-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OwKFa5tSoEYUsuJORlvk30hrl+TjReefy3MdqkvzrygHBy9faBCpHq2SBLMmBfjh Qg8ShrUdbJqQRef/NKJBnw== 0000898430-97-001689.txt : 19970428 0000898430-97-001689.hdr.sgml : 19970428 ACCESSION NUMBER: 0000898430-97-001689 CONFORMED SUBMISSION TYPE: 10-12G PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19970425 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FISHER COMPANIES INC CENTRAL INDEX KEY: 0001034669 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: 10-12G SEC ACT: 1934 Act SEC FILE NUMBER: 000-22439 FILM NUMBER: 97587757 BUSINESS ADDRESS: STREET 1: 1525 ONE UNION SQU STREET 2: 600 UNIVERSITY ST CITY: SEATTLE STATE: WA ZIP: 98101-3185 BUSINESS PHONE: 2066242752 MAIL ADDRESS: STREET 1: 1525 ONE UNION SQU STREET 2: 600 UNIVERSITY ST CITY: SEATTLE STATE: WA ZIP: 98101-3185 10-12G 1 FORM 10 As Filed With the Securities and Exchange Commission on April 25, 1997 Registration No. ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________ FORM 10 GENERAL FORM FOR REGISTRATION OF SECURITIES Pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934 __________ FISHER COMPANIES INC. (Exact name of registrant as specified in its charter) Washington 91-0222175 (State or other jurisdiction (I.R.S. employer identification number) of incorporation or organization) 1525 One Union Square 98101-3185 600 University Street (Zip code) Seattle, Washington (Address of principal executive offices) (206) 624-2752 (Registrant's telephone number, including area code) Securities to be registered pursuant to Section 12(b) of the Act: None Securities to be registered pursuant to Section 12(g) of the Act: Common Stock, $2.50 par value ================================================================================ FISHER COMPANIES INC. FORM 10 REGISTRATION STATEMENT ITEM 1. BUSINESS. Through its operating subsidiaries, Fisher Companies Inc. (the "Company") is actively engaged in television and radio broadcasting, the operation of satellite teleports and the exploitation of other emerging technologies; flour milling and bakery products distribution; and real estate investment and proprietary property management. The Company provides direction and guidance to its operating subsidiaries. The Company was founded in 1910 as Fisher Flouring Mills Company ("FFMCO"), and was reorganized into its current structure in 1971, by means of mergers with two milling-related entities that had common ownership with FFMCO and an entity with real estate investments that had similar ownership with FFMCO and the establishment of two additional operating subsidiaries, Fisher Mills Inc. ("FMI") and Fisher Properties Inc. ("FPI"). At the same time, FFMCO became a holding company and was renamed Fisher Companies Inc. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS (1):
CORPORATE, ELIMINATIONS BROADCASTING MILLING REAL ESTATE & OTHER CONSOLIDATED ------------ -------- ----------- ------------ ------------ SALES AND OTHER REVENUE 1996 $111,967 $135,697 $13,556 $ 4,000 $265,220 1995 101,192 112,360 10,941 4,087 228,580 1994 87,112 93,277 8,659 3,460 192,508 INCOME FROM OPERATIONS 1996 34,025 3,410 5,749 1,948 45,132 1995 31,518 2,907 3,267 2,152 39,844 1994 26,066 1,078 2,199 2,236 31,579 IDENTIFIABLE ASSETS 1996 120,911 57,638 86,600 129,000 394,149 1995 97,532 54,565 90,212 110,726 353,035 1994 84,760 47,899 90,887 84,526 308,072 (1) In thousands of dollars.
BROADCASTING OPERATIONS ----------------------- INTRODUCTION The Company's broadcasting operations are conducted through Fisher Broadcasting Inc. ("Fisher Broadcasting"), a Washington corporation. Fisher Broadcasting was incorporated by 1 FFMCO in 1926 as Fisher's Blend Stations Inc. to operate radio broadcasting properties, and was renamed Fisher Broadcasting Inc. in 1978. The Company owns all of the outstanding capital stock of Fisher Broadcasting, except that 3% of the outstanding shares of a class of nonvoting participating preferred stock is owned by third parties. Fisher Broadcasting owns and operates, directly or through subsidiaries in Washington, Oregon and Montana, two network-affiliated television stations, 23 radio stations, two broadcast satellite teleports, and provides emerging media development service. Fisher Broadcasting's television stations reach approximately 2,500,000 households, or 2.5% of all U.S. television households; its radio stations collectively represent the 37th largest radio group in the U.S. by audience, reaching approximately 1,300,000 persons in total cume (the estimated number of persons who listen to a station for a minimum of five minutes within a given time period); and its satellite teleports serve many of the Northwest's businesses and news organizations. Fisher Broadcasting believes that the foundation of its success in the broadcast and news media businesses is its commitment to creating value in today's broadcasting environment and in tomorrow's emerging communications marketplace. Throughout its 70 year history, Fisher Broadcasting has been committed to maximizing shareholder value by looking for ways to leverage its core competencies in a manner that serves Fisher Broadcasting's viewers, listeners, vendors and clients. Both of Fisher Broadcasting's television stations are located in the top 25 television markets: KOMO TV 4 (ABC) Seattle-Tacoma, Washington, market rank 12; and KATU Television 2 (ABC), Portland, Oregon, market rank 24. See Broadcasting Operations - "Television - KOMO TV" and "- Television - KATU Television." Fisher Broadcasting's stations are rated either number one or two in overall sign-on/sign-off audience delivery in their respective markets. Fisher Broadcasting's radio operations are concentrated in large, medium and small markets located in Washington, Oregon and Montana. In Seattle, KOMO News 1000, `Hot Talk' KVI 570, and STAR 101.5 (KPLZ) are uniquely positioned radio stations that serve a broad base of listeners with news, information and entertainment. See "Broadcasting Operations - Radio - Seattle Radio Market." In Portland, Oregon, the KWJJ AM/FM stations deliver country music to the total metropolitan population of approximately 1,900,000. See "Broadcasting Operations - Radio - Portland Radio Market." Sunbrook Communications, Inc. ("Sunbrook"), a wholly- owned subsidiary of Fisher Broadcasting, owns and operates 18 radio stations in Washington and Montana. See "Broadcasting Operations - Radio - Medium - and Small - Market Radio Operations." Fisher Communications Inc. ("FishComm"), a wholly owned subsidiary of Fisher Broadcasting, owns and operates Fisher Broadcasting's satellite teleport services, Internet services, and emerging media development operations. FishComm is committed to the full use of existing Fisher Broadcasting facilities and services and to leading the way into the future of emerging new media and emerging technologies. By generating new revenue from existing facilities, such as satellite communications receive and transmit facilities, FishComm is positioned to leverage Fisher Broadcasting's core competencies. See "Broadcasting Operations - Satellite, Internet, and Emerging Media Operations." As of December 31, 1996, Fisher Broadcasting employed 780 full- and part- time employees, 136 of whom are covered by five collective bargaining agreements with three labor unions. KOMO TV's IBEW (International Brotherhood of Electrical Workers) and AFTRA (American Federation of Television and Radio Artists) Staff Artists contracts expire on May 31 2 and December 1, 1997, respectively. The station's IATSE (International Alliance of Theatrical Stage Employees) contracts for photographers and for film and tape editors expire on May 1 and June 1, 1998, respectively. KATU's IATSE contract for photographers expires September 1, 1997. KWJJ AM/FM's IBEW contract for its on-air staff expires on December 4, 1997. Negotiations for the three-year contracts usually begin approximately one month prior to the end of the contract. Fisher Broadcasting believes its relations with employees to be good. TELEVISION AND RADIO OPERATIONS Fisher Broadcasting focuses on increasing shareholder value and profitability by serving the needs and wants of the diverse communities in which it operates. Management believes that increased audience share and revenue growth each flow from a commitment to serve the various audiences in the community. Fisher Broadcasting strives to develop and maintain the highest ranked stations in each of its markets, while maintaining careful control of programming and other operating costs. POSITIONING AND BRANDING STATIONS In each of its markets, Fisher Broadcasting positions its stations in a manner that creates and reinforces a local "brand" with which the viewer, listener or advertiser can identify. In developing and implementing this positioning, each broadcasting operation utilizes a market-specific planning process designed to integrate news and entertainment programming with customized promotional and sales strategies. Fisher Broadcasting's positioning varies by market, taking into account service to the community, demographics, competition, and other market dynamics and opportunities. See "Broadcasting Operations - Television - General Overview" and "- Radio - General Overview." BUILDING ON LOCAL NEWS INFORMATION AND ENTERTAINMENT PROGRAMMING FRANCHISES Each Fisher Broadcasting station strives to build audience loyalty by focusing on local news and entertainment programming. Fisher Broadcasting believes a strong, well-defined local news product builds viewer loyalty. In addition, each station also produces information, entertainment, public affairs and children's programs that enhance Fisher Broadcasting's ties to the local communities served by such station. Dedication to public service and community affairs also serves to strengthen Fisher Broadcasting's bond with the viewers, listeners and advertisers in such communities. See "Broadcasting Operations - Television - Competition" and "- Radio - Competition." INVESTING IN EMPLOYEES Fisher Broadcasting believes that its employees are its most important and valuable resource. Each employee has the opportunity to participate in training to assist him or her in the continual process of generating a new future, both for the employee and for Fisher Broadcasting. Through Fisher University, a program for employees of the Company and all of its subsidiaries, employees receive training that emphasizes the importance of Fisher Broadcasting's historical strengths, while addressing current and future challenges. 3 INVESTING IN TECHNOLOGY AND OTHER CAPITAL IMPROVEMENTS Fisher Broadcasting regularly invests in capital equipment that will either increase worker productivity, reduce station operating costs, or improve signal quality and strength. Capital expenditures for Fisher Broadcasting's television and radio operations over the past five years were approximately $18.5 million. Fisher Broadcasting believes that its capital investment program enables it to enhance the quality of its programming production and gain competitive advantages in the local markets served by its stations. On January 20, 1997, under an experimental license granted by the Federal Communications Commission ("FCC"), KOMO TV became the first commercial broadcast station on the West Coast to transmit digital high definition television. As discussed in "Broadcasting Operations - Licensing and Regulations Application to Television and Radio Broadcasting - Proposed Legislation and Regulations", the FCC has just announced its licensing plan for digital television. Advancements in digital technology are expected to replace today's current analog standard, making it the first fundamental change in television in over 50 years, and Fisher Broadcasting is prepared to make the necessary investment in order to fully exploit this technology. ACQUISITIONS In early 1994, Fisher Broadcasting owned and operated two television stations (KOMO TV, Seattle and KATU Television, Portland) and one radio station (KOMO AM, Seattle). Since that time, Fisher Broadcasting has acquired two additional radio stations in Seattle, two radio stations in Portland, and eighteen radio stations in Washington and Montana. See "Broadcasting Operations - - Radio." Fisher Broadcasting plans to continue to evaluate and, if appropriate, pursue acquisition opportunities in television, radio, and emerging media markets. Any acquisition would target broadcast and emerging media properties that could be acquired on favorable terms and offer attractive opportunities for the successful application of Fisher Broadcasting's operating strategies or would be complementary to its current operations and core competencies. In assessing acquisition opportunities, Fisher Broadcasting will consider various factors, including (1) price, (2) available resources for acquisition, (3) government regulation of station ownership, (4) whether the size, location, network affiliation, and other characteristics of any acquisition candidate would complement Fisher Broadcasting's current broadcast operating commitments, (5) whether the projected population growth, audience demographics, and business development opportunities in the acquisition candidate's markets would facilitate increased advertising revenues, and (6) whether any acquisition candidate would provide station- and market-specific opportunities to increase revenues and leverage Fisher Broadcasting's core competencies and existing technology commitments. Fisher Broadcasting does not presently have any agreements or understandings to acquire or sell broadcast or emerging media properties. Fisher Broadcasting is not committed to any timetable for acquisitions nor to any number or level of acquisitions. There can be no guarantee that Fisher Broadcasting will make future acquisitions and, if there are such acquisitions, no guarantee as to the number of stations or the size of the markets any such stations might serve. 4 EXPANDING PROGRAMMING PRODUCTION Fisher Broadcasting seeks to address and satisfy the news, information, entertainment and public outreach needs of the local communities served by each station. Fisher Broadcasting believes that consistent focus on such needs is one of the principal reasons why various Fisher Broadcasting programs have received significant local and national attention. This attention has, in turn, led to the syndication of some of Fisher Broadcasting's programming efforts. Fisher Broadcasting believes that syndication is an area of emerging growth, creating new revenue opportunities without commensurate increases in expenses. TELEVISION GENERAL OVERVIEW Commercial television broadcasting began in the United States on a regular basis in the 1940s. There are a limited number of channels available for broadcasting in any one geographic area, and the license to operate a television station is granted by the FCC. Television stations that broadcast over the very high frequency ("VHF") band (channels 2-13) of the spectrum generally have some competitive advantage over television stations that broadcast over the ultra- high frequency ("UHF") band (channels above 13) of the spectrum because VHF channels usually have better signal coverage and operate at a lower transmission cost. However, the improvement of UHF transmitters and receivers, the complete elimination from the marketplace of VHF-only television receivers and the expansion of cable television systems have reduced the competitive advantage of stations broadcasting over the VHF band. Television station revenues are primarily derived from the sale of local, regional and national advertising and, to a much lesser extent, from network compensation and studio rental and commercial production activities. Broadcast television stations' heavy reliance on advertising revenues renders the stations vulnerable to cyclical changes in the economy. The size of advertisers' budgets, which are affected by broad economic trends, affect the broadcast industry in general and, specifically, the revenues of individual broadcast television stations. Television stations in the country are grouped by A.C. Nielsen & Co. ("Nielsen"), a company that provides audience measuring services, into approximately 210 generally recognized television markets that are ranked in size according to various formulae based upon an actual or potential audience. Each market is designated as an exclusive geographic area consisting of all counties in which the home-market commercial stations receive the greatest percentage of total viewing hours. Nielsen periodically publishes data on estimated audiences for television stations in the various markets throughout the country. These estimates are expressed in terms of the percentage of the total potential audience viewing a station in the market (the station's "rating") and of the percentage of the audience actually watching television (the station's "share"). Nielsen provides such data on the basis of total television households and selected demographic groupings in the market. The specific geographic markets are called Designated Market Areas, or "DMAs." 5 Nielsen uses two methods of determining a station's rating and share. In larger geographic markets, ratings are determined by a combination of meters connected directly to selected television sets and weekly viewer-completed diaries. In smaller markets, ratings are determined by weekly diaries only. Both markets in which Fisher Broadcasting has television stations are metered. Historically, three major broadcast networks, ABC, CBS, and NBC, dominated broadcast television. In recent years, The Fox Network ("Fox") has effectively evolved into the fourth major network, although the hours of network programming produced by Fox for its affiliated stations are fewer than those produced by the other three major networks. In addition, the United-Paramount Network ("UPN") and the Warner Brothers Network ("WB") have launched new television networks with a limited amount of weekly programming. See "Broadcasting Operations - Television - Network Affiliations." The affiliation by a television station with one of the four major networks has a significant impact on the composition of the station's programming, revenues, expenses and operations. A typical affiliated station receives approximately 9 to 10 hours of each day's programming from the network. This programming, along with cash payments ("network compensation"), is provided to the affiliate by the network in exchange for a substantial majority of the advertising time sold during the airing of network programs. The network then sells this advertising time for its own account. The affiliate retains the revenues from time sold during designated breaks for local sale in and between network programs, and during programs produced by the affiliate or purchased from non-network sources. In acquiring programming to supplement network programming, network affiliates compete primarily with other affiliates and independent stations in their markets. Cable systems generally do not compete with local stations for programming, although various national cable networks from time to time have acquired programs that would otherwise have been offered to local stations. In addition, a television station may acquire programming through bartering arrangements. Under such arrangements, which are becoming increasingly popular with both network affiliates and independents, a national program distributor may receive advertising time in exchange for the programming it supplies, with the station paying no cash or a reduced fee for such programming. An affiliate of UPN or WB receives a smaller portion of its programming from the network compared to an affiliate of NBC, ABC, CBS or Fox. Currently, UPN and WB provide twelve hours and seventeen hours, respectively, of programming per day to their affiliates. As a result of the smaller amount of programming provided by their networks, affiliates of UPN or WB must purchase or produce a greater amount of their programming, resulting in generally higher programming costs. These stations, however, retain a larger portion of the inventory of advertising time and the revenues obtained from the sale of such time than stations affiliated with the major networks. In contrast to a network-affiliated station, an independent station purchases or produces all of the programming that it broadcasts, generally resulting in higher programming costs, although the independent station is, in theory, able to retain its entire inventory of advertising time and all of the revenue obtained from the sale of such time. Barter and cash-plus-barter arrangements, however, also have become increasingly popular among independent stations. 6 Broadcast television stations compete for advertising revenues primarily with other broadcast television stations and, to a lesser extent, with radio stations, cable system operators and programmers and newspapers serving the same market. Traditional network programming, and recently Fox programming, generally achieves higher audience levels than syndicated programs aired by independent stations. However, as greater amounts of advertising time are available for sale by independent stations and Fox affiliates in syndicated programs, those stations typically achieve a share of the television market advertising revenues that is greater than their share of the market's audience. Through the 1970s, network television broadcasting enjoyed virtual dominance in viewership and television advertising revenues because network- affiliated stations only competed with each other in local markets. Beginning in the 1980s, this level of dominance began to change as the FCC authorized more local stations, and marketplace choices expanded with the growth of independent stations and cable television services. Cable television systems were first installed in significant numbers in the 1970s and were initially used to retransmit broadcast television programming to paying subscribers in areas with poor broadcast signal reception. In the aggregate, cable-originated programming has emerged as a significant competitor for viewers of broadcast television programming, although no single cable programming network regularly attains audience levels amounting to more than a small fraction of any of the major broadcast networks. The advertising share of cable networks increased during the 1970s and 1980s as a result of the growth in cable penetration (the percentage of television households that are connected to a cable system). Notwithstanding such increases in cable viewership and advertising, over-the-air broadcasting remains the dominant distribution system for mass market television advertising. Fisher Broadcasting believes that the market shares of television stations affiliated with NBC, ABC and CBS declined during the 1980's primarily because of the emergence of Fox and certain strong independent stations and, secondarily, because of increased cable penetration. Independent stations have emerged as viable competitors for television viewership share, particularly as a result of the availability of first-run, network-quality programming. In addition, there has been substantial growth in the number of home satellite dish receivers and video cassette recorders, which have further expanded the number of programming alternatives available to household audiences. Further advances in technology may increase competition for household audiences and advertisers. Video compression techniques, now in use with direct broadcast satellites and in development for cable and wireless cable, are expected to permit greater numbers of channels to be carried with existing bandwidth. These compression techniques, as well as other technological developments, are applicable to all digital delivery systems, including over- the-air broadcasting, and have the potential to provide vastly expanded programming to highly targeted audiences. Reduction in the cost of creating additional channel capacity could lower entry barriers for new channels and encourage the development of increasingly specialized niche programming. This ability to reach very narrowly defined audiences is expected to alter the competitive dynamics for advertising expenditures. Fisher Broadcasting is unable to predict the effect that technological changes will have on the broadcast television industry or the future results of Fisher Broadcasting's operations. 7 COMPETITION Competition in the television industry, including the markets in which Fisher Broadcasting's stations compete, takes place on several levels: competition for audience, competition for programming (including news) and competition for advertisers. Additional factors material to a television station's competitive position include signal coverage and assigned frequency. The television broadcasting industry is continually faced with technological change and innovation, the possible rise in popularity of competing entertainment and communications media, and governmental restrictions or actions of federal regulatory bodies, including the FCC and the Federal Trade Commission, any of which could have a material effect on the broadcasting business in general and Fisher Broadcasting's business in particular. Audience. Stations compete for audiences on the basis of program -------- popularity, which has a direct effect on advertising rates. A majority of the daily programming on network-affiliated stations is supplied by the network with which such stations are affiliated. During periods of network programming, the stations are totally dependent upon the performance of the network programs in attracting viewers. The competition between the networks is intense and the success of any network's programming can vary significantly over time. Each station competes in non-network time periods on the basis of the performance of its programming during such time periods, using a combination of self-produced news, public affairs and other entertainment programming that each station believes will attract viewers. The competition between stations in non-network time periods is intense and here, too, success can vary over time. Fisher Broadcasting's stations compete for television viewership share against local network-affiliated and independent stations, as well as against cable and alternate methods of television transmission. These other transmission methods can increase competition for a station by bringing into its market distant broadcasting signals not otherwise available to the station's audience, and also by serving as a distribution system for non-broadcast programming originated on the cable system. Historically, cable operators have not sought to compete with broadcast stations for a share of the local news audience. To the extent cable operators elect to do so in the future, the increased competition for local news audiences could have an adverse effect on Fisher Broadcasting's advertising revenues. Other sources of competition for Fisher Broadcasting's television stations include home entertainment systems (including video cassette recorder and playback systems, videodisks and television game devices), multipoint distribution systems, multichannel-multipoint distribution systems, wireless cable and satellite master antenna television systems. Fisher Broadcasting's stations also face competition from high-powered, direct broadcast satellite services, such as DIRECT-TV, which transmit programming directly to homes equipped with special receiving antennas or to cable television systems for transmission to their subscribers. Fisher Broadcasting competes with these sources of competition both on the basis of service and product performance (quality of reception and number of channels that may be offered) and price (the relative cost to utilize these systems compared to television viewing). Programming. Competition for non-network programming involves negotiating ----------- with national program distributors, or syndicators, which sell first-run and rerun packages of programming. Fisher Broadcasting's stations compete against in-market broadcast stations for exclusive access to off-network reruns (such as "Home Improvement") and first-run product 8 (such as "The Oprah Winfrey Show"). Cable systems generally do not compete with local stations for programming, although various national cable networks from time to time have acquired programs that would have otherwise been offered to local television stations. Advertising. Advertising rates are based upon the size of the market in ----------- which a station operates, a program's popularity among the viewers an advertiser wishes to attract in that market, the number of advertisers competing for the available time, the demographic make-up of the market served by the station, the availability of alternative advertising media in the market area, the presence of aggressive and knowledgeable sales forces, and the development of projects, features and programs that tie advertiser messages to programming. Advertising rates are also determined by a station's overall ability to attract viewers in its market, as well as the station's ability to attract viewers among particular demographic groups that an advertiser may be targeting. Fisher Broadcasting's stations compete for advertising revenues with other television stations in their respective markets, as well as with other advertising media, such as newspapers, radio, magazines, outdoor advertising, transit advertising, yellow page directories, direct mail and local cable systems. The amount of paid political advertising fluctuates significantly and follows no predictable pattern. Competition for advertising dollars in the television broadcasting industry occurs primarily within individual markets on the basis of the above factors as well as on the basis of advertising rates charged by competitors. Generally, a television broadcasting station in one market area does not compete with stations in other market areas. Fisher Broadcasting's television stations are located in highly competitive markets. NETWORK AFFILIATIONS Fisher Broadcasting's television stations are both affiliated with the ABC Television Network. The stations' affiliation agreements with ABC provide each station with the right to broadcast all programs transmitted by the network. In return, the network has the right to sell most of the advertising time during such broadcasts. Each station receives a specified amount of network compensation for broadcasting network programs. To the extent a station's preemption of network programming exceeds a designated amount, such compensation may be reduced. The payments are also subject to decreases by the network during the term of the affiliation agreement under other circumstances, with provisions for advanced notice. Fisher Broadcasting's ABC affiliation agreements for KOMO TV and KATU expire in 2004. Although Fisher Broadcasting expects to continue to be able to renew its affiliation agreements with ABC, no assurance can be given that such renewals will be obtained. The non-renewal or termination of one or both of those agreements could have a material adverse effect on Fisher Broadcasting's results of operations. KOMO TV, SEATTLE, WASHINGTON Market Overview. KOMO TV, an ABC affiliate, operates in the Seattle-Tacoma --------------- market, the 12th largest DMA in the nation, with approximately 1.5 million television households and a population of approximately 3.9 million. In 1996, approximately 72% of the population in the DMA subscribed to cable. According to recent U.S. Census Bureau reports, the market's metropolitan audience had an average household income of approximately $50,300, as compared to the national average of approximately $46,800. Major industries in the market include aerospace, biotechnology, forestry, software, telecommunications, transportation, retail and international trade. Major employers include The Boeing Company, Microsoft Corporation, 9 Nordstrom, Inc. and Alaska Airlines, Inc. In 1996, television advertising revenue for the Seattle-Tacoma DMA was $276 million, as reported by Miller, Kaplan, Arase & Co., an accounting firm that provides the television industry with revenue figures. Station Performance. KOMO TV had an average audience share of 18%, sign on ------------------- to sign off from 1992-1996. Fisher Broadcasting believes that KOMO TV has established a strong local presence in the Seattle-Tacoma market through the station's community involvement, local news operation and local non-news programming. KOMO TV has made a major commitment to enhancing the health and welfare of the Northwest's young people and their families with its "For Kids' Sake" campaign. KOMO TV fulfills this commitment with a significant schedule of programming, projects, and community outreach activities and events. Since the campaign's inception in 1987, KOMO TV has been recognized for its leadership in the area of children and families by the White House, the National Association of Broadcasting, the National Association of Television Arts and Sciences, and the National Association of Television Programmers and Executives. Now in its 11th year, KOMO TV's "For Kids Sake" campaign has helped raise over $24 million for Children's Hospital and Medical Center in Seattle, Washington; collected over 2.8 million pounds of food to help feed hungry families in Western Washington; produced award-winning prime time specials on issues of concern to Northwest families; and encouraged thousands of young people to "Read as much as you watch TV." KOMO TV broadcasts 25 hours per week of scheduled local news programs. KOMO News 4 has been recognized for excellence by the National Association of Broadcasters, the Radio and Television News Directors' Association, and the National Association of Television Arts and Sciences. KOMO TV was notified in April 1997 that it had received a George Foster Peabody Award for "Excellence in Local TV Programming." There were 31 recipients of this international award which recognizes broadcasting and cable excellence, with KOMO TV being one of the four commercial television stations in the country to be honored. KOMO TV received the Peabody Award for its News 4 specials "War on Children" and "Earth Agenda." KOMO TV also has a long-standing history of local non-news programming. "Northwest Afternoon" is a live Monday through Friday talk program designed to meet the information and entertainment needs of the female audience. "Town Meeting," which airs on Sundays at 6:00 p.m., is a weekly public affairs program that provides a forum for viewers to share and discuss important issues in their lives. KOMO TV also airs a number of syndicated programs, including "Live with Regis and Kathie Lee," "Wheel of Fortune," "Jeopardy," and, beginning in the fall of 1997, "The Rosie O'Donnell Show." KOMO TV broadcasts from its studios in Seattle. Currently, Fisher Broadcasting is contemplating a new broadcast center with digital equipment that would greatly expedite the transition from analog to digital high definition television broadcasting. Planning of the contemplated facility is in the initial stage only, and no decision has been made to proceed. If subsequent planning and actual construction is approved and proceeds according to Fisher 10 Broadcasting's preliminary objectives, it is anticipated that KOMO TV's move into such new facility would be completed by January 1, 2000.
KOMO TV MARKET/STATION DATA 1992 1993 1994 1995 1996 --------- --------- --------- --------- --------- Market revenue (in thousands)........... $211,472 $218,347 $254,376 $258,660 $275,594 Market revenue growth over prior period................................ 8.9% 3.3% 16.5% 1.7% 6.5% Market rank (DMA)....................... 13 13 12 12 12 Television homes (in thousands)......... 1,390 1,428 1,429 1,464 1,492 Total commercial competitors in market.. 8 8 8 8 8 Station rank in market, sign on to sign off.................................... 1 1 2 2 2 Station audience share, sign on to sign off.................................... 19% 19% 18% 17% 15% Station rank in market 4:00 p.m. to 8:00 p.m............................... 2 2 1 1 2 Station audience share 4:00 p.m. to 8:00 p.m................................ 20% 22% 23% 21% 19%
- --------------------- Source: Miller, Kaplan, Arase & Co.; The A.C. Nielsen Co. KATU TELEVISION, PORTLAND, OREGON Market Overview. Portland, Oregon ranks as the 24th largest DMA in the --------------- nation, with a population of approximately 2.5 million and approximately 952,700 television households. Approximately 63% of Portland's population subscribed to cable in 1996. In 1996, the average household income in the Portland DMA was approximately $44,500. Portland maintains a balanced economy with services, wholesale/retail and manufacturing representing approximately 26%, 25% and 16% of total employment, respectively. Major employers include high-technology companies such as Intel Corporation, Hewlett-Packard Company and Tektronix, Inc., as well as Nike, Inc., Kaiser Permanente, the United States Government and the State of Oregon. Station Performance. KATU, an ABC affiliate, had an average audience share ------------------- of 20% during the past five years, sign-on to sign-off. KATU currently broadcasts 26 hours per week of scheduled local news programs. The station has won numerous local and regional awards for excellence, including the 1995 Associated Press award for Best Newscast in Oregon. In addition, KATU has a strong commitment to public affairs and local interest programming. "AM Northwest" is a daily, hour-long topical interest program directed at women viewers. "Town Hall" is a weekly public affairs discussion program that airs Sunday evenings at 6:00 p.m. The station's syndicated programming includes "Wheel of Fortune," "Jeopardy" and "The Rosie O'Donnell Show." KATU also devotes a large amount of air time and resources to community service projects. When massive flooding afflicted Oregon and Southwest Washington in February 1996, the station organized a relief effort that raised nearly one million dollars for flood victims. Each 11 year the station broadcasts the Children's Miracle Network Telethon benefiting Portland's Doernbecher Children's Hospital. Since 1994, the station has supported an annual campaign that has raised nearly $2 million to help local schools. The station also supports numerous community service events and projects throughout the year with public service announcements and programming support. KATU has developed a local on-line computer service, offering viewers news, weather and programming information via the station's own electronic bulletin board. The station is in the process of expanding that service via the Internet, and intends to involve its TV advertisers in the service as a way to generate incremental income for the station and provide added value to its clients. KATU operates from studios in the city of Portland. The station continuously invests in new technology to improve the quality of its programs and reduce operating costs.
