
operations 3,542 281 1,823 (1,874)
Income from
discontinued
operations, net
of income taxes 74 47 66 23
-------- -------- -------- --------
Net income (loss) $ 3,616 $ 328 $ 1,889 $ (1,851)
======== ======== ======== ========
Income (loss) per
share:
From continuing
operations $ 0.40 $ 0.03 $ 0.21 $ (0.21)
From
discontinued
operations 0.01 0.01 0.01 0.00
-------- -------- -------- --------
Net income
(loss) per
share $ 0.41 $ 0.04 $ 0.21 $ (0.21)
======== ======== ======== ========
Income (loss) per
share assuming
dilution:
From continuing
operations $ 0.40 $ 0.03 $ 0.21 $ (0.21)
From
discontinued
operations 0.01 0.01 0.01 0.00
-------- -------- -------- --------
Net income
(loss) per
share assuming
dilution $ 0.41 $ 0.04 $ 0.21 $ (0.21)
======== ======== ======== ========
Weighted average
shares
outstanding 8,834 8,798 8,822 8,793
======== ======== ======== ========
Weighted average
shares
outstanding
assuming
dilution 8,895 8,830 8,892 8,793
======== ======== ======== ========
Fisher Communications, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
(in thousands) 2011 2010
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 33,298 $ 52,945
Receivables, net 29,405 30,755
Income taxes receivable - 1,353
Deferred income taxes, net 1,649 1,649
Prepaid expenses and other 2,456 2,863
Cash surrender value of annuity contracts - 2,397
Television broadcast rights 2,060 7,855
Assets held for sale 44 52
------------ ------------
Total current assets 68,912 99,869
Cash surrender value of life insurance and
annuity contracts 16,877 16,499
Goodwill, net 13,293 13,293
Intangible assets, net 40,425 40,543
Other assets 6,843 7,376
Assets held for sale 611 485
Property, plant and equipment, net 140,418 142,827
------------ ------------
Total Assets $ 287,379 $ 320,892
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 4,753 $ 4,017
Accrued payroll and related benefits 4,187 7,896
Interest payable 1,901 2,552
Television broadcast rights payable 1,882 7,849
Income taxes payable 310 -
Current portion of accrued retirement benefits 1,117 1,117
Other current liabilities 4,783 4,388
Liabilities of business held for sale 41 27
------------ ------------
Total current liabilities 18,974 27,846
Long-term debt 75,580 101,440
Accrued retirement benefits 18,975 18,982
Deferred income taxes, net 438 417
Other liabilities 5,723 6,981
------------ ------------
Total liabilities 119,690 155,666
------------ ------------
Total Stockholders' Equity 167,689 165,226
------------ ------------
Total Liabilities and Stockholders' Equity $ 287,379 $ 320,892
============ ============
Fisher Communications, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flow
(Unaudited)
Six months ended June 30,
(in thousands) 2011 2010
------------ ------------
Operating activities
Net income (loss) $ 1,889 $ (1,851)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities
Depreciation and amortization 5,330 7,318
Deferred income taxes 21 11
Amortization of deferred financing fees 170 217
Amortization of broadcast rights 5,875 5,933
Payments for broadcast rights (6,057) (6,239)
Gain on exchange of assets, net - (1,782)
Loss on extinguishment of senior notes,
net 1,058 72
Loss on disposal of property, plant and
equipment 52 208
Gain on sale of radio station (48) -
Gain on sale of real estate, net (4,089) -
Amortization of non-cash contract
termination fee (731) (731)
Loss in operations of equity investees 84 -
Stock-based compensation 733 603
Change in operating assets and liabilities,
net
Receivables 1,358 (1,336)
Prepaid expenses and other 408 2,639
Cash surrender value of life insurance and
annuity contracts 2,019 (505)
Other assets 136 194
Trade accounts payable, accrued payroll and
related benefits and other current
liabilities (2,595) 3,871
Interest payable (651) (524)
Income taxes receivable and payable 1,662 9,028
Accrued retirement benefits 31 32
Other liabilities (428) (370)
------------ ------------
Net cash provided by operating
activities 6,227 16,788
------------ ------------
Investing activities
Contribution to equity investee (77) -
Net cash in consolidation of equity investee - 75
Purchase of radio stations (113) -
Proceeds from sale of radio station 48 -
Proceeds from sale of real estate 4,164 -
Purchase of property, plant and equipment (3,009) (6,120)
------------ ------------
Net cash provided by (used in)
investing activities 1,013 (6,045)
------------ ------------
Financing activities
Repurchase of senior notes (26,600) (17,160)
Shares settled on vesting of stock rights (273) (104)
Payments on capital lease obligations (89) (82)
Proceeds from exercise of stock options 75 -
------------ ------------
Net cash used in financing activities (26,887) (17,346)
------------ ------------
Net decrease in cash and cash equivalents (19,647) (6,603)
Cash and cash equivalents, beginning of period 52,945 43,982
------------ ------------
Cash and cash equivalents, end of period $ 33,298 $ 37,379
============ ============
Fisher Communications, Inc. and Subsidiaries
GAAP to Non-GAAP Reconciliations
(Unaudited, in thousands)
The following table provides a reconciliation of income from
continuing operations (GAAP) to EBITDA (non-GAAP) in each of the
periods presented:
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
2011 2010 2011 2010
-------- -------- -------- --------
Income from continuing operations $ 8,333 $ 3,089 $ 7,911 $ 2,314
Add:
Amortization of broadcast
rights 2,905 2,963 5,875 5,933
Depreciation and amortization 2,672 3,682 5,330 7,318
Stock-based compensation 433 371 733 603
Loss on disposal of property,
plant and equipment 18 47 52 208
Subtract:
Gain on exchange of assets, net - 842 - 1,782
Gain on sale of real estate 4,089 - 4,089 -
Plaza fire reimbursements, net 105 309 183 400
Payments for broadcast rights 2,864 3,189 6,057 6,239
Amortization of non-cash
benefit resulting from change
in national advertising
representation firm 366 366 731 731
-------- -------- -------- --------
EBITDA (Non-GAAP) $ 6,937 $ 5,446 $ 8,841 $ 7,224
======== ======== ======== ========
EBITDA as a percentage of Revenue 17.2% 13.5% 11.3% 9.6%
======== ======== ======== ========
The following table provides a reconciliation of television
income from continuing operations (GAAP) to television cash flow
(non-GAAP) in each of the periods presented:
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
2011 2010 2011 2010
-------- -------- -------- --------
Television segment income from
continuing operations $ 4,517 $ 4,243 $ 6,844 $ 4,958
Add:
Amortization of broadcast
rights 2,905 2,963 5,875 5,933
Depreciation and amortization 1,535 2,350 3,087 4,732
Corporate and internet expenses 2,511 2,045 5,017 4,090
Loss on disposal of property,
plant and equipment 18 46 52 82
Subtract:
Gain on exchange of assets, net - 842 - 1,782
Payments for broadcast rights 2,864 3,189 6,057 6,239
Amortization of non-cash
benefit resulting from change
in national advertising
representation firm 366 366 731 731
Non-convergence internet
revenue 1,372 826 2,550 1,449
-------- -------- -------- --------
Television Broadcast Cash Flow
(Non-GAAP) $ 6,884 $ 6,424 $ 11,537 $ 9,594
======== ======== ======== ========
Television Broadcast Cash Flow as a
percentage of Television Segment
Revenue 22.3% 20.7% 19.2% 16.6%
======== ======== ======== ========
Television Segment Revenue $ 30,934 $ 31,063 $ 60,035 $ 57,648
======== ======== ======== ========
The following table provides a reconciliation of radio income
from continuing operations (GAAP) to radio cash flow (non-GAAP) in
each of the periods presented:
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
2011 2010 2011 2010
-------- -------- -------- --------
Radio segment income from
continuing operations $ 1,410 $ 713 $ 1,268 $ 642
Add:
Depreciation and amortization 121 165 245 345
Corporate expenses and other 120 119 399 350
-------- -------- -------- --------
Radio Broadcast Cash Flow
(Non-GAAP) $ 1,651 $ 997 $ 1,912 $ 1,337
======== ======== ======== ========
Radio Broadcast Cash Flow as a
percentage of Radio Segment
Revenue 29.1% 16.7% 18.2% 12.3%
======== ======== ======== ========
Radio Segment Revenue $ 5,674 $ 5,964 $ 10,532 $ 10,878
======== ======== ======== ========
The following table provides a reconciliation of Plaza income
from continuing operations (GAAP) to Plaza EBITDA (non-GAAP) in
each of the periods presented:
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
2011 2010 2011 2010
-------- -------- -------- --------
Plaza segment income from
continuing operations $ 2,282 $ 1,901 $ 4,340 $ 3,472
Add:
Depreciation 766 873 1,530 1,653
Loss on disposal of property,
plant and equipment - - - 125
Subtract:
Plaza fire reimbursements, net 105 309 183 400
Operating expense allocated to
TV and Radio segments 492 287 1,035 736
-------- -------- -------- --------
Plaza EBITDA (Non-GAAP) $ 2,451 $ 2,178 $ 4,652 $ 4,114
======== ======== ======== ========
Plaza EBITDA as a percentage of
Plaza Segment Revenue 64.3% 62.7% 62.0% 58.8%
======== ======== ======== ========
Plaza Segment Revenue $ 3,811 $ 3,475 $ 7,508 $ 6,993
======== ======== ======== ========
The following table provides television net revenue comparisons
in each of the periods presented:
Three months ended Six months ended
June 30, % June 30, %
------------------- ------ ------------------- ------
2011 2010 Change 2011 2010 Change
--------- --------- ------ --------- --------- ------
Core advertising
(local and
national) $ 24,052 $ 23,314 3% $ 46,803 $ 44,266 6%
Political 266 1,498 (82%) 354 2,250 (84%)
Internet 1,372 826 66% 2,550 1,449 76%
Retransmission 3,315 3,296 1% 6,617 5,940 11%
Trade, barter
and other 1,929 2,129 (9%) 3,711 3,743 (1%)
--------- --------- ------ --------- --------- ------
TV segment net
revenue $ 30,934 $ 31,063 (0%) $ 60,035 $ 57,648 4%
========= ========= ====== ========= ========= ======
Net television
revenue,
excluding
political $ 30,668 $ 29,565 4% $ 59,681 $ 55,398 8%
The following table provides radio net revenue comparisons in
each of the periods presented:
Three months ended Six months ended
June 30, % June 30, %
------------------- ------ ------------------- ------
2011 2010 Change 2011 2010 Change
--------- --------- ------ --------- --------- ------
Core advertising
(local and
national) $ 5,276 $ 5,585 (6%) $ 9,892 $ 10,218 (3%)
Political 94 57 65% 127 105 21%
Trade, barter
and other 304 322 (6%) 513 555 (8%)
--------- --------- ------ --------- --------- ------
Radio segment
net revenue $ 5,674 $ 5,964 (5%) $ 10,532 $ 10,878 (3%)
========= ========= ====== ========= ========= ======
Net radio
revenue,
excluding
political $ 5,580 $ 5,907 (6%) $ 10,405 $ 10,773 (3%)
Contacts: Sard Verbinnen & Co Paul Kranhold or Ron Low (415)
618-8750 Robin Weinberg (212) 687-8080
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