Fisher Communications, Inc. (NASDAQ: FSCI) today reported its
financial results for the third quarter ended September 30, 2011.
Fisher's third quarter net television revenue, excluding political
revenue, increased 8% over the same period last year. Fisher's
total consolidated revenue for the quarter, which includes Fisher
Plaza, was $39.7 million, down 5% from the third quarter of 2010.
Increases in TV core advertising and internet revenue helped offset
some of the expected decrease in political revenue. During the
quarter, internet revenue increased 52% to $1.4 million and TV core
advertising revenue increased 9%.
The Company reported net income of $1.4 million in the quarter,
compared to $3.3 million in the third quarter of 2010. The 2010
results included a pre-tax gain on the exchange of broadcast
equipment of $0.3 million and a $2.9 million gain from net
insurance reimbursements relating to the 2009 Fisher Plaza fire
insurance claim. Earnings per share were $0.16 in the third quarter
of 2011, compared to $0.38 for the third quarter of 2010.
Direct operating costs and selling, general and administrative
expenses for the quarter decreased $0.8 million, or 3%, from the
third quarter of 2010. Program amortization costs decreased $0.5
million, or 17%. The expense reductions are a reflection of the
continuing successful implementation of the Company's strategic
plan.
The decrease in operating costs included $1.5 million of savings
related to the non-renewal of the KING-FM Joint Sales Agreement, a
reduction in total variable compensation and a credit resulting
from the Company's revised employee vacation policy that was
announced in 2010 and became effective January 1, 2011. Some of
these savings were offset by additional costs of $0.7 million
related to the Plaza strategic review, investments in the internet
division and the resumption of the Company's matching contributions
to the 401(k) plan for employees.
EBITDA decreased $1.0 million, or 13%, to $6.8 million in the
third quarter of 2011.
Fisher President and Chief Executive Officer Colleen B. Brown
commented, "Our solid third quarter performance demonstrates the
continued strength of our market-leading broadcast properties and
the growing popularity of our digital platform. Through the
successful execution of our strategic plan, we have transformed
Fisher into a leader in local media by improving audience and
revenue share, embracing new ways to distribute our content, and
leveraging our unique multiplatform approach. Our demonstrated
ability to anticipate the changing nature of advertisers' spending
while developing innovative platforms and channels to meet their
needs, positions us well to deliver long-term value to our
communities and our shareholders."
Financial Highlights for the Third Quarter of
2011
(All comparisons are made to the third quarter of 2010 unless
otherwise noted.)
Television:
- TV core advertising revenue (excluding political) increased 9%
to $22.8 million.
- Net TV revenue increased 8% to $29.6 million (excluding
political).
- Retransmission consent revenue increased 4% to $3.4
million.
- Professional Services advertising revenue increased 26%, retail
increased 16% and automotive increased 3%.
- TV cash flow decreased $802,000 to $6.8 million; TV cash flow
margin was 22%, down from 24% in the same period last year.
- Internet revenue grew 52% to $1.4 million. Internet revenue
(including internet convergence revenue, which is reported in TV
core net advertising revenue) was 7% of TV net revenue.
Radio:
- Radio net revenue decreased 14% to $5.3 million.
- Radio cash flow decreased $494,000 to $1.5 million and cash
flow margin was 28%, down from 32%.
- Radio results in 2011 do not include the KING-FM Joint Sales
Agreement, which was not renewed during the second quarter.
Plaza:
- Fisher Plaza revenue grew $187,000, or 5%.
- Fisher Plaza EBITDA increased 7% to $2.3 million.
Balance Sheet:
- Cash and short-term investments were $27.3 million at September
30, 2011, compared to $52.9 million at the end of 2010. The
decrease reflected $10.3 million of cash generated from operations
during the nine months ended September 30, 2011, offset by the
Company's repurchase and redemption of $34.6 million in principal
amount of its senior notes, $4.2 million of proceeds from the sale
of non-essential real estate and $5.1 million in capital
expenditures.
- Total debt outstanding decreased from $101.4 million at the end
of 2010 to $66.8 million at September 30, 2011. As a result of
improved operating results and the Company's debt reduction
strategy, Fisher's debt-to-operating cash flow ratio decreased from
1.9x at the end of the second quarter to 1.7x at the end of the
third quarter.
Key Operating and Strategic Highlights
- Fisher television stations ranked either #1 or #2 in the key
Adult 25-54 demographic in early evening local news in five out of
its six markets during the July 2011 ratings period. Additionally,
Fisher television stations ranked #1 or #2 among adults 25-54 in
total day share in five out of its six markets.
- In its audited television markets, Fisher's consolidated TV
revenue was better than the consolidated market revenue decline by
210 basis points; excluding political, Fisher's TV revenue was 1060
basis points better than market growth. Fisher's share of
consolidated TV market revenues improved 50 basis points from the
third quarter of 2010.
- 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 two of the Top 5 when ranked by cumulative audience in
September 2011.
- Fisher Plaza occupancy was 96%, which is unchanged from
year-end.
Third Quarter Conference Call
Fisher will host a conference call today at 1:00 p.m. (PST).
Senior management will discuss the financial results and host a
question and answer session. The dial-in number for the audio
conference call is 1-866-783-2138; confirmation code 58746817. 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 29961898.
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,
except per-share
amounts) Three months ended Nine months ended
September 30, % September 30, %
2011 2010 change 2011 2010 change
-------- -------- ------ -------- -------- ------
Revenue $ 39,700 $ 41,831 (5%) $117,602 $117,227 0%
-------- -------- ------ -------- -------- ------
Operating expenses
Direct operating
costs 17,704 17,441 2% 52,595 51,834 1%
Selling, general
and
administrative
expenses 12,642 13,720 (8%) 40,809 41,340 (1%)
Amortization of
broadcast
rights 2,449 2,953 (17%) 8,324 8,886 (6%)
Depreciation and
amortization 2,697 3,525 (23%) 8,027 10,843 (26%)
Gain on sale of
real estate,
net - - n/a (4,089) - n/a
Plaza fire
reimbursements,
net (40) (2,919) 99% (223) (3,319) 93%
Gain on asset
exchange, net - (275) 100% - (2,057) 100%
-------- -------- ------ -------- -------- ------
Total operating
expenses 35,452 34,445 3% 105,443 107,527 (2%)
-------- -------- ------ -------- -------- ------
Income from
continuing
operations 4,248 7,386 (42%) 12,159 9,700 25%
Loss on
extinguishment of
senior notes, net (298) - (1,356) (72)
Other income, net 34 31 214 194
Interest expense (1,572) (2,368) (5,697) (7,630)
-------- -------- -------- --------
Income from
continuing
operations before
income taxes 2,412 5,049 5,320 2,192
Provision for
income taxes 893 1,785 1,978 802
-------- -------- -------- --------
Income from
continuing
operations, net
of income taxes 1,519 3,264 3,342 1,390
Income (loss) from
discontinued
operations, net
of income taxes (75) 56 (9) 79
-------- -------- -------- --------
Net income $ 1,444 $ 3,320 $ 3,333 1,469
======== ======== ======== ========
Income (loss) per
share:
From continuing
operations $ 0.17 $ 0.37 $ 0.38 $ 0.16
From
discontinued
operations (0.01) 0.01 - 0.01
-------- -------- -------- --------
Net income per
share $ 0.16 $ 0.38 $ 0.38 $ 0.17
======== ======== ======== ========
Income (loss) per
share assuming
dilution:
From continuing
operations $ 0.17 $ 0.37 $ 0.38 $ 0.16
From
discontinued
operations ( 0.01) 0.01 (0.01) 0.01
-------- -------- -------- --------
Net income per
share assuming
dilution $ 0.16 $ 0.38 $ 0.37 $ 0.17
======== ======== ======== ========
Weighted average
shares
outstanding 8,836 8,801 8,827 8,797
-------- -------- -------- --------
Weighted average
shares
outstanding
assuming dilution 8,900 8,845 8,898 8,837
-------- -------- -------- --------
Fisher Communications, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
(in thousands) 2011 2010
------------- -------------
ASSETS
Current Assets
Cash and cash equivalents $ 27,286 $ 52,945
Receivables, net 28,992 30,755
Income taxes receivable 92 1,353
Deferred income taxes, net 1,649 1,649
Prepaid expenses and other 2,072 2,863
Cash surrender value of annuity contracts - 2,397
Television broadcast rights 9,325 7,855
Assets held for sale 23 52
------------- -------------
Total current assets 69,439 99,869
Cash surrender value of life insurance and
annuity contracts 17,077 16,499
Goodwill, net 13,293 13,293
Intangible assets, net 40,366 40,543
Other assets 6,439 7,376
Assets held for sale 611 485
Property, plant and equipment, net 140,119 142,827
------------- -------------
Total Assets $ 287,344 $ 320,892
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 2,686 $ 4,017
Accrued payroll and related benefits 5,035 7,896
Interest payable 240 2,552
Television broadcast rights payable 8,970 7,849
Income taxes payable 1,250 -