KATU MARKET/STATION DATA 1992 1993 1994 1995 1996 --------- --------- --------- --------- --------- Market revenue (in thousands)........... $118,600 $118,900 $138,700 $145,200 $161,050 Market revenue growth over prior period................................. 7.7% 0.2% 16.7% 4.7% 11.0% Market rank (DMA)....................... 27 27 27 24 24 Television homes (in thousands)......... 846 868 890 920 953 Total commercial competitors in market. 6 6 7 8 8 Station rank in market, sign on to sign off............................... 1 1 1 1 1 Station audience share, sign on to sign off............................... 20% 22% 21% 19% 17% Station rank in market 4:00 p.m. to 8:00 p.m............................... 1 1 1 1 1 Station audience share 4:00 p.m. to 8:00 p.m................................ 23% 27% 25% 23% 22%
- --------------------- Source: Laura M. Lekas, C.P.A.; The A.C. Nielsen Co. RADIO GENERAL OVERVIEW Commercial radio broadcasting began in the United States in the early 1920s. There are a limited number of frequencies available for broadcasting in any one geographic area. The license to operate a radio station is granted by the FCC. There are two commercial broadcast bands, each of which employ different methods of delivering the radio signal to radio receivers. The AM band (amplitude modulation) consists of frequencies from 550 KHz to 1700 KHz. The FM (frequency modulation) band consists of frequencies from 88.1 MHz to 107.9 MHz. Radio listeners have gradually shifted over the years from AM to FM stations. Stations on the FM band are generally considered to have a competitive advantage over stations that broadcast on the AM band. FM reception is generally clearer than AM and provides greater tonal range and higher fidelity. Music formats that appeal to the younger demographics desired 12 by the majority of advertisers are found almost exclusively on the FM band because of the disparity in the quality of reception. A radio station on the FM band, therefore, has an abundance of choices in format while AM stations tend to be limited to either spoken word formats or musical formats that appeal to adults 55 years of age and older. Nationally, the FM listener share is now in excess of 75%, despite the fact that the number of AM and FM commercial stations in the United States is approximately equal. Radio station revenues are derived almost exclusively from local, regional and national advertising. At present, approximately 80% of the average station's revenues are derived from local and regional advertisers, and 20% or less is from national advertisers located outside of the radio station's market. Radio stations generally employ a local sales force to call on local and regional advertisers and contract with a national firm to represent business from outside the market and/or region. Both sales forces are generally compensated by way of a commission on advertising time sold. Because radio stations rely on advertising revenues, they are sensitive to cyclical changes in the economy. The growth in radio revenues, though, has been relatively stable over the past two decades. With the exception of 1991, when total radio advertising revenue fell by 3.1% from the preceding year, radio advertising revenues over the past 15 years have grown faster than inflation and the Gross National Product. In 1995, the Radio Advertising Bureau estimated that the industry garnered in excess of $11 billion in total advertising revenues. Radio is generally viewed as a highly targetable medium for advertisers. Radio stations are generally classified by their format, such as country, alternative rock, news/talk, adult contemporary or oldies. A station's format and style of presentation enable it to target certain demographics and psychographics. By capturing a specific audience share of a market's radio listeners, a station is able to market its broadcasting time to advertisers seeking to reach a specific audience. For example, grocery and department stores find that the majority of purchases are made by women between 25 and 49 years of age. In a market of Seattle's size, as many as six radio stations may target women aged 25-49, developing music and on-air presentations to serve the needs of such women. Most of a radio station's programming is produced locally, although syndicated programs such as Rush Limbaugh and Dr. Joy Brown, as well as weekly countdown shows, contribute to many stations daily and weekly programming line- ups. These syndicated programs are obtained with either cash payments, barter agreements for air time on the station, or a combination of both. However, the emphasis on local programming provides radio stations with maximum flexibility in programming, retention of nearly its entire commercial inventory and the revenue from sale of that time. Advertisers and stations utilize data published by audience measuring services to estimate how many people within particular geographical markets and demographics listen to specific stations. Arbitron is the largest audience measuring service. Arbitron measures audience on either a quarterly, semi- annual, or annual basis, depending on market size. Both Seattle and Portland are quarterly measurement markets. Arbitron's audience estimates are based on geographically and demographically representative samples of radio listeners who agree to record their radio listening for one week in diaries provided by Arbitron. The quarterly sample sizes vary by market size, but generally represent 0.1625% of a market's total population. Arbitron estimates a radio station's cumulative (cume) audience, and time spent listening (the amount of time each listener spent with that radio station). Arbitron then estimates by hour (i.e., 13 7:00 a.m. to 8:00 a.m.) and daypart (i.e., 6:00 a.m. to 10:00 a.m., or morning drive) how many listeners are tuned to each radio station in a given 15-minute span of time, or average quarter-hour persons (AQH Persons). The estimated number is then compared to the total population in a given demographic and expressed as a rating (AQH Rating), or compared to the total number of people in the demographic who were listening to a radio in the given daypart and expressed as a share (AQH Share). Through the early 1970s, a handful of AM radio stations in each market dominated the listening shares. The rise of FM listening, brought about by an industry standard for FM stereo broadcast, essentially doubled the number of viable competitors in each market. In the early and mid-1980s, the FCC awarded additional FM signals to many communities and allowed radio stations from communities on the fringe of many major metropolitan areas ("metro") to redirect their signal patterns to cover the entire metro. In the early 1990s, the FCC expanded the AM band to 1700 KHz. The result of this increase in the number of viable competitors has been a significant decline in the listening shares reasonably available to the average radio station. By the late 1980s, the Radio Advertising Bureau estimated that one-third of all licensees were losing money. This, in part, led the FCC to relax its ownership regulations on radio stations and led to the creation of duopolies (ownership of more than one AM or FM station in a given market). The Telecommunications Act of 1996 further eased radio station ownership regulations governing multiple ownership. See "Broadcasting Operations - Licensing and Regulation Applicable to Television" and "- Radio Broadcasting - Multiple Ownership Rules and Cross-Ownership Restrictions." The common ownership of multiple stations in a single market allows for more aggressive marketing and can drive up the cost per rating point in such market. Further advances in technology may increase competition for radio listening shares. New media technologies, such as the delivery of audio programming by satellite, digital audio broadcasting ("DAB") and cable television systems, are either in use currently or in development. Historically, the radio broadcasting industry has grown despite the introduction of new technologies for the delivery of entertainment and information, such as broadcast television, cable television, audio tapes and compact discs. A growing population and greater availability of radios, particularly car and portable radios, have contributed to this growth. There can be no assurance, however, that the development or introduction in the future of any new media technology will not have a material adverse effect on the radio broadcasting industry. The FCC has authorized the use of DAB to deliver audio programming by satellite, and is considering whether to authorize terrestrial DAB. DAB will provide a medium for the delivery by satellite or terrestrial means of multiple new, high quality audio programming formats to local and national audiences. Terrestrial DAB may be used in the future by radio broadcast stations either on existing or alternate broadcasting frequencies, or on new frequency bands. COMPETITION Competition in the radio industry, including each of the markets in which Fisher Broadcasting's radio stations compete, takes place primarily on two levels: competition for audience and competition for advertisers. Additional significant factors affecting a radio station's competitive position include assigned frequency and signal strength. The radio broadcasting industry is continually faced with technological change and innovation, the possible rise in popularity of competing entertainment and communications media, as well as governmental restrictions or actions of federal regulatory bodies, including the FCC and the 14 Federal Trade Commission, any of which could have a material adverse effect on the broadcasting business. Audience. Fisher Broadcasting's radio stations compete for audience on the -------- basis of programming popularity, which has a direct effect on advertising rates. As a program or station grows in ratings (percentage of total population reached), the station is capable of charging a higher cost-per-point to advertising agencies, in particular, and direct advertisers, in general. Formats, stations and music are highly researched through large-scale perceptual studies, auditorium-style music tests and weekly call-outs. All are designed to evaluate the distinctions and unique tastes of formats and listeners. In the early days of radio, and until the early to mid-1970s, many stations programmed a variety of elements to attract larger shares of audience. In today's competitive market, new formats and audience niches have created very targeted advertising vehicles and programming that is highly focused and tightly regulated to appeal to a narrow segment of the population. Formats in one market targeting similar audiences with slight variances in demographic or psychographic appeal may be Classic Rock, Alternative Rock, Adult Album Alternative, and/or Album-Oriented-Rock. Tactical and strategic plans are utilized to attract larger shares of audience through marketing campaigns and promotions. Marketing campaigns through television, transit, outdoor, telemarketing or direct mail are designed to improve a station's cume audience (total number of people listening) while promotional tactics such as cash giveaways, trips and prizes are utilized by stations to extend the TSL (time- spent-listening), which works in correlation to cume as a means of establishing a station's share of audience. Advertising. Advertising rates are based upon the size of the market in ----------- which a radio station operates, the total number of listeners the station attracts in a particular demographic group that an advertiser may be targeting, the number of advertisers competing for the available time, the demographic make-up of the market served by the station, the availability of alternative advertising media in the market area, the presence of aggressive and knowledgeable sales forces and the development of projects, features and programs that tie advertisers' messages to programming. The amount of paid political advertising on radio fluctuates significantly and follows no particular pattern. Fisher Broadcasting's radio stations compete for revenue primarily with other radio stations and, to a lesser degree, with other advertising mediums such as television, cable, newspaper, yellow pages directories, direct mail, and outdoor and transit advertising. Competition for advertising dollars in the radio broadcasting industry occurs primarily within the individual markets on the basis of the above factors, as well as on the basis of advertising rates charged by competitors. Generally, a radio station in one market area does not compete with stations in other market areas. SEATTLE RADIO MARKET Introduction. Seattle, Washington ranks as the 13th largest radio ------------ metropolitan area in the nation, with a Persons aged 12+ population of approximately 2,745,000 and a total population of approximately 3,260,000. The Seattle-Tacoma radio metropolitan area ("metro") is comprised of King, Snohomish, Pierce, Kitsap, Thurston and Island counties. Using PRIZM (a market segmentation analysis developed by Claritas, Inc., and provided to The Arbitron Company), Seattle's largest population concentration is Affluentials (upwardly mobile young singles and couples; white-collar suburban families) at approximately 20% of the population, compared to an approximately 9.5% national average. Median household income for the metro is approximately 15 $50,100 and total retail expenditures per household are approximately $24,500. Major industries in the market include aerospace, biotechnology, forestry, software, telecommunications, transportation, retail and international trade. Major employers include the Boeing Company, Microsoft Corporation, Nordstrom Inc. and Alaska Airlines Inc. Seattle is tied with Chicago as the most competitive News/Talk radio market in the nation, with a format reach of 21.5% compared to a national average of 12.5%, and a West-Regional average of 15.1%. Radio advertising revenue for the Seattle-Tacoma market was approximately $135 million in 1996, as compiled by Miller, Kaplan, Arase & Co., an accounting firm that provides the radio industry with revenue figures. The Seattle radio market has 18 FM and 29 AM stations licensed to the metro. Figures set forth in the preceding discussion of the Seattle radio market vary from those set forth in the discussion of the Seattle television market (see "Broadcasting Operations - KOMO TV - Market Overview"), as different size and measurement criteria are applied by the relevant rating organizations in the two separate markets.
MARKET DATA SEATTLE-TACOMA, WASHINGTON 1992 1993 1994 1995 1996 ----------- ----------- ----------- ----------- ----------- Market Revenue (in thousands) $ 94,100 $ 102,700 $ 114,400 $ 127,175 $ 134,844 Market Revenue Growth over prior period 3.5% 9.1% 11.4% 11.2% 6.0% Market Rank (Arbitron Metro) 13 13 13 13 13 Persons 12+ Population 2,342,500 2,365,100 2,696,500 2,696,500 2,698,900 Total commercial competitors in market 47 47 47 47 47
- --------------------- Source: Miller, Kaplan, Arase & Co.; The Arbitron Company. Fisher Broadcasting has owned and operated KOMO-AM since December 31, 1926 when the station signed on the air. When changes to FCC regulations allowed multiple station ownership in one market, Fisher Broadcasting pioneered new ground. Fisher Radio Seattle was formed on May 5, 1994 when Fisher Broadcasting purchased the assets of KVI-AM and KPLZ-FM. Since then, all three station staffs and many of the stations' operating functions have been consolidated into a $1.3 million facility in downtown Seattle. Fisher Broadcasting believes that the synergies achieved through collaborative efforts benefit all three of its Seattle radio stations. As a result, station personnel work side-by-side to maximize available resources and talent at a considerable cost savings. In addition, fiber optic links between the radio and television facilities allow resources to be shared with KOMO TV. A more detailed description of Fisher Broadcasting's Seattle radio stations is set forth below. KOMO-AM [1000 KHz / 50 kw (day/night), Affiliate: ABC Information ------- Network]. KOMO-AM, known as "KOMO News 1000," is one of the United States' heritage 50,000 watt radio stations. The station was ranked 12th in the market in 1996 (average) with a 3.7% share of listening among Persons 12+, Monday- Sunday, 6:00 a.m. to 12 midnight. The station's primary target audience is Adults 35-54. KOMO News 1000 programs a combination of news and talk, featuring a variety of information services such as hourly news, weather, traffic, sports and talk programs concerning local and national news issues. With a staff of eight news journalists, KOMO has one of the largest radio news staffs in the Northwest. While the station has always enjoyed a strong reputation for information services, the News/Talk format is an evolution from the long-time full-service format and is a relatively new development for KOMO-AM. As home of University of Washington Husky Sports, the station builds on the large University alumni base 16 in the Northwest and works together with the University on many promotional and community events throughout the year. In addition to news, talk and sports programming, the station participates in numerous community service sponsorships with local organizations, such as Food Lifeline, Children's Hospital, and the Fred Hutchinson Cancer Research Center, to serve the needs and interests of the community. Fisher Broadcasting believes the investments made in talent and marketing strategies will support growth in the station's new format.
KOMO-AM STATION DATA 1992 1993 1994 1995 1996 -------- -------- -------- -------- -------- Station rank in market Mon-Sun, 6 a.m. to 12- mid, AQH Share 4 6 10 15 12 Station audience AQH share in market Mon-Sun, 6 a.m. to 12-mid 5.2% 4.7% 4.1% 3.3% 3.7% Station rank in market for cumulative weekly audience Mon-Sun, 6 a.m. to 12-mid 3 5 7 7 7 Station cumulative audience in market Mon-Sun, 6 a.m. to 12-mid 378,400 378,800 331,000 317,100 337,100
- ----------------------------- Source: The Arbitron Company KVI-AM [570 KHz / 5 kw (day/night), Affiliate: ABC Entertainment Network]. ------ KVI-AM is known as "Hot Talk 570-KVI." KVI was the leading talk radio station in Seattle, tied for fourth among all stations in the market with a 5.2% share of listening among Persons 12+, Monday-Sunday, 6:00 a.m. to 12 midnight (Arbitron-Summer 1996), and eighth among its target audience of Adults 25-54. KVI's programming mission is to enlighten, educate and inform through listener issue-oriented, entertaining talk radio. The station is a mixture of local programming featuring strong local hosts, including the nationally recognized Michael Medved, and national programming such as Rush Limbaugh and Mike Reagan. KVI's commitment to numerous community service projects is exemplified by its efforts on behalf of the Make-A-Wish Foundation. Each year, the station sponsors a Make-A-Wish Foundation Radiothon to raise money for children with life-threatening diseases. Last year, KVI and its listeners raised over $160,000 and 800,000 frequent flier miles in just six hours to support the children of the Make-A-Wish Foundation. Other community oriented projects have ranged from grass-roots support of replacing a vandalized statue in West Seattle to supporting a local retail store victimized by crime. While KVI and KOMO are complimentary formats, they maintain unique identities and format niches in the market.
KVI-AM STATION DATA 1992 1993 1994 1995 1996 -------- -------- -------- -------- -------- Station rank in market Mon-Sun, 6 a.m. to 12-mid, AQH Share 18 5 3 3 5 Station audience AQH share in market Mon-Sun, 6 a.m. to 12-mid 2.0% 4.6% 5.9% 5.4% 5.2% Station rank in market for cumulative weekly audience Mon-Sun, 6 a.m. to 12-mid 16 12 12 11 12 Station cumulative audience in market Mon-Sun, 6 a.m. to 12-mid 136,200 247,100 261,100 264,000 246,100
- ----------------------------- Source: The Arbitron Company 17 KPLZ-FM [101.5 MHZ / 100 kw, Affiliation: Independent]. KPLZ-FM is known ------- as "Star 101.5," playing a mix of 80s and 90s music. In January 1994, the station's format shifted to Adult Top 40 or Hot Adult Contemporary. The station was ranked 9th in the market with a 4.0% share of listening among Persons 12+, Monday-Sunday, 6:00 a.m. to 12 midnight (Arbitron-Average 1996). The station is involved in numerous promotional and community events every year. KPLZ-FM sponsors events such as the Northwest Women's Show, the Teacher of the Week recognition contest, the Baby Star Team, and the Back To School Fashion Show and Concert. In addition, the station hosts the annual Starlight Foundation Auction and Golf Tournament, the Sharing Sleigh and the Terry Fox Run. The station features a weekly community service program called the Pulse of Puget Sound.
KPLZ-FM STATION DATA 1992 1993 1994 1995 1996 -------- -------- -------- -------- -------- Station rank in market Mon-Sun, 6 a.m. to 12-mid, AQH Share 5 12 11 13 9 Station audience AQH share in market Mon-Sun, 6 a.m. to 12-mid 4.9% 3.2% 4.0% 3.7% 4.0% Station rank in market for cumulative weekly audience Mon-Sun, 6 a.m. to 12-mid 3 6 6 6 4 Station cumulative audience in market Mon-Sun, 6 a.m. to 12-mid 389,800 322,100 345,300 332,900 359,300
- ----------------------------- Source: The Arbitron Company PORTLAND RADIO MARKET Introduction. Portland, Oregon ranks as the 24th largest radio metro in ------------ the nation, with a Persons 12+ population of approximately 1,600,000 and a total population of approximately 1,900,000. The radio metro is comprised of Multnomah, Washington, Clackamas, Marion and Yamhill counties in Oregon and Clark County in the State of Washington. Median household income for the metro was approximately $46,200, and total retail expenditures per household were approximately $25,150. The Portland metro maintains a balanced economy with services, wholesale/retail and manufacturing representing approximately 26%, 25% and 16% of total employment, respectively. Major employers include such companies as Intel Corporation, Hewlett Packard Company, Nike, Inc. and Tektronix, Inc., as well as Kaiser Permanente, the United States Government and the State of Oregon. The FCC has licensed 14 FM and 13 AM stations in the Portland radio metro. Figures set forth in the preceding discussion of the Portland radio market may vary from those set forth in the discussion of the Portland television market (see "Broadcasting Operations -- KATU Television-Market Overview") as different size and measurement criteria are applied by the relevant rating organizations to the two separate markets. KWJJ AM [1080 KHz / 50 kw (day), 10 kw (night), Affiliation: Independent] ------- and KWJJ FM [99.9 MHz / 52 kw, Affiliation: Independent]. KWJJ-FM was the second-ranked radio station in the Portland market, with a 7.2% share of listening Persons 12+, Monday-Sunday, 6:00 a.m. to 12:00 midnight, as of the Summer 1996 Arbitron survey. KWJJ-AM was the 17th ranked 18 radio station in the market, with a 1.7% share of listening Persons 12+, Monday- Sunday, 6:00 a.m. to 12:00 midnight, as of the Summer 1996 Arbitron survey. Both radio stations program a mix of country music, with KWJJ-FM playing contemporary country hits and KWJJ-AM playing classic country favorites. Advertising time on the two stations is sold to advertisers as a combination (i.e., for one price, advertisers receive commercials on both radio stations). Among radio formats, country music has garnered an average 14% of the market's radio listening shares over the past decade, ranking it consistently #1 or #2 among format preferences in the market. KWJJ-AM has a 50,000 watt signal. KWJJ AM/FM participates in numerous community service sponsorships with local organizations, such as Doernbecher Children's Hospital, Western Youth Development, Salmon Aid and the Oregon City Chamber of Commerce. The stations also produce and broadcast a weekly half-hour public service show called Metro Magazine. Since purchasing the Portland radio stations in June 1996, Fisher Broadcasting has made a substantial investment to upgrade the stations' facilities and equipment. In April 1997, the stations moved into new broadcast facilities in downtown Portland. An investment of approximately $1.9 million is being made in the new facility, which will equip both radio stations with fully digital production and broadcast equipment, communication links between KATU Television and both radio stations, and computer equipment needed for traffic news, accounting and sales. Fisher Broadcasting expects that the new facility will improve operating efficiencies and reduce operating costs.
KWJJ MARKET/STATION DATA (1) 1992 1993 1994 1995 1996 ----------- ----------- ----------- ----------- ----------- Market Revenue (in thousands) $ 52,081 $ 57,858 $ 66,056 $ 73,194 $ 86,159 Market Revenue Growth over prior period 9.7% 11.1% 14.2% 10.8% 17.7% Market Rank (Arbitron Metro) 25 25 26 24 24 Persons 12+ Population 1,432,900 1,473,700 1,511,600 1,563,300 1,598,800 Total commercial competitors in market 25 25 26 27 27 Station rank in market, Mon-Sun, 6 a.m. to 12-mid, AQH Share 7 7 1 1 2 Station audience AQH share in market Mon-Sun, 6 a.m. to 12-mid 6.2% 6.3% 8.1% 8.7% 8.1% Station rank in market for cumulative weekly audience, Mon-Sun, 6 a.m. to 12-mid 7 6 2 1 2 Station cumulative audience in market, Mon-Sun, 6 a.m. to 12-mid 204,000 242,000 286,200 294,000 308,500
- ------------------------- Source: Miller, Kaplan, Arase & Co.; The Arbitron Company MEDIUM- AND SMALL-MARKET RADIO OPERATIONS Introduction. The local radio station plays a significant role in smaller ------------ communities in America. In communities that do not have their own TV station, the primary source of up-to-date news is the radio. In all small markets, radio choices are limited. Radio stations have benefited in this environment, where the local schools, civic clubs, churches, and government depend upon their local radio stations as the primary source for local news, weather information, 19 and other matters of local interest such as the school lunch menu and the high school's football game. Small-market radio has also benefited from an advertising sales environment in which most sales occur through direct contact with local retailers rather than through national advertising agencies. Typically, a national advertiser utilizes a long-term strategy to deliver a set number of ratings points at the lowest possible cost-per-point. Thus, the revenue is often outside of the broadcaster's control. In contrast, small-market radio can more easily control its destiny as a result of its direct ties to local advertisers who are generally small, independent merchants. Recent changes in the multiple ownership limitations under federal law have resulted in increased competition among acquisition-minded broadcast companies for major-market radio stations. Consequently, significant consolidation has occurred, reducing the acquisition opportunities that are available in the major markets and leading, in turn, to increased interest in small and medium markets. Small markets are increasingly inhabited by larger group broadcasters. Fisher Broadcasting believes that Sunbrook is well-positioned to compete in this environment, having succeeded over the past decade in its strategy to reach the largest number of listeners in selected markets. Sunbrook is committed to increasing listenership through research, marketing, and community service. Fisher Broadcasting believes that this commitment will continue to build long- term value as the Sunbrook-operated stations capitalize on their audience leadership to generate increased revenue, and on their experience in strict cost controls to maximize operating income. Through Sunbrook, Fisher Broadcasting operates radio stations in five small and medium markets in the northwestern United States. Sunbrook is the leading radio broadcaster in Montana, with 14 radio stations in the four largest cities in the state. Additionally, Sunbrook owns four radio stations and has a joint sales agreement with a fifth station in Wenatchee, a market of approximately 55,000 people in the center of Washington State. Sunbrook has sought to acquire under-performing stations in small and medium markets at cash-flow multiples that are considerably lower than in larger markets. The relaxation of federal multiple ownership rules has led Sunbrook to expand its holdings within its existing markets. The resulting synergy allows Sunbrook to better serve its communities while enjoying certain economies of scale. The following table sets forth general information for each of Sunbrook's stations and the markets they serve. 20
# OF RATINGS(1) MARKET REVENUE COMMERCIAL --------------------- --------------------- DIAL RADIO STATIONS RANK IN STATION STATION $ (IN MARKET STATION POSITION POWER IN THE MARKET MARKET SHARE SHARE THOUSANDS) FORMAT - ------------------------------------------------------------------------------------------------------------------------------- Billings, MT $5,300 KRKX 93.3 FM 100 Kw 12 3 11.9% 12% Adult Contemp KYYA 94.1 FM 100 Kw 4 10.6% 14% Classic Rock KBLG(2) 910 AM 1 Kw 8 5.0% 4% News/Talk Missoula, MT $4,500 KZOQ 100.1 FM 14 Kw 8 1 24.5% 21% Classic Rock KGGL 93.3 FM 43 Kw 2 19.5% 19% Country KYLT 1340 AM 1 Kw 7 3.1% 6% Oldies KGRZ 1450 AM 1 Kw 8 1.8% 2% Sports/Talk Great Falls, MT $3,000 KAAK 98.9 FM 100 Kw 8 2 15.9% 23% Adult Contemp KQDI 106.1 FM 100 Kw 3 12.0% 20% Classic Rock KXGF 1400 AM 1 Kw 5 8.3% 3% Pop Standards KMSL 1450 AM 1 Kw 8 1.9% 3% News/Talk Butte, MT $1,500 KAAR 92.5 FM 4.5 Kw 5 1 40.9% 27% Country KMBR 95.5 FM 50 Kw 2 15.9% 23% Classic Rock KXTL 1370 AM 5 Kw 5 6.8% 7% Oldies/Talk Wenatchee, WA $3,100 KYSN 97.7 FM 3 Kw 9 1 22.2% 22% Country KWWW(3) 96.7 FM .5 Kw 2 14.6% 16% Adult Contemp KZPH(4) 106.7 FM 3 Kw 5 8.6% 8% Classic Rock KXAA(5) 99.5 FM 5 Kw 6 7.9% 14% Oldies KWWX 1340 AM 1 Kw 9 (6) 5% Spanish
- ------------------ (1) Ratings information in the above chart refers to average-quarter-hour share of listenership among total persons, Adults 12+, Monday through Sunday, 6 a.m. to midnight, and is subject to the qualifications listed in each report. Sources: Billings, Montana: Arbitron Ratings, Fall, 1996 Billings Market Report Missoula, Montana: Willhight Research, Spring, 1996, Missoula Market Report Great Falls, Montana: Arbitron Ratings, Spring, 1996 Great Falls Market Report Butte, Montana: Arbitron Ratings, 1996 County Coverage Study, Silver-Bow County Wenatchee, Washington: Willhight Research, Winter, 1996 Wenatchee Market Report. (2) KBLG's power is 1,000 watts days, 63 watts nights. (3) KWWW is licensed to the city of Quincy, Washington. (4) Sunbrook sells advertising on KZPH under a joint sales agreement. KZPH is licensed to the city of Cashmere, Washington. (5) KXAA is licensed to the city of Rock Island, Washington. (6) Listenership below minimum reporting standards. The following discussion briefly describes the radio stations owned and operated by Sunbrook, and such stations' respective markets. Montana. Sunbrook is Montana's largest radio broadcaster, with stations in ------- the state's four largest markets. Available rating information (derived from the sources listed in footnote (1) to the preceding table) indicates that nearly 250,000 Montanans listen to a Sunbrook radio station each week, representing nearly one out of every three people in the state. A brief discussion of each Montana market and Sunbrook's stations follows. Billings, Montana. Billings is Montana's largest market (population approximately 125,000) and a regional trade center. Billings is a livestock center for a four-state region and is also home to two petroleum refineries and two local colleges. The Billings market is served by twelve commercial radio stations, three local television stations, and one local newspaper. Recent combined historical audience performance of Sunbrook's three Billings stations is set forth below. 21
1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- Combined Audience Share 20.0% 29.7% 34.0% 28.8% 26.4% Group Ownership Audience Rank 2 2 2 2 2
- ------------------------- Source: The Arbitron Company (Average-quarter-hour share of total audience Persons 12+, Monday through Sunday, 6 a.m. to midnight). Missoula, Montana. Missoula is Montana's second largest market. Its current population is approximately 86,000. The wood and paper products industry provides the largest employment base, followed by the U.S. Forest Service, which has regional headquarters and a fire-fighting school in Missoula. the city is home to the University of Montana, which is also one of the city's largest employers and provides a strong influence on the community's lifestyle. Missoula is served by eight commercial radio stations, three local television stations, and a daily newspaper. Recent combined historical audience performance of Sunbrook's four Missoula stations is set forth below.
1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- Combined Audience Share 47.4% 37.5% 39.8% 42.0% 48.9% Group Ownership Audience Rank(1) 1 1 1 1 1
- ---------------------- (1) The data above reflect the position of the four combined stations which Sunbrook now owns. Sunbrook did not own or operate all four of these stations during all five of these years. (Audience information from Willhight Research, Missoula Spring reports from each year noted, 1993 through 1996. Average-quarter-hour share of total audience Persons 12+, Monday through Sunday, 6 a.m. to midnight. 1992 information from American Radio Research, Spring Missoula report, Brand Loyal Listeners, total audience Persons 12+). Great Falls, Montana. Great Falls is Montana's third largest market, with a population of approximately 84,000. Agriculture and the Malmstrom Air Force Base are major forces in the Great Falls economy. Great Falls is served by eight commercial radio stations, three television stations, and one daily newspaper. Recent combined historical audience performance of Sunbrook's four Great Falls stations is set forth below.
1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- Combined Audience Share 41.1% 34.4% 34.6% 44.2% 38.1% Group Ownership Audience Rank(1) 1 1 1 1 2
- --------------------- (1) The data above reflect the position of the four combined stations which Sunbrook now owns. Sunbrook did not own or operate all four of these stations during all five of these years. (Audience information from Arbitron ratings, Great Falls Spring reports for each year noted. Average-quarter-hour share of total audience Persons 12+, Monday through Sunday, 6 a.m. to midnight). Butte, Montana. Butte is Montana's fourth largest city, with a population of approximately 35,000. While the city has, historically, been a mining town, mining interests today only employ approximately 400 people. The largest employer in Butte is the state's primary electric utility, Montana Power Company, which has its corporate headquarters in the 22 city and employs nearly 1,000 people. Butte is served by three television stations, five commercial radio stations, and one newspaper. Recent combined historical audience performance of Sunbrook's three Butte stations is set forth below.
1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- Combined Audience Share 33.0% 60.8% 55.6% 63.6% 63.6% Group Ownership Audience Rank 2 1 1 1 1
- ------------------------ Source: Arbitron County Coverage Report, Silver Bow County, for 1994, 1995 & 1996. Willhight Research, Butte Report, Spring, 1993. Average quarter-hour share of total audience Persons 12+, Monday through Sunday, 6 a.m. to midnight. American Radio Research, Butte Report, Spring, 1992, Brand-loyal listeners, total audience Persons 12+. Washington. In addition to being the largest radio group in Montana, ---------- Sunbrook also is the market leader in Wenatchee, Washington, a market of approximately 55,000 people that is located in the center of Washington. While agriculture dominates the local economy, an aluminum manufacturing facility also provides significant employment. The Wenatchee market is served by nine commercial radio stations and one local newspaper. There are no local television stations in Wenatchee. Recent combined historical audience performance of Sunbrook's four Wenatchee area stations and the station with which it has a joint sales agreement is set forth below.
1992 1993 1994 1995 1996 ----- ----- ----- ----- ----- Combined Audience Share 49.2% 58.0% 65.2% 57.5% 53.3% Group Ownership Audience Rank(1) 1 1 1 1 1
- ---------------------- (1) The data above reflect the position of the four combined stations which Sunbrook now owns and the station with which it has a joint sales agreement. Sunbrook did not own or operate all four of the stations that it now owns during all five of these years. Source: Willhight Research, Wenatchee Report, Winter, 1994, 1995 and 1996, Average quarter-hour share of total audience Persons 12+, Monday through Sunday, 6 a.m. to midnight. American Radio Research, Wenatchee Report, Spring, 1992 and 1993, Brand-loyal listeners, total audience Persons 12+. LICENSING AND REGULATION APPLICABLE TO TELEVISION AND RADIO BROADCASTING The following is a brief discussion of certain provisions of the Communications Act of 1934, as amended (the "Communications Act"), most recently amended by the Telecommunications Act of 1996 (the "Telecommunications Act"), and of FCC regulations and policies that affect the television and radio broadcasting business conducted by Fisher Broadcasting. Reference should be made to the Communications Act, FCC rules and the public notices and rulings of the FCC, on which this discussion is based, for further information concerning the nature and extent of FCC regulation of television broadcasting stations. LICENSE RENEWAL, ASSIGNMENTS AND TRANSFERS Broadcasting licenses for both radio and television stations are currently granted for a maximum of eight years and are subject to renewal upon application to the FCC. The FCC prohibits the assignment of a license or the transfer of control of a television or radio 23 broadcasting license without prior FCC approval. In determining whether to grant or renew a broadcasting license, the FCC considers a number of factors pertaining to the applicant, including compliance with limitations on alien ownership, common ownership of broadcasting, cable and newspaper properties, and compliance with character and technical standards. The Telecommunications Act, which has been enacted, but not yet fully implemented by the FCC, eliminates the comparative renewal process and simplifies license renewal. During certain limited periods when a renewal application is pending, petitions to deny a license renewal may be filed by interested parties, including members of the public. Such petitions may raise various issues before the FCC. The FCC is required to hold evidentiary, trial-type hearings on renewal applications if a petition to deny renewal raises a "substantial and material question of fact" as to whether the grant of the renewal application would be inconsistent with the public interest, convenience and necessity. The FCC is required to renew a broadcast license if: the FCC finds that the station has complied with FCC regulations regarding equal employment opportunity; that the station has served the public interest, convenience and necessity; there have been no serious violations by the licensee of either the Communications Act or the FCC's rules; and there have been no other violations by the licensee which taken together would constitute a pattern of abuse. Additionally, in the case of renewal of television licenses, the FCC considers the station's compliance with FCC programming and commercialization rules relating to programming for children. If the incumbent licensee fails to meet the renewal standard, and if it does not show other mitigating factors warranting a lesser sanction, the FCC then has the authority to deny the renewal application and permit the submission of competing applications for that frequency. Failure to observe FCC rules and policies, including, but not limited to, those discussed herein, can result in the imposition of various sanctions, including monetary forfeitures, the grant of short-term (i.e., less than the full eight years) license renewals or, for particularly egregious violations, the denial of a license renewal application or revocation of a license. While the vast majority of such licenses are renewed by the FCC, there can be no assurance that Fisher Broadcasting's licenses will be renewed at their expiration dates, or, if renewed, that the renewal terms will be for eight years. Both of Fisher Broadcasting's television stations are presently operating under regular five-year licenses, granted prior to recent FCC action which extended license terms to eight years, that expire on January 31, 1999. Fisher Broadcasting's and Sunbrook's radio stations in Washington and Oregon currently operate under seven-year licenses, also granted prior to recent FCC action extending the term of radio licenses to eight years, that expire on January 31, 1998. The license terms for all of Sunbrook's Montana radio stations expire on April 1, 1997. Sunbrook has filed applications for renewal of these stations' licenses. Upon renewal, such licenses would extend until April 1, 2005. The non-renewal or revocation of one or more of Fisher Broadcasting's FCC licenses could have a material adverse effect on Fisher Broadcasting's television or radio broadcasting operations. MULTIPLE OWNERSHIP RULES AND CROSS OWNERSHIP RESTRICTIONS The FCC generally applies its ownership limits to "attributable" interests held by an individual, corporation, partnership or other association. In the case of corporations holding broadcast licenses, the interests of officers, directors and those who, directly or indirectly, have the right to vote 5% or more of the corporation's stock (or 10% or more of such stock in the case of insurance companies, mutual funds, bank trust departments and certain other passive investors that are holding stock for investment purposes only) are generally deemed to be attributable, as 24 are interests held by officers and directors of a corporate parent of a broadcast licensee. Pursuant to the Telecommunications Act, the FCC has eliminated the restrictions on the number of television stations in which a person or entity may have an attributable interest, but instead establishes a national television reach limit of 35%. The Telecommunications Act requires the FCC to conduct a rulemaking proceeding to determine whether the local "duopoly" television ownership rules should be retained, modified or eliminated. The present "duopoly" rules prohibit attributable interests in two or more television stations with overlapping service areas. The FCC initiated the rulemaking proceeding required by the Telecommunications Act in November 1996. Initial comments to the FCC's proposals were received by the FCC on February 7, 1997. While the FCC has proposed to allow ownership of television stations where the stations do not have substantial signal overlap and are in separate Designated Market Areas, the majority of comments in the proceeding urged the FCC to adopt a looser standard, thereby allowing more duopolies. The statutory prohibition against television station/cable system cross- ownership is repealed in the Telecommunications Act, but the FCC's parallel cross-ownership rule remains in place. The FCC intends to conduct a proceeding on repeal of this cross-ownership restriction. The television station/daily newspaper cross-ownership prohibition in the FCC rule was not repealed by the Telecommunications Act. The FCC, however, intends to conduct a rule-making proceeding on whether to repeal such restriction. The Telecommunications Act requires the FCC to review its ownership rules biennially as part of its regulatory reform obligations. The FCC imposes less severe restraints on the control or ownership of AM and FM radio stations that serve the same area than are imposed with regard to television stations. In a number of situations, a single party may control or own an AM and/or an FM "duopoly" - two AM and/or two FM stations - in the same market area. FCC rules also preclude the grant of applications for station acquisitions that would result in the creation of new radio-television combinations in the same market under common ownership, or the sale of such a combination to a single party, subject to the availability of a waiver. Under FCC policy, waiver applications that involve radio-television station combinations in the top 50 TV markets where there would be at least 30 separately owned, operated and controlled broadcast licensees after the proposed combination will generally be favorably received. At present, the FCC imposes no limits on the number of radio stations that may be directly or indirectly owned nationally by a single entity. National ownership of television stations by one entity, direct or indirect, is limited to a 35% national share, computed by dividing the aggregate number of households in each market in which the licensee owns a station by the total number of households nationally. In the case of UHF television stations, the number of households in such markets is halved for purposes of the foregoing formula. If an attributable stockholder of the Company has or acquires an attributable interest in other television or radio stations, or in daily newspapers, depending on the size and location of such stations and/or newspapers, or if a proposed acquisition by the Company or Fisher Broadcasting would cause a violation of the FCC's multiple ownership rules or cross-ownership restrictions, Fisher Broadcasting may be unable to obtain from the FCC one or more authorizations needed to conduct its business and may be unable to obtain FCC consents for certain future acquisitions. 25 Fisher Broadcasting is unable to predict the ultimate outcome of possible changes to these FCC rules and the impact such changes may have on its broadcasting operations. ALIEN OWNERSHIP Under the Communications Act, broadcast licenses may not be granted to or held by any corporation having more than one-fifth of its capital stock owned of record or voted by non-U.S. citizens (including a non-U.S. corporation), foreign governments or their representatives (collectively, "Aliens"). The Communications Act also prohibits a corporation, without an FCC public interest finding, from holding a broadcast license if that corporation is controlled, directly or indirectly, by another corporation, more than one-fourth of the capital stock of which is owned of record or voted by Aliens. The FCC has issued interpretations of existing law under which these restrictions in modified form apply to other forms of business organizations, including general and limited partnerships. As a result of these provisions, and without an FCC public interest finding, the Company, which serves as a holding company for its television station licensee subsidiaries, cannot have more than 25% of its capital stock owned of record or voted by Aliens or their representatives. PROGRAMMING AND OPERATION The Communications Act requires broadcasters to serve the "public interest." Since the late 1970s, the FCC gradually relaxed or eliminated many of the more formalized procedures it had developed to promote the broadcast of certain types of programming responsive to the needs of a station's community of license. Broadcast station licensees continue, however, to be required to present programming that is responsive to community problems, needs and interests and to maintain certain records demonstrating such responsiveness. Complaints from viewers concerning a station's programming may be considered by the FCC when it evaluates license renewal applications, although such complaints may be filed, and generally may be considered by the FCC, at any time. Stations must also follow various FCC rules that regulate, among other things, children's television programming, political advertising, sponsorship identifications, contest and lottery advertising, obscene and indecent broadcasts, and technical operations, including limits on radio frequency radiation. In addition, broadcast licensees must develop and implement affirmative action programs designed to promote equal employment opportunities, and must submit reports to the FCC with respect to these matters on an annual basis and in connection with a license renewal application. SYNDICATED EXCLUSIVITY/TERRITORIAL EXCLUSIVITY Effective January 1, 1990, the FCC reimposed syndicated exclusivity rules and expanded the existing network non-duplication rules. The syndicated exclusivity rules allow local broadcast stations to require that cable television operators black out certain syndicated, non-network programming carried on "distant signals" (i.e., signals of broadcast stations, including so- called superstations, that serve areas substantially removed from the local community). Under certain circumstances, the network non-duplication rule allows local broadcast network affiliates to demand that cable television operators black out duplicative network broadcast programming carried on more distant signals. 26 RESTRICTIONS ON BROADCAST ADVERTISING The advertising of cigarettes on broadcast stations has been banned for many years. The broadcast advertising of smokeless tobacco products has more recently been banned by Congress. Certain Congressional committees have examined legislative proposals to eliminate or severely restrict the advertising of alcohol, including beer and wine. Fisher Broadcasting cannot predict whether any or all of such proposals will be enacted into law and, if so, what the final form of such law might be. The elimination of all beer and wine advertising would have an adverse effect on Fisher Broadcasting's stations revenues and operating income, as well as the revenues and operating incomes of other stations that carry beer and wine advertising. Additionally, the FCC has promulgated a number of regulations prohibiting, with certain exceptions, advertising relating to lotteries and casinos. The FCC has also placed limits upon the amount of commercialization during, and adjacent to, television programming intended for an audience of children ages 12 and under. OTHER PROGRAMMING RESTRICTIONS The Telecommunications Act requires that any newly manufactured television set with a picture screen of 13 inches or greater be equipped with a feature designed to enable viewers to block all programs with a certain violence rating (the "v-chip"). The FCC, after consulting with the TV manufacturing industry, will specify the effective date of this requirement, which may not be less than two years after enactment of the law. The FCC is directed to oversee the adoption of standards for this blocking technology. The television industry has adopted, effective January 1, 1997, a voluntarily rating scheme regarding violence and sexual content contained in television programs. The FCC has indicated that it will accept public comments on the industry rating scheme, and will subsequently make a decision as to whether such scheme meets the standards of the Telecommunications Act. Fisher Broadcasting cannot predict whether the v-chip and a ratings system will have any significant effect on the operations of its business. The FCC has adopted regulations, which will take effect September 1, 1997, effectively requiring television stations to broadcast a minimum of three hours per week of programming designed to meet specifically identifiable educational and informational needs, and interests, of children. Present FCC regulations require that each television station licensee appoint a liaison responsible for children's' programming. Information regarding children's programming and commercialization during such programming is required to be filed quarterly with the FCC and made available to the public. Fisher Broadcasting does not believe that the FCC children's programming regulations described above have, or will have, an adverse effect on the operation of its business. CABLE "MUST-CARRY" OR "RETRANSMISSION CONSENT" RIGHTS The 1992 Cable Act requires television broadcasters to make an election to exercise either "must-carry" or "retransmission consent" rights in connection with the carriage of television stations by cable television systems in the station's local market. If a broadcaster chooses to exercise its must-carry rights, it may demand carriage on a specified channel on cable systems within its market, which, in certain circumstances, may be denied. Must-carry rights are not absolute, and their exercise is dependent on variables such as the number of activated channels 27 on and the location and size of the cable system and the amount of duplicative programming on a broadcast station. If a broadcaster chooses to exercise its retransmission consent rights, it may prohibit cable systems from carrying its signal, or permit carriage under a negotiated compensation arrangement. Fisher Broadcasting has executed retransmission consent agreements with all of the cable systems operating within the DMAs of its two television stations. On March 31, 1997, the United States Supreme Court upheld the constitutionality of the must-carry provisions of the 1992 Cable Act. The Court held that the must-carry provisions were "content neutral" and thus not subject to strict scrutiny, and that Congress' stated interests in preserving the benefits of free, over-the-air local broadcast television, promoting the widespread dissemination of information from a multiplicity of sources and (in the view of a four justice plurality) promoting fair competition in the market for television programming qualified as important governmental interests. The Court concluded that Congress had established an extensive evidentiary record justifying the predictive judgment that the must-carry provisions served important governmental interests, and that Congress' judgment deserved great deference from the Court. PROPOSED LEGISLATION AND REGULATIONS On April 3, 1997, the FCC adopted new regulations regarding the implementation of advanced television in the United States. These new regulations govern a new form of digital telecasting ("DTV") based on technical standards adopted by the FCC in December 1996. They permit, but do not require, broadcasters to provide a high definition television ("HDTV") signal. While the formal regulations have not yet been released, the FCC has announced a number of key aspects of its implementation program. Each existing station will be given a second channel in the range of channels 2 through 51 on which to initiate DTV broadcasts. The FCC will specify the channel and the maximum power that may be radiated by each station. DTV stations will be limited to 1 million watts Effective Radiated Power, and no station will be assigned less than 50 thousand watts Effective Radiated Power. The FCC has announced its intention to release a list of channel and power allotments in the immediate future, but it is not known at this time which channels and power levels will be allocated to Fisher Broadcasting's Seattle and Portland television stations or their competitors. The FCC has stated that the new channels will be paired with existing analog channels, and broadcasters will not be permitted to sell their DTV channels, while retaining their analog channels, and vice versa. Affiliates of the ABC, CBS, Fox and NBC television networks in the top 10 television markets will be given until May 1, 1999, to construct and commence operation of DTV facilities on their newly allocated DTV channels. Affiliates of those networks in markets 11 through 30 will be given until November 1, 1999 to do the same. All other commercial television stations will be given five years to place a DTV signal on the air, and all non-commercial stations will have six years to begin operation of a DTV signal. As ABC affiliates operating in markets 12 and 24, Fisher Broadcasting's Seattle and Portland television stations will be required to commence DTV broadcasts by November 1, 1999. Stations will have one-half of the specified construction periods in which to apply to the FCC for a construction permit authorizing 28 construction of the new DTV facilities. The FCC has indicated its intention to act expeditiously on such applications. While the FCC has announced its intention to grant extensions of the construction deadlines in appropriate cases, the impact of failing to meet these applications and construction deadlines cannot be predicted at this time. Once a Fisher Broadcasting station begins operation of its new DTV facilities it will be required to deliver, at a minimum, a free programming service with picture resolution at least as good as that of the current analog service provided by the station, and will have to be aired during the same time periods as the current service. It may prove possible to provide more than one of such "analog equivalent" signals over a single DTV channel, or to mix an "analog equivalent" signal with other forms of digital material. The FCC will not require a broadcaster to transmit a higher quality, HDTV signal over a DTV channel; the choice as to whether to transmit an HDTV signal or one or more "analog equivalent" channels will be left up to the station licensee. ABC has announced that it intends to supply its affiliates with an HDTV feed of network programming, and it is not believed possible, under the present state of the art, to transmit additional program information over the DTV signal while it is transmitting in the HDTV mode. It cannot be predicted whether competitors of Fisher Broadcasting's television stations will operate in the HDTV or "analog equivalent" mode or to the economic impact of such choices on the stations' operations. Stations operating in the DTV mode will be subject to existing public service requirements. The FCC has announced that it will consider imposing additional public service requirements, such as free advertising time for federal political candidates, and increased news, public affairs, and children's programming requirements, in the future. It cannot be predicted whether such changes will be adopted, or any impact they might have on station operations. By 2002, DTV stations will have to devote at least one-half of their broadcast time to duplication of the programming on their paired analog stations. In 2003, this simulcasting requirement will increase to 75%, and to 100% in 2004 and 2005. The FCC has indicated that the transition from analog to digital service will end in 2006, at which time one of the two channels being used by broadcasters will have to be relinquished to the government, and DTV transmissions will be "repacked" into channels 2-46 or channels 7-51. It is unknown whether licensees will be permitted to retain their former analog channels if they operate using DTV technology, and relinquish their new digital channels, or whether they will be required to utilize the newly allotted channels, and return their former analog channels. Implementation of DTV is expected to generally improve the technical quality of television signals received by viewers. Under certain circumstances, however, conversion to DTV may reduce a station's geographic coverage area or result in some increased interference. Also, the FCC's allocations could reduce the competitive advantage presently enjoyed by Fisher Broadcasting's Seattle and Portland television stations, which operate on low VHF channels serving broad areas. Implementation of DTV will impose substantial additional costs on television stations because of the need to replace equipment and because some stations will operate at higher utility costs. Fisher Broadcasting estimates that the adoption of DTV would require average capital expenditures of approximately $8-10 million per station to provide facilities and equipment necessary to produce the broadcast DTV programming. The 29 introduction of this new technology will require that customers purchase new receivers (television sets) for DTV signals or, if available by that time, adapters for their existing receivers. When the Telecommunications Act was passed, certain leaders in Congress asked the FCC to postpone issuing DTV licenses pending consideration of possible future legislation that might require broadcasters to bid at auctions for DTV channels or which might require that the current conventional channels be returned to the government on an expedited schedule. In the course of the debate on the federal budget, some leaders in Congress have proposed various plans that might require the auctioning of the spectrum which broadcasters will need in order to provide DTV. Various plans for raising revenue also include provisions to require the auctioning of radio frequencies in bands which encompass those currently licensed for use by broadcasters, including those channels used for "auxiliary" purposes, such as remote pickups in electronic news gathering and studio-to-transmitter links. Hearings on spectrum auctions and usage were recently held by Congress. While the FCC has authorized DTV in the United States, Fisher Broadcasting cannot predict whether Congress will attempt to modify the FCC's actions, or the effect DTV authorizations might have on Fisher Broadcasting's television broadcasting business. Fisher Broadcasting cannot predict whether legislation requiring auctions for DTV spectrum will be enacted or the effect of such legislation. Other matters that could affect Fisher Broadcasting's stations include technological innovations affecting the mass communications industry such as technical allocation matters, including assignment by the FCC of channels for additional broadcast stations, low-power television stations and wireless cable systems and their relationship to and competition with full-power television broadcasting service. Congress and the FCC also have under consideration, or may in the future consider and adopt, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect the operation, ownership and profitability of Fisher Broadcasting's broadcasting business, resulting in the loss of audience share and advertising revenues of the stations, and affecting Fisher Broadcasting's ability to acquire additional, or retain ownership of existing, broadcast stations, or finance such acquisitions. Such matters include, for example, (i) changes to the license renewal process; (ii) imposition of spectrum use or other governmentally imposed fees upon a licensee; (iii) proposals to expand the FCC's equal employment opportunity rules and other matters relating to minority and female involvement in broadcasting; (iv) proposals to increase the benchmarks or thresholds for attributing ownership interest in broadcast media; (v) proposals to change rules or policies relating to political broadcasting; (vi) technical and frequency allocation matters, including those relative to the implementation of DTV; (vii) proposals to restrict or prohibit the advertising of beer, wine and other alcoholic beverages on broadcast stations; (viii) changes in the FCC's cross-interest, multiple ownership, alien ownership and cross-ownership policies; (ix) changes to broadcast technical requirements; and (x) proposals to limit the tax deductibility of advertising expenses by advertisers. Fisher Broadcasting cannot predict what other matters might be considered in the future, nor can it judge in advance what impact, if any, the implementation of any of these proposals or changes might have on its television broadcasting business. The foregoing does not purport to be a complete discussion of all of the provisions of the Communications Act, the Telecommunications Act, or other Congressional acts or related FCC regulations and policies. Reference is made to the Communications Act, the 30 Telecommunications Act, other Congressional acts, such regulations, and the public notices promulgated by the FCC, on which the foregoing discussion is based, for further information. There are additional FCC regulations and policies, and regulations and policies of other federal agencies, that govern political broadcasts, public affairs programming, equal employment opportunities and other areas affecting Fisher Broadcasting's broadcasting business and operations. SATELLITE, INTERNET, AND EMERGING MEDIA OPERATIONS INTRODUCTION FishComm is a regional satellite teleport operator, Internet service provider, and emerging media development company. FishComm was created to expand on Fisher Broadcasting's capacity to develop revenue from existing resources, such as satellite communication receive and transmit facilities, and to investigate the potential for revenue streams from new technologies, such as the Internet. Since its inception, FishComm has operated satellite communication teleports in Portland and Seattle, primarily supplying news and sporting event video originating from these two markets for distant multi- and single-market consumption. The Portland teleport consists of two C-band transmit and receive satellite dishes while the Seattle teleport consists of four such dishes. The teleports are connected to each other by microwave. KU-band satellite transmissions are handled by a mobile truck. The list of FishComm's current clients include ABC, NBC, AT&T, CNN, ESPN, Fox, the National Basketball Association and Microsoft Corporation for occasional use video purposes, and Primetime 24 and Canadian Communications Corporation for continuous use purposes. FishComm also operates a fiber optic terminal, with connectivity to the VYVX fiber optic national network, for the point-to-point transmission of audio and video signals. Fisher Broadcasting believes that the combination of fiber optic and satellite communication capabilities provides FishComm with a competitive advantage in the efficient transmission of point-to-point and point- to-multi-point video and audio from the Pacific Northwest. FishComm also has developed a presence on the Internet World Wide Web for the Company and its subsidiaries, providing e-mail and Internet connectivity as well as home page design, execution and implementation. FishComm Internet servers provide the bandwidth for possible intercompany intranet applications, with excess bandwidth available for sale to host potential outside users. Current revenues attributable to FishComm's operations are not material to the Company's results of operations. As the Internet grows, potential applications also are expected to grow. COMPANY PERFORMANCE, COMPETITION AND COMMITMENTS From its inception, FishComm has focused on profitably marketing the excess capacity of Fisher Broadcasting's existing resources. The capacity of Fisher Broadcasting's existing satellite transmission equipment, for instance, has been increased from 1% use for revenue generation to 14% use in just two years. KU- band satellite transmissions are often handled by production companies that utilize mobile trucks for one-time-only events. FishComm will compete for this business through the use of its mobile truck. FishComm's Internet program is currently in the development stage. 31 FLOUR MILLING AND FOOD DISTRIBUTION OPERATIONS ---------------------------------------------- INTRODUCTION FMI, a wholly owned subsidiary of the Company, is a manufacturer of wheat flour and a distributor of bakery products. Wheat flour is produced at FMI's milling sites in Seattle, Washington; Portland, Oregon and Modesto, California. A mill in Blackfoot, Idaho, which is owned and operated jointly by FMI and another party (see "Flour Milling and Food Distribution Operations - Marketing"), commenced operations in April 1997. FMI was incorporated in Washington State in 1971, although it has conducted flour milling operations since 1910, initially as FFMCO. FMI produces approximately two million pounds of flour daily. Fluctuations in wheat prices can result in fluctuations in FMI's revenues and profits. FMI seeks to hedge flour sales through the purchase of wheat futures or cash wheat. FMI does not speculate in the wheat market. Wheat is purchased from grain merchandisers in Washington, Idaho, Montana and California, and is delivered directly to the mills by rail or truck. FMI expects that the Blackfoot mill will add an additional 200,000 pounds of daily capacity. During 1996, FMI operated its mills on more than 320 days. Bakery products purchased from other food manufacturers are warehoused and distributed, along with FMI-manufactured flour, from FMI's three warehouses in Seattle, Washington; Portland, Oregon and Rancho Cucamonga, California. FMI's distribution division markets its products primarily in the retail bakery and food manufacturing industries. FMI makes deliveries using company owned and leased vehicles with primarily company drivers. Per capita flour consumption in the U.S. has risen steadily over the past twenty-five years, from 111 pounds to 148 pounds in 1996. Production of wheat flour by U.S. mills in 1996 reached a new all-time record of 396,176,000 one- hundred pound units ("cwts"), up 1.9% from 388,689,000 cwts in 1995, according to the Bureau of Census. Acceptance by the American public of the new food pyramid and nutritional labeling have been instrumental in promoting carbohydrate-based food. Due to changes in the American diet, and increased emphasis on the importance of grain-based products, there has been a significant growth of specialty bread shops in general, and in particular, a sharp increase in the number of bagel producers. Other specialty items such as tortillas, muffins and pretzels also contribute to the increased consumption of flour based foods. Construction of conventional milling capacity has been limited in the last five years primarily to mills capable of producing durum flour. Construction costs are typically expressed in the cost of producing one cwt of flour on a daily basis. Costs for land, buildings, wheat cleaning equipment and milling equipment are currently between $2,000 and $3,000 per cwt of rated daily capacity. The combination of relatively limited new construction and increased demand due to population increase and per capita flour consumption has equalized supply and demand. U.S. flour mills are currently operating at approximately 91% of rated capacity based upon a six day, 24 hour per day work week. Although the current market environment is expected to create 32 opportunity for improved profit margins, the considerable expense and time required to bring new milling capacity on line serves as a barrier to entry into the market. As of January 1, 1997, FMI had 191 full-time employees, 101 of whom are covered by collective bargaining agreements with three labor unions. On July 1, 1996, FMI negotiated five-year collective bargaining agreements with the International Longshoremen and Warehouseman's Union and with the AFL-CIO covering the Seattle plant. Two separate contracts with the International Brotherhood of Teamsters expire March 31, 1998 and December 31, 1999. FMI considers its relations with its employees to be good. BUSINESS PRODUCTS FMI's mills produce wheat flour for sale to a wide variety of end-users. FMI primarily serves specialty niche markets with bag product for smaller manufacturers, institutional markets such as restaurants and hotels, retail and in-store bakeries. Bulk flour shipped in rail cars and tanker trucks is delivered to large wholesale bakeries and mix manufacturers. FMI produces approximately 40 grades of flour, ranging from high-gluten spring wheat flour to low-protein cake and cookie flour. FMI believes that it differentiates itself from competitors by producing high quality specialty flours for specific applications. FMI also produces millfeed for sale to the animal feed industry. Millfeed is incorporated into feed rations for dairy cattle and other livestock. FMI's food distribution division purchases and markets approximately 2,000 bakery related items, including grain commodities (such as corn, oats, rye and barley products), mixes, sugars and shortenings, paper goods, and other items. Where appropriate, FMI takes advantage of bulk buying discounts and exclusive supplier agreements to purchase bakery products at favorable market prices. FMI intends to evaluate and, as appropriate, engage in new mill construction and acquisition of food distribution operations. The building and associated support structure at FMI's new Blackfoot, Idaho mill (see "Flour Milling and Food Distribution Operations - Marketing" below) has been designed to double the company's current compact milling capacity. The food distribution division continues to evaluate expansion opportunities through acquisitions in its current marketing area. COMPETITION The U.S. milling industry is currently composed of 197 flour mills, down from 252 in 1981, with a median mill size of approximately 7,500 cwts per day capacity. During the same period, the number of milling companies has decreased from 166 to 91. The largest five manufacturers account for approximately 74% of total U.S. production. FMI, at 21,000 cwts of daily capacity, ranks 13th in the U.S. MARKETING FMI's milling division markets its products principally in the states of Washington, Oregon and California. The majority of FMI's flour sales are made under contractual agreements with large wholesale bakeries, mix manufacturers, blending facilities, food service distributors, 33 and finished food manufacturers. No flour customer accounts for more than fifteen percent of FMI's total revenues. FMI's food distribution division, including its wholly-owned subsidiary, Sam Wylde Flour Co., Inc., markets its products primarily within a 100-mile radius of FMI's warehouses. FMI's customer base consists primarily of retail and wholesale bakeries, in-store bakeries, retail and wholesale donut shops, retail and wholesale bagel shops and small food manufacturers. FMI's milling division strives to differentiate itself from its competition with a strong service and technical department, an emphasis on branded products, new product development, and growth through the development of compact milling units. FMI targets its marketing in food groups that are in emerging or growth product life cycles. These food groups are characterized by growth rates higher than average, fragmented market share and a need for technological assistance in product formulation. FMI evaluates market conditions related to each of its products and will exit certain product categories where market consolidation, over capacity and lack of growth lead to lower flour margins. FMI's milling division also utilizes its technical service department as a value-added sales tool. The technical service department is accountable for developing and training salespersons in the company's network of food service distributors. The service department also provides on-site product trouble- shooting and formulation assistance to small retail bakers and restaurants. FMI markets its flour through the use of branded products such as Mondako(R) and Power(R) and product category branded ingredients under the name Sol Brillante(R). This marketing strategy builds brand identity and differentiates a group of products from other products in the market. Trademarks are also registered in selected international markets in which FMI is engaged in business. In 1991, FMI became the first milling company in the country to install a new milling concept called a KSU shortflow. The "shortflow" or "compact" process reduces the amount of building and equipment required to mill flour. The electronically controlled modular units can be installed at approximately 60 percent of the cost of a conventional mill and in one-third of the construction time. While compact units do not replace the need for conventional milling capacity, they do provide flexible milling capacity for niche milling segments. Since 1991, FMI has installed three additional compact units and is the world leader in compact flour production. FMI's recently completed flour mill in Blackfoot, Idaho adds a KSU 2000 milling unit to FMI's capacity. This unit is owned and operated jointly with Koch Agriculture Company of Wichita, Kansas ("Koch"). FMI and Koch are each 50% interest owners in the limited liability company which owns and operates the Blackfoot mill (the "Koch Fisher Mills L.L.C."). FMI and Koch have announced their plans to expand the Blackfoot compact mill, and to construct a conventional flour mill at the Blackfoot site. These projects will be constructed, owned and operated by the Koch Fisher Mills L.L.C. FMI anticipates its investment in these projects will not exceed $10 million. FMI's investment will be funded through existing lines of credit and is expected to be repaid from cash flow from the projects. In addition to the direct investment by FMI, the Company may guarantee FMI's proportionate share (50%) of up to $10 million of industrial revenue bonds which will provide a portion of the projects' funding. 34 RISKS ASSOCIATED WITH FOOD PRODUCTION The food manufacturing and distribution industry is subject to varying degrees of risk. Food production is a heavily regulated industry, and federal laws or regulations promulgated by the Food and Drug Administration, or agencies having jurisdiction at the state level, could adversely effect FMI's revenues and results of operations. Certain risks are associated with the production and sale of food products. Food producers can be liable for damages if contaminated food causes injury to consumers. Although flour is not a highly perishable product, FMI is subject to some risk as a result of its need for timely and efficient transportation of its flour. Costs associated with compliance with environmental laws can adversely affect profitability. In addition, the amount of wheat available for milling, and consequently the price of wheat, is affected by weather and growing conditions. REVENUES BY CLASS FMI's revenue by product class is summarized as follows:
1994 1995 1996 (In thousands) FLOUR $50,122 $ 61,535 $ 75,319 MILLFEED 7,595 7,828 11,428 FOOD DISTRIBUTION AND OTHER 35,560 42,997 48,950 ------- -------- -------- $93,277 $112,360 $135,697
REAL ESTATE OPERATIONS ---------------------- INTRODUCTION FPI, a wholly owned subsidiary of the Company, is a proprietary real estate company engaged in the acquisition, development, ownership and management of a diversified portfolio of real estate properties, principally located in the Seattle, Washington metropolitan area. The real estate development and acquisition activities currently conducted by FPI were initiated prior to 1971, at which time various real estate interests were consolidated into FPI, in the Fisher Companies Inc. reorganization. (See "Real Estate Operations - Business"). FPI had 31 employees as of January 1, 1997. As of December 31, 1996, FPI's portfolio of real estate assets included 24 commercial and industrial buildings containing over 1.1 million square feet of leaseable space with approximately 160 tenants, a 201 slip marina, and more than 320 acres of unimproved residential land held for development. FPI's most recent development is the 185,000 square foot West Lake Union Center located adjacent to Lake Union, in Seattle, Washington. The ten-story office building was completed in 1994 and achieved 99% occupancy in 1996. FPI's real estate assets also include interests in two partnerships. The largest such partnership is Fisher Business Center, a 195,000 square foot, two-building, office complex located in Lynnwood, Washington. FPI owns 95% of the Fisher Business Center; the remaining 5% interest is owned by Mr. William W. 35 Krippaehne, President of the Company. (See "Item 7 - Certain Relationships and Related Transactions"). FPI estimates that the total fair market value of FPI's real estate holdings was approximately $120 million as of December 31, 1996, including FPI's partnership interests and excluding any related liabilities and potential liquidation costs. Although the foregoing fair market value estimate is based on information and assumptions considered to be adequate and reasonable by FPI, such estimate requires significant subjective judgments to be made by FPI. Such estimate is not based on technical appraisals and will change from time to time, and could change materially, as economic and market factors change, and as management evaluates those and other factors. FPI's owned real estate is managed, leased, and operated by FPI. More than half of FPI's employees are engaged in activities related to service of FPI's existing buildings and their tenants. FPI does not manage properties for third- party owners, nor does it anticipate doing so in the future. BUSINESS FPI focuses on reducing debt, enhancing the revenue stream of FPI's existing properties, and acquiring or developing selected strategic properties. The cash flow from real estate operations is used entirely to pay real estate debt, maintain properties and otherwise finance real estate operations. As stated in Note 10 to the Consolidated Financial Statements included in this Form 10, the income from operations reported for the real estate segment excludes interest expense. When interest expense is taken into account, real estate operations have historically had negative income or nominal profit, including negative income in 1994 and 1995. FPI also would have incurred a loss in 1996, except for gain from the sale of real property. The majority of FPI's existing operating properties were developed by FPI. FPI anticipates that most future acquisition and development activities will be located near existing facilities to promote business efficiencies. FPI believes that, by developing, owning, and managing a diverse portfolio of properties in a relatively small geographic area, it can better control the overall character of FPI's developments. DEVELOPMENT AND ACQUISITION ACTIVITIES FPI plans to increase its ownership of industrial and office properties in the Seattle area. FPI intends to be significantly involved in planning and development of contemplated new studio space and corporate offices for Fisher Broadcasting and others on a block of land owned partially by Fisher Broadcasting and partially by FPI at Fourth Avenue and Denny Street in Seattle, if current preliminary plans result in a decision to proceed with the project (see "Broadcasting Operations - KOMO TV"). From time to time, FPI may consider selling a property when it reaches a certain maturity, no longer fits FPI's investment goals, or is under threat of condemnation. FPI has no current plans to sell any of its properties. 36 OPERATING PROPERTIES FPI's portfolio of operating properties are classified into three business categories: (i) marina properties; (ii) office; and (iii) warehouse and industrial. Note 4 to the Consolidated Financial Statements sets forth the minimum future rentals from leases in effect as of December 31, 1996 with respect to FPI's properties. The following table includes FPI's significant properties:
OWNERSHIP FPI'S YEAR LAND AREA RENTABLE % LEASED NAME AND LOCATION INTEREST INTEREST DEVELOPED (ACRES) SPACE) 12/31/96 ----------------- -------- -------- --------- ------- ------ -------- MARINA Marina Mart Moorings Fee & Leased 100% 1939 5.01 Fee & 201 Slips 98% Seattle, WA to 2.78 Leased 1987 OFFICE West Lake Union Center Fee 100% 1994 1.24 185,000 SF 99% Seattle, WA 487 car garage I-90 Building Fee 100% Renovated .34 28,265 SF 93% Seattle, WA 1990 22 car garage Fisher Business Center Fee 95% 1986 9.75 195,000 SF 86% Lynnwood, WA Parking for 733 cars Marina Mart Fee 100% Renovated * 18,950 SF 100% Seattle, WA 1993 Latitude 47 Restaurant Fee 100% Renovated * 15,470 SF 100% Seattle, WA 1987 1530 Building Fee 100% Renovated * 10,160 SF 97% Seattle, WA 1985 INDUSTRIAL Fisher Industrial Park Fee 100% 1982 and 22.08 398,600 SF 100% Kent, WA 1992 Fisher Commerce Center Fee 100% NA 10.21 171,400 SF 96% Seattle, WA Fisher Industrial Center Fee 100% Redeveloped 3.3 80,475 SF 96% Seattle, WA 1980 Pacific North Equipment Co. Fee 100% NA 5.5 38,000 SF 100% Kent, WA
- ------------------ * Undivided land portion of Marina. In addition to the above listed properties, FPI owns a 2.6 acre parking lot that serves Fisher Mills Inc. in Seattle, a one acre parking lot that serves Fisher Broadcasting in Seattle, 320 acres of unimproved residential property in Marysville, Washington, held for future development, and a small residential property in Seattle. FPI does not currently intend to acquire other parking or residential properties. 37 West Lake Union Center, Fisher Business Center, Fisher Industrial Center, Fisher Industrial Park, and Fisher Commerce Center are encumbered by liens securing non-recourse, long-term debt financing that was obtained by FPI in connection with the development or refinancing of such properties. Each of these properties produces cash flow that exceeds debt service, and in no case does such debt exceed 75% of the estimated value of the financed property. Total FPI debt is approximately 50% of the estimated value of the total owned real estate. It is FPI's objective to reduce this ratio over time with excess cash flow not needed for capital investments. FPI believes that it currently has sufficient credit and cash flow to meet its investment objectives. RISKS ASSOCIATED WITH REAL ESTATE The development, ownership and operation of real property is subject to varying degrees of risk. FPI's revenue, operating income and the value of its properties may be adversely affected by the general economic climate, the local economic climate and local real estate conditions, including the perceptions of prospective tenants of attractiveness of the properties and the availability of space in other competing properties; FPI's ability to provide adequate management, maintenance and insurance; the inability to collect rent due to bankruptcy or insolvency of tenants or otherwise; and increased operating costs. One of FPI's properties is leased to, and occupied by, a single tenant, and several properties are leased to, and occupied by, single tenants which occupy substantial portions of such properties. Real estate income and values may also be adversely affected by such factors as applicable laws and regulations, including tax and environmental laws, interest rate levels and the availability of financing. FPI carries comprehensive liability, fire, extended coverage and rent loss insurance with respect to its properties, with policy specifications and insured limits customary for similar properties. There are, however, certain types of losses that may be either uninsurable or not economically insurable. If an uninsured loss occurs with respect to a property, FPI could lose both its invested capital in and anticipated profits from such property. INVESTMENT IN SAFECO CORPORATION A substantial portion of the Company's assets is represented by an investment in 3,002,376 shares of the common stock of SAFECO Corporation, an insurance and financial services corporation ("SAFECO"). The Company has been a stockholder of SAFECO since 1923. The market value of the Company's investment in SAFECO common stock as of December 31, 1996, 1995, and 1994, was approximately $118,406,000, $103,582,000, and $78,062,000, respectively, representing 30%, 29.3%, and 25.3%, respectively, of the Company's total assets as of such dates. Dividends paid with respect to the Company's SAFECO common stock constituted 11.4%, 12.1%, and 15.0% of the Company's net income for the years 1996, 1995, and 1994, respectively. As of April 15, 1997, the market value of the SAFECO common stock beneficially owned by the Company was $116,342,000. A significant decline in the market price of SAFECO common stock or a significant reduction in the amount of SAFECO's periodic dividends could have a material adverse effect on the financial condition or results of operation of the Company. The Company has no present intention of disposing of its SAFECO common stock or its other marketable securities, although such securities are classified as investments available for sale under applicable accounting standards (see "Notes to Consolidated Financial Statements; Note 1: Operations and Accounting Policies: Marketable Securities"). Mr. William 38 W. Krippaehne, Jr., President, CEO, and a Director of the Company, is a Director of SAFECO. SAFECO's common stock is registered under the Securities Exchange Act of 1934, as amended, and further information concerning SAFECO may be obtained from reports and other information filed by SAFECO with the Securities and Exchange Commission (the "Commission"). SAFECO common stock trades on The NASDAQ Stock Market under the symbol "SAFC". 39 ITEM 2 - FINANCIAL INFORMATION. SELECTED FINANCIAL DATA The following financial data of the Company are derived from the Company's historical audited financial statements and related footnotes. The information set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and related footnotes contained elsewhere in this Registration Statement.
SELECTED FINANCIAL DATA YEAR ENDED DECEMBER 31, 1992 1993 1994 1995 1996 --------- -------- -------- -------- --------- (All amounts in thousands except per share data) Sales and other revenue Broadcasting $ 70,763 $ 73,291 $ 87,112 $101,192 $111,967 Milling 88,696 94,490 93,277 112,360 135,697 Real estate 5,944 6,462 8,659 10,941 13,556 Corporate and other, primarily dividends and interest income (1) 2,843 3,232 3,460 4,087 4,000 -------- -------- -------- -------- -------- $168,246 $177,475 $192,508 $228,580 $265,220 ======== ======== ======== ======== ======== Operating income Broadcasting $ 12,905 $ 15,947 $ 26,066 $ 31,518 $ 34,025 Milling 577 737 1,078 2,907 3,410 Real estate 1,388 1,476 2,199 3,267 5,749 Corporate and other 958 1,852 2,236 2,152 1,948 -------- -------- -------- -------- -------- $ 15,828 $ 20,012 $ 31,579 $ 39,844 $ 45,132 ======== ======== ======== ======== ======== Income before effect of a change in accounting method $ 9,621 $ 12,343 $ 18,152 $ 22,683 $ 26,086 Cumulative effect of a change in method of accounting for postretirement benefits (2) (1,305) -------- -------- -------- -------- -------- Net income $ 9,621 $ 12,343 $ 16,847 $ 22,683 $ 26,086 ======== ======== ======== ======== ======== Per common share data (3) Income before effect of a change in accounting method $ 2.26 $ 2.89 $ 4.26 $ 5.32 $ 6.12 Cumulative effect of a change in method of accounting for postretirement benefits (2) (0.31) -------- -------- -------- -------- -------- Net income $ 2.26 $ 2.89 $ 3.95 $ 5.32 $ 6.12 ======== ======== ======== ======== ======== Cash dividends declared (4) $ 1.26 $ 1.26 $ 1.34 $ 1.52 $ 3.68 ======== ======== ======== ======== ========
40
DECEMBER 31, 1992 1993 1994 1995 1996 -------- -------- -------- -------- -------- Working capital $ 44,787 $ 48,989 $ 47,227 $ 49,744 $ 42,421 Total assets (5) 179,851 211,000 308,072 353,035 394,149 Total debt 46,714 67,563 75,859 71,869 74,971 Stockholders' equity (5) 101,071 107,996 170,751 203,681 232,129
(1) Included in this amount are dividends received from the Company's investment in SAFECO Corporation common stock amounting to $2,342 in 1992, $2,582 in 1993, $2,822 in 1994, $3,062 in 1995 and $3,333 in 1996. (2) In 1994, the Company adopted the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" (FAS 106), which requires that the cost of health care and life insurance benefits provided to certain retired employees be accrued during the years that employees render service. Health care and life insurance benefits are provided to all non- broadcasting employees. The Company elected to immediately recognize the accumulated benefit obligation, measured as of December 31, 1993. Accordingly, the $2,012 cumulative effect of this change in accounting method on years prior to 1994 ($1,305 after income tax effects) is deducted from the results of operations for 1994. (3) 1994 and prior per-share amounts have been restated for a four-for-one stock split that was effective May 15, 1995. (4) 1992 through 1995 amounts were declared and paid. 1996 includes $1.96 per share declared for payment in 1997. (5) In the first quarter of 1994, the Company adopted the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities" (FAS 115), which requires investments in equity securities, be designated as either trading or available-for-sale. While the Company has no present intention to dispose of its investments in marketable securities, it has classified its investments as available-for-sale and, beginning in 1994, those investments are reported at fair market value. Accordingly, total assets include unrealized gain on marketable securities as follows: December 31, 1994 - $79,531; December 31, 1995 - $105,401; December 31, 1996 - $120,468. Stockholders' equity includes unrealized gain on marketable securities, net of deferred income tax, as follows: December 31, 1994 - $51,695; December 31, 1995 - $68,510; December 31, 1996 - $78,304. 41 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS CONSOLIDATED RESULTS OF OPERATIONS Year ended December 31, 1996 compared to year ended December 31, 1995 - --------------------------------------------------------------------- Sales and other revenue in 1996 increased by $36,640,000 or 16.0% to $265,220,000 from $228,580,000 in 1995. Broadcasting, milling, and real estate operations had increases in sales and other revenue of 10.6%, 20.8%, and 23.9%, respectively. Cost of products and services sold in 1996 increased by $25,138,000 or 17.4% to $170,016,000 from $144,878,000 in 1995. The increase resulted primarily from increased costs to acquire and produce broadcasting programming and from historically high wheat prices. As a percentage of sales and other revenue, cost of products and services sold was 64.1% and 63.4% in 1996 and 1995, respectively. The increase in the cost of products and services sold as a percentage of sales and other revenue was due to lower margins at recently acquired radio stations which operate in smaller markets and have a lower return than larger market radio stations. Selling expenses in 1996 increased by $3,071,000 or 22.1% to $16,941,000 from $13,870,000 in 1995. 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 6.4% and 6.1% in 1996 and 1995, respectively. General and administrative expenses in 1996 increased by $3,143,000 or 10.5% to $33,131,000 from $29,988,000 in 1995. The increase relates primarily to general and administrative expenses at recently acquired radio stations and the Rancho Cucamonga food distribution center which operated for the entire year compared to seven months in 1995. As a percentage of sales and other revenue, general and administrative expenses were 12.5% and 13.1% in 1996 and 1995, respectively. Interest expense increased in 1996 by $391,000 or 7.4% to $5,671,000 from $5,280,000 in 1995. The increase in interest expense is due to higher average long-term debt balances outstanding during 1996 compared to 1995. Additionally, the average interest rate during 1996 and 1995 was 7.7% and 7.1%, respectively, which further impacted the effect of the increase in average long- term debt outstanding on interest expense. Provision for federal and state income taxes in 1996 increased by $1,494,000 or 12.6% to $13,375,000 from $11,881,000 in 1995. For 1996 and 1995, the Company's effective tax rate was 33.9% and 34.4%, respectively. The decrease in the effective tax rate in 1996 was due to increased dividend income for which a dividends received deduction is available. 42 Year ended December 31, 1995 compared to year ended December 31, 1994 - --------------------------------------------------------------------- Sales and other revenue in 1995 increased by $36,072,000 or 18.7% to $228,580,000 from $192,508,000 in 1994. Broadcasting, milling, and real estate operations had increases in sales and other revenue of 16.2%, 20.5%, and 26.4%, respectively. Cost of products and services sold in 1995 increased by $20,395,000 or 16.4% to $144,878,000 from $124,483,000 in 1994. The increase is primarily related to growth at recently acquired radio stations and food distribution operations, increased costs to acquire and produce broadcasting programming, and historically high wheat prices. As a percentage of sales and other revenue, costs of products and services sold was 63.4% and 64.7% in 1995 and 1994, respectively. The decrease in costs of products and services sold as a percentage of net revenue is due, in part, to increased margins at KVI-AM and KPLZ-FM, which had improved ratings in 1995. These stations were included in broadcasting operations for the entire year of 1995 compared to only seven months in 1994. Selling expenses in 1995 increased by $2,854,000 or 25.9% to $13,870,000 from $11,016,000 in 1994. The increase in selling expenses is due principally to the growth at acquired and existing radio stations and at the Rancho Cucamonga food distribution center. As a percentage of sales and other revenue, selling expenses were 6.1% and 5.7% in 1995 and 1994, respectively. General and administrative expenses in 1995 increased by $4,558,000 or 17.9% to $29,988,000 from $25,430,000 in 1994. The increase is primarily due to general and administrative expenses at recently acquired and existing radio stations and at the Rancho Cucamonga food distribution center. As a percentage of sales and other revenue, general and administrative expenses were 13.1% and 13.2% in 1995 and 1994, respectively. Interest expense increased in 1995 by $1,275,000 or 31.8% to $5,280,000 from $4,005,000 in 1994. The increase in interest expense is due to the Company incurring higher average interest rates. The average interest rate on the Company's long-term debt during 1995 and 1994 was 7.1% and 5.6%, respectively. Provision for federal and state income taxes in 1995 increased by $2,459,000 or 26.1% to $11,881,000 from $9,422,000 in 1995. For 1995 and 1994, the Company's effective tax rate was 34.4% and 34.2%, respectively. Year ended December 31, 1994 compared to year ended December 31, 1993 - --------------------------------------------------------------------- Sales and other revenue in 1994 increased by $15,033,000 or 8.5% to $192,508,000 from $177,475,000 in 1993. Sales and other revenue increased at broadcasting and real estate operations by 17.9% and 33.8%, respectively, while milling operations had a decrease in sales and other revenue of 1.4%. Cost of products and services sold in 1994 decreased by $3,346,000 or 2.6% to $124,483,000 from $127,829,000 in 1993. The decrease is primarily related to lower milling revenue and expiration and renegotiation of certain television and radio broadcasting rights 43 contracts. As a percentage of sales and other net revenue, cost of products and services sold was 64.7% and 72.0% in 1994 and 1993, respectively. The decrease in costs of products and services sold as a percentage of net revenue is primarily due to lower costs at the broadcasting operations and improvements in the gross margin percentage at the milling operations. Selling expenses in 1994 increased by $1,762,000 or 19.0% to $11,016,000 from $9,254,000 in 1993. The increase in selling expenses is due to acquisition of KVI-AM and KPLZ-FM in May 1994 and additional selling expenses at existing broadcasting operations, a function of increasing revenue. As a percentage of sales and other revenue, selling expenses were 5.7% and 5.2% in 1994 and 1993, respectively. General and administrative expenses in 1994 increased by $3,736,000 or 17.2% to $25,430,000 from $21,694,000 in 1993. The increase is largely attributed to general and administrative expenses at KVI-AM and KPLZ-FM which were acquired in May 1994, a non-recurring charge of $1,200,000 for restructuring broadcasting operations, and adoption of Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" (FAS 106) which requires that the cost of health care and life insurance benefits provided to certain retired employees be accrued during the years that employees render service. As a percentage of sales and other revenue, general and administrative expenses were 13.2% and 12.2% in 1994 and 1993, respectively. The increase in general and administrative expenses as a percentage of sales and other revenue was due to the non-recurring restructuring charge and the adoption of FAS 106. Interest expense increased in 1994 by $2,166,000 or 117.8% to $4,005,000 from $1,839,000 in 1993. The increase in interest expense is due to increased long-term debt balances resulting from debt financing of the West Lake Union Center project which opened in March 1994 and higher average interest rates. The average interest rate on the Company's long-term debt during 1994 and 1993 was 5.6% and 3.2%, respectively. Provision for federal and state income taxes in 1994 increased by $3,592,000 or 61.6% to $9,422,000 from $5,830,000 in 1993. For 1994 and 1993, the Company's effective tax rate was 34.2% and 32.1%, respectively. The lower effective tax rate in 1993 was primarily due to a rehabilitation tax credit received related to restoration activities by real estate operations at the Marina Mart Building. BROADCASTING OPERATIONS Year ended December 31, 1996 compared to year ended December 31, 1995 - --------------------------------------------------------------------- Broadcasting revenue in 1996 increased by $10,775,000 or 10.6% to $111,967,000 from $101,192,000 in 1995. The increase in broadcasting revenue is, in part, due to the revenue earned at KWJJ-AM/FM and four radio stations in eastern Washington and Montana which were acquired during 1996. These stations contributed net revenue of approximately $4,600,000 in 1996. Additionally, revenue at the two television stations increased by $3,968,000 primarily due to growth in local advertising sales and to additional political and advocacy advertising during the 1996 campaign year. The remaining increase in revenue is attributed to the full year of operations in 1996 of the twelve radio stations acquired in March 1995. 44 Operating income in 1996 increased by $2,507,000 or 8.0% to $34,025,000 from $31,518,000 in 1995. As a percentage of broadcasting revenue, operating income was 30.4% and 31.1% in 1996 and 1995, respectively. Broadcasting operating expenses outpaced the growth in broadcasting revenue primarily due to the operation of recently acquired radio stations in eastern Washington and Montana. These stations have a lower return on revenue than stations in larger markets because advertising time is sold for lower rates while operating expenses are somewhat comparable to radio stations in larger markets. Year ended December 31, 1995 compared to year ended December 31, 1994 - --------------------------------------------------------------------- Broadcasting revenue in 1995 increased by $14,080,000 or 16.2% to $101,192,000 from $87,112,000 in 1994. The increase in broadcasting revenue is, in part, due to a full year of operations of KVI-AM and KPLZ-FM in 1995, compared to seven months of operations in 1994, as well as improved audience ratings for those stations during 1995. Revenue from KVI-AM and KPLZ-FM in 1995 increased $5,206,000 over 1994. Revenue from the twelve radio stations acquired in March 1995 totaled $4,960,000. Additionally, television revenue grew 3.9%. This increase was due in part to an increase in the stations' share of national advertising revenue at a time when the local advertising markets experienced little growth. Operating income in 1995 increased by $5,452,000 or 20.9% to $31,518,000 from $26,066,000 in 1994. As a percentage of broadcasting revenue, operating income was 31.1% and 29.9% in 1995 and 1994, respectively. The increase in operating income exceeded the growth in broadcasting revenue due to the ability of broadcasting operations to leverage its selling, general and administrative expenses for its Seattle radio stations (KOMO-AM, KVI-AM and KPLZ-FM) and improved ratings performance of KVI-AM and KPLZ-FM. Year ended December 31, 1994 compared to year ended December 31, 1993 - --------------------------------------------------------------------- Broadcasting revenue in 1994 increased by $13,821,000 or 18.9% to $87,112,000 from $73,291,000 in 1993. The increase in broadcasting revenue is, in part, due to revenue earned by radio stations KVI-AM and KPLZ-FM which were acquired in May 1994. These stations contributed $6,400,000 to broadcasting revenue in 1994. Revenue from television operations increased $8,596,000 as a result of increased demand for advertising spots which increased advertising rates. The increases in revenue were partially offset by a decline in KOMO-AM radio revenue attributed to lower ratings. Operating income in 1994 increased by $10,119,000 or 63.5% to $26,066,000 from $15,947,000 in 1993. As a percentage of broadcasting revenue, operating income was 30.0% and 21.6% in 1994 and 1993, respectively. The increase in operating income resulted from the expiration of certain television broadcasting contracts and renegotiation of the contract for rights to broadcast University of Washington Husky sports on KOMO-AM which resulted in lower operating expenses. Additionally, an improved local economy caused greater demand for advertising time which increased broadcasting revenue without significant sales and administrative expenditures. 45 MILLING OPERATIONS Year ended December 31, 1996 compared to year ended December 31, 1995 - --------------------------------------------------------------------- Revenue from the milling subsidiary in 1996 increased by $23,337,000 or 20.8% to $135,697,000 from $112,360,000 in 1995. The increase in revenue is primarily due to increased sales prices for flour which resulted from historically high wheat prices and from increased sales volume in both the milling and food distribution divisions. Flour sales volume increased 6.2% in 1996. Revenue from the food distribution division increased $7,908,000 due largely to a full year of operations of the Rancho Cucamonga food distribution operation in 1996 compared to seven months activity in 1995. Operating income in 1996 increased by $503,000 or 17.3% to $3,410,000 from $2,907,000 in 1995. As a percentage of milling revenue, operating income was 2.5% and 2.6% in 1996 and 1995, respectively. The consistency of operating income as a percentage of milling revenue was due to similar gross margin percentage in 1996 and 1995 and the milling operations ability to leverage its operating expenses during a period of increased sales volumes. Year ended December 31, 1995 compared to year ended December 31, 1994 - --------------------------------------------------------------------- Revenue from the milling subsidiary in 1995 increased by $19,083,000, or 20.5% to $112,360,000 from $93,277,000 in 1994. The increase in milling revenue was primarily due to increased sales prices for flour which were driven by higher wheat prices and increased sales volume at both the milling and food distribution divisions. Flour sales volume increased 7.9% in 1995. Revenue from the food distribution division increased $6,824,000 primarily as a result additional sales at the Rancho Cucamonga food distribution operation which was acquired in June of 1995. Operating income in 1995 increased by $1,829,000 or 169.7% to $2,907,000 from $1,078,000 in 1994. As a percentage of milling revenue, operating income was 2.6% and 1.2% in 1995 and 1994, respectively. The increase in operating income and operating income as a percentage of milling revenue was due to improved gross margin percentage particularly in the food distribution division. Gross margin for the food distribution division increased to 14.3% in 1995 from 12.4% in 1994, as a result of emphasis to increase sales to higher margin bakery customers. Year ended December 31, 1994 compared to year ended December 31, 1993 - --------------------------------------------------------------------- Revenue from the milling subsidiary in 1994 decreased $1,213,000 or 1.3% to $93,277,000 from $94,490,000 in 1993. The decrease in milling revenue resulted from a decrease in sales volume of 3.4% as the milling division discontinued sales to certain low-margin bulk flour accounts. The decrease in sales volume was partially offset by higher flour prices. Operating income in 1994 increased by $341,000 or 46.3% to $1,078,000 from $737,000 in 1993. As a percentage of milling revenue, operating income was 1.2% and 0.8% in 1994 and 1993, respectively. The increase in operating income and operating income as a percentage of 46 milling revenue was the result of an improvement in gross margin percentage of 2.8% to 11.8% in 1994 compared to 9.0% in 1993. REAL ESTATE OPERATIONS Year ended December 31, 1996 compared to year ended December 31, 1995 - --------------------------------------------------------------------- Real estate revenue in 1996 increased by $2,615,000 or 23.9% to $13,556,000 from $10,941,000 in 1995. The increase in real estate revenue is primarily due to a gain of $2,300,000 on the sale of property which was sold under the threat of condemnation. Real estate revenue also increased due to higher average occupancy levels which were 95.3% and 93.7% in 1996 and 1995, respectively. Operating income in 1996 increased by $2,482,000 or 76.0% to $5,749,000 from $3,267,000 in 1995. As a percentage of real estate revenue, operating income was 42.4% and 29.9% in 1996 and 1995, respectively. The increase in operating income is primarily due to a gain of $2,300,000 on the sale of property. Year ended December 31, 1995 compared to year ended December 31, 1994 - --------------------------------------------------------------------- Real estate revenue in 1995 increased by $2,282,000 or 26.4% to $10,941,000 from $8,659,000 in 1994. The increase in real estate revenue is primarily due to higher occupancy rates and to rental income from the West Lake Union Center project which was in operation for the entire year compared to ten months of 1994. Average occupancy levels in 1995 and 1994 were 93.7% and 86.9%, respectively. Operating income in 1995 increased by $1,068,000 or 48.6% to $3,267,000 from $2,199,000 in 1994. As a percentage of revenue, operating income was 29.9% and 25.4% in 1995 and 1994, respectively. The increase in operating income is primarily due to higher occupancy rates which increased revenue but did not require significant additional operating expenses. Year ended December 31, 1994 compared to year ended December 31, 1993 - --------------------------------------------------------------------- Real estate revenue in 1994 increased by $2,197,000 or 34.0% to $8,659,000 from $6,462,000 in 1993. The increase in real estate revenue was, in part, due to rental income from the West Lake Union Center project which opened in March 1994 and was 77% occupied by year end. Additionally, real estate revenue increased as average occupancy levels increased to 86.9% in 1994 compared to 85.6% in 1993. Operating income in 1994 increased by $723,000 or 49.0% to $2,199,000 from $1,476,000 in 1993. As a percentage of real estate revenue, operating income was 25.4% and 22.8% in 1994 and 1993, respectively. The increase in operating income is due to higher occupancy rates which increased revenue but did not require significant additional operating expenses. 47 LIQUIDITY AND CAPITAL RESOURCES As of December 31, 1996, the Company had working capital of $42,421,000 and cash and short-term cash investments totaling $5,116,000. 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 $32,511,000 for the year ended December 31, 1996. 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 $42,554,000 for the year ended December 31, 1996. The principle use of cash in investing activities was $36,684,000 for acquisition of the assets of KWJJ-AM/FM and four radio stations in eastern Washington and Montana, and $8,730,000 to purchase property, plant and equipment used in operations. Net cash used by financing activities was $4,330,000 for the year ended December 31, 1996. Cash for financing activities was provided by borrowing under a mortgage loan agreement in the amount of $27,000,000 and $17,000,000 under a line of credit. Proceeds from the mortgage loan were used to repay construction period financing for the West Lake Union Center project. Proceeds from the line of credit were used as partial payment to acquire the assets of KWJJ-AM/FM. In addition, during 1996 the Company repaid $5,000,000 on the line of credit and retired other debt amounting to $4,200,000. Cash paid for dividends to stockholders totaled $7,432,000 or $1.72 per common share. ITEM 3 - DESCRIPTION OF PROPERTIES. Fisher Broadcasting's television stations operate from offices and studios owned by Fisher Broadcasting and located in Seattle, Washington and Portland, Oregon. Television transmitting facilities and towers are also owned by Fisher Broadcasting. Radio studios are generally located in leased space. Radio transmitting facilities and towers are owned by Fisher Broadcasting, except KWJJ-FM and the stations operated by Sunbrook, where such facilities are situated on leased land. The Seattle flour mill and food distribution facility operate from FMI- owned facilities in Seattle, Washington. The compact flour mill and food distribution facilities located in Portland, Oregon, are owned by FMI. In California, FMI's food distribution activities and compact flour mill operate from leased facilities in Rancho Cucamonga and Modesto, respectively. Property operated by the Company's real estate subsidiary, FPI, is described under "Real Estate Operations - Operating Properties." Real estate projects that are subject to non-recourse mortgage loans are West Lake Union Center, Fisher Business Center, Fisher Industrial Center, Fisher Industrial Park, and Fisher Commerce Center. The Company believes that the properties owned or leased by its operating subsidiaries are generally in good condition and well maintained, and are adequate for present operations. 48 ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Principal Stockholders. The following table sets forth information as of April 15, 1997, with respect to the shares of the common stock, $2.50 par value of the Company ("Company Common Stock") beneficially owned by (i) each person known by the Company to own beneficially more than 5% of Company Common Stock, (ii) each director of the Company, (iii) the five most highly compensated executive officers of the Company (including certain executive officers of subsidiaries of the Company - see "Executive Compensation"), and (iv) all directors and executive officers of the Company as a group. The number of shares beneficially owned by each stockholder, director or executive officer is determined according to rules of the Commission, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power. As a consequence, several persons may be deemed to be the "beneficial owners" of the same shares. Except as noted below, each holder has sole voting and investment power with respect to shares of Company Common Stock listed as owned by such person or entity. When a person is a "co-trustee" or one of a number of directors of a corporation that owns shares of the Company's Common Stock, he or she has shared voting and investment power.
NUMBER OF PERCENTAGE OF NAME AND ADDRESS SHARES OF OUTSTANDING OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK ------------------- ------------ ------------ BANK OF AMERICA NT & SA/(1)/........ 779,502 18.3% P.O. Box 34260 Seattle, WA 98124-1260 TRUSTEES OF THE D. R. FISHER TRUST UW OF D. R. FISHER/(2)/....................... 238,504 5.6% P.O. Box 98549 Des Moines, WA 98198 O. D. FISHER INVESTMENT CO./(3)/............... 232,816 5.5% 1525 One Union Square Seattle, WA 98101 LULA FISHER WARREN TRUST/(4)/........................ 240,184 5.6% The Bank of California P.O. Box 3123 Seattle, WA 98114
49
NUMBER OF PERCENTAGE OF NAME OF DIRECTOR/ SHARES OF OUTSTANDING EXECUTIVE OFFICER COMMON STOCK COMMON STOCK ----------------- ------------ ------------ Robin E. Campbell/(5)/.............. 460,780 10.8% James W. Cannon..................... 0 * Phelps K. Fisher/(6)/............... 134,471 3.2% William O. Fisher/(7)/.............. 240,704 5.6% Carol H. Fratt/(8)/................. 300 * Donald G. Graham, Jr./(9)/.......... 484,144 11.3% Donald G. Graham, III/(10)/......... 240,016 5.6% William W. Krippaehne, Jr./(11)/.... 2,938 * John D. Mangels..................... 400 * Jean F. McTavish/(12)/.............. 35,400 * Jacklyn F. Meurk/(13)/.............. 45,516 1.1% W. W. Warren/(14)/.................. 412,576 9.7% W. W. Warren, Jr./(15)/............. 465 * George D. Fisher/(16)/.............. 357,368 8.4% Patrick M. Scott/(17)/.............. 4,305 * Terry L. Barrans/(18)/.............. 815 * Mark A. Weed/(19)/.................. 1,000 * David D. Hillard/(20)/.............. 205 * Directors and Executive Officers as a Group (18 Persons)/(21)(22)/... 1,717,267 40.2%
- ------------------ * Represents holdings of less than 1%. (1) Bank of America National Trust and Savings Association, as a fiduciary, possesses sole voting power as to 510,678 shares of Company Common Stock, sole investment power as to 665,674 shares of Company Common Stock, and shared investment power as to 35,280 shares of Company Common Stock under a number of wills, trusts and agency arrangements. (2) Three trustees of the D.R. Fisher Trust share voting and investment power as to the 238,504 shares held by such trust. The shares held by the D.R. Fisher Trust are also reported as beneficially owned by two of such trustees, Messrs. William O. Fisher and George D. Fisher. (3) Mr. Donald G. Graham, Jr., President, director and a 14.40% shareholder of the O.D. Fisher Investment Company ("ODFICO"), has sole voting power with respect to the shares of Company Common Stock owned by ODFICO. Ms. Robin Campbell is Chairman of the Board of Directors of ODFICO, and a 4.96% shareholder thereof; Mr. Donald G. Graham, III is Vice President, a director, and a 3.86% shareholder of ODFICO. The 232,816 shares owned by ODFICO are also reported as beneficially owned by Ms. Campbell and Messrs. Donald G. Graham, Jr. and Donald G. Graham, III. (4) The 240,184 shares held by the Lula Fisher Warren Trust are also reported in this table as beneficially owned by Mr. W. W. Warren, who shares voting and investment power as one of several trustees of such trust. (5) Ms. Campbell owns 114,144 shares. In addition, she shares voting power, as co-trustee, as to 7,040 shares held by Trust A Under the Will of Peggy Locke Newman and 106,780 shares held by Trust B Under the Will of Peggy Locke Newman. Additionally, Ms. Campbell shares investment power as to the 232,816 shares held by the O.D. Fisher Investment Company (see footnote (3)). (6) Mr. Phelps K. Fisher owns 41,517 shares. In addition, he has sole voting power and shared investment power as to 67,436 shares owned by K.R. Fisher Investment Company, and has sole voting power, pursuant to a power of attorney, as to 7,036 shares and 7,096 shares, respectively, owned by two of his adult sons. Mr. Fisher's wife owns 11,386 shares. 50 (7) Mr. William O. Fisher owns 2,200 shares. In addition, he shares voting and investment power as one of three trustees of the D.R. Fisher Trust, as to the 238,504 shares held by such trust. (8) Mrs. Fratt owns 100 shares, and her husband owns 200 shares. (9) Mr. Donald G. Graham, Jr. owns 36,960 shares. In addition, he has sole voting power and shared investment power as to the 232,816 shares owned by the O.D. Fisher Investment Company. Additionally, Mr. Graham has voting power as to a total of 214,368 shares held by (i) two trusts under the will of Nellie Hughes Fisher, and (ii) two trusts under the will of O.D. Fisher. (10) Mr. Donald G. Graham, III, owns 7,200 shares. In addition, he shares investment power as to 232,816 shares owned by the O.D. Fisher Investment Company (see footnote (3)). (11) Mr. Krippaehne holds 228 shares in an Individual Retirement Account and owns 1,390 shares jointly with his wife. Includes 1,320 shares subject to purchase within sixty days upon the exercise of stock options. (12) Ms. McTavish owns 120 shares. In addition, she shares voting power, as one of three trustees, as to 35,280 shares held by a trust under the will of Vivien S. Fisher. Ms. McTavish is also one of two income beneficiaries under such trust. (13) Ms. Meurk owns 900 shares jointly with her husband. She also has sole voting power, as trustee under the will of Ethyln Gaige Fisher, as to 9,284 shares held by that trust. She is also a general partner in the Meurk Family Limited Partnership, which owns 5,720 shares, and shares voting and investment power with respect to such shares. Ms. Meurk also shares voting and investment power, as a trustee of the Revocable Living Trust of Elaine Fisher Gourlie, as to the 29,612 shares held by that trust. (14) Mr. W. W. Warren owns 12,420 shares. In addition, he shares voting and investment power, as one of several Trustees, as to 240,184 shares owned by the Lula Fisher Warren Trust; Mr. Warren is an income beneficiary of such trust. Mr. Warren also has sole voting power and shares investment power with respect to 159,972 shares owned by Warren Investment Company, of which he is President and a Director. (15) Mr. W. W. Warren, Jr. owns 465 shares jointly with his wife. (16) Mr. George D. Fisher owns 2,400 shares. In addition, he shares voting and investment power as one of three trustees of the D.R. Fisher Trust, as to the 238,504 shares held by such trust. Mr. Fisher is also President and a director of the D.R. Fisher Company, which owns 116,464 shares, and has sole voting power and shares investment power with respect to such shares. (17) Mr. Scott owns 700 shares and owns 2,465 shares jointly with his wife. Includes 1,140 shares subject to purchase within sixty days upon the exercise of stock options. (18) Mr. Barrans owns 180 shares and owns 445 shares jointly with his wife. Includes 190 shares subject to purchase within sixty days upon exercise of stock options. (19) Mr. Weed's beneficial ownership includes 260 shares subject to purchase within sixty days upon the exercise of stock options. (20) Mr. Hillard owns 205 shares jointly with his wife. (21) Includes 2,910 shares subject to purchase within sixty days by all Directors and Executive Officers as a Group. (22) The total number of shares and percentage of outstanding Company Common Stock for the Group eliminates the duplication of any shares deemed to be beneficially owned by more than one member of the Group. ITEM 5 - DIRECTORS AND EXECUTIVE OFFICERS. The following information is provided with respect to the directors and executive officers of the Company. 51 MANAGEMENT ---------- EXECUTIVE OFFICERS AND DIRECTORS:
NAME POSITION WITH COMPANY - ---- --------------------- William W. Krippaehne, Jr./(1)/....................... President, Chief Executive Officer, and Director David D. Hillard...................................... Senior Vice President, Chief Financial Officer, and Secretary Glen P. Christofferson................................ Vice President and Controller Robin E. Campbell..................................... Director James W. Cannon /(2)/................................. Director George D. Fisher...................................... Director Phelps K. Fisher /(4)/................................ Director William O. Fisher..................................... Director Carol H. Fratt........................................ Director Donald G. Graham, Jr. /(1)(2)(3)(4)/.................. Director Donald G. Graham, III................................. Director John D. Mangels /(2)(3)/.............................. Director Jean F. McTavish /(1)(3)(4)/.......................... Director Jacklyn F. Meurk /(1)(3)(4)/.......................... Director W. W. Warren /(1)(2)(4)/.............................. Director W. W. Warren, Jr. /(3)/............................... Director
- ----------------------- (1) Member of the Executive Committee (2) Member of the Compensation Committee (3) Member of the Audit Committee (4) Member of the Nominating Committee The Company has three classes of Directors: Class 1, Class 2 and Class 3, the terms of office of which will expire, respectively, at the annual meetings of stockholders in 2000, 1998, and 1999. The term of the current Class 1 Directors, Robin E. Campbell, James W. Cannon, George D. Fisher, Phelps K. Fisher, and William O. Fisher, will expire at the 2000 Annual Meeting of the Company's stockholders. The term of the current Class 2 Directors, Carol H. Fratt, Donald G. Graham, Jr., Donald G. Graham, III, W. W. Krippaehne, Jr., and John D. Mangels, will expire at the 1998 Annual Meeting of the Company's stockholders. The term of the current Class 3 Directors, Jean F. McTavish, Jacklyn F. Meurk, W. W. Warren, and W. W. Warren, Jr., will expire at the 1999 Annual Meeting of the Company's stockholders. Successors to any Directors whose terms are expiring are elected to three year terms and hold office until their successors are elected and qualified. Executive officers of the Company are elected by the Board of Directors annually, for one-year terms, at each annual meeting of the Board of Directors of the Company. William W. Krippaehne, Jr., 46, is President and Chief Executive Officer of the Company, and a Director of the Company. He has served as President since April 1991, and as 52 Chief Executive Officer since June 1993, and as a Director since March 1982. Mr. Krippaehne also serves as a Director of Fisher Broadcasting, FPI, FMI, and SAFECO Corporation. David D. Hillard, 54, was elected Senior Vice President of the Company in April 1996, and has served as Chief Financial Officer and Secretary since December 1992. Prior to that, Mr. Hillard served as Assistant Treasurer of the Company, from May 1979. Glen P. Christofferson, 37, has been Vice President and Controller of the Company since April 1996. From December 1992 until April 1996, he served as Controller of the Company. Prior to such time, Mr. Christofferson was the Vice President-Finance of the Seattle Supersonics basketball organization. Robin E. Campbell, 51, has owned and operated a jewelry design and appraisal business since 1986. Ms. Campbell has served as a Director of the Company since April 1996. James W. Cannon, 69, is the retired Executive Vice President of SAFECO Corporation and retired President of SAFECO's Property and Casualty Insurance Companies. Mr. Cannon retired from such positions on December 31, 1992. SAFECO is engaged in insurance and financial services activities. Mr. Cannon has served as a Director of the Company since April 1993. George D. Fisher, 48, is Vice President and Secretary of Hunting, Fisher & Co. P.S., C.P.A.s, positions he has held since 1976. Mr. Fisher has served as a Director of the Company since December 4, 1996, when he was elected by the Board of Directors to fill the vacancy created by the death of Mr. G. O. Fisher. Mr. Fisher is the brother of Mr. William O. Fisher. Phelps K. Fisher, 62, is the Executive Vice President - Marketing of Fisher Broadcasting, a position he has held since May 1993. Prior to such time, Mr. Fisher served as Vice President and Director of Marketing of Fisher Broadcasting. Mr. Fisher has served as a Director of the Company since March 1979. Mr. Fisher also serves as a Director of Fisher Broadcasting, FPI and FMI. William O. Fisher, 46, is a partner in the law firm of Pillsbury, Madison & Sutro LLP, a position he has held since 1987. Mr. Fisher has served as a Director of the Company since April 1993. Mr. Fisher is the brother of Mr. George D. Fisher. Carol H. Fratt, 52, is a landscape designer. Since 1989, she has owned and operated a landscape design business. Ms. Fratt has served as a Director of the Company since April 1993. Ms. Fratt is the niece of Ms. Jean McTavish. Donald G. Graham, Jr., 73, has served as Chairman of the Board of Directors of the Company since June 1993. Mr. Graham was President and Chief Executive Officer of the Company from January 1974 to April 1991, and served as Chairman and Chief Executive Officer of the Company from April 1991 to May 1993. Mr. Graham has been a Director of the Company since May 1972. Mr. Graham also serves as a Director of Fisher Broadcasting, FPI and FMI. Mr. Graham is the father of Donald G. Graham, III. 53 Donald G. Graham, III, 42, is, and has been since 1983, a commercial photographer. Mr. Graham has served as a Director of the Company since April 1993. Mr. Graham is the son of Donald Graham, Jr. John D. Mangels, 71, is the retired Chairman and Chief Executive Officer of Security Pacific Bancorporation Northwest and Security Pacific Bank Washington. Mr. Mangels has served as a Director of the Company since December 1990. Jean F. McTavish, 74, is a homemaker and is involved in a number of community and charitable activities. Ms. McTavish has served as a Director of the Company since November 1979. Ms. McTavish is also a member of the Boards of Directors of Fisher Broadcasting and FPI. Ms. McTavish is the first cousin of Mr. W. W. Warren. Ms. McTavish is the aunt of Ms. Carol H. Fratt. Jacklyn F. Meurk, 74, manages property, assets and investments for family trusts, partnerships and other interests. She is a member of the Boards of Directors of the Virginia Mason Medical Center and the Virginia Mason Health System. Ms. Meurk has served as a Director of the Company since January 1973. Ms. Meurk also serves as a Director of FPI. W. W. Warren, 85, is the retired Chairman and Chief Executive Officer of Fisher Broadcasting. Mr. Warren has served as a Director of the Company since March 1979. Mr. Warren also serves as a Director of Fisher Broadcasting. Mr. Warren is the first cousin of Ms. Jean McTavish and the father of Mr. W. W. Warren, Jr. W. W. Warren, Jr., 58, is a Professor of Physics and the Director of the W. M. Keck Nuclear Magnetic Resonance Laboratory at Oregon State University, positions he has held since 1991. Mr. Warren has served as a Director of the Company since March 1992. Mr. Warren is the son of Mr. W. W. Warren. COMMITTEES OF THE BOARD OF DIRECTORS OF THE COMPANY The standing committees of the Board of Directors of the Company are the Executive Committee, the Audit Committee, the Compensation Committee, and the Nominating Committee. The Company also has a Stock Purchase Committee, although such committee does not currently meet regularly. The Executive Committee has authority to exercise all of the authority of the Board of Directors. Additionally, the Executive Committee has the power and duty to vote the stock of all subsidiaries of the Company and to make all decisions and determinations with respect to such subsidiaries. The Audit Committee reviews the Company's audit plan, the scope of activities of the Company's independent auditors, the results of the audit after completion, and the fees for related services performed during the year. The Audit Committee also recommends to the Board of Directors the firm to be appointed as independent auditors. At times, the Audit Committee meets with representatives of the Company's independent auditors without any officers or employees of the Company present. The Compensation Committee reviews and approves, in advance, the Company's retirement and benefit plans, determines the compensation of officers of the Company, and authorizes and approves bonus and incentive programs for executive personnel. The Compensation Committee also reviews and recommends changes in compensation for members of the Board of Directors, and administers the Fisher Companies Incentive Plan of 1995. The Nominating Committee 54 considers and recommends to the Board of Directors nominees for possible election to the Board of Directors and considers other matters pertaining to the size and composition of the Board of Directors and its Committees. DIRECTORS' COMPENSATION The Board of Directors of the Company is comprised of fourteen Directors, two of whom are salaried employees of the Company or one of its subsidiaries. The members of the Company's Board of Directors who are not officers of the Company, or its subsidiaries, receive an annual retainer of $12,000. The Chairman of the Board of Directors receives a total annual retainer of $55,000. In addition, every Director receives a fee of $1,000 for each Board of Directors or Committee meeting attended. The Company also pays the Chairmen of the Audit Committee and the Compensation Committee an annual retainer of $3,000. Directors are reimbursed for travel expenses incurred, and receive a per diem payment of $200, in connection with travel to and from Board of Directors or Committee meetings. ITEM 6 - EXECUTIVE COMPENSATION The following information is provided regarding the compensation paid by the Company or its subsidiaries, as the case may be, to the Chief Executive Officer of the Company and the most highly compensated executive officers of the Company or its subsidiaries, as the case may be, in fiscal year 1996. In accordance with applicable regulations promulgated by the Commission, information regarding Messrs. Scott, Weed and Barrans, who are the CEOs of Fisher Broadcasting, FPI and FMI, respectively, is included because such persons perform policy making functions for the Company.
SUMMARY COMPENSATION TABLE LONG-TERM ANNUAL COMPENSATION COMPENSATION -------------------------------------- --------------------------------------------- RESTRICTED SECURITIES OTHER ANNUAL STOCK UNDERLYING ALL OTHER YEAR SALARY BONUS COMPENSATION(1) AWARDS(2) OPTIONS (3) COMPENSATION(4) ---- -------- -------- --------------- --------- ----------- ---------------- WILLIAM W. KRIPPAEHNE, JR. 1996 $410,000 $220,000 $2,000 $115,475 6,600 $4,500 President and CEO PATRICK M. SCOTT 1996 385,000 165,000 1,709 98,713 5,700 4,500 President and CEO, Fisher Broadcasting Inc. MARK A. WEED 1996 193,500 65,000 387 22,350 1,300 4,500 President and CEO, Fisher Properties Inc. TERRY L. BARRANS 1996 172,500 60,000 290 16,763 950 4,500 President and CEO, Fisher Mills Inc. DAVID D. HILLARD 1996 147,917 35,000 355 20,488 0 4,500 Senior Vice President, Chief Financial Officer - ------------------------------------------------------------------------------------------------------------------------------------
(1) This column reflects dividends paid on stock rights awarded under the Fisher Companies Incentive Plan of 1995. See footnote (2) below. (2) This column shows the market value of restricted stock awards made pursuant to the Fisher Companies Incentive Plan of 1995. The restricted stock awards vest (i.e., stock is issuable or an equivalent cash payment is payable) in an amount equal to 20% of the total restricted stock award, on each of five annual target dates designated in the written agreement granting such awards, conditioned on the continued employment of the awardee 55 through such target dates. Each of the restricted stock awards reflected in this column was made on February 28, 1996, and provides for vesting dates commencing March 15, 1997 (and continuing on March 15 of each of the following four years). The total number of shares awarded to the named executives, subject to the vesting schedule described above, is: Mr. Krippaehne, 1,550; Mr. Scott, 1,325; Mr. Weed, 300; Mr. Barrans, 225; and Mr. Hillard, 275. The Fisher Companies Incentive Plan of 1995 provides for the annual payment of additional compensation to persons holding restricted stock rights, whether or not vested, in an amount equal to any dividend that would have been payable to the holder of such rights if the holder had owned the stock subject to such rights. The value of the restricted stock awards, on a per-share basis, as of April 14, 1997, was $116.00, based upon the average of the bid and ask price of Company Common Stock on such date. (3) This column reflects the number of shares of Company Common Stock issuable upon exercise of stock options granted. (4) This column reflects Company contributions to the Fisher Broadcasting 401(k) Retirement Plan and the Fisher 401(k) Retirement Plan. The following table sets forth stock options granted during 1996 to the executive officers named in the "Summary Compensation Table" above, pursuant to the Fisher Companies Incentive Plan of 1995. All such stock options were granted on February 28, 1996.
OPTION/SAR GRANTS IN FISCAL YEAR 1996 POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION FOR INDIVIDUAL GRANTS OPTION TERM/(3)/ - ----------------------------------------------------------------------------------------------------------------------------------- Percent of Number of Total Options Securities Granted to Underlying Options Employees in Exercise Price Expiration Name Granted(1) Fiscal Year ($/Sh) (2) Date 5% 10% ---- ---------- ----------- -------------- ----------- -------- -------- William W. Krippaehne, Jr. 6,600 31% $74.50 2/28/2006 $121.36 $193.25 Patrick M. Scott 5,700 27% $74.50 2/28/2006 $121.36 $193.25 Mark A. Weed 1,300 6% $74.50 2/28/2006 $121.36 $193.25 Terry L. Barrans 950 5% $74.50 2/28/2006 $121.36 $193.25
(1) The options are non-qualified stock options and become exercisable in five equal annual installments beginning March 15, 1997. (2) The per-share option exercise price represents the fair market value of the Company's Common Stock at the date of grant, based on the average of the bid and ask price of such stock on such date. (3) The dollar amounts under these columns result from calculations at the 5% and 10% assumed appreciation rate established by the Commission and, therefore, are not intended to forecast possible future appreciation, if any, of the Company's Common Stock price. Mr. Patrick M. Scott, one of the named executive officers, is covered by the Fisher Broadcasting Inc. Retirement Plan (the "Fisher Broadcasting Pension Plan"), which is a funded, qualified, non-contributory, defined benefit plan that covers employees of Fisher Broadcasting. The Fisher Broadcasting Pension Plan provides benefits based on the participant's highest 3-year annual average salary and the participant's length of service. The amounts payable under the Fisher Broadcasting Pension Plan are in addition to any Social Security benefit to be received by a participant. The Fisher Broadcasting Pension Plan benefit vests 20% after 3 years of service with Fisher Broadcasting, and an additional 20% for each year of service thereafter until 7 years 56 of service, when the benefits are 100% vested. As of December 31, 1996, Mr. Scott had 28 years of credited service under the terms of the Fisher Broadcasting Pension Plan. All named executive officers except Mr. Scott are covered by the Retirement Plan for Certain Employees of Fisher Mills Inc. (the "Retirement Plan"). The Retirement Plan is a funded, qualified, non-contributory defined benefit plan that covers all employees of the Company, FPI, and FMI. The Retirement Plan provides benefits based on a participant's length of service. The amounts payable under the Retirement Plan are in addition to any Social Security benefit to be received by a participant. The Retirement Plan benefit vests 100% upon completion of five years of service with the Company, FPI, or FMI, as the case may be. As of December 31, 1996, the following named executive officers have the following years of credited service under the terms of the Retirement Plan: Mr. Krippaehne, 15 years; Mr. Weed, 9 years; Mr. Barrans, 20 years: and Mr. Hillard, 18 years. The Company and its subsidiaries have supplemental retirement plans ("SRPs") for certain executive and management personnel of the Company, Fisher Broadcasting, FPI and FMI. The SRPs are non-funded, non-qualified, non- contributory defined benefit plans. The SRPs do not require funding, but generally the companies have acquired annuity contracts and life insurance on the lives of the individual participants to assist in payment of retirement benefits. The companies are the owners and beneficiaries of such policies. The SRPs require continued employment through the date of expected retirement. The SRPs provide that the SRP benefits, together with all other pension and retirement benefits provided by the employing entity, including an amount equal to one-half of the participant's Social Security benefits, will represent a specified percentage (between 50% and 70%) of the participant's average annual compensation. "Average annual compensation" for purposes of the SRPs is determined by averaging the participant's base salary over a period of the three consecutive years that will provide the highest average. The SRPs provide for payment of accrued benefits in the event of involuntary termination prior to age 65, and for death or disability benefits in the event of death or permanent disability prior to age 65. Each of Messrs. Krippaehne, Scott, Weed, Barrans and Hillard is a participant in an SRP. Fisher Broadcasting has established a 401(k) Retirement Plan (the "Fisher Broadcasting 401(k) Plan") to provide a savings incentive for employees. The Fisher Broadcasting 401(k) Plan involves a contribution by Fisher Broadcasting, matching participant contributions on a dollar-for-dollar basis up to a maximum of 3% of participant compensation. Fisher Broadcasting contributions to the Fisher Broadcasting Inc. 401(k) Plan vest at the rate of 20% per year of service, commencing with the third year of completed service. Employees who have completed at least one year of service with Fisher Broadcasting, including Mr. Patrick M. Scott, are eligible to participate in the Fisher Broadcasting 401(k) Plan. A plan entitled Fisher 401(k) Retirement Plan (the "Fisher 401(k) Plan") has been established for employees of the Company, FMI, and FPI. The Fisher 401(k) Plan has the same levels of employer contributions, vesting schedule, and standards of eligibility as the Fisher Broadcasting 401(k) Plan described above. Messrs. Krippaehne, Weed, Barrans, and Hillard are eligible to participate in the Fisher 401(k) Plan. 57 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 1996, the following persons served as members of the Company's Compensation Committee of the Board of Directors: James W. Cannon, Donald G. Graham, Jr., John D. Mangels, and W. W. Warren. Mr. Graham was formerly President and Chief Executive Officer of the Company, having served in such capacity from 1974 to 1991, and served as Chairman and Chief Executive Officer of the Company from 1991 to 1993. Prior to retirement, Mr. Warren was the Chief Executive Officer of Fisher Broadcasting. Mr. Graham serves as the executor of two estates, and as trustee of two trusts, which have made loans to the Company, and as attorney-in-fact for his mother, who has made a loan to the Company. See "Certain Relationships and Related Transactions" below. ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Certain directors and shareholders of the Company (together with employees and others), and/or entities in which such persons have ownership interests, have made working capital loans to the Company. Such persons and/or entities hold promissory notes ("Notes") from the Company reflecting such loans. At December 31, 1996, the total amount of Notes payable was approximately $8.1 million. The Notes are payable either on demand, or in 90-days, and bear interest at rates equivalent to rates available to the Company for short-term cash equivalents. Of the approximately $8.1 million in principal amount of Notes outstanding at December 31, 1996, approximately $5.2 million consisted of demand notes, accruing interest at a rate equal to the 90-day certificate of deposit ("CD") rate for CDs of $100,000 or more as announced from time to time by Seafirst Bank, less 0.25%. Approximately $2.9 million of the Notes outstanding as of December 31, 1996, were Notes having a 90-day maturity, and providing for interest at a rate equal to the 90-day CD rate for CDs of $100,000 or more as announced from time to time by Seafirst Bank, plus 0.35%. The Company currently anticipates that it will continue to borrow funds under these loan arrangements in the future, at approximately historical levels, although the exact amount of such Notes outstanding at any particular time is expected to fluctuate significantly from time to time and, consequently, cannot be predicted. In 1984, FPI and Mr. William W. Krippaehne, Jr., entered into a joint venture to construct and operate for lease two office buildings in Lynnwood, Washington. At that time, Mr. Krippaehne was President of FPI; he is now President and Chief Executive Officer of the Company. FPI contributed land at its fair market value for a 95% interest in the joint venture, and Mr. Krippaehne contributed cash for a 5% interest. The joint venture agreement provides that profits and losses, additional cash contributions, if any, and distributions shall be allocated in proportion to the original contributions. The joint venture owns the Fisher Business Center in Lynnwood, Washington. (See "Real Estate Operations - Operating Properties".) ITEM 8 - LEGAL PROCEEDINGS The Company and its subsidiaries are parties to various claims, legal actions and complaints in the ordinary course of their businesses. In the Company's opinion, all such matters are adequately covered by insurance, are without merit or are of such kind, or involve such amounts, that unfavorable disposition would not have a material adverse effect on the consolidated financial position or results of operations of the Company. 58 ITEM 9 - MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Bid and ask prices for the Company's Common Stock are quoted in the Pink Sheets and on the OTC Bulletin Board. As of April 11, 1997, there were five Pink Sheet Market Makers and eight Bulletin Board Market Makers. The range of high and low bid prices for the Company's Common Stock for each quarter during the two most recent fiscal years is as follows:
QUARTERLY COMMON STOCK PRICE RANGES (1) --------------------------------------- 1996 1995 ------------------- ----------------- QUARTER HIGH LOW HIGH LOW - ---------- -------- -------- ------- ------- 1ST $ 80.00 $73.50 $69.00 $56.75 2ND 86.00 80.00 73.25 70.00 3RD 100.00 85.25 75.50 72.25 4TH 100.00 97.00 75.00 74.00
- ----------- (1) This table reflects the range of high and low bid prices for the Company's Common Stock during the indicated periods, as published in the NQB Non-NASDAQ Price Report by the National Quotation Bureau. Prices for 1995 have been adjusted to reflect a four-for-one stock split that was effective May 15, 1995. The quotations merely reflect the prices at which transactions were proposed, and do not necessarily represent actual transactions. Prices do not include retail markup, markdown or commissions. The approximate number of record holders of the Company's Common stock as of April 15, 1997 was 512. The Company paid cash dividends on its Common Stock of $1.52 and $1.72 per share, respectively, for the fiscal years 1995 and 1996. In addition, the Company declared, on December 4, 1996, a dividend of $1.96 per share for 1997, which will be payable at a rate of $0.49 per quarter to shareholders of record on such quarterly payment dates during 1997. Annual cash dividends have been paid on the Company's Common Stock every year since the Company's reorganization in 1971. The Company currently expects that comparable cash dividends will continue to be paid in the future. ITEM 10 - RECENT SALES OF REGISTRANT'S SECURITIES TO BE REGISTERED In 1997 (March 15 through April 15), the Company sold 390 shares of Company Common Stock to certain officers and employees of the Company, Fisher Broadcasting, FMI and FPI, upon the exercise of non-qualified stock options previously granted to such persons under the Fisher Companies Incentive Plan of 1995. The aggregate price for the Company Common Stock sold to such persons was $29,055. No underwriting discounts or commissions were paid in connection with such sale. The issuance and sale of Company Common Stock pursuant to the Fisher Companies Incentive Plan of 1995 is exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) of such Act, as a sale of securities not involving a public offering. The Company intends to register Company Common Stock issued pursuant to the Fisher Companies Incentive Plan of 1995, on a Form S-8 registration statement under the 59 Securities Act of 1933, to be effective immediately following the effective date of this Registration Statement. ITEM 11 - DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED DESCRIPTION OF CAPITAL STOCK The Company is currently authorized to issue 12,000,000 shares of Company Common Stock, $2.50 par value per share. The following description of the Company Common Stock and certain provisions of the Company's Amended and Restated Articles of Incorporation (the "Articles") and Bylaws is a summary, does not purport to be complete, and is subject to the detailed provisions of, and is qualified in its entirety by reference to, the Articles and Bylaws, copies of which have been filed as exhibits to this Registration Statement. VOTING The holders of Company Common Stock are entitled to one vote per share held of record on all matters submitted to a vote of the stockholders, except in the case of election of directors. The Bylaws provide for cumulative voting for director elections, giving each stockholder the right to vote the number of shares owned by such shareholder times the number of persons being elected as directors and for whose election such shareholder has a right to vote, or to cumulate such votes by giving one candidate as many votes as the number of directors being elected multiplied by the number of shares owned, or by distributing such votes on the same principle among any number of candidates. The Bylaws provide that a majority of shares entitled to vote constitutes a quorum, and that the affirmative vote of the majority of the shares represented at a meeting at which a quorum is present constitutes the act of the stockholders, unless the vote of a greater number is required by law or by the Articles. The Articles contain no provisions requiring a greater number of votes than provided in the Bylaws. DIVIDENDS AND OTHER DISTRIBUTIONS (INCLUDING DISTRIBUTIONS UPON LIQUIDATION) All shares of Common Stock are equal in respect of dividends and other distributions in cash, stock or property, including distributions upon liquidation of the Company. TRANSFERABILITY OF SHARES The shares of Common Stock are freely transferable, subject to certain restrictions on resale imposed on (i) affiliates of the Company, and (ii) persons having received shares of Company Common Stock pursuant to the Incentive Plan of 1995. WASHINGTON LAW REGARDING CERTAIN BUSINESS TRANSACTIONS Certain provisions of the Revised Code of Washington ("RCW"), summarized below, may be considered to have an anti-takeover effect and may delay, deter, or prevent a tender offer, proxy contest or other takeover attempt that a stockholder might consider to be in such stockholder's best interest, including such an attempt as might result in payment of a premium over the market price for shares held by stockholders. 60 As a Washington corporation, the Company is subject to the provisions of the RCW, including Section 23B.19. In general, Section 23B.19 prohibits a Washington corporation from engaging in a "significant business transaction" for a period of five years after the acquisition of ten percent or more of the corporation's outstanding stock by a third party (an "acquiring person"), unless the significant business transaction or the acquisition of the threshold number of shares by the acquiring person is approved, prior to the acquisition of the shares, by a majority of the directors of the corporation. "Significant business transactions" are defined to include, among other things, (i) merger of the target corporation or any subsidiary thereof with the acquiring person or any affiliate; (ii) sale, lease, mortgage, or other disposition or encumbrance, to or with the acquiring person or affiliate, of five percent or more of the target corporation's assets; (iii) termination of five percent or more of the employees of the target corporation or its subsidiaries employed in Washington; (iv) issuance, transfer or redemption by the target corporation or any subsidiary, of shares, or of options, warrants, or rights to acquire shares of the target corporation or any subsidiary, to or beneficially owned by an acquiring person, unless on the same terms as are offered to all other target corporation shareholders; and (v) the liquidation or dissolution of the target corporation proposed by, or pursuant to an agreement or understanding with, an acquiring person or affiliate. SPECIAL MEETINGS OF SHAREHOLDERS The Bylaws provide that special meetings of shareholders may be called by the Chairman of the Board of Directors, the President or by the Secretary at the request of any three or more directors. CLASSIFIED BOARD OF DIRECTORS The Articles and the Bylaws provide for the division of the Board of Directors into three classes nearly equal in size as possible with staggered three-year terms (except for the current terms of current Class 2 and Class 3 directors, which are 2 years and 3 years, respectively). At each annual meeting of the shareholders, successors to the directors whose terms expire at that annual meeting are elected for a three-year term, with each director to hold office until a successor has been duly elected and qualified. As a result, approximately one-third of the Board of Directors will be elected each year. See "Management--Executive Officers and Directors." ITEM 12 - INDEMNIFICATION OF DIRECTORS AND OFFICERS DIRECTOR LIABILITY AND INDEMNIFICATION The Articles and the Bylaws, taken together, provide that the Company shall indemnify any person who was or is involved in any manner or was or is threatened to be made so involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that such person is or was a director or director-officer of the Company or any of its subsidiaries, against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such proceeding. The Company may not, however, provide such indemnification on account of (a) acts or omissions finally adjudged to be intentional misconduct or knowing violation of law; (b) conduct finally adjudged to be in violation of RCW Section 23B.08.310; or (c) any transaction with respect to which it was finally adjudged that such person personally 61 received a benefit in money, property, or services to which such person was not entitled (the foregoing instances being defined in the Company's Bylaws as "egregious conduct"). The Articles provide that no director of the Company will be liable to the Company or to its shareholders, or to any subsidiary or its shareholders, for monetary damages for conduct as a director or director-officer except in instances involving egregious conduct. The rights to indemnification provided by the Articles and Bylaws include the right to receive payment of any expenses incurred by the person being indemnified in connection with a proceeding in advance of the final disposition of the proceeding consistent with applicable law. Such rights are not exclusive of any other rights to which any person seeking indemnification may otherwise be entitled. The Articles and Bylaws also specify or incorporate by reference certain procedures, presumptions and remedies that apply with respect to the right to indemnification and the advancement of expenses. 62 REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholders and Board of Directors of Fisher Companies Inc. In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, of stockholders' equity and of cash flows present fairly, in all material respects, the financial position of Fisher Companies Inc. and its subsidiaries at December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Price Waterhouse LLP Seattle, Washington February 21, 1997 63 ITEM 13 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA FISHER COMPANIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31 1994 1995 1996 - -------------------------------------------------------------------------------------------------- (In thousands except per share amounts) Sales and other revenue: Broadcasting $ 87,112 $101,192 $111,967 Milling 93,277 112,360 135,697 Real estate 8,659 10,941 13,556 Corporate and other, primarily dividends and interest income 3,460 4,087 4,000 - -------------------------------------------------------------------------------------------------- 192,508 228,580 265,220 - -------------------------------------------------------------------------------------------------- Costs and expenses: Cost of products and services sold 124,483 144,878 170,016 Selling expenses 11,016 13,870 16,941 General, administrative and other expenses 25,430 29,988 33,131 - -------------------------------------------------------------------------------------------------- 160,929 188,736 220,088 - -------------------------------------------------------------------------------------------------- Income from operations 31,579 39,844 45,132 Interest expense 4,005 5,280 5,671 - -------------------------------------------------------------------------------------------------- Income before provision for income taxes and effect of change in accounting method 27,574 34,564 39,461 Provision for federal and state income taxes 9,422 11,881 13,375 - -------------------------------------------------------------------------------------------------- Income before effect of change in accounting method 18,152 22,683 26,086 Cumulative effect of change in method of accounting for postretirement benefits, net of tax (1,305) - -------------------------------------------------------------------------------------------------- Net income $ 16,847 $ 22,683 $ 26,086 - -------------------------------------------------------------------------------------------------- Income per common share: Income before effect of change in accounting method $ 4.26 $5.32 $6.12 Cumulative effect of change in method of accounting for postretirement benefits, net of tax (.31) - -------------------------------------------------------------------------------------------------- Net income $ 3.95 $5.32 $6.12 - -------------------------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements.
64 FISHER COMPANIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Unrealized Gain on Common Capital in Marketable Retained Total Stock excess of par Securities Earnings Equity - ---------------------------------------------------------------------------------------------------------------------------- (In thousands) Balance, December 31, 1993 $10,663 $ 48 $ 97,285 $107,996 Change in method of accounting, January 1, 1994 $54,948 54,948 Net income 16,847 16,847 Dividends paid (5,787) (5,787) Net decrease (3,253) (3,253) - ---------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1994 10,663 48 51,695 108,345 170,751 Net income 22,683 22,683 Dividends paid (6,568) (6,568) Net increase 16,815 16,815 - ---------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1995 10,663 48 68,510 124,460 203,681 Net income 26,086 26,086 Dividends paid (7,432) (7,432) Net increase 9,794 9,794 - ---------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1996 $10,663 $ 48 $78,304 $143,114 $232,129 - ----------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements 65 FISHER COMPANIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
YEAR ENDED DECEMBER 31 1995 1996 - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS - ------------------------------------------------------------------------------------------------------------------------------------ (In thousands except share amounts) Current Assets: Cash and short-term cash investments $ 19,489 $ 5,116 Receivables 41,675 44,759 Inventories 11,793 13,199 Prepaid expenses 6,384 7,859 Television and radio broadcast rights 5,606 5,383 - ------------------------------------------------------------------------------------------------------------------------------------ Total current assets 84,947 76,316 - ------------------------------------------------------------------------------------------------------------------------------------ Marketable Securities, at market value 106,447 121,545 - ------------------------------------------------------------------------------------------------------------------------------------ Other Assets: Cash value of life insurance and retirement deposits 8,881 9,362 Television and radio broadcast rights 1,010 317 Intangible assets, net of amortization 14,641 47,982 Other 3,075 4,033 - ------------------------------------------------------------------------------------------------------------------------------------ 27,607 61,694 - ------------------------------------------------------------------------------------------------------------------------------------ Property, Plant and Equipment, net 134,034 134,594 - ------------------------------------------------------------------------------------------------------------------------------------ $353,035 $394,149 - ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Notes payable $ 13,759 $ 9,258 Trade accounts payable 6,782 8,674 Accrued payroll and related benefits 4,058 4,536 Television and radio broadcast rights payable 5,056 5,036 Income taxes payable 2,054 1,147 Other current liabilities 3,494 5,244 - ----------------------------------------------------------------------------------------------------------------------------------- Total current liabilities 35,203 33,895 - ------------------------------------------------------------------------------------------------------------------------------------ Long-term Debt, net of current maturities 58,110 65,713 - ------------------------------------------------------------------------------------------------------------------------------------ Other Liabilities: Accrued retirement benefits 11,496 11,924 Deferred income taxes 42,705 49,483 Television and radio broadcast rights payable, long-term portion 860 296 Deposits and retainage payable 947 676 - ----------------------------------------------------------------------------------------------------------------------------------- 56,008 62,379 - ------------------------------------------------------------------------------------------------------------------------------------ Minority Interests 33 33 - ------------------------------------------------------------------------------------------------------------------------------------ Commitments and Contingencies (Notes 11 and 12) - ------------------------------------------------------------------------------------------------------------------------------------ Stockholders' Equity: Common stock, shares authorized 12,000,000, $2.50 par value; issued 4,265,172 10,663 10,663 Capital in excess of par 48 48 Unrealized gain on marketable securities, net of deferred income taxes of $36,891 in 1995 and $42,164 in 1996 68,510 78,304 Retained earnings 124,460 143,114 - ------------------------------------------------------------------------------------------------------------------------------------ 203,681 232,129 - ------------------------------------------------------------------------------------------------------------------------------------ $353,035 $394,149 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements 66 FISHER COMPANIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31 1994 1995 1996 - ------------------------------------------------------------------------------------------------------------- (In thousands) Cash flows from operating activities: Net income $ 16,847 $ 22,683 $ 26,086 Adjustments to reconcile net income to working capital provided by operating activities: Depreciation and amortization 8,387 9,747 10,753 (Decrease) increase in noncurrent deferred income taxes (8) 910 1,505 Gain on sale of real estate (2,300) Cumulative effect of change in method of accounting for postretirement benefits, before tax 2,012 - ------------------------------------------------------------------------------------------------------------ Working capital provided by operating activities 27,238 33,340 36,044 Change in operating assets and liabilities: Receivables (4,820) (5,869) (3,084) Inventories 792 (2,518) (1,406) Prepaid expenses (986) (82) (1,475) Cash value of life insurance and retirement deposits (363) (335) (481) Income taxes payable 843 711 (907) Trade accounts payable, accrued payroll and related benefits and other current liabilities (3,467) 4,175 4,120 Other assets 360 (564) (958) Accrued retirement benefits 240 128 428 Deposits and retainage payable (567) (77) (271) Amortization of television and radio broadcast rights 7,993 8,119 8,575 Payments for television and radio broadcast rights (7,802) (8,067) (8,243) Other, net 94 270 169 - ------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 19,555 29,231 32,511 - ------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Proceeds from sale of real estate 2,860 Purchase assets of radio stations (11,282) (6,740) (36,684) Purchase of property, plant and equipment (16,640) (10,784) (8,730) - ------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (27,922) (17,524) (42,554) - ------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Net borrowings under notes payable 3,518 1,662 (4,698) Borrowings under borrowing agreements and mortgage loans 9,431 44,000 Payments on borrowing agreements and mortgage loans (4,653) (5,652) (36,200) Cash dividends paid (5,787) (6,568) (7,432) - ------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 2,509 (10,558) (4,330) - ------------------------------------------------------------------------------------------------------------- Net (decrease) increase in cash and short-term cash investments (5,858) 1,149 (14,373) Cash and short-term cash investments, beginning of year 24,198 18,340 19,489 - ------------------------------------------------------------------------------------------------------------- Cash and short-term cash investments, end of year $ 18,340 $ 19,489 $ 5,116 - -------------------------------------------------------------------------------------------------------------
Supplemental cash flow information is included in Notes 5 and 8. See accompanying notes to consolidated financial statements 67 FISHER COMPANIES INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 OPERATIONS AND ACCOUNTING POLICIES The principal operations of Fisher Companies Inc. and subsidiaries are television and radio broadcasting, flour milling and distribution of bakery supplies, and proprietary real estate development and management. The Companies conduct business primarily in Washington, Oregon, California and Montana. A summary of significant accounting policies is as follows: Principles of consolidation. The consolidated financial statements include --------------------------- the accounts of Fisher Companies Inc., its majority-owned subsidiaries and a joint venture in which the Company's real estate subsidiary is the majority partner (see Note 4). All material intercompany balances and transactions have been eliminated. Estimates. The preparation of financial statements in conformity with --------- generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Short-term cash investments. Short-term cash investments comprise discount --------------------------- notes issued by federal agencies and repurchase agreements collateralized by U.S. Government securities held by major banks. The recorded amount represents market value because of the short maturity of the investments. For purposes of the statement of cash flows, the Company considers short-term cash investments which have original maturities of 90 days or less to be cash equivalents. Inventories. Inventories of grain and the grain component of finished ----------- products are valued at December 31 market prices and adjusted for unrealized gains and losses on open purchase and sales contracts to approximate cost. Grain futures and option contracts are entered into by the milling subsidiary to protect the Company from risks related to commitments to buy grain and sell flour. Gains and losses arising from grain hedging activity are a component of the cost of the related inventory. The market value of hedges is based on spot prices obtained from brokers. All other inventories and inventory components are valued at the lower of average cost or market. Revenue recognition. Television and radio revenue is recognized when the ------------------- advertisement is broadcast. Sales of flour and food products are recognized when the product is shipped. Rentals from real estate leases are recognized over the term of the lease. Television and radio broadcast rights. Costs of television and radio ------------------------------------- broadcast rights are charged to operations using accelerated or straight-line methods of amortization selected to match expense with anticipated revenue over the contract life. Asset costs and liabilities for television and radio broadcast rights are recorded without discount for any noninterest-bearing liabilities. Those costs attributable to programs scheduled for broadcast after one year have been classified as noncurrent assets in the accompanying financial statements. 68 Marketable securities. Marketable securities consist of equity securities --------------------- (primarily SAFECO Corporation) traded on a national securities exchange or reported on the NASDAQ securities market. Market value is based on closing per share sale prices. While the Company has no intention to dispose of its investments in marketable securities, it has classified its investments as available-for-sale and those investments are reported at fair market value. Unrealized gains and losses are a separate component of stockholders' equity. Intangible assets. Intangible assets represent the excess of purchase ----------------- price of certain broadcast properties over the fair value of tangible net assets acquired (goodwill) and are amortized based on the straight-line method over the estimated useful life of 40 years. Accumulated amortization at December 31, 1995 and 1996 is $358,000 and $1,169,000, respectively. The Company periodically reviews its intangible assets to determine whether impairment has occurred. The Company assesses the recoverability of intangible assets by reviewing the performance of the underlying operations, in particular the operating cash flows (earnings before income taxes, depreciation and amortization) of the operation. No losses from impairment of value have been recorded in the financial statements. Property, plant and equipment. Replacements and improvements are ----------------------------- capitalized while maintenance and repairs are charged as expense when incurred. Real estate taxes, interest expense and certain other costs related to real estate projects constructed for lease to third parties are capitalized as a cost of such projects until the project, including major tenant improvements, is substantially completed. A project is generally considered to be substantially completed when a predetermined occupancy level has been reached or the project has been available for occupancy for a period of one year. Costs, including depreciation, applicable to a project are charged to expense based on the ratio of occupied space to total rentable space until the project is substantially completed, after which costs are expensed as incurred. For financial reporting purposes, depreciation of plant and equipment is determined primarily by the straight-line method over the estimated useful lives of the assets as follows: Buildings and improvements 30 - 55 years Machinery and equipment 3 - 20 years Land improvements 10 - 55 years Income taxes. Deferred income taxes are provided for all significant ------------ temporary differences in reporting for financial reporting purposes versus income tax reporting purposes. Advertising. The Company expenses advertising costs at the time the ----------- advertising first takes place. Net advertising expense was $1,148,000, $1,892,000 and $2,507,000 in 1994, 1995 and 1996, respectively. Earnings per share. Income per common share has been calculated on the ------------------ basis of the weighted average number of shares outstanding during the year. 69 Fair Value of Financial Instruments. The carrying amount of cash and ----------------------------------- short-term cash investments, receivables, inventories, marketable securities, trade accounts payable and broadcast rights payable approximate fair value. The fair value of notes payable and long-term debt approximates the recorded amount based on borrowing rates currently available to the Company. Reclassifications. Certain 1994 and 1995 balances have been reclassified ----------------- to conform to the 1996 presentation. NOTE 2 RECEIVABLES Receivables are summarized as follows (in thousands):
- ---------------------------------------------------------------------------- December 31 1995 1996 - ---------------------------------------------------------------------------- Trade accounts $42,614 $45,704 Other 668 473 - ---------------------------------------------------------------------------- 43,282 46,177 Less - Allowance for doubtful accounts 1,607 1,418 - ---------------------------------------------------------------------------- $41,675 $44,759 - ----------------------------------------------------------------------------
NOTE 3 INVENTORIES Inventories are summarized as follows (in thousands):
- ---------------------------------------------------------------------------- December 31 1995 1996 - ---------------------------------------------------------------------------- Finished products $ 4,296 $ 4,758 Raw materials 7,296 8,255 Spare parts and supplies 201 186 - ---------------------------------------------------------------------------- $11,793 $13,199 - ----------------------------------------------------------------------------
70 NOTE 4 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are summarized as follows (in thousands):
- ------------------------------------------------------- December 31 1995 1996 - ------------------------------------------------------- Buildings and improvements $118,386 $120,128 Machinery and equipment 82,397 84,033 Land and improvements 15,935 16,622 - ------------------------------------------------------- 216,718 220,783 Less Accumulated depreciation 85,838 91,487 - ------------------------------------------------------- 130,880 129,296 Construction in progress 3,154 5,298 - ------------------------------------------------------- $134,034 $134,594 - -------------------------------------------------------
The Company's real estate subsidiary and the president of the Company are partners in a joint venture established in 1984 to construct and operate for lease to third parties two office buildings in Lynnwood, Washington. The subsidiary contributed land at its fair value for a 95% interest in the venture. The minority partner contributed cash for a 5% interest. The joint venture agreement provides that profits and losses, additional cash contributions, if any, and distributions be allocated in proportion to the original contributions. The Company's real estate subsidiary receives rental income principally from the lease of warehouse, office and retail space, boat moorages and unimproved properties under gross and net leases which expire at various dates through 2005. These leases are accounted for as operating leases. The subsidiary generally limits lease terms to periods not in excess of five years. Minimum future rentals from leases which were in effect at December 31, 1996 are (in thousands):
Year Rentals - ---- ------- 1997 $9,133 1998 7,620 1999 6,148 2000 4,313 2001 2,714 Thereafter 4,761 - --------------------------------------------- $34,689 - ---------------------------------------------
Property held by the real estate subsidiary includes property leased to third parties and to other subsidiaries of the Company and property held for future development. The investment in property held for lease to third parties included in property, plant and equipment at December 31, 1996 includes buildings, equipment and improvements of $95,912,000, land and improvements of $11,962,000 and accumulated depreciation of $25,740,000. 71 Interest capitalized relating to construction of property, plant and equipment amounted to approximately $758,000 and $97,000 in 1994 and 1995, respectively. No interest was capitalized in 1996. NOTE 5 NOTES PAYABLE AND LONG-TERM DEBT Notes payable. The Company maintains bank lines of credit which totaled ------------- $25,000,000 at December 31, 1996. The lines are unsecured and bear interest at rates no higher than the prime rate. No borrowings were outstanding under the lines at December 31, 1996. The notes payable to directors, stockholders and others comprise notes payable on demand and in 90 days. Such notes bear interest at rates equivalent to those available to the Company for short-term cash investments. Interest on such notes amounted to $238,000, $401,000 and $430,000 in 1994, 1995 and 1996, respectively. Notes payable are summarized as follows (in thousands):
- --------------------------------------------- December 31 1995 1996 - --------------------------------------------- Banks $ 6,255 Directors, stockholders and others 6,584 $8,141 Current maturities of long-term debt 920 1,117 - --------------------------------------------- $13,759 $9,258 - ---------------------------------------------
Long-term debt. - -------------- Line of credit. The Company maintains an unsecured reducing revolving line -------------- of credit with a bank in the amount of $45,000,000, for the purpose of funding potential acquisitions of broadcast properties. The amount available under the line is reduced by $5,000,000 in September 1998 and 1999, and by $10,000,000 in September 2000 and 2001. The line matures in September 2002. Borrowings under the line bear interest at a variable rate not to exceed the bank's prime lending rate. $12,000,000 was outstanding under the line at December 31, 1996. Mortgage loans. The real estate subsidiary maintains the following -------------- mortgage loans: Principal amount of $4,411,000 secured by an industrial park with a book value of $6,213,000 at December 31, 1996. The nonrecourse loan requires monthly payments including interest of $29,836. The loan matures in May 2006 and bears interest at 6.88%. The interest rate is subject to adjustment in May 2001 to the then prevailing market rate for loans of a similar type and maturity; the real estate subsidiary may prepay all or part of the loan on that date. Principal amount of $12,784,000 secured by two industrial parks with a combined book value of $13,320,000 at December 31, 1996 and principal amount of $11,111,000 secured by the Lynnwood project owned by the real estate joint venture with a book value of $17,123,000 at 72 December 31, 1996. The loans mature in 2008, bear interest at 7.75% and require monthly payments of $101,025 and $87,807, respectively, including interest. These mortgage loans are nonrecourse; however, the real estate subsidiary has guaranteed 20% of the combined outstanding principal balance until certain loan to value ratios are reached. The interest rates are subject to adjustment in December 1998 and 2003 to the then prevailing rate for loans of a similar type and maturity; all or a portion of the outstanding principal balance may be prepaid on those dates. The agreements provide that the real estate subsidiary maintain a stipulated minimum net worth and hold marketable securities with a market value equal to 75% of the outstanding principal balance of the loans. Principal amount of $26,511,000 secured by an office building and parking structure with a book value of $34,782,000 at December 31, 1996. The nonrecourse loan matures in February 2006, bears interest at 7.72% and requires monthly payments of principal and interest amounting to $221,157. Long-term debt is summarized as follows (in thousands):
- ---------------------------------------------------------------------------- December 31 1995 1996 - ---------------------------------------------------------------------------- Notes payable under bank lines of credit $30,268 $12,000 Mortgage loans payable 28,747 54,817 Other 15 13 - ---------------------------------------------------------------------------- 59,030 66,830 Less - Current maturities 920 1,117 - ---------------------------------------------------------------------------- $58,110 $65,713 - ----------------------------------------------------------------------------
Future maturities of notes payable and long-term debt are as follows (in thousands):
- ----------------------------------------------------------------------------- Directors, Bank Mortgage Stockholders Line Loans and Others of Credit and Other Total - ---------------------------------------------------------------------------- 1997 $8,141 $ 1,117 $ 9,258 1998 1,206 1,206 1999 1,301 1,301 2000 1,405 1,405 2001 1,517 1,517 Thereafter $12,000 48,284 $60,284 - ---------------------------------------------------------------------------- $8,141 $12,000 $54,830 $74,971 - ----------------------------------------------------------------------------
Cash paid for interest (net of amounts capitalized) during 1994, 1995 and 1996 was $3,950,000, $5,071,000 and $6,184,000, respectively. 73 NOTE 6 TELEVISION AND RADIO BROADCAST RIGHTS At December 31, 1996, the long-term portion of television and radio broadcast rights payable is primarily due in 1997. Television and radio broadcast rights acquired under contractual arrangements were $9,187,000 and $7,658,000 in 1995 and 1996, respectively. At December 31, 1996, the broadcasting subsidiary had executed license agreements amounting to $29,056,000 for future rights to television and radio programs. As these programs will not be available for broadcast until after December 31, 1996, they have been excluded from the financial statements. NOTE 7 STOCKHOLDERS' EQUITY The Board of Directors authorized a four-for-one stock split which was effective May 15, 1995. Accordingly, 1994 per share amounts and number of shares have been restated. During 1995 the stockholders approved the Fisher Companies Incentive Plan of 1995 (the Plan) which provides that up to 280,000 shares of the Company's common stock may be issued or sold to eligible key management employees pursuant to options and rights through 2002. STOCK OPTIONS - ------------- The Plan provides that eligible key management employees may be granted options to purchase the Company's common stock at the fair market value on the date the options are granted. The options generally vest over five years and generally expire ten years from the date of grant. Options to purchase 21,000 shares were granted in 1996 at an exercise price of $74.50 per share. These options remained outstanding and unvested at December 31, 1996. RESTRICTED STOCK RIGHTS - ----------------------- The Plan also provides that eligible key management employees may be granted restricted stock rights which entitle such employees to receive a stated number of shares of the Company's common stock. The rights generally vest over five years and expire upon termination of employment. Restricted stock rights issued in 1996 entitled employees to receive a total of 9,700 common shares. Compensation expense of $145,000 related to the rights was recorded during the year ended December 31, 1996. The Company accounts for common stock options and restricted common stock rights issued pursuant to the Plan in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). In 1995 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (FAS123) which requires companies which elect to adopt its provisions to utilize a fair value approach for stock compensation. The Company has elected to 74 apply the provisions of APB 25 in its financial statements. If the provisions of FAS 123 were applied to the Company's stock options and restricted stock rights, the impact on net income and net income per share would not have been material. Cash dividends are as follows (in thousands except per share amounts):
- -------------------------------------------------------------------------------- Year Ended December 31 1994 1995 1996 - -------------------------------------------------------------------------------- Fisher Companies Inc. common stock, $1.34, $1.52 and $1.72 per share, respectively $5,715 $6,482 $7,337 Subsidiary's preferred stock held by minority interest 72 86 95 - -------------------------------------------------------------------------------- $5,787 $6,568 $7,432 - --------------------------------------------------------------------------------
NOTE 8 INCOME TAXES Income taxes have been provided as follows (in thousands):
- -------------------------------------------------------------------------------- Year Ended December 31 1994 1995 1996 - -------------------------------------------------------------------------------- Payable currently $8,390 $11,509 $11,630 Current and noncurrent deferred income taxes 1,032 372 1,745 - -------------------------------------------------------------------------------- $9,422 $11,881 $13,375 - --------------------------------------------------------------------------------
Reconciliation of income taxes computed at federal statutory rates to the reported provisions for income taxes is as follows (in thousands):
- -------------------------------------------------------------------------------- Year Ended December 31 1994 1995 1996 - -------------------------------------------------------------------------------- Normal provision computed at 35% of pretax income before change in accounting method $9,653 $12,098 $13,811 Dividends received credit (713) (776) (844) Rehabilitation investment tax credit (6) State taxes, net of federal tax benefit 336 426 309 Other 152 133 99 - -------------------------------------------------------------------------------- $9,422 $11,881 $13,375 - --------------------------------------------------------------------------------
75 Deferred tax assets (liabilities) are summarized as follows (in thousands):
- --------------------------------------------------------------------- December 31 1995 1996 - --------------------------------------------------------------------- Current: Accrued employee benefits $ (759) $ (923) Allowance for doubtful accounts 554 495 Accrued property tax (176) (227) Other 180 194 - --------------------------------------------------------------------- $ (201) $ (461) - --------------------------------------------------------------------- Noncurrent Unrealized gain on marketable securities $(36,891) $(42,164) Property, plant and equipment (9,021) (10,432) Accrued employee benefits 3,207 3,113 - --------------------------------------------------------------------- $(42,705) $(49,483) - ---------------------------------------------------------------------
The current deferred tax liability is reflected in other current liabilities. Cash paid for income taxes during 1994, 1995 and 1996 was $7,855,000, $9,938,000 and $12,636,000, respectively. NOTE 9 RETIREMENT BENEFITS The Company and its subsidiaries have qualified defined benefit pension plans covering substantially all of their employees not covered by union plans. Benefits are based on years of service and, in one of the pension plans, on the employees' compensation at retirement. The Companies accrue annually the normal costs of their pension plans plus the amortization of prior service costs over periods ranging to 15 years. Such costs are funded in accordance with provisions of the Internal Revenue Code. The funded status of the Companies' pension plans is as follows (in thousands):
- ----------------------------------------------------------- December 31 1995 1996 - ----------------------------------------------------------- Plan assets at fair value- Insurance contracts and marketable securities $ 23,782 $ 26,745 Actuarial present values of benefit obligations Vested benefits (18,945) (20,620) Nonvested benefits (1,352) (1,501) - ----------------------------------------------------------- Accumulated benefit obligation the actuarial present value of pension benefits earned to date based on current compensation levels (20,297) (22,121) Excess of plan assets over accumulated benefit obligation $ 3,485 $ 4,624 - -----------------------------------------------------------
76 The composition of the prepaid pension cost is as follows (in thousands):
- ----------------------------------------------------------- December 31 1995 1996 - ----------------------------------------------------------- Plan assets at fair value $ 23,782 $ 26,745 Projected benefit obligation - -the actuarial present value of pension benefits earned to date reflecting assumed increases to compensation levels (23,885) (25,668) Items not yet recognized in earnings to be amortized over the average remaining service period of plan participants: Prior service costs resulting from plan amendments 1,142 693 Net asset at adoption of FAS 87 (191) (124) Net loss from past experience different from assumed 1,437 1,108 - ----------------------------------------------------------- Prepaid pension cost included in the consolidated balance sheet $ 2,285 $ 2,754 - -----------------------------------------------------------
The discount rate used in determining the actuarial present value of the projected benefit obligation at December 31, 1995 and 1996 was 7.5%; the rate of increase in future compensation was 4.5%. The expected long-term rate of return on assets ranged from 8.5% to 9.25% in both years. The Company and its subsidiaries have a noncontributory supplemental retirement program for key management. The program provides for vesting of benefits under certain circumstances. Funding is not required, but generally the Companies have acquired annuity contracts and life insurance on the lives of the individual participants to assist in payment of retirement benefits. The Companies are the owners and beneficiaries of such policies; accordingly, the cash value of the policies as well as the accrued liability are reported in the financial statements. The program requires continued employment through the date of expected retirement and the cost of the program is accrued over the participants' remaining years of service. The Companies have two defined contribution retirement plans which are qualified under Section 401(k) of the Internal Revenue Code. All U.S. employees who are age 21 or older and have completed one year of service are eligible to participate. The Companies match employee contributions up to a maximum of 3% of gross pay. 77 Amounts charged to expense for the respective plans are as follows (in thousands):
- ------------------------------------------------------------------------ Y e a r E n d e d D e c e m b e r 31 1994 1995 1996 - ------------------------------------------------------------------------ Qualified defined benefit pension plans: Benefits earned during the year $ 1,182 $1,058 $1,182 Interest cost on projected benefit obligation 1,715 1,655 1,739 Net amortization and deferral of items not recognized in earnings (2,389) 3,010 484 - ------------------------------------------------------------------------ 508 5,723 3,405 Less: Actual return on plan assets (1,063) 4,300 2,072 - ------------------------------------------------------------------------ Net pension cost, qualified defined benefit plans 1,571 1,423 1,333 Qualified defined contribution retirement plans 690 855 940 Supplemental retirement program 506 614 609 Contributions to union pension plans 92 110 120 - ------------------------------------------------------------------------ $ 2,859 $3,002 $3,002 - ------------------------------------------------------------------------
In 1994 the Company adopted the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" (FAS 106), which requires that the cost of health care and life insurance benefits provided to certain retired employees be accrued during the years that employees render service. Health care and life insurance benefits are provided to all retired non-broadcasting employees. The Company elected to immediately recognize the accumulated benefit obligation, measured as of January 1, 1994. Accordingly, the $2,012,000 cumulative effect of this change in accounting method on years prior to 1994 ($1,305,000 after income tax effects) is deducted from the results of operations for 1994. Cash flow is not affected. The Company's net periodic postretirement cost was $197,000, $153,000 and $112,000 in 1994, 1995 and 1996, respectively. The accrued postretirement benefit cost at December 31, 1995 and 1996 was $2,158,000 and $1,905,000, respectively. The discount rate used in determining the actuarial present value of the accumulated postretirement benefit obligation at December 31, 1995 and 1996 was 7.5%. A one percent increase in the health care cost trend rate would not have had a significant affect on plan costs or the accumulated benefit obligation in 1995 and 1996. Beginning in 1996 plan costs are generally based on a defined maximum employer contribution which is not directly subject to health care cost trend rates. 78 NOTE 10 SEGMENT INFORMATION The operations of the Company are organized into three principal business segments, broadcasting, milling and real estate. Operating results and other financial data for each segment are as follows (in thousands):
- --------------------------------------------------------------------------------------------------- Corporate, Eliminations Broadcasting Milling Real Estate & Other Consolidated - --------------------------------------------------------------------------------------------------- Sales and other revenue 1994 $ 87,112 $ 93,277 $ 8,659 $ 3,460 $192,508 1995 101,192 112,360 10,941 4,087 228,580 1996 111,967 135,697 13,556 4,000 265,220 Income from operations 1994 $ 26,066 $ 1,078 $ 2,199 $ 2,236 $ 31,579 1995 31,518 2,907 3,267 2,152 39,844 1996 34,025 3,410 5,749 1,948 45,132 Identifiable assets 1994 $ 84,760 $ 47,899 $90,887 $ 84,526 $308,072 1995 97,532 54,565 90,212 110,726 353,035 1996 120,911 57,638 86,600 129,000 394,149 Capital expenditures 1994 $ 4,053 $ 1,055 $11,479 $ 53 $ 16,640 1995 4,934 2,495 3,319 36 10,784 1996 5,092 2,207 1,365 66 8,730 Depreciation and amortization 1994 $ 3,100 $ 1,794 $ 3,462 $ 31 $ 8,387 1995 3,587 1,915 4,211 34 9,747 1996 4,391 2,009 4,314 39 10,753
Intersegment sales are not significant. Income from operations by business segment is total sales and other revenue less operating expenses. In computing income from operations by business segment, interest income and dividends from marketable securities have not been added, and interest expense, income taxes and unusual items have not been deducted. Identifiable assets by business segment are those assets used in the operations of each segment. Corporate assets are principally long-term equity investments. Capital expenditures are reported exclusive of acquisitions. No geographic areas outside the United States were material relative to consolidated sales and other revenue, income from operations or identifiable assets. Export sales by the milling subsidiary were $2,100,000 in 1994, $2,300,000 in 1995 and $2,600,000 in 1996. 79 NOTE 11 ACQUISITIONS On June 20, 1996, assignment of Federal Communication Commission (FCC) licenses for radio broadcasting stations KWJJ-AM/FM in Portland, Oregon was completed, and the broadcasting subsidiary acquired the assets, including real estate, of those stations for $35.2 million. Additionally, during May and June 1996, upon assignment of FCC licenses, the broadcasting subsidiary acquired the assets of four radio broadcasting stations in Eastern Washington and Montana for $1.5 million. On March 1, 1995, assignment of FCC licenses and acquisition of the assets of ten radio broadcasting stations in Montana and two in Eastern Washington by the broadcasting subsidiary was completed. The acquisition cost was $6.7 million. On May 5, 1994, assignment of FCC licenses and acquisition of the assets of KPLZ-FM and KVI-AM in Seattle, Washington was completed. The acquisition cost was $11.3 million. The above transactions are accounted for under the purchase method. Accordingly, the Company has recorded identifiable assets and liabilities of the acquired stations at their fair market value. The excess of the purchase price over the fair market value of the assets acquired has been allocated to goodwill. The results of operations of the acquired radio stations are included in the financial statements from the date of acquisition. Unaudited pro forma results as if the acquired stations had been included in the financial results since January 1, 1994 are as follows (in thousands except per share amounts):
- --------------------------------------------------------------- Year ended December 31 1994 1995 1996 - --------------------------------------------------------------- (All amounts are unaudited) Sales and other revenue $204,466 $234,461 $267,782 Net income $ 16,875 $ 22,351 $ 25,950 Income per share $ 3.96 $ 5.24 $ 6.08
The pro forma results are not necessarily indicative of what actually would have occurred if the acquisition had been in effect for the entire periods presented. In addition, they are not intended to be a projection of future results and do not reflect any synergies that might be achieved from combined operations. In July 1996 the milling subsidiary entered into an agreement to become a 50% member of a Limited Liability Company formed to construct and operate a compact or short flow flour mill in Idaho. The agreement provides for each 50% member to share equally in initial capital contributions, profits and losses, additional capital contributions, if any, and distributions. Construction of the flour mill is in progress, with completion expected in April 1997. Original capital commitments by each member amount to $1.6 million. 80 NOTE 12 SUBSEQUENT EVENTS The broadcasting subsidiary has entered into agreements to purchase the assets (including assignment of FCC licenses and real estate) of an AM and an FM radio broadcasting station in Missoula, Montana. Assignment of FCC licenses occurred on January 15, 1997 and the acquisition was completed on that date at a cost of $3.9 million. In January 1997 the real estate subsidiary entered into an agreement in principle to acquire 5.5 acres of improved real estate located adjacent to an existing industrial park at a cost of $2.8 million. The transaction is expected to be completed in the first quarter of 1997. ITEM 14 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable. ITEM 15 - FINANCIAL STATEMENTS AND EXHIBITS INDEX (a)(1) Report of Independent Accountants. (2) Consolidated Statement of Income for the years ended December 31, 1996, December 31, 1995 and December 31, 1994. (3) Consolidated Statements of Stockholders' Equity. (4) Consolidated Balance Sheets at December 31, 1996 and December 31, 1995. (5) Consolidated Statements of Cash Flows for the years ended December 31, 1996, December 31, 1995 and December 31, 1994. (6) Notes to Consolidated Financial Statements. (b) Exhibits: See "Exhibit Index." 81 SIGNATURES ---------- Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. FISHER COMPANIES INC. --------------------- (Registrant) Date: April 24, 1997 By: /s/ William W. Krippaehne, Jr. ------------------------------ William W. Krippaehne, Jr. President and Chief Executive Officer 82 EXHIBIT INDEX -------------
Exhibit No. Description - ----------- ----------- 3.1 Articles of Incorporation. 3.2 Bylaws. 4.1 Form of Stock Certificate. 10.1 Primary Television Affiliation Agreement between FBI and American Broadcasting Companies, Inc., dated April 17, 1995, regarding KOMO TV. 10.2 Primary Television Affiliation Agreement between FBI and American Broadcasting Companies, Inc., dated April 17, 1995, regarding KATU TV. 10.3 Fisher Companies Inc. Incentive Plan of 1995. 10.4 Fisher Companies Inc. Supplemental Pension Plan, dated February 29, 1996. 10.5 Fisher Broadcasting Inc. Supplemental Pension Plan, dated March 7, 1996. 10.6 Fisher Mills Inc. Supplemental Pension Plan, dated March 1, 1996. 10.7 Fisher Properties Inc. Supplemental Pension Plan, dated March 1, 1996. 22 Subsidiaries of the Registrant. 27 Financial Data Schedule.
83 EX-3.1 2 ARTICLES OF INCORPORATION Exhibit 3.1 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF FISHER COMPANIES INC. ARTICLE I --------- Name ---- The name of the corporation is FISHER COMPANIES INC. ARTICLE II ---------- Capitalization -------------- The number of shares of stock which the corporation is authorized to issue is 12,000,000, all of which are one class of a par value of $2.50 each, and all of which are common stock. ARTICLE III ----------- Stockholder Rights ------------------ The stockholders of the corporation do not have preemptive rights to acquire proportional amounts of the corporation's unissued shares upon the decision of the Board of Directors to issue them. ARTICLE IV ---------- Board of Directors ------------------ Section 1. The Board of Directors shall consist of not fewer than 9 nor more - --------- than 19 individuals. The exact number shall be fixed by the Bylaws and may be changed from time to time by amending such Bylaws as provided in the Bylaws. Section 2. The Board of Directors shall be divided into three classes: Class 1, - --------- Class 2 and Class 3. Each such Class shall consist, as nearly as possible, of one-third of the total number of directors constituting the entire Board of Directors. In no event shall a Class be comprised of fewer than 3 directors. Each director shall serve for a term ending on the date of the third annual meeting of stockholders following the annual meeting at which such director was elected; provided, however, that each initial director in Class 1 shall hold office until the annual meeting of stockholders in 1997; each initial director in Class 2 shall hold office until the annual meeting of stockholders in 1 1998; and each initial director in Class 3 shall hold office until the annual meeting of stockholders in 1999. Section 3. In the event of an increase or decrease in the authorized number of - --------- directors, (a) each director then serving as such shall nevertheless continue as a director of the Class in which he or she is a member until the expiration of his or her current term, or his or her earlier resignation, removal from office or death, and (b) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three Classes of directors so as to maintain such Classes as nearly equal as possible. ARTICLE V --------- Director Standard of Care and Indemnification --------------------------------------------- Section 1. The personal liability of an existing or former director or officer- - --------- director to the corporation or its stockholders, or to a subsidiary corporation or its stockholders, for monetary damages for conduct as a director or officer- director is hereby eliminated, provided that such liability shall not be eliminated for acts or omissions that involve intentional misconduct or a knowing violation of law, for conduct violating RCW (S) 23B.08.310, or for any transaction from which the existing or former director or officer-director will personally receive a benefit in money, property, or services to which such person is not legally entitled. Section 2. The corporation shall indemnify an existing or former director or - --------- officer-director made a party to a proceeding by reason of the fact that such person is or was a director or officer-director and obligate itself to advance or reimburse expenses incurred in any such proceeding, all without regard to the limitations in RCW (S)(S) 23B.08.510 through 23B.08.550 and in RCW (S) 23B.08.560(2), provided that no such indemnity, advance or reimbursement shall be provided from or on account of (a) acts or omissions finally adjudged to be intentional misconduct or a knowing violation of law, (b) conduct finally adjudged to be in violation of RCW (S) 23B.08.310, or (c) any transaction with respect to which it was finally adjudged that such person personally received a benefit in money, property, or services to which such person was not entitled. Section 3. The Board of Directors, by resolution adopted at any regular or - --------- special meeting, shall make provisions in the corporation's Bylaws for the matters set forth in this Article V. /s/ William W. Krippaehne, Jr. ------------------------------ William W. Krippaehne, Jr. President and CEO 2 EX-3.2 3 BYLAWS EXHIBIT 3.2 BYLAWS OF FISHER COMPANIES INC. (Incorporated Under the Laws of the State of Washington) As amended April 22, 1997 ------------------------- 1 ARTICLE I ---------- REGISTERED OFFICE ----------------- The location and post office address of the registered office of the corporation shall be 1525 One Union Square, Seattle, Washington 98101. ARTICLE II ----------- STOCKHOLDERS' MEETINGS ---------------------- 1. Annual Meeting. The annual meeting of the stockholders of the -------------- corporation for the election of Directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting shall be held each year at the principal place of business of the corporation (unless a different place within or without the State of Washington is specified in the notice of the meeting), on a day in the last two weeks of April to be set by the Directors, at 10:00 o'clock in the forenoon unless otherwise stated in the notice of meeting. In the event of failure to hold an election of Directors at the annual meeting of the stockholders or in the event the annual meeting of the stockholders shall be omitted by oversight or otherwise, a meeting of the stockholders may be held at a later date for the election of Directors and for the transaction of such other business as may properly come before the meeting. Any election held or other business transacted at any such later meeting shall be as valid as if done or transacted at the annual meeting of the stockholders. Any such later meeting shall be called in the same manner as a special meeting of the stockholders and notice of the time, place and purpose thereof shall be given in the same manner as notice of a special meeting of the stockholders. 2. Special Meetings. Special meetings of the stockholders for any purpose ---------------- or purposes may be called at any time by the Board of Directors to be held at such time and place as the Board may prescribe. At any time, upon the request of the Chairman of the Board, the President, or of any three (3) Directors, or of any stockholder or stockholders holding in the aggregate at least twenty percent (20%) of the voting power of all stockholders, it shall be the duty of the Secretary to call a special meeting of the stockholders to be held at such place and at such time as the Secretary may fix, not less than ten (10) nor more than sixty (60) days after the receipt of said request, and if the Secretary shall neglect or refuse to issue such call, the Directors or stockholders making the request may do so. 2 3. Notices of Meetings. Written notice stating the place, day and hour of ------------------- the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, unless a purpose of the meeting is to act on an amendment to the Articles of Incorporation, a plan of merger or share exchange, a proposed sale of all or substantially all of the assets of the corporation, or the dissolution of the corporation, in which case notice will be delivered not less than twenty (20) nor more than sixty (60) days before the date of the meeting. Notice of any shareholders' meeting will be delivered either personally or by mail, by or at the direction of the Chairman of the Board, the President, the Secretary, or the person or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the stockholder at his address as it appears in the stockholder address records of the corporation, with postage thereon prepaid. 4. Waiver of Notice. Notice of any stockholders' meeting may be waived in ---------------- writing by any stockholder at any time, either before or after any such meeting, and shall be deemed waived by the presence of such stockholder at the meeting unless such stockholder (a) shall have made his written objection to the transaction of business at such meeting for the reason that it is not lawfully called or convened, and (b) shall, at or prior to the commencement of such meeting, deliver such written objection to the chairman of the meeting or other officer of the corporation present at such meeting. 5. Adjourned Meetings. An adjournment or adjournments of any ------------------ stockholders' meeting may be taken until such time and place as those present may determine without new notice being given, whether by reason of the failure of a quorum to attend or otherwise; but any meeting at which Directors are to be elected shall be adjourned only from day to day until such Directors are elected. If a new record date for the adjourned meeting is or must be fixed, however, notice of the adjourned meeting must be given to persons who are stockholders as of the new record date. 6. Quorum of Stockholders. A majority of the shares entitled to vote, ---------------------- represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. If a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter under consideration shall be the act of the stockholders, unless the vote of a greater number is required by law or by the Articles of Incorporation. 7. Voting of Shares. Each outstanding share shall be entitled to one vote ---------------- on each matter submitted, except in the case of election of Directors as provided in this section. All voting at stockholders' meetings shall be by voice vote, unless any qualified voter shall demand a vote by ballot. A stockholder may vote either in person or by proxy executed in writing by the stockholder or his duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in such proxy. At each election for Directors, every stockholder entitled to vote at such election shall have the right to vote in person or by proxy the number of shares owned by him for as many persons as there are Directors to be elected and for whose election he has a right to vote, or to cumulate his votes by giving one candidate as many votes as the number of such Directors multiplied by the number of his shares shall equal, or by distributing such votes on the same principle among any number of such candidates. 3 ARTICLE III ------------ BOARD OF DIRECTORS ------------------ 1. Number and Qualifications. The business and affairs of the corporation ------------------------- shall be managed by a board of fourteen (14) Directors who need not be stockholders of the corporation nor residents of the State of Washington. 2. Election - Term of Office. The Board of Directors shall be divided ------------------------- into three classes: Class 1, Class 2, and Class 3. Each such Class shall consist, as nearly as possible, of one-third of the total number of directors constituting the entire Board of Directors. In no event shall a Class be comprised of fewer than 3 directors. Each director shall serve for a term ending on the date of the third annual meeting of shareholders following the annual meeting at which such director was elected; provided, however, that each initial -------- ------- director in Class 1 shall hold office until the annual meeting of shareholders in 1997; each initial director in Class 2 shall hold office until the annual meeting of shareholders in 1998; and each initial director in Class 3 shall hold office until the annual meeting of shareholders in 1999; and in each case until their successors are duly elected and have qualified or until their earlier resignation, removal from office or death. In the event of an increase or decrease in the authorized number of directors, (a) each director then serving as such shall nevertheless continue as a director of the Class in which he or she is a member until the expiration of his or her current term, or his or her earlier resignation, removal from office or death, and (b) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three Classes of Directors so as to maintain such classes as nearly equal as possible. 3. Vacancies. Except as otherwise provided by law, vacancies in the Board --------- of Directors, whether caused by resignation, death or otherwise, may be filled by a majority of the remaining Directors attending any regular meeting of the Board of Directors, or any special meeting if the notice of such special meeting indicates that filling such vacancy is a purpose of the meeting. A Director thus elected to fill in a vacancy shall hold office during the unexpired term of his predecessor and until his successor is elected and qualified. 4. Annual Meeting. The first meeting of each newly elected Board of -------------- Directors shall be known as the annual meeting thereof and shall be held immediately after and at the same place as the annual stockholders' meeting or any later stockholders' meeting at which a Board of Directors is elected. 5. Chairman of the Board. At its annual meeting, the Board of Directors --------------------- shall elect a Chairman of the Board. The Chairman of the Board shall preside at all meetings of the stockholders, the Directors, and the Executive Committee, and shall perform such other duties as may from time to time be assigned by the Board or the Executive Committee. 4 6. Regular Meetings. Regular Meetings of the Board of Directors shall be ---------------- held on such dates and at such times and places as the Board of Directors by resolution may decide. 7. Special Meetings. Special meetings of the Board of Directors may be ---------------- held at any time or at any place whenever called by the Chairman of the Board, the President or by the Secretary at the request of any three (3) or more Directors. 8. Place of Meetings. Any meeting of the Board of Directors may be held ----------------- within or without the State of Washington. 9. Notice of Meetings. Notice of the annual meeting of the Board of ------------------ Directors shall not be required. Notice of the time and place of all other meetings of the Board of Directors shall be given by the Chairman of the Board, the President, the Secretary or any person or persons calling the meeting by mail, radio, telegram or personal communication over the telephone or otherwise, at least three (3) days prior to the day upon which the meeting is to be held; provided, that no notice need be given if the time and place thereof shall have been fixed by resolution of the Board of Directors and a copy of such resolution has been mailed to every Director at least three (3) days before the first of any meeting or meetings held in pursuance thereof. 10. Waiver of Notice. Notice of any meeting of the Board of Directors ---------------- need not be given to any Director if such notice is waived in a writing signed by the Director, whether before or after such meeting is held, and delivered to the corporation for inclusion in the minutes or filing with the corporate records. Notice of any meeting shall be deemed waived by the presence of a Director at the meeting unless such Director (a) at the beginning of the meeting or promptly upon the Director's arrival, shall have made his written objection to the holding of the meeting or the transaction of business at the meeting, and (b) does not thereafter vote for or assent to action taken at the meeting. Any meeting of the Board shall be a legal meeting without any notice thereof having been given if all of the Directors are either present, other than for the sole purpose just described, or waive notice thereof. 11. Directors' Fees. Each Director shall receive a fee, as set by the --------------- Board of Directors from time to time, for services rendered at each regular or special meeting of the Board of Directors or meeting of a committee thereof and, in addition, shall be reimbursed for expenses of travel and lodging reasonably incurred in attending any such meeting. In addition to the foregoing, each outside Director shall receive an annual retainer fee as set by the Directors. An outside Director is a Director who is not a salaried officer or employee of this corporation or any of its subsidiaries. Nothing in this section shall be construed to preclude a Director from serving the corporation in any other capacity and receiving compensation therefor. If there are simultaneous Board Meetings of Fisher companies, and a Director of Fisher Companies Inc. is a Director of one or more of the other companies involved, he will receive only one fee for the meeting, namely his fee as Director of Fisher Companies Inc. 12. Quorum of Directors. A majority of the number of Directors fixed by ------------------- these Bylaws shall constitute a quorum for the transaction of business, but a less number may adjourn any meeting from time to time and the same may be held without further notice. When a quorum is 5 present at any meeting, a majority vote of the members in attendance shall decide any question brought before such meeting, except that no sale or exchange of unissued stock shall be made without the affirmative vote of three-fourths (3/4) of the entire Board of Directors declaring that the sale or exchange of such stock is necessary for a specific business purpose of the corporation other than the acquisition of additional capital funds in cash. The act of a majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. ARTICLE IV ----------- COMMITTEES ---------- 1. Designation of Committees. The Board of Directors of this corporation ------------------------- may, by resolution adopted at any regular or special meeting of such Board, designate from among its members one or more committees each of which shall have two or more members and, to the extent provided in this Article IV or in such resolution, shall have and may exercise all of the authority of the Board of Directors, but no such committee shall have the authority of the Board of Directors in reference to: amending the Articles of Incorporation or the Bylaws of the corporation, adopting a plan of merger or consolidation, recommending to the shareholders, the sale, lease, exchange or other disposition of all or substantially all the property and assets of the corporation other than in the usual and regular course of its business, or recommending to the shareholders a voluntary dissolution of the corporation or a revocation thereof. The designation of any such committee by the Board of Directors and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any of its members, of any responsibility imposed by law. 2. Executive Committee. ------------------- (a) Membership. The Executive Committee shall be comprised of the ---------- Chairman of the Board, the President and three (3) other Directors elected by the Board of the Directors. Members of the Executive Committee shall be elected by the Board of Directors at each annual meeting, to hold office until their successors are elected and qualified. The Chairman of the Board shall be chairman of the Committee unless the Board designates some other member of the Committee as its chairman. Each member of the Committee shall continue as a member of the Committee at the pleasure of the Board. (b) Vacancies. Vacancies on the Committee arising from any cause may --------- be filled by the Board of Directors at any regular or special meeting. (c) Powers and Duties. The Executive Committee shall have and may ----------------- exercise all of the authority of the Board of Directors. The Executive Committee shall specifically have the power and duty to vote the stock of fully and partially owned subsidiary companies, which power and duty of the Executive Committee shall include authority to make all determinations and decisions with respect thereto. All actions of the Executive Committee shall be recorded in minutes of its meetings and shall be reported to the Board of Directors at its meeting next succeeding any 6 such action and shall be subject to revision or alteration by the Board, except that existing rights of third parties shall not be affected thereby. (d) Rules of Procedure. The Executive Committee shall fix its own rules ------------------ of procedure and shall meet where and as provided by such rules. Special meetings of the Committee may be called at any time by the President, the chairman of the Committee if not the President, or any two (2) members. At all meetings of the Committee, the presence of at least three (3) members shall be necessary to constitute a quorum. The affirmative vote of a majority of the members present shall be necessary and sufficient for the adoption of any resolutions. 3. Compensation Committee. ---------------------- (a) Membership. The Compensation Committee shall consist of not less ---------- than four (4) Directors of the corporation elected by the Board of Directors, none of whom shall be an employee of the corporation or of any of its subsidiaries. Each member of the Committee shall continue as a member of the Committee at the pleasure of the Board. (b) Vacancies. Vacancies on the Committee arising from any cause may be --------- filled by the Board of Directors at any regular or special meeting. (c) Powers and Duties. The Compensation Committee shall: ----------------- (1) Review and establish the salary of officers and selected other key management employees of the corporation, as well as review and consider for approval, prior to their effective date, the salaries of key management employees of subsidiaries set by the subsidiaries' Compensation Committees, where a salary exceeds an amount set from time to time by the Committee. (2) Review and establish all cash bonuses under and pursuant to the Fisher Companies Management Incentive Plan, as well as review and consider for approval, prior to their effective date, bonuses established under and pursuant to Management Incentive Plans of subsidiaries. (3) Review and recommend changes in compensation for members of the corporation's Board of Directors and its Chairman; (4) Administer the Fisher Companies Incentive Plan of 1995 and review and establish all stock options and stock rights to be granted to officers and selected other key management employees of the corporation and its subsidiaries; (5) Authorize the enrollment of selected management employees of the corporation as new participants in the Supplemental Pension Plan. 7 (6) Recommend to the Board any additional compensation or employee benefit programs of a substantial nature and changes to existing programs of the corporation or its subsidiaries; (7) Record all actions of the Committee in minutes of its meetings; and (8) Report to the Board compensation actions of the Committee prior to their effective date. (d) Rules of Procedure. The Compensation Committee shall fix its own rules of procedure and shall meet where and as provided by such rules. Special meetings of the Committee may be called at any time by the chairman of the Committee or any two (2) members. At all meetings of the Committee, the presence of at least three (3) members shall be necessary to constitute a quorum. The affirmative vote of a majority of the members present shall be necessary and sufficient for the adoption of any resolution. 4. Audit Committee. --------------- (a) Membership. The Audit Committee shall consist of not less than ---------- five (5) Directors of the corporation elected by the Board of the Directors, none of whom shall be an employee of the corporation or of any of its subsidiaries. Each member of the Committee shall continue as a member of the Committee at the pleasure of the Board. (b) Vacancies. Vacancies on the Committee arising from any cause may --------- be filled by the Board of Directors at any regular or special meeting. (c) Powers and Duties. The Audit Committee shall: ----------------- (1) Recommend the independent public accountants for selection as auditors by the Board; (2) Review the scope and, upon completion, the results of the audit with the corporation's independent public accountants; (3) Review management letters received from the independent public accountants in connection with audits; (4) Review the corporation's internal accounting controls; (5) Review compliance with the Financial Accounting Charter; (6) Review with management any accounting changes affecting the corporation or its subsidiaries; 8 (7) Meet in alternative and separate executive sessions with the independent public accountants and management; (8) Review the scope of and fees for consulting services provided by the independent public accountants; (9) Review any interested party conflict-of-interest situation brought to its attention; (10) Record all actions of the Committee in minutes of its meetings; and (11) Report the Committee's actions and recommendations to the Board. (d) Rules of Procedure. The Audit Committee shall fix its own rules of ------------------ procedure and shall meet where and as provided by such rules. Special meetings of the Committee may be called at any time by the chairman of the Committee or any two (2) members. At all meetings of the Committee, the presence of at least three (3) members shall be necessary to constitute a quorum. The affirmative vote of a majority of the members present shall be necessary and sufficient for the adoption of any resolution. 5. Stock Purchase Committee. ------------------------ (a) Membership. The Stock Purchase Committee shall consist of not less ---------- than four (4) Directors of the corporation elected by the Board of the Directors, none of whom shall be an employee of the corporation or of any of its subsidiaries. Each member of the Committee shall continue as a member of the Committee at the pleasure of the Board. (b) Vacancies. Vacancies on the Committee arising from any cause may be --------- filled by the Board of Directors at any regular or special meeting. (c) Powers and Duties. The Stock Purchase Committee shall: ----------------- (1) Exercise the powers and perform the duties prescribed for it by the Board of Directors in order to carry out a stock purchase policy, at such time as such a policy is adopted by the Board of Directors, subject to revision or alteration by the Board; (2) Record all actions of the Committee in minutes of its meetings; and (3) Report the actions and recommendations of the Committee to the Board. (d) Rules of Procedure. The Stock Purchase Committee shall fix its own ------------------ rules of procedure and shall meet where and as provided by such rules. Special meetings of the 9 Committee may be called at any time by the chairman of the Committee or any two (2) members. At all meetings of the Committee, the presence of at least three (3) members shall be necessary to constitute a quorum. The affirmative vote of a majority of the members present shall be necessary and sufficient for the adoption of any resolution. 6. Nominating Committee. --------------------- (a) Membership. The Nominating Committee shall consist of not less than ---------- five (5) Directors of the corporation elected by the Board of Directors, none of whom shall be an employee of the corporation or of any of its subsidiaries. Each member of the Committee shall continue as a member of the Committee at the pleasure of the Board. (b) Vacancies. Vacancies on the Committee arising from any cause may be --------- filled by the Board of Directors at any regular or special meeting. (c) Powers and Duties. The Nominating Committee shall: ----------------- (1) Review qualifications of candidates for Board membership from whatever source received; (2) Recommend to the Board the slate of Director candidates to be proposed for election by stockholders at the annual meeting; (3) Recommend to the Board candidates to fill Director vacancies which occur between annual meetings of stockholders; (4) Recommend to the Board criteria regarding personal qualifications for nomination as Director, including experience, skills, affiliations and characteristics; (5) Recommend to the Board criteria regarding the composition of the Board, including total size and number of employee- Directors; (6) Recommend to the Board criteria relating to tenure as a Director, including retirement age and continuation of a Director in an honorary or similar capacity; (7) Record all actions of the Committee and minutes of its meeting; and (8) Report to the Board all actions and recommendations of the Committee. (d) Rules of Procedure. The Nominating Committee shall fix its own ------------------ rules of procedure and shall meet where and as provided by such rules. Special meetings of the Committee may be called at any time by the chairman of the Committee or any two (2) members. At all 10 meetings of the Committee, the presence of at least three (3) members shall be necessary to constitute a quorum. The affirmative vote of a majority of the members present shall be necessary and sufficient for the adoption of any resolution. ARTICLE V ---------- OFFICERS -------- 1. Officers Enumerated - Election. The officers of the corporation shall ------------------------------ be a President, one or more Vice Presidents, a Secretary and a Treasurer, and such assistants to such officers as the Board of Directors may determine, all of whom shall be elected by the Board of Directors at the annual meeting thereof to hold office for the term of one year and until their successors are elected and qualified. 2. Qualification. None of the officers of the corporation except the ------------- President need be a Director. Excluding the President, any two of the other corporate offices may be combined in one person. 3. President. The President shall be the chief executive officer of the --------- corporation and, subject to the Board of Directors and the Executive Committee, shall supervise and control the business and affairs of the corporation. In the absence of the Chairman of the Board, the President shall preside at meetings of the stockholders, the Directors and the Executive Committee. 4. Vice Presidents. Each Vice President shall perform such duties as the --------------- Board of Directors, the Executive Committee, or the President may from time to time designate or assign. In the absence or disability of the President, one of the Vice Presidents, in the order determined by the order of their election, shall act as President, but a Vice President who is not a Director cannot succeed to or fill the office of President. (a) One such Vice President shall be designated Chief Financial Officer and be accountable for the corporation's overall financial plans and policies, consistent with the corporation's Financial Accounting Charter, and the conduct of the corporation's relationships with banks and lending institutions, and the financial community. The chief financial officer shall also have charge and custody of and be responsible for all funds and securities of the corporation. He shall deposit all such funds in the name of the corporation in such depositories or invest them in such manner as may be designated or approved by the Board of Directors, and shall authorize disbursement of the funds of the corporation in payment of just demands against the corporation. 5. Secretary. The Secretary shall issue notices of meetings of stockholders --------- and Directors and shall make and keep minutes of meetings of stockholders and Directors. The Secretary shall keep and, when proper, affix the seal of the corporation. The Secretary shall keep the stock book of the corporation, a record of certificates representing shares of stock issued by the corporation, and a record of transfers of such certificates. The Secretary shall exercise the usual authority pertaining to the office of Secretary, and he shall perform such other duties as the Board of Directors, the Executive Committee or the President may from time to time designate. 11 6. Vacancy. Vacancies in any office arising from any cause may be filled ------- by the Board of Directors at any regular or special meeting. 7. Other Officers and Agents. The Board of Directors may appoint such ------------------------- other officers and agents as it shall deem necessary or expedient. Such other officers shall hold their offices for terms as provided in Section 1 of this Article V and such other agents shall hold their offices for such period as shall be determined from time to time by the Board of Directors. Such other officers and agents shall exercise such authority and perform such duties as the Board of Directors, Executive Committee or President may prescribe, which authority and duties may include, in the case of the other officers, one or more of the duties of the named officers of the corporation. 8. Removal of Officers. Any officer or agent may be removed by the Board ------------------- of Directors whenever in its judgment the best interest of the corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. 9. Salaries. Salaries of all officers and agents of the corporation -------- appointed by the Board of Directors shall be fixed by the Board of Directors. ARTICLE VI ----------- STOCK ----- 1. Certificate of Stock. Certificates of stock shall be issued in -------------------- numerical order and each stockholder shall be entitled to a certificate signed by the President or Vice President and the Secretary or an Assistant Secretary and sealed with the corporate seal. Every certificate of stock shall state (1) the name of the corporation and that it is incorporated under the laws of the State of Washington, (2) the name of the registered holder of the shares represented thereby, and (3) the number and class of shares the certificate represents. 2. Transfers. Shares of stock may be transferred by delivery of the --------- certificates therefor accompanied either by an assignment in writing on the back of the certificate or by a separate written assignment and power of attorney to transfer the same, which in either event is signed by the record holder of the certificate. No transfer shall be valid, except as between the parties thereto, until such transfer shall have been made upon the books of the corporation. Except as otherwise specifically provided in these Bylaws, no shares of stock shall be transferred on the books of the corporation until the outstanding certificate or certificates therefor have been surrendered to the corporation. 3. Stockholders of Record. The corporation shall be entitled to treat the ---------------------- holder of record on the books of the corporation of any share or shares of stock as the holder in fact thereof 12 for all purposes, including the payment of dividends on such stock and the right to vote on such stock. 4. Loss or Destruction of Certificates. In case of loss or destruction of ----------------------------------- any certificate of stock, another may be issued in its place upon proof of such loss or destruction and upon the giving of a satisfactory bond of indemnity to the corporation. A new certificate may be issued without requiring any bond when, in the judgment of the Board of Directors, it is proper to do so. 5. Closing of Transfer Books. The Board of Directors may close the books ------------------------- of the corporation against transfers of stock of the corporation for such period as the Directors may from time to time determine, in anticipation of stockholders' meetings, the payment of any dividend or distribution, or any change, conversion or exchange of shares of the corporation. 6. Regulations. The Board of Directors shall have the power and authority ----------- to make all such rules and regulations as it may deem expedient concerning the issue, transfer, conversion and registration of certificates for shares of the stock of the corporation not inconsistent with these Bylaws, the Articles of Incorporation, or the laws of the State of Washington. ARTICLE VII ------------ BOOKS AND RECORDS ----------------- 1. Records of Corporate Meetings and Share Register. The corporation shall ------------------------------------------------ keep either at its principal place of business or at its registered office (a) complete records of all of the proceedings of the Board of Directors and stockholders, and (b) a share register giving the names of the stockholders in alphabetical order and showing their respective addresses, the number of shares held by each and the dates upon which they acquired the same. 2. Copies of Resolutions. Any person dealing with the corporation may rely --------------------- upon a copy of any of the records of the proceedings, resolutions or votes of the Board of Directors or stockholders when certified by the President, a Vice President, the Secretary or an Assistant-Secretary. ARTICLE VIII ------------- CORPORATE SEAL -------------- The corporate seal of the corporation shall consist of a flat-faced circular die producing in raised form, words, letters and figures, the design of which shall conform to the impression which appears upon this page opposite to this Bylaw. 13 ARTICLE IX ----------- INDEMNIFICATION --------------- 1. Definitions. As used in this Article IX and, if applicable, Article V ----------- of the corporation's Articles of Incorporation: (a) The term "egregious conduct" by a person shall mean acts or omissions that involve intentional misconduct or a knowing violation of law, conduct violating Section 23B.08.310, as amended, of the Revised Code of Washington, or participation in any transaction from which the person personally received a benefit in money, property, or services to which the person is not legally entitled. (b) The term "finally adjudged" shall mean stated in a final judgment based on clear and convincing evidence by a court having jurisdiction, from which there is no further right to appeal. (c) The term "director" shall mean any person who is a director of the corporation or a subsidiary corporation and any person who, while a director of the corporation or a subsidiary corporation, is serving at the request of the corporation as a director, officer, manager, partner, trustee, employee, or agent of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, or other enterprise, or is a fiduciary or party in interest in relation to any employee benefit plan maintained by the corporation or any subsidiary corporation; and "conduct as a director" shall include conduct while such a person is or was acting in any of such capacities. (d) The term "officer-director" shall mean any person who is simultaneously both an officer and director of the corporation, or an officer and director of a subsidiary corporation, and any person who, while simultaneously both an officer and director of the corporation, or a subsidiary corporation, is serving at the request of the corporation as a director, officer, manager, partner, trustee, employee, or agent of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, or other enterprise, or is a fiduciary or party in interest in relation to any employee benefit plan maintained by the corporation or any subsidiary corporation; and "conduct as an officer-director" shall include conduct while such a person is or was acting as an officer of the corporation or a subsidiary corporation or in any of such capacities. (e) The term "subsidiary corporation" shall mean any corporation or limited liability company at least 51 percent of the voting interests of which is held beneficially by the corporation. (f) No person shall be deemed to be serving at the request of the corporation unless the Board of Directors has expressly stated so in a duly adopted resolution. 2. Indemnification - Generally. The corporation shall indemnify any person --------------------------- who is, or is threatened to be made, a party to any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and whether formal or informal, and whether by or in the right of the corporation or its stockholders or by any other party, by reason of the fact that the person is or 14 was a director or officer-director against judgments, penalties or penalty taxes, fines, settlements (even if paid or payable to the corporation or its stockholders or to a subsidiary corporation) and reasonable expenses, including attorneys' fees, actually incurred in connection with such action, suit or proceeding unless the liability and expenses were on account of conduct finally adjudged to be egregious conduct. The reasonable expenses, including attorneys' fees, of such person incurred in connection with such action, suit or proceeding shall be paid or reimbursed by the corporation, upon request of such person, in advance of the final disposition of such action, suit or proceeding upon receipt by the corporation of a written, unsecured promise by the person to repay such amount if it shall be finally adjudged that the person is not eligible for indemnification. All expenses incurred by such person in connection with such action, suit or proceeding shall be considered reasonable. 3. No Determination. Except as stated in Section 4 of this Article IX, no ---------------- action by the board of directors, the stockholders, independent counsel, or any other person or persons shall be necessary or appropriate to the determination of the corporation's indemnification obligation in any specific case, to the determination of the reasonableness of any expenses incurred by a person entitled to indemnification under this Article IX or Article V of the corporation's Articles of Incorporation, nor to the authorization of indemnification in any specific case. 4. Limitation on Expenses. Notwithstanding Section 3 of this Article IX, ---------------------- the corporation shall not be obligated to indemnify any person for any expenses, including attorneys' fees, incurred to assert any claim against the corporation or a subsidiary corporation (except a claim based on Section 6 of this Article IX) or against any person related to or associated with the corporation or a subsidiary corporation. 5. Submission of Claim; Presumption. If a claim under this Article IX or -------------------------------- Article V of the corporation's Articles of Incorporation is not paid in full by the corporation within 60 days after a written claim has been received by the corporation, except in the case of a claim for expenses incurred in defending an action, suit or proceeding in advance of its final disposition, in which case the applicable period shall be 20 days, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, to the extent successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. The claimant shall be presumed to be entitled to indemnification under Article V of the corporation's Articles of Incorporation and this Article IX upon submission of a written claim (and, in an action brought to enforce a claim for expenses incurred in defending any action, suit or proceeding in advance of its final disposition, where the required undertaking has been tendered to the corporation), and thereafter the corporation shall have the burden of proving that the claimant is not so entitled. The claimant is entitled to indemnification even if the corporation (including its Board of Directors, independent legal counsel or its stockholders) failed to determine prior to the commencement of such action that indemnification or reimbursement or advancement of expenses to the claimant is proper in the circumstances or even if the corporation (including its Board of Directors, independent legal counsel or its stockholders) actually determined that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses. 15 6. Enforcement Expenses. The corporation shall indemnify any person -------------------- granted indemnification rights under this Article IX or Article V of the corporation's Articles of Incorporation against any reasonable expenses incurred by the person to enforce such rights. 7. Set-Off. Any person granted indemnification rights under this Article ------- IX or Article V of the corporation's Articles of Incorporation may directly assert such rights in set-off of any claim raised against the person by or in the right of the corporation and shall be entitled to have the same tribunal that adjudicates the corporation's claim adjudicate the person's entitlement to indemnification by the corporation. 8. Rights Not Exclusive. The right to indemnification and the payment of -------------------- expenses incurred in defending an action, suit or proceeding in advance of its final disposition conferred by this Article IX and Article V of the corporation's Articles of Incorporation shall not be exclusive of any other right that any person may have or hereafter acquire under any statute, provision of the Articles of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise. 9. Officers, Employees and Agents. As provided by the Washington Business ------------------------------ Corporation Act, as amended from time to time, the corporation may by action of its Board of Directors provide indemnification and pay expenses in advance of the final disposition of an action, suit or proceeding to officers, employees and agents of the corporation or a subsidiary corporation with the same scope and effect as the provisions of this Article IX and Article V of the corporation's Articles of Incorporation with respect to the indemnification and advancement of expenses of directors and officer-directors. 10. Cessation of Service. The indemnification rights provided in this -------------------- Article IX and Article V of the corporation's Articles of Incorporation shall continue as to a person who has ceased to be a director or officer-director and shall inure to the benefit of the heirs, executors, and administrators of such person. 11. Interpretation. The provisions of this Article IX shall be construed to -------------- be adopted in furtherance of, and not in limitation of, Article V of the corporation's Articles of Incorporation. 12. Amendment and Repeal. Notwithstanding anything in these Bylaws to the -------------------- contrary, this Article IX may only be amended by the stockholders in accordance with the statutory requirements that would be applicable to such stockholder action if this Article IX were part of the corporation's Articles of Incorporation. No amendment or repeal of this Article IX or Article V of the corporation's Articles of Incorporation shall adversely affect any right or protection of a director or officer-director or person formerly serving in any of such capacities existing at the time of such amendment or repeal with respect to acts or omissions occurring prior to such amendment or repeal. 13. Severability. Each of the substantive provisions of this Article IX ------------ and Article V of the corporation's Articles of Incorporation is separate and independent of the others, so that if any provision of this Article IX or Article V of the corporation's Articles of Incorporation shall be held 16 to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of any other provisions. ARTICLE X ---------- AMENDMENT OF BYLAWS ------------------- 1. By the Stockholders. These Bylaws may be amended, altered or repealed ------------------- at any regular or special meeting of the stockholders if notice of the proposed alteration or amendment is contained in the notice of the meeting. 2. By the Board of Directors. These Bylaws may be amended, altered or repealed, so long as consistent with the Articles of Incorporation, by the affirmative vote of a majority of the Board of Directors at any regular or special meeting of the Board if notice of the proposed alteration or amendment is contained or transmitted in the notice of the meeting. Any action of the Board of Directors with respect to the amendment, alteration or repeal of these Bylaws is hereby made expressly subject to change or repeal by the stockholders. 17 EX-4.1 4 FORM OF STOCK CERTIFICATE EXHIBIT 4.1 [LOGO OF FISHER COMPANIES] FISHER COMPANIES INC. NUMBER SHARES Incorporated Under the Laws of the State of Washington CUSIP 337756 20 9 SEE REVERSE FOR CERTAIN DEFINITIONS - -------------------------------------------------------------------------------- This Certifies that is the registered owner of ***SPECIMEN*** - -------------------------------------------------------------------------------- fully paid and nonassessable shares of the Common Stock of FISHER COMPANIES INC. a corporation, transferable only on the books of the corporation by the holder hereof in person or by duly authorized attorney upon the surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Articles of Incorporation of the Corporation as now or hereafter amended, to all of which the holder hereof by acceptance hereof assents. IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by its officers. [Fisher Companies Corporate SEAL] Dated: Secretary President 1 The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM- as tenants in common UGMA-________Custodian____________ (Cust) (Minor) TEN ENT- as tenants by the entireties under Uniform Gifts to Minors Act JT TEN- as joint tenants with right of survivorship and not as _________________ tenants in common (State) Additional abbreviations may also be used though not in the above list For value received,________________hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE _______________________________________ _______________________________________ PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ __________________________________________________________________ Shares represented by the within Certificate, and do hereby irrevocably constitute and appoint __________________________________________________________________Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises. Dated,_______________________ ________________________________________________________________ NOTICE: The signature to this Assignment must correspond with the Name as Written Upon the Face of the Certificate in Every Particular, Without Alteration or Enlargement or Any Change Whatever 2 EX-10.1 5 PRIMARY TELEVISION AFFILIATION AGMT RE: KOMO TV EXHIBIT 10.1 April 17, 1995 PRIMARY TELEVISION AFFILIATION AGREEMENT ---------------------------------------- Fisher Broadcasting Inc. TELEVISION STATION: KOMO - Seattle, Washington Gentlemen: The following shall constitute the agreement between American Broadcasting Companies, Inc. ("ABC" or "we") and Fisher Broadcasting Inc. ("you"), in order that your station may continue to serve the public interest, convenience and necessity. We and you hereby mutually agree upon the following plan of network cooperation which shall replace, effective September 1, 1994, the affiliation agreement between you and us dated May 31, 1989, as amended: I. NETWORK AFFILIATION AND PROGRAM SERVICE --------------------------------------- A. PRIMARY AFFILIATION. You agree to serve as our primary affiliate to ------------------- broadcast Network Television Programs, in the community to which your station is licensed by the Federal Communications Commission, subject to the conditions and limitations set forth herein. As used in this Agreement, Network Television Programs means television programs which are part of the network schedule for the then current September to September television season, broadcast on a national television basis and in the time period established for such broadcast by ABC. (Network Television Programs will also be referred to herein as "network programs," "television programs," "programs" or "programming" or in the singular of such terms.) B. FIRST CALL RIGHTS. To enable you to serve as our primary affiliate, we ----------------- agree to offer you first call on the right to broadcast Network Television Programs, in the time period established by ABC for their broadcast, in the community to which your station is licensed by the Federal Communications Commission ("First Call Rights"), for reception by the general public in places to which no admission is charged. Notwithstanding the foregoing, ABC shall have the right to authorize any television broadcasting station, regardless of the community to which it is licensed by the FCC, to broadcast any network presentation of a subject we deem to be of immediate national significance including, but not limited to, a Presidential address. 1. You agree that, within 15 days of the date of our offer of a First Call Right to a regularly scheduled network program, you will advise us of your acceptance (if requested to do so by the terms of our offer) or rejection. With respect to any network program not regularly scheduled, you will advise us of your acceptance or rejection of our offer of a First Call night within 72 hours (exclusive of Saturdays, Sundays and holidays) after such offer has been received at your station. However, if the first broadcast referred to in our offer is scheduled to 1 occur within less than 15 days after the date of our offer with respect to regularly scheduled network programs or less than 72 hours after our offer has been received at your station with respect to network programs not regularly scheduled, you shall notify us of your acceptance or rejection of such offer as promptly as possible, but in no event after the first broadcast time specified in such offer. Acceptance by you of our offer of a First Call Right shall constitute your agreement to broadcast subject network program in accordance with the terms of this Agreement and of our offer to you. As an ABC primary affiliate, you are obligated to accept the substantial majority of the ABC network programs offered to you, provided, that the obligation does not apply to network programming offered to you above the level of such programming offered to ABC affiliates generally on the effective date of this Agreement. Your failure to do so shall constitute a material breach of this Agreement entitling ABC, in addition to all other remedies, to terminate this Agreement on fourteen (14) days written notice to you. 2. You will be offered "First Call Rights" with respect to: a. Network Sponsored Programs. "Network sponsored programs", as used -------------------------- in this Agreement, shall mean those Network Television Programs which contain one or more commercial announcements paid for by or on behalf of one or more ABC Network advertisers. You agree to broadcast network sponsored programs in their entirety, including but not limited to the network commercial announcements ordered for your station, network identifications, program promotional material or credit announcements contained in such programs which you accept, without interruption or deletion or addition of any kind. Notwithstanding the foregoing, you may substitute other ABC Network promotional announcements in lieu of program promotional material which is inaccurate as it pertains to your station. It is also understood that no commercial announcement, promotional announcement or public service announcement will be broadcast by you during any interval within a network program designated by ABC as being for the sole purpose of making a station identification announcement. b. Network Sustaining, Cooperative and Spot Carrier Programs. --------------------------------------------------------- i) We will from time to time offer you live or recorded Network Television Programs identified as sustaining programs, cooperative programs or spot carrier programs. Except as set forth below in subparagraphs (ii) and (iii), you agree to broadcast such programs which you accept in their entirety without interruption or deletion or addition of any kind. ii) The network sustaining programs which we may offer to you may not, without our prior written consent, be sold by your station for commercial sponsorship or interrupted for commercial announcements or used for any purpose other than sustaining broadcasting. iii) You may carry the cooperative or spot carrier programs on the same basis as regular sustaining programs or you may offer them for 2 commercial sponsorship on terms and conditions specified by us at the time such programs are offered to you. C. PROGRAM DELIVERY. By means satisfactory to us, we will arrange, at our ---------------- own expense, for programs to be delivered to your station. II. TERM ---- This agreement shall become effective at 3:00 AM, NYT, on the lst day of September, 1994, and shall continue until 3:00 AM, NYT, on the 1st day of September, 2004. III. NETWORK STATION COMPENSATION ---------------------------- Your compensation will be determined by the formula set forth in Schedule A attached hereto and made a part hereof. A. Your network station rate, the table of daypart percentages and the network weekly deduction set forth in Schedule A (respectively, the "Original Network Station Rate," the "Original Percentages" and the "Original Network Deduction") shall be used to calculate your compensation provided that the following conditions are satisfied: 1. Your station will maintain the same level of clearances of ABC network programs as it did in the 1993-1994 television season (i.e., the last two quarters of 1993 and the first two quarters of 1994). 2. Your station's preemption levels for network prime-time and sports programming will not exceed one hundred (100) half hours for each year (measured from September 1 to August 31 of the following year) during the term of this Agreement. 3. Nightline will be regularly scheduled to clear on a "live" basis. B. 1. If you fail to satisfy any of the conditions set forth in paragraph A of this Section, and we give you written notice of such failure, you shall have ninety (90) days from receipt of such notice to return to complying fully with such conditions. If at the end of such ninety (90) day period, you fail to return to complying fully with such conditions, in addition to the remedy set out in paragraph C of this Section, we will have the right then and periodically thereafter to reevaluate and change (a) your station's network station rate, (b) the percentages set forth in the Table in Schedule A, or (c) your station's network weekly deduction, by notice to you in writing to such effect. If the effect of such changes, alone or in combination with any other previous such changes, would be to decrease your annual network compensation under Schedule A, using the Original Network Station Rate, the Original Percentages and the Original Network Deduction, by more than 25%, you may, if you so elect, terminate this Agreement by giving us prior written notification within forty- five (45) days after the date of our notice to you, provided 3 that such termination will not be effective less than one hundred twenty (120) days after your notice is received by us. If after your compensation has been reduced in accordance with paragraph B(1) of this Section, you thereafter return to complying fully with all of the conditions set forth in paragraph A of this Section, your compensation will (subject to the rights reserved to us under paragraphs B(1) and C of this Section) be calculated by using the Original Network Station Rate, the Original Percentages and the Original Network Deduction. C. Your Original Network Station Rate will be increased if the aggregate annual compensation paid by us to all ABC primary affiliates (not including payments by us under any bonus compensation programs in force during the term of this Agreement) (the "Aggregate Affiliate Compensation"), calculated annually for the period January 1 through December 31 beginning for the year ending December 31, 1996, exceeds by more than fifteen percent (15%) the Aggregate Affiliate Compensation paid during the year ending December 31, 1995 (the "1995 Compensation"). In that event, your Original Network Station Rate will be increased, effective January 1 of the same year, by the percent difference between the 1995 Compensation and the most recently calculated Aggregate Affiliate Compensation minus fifteen percent (15%) (and minus any previous increase made to your Original Network Station Rate under this subparagraph). D. If you fail at any time to satisfy any of the conditions set forth in paragraph A of this Section, and we give you written notice of such failure, you shall have ninety (90) days from receipt of such notice to return to complying fully with such conditions. If by the end of such ninety (90) day period, you fail to return to complying fully with such conditions, we shall have the right, in our sole discretion, in addition to the remedy set forth in paragraph B of this Section, to terminate this Agreement upon no less than two hundred seventy (270) days written notice to you. IV. NETWORK NON-DUPLICATION PROTECTION ---------------------------------- You shall be entitled to network non-duplication protection provided as and to the extent set forth in Rider One to this Agreement, which is attached hereto and made a part hereof. V. CUT-IN ANNOUNCEMENTS AND LOCAL TAG SERVICES ------------------------------------------- A. CUT-IN ANNOUNCEMENTS. "Cut-In Announcements", as used herein, shall mean -------------------- the substitution of a special commercial in place of a regularly scheduled network commercial. 1. Upon at least twenty-four (24) hours' notice, you shall, at our request, furnish such personnel and equipment as may be necessary to (a) broadcast cut-in announcements from your station alone, or (b) originate from your station cut-in announcements to one or more other stations, without regard to whether or not your station is requested to broadcast said cut -in announcement(s) . Notwithstanding anything contained in this Agreement, you may refuse to broadcast any such cut-in announcement in the community to which your station is licensed by the FCC if, in your opinion, it is not in the public interest, convenience or necessity, but you shall 4 nevertheless furnish such personnel and equipment as may be necessary to originate such cut-in announcements from your station to one or more other stations. 2. Cut-in announcements shall be broadcast only when authorized by us and then only in accordance with the instructions furnished to you. You will be supplied, as promptly as possible, with the material and instructions for these announcements. 3. We may cancel any order for cut-in announcements without liability on our part, provided we do so upon not less than twenty-four (24) hours' notice to you, failing which, we will pay you the compensation you would have received if the announcements had continued as scheduled for twenty-four (24) hours following receipt by you of such notice of cancellation. 4. For each program during which such cut-in announcements are included, we shall pay you in accordance with the applicable table set forth in Schedule B hereto and hereby made a part hereof. B. LOCAL TAG SERVICES. "Local Tag Announcements", as used herein, ------------------ shall mean a visual commercial announcement, made by you on behalf of a local dealer of a network advertiser, not exceeding ten seconds of a one-minute network commercial announcement or five seconds of a thirty-second network commercial announcement projected by means of a slide and not utilizing more than two (2) slides. 1. Upon at least twenty-four (24) hours, notice, you shall, at our request, furnish such personnel and equipment as may be necessary to broadcast "local tag announcements". 2. Local tag announcements shall be broadcast in accordance with our instructions. The network advertiser shall supply to you or purchase from you, as promptly as possible, the slide(s) for each local tag announcement. Local tag announcements shall not be accompanied by oral announcements unless the network advertiser shall make direct requests of you therefor and shall have assumed sole responsibility for payment of such oral announcements. 3. We may cancel any order for local tag announcements without liability on our part provided we do so upon not less than twenty-four (24) hours, notice to you, failing which we will pay you the compensation you would have received if the local tag announcements had continued as scheduled for twenty-four (24) hours following receipt by you of such notice of cancellation. 4. For each local tag announcement which you broadcast, we shall compensate you in accordance with the applicable table set forth in Schedule B hereto and hereby made a part hereof. 5 VI. GENERAL ------- A. We may at any time, upon notice to you, substitute for any scheduled network program another network program, except that if such other network program in our judgment involves a special event of public interest or importance, no such notice is required. No compensation will be paid to you for the scheduled program or for the substitute program unless such substitute program is a network sponsored program in which event you shall be compensated in accordance with the terms or formula, whichever is applicable, set forth in Schedule A hereof. B. Nothing contained in this Agreement shall be construed to prevent or hinder us, at any time upon notice to you as soon as practicable, from canceling one or more network programs, whether sponsored or sustaining, in which event you shall receive no compensation for any such canceled network sponsored program(s). C. With respect to network programs offered or already accepted pursuant to this Agreement, nothing herein contained shall be construed to prevent or hinder you from exercising your rights under Federal Communications Commission rules to: 1) reject or refuse network programs which you reasonably believe to be unsatisfactory, unsuitable or contrary to the public interest; or 2) substitute a program, which in your good faith opinion, is of greater local or national importance, including, but not limited to, coverage of news events and local public affairs programming. We shall not compensate you for any such program you have refused or rejected or for which you have substituted a program which is of greater local or national importance. With respect to programs already accepted hereunder, you shall give us prompt notice of any such refusal, rejection or substitution no later than fourteen (14) days prior to the air date of such programming, except where the nature of the substitute program makes such notice impracticable (e.g., coverage of breaking news or other unscheduled events), in which case you agree to give us as much advance notice as possible under the circumstances. Such notice shall include a statement of the reason(s) you believe that a rejected or refused network program is unsatisfactory, unsuitable or contrary to the public interest, and/or that a substituted program is of greater local or national importance. In addition to all other remedies, we shall have the right, upon thirty (30) days' notice, to terminate your "First Call Rights" on a series of Network programs already accepted hereunder and withdraw all future episodes of that series if one or more individual program episode(s) of such series is preempted by you for any reason other than those set forth in (a) and (b) above. We shall also have the right, upon thirty (30) days' notice, to terminate your "First Call Rights" concerning a series of Network programs already accepted hereunder and to withdraw all future episodes of that series if three or more individual program episodes of such series are pre-empted by you in any thirteen-week period, whether or not such pre-emptions are for the reasons 6 set forth in (a) and (b) above. Such thirteen-week periods shall be measured consecutively from the first broadcast date of the program series in question. We reserve the right not to offer you the "First Call Rights" for the next broadcast season on any series of Network program as to which we have terminated your "First Call Rights" and withdrawn future episodes of that series pursuant to this Paragraph and which has been placed by ABC on another station serving your market. D. You will submit to us in writing, upon forms provided by us for that purpose, such reports covering network programs broadcast by your station as ABC may request from time to time. To verify your carriage of network commercial announcements, identifications and program promotional material, we may require delivery by you, within five (5) days of our request, of copies of your official station logs, air checks or broadcast tapes. E. Neither you nor we shall incur any liability hereunder because of our failure to deliver, or your failure to broadcast, any or all network programs due to: (1) failure of facilities (2) labor disputes, or (3) causes beyond the control of the party so failing to deliver or broadcast. F. You agree to notify us of any application made to the Federal Communications Commission to modify your station's transmitter location, power, frequency or hours of operation within ten (10) days of the filing of such application. In the event that the transmitter location, power, frequency or hours of operation of your station are changed permanently at any time so that your station is of less value to us as a network outlet than it is as of the effective date of this agreement, including but not limited to, as a result of additional overlap of your station's broadcast signal with that of another ABC affiliate, we will have the right to terminate this Agreement upon thirty (30) days, advance written notice. G. Unless we exercise our right of termination set forth in this paragraph, this Agreement shall be binding on any assignee or transferee of your station's license. You agree not to assign or to transfer any of the rights or privileges granted to you under this Agreement without our prior consent in writing, which consent shall not be unreasonably withheld. You also agree that if any application is made to the Federal Communications Commission pertaining to an assignment or a transfer of control of your license, or any interest therein, you shall notify us in writing immediately of the filing of such application. Except as to assignments or transfers of control comprehended by Section 73.3540(f) of the Rules and Regulations of the Federal Communications Commission, we shall have the unilateral right to terminate this Agreement effective as of the effective date of any assignment or transfer of control (voluntary or involuntary) of your license or any interest therein, provided ABC shall have given you notice in writing of such termination within thirty (30) days after we have been advised that such application for assignment or transfer has been filed with the Federal Communications Commission. If you fail to notify us of the assignment or transfer of control of your station's license, we shall have the unilateral right, as a non-exclusive remedy, to terminate this 7 Agreement within thirty (30) days of receiving notice of said assignment or transfer or control. We shall not seek to renegotiate this Agreement or to impose upon the proposed assignee or transferee any obligations or standards of performance not provided in this Agreement as a condition to ABC's consent to the assignment or transfer of the rights and privileges granted to you under this Agreement. If ABC elects not to accept the proposed assignee or transferee, then ABC shall give you notice of termination as set forth above and such termination shall be effective upon the effective date of the assignment or transfer of control of your station's license to such assignee or transferee. If ABC elects to accept the proposed assignee or transferee, you agree that you shall not consummate any assignment or transfer of control of your station's license until you have procured and delivered to us, in form satisfactory to us, the acknowledgment of the proposed assignee or transferee that, upon consummation of the assignment or transfer of control of your station's license, the assignee or transferee will assume and perform this Agreement in its entirety without limitation of any kind. You agree that in view of the uniqueness of the plan of network cooperation set forth in this Agreement and the fact that money damages would be inadequate to compensate ABC for the breach of your obligations hereunder, in addition to all other remedies, ABC shall be entitled to obtain equitable relief to enforce the obligations set forth in this paragraph. H. Your rights under this Agreement are limited to the First Call Rights to Network Television Programs pursuant to the terms herein. You agree not to authorize, cause, permit or enable the use of any program which we supply to you herein for any purpose other than broadcasting by your station pursuant to the terms herein, in the community to which your station is licensed by the Federal Communications Commission, for reception by the general public in places to which no admission is charged. You agree when you are authorized to tape a program for subsequent broadcast that the recording will be broadcast not more than once in its entirety and will be erased within six (6) hours of use. All rights not specifically granted to you by this Agreement shall be retained by ABC. I. Except with our prior written consent and except upon such terms and conditions as we may impose, you agree not to authorize, cause, permit or enable anything to be done whereby a recording on film, tape or otherwise is made or a recording is broadcast, of a program which has been, or is being, broadcast on our network, or a rebroadcast is made of the broadcast transmission of your station during any hours when your station is broadcasting a program provided by ABC. J. With respect to any and all promotional material issued by you or under your direction or control, you agree to abide by any and all restrictions of which we advise you pertaining to the promotion of a network program(s) scheduled to be broadcast by you in your community, including, but without limitation, on-the- air promotion, billboards, and newspaper or other printed advertisements, announcements or promotions. K. You agree to maintain for your television station such licenses, including performing rights licenses as now are or hereafter may be in general use by television broadcasting stations and necessary for you to broadcast the television programs which we furnish to you hereunder. we will clear all music in the repertory of ASCAP and of BMI used in 8 our network programs, thereby licensing the broadcasting of such music in such programs over your station. You will be responsible for all music license requirements for any commercial or other material inserted by you within or adjacent to our network programs in accordance with this agreement. L. The furnishing of film or tape recorded programs hereunder is contingent upon our ability to make arrangements satisfactory to us for the film or tape recordings necessary to deliver the programs to you. Such film or tape recorded programs shall be used only for a single television broadcast over your station. Positive prints of film or tape recorded programs are to be shipped by us, shipping charges prepaid, and you agree to return to us or to forward to such television station as we designate, shipping charges prepaid, each print or copy of said film or tape recording received by you hereunder, together with the original reels and containers furnished therewith. You will return or forward all prints in the same condition as received by you, ordinary wear and tear excepted, immediately after a single TV broadcast over your station. In the event you damage a print of any film or tape recorded program which is delivered to you, or fail to return or forward the original reels and containers furnished therewith, as aforesaid, you agree to pay the cost of replacing the complete print, original reels and/or containers as and when billed by us. M. No inducements, representations or warranties except as specifically set forth herein have been made by any of the parties to this Agreement. This Agreement constitutes the entire contract between the parties hereto and no provision thereof shall be changed or modified, nor shall this Agreement be discharged in whole or in part, except by an agreement in writing, signed by the party against whom the change, modification or discharge is claimed or sought to be enforced; nor shall any waiver of any of the conditions or provisions of this Agreement be effective and binding unless such waiver shall be in writing and signed by the party against whom the waiver is asserted, and no waiver of any provision of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach of the same or of any other provision. N. All notices, demands, requests or other communications which may be or are required to be given or made by ABC or you pursuant to this Agreement (except for our program offers and your notices of acceptance or rejection, if required, of such offers and any other program information or program administration communications) shall be delivered (postage or fee prepaid) by first-class mail, express mail, express delivery service or by facsimile transmission addressed as follows: (a) If to you: Mr. Patrick Scott President and Chief Executive Officer Fisher Broadcasting Inc. 100 Fourth Avenue Seattle, WA 98109-4997 Phone: 206-443-4000 / Fax: 206-443-8272 with copies (which shall not constitute notice) to: 9 Fisher Companies Inc. Attn.: William W. Krippaehne, Jr. President and Chief Executive Officer 1525 One Union Square Seattle, WA 98101 Phone: 206-682-7733 / Fax: 206-682-3211 Clifford M. Harrington, Esq. Fisher Wayland Cooper Leader & Zaragoza 2001 Pennsylvania Avenue, N.W., Suite 400 Washington, DC 20006-1851 Phone: 202-659-3494 / Fax: 202-296-6518 (b) If to ABC: Ms. Maureen Lesourd Senior Vice President Affiliate Relations ABC Television Network 77 West 66 Street, 2nd Floor New York, NY 10023-6298 Phone: 212-456-6493 / Fax: 212-456-7450 with a copy (which shall not constitute notice) to: Roger Goodspeed, Esq. Capital Cities/ABC, Inc. Law & Regulation Department 77 West 66 Street, 16th Floor New York, NY 10023-6298 Phone: 212-456-7593 / Fax: 212-456-6202 or to such other person, address or facsimile number as you or ABC may designate by written notice. O. This Agreement and all questions relating to its validity, interpretation, performance, and enforcement (including, without limitation, provisions concerning limitations of action) , shall be governed by and construed in accordance with the laws of the State of New York, notwithstanding conflict-of-laws doctrines of any state or other jurisdictions to the contrary. P. Upon termination of this Agreement, the consent theretofore granted to broadcast our network programs or use ABC logos or trademarks shall be deemed immediately withdrawn and you shall have no further rights of any nature whatsoever in such programs, logos or trademarks. 10 Q. We mutually acknowledge that, in view of the uniqueness of the plan of network cooperation set forth in this Agreement, in the event that the obligations of either party under this Agreement are not performed in accordance with its terms, the other party would not have an adequate remedy at law and therefore agree that any aggrieved party shall be entitled to specific performance of the terms hereof in addition to any other remedy to which it may be entitled at law or in equity. R. You agree to indemnify and hold ABC and its parent corporation, subsidiaries and their respective officers, directors, agents and employees, successors and assigns harmless from and against any and all claims made against us and all damages, liabilities, costs and expenses incurred as a result of such claims, including reasonable attorney's fees, arising out of the broadcast by ABC of any material supplied by you to ABC in accordance with this Agreement, and we agree to indemnify and hold you and your parent corporation, subsidiaries and their respective officers, directors, agents and employees, successors and assigns harmless from and against any and all claims made against you and all damages, liabilities, costs and expenses incurred as a result of such claims, including reasonable attorney's fees, arising out of the broadcast by you of any material provided by ABC to you in accordance with this Agreement. It is understood that the foregoing indemnities shall apply only with respect to materials that are broadcast without change from the form and content in which such materials were originally provided and in strict conformance to any instructions or limitations given by the party providing the material. The parties also agree to indemnify and hold harmless the other, as well as their parent companies, subsidiaries, officers, directors, agents and employees, successors and assigns, from and against any and all claims, or portion thereof, made and all damages, liabilities, costs and expenses incurred including reasonable attorneys fees, arising exclusively out of or solely as a result of any material editing, lead- ins, or other contextual changes made to such material without the consent of the originating party. Each party will notify the other promptly of any litigation or claim to which such indemnity applies and will cooperate fully in the defense at the other party's request. The provisions of this paragraph shall survive the expiration or sooner termination of this Agreement. S. Nothing in this Agreement shall create any partnership, association, joint venture, fiduciary or agency relationship between ABC and you. If, after examination, you find that the arrangement herein proposed is satisfactory to you, please indicate your acceptance on the copy of this letter enclosed for that purpose and return that copy to us. Very sincerely yours, AMERICAN BROADCASTING COMPANIES, INC. By: /s/ Maureen Lesourd --------------------- 11 Accepted this 21st day of April, 1995 Licensee: Fisher Broadcasting Inc. By: /s/ Patrick M. Scott --------------------- Name: Patrick M. Scott ------------------ Title: Fisher Broadcasting Inc., President & CEO ----------------------------------------- 12 RIDER ONE --------- You shall be entitled to network non-duplication protection, as defined by Rule 76.92 of the Federal Communications Commission Rules, as follows: a. The geographic zone of network non-duplication protection shall be the Area of Dominant Influence ("ADI") (as defined by Arbitron) in which your station is located, or any lesser zone pursuant to any geographic restrictions contained in the Federal Communications Commission rules and regulations, now or as subsequently modified. b. Network non-duplication protection shall extend to all ABC television network programs that you broadcast in accordance with this Agreement. Protection shall not extend to individually preempted programs of an otherwise cleared series. c. Network non-duplication protection shall begin 48 hours prior to the live time period designated by us for broadcast of that network program by your station, and shall end at 12:00 Midnight on the seventh day following that designated time period. You are under no obligation to exercise in whole or in part the network non- duplication rights granted under this Agreement. 13 SCHEDULE A ---------- STATION COMPENSATION - -------------------- (a) We will pay you within a reasonable period of time after the close of each four or five week accounting period, as the case may be, for broadcasting each network sponsored program or portion thereof hereunder, except those specified in paragraph (b) hereof, which is broadcast over your station during the live time period* therefor, the amount resulting from multiplying the following: (i) Your network station rate of $3,571.00 or such other rate applicable pursuant to the terms of Section III of the Agreement; by (ii) the percentage set forth in the table below opposite such applicable time period or such other percentage applicable pursuant to the terms of Section III of the Agreement; by (iii) the fraction of an hour substantially occupied by such program or portion thereof; by (iv) the fraction of the aggregate length of all commercial availabilities** during such program or portion thereof occupied by network commercial announcements*** * Live time period, as used herein, means the time period or periods as specified by us in our initial offer of a network program for the broadcast of such program over your station. ** Commercial availability, as used herein, means a period of time made available by us during a network sponsored program for one or more network commercial announcements or local cooperative commercial announcements. *** Network commercial announcement, as used herein, means a commercial announcement broadcast over your station during a commercial availability and paid for by or on behalf of one or more of our network advertisers, not including, however, announcements consisting of billboards, credits, public service announcements, promotional announcements, and announcements required by law. For each network sponsored program or portion thereof, except those specified in paragraph (b) hereof, which is broadcast by your station with our consent during a time period other than the live time period therefor, we will pay you as if your station had broadcast such program or portion thereof during such live time period, except that: 14 (i) if the percentage set forth above opposite the time period during which your station broadcast such program or portion thereof is less than that set forth opposite such live time period, then we will pay you on the basis of the time period during which your station broadcast such program or portion thereof. (b) Payment For Other Programs -------------------------- We will establish such compensation arrangements as we and you shall agree upon prior to the expiration of the applicable periods of time for program acceptance, as set forth in Paragraph I(B) of this affiliation agreement, for all network sponsored programs broadcast by your station consisting of: (i) Sports programs; (ii) special events programs (including, but not limited to, special news programs, awards programs, entertainment specials and miniseries); (iii) programs for which we specified a live time period, which time period straddles any of the time period categories in the table in paragraph (a) above; and (iv) any other programs which we may designate from time to time. (c) Deductions ---------- (i) From the amounts we are to pay you for station compensation hereunder, we shall throughout the term of this affiliation agreement deduct during each accounting period a sum equal to 168% of your station's network rate, or such other percentage applicable pursuant to the terms of Section III of the Agreement, for each week of said period. (ii) We will deduct a sum equal to the total of whatever fees, if any, may have mutually been agreed upon by you and us with respect to local cooperative commercial announcements broadcast during the applicable accounting period for which your station is being compensated. 15 TABLE ----- PACIFIC
MONDAY through FRIDAY --------------------- Sign-on to 10:00 a.m. - 7% 10:00 a.m to 12:00 N - 16.30% 12:00 N to 3:00 p.m. - 6% 3:00 p.m to 8:00 p.m. - 10% 8:00 p.m to 11:00 p.m. - 30% 11:00 p.m to Sign-off - 15%
Saturday Sunday -------- ------ Sign-on to 9:00 AM - 5% Sign-on to 9:00 a.m. - 5% 9:00 AM to 2:00 PM - 8% 9:00 AM to 2:00 PM - 6% 2:00 PM to 6:00 PM - 15% 2:00 PM to 5:00 PM - 15% 6:00 PM to 8:00 PM - 10% 5:00 PM to 7:00 PM - 10% 8:00 PM to 11:00 PM - 30% 7:00 PM to 11:00 PM - 30% 11:00 PM to Sign-off - 15% 11:00 PM to Sign-off - 15%
All times in this paragraph are expressed in terms of your station's then current local time. 16 SCHEDULE B ---------- COMPENSATION FOR CUT-IN AND LOCAL TAG ANNOUNCEMENT(S) ----------------------------------------------------- A. CUT-IN ANNOUNCEMENTS -------------------- I. With respect to programs broadcast by you during the time period(s) ------------------------------------------------------------------- specified by us in our initial offer for such programs. ------------------------------------------------------- For each local cut-in announcement you broadcast within a program, which program is broadcast during the time period(s) specified by us in our initial offer for such program, we will pay you the amount resulting from multiplying your network station rate (set forth in Section II of the agreement) by the percentage for cut-in announcements) set forth in the applicable Table in Section C below opposite such applicable time period. II. With respect to programs broadcast by you with our consent during time ---------------------------------------------------------------------- period(s) other than that specified by us in our initial offer of such ---------------------------------------------------------------------- programs. --------- For each local cut-in announcement you broadcast within a program, which program is broadcast by you with our consent during a time period other than that specified by us in our initial offer of such program, we will pay you an amount as set forth in Section A.I. above, except that: (i) if the percentage set forth in the applicable Table in Section C below for cut-in announcement(s) opposite the time period during which your station actually broadcast the program in which you broadcast or originated such cut-in announcement(s) is less than that set forth opposite the applicable time period specified in our initial offer of such program, then we will pay you for each cut-in announcement(s) on the basis of the time period during which your station actually broadcast such program. III. With respect to programs broadcast by you in a time period which ---------------------------------------------------------------- straddles any of the time period categories set forth in the applicable ----------------------------------------------------------------------- Table in Section C below. ------------------------ In the event that we offer you a program for broadcast in a time period which straddles any of the time period categories set forth in the applicable Table in Section C below, and you broadcast such program within which you also broadcast or originate one or more cut-in announcements), we will pay you such amounts as we and you shall have agreed upon prior to your broadcast or origination of such cut-in announcement(s). LOCAL TAG ANNOUNCEMENTS - ----------------------- I. With respect to programs broadcast by you during the time period(s) ------------------------------------------------------------------- specified by us in our initial offer for such programs. ------------------------------------------------------ 17 For each local tag announcement you broadcast within a program, which program is broadcast during the time period(s) specified by us in our initial offer for such program, we will pay you the amount resulting from multiplying your network station rate (set forth in Section II of the agreement) by the percentage for each local tag announcement set forth in the applicable Table in Section C below opposite such applicable time period. II. With respect to programs broadcast by you with our consent during -time ----------------------------------------------------------------------- period(s) other than that specified by us in our initial offer of such ---------------------------------------------------------------------- programs. -------- For each local tag announcement you broadcast within a program, which program is broadcast by you with our consent during a time period other than that specified by us in our initial offer of such program, we will pay you an amount as set forth in Section B.I. above, except that: (i) if the percentage set forth in the applicable Table in Section C below for each local tag announcement opposite the time period during which your station actually broadcast the program in which you broadcast such local tag announcement is less than that set forth opposite the applicable time period specified in our initial offer of such program, then we will pay you for each local tag announcement on the basis of the time period during which your station actually broadcast such program. III. With respect to programs broadcast by you in a time period-which straddles -------------------------------------------------------------------------- any of the time period categories set forth in the applicable Table in ---------------------------------------------------------------------- Section C below. --------------- In the event that we offer you a program for broadcast in a time period which straddles any of the time period categories set forth in the applicable Table in Section C below, and you broadcast such program within which you also broadcast one or more local tag announcement (s), we will pay you such amounts as we and you shall have agreed upon prior to your broadcast of such local tag announcement(s). 18 C. COMPENSATION TABLE FOR CUT-IN OR LOCAL TAG ANNOUNCEMENTS -------------------------------------------------------- Cut-In Announcements -------------------- Monday through Sunday 6:00 p.m. to 11:00 p.m. - 18.75% All other times - 7.50% Local Tag Announcements ----------------------- Monday through Sunday 6:00 p.m. to 11:00 p.m. - 9.38% All other times - 3.75% All times in this paragraph are expressed in terms of your station's then- current local time. 19 EX-10.2 6 PRIMARY TELEVISION AFFILIATION AGMT RE: KATU TV EXHIBIT 10.2 April 17, 1995 PRIMARY TELEVISION AFFILIATION AGREEMENT ---------------------------------------- Fisher Broadcasting Inc. TELEVISION STATION: KATU - Portland, Oregon Gentlemen: The following shall constitute the agreement between American Broadcasting Companies, Inc. ("ABC" or "we") and Fisher Broadcasting Inc. ("you"), in order that your station may continue to serve the public interest, convenience and necessity. We and you hereby mutually agree upon the following plan of network cooperation which shall replace, effective September 1, 1994, the affiliation agreement between you and us dated May 31, 1989, as amended: I. NETWORK AFFILIATION AND PROGRAM SERVICE --------------------------------------- A. PRIMARY AFFILIATION. You agree to serve as our primary affiliate to ------------------- broadcast Network Television Programs, in the community to which your station is licensed by the Federal Communications Commission, subject to the conditions and limitations set forth herein. As used in this Agreement, Network Television Programs means television programs which are part of the network schedule for the then current September to September television season, broadcast on a national television basis and in the time period established for such broadcast by ABC. (Network Television Programs will also be referred to herein as "network programs," "television programs," "programs" or "programming" or in the singular of such terms.) B. FIRST CALL RIGHTS. To enable you to serve as our primary affiliate, ----------------- we agree to offer you first call on the right to broadcast Network Television Programs, in the time period established by ABC for their broadcast, in the community to which your station is licensed by the Federal Communications Commission ("First Call Rights"), for reception by the general public in places to which no admission is charged. Notwithstanding the foregoing, ABC shall have the right to authorize any television broadcasting station, regardless of the community to which it is licensed by the FCC, to broadcast any network presentation of a subject we deem to be of immediate national significance including, but not limited to, a Presidential address. 1. You agree that, within 15 days of the date of our offer of a First Call Right to a regularly scheduled network program, you will advise us of your acceptance (if requested to do so by the terms of our offer) or rejection. With respect to any network program not regularly scheduled, you will advise us of your acceptance or rejection of our offer of a First Call night within 72 hours (exclusive of Saturdays, Sundays and holidays) after such offer has been received at your station. However, if the first broadcast referred to in our offer is scheduled to 1 occur within less than 15 days after the date of our offer with respect to regularly scheduled network programs or less than 72 hours after our offer has been received at your station with respect to network programs not regularly scheduled, you shall notify us of your acceptance or rejection of such offer as promptly as possible, but in no event after the first broadcast time specified in such offer. Acceptance by you of our offer of a First Call Right shall constitute your agreement to broadcast subject network program in accordance with the terms of this Agreement and of our offer to you. As an ABC primary affiliate, you are obligated to accept the substantial majority of the ABC network programs offered to you, provided, that the obligation does not apply to network programming offered to you above the level of such programming offered to ABC affiliates generally on the effective date of this Agreement. Your failure to do so shall constitute a material breach of this Agreement entitling ABC, in addition to all other remedies, to terminate this Agreement on fourteen (14) days written notice to you. 2. You will be offered "First Call Rights" with respect to: a. Network Sponsored Programs. "Network sponsored programs", as used in -------------------------- this Agreement, shall mean those Network Television Programs which contain one or more commercial announcements paid for by or on behalf of one or more ABC Network advertisers. You agree to broadcast network sponsored programs in their entirety, including but not limited to the network commercial announcements ordered for your station, network identifications, program promotional material or credit announcements contained in such programs which you accept, without interruption or deletion or addition of any kind. Notwithstanding the foregoing, you may substitute other ABC Network promotional announcements in lieu of program promotional material which is inaccurate as it pertains to your station. It is also understood that no commercial announcement, promotional announcement or public service announcement will be broadcast by you during any interval within a network program designated by ABC as being for the sole purpose of making a station identification announcement. b. Network Sustaining, Cooperative and Spot Carrier Programs. ---------------------------------------------------------- i) We will from time to time offer you live or recorded Network Television Programs identified as sustaining programs, cooperative programs or spot carrier programs. Except as set forth below in subparagraphs (ii) and (iii), you agree to broadcast such programs which you accept in their entirety without interruption or deletion or addition of any kind. ii) The network sustaining programs which we may offer to you may not, without our prior written consent, be sold by your station for commercial sponsorship or interrupted for commercial announcements or used for any purpose other than sustaining broadcasting. iii) You may carry the cooperative or spot carrier programs on the same basis as regular sustaining programs or you may offer them for 2 commercial sponsorship on terms and conditions specified by us at the time such programs are offered to you. C. PROGRAM DELIVERY. By means satisfactory to us, we will arrange, at our ---------------- own expense, for programs to be delivered to your station. II. TERM ---- This agreement shall become effective at 3:00 AM, NYT, on the lst day of September, 1994, and shall continue until 3:00 AM, NYT, on the 1st day of September, 2004. III. NETWORK STATION COMPENSATION ---------------------------- Your compensation will be determined by the formula set forth in Schedule A attached hereto and made a part hereof. A. Your network station rate, the table of daypart percentages and the network weekly deduction set forth in Schedule A (respectively, the "Original Network Station Rate," the "Original Percentages" and the "Original Network Deduction") shall be used to calculate your compensation provided that the following conditions are satisfied: 1. Your station will maintain the same level of clearances of ABC network programs as it did in the 1993-1994 television season (i.e., the last two quarters of 1993 and the first two quarters of 1994). 2. Your station's preemption levels for network prime-time and sports programming will not exceed one hundred (100) half hours for each year (measured from September 1 to August 31 of the following year) during the term of this Agreement. 3. Nightline will be regularly scheduled to clear on a "live" basis. B. 1. If you fail to satisfy any of the conditions set forth in paragraph A of this Section, and we give you written notice of such failure, you shall have ninety (90) days from receipt of such notice to return to complying fully with such conditions. If at the end of such ninety (90) day period, you fail to return to complying fully with such conditions, in addition to the remedy set out in paragraph C of this Section, we will have the right then and periodically thereafter to reevaluate and change (a) your station's network station rate, (b) the percentages set forth in the Table in Schedule A, or (c) your station's network weekly deduction, by notice to you in writing to such effect. If the effect of such changes, alone or in combination with any other previous such changes, would be to decrease your annual network compensation under Schedule A, using the Original Network Station Rate, the Original Percentages and the Original Network Deduction, by more than 25%, you may, if you so elect, terminate this Agreement by giving us prior written notification within forty- five (45) days after the date of our notice to you, provided 3 that such termination will not be effective less than one hundred twenty (120) days after your notice is received by us. If after your compensation has been reduced in accordance with paragraph B(1) of this Section, you thereafter return to complying fully with all of the conditions set forth in paragraph A of this Section, your compensation will (subject to the rights reserved to us under paragraphs B(1) and C of this Section) be calculated by using the Original Network Station Rate, the Original Percentages and the Original Network Deduction. C. Your Original Network Station Rate will be increased if the aggregate annual compensation paid by us to all ABC primary affiliates (not including payments by us under any bonus compensation programs in force during the term of this Agreement) (the "Aggregate Affiliate Compensation"), calculated annually for the period January 1 through December 31 beginning for the year ending December 31, 1996, exceeds by more than fifteen percent (15%) the Aggregate Affiliate Compensation paid during the year ending December 31, 1995 (the "1995 Compensation"). In that event, your Original Network Station Rate will be increased, effective January 1 of the same year, by the percent difference between the 1995 Compensation and the most recently calculated Aggregate Affiliate Compensation minus fifteen percent (15%) (and minus any previous increase made to your Original Network Station Rate under this subparagraph). D. If you fail at any time to satisfy any of the conditions set forth in paragraph A of this Section, and we give you written notice of such failure, you shall have ninety (90) days from receipt of such notice to return to complying fully with such conditions. If by the end of such ninety (90) day period, you fail to return to complying fully with such conditions, we shall have the right, in our sole discretion, in addition to the remedy set forth in paragraph B of this Section, to terminate this Agreement upon no less than two hundred seventy (270) days written notice to you. IV. NETWORK NON-DUPLICATION PROTECTION ---------------------------------- You shall be entitled to network non-duplication protection provided as and to the extent set forth in Rider One to this Agreement, which is attached hereto and made a part hereof. V. CUT-IN ANNOUNCEMENTS AND LOCAL TAG SERVICES ------------------------------------------- A. CUT-IN ANNOUNCEMENTS. "Cut-In Announcements", as used herein, shall -------------------- mean the substitution of a special commercial in place of a regularly scheduled network commercial. 1. Upon at least twenty-four (24) hours' notice, you shall, at our request, furnish such personnel and equipment as may be necessary to (a) broadcast cut-in announcements from your station alone, or (b) originate from your station cut-in announcements to one or more other stations, without regard to whether or not your station is requested to broadcast said cut-in announcement(s) . Notwithstanding anything contained in this Agreement, you may refuse to broadcast any such cut-in announcement in the community to which your station is licensed by the FCC if, in your opinion, it is not in the public interest, convenience or necessity, but you shall 4 nevertