<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1997
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act
For the transition period from _______________ to _____________
Commission File Number 0-22439
FISHER COMPANIES INC.
(Exact Name of Registrant as Specified in Its Charter)
WASHINGTON 91-0222175
------------------------------ ---------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization Identification Number
1525 ONE UNION SQUARE
600 UNIVERSITY STREET
SEATTLE, WASHINGTON 98101-3185
(Address of Principal Executive Offices) (Zip Code)
(206) 624-2752
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes No X
------ ------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common Stock, $2.50 par value, outstanding as of March 31, 1997: 4,267,516
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following Consolidated Financial Statements are presented for the
Registrant, Fisher Companies Inc. and wholly owned subsidiaries.
1. Consolidated Statement of income:
Three months ended March 31, 1997 and 1996.
2. Consolidated Balance sheet:
March 31, 1997 and December 31, 1996.
3. Consolidated Statement of Cash Flows:
Three months ended March 31, 1997 and 1996.
4. Notes to Consolidated Financial Statements.
2
<PAGE>
ITEM 1 - FINANCIAL STATEMENTS
FISHER COMPANIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31 1997 1996
- --------------------------- ---------- ---------
(In thousands except share and per share amounts)
(Unaudited)
<S>
Sales and other revenue: <C> <C>
Broadcasting $ 25,217 $ 22,295
Milling 31,585 31,249
Real estate 2,812 2,917
Corporate and other, primarily dividends and interest income 896 1,057
---------- ---------
60,510 57,518
---------- ---------
Costs and expenses:
Cost of products and services sold 40,076 39,450
Selling expenses 4,331 3,856
General, administrative and other expenses 8,943 8,074
---------- ---------
53,350 51,380
---------- ---------
Income from operations 7,160 6,138
Interest expense 1,382 1,337
---------- ---------
Income before provision for income taxes 5,778 4,801
Provision for federal and state income taxes 1,897 1,557
---------- ---------
Net income $ 3,881 $ 3,244
---------- ---------
Net income per common share $.91 $.76
---------- ---------
Weighted average common shares and equivalents outstanding 4,283,609 4,265,172
---------- ---------
Dividends declared per share $1.72
---------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
FISHER COMPANIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1997 1996
---------- ---------
<S> <C> <C>
ASSETS
(In thousands except share amounts)
(Current year unaudited)
Current Assets:
Cash and short-term cash investments $ 3,936 $ 5,116
Receivables 38,747 44,759
Inventories 16,661 13,199
Prepaid expenses 6,769 7,859
Television and radio broadcast rights 3,299 5,383
-------- --------
Total current assets 69,412 76,316
-------- --------
Marketable Securities, at market value 123,051 121,545
-------- --------
Other Assets:
Cash value of life insurance and retirement deposits 9,400 9,362
Television and radio broadcast rights 235 317
Intangible assets, net of amortization 50,511 47,982
Other 4,401 4,033
-------- --------
64,547 61,694
-------- --------
Property, Plant and Equipment, net 138,896 134,594
-------- --------
$395,906 $394,149
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 17,268 $ 9,258
Trade accounts payable 6,331 8,674
Accrued payroll and related benefits 3,384 4,536
Television and radio broadcast rights payable 3,400 5,036
Income taxes payable 1,984 1,147
Other current liabilities 3,463 5,244
-------- --------
Total current liabilities 35,830 33,895
-------- --------
Long-term Debt, net of current maturities 62,517 65,713
-------- --------
Other Liabilities:
Accrued retirement benefits 11,763 11,924
Deferred income taxes 49,896 49,483
Television and radio broadcast rights payable, long-term portion 119 296
Deposits and retainage payable 700 676
-------- --------
62,478 62,379
-------- --------
Minority Interests 33 33
-------- --------
Stockholders' Equity:
Common stock, shares authorized 12,000,000, $2.50 par value;
issued 4,267,516 in 1997 and 4,265,172 in 1996 10,669 10,663
Capital in excess of par 216 48
Unrealized gain on marketable securities, net of deferred
income taxes of $42,691 in 1997 and $42,164 in 1996 79,283 78,304
Retained earnings 144,880 143,114
-------- --------
235,048 232,129
-------- --------
$395,906 $394,149
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
FISHER COMPANIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31 1997 1996
------- --------
(In thousands)
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,881 $ 3,244
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,959 2,501
Noncurrent deferred income taxes (114) (57)
Issuance of stock pursuant to vested stock rights
and related tax benefit 146
Change in operating assets and liabilities:
Receivables 6,012 5,434
Inventories (3,462) (2,482)
Prepaid expenses 1,090 (2,064)
Cash value of life insurance and retirement deposits (38) 9
Income taxes payable 837 (377)
Trade accounts payable, accrued payroll and related
benefits and other current liabilities (5,276) (330)
Other assets (368) (500)
Accrued retirement benefits (161) (29)
Deposits and retainage payable 24 22
Amortization of television and radio broadcast rights 2,247 2,217
Payments for television and radio broadcast rights (1,894) (1,710)
Other, net 8 10
------- --------
Net cash provided by operating activities 5,891 5,888
------- --------
Cash flows from investing activities:
Purchase assets of radio stations (3,949)
Purchase of property, plant and equipment (5,849) (2,472)
------- --------
Net cash used in investing activities (9,798) (2,472)
------- --------
Cash flows from financing activities:
Net borrowings under notes payable 5,085 1,157
Borrowings under borrowing agreements and mortgage loans 27,000
Payments on borrowing agreements and mortgage loans (271) (27,152)
Proceeds received from exercise of stock options 28
Cash dividends paid (2,115) (1,859)
------- --------
Net cash provided by (used in) financing activities 2,727 (854)
------- --------
Net change in cash and short-term cash investments (1,180) 2,562
Cash and short-term cash investments, beginning of period 5,116 19,489
------- --------
Cash and short-term cash investments, end of period $ 3,936 $ 22,051
------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
FISHER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The unaudited financial information furnished herein, in the opinion of
management, reflects all adjustments which are necessary to state fairly the
consolidated financial position, results of operations, and cash flows of
Fisher Companies Inc. (the "Company") as of and for the periods indicated.
The Company presumes that users of the interim financial information herein
have read or have access to the Company's audited consolidated financial
statements and that the adequacy of additional disclosure needed for a fair
presentation, except in regard to material contingencies or recent
subsequent events, may be determined in that context. Accordingly, footnote
and other disclosures which would substantially duplicate the disclosures
contained in Form 10 for the year ended December 31, 1996 filed on April 25,
1997 by the Company have been omitted. The financial information herein is
not necessarily representative of a full year's operations.
2. In February 1997, Statement of Financial Accounting Standards No. 128,
Earnings per Share (SFAS 128), was issued. This pronouncement modifies the
calculation and disclosure of earnings per share (EPS) and will be adopted
by the Company in its financial statements for the year ended December 31,
1997. Early adoption is not permitted. After the adoption date, EPS data for
all periods presented, including quarterly financial data, is required to be
restated to conform to the provisions of SFAS 128.
3. Inventories are summarized as follows (in thousands):
<TABLE>
<CAPTION>
March 31 December 31
1997 1996
------- -------
<S> <C> <C>
Finished products $ 5,625 $ 4,758
Raw materials 10,880 8,255
Spare parts and supplies 156 186
------- -------
$16,661 $13,199
======= =======
</TABLE>
4. Dividends declared in March 1996 were payable quarterly at the rate of $.43
per share. In December 1996 an annual dividend in the amount of $1.96 per
share was declared, payable quarterly during 1997 at the rate of $.49 per
share.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CONSOLIDATED RESULTS OF OPERATIONS
Sales and other revenue for the three months ended March 31, 1997 increased by
$2,992,000 or 5.2% to $60,510,000 from $57,518,000 for the three months ended
March 31, 1996. Broadcasting and milling operations had increases in sales and
other revenue of 13.1% and 1.1%, respectively, while real estate operations had
a decrease in sales and other revenue of 3.6%.
Cost of products and services sold for the three months ended March 31, 1997
increased by $626,000 or 1.6% to $40,076,000 from $39,450,000 for the three
months ended March 31, 1996. The increase resulted primarily from increased
costs to acquire and produce broadcasting programming. As a percentage of sales
and other revenue, cost of products and services sold was 66.2% and 68.6% for
the three months ended March 31, 1997 and 1996, respectively. The decrease in
costs and services sold as a percentage of sales and other revenue was due
primarily to improved margins from milling operations.
Selling expenses for the three months ended March 31, 1997 increased by $475,000
or 12.3% to $4,331,000 from $3,856,000 for the three months ended March 31,
1996. The increase is the result of increased sales by broadcasting and milling
operations and additional selling expenses incurred at recently acquired radio
stations. As a percentage of sales and other revenue, selling expenses were 7.2%
and 6.7% for the three months ended March 31, 1997 and 1996, respectively.
General and administrative expenses for the three months ended March 31, 1997
increased by $869,000 or 10.8% to $8,943,000 from $8,074,000 for the three
months ended March 31, 1996. The increase relates primarily to general and
administrative expenses at recently acquired radio stations. As a percentage of
sales and other revenue, general and administrative expenses were 14.8% and
14.0% for the three months ended March 31, 1997 and 1996, respectively.
Interest expense for the three months ended March 31, 1997 increased by $45,000
or 3.4% to $1,382,000 from $1,337,000 for the three months ended March 31, 1996.
The increase in interest expense is due to higher average long-term debt
balances outstanding during the three months ended March 31, 1997 compared to
the three months ended March 31, 1996. The average interest rate during the
three months ended March 31, 1997 and 1996 was 7.0% and 7.2% respectively, which
partially offset the effect of the increase in average long-term debt
outstanding on interest expense.
Provision for federal and state income taxes for the three months ended March
31, 1997 increased by $340,000 or 21.8% to $1,897,000 from $1,557,000 for the
three months ended March 31, 1996. For the three months ended March 31, 1997 and
1996, the Company's effective tax rate was 32.8% and 32.4%, respectively.
7
<PAGE>
BROADCASTING OPERATIONS
Broadcasting revenue for the three months ended March 31, 1997 increased by
$2,922,000 or 13.1 % to $25,217,000 from $22,295,000 for the three months ended
March 31, 1996. The increase in broadcasting revenue is, in part, due to the
revenue earned at KWJJ-AM/FM and six radio stations in eastern Washington and
Montana which were acquired between May 1996 and January 1997. These stations
contributed net revenue of approximately $1,764,000 during the three months
ended March 31, 1997. Revenue from the Company's Seattle radio stations (KOMO-
AM, KVI-AM and KPLZ-FM) increased $1,014,000 or 26.6% over the three months
ended March 31, 1996 due to a strong local advertising market during the three
months ended March 31, 1997. Additionally, television revenue increased 1.9% due
to strong local advertising sales partially offset by slightly declining
national advertising sales.
Operating income for the three months ended March 31, 1997 increased by
$1,276,000 or 32.0% to $5,260,000 from $3,984,000 for the three months ended
March 31, 1996. As a percentage of broadcasting revenue, operating income was
20.9% and 17.9% for the three months ended March 31, 1997 and 1996,
respectively. The increase in operating income exceeded the growth in
broadcasting revenue primarily due to a strong market for local advertising
time, which increased broadcasting revenue without significant sales and
administrative expenditures.
MILLING OPERATIONS
Revenue from the milling subsidiary for the three months ended March 31, 1997
increased by $336,000 or 1.1 % to $31,585,000 from $31,249,000 for the three
months ended March 31, 1996. The increase in milling revenue was the net result
of increased revenues in the milling division partially offset by decreased
revenues in the food distribution division. Milling division revenue increased
$661,000 or 3.1%, which was primarily driven by a 9.6% increase in flour sales
volume partially offset by declining prices. Revenue from food distribution
decreased $1,403,000 or 10.3% as sales volume decreased 5.6% and prices
decreased as the product mix changed.
Operating income for the three months ended March 31, 1997 increased by $216,000
or 35.5% to $824,000 from $608,000 for the three months ended March 31, 1996. As
a percentage of milling revenue, operating income was 2.6% and 1.9% for the
three months ended March 31, 1997 and 1996, respectively. The increase in
operating income as a percentage of milling revenue was due to improved gross
margin percentages, particularly in the food distribution division. Gross margin
for the food distribution division increased to 17.3% for the three months ended
March 31, 1997 from 14.4% for the three months ended March 31, 1996, as a result
of an emphasis on sales of higher margin products.
REAL ESTATE OPERATIONS
Real estate revenue for the three months ended March 31, 1997 decreased by
$105,000 or 3.6% to $2,812,000 from $2,917,000 for the three months ended March
31, 1996. The decrease in real estate revenue is primarily due to the absence of
$128,000 in lease cancellation fees which were included in revenue during the
three months ended March 31, 1996. The decrease in lease cancellation fees was
partially offset by an increase in real estate revenues due to higher
8
<PAGE>
occupancy rates. Average occupancy levels for the three months ended March 31,
1997 and 1996 were 95.7% and 94.9%, respectively.
Operating income for the three months ended March 31, 1997 decreased by $215,000
or 20.7% to $822,000 from $1,037,000 for the three months ended March 31, 1996.
As a percentage of revenue, operating income was 29.2% and 35.6% for the three
months ended March 31, 1997 and 1996, respectively. The decrease in operating
income as a percentage of real estate revenue was due to higher personnel costs
and lower lease cancellation fees. These factors resulted in decreased revenue
and slightly higher operating expenses.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Company had working capital of $33,582,000 and cash
and short-term cash investments totaling $3,936,000. The Company intends to
finance working capital, debt service, capital expenditures and dividend
requirements primarily through operating activities. However, the Company will
consider using available lines of credit to fund acquisition activities and
significant real estate project development activities.
Net cash provided by operating activities was $5,891,000 for the three months
ended March 31, 1997. Net cash provided by operating activities consists of the
Company's net income, increased by non-cash expenses such as depreciation and
amortization, and adjusted by changes in components of working capital. Net cash
used in investing activities was $9,798,000 for the three months ended March 31,
1997. The principle uses of cash in investing activities were $3,949,000 for
acquisition of the assets of two radio stations in Montana and $5,849,000 to
purchase property, plant and equipment used in operations. Net cash provided by
financing activities was $2,727,000 for the three months ended March 31, 1997.
Cash provided for financing activities was obtained through net borrowings of
$5,085,000 under lines of credit and notes from shareholders and directors.
Proceeds from these net borrowings were used to finance acquisition of assets of
two Montana radio stations and purchase of property, plant and equipment to the
extent such purchases exceeded net cash provided by operating activities. In
addition, during the three months ended March 31, 1997 the Company repaid
$271,000 due on mortgage loans and received proceeds of $28,000 from the
exercise of stock options. Cash paid for dividends to stockholders totaled
$2,115,000 or $.49 per common share.
9
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: Exhibit 11, Statement re Computation of Per Share Earnings
Exhibit 27, Financial Data Schedule
(b) Reports on Form 8-K: None
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FISHER COMPANIES INC.
(Registrant)
Dated June 5, 1997 /s/ William W. Krippaehne, Jr.
- ---------------------- --------------------------------------
William W. Krippaehne, Jr.
President and Chief Executive Officer
Dated June 5, 1997 /s/ David D. Hillard
- ---------------------- --------------------------------------
David D. Hillard
Senior Vice President and Chief Financial
Officer
11
<PAGE>
EXHIBIT 11
FISHER COMPANIES INC.
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended March 31
1997 1996
---- ----
<S> <C> <C>
Weighted average common shares and equivalents
outstanding during the period:
Common shares 4,265,172 4,265,172
Stock options 7,057
Restricted stock rights 11,380
---------- ----------
Total 4,283,609 4,265,172
========== ==========
Net income $3,881,000 $3,244,000
========== ==========
Net income per common share $.91 $ .76
========== ==========
</TABLE>
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,936
<SECURITIES> 123,051
<RECEIVABLES> 38,747
<ALLOWANCES> 1,449
<INVENTORY> 16,661
<CURRENT-ASSETS> 69,412
<PP&E> 138,896
<DEPRECIATION> 93,969
<TOTAL-ASSETS> 395,906
<CURRENT-LIABILITIES> 35,830
<BONDS> 62,517
0
0
<COMMON> 10,669
<OTHER-SE> 224,379
<TOTAL-LIABILITY-AND-EQUITY> 235,048
<SALES> 59,441
<TOTAL-REVENUES> 60,510
<CGS> 40,076
<TOTAL-COSTS> 40,076
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 286
<INTEREST-EXPENSE> 1,382
<INCOME-PRETAX> 5,778
<INCOME-TAX> 1,897
<INCOME-CONTINUING> 3,881
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,881
<EPS-PRIMARY> .91
<EPS-DILUTED> 0
</TABLE>