Current portion of accrued retirement benefits 1,117 1,117
Other current liabilities 7,239 4,388
Liabilities of business held for sale 28 27
------------- -------------
Total current liabilities 26,565 27,846
Long-term debt 66,834 101,440
Accrued retirement benefits 18,956 18,982
Deferred income taxes, net 448 417
Other liabilities 4,953 6,981
------------- -------------
Total liabilities 117,756 155,666
------------- -------------
Total Stockholders' Equity 169,588 165,226
------------- -------------
Total Liabilities and Stockholders' Equity $ 287,344 $ 320,892
------------- -------------
Fisher Communications, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flow
(Unaudited)
Nine months ended September 30,
(in thousands) 2011 2010
--------------- ---------------
Operating activities
Net income $ 3,333 $ 1,469
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation and amortization 8,027 10,843
Deferred income taxes 31 (135)
Amortization of deferred financing
fees 235 312
Loss in operations of equity
investees 188 41
Loss on disposal of property, plant
and equipment 75 215
Gain on sale of radio station (48) -
Gain on sale of real estate, net (4,089) -
Amortization of broadcast rights 8,324 8,886
Payments for broadcast rights (8,688) (9,103)
Gain on exchange of assets, net - (2,057)
Loss on extinguishment of senior
notes, net 416 72
Amortization of non-cash contract
termination fee (1,096) (1,096)
Stock-based compensation 1,174 958
Change in operating assets and
liabilities, net
Receivables 1,791 (1,419)
Prepaid expenses and other 791 256
Cash surrender value of life insurance
and annuity contracts 1,819 (692)
Other assets 203 (46)
Trade accounts payable, accrued
payroll and related benefits and
other current liabilities (1,593) 6,161
Interest payable (2,312) (2,782)
Income taxes receivable and payable 2,514 10,993
Accrued retirement benefits 31 45
Other liabilities (783) (507)
--------------- ---------------
Net cash provided by operating
activities 10,343 22,414
--------------- ---------------
Investing activities
Proceeds from sale of radio station 48 -
Contribution to equity investee (88) (23)
Net cash in consolidation of equity
investee - 75
Purchase of radio stations (113) -
Purchase of property, plant and
equipment (5,070) (8,854)
Proceeds from sale of real estate 4,164 -
--------------- ---------------
Net cash used in investing
activities (1,059) (8,802)
--------------- ---------------
Financing activities
Repurchase of senior notes (34,606) (17,160)
Shares settled on vesting of stock
rights (278) (104)
Payments on capital lease obligations (134) (124)
Proceeds from exercise of stock options 75 -
--------------- ---------------
Net cash used in financing
activities (34,943) (17,388)
--------------- ---------------
Net decrease in cash and cash equivalents (25,659) (3,776)
Cash and cash equivalents, beginning of
period 52,945 43,982
--------------- ---------------
Cash and cash equivalents, end of period $ 27,286 $ 40,206
--------------- ---------------
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 Nine months ended
September 30, September 30,
2011 2010 2011 2010
-------- -------- -------- --------
Income from continuing operations $ 4,248 $ 7,386 $ 12,159 $ 9,700
Add:
Amortization of broadcast rights 2,449 2,953 8,324 8,886
Depreciation and amortization 2,697 3,525 8,027 10,843
Stock-based compensation 441 355 1,174 958
Loss on disposal of property,
plant and equipment 23 7 75 215
Subtract:
Gain on exchange of assets, net - 275 - 2,057
Gain on sale of real estate - - 4,089 -
Plaza fire reimbursements, net 40 2,919 223 3,319
Payments for broadcast rights 2,631 2,864 8,688 9,103
Amortization of non-cash benefit
resulting from change in national
advertising representation firm 365 365 1,096 1,096
-------- -------- -------- --------
EBITDA (Non-GAAP) $ 6,822 $ 7,803 $ 15,663 $ 15,027
-------- -------- -------- --------
EBITDA as a percentage of Revenue 17.2% 18.7% 13.3% 12.8%
-------- -------- -------- --------
The following table provides a reconciliation of television income from
continuing operations (GAAP) to television broadcast cash flow (non-GAAP)
in each of the periods presented:
Three months ended Nine months ended
September 30, September 30,
2011 2010 2011 2010
-------- -------- -------- --------
Television segment income from
continuing operations $ 4,417 $ 4,521 $ 11,261 $ 9,479
Add:
Amortization of broadcast rights 2,449 2,953 8,324 8,886
Depreciation and amortization 1,572 2,246 4,659 6,978
Corporate and internet expenses 2,729 2,288 7,746 6,378
Loss on disposal of property,
plant and equipment 23 8 75 90
Subtract:
Gain on exchange of assets, net - 275 - 2,057
Payments for broadcast rights 2,631 2,864 8,688 9,103
Amortization of non-cash benefit
resulting from change in national
advertising representation firm 365 365 1,096 1,096
Non-convergence internet revenue 1,408 924 3,958 2,373
-------- -------- -------- --------
Television Broadcast Cash Flow (Non-
GAAP) $ 6,786 $ 7,588 $ 18,323 $ 17,182
======== ======== ======== ========
Television Broadcast Cash Flow as a
percentage of Television Segment
Revenue 22.2% 23.7% 20.2% 19.2%
======== ======== ======== ========
Television Segment Revenue $ 30,522 $ 31,986 $ 90,557 $ 89,634
======== ======== ======== ========
The following table provides a reconciliation of radio income from
continuing operations (GAAP) to radio broadcast cash flow (non-GAAP) in
each of the periods presented:
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
2011 2010 2011 2010
-------- -------- -------- --------
Radio segment income from continuing
operations $ 1,155 $ 1,599 $ 2,423 $ 2,241
Add:
Depreciation and amortization 122 200 367 545
Corporate expenses and other 200 172 599 522
-------- -------- -------- --------
Radio Broadcast Cash Flow (Non-GAAP) $ 1,477 $ 1,971 $ 3,389 $ 3,308
======== ======== ======== ========
Radio Broadcast Cash Flow as a
percentage of Radio Segment Revenue 27.6% 31.9% 21.3% 19.4%
======== ======== ======== ========
Radio Segment Revenue $ 5,344 $ 6,179 $ 15,876 $ 17,057
======== ======== ======== ========
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 Nine months ended
September 30, September 30,
------------------ ------------------
2011 2010 2011 2010
-------- -------- -------- --------
Plaza segment income from continuing
operations $ 2,131 $ 4,583 $ 6,471 $ 8,055
Add:
Depreciation 763 779 2,293 2,432
Loss on disposal of property,
plant and equipment - - - 125
Subtract:
Plaza fire reimbursements, net 40 2,919 223 3,319
Operating expense allocated to TV
and Radio segments 569 299 1,604 1,035
-------- -------- -------- --------
Plaza EBITDA (Non-GAAP) $ 2,285 $ 2,144 $ 6,937 $ 6,258
======== ======== ======== ========
Plaza EBITDA as a percentage of
Plaza Segment Revenue 59.3% 58.5% 61.1% 58.7%
======== ======== ======== ========
Plaza Segment Revenue $ 3,853 $ 3,666 $ 11,361 $ 10,659
======== ======== ======== ========
The following table provides television net revenue comparisons in each of
the periods presented:
Three months ended Nine months ended
September 30, % September 30, %
------------------ ------ ------------------ ------
2011 2010 Change 2011 2010 Change
--------- -------- ------ --------- -------- ------
Core advertising
(local and
national) $ 22,775 $ 20,954 9% $ 69,578 $ 65,220 7%
Political 947 4,651 (80%) 1,301 6,901 (81%)
Internet 1,408 924 52% 3,958 2,373 67%
Retransmission 3,420 3,295 4% 10,037 9,235 9%
Trade, barter and
other 1,972 2,162 (9%) 5,683 5,905 (4%)
--------- -------- ------ --------- -------- ------
TV segment net
revenue $ 30,522 $ 31,986 (5%) $ 90,557 $ 89,634 1%
========= ======== ====== ========= ======== ======
Net television
revenue, excluding
political $ 29,575 $ 27,335 8% $ 89,256 $ 82,733 8%
The following table provides radio net revenue comparisons in each of the
periods presented:
Three months ended Nine months ended
September 30, % September 30, %
------------------ ------ ------------------ ------
2011 2010 Change 2011 2010 Change
--------- -------- ------ --------- -------- ------
Core adverting
(local and
national) $ 5,059 $ 5,635 (10%) $ 14,951 $ 15,853 (6%)
Political 22 272 (92%) 149 377 (60%)
Trade, barter and
other 263 272 (3%) 776 827 (6%)
--------- -------- ------ --------- -------- ------
Radio segment net
revenue $ 5,344 $ 6,179 (14%) $ 15,876 $ 17,057 (7%)
========= ======== ====== ========= ======== ======
Net radio revenue,
excluding political $ 5,322 $ 5,907 (10%) $ 15,727 $ 16,680 (6%)
Contacts: Sard Verbinnen & Co Paul Kranhold or Ron Low (415)
618-8750 Robin Weinberg (212) 687-8080
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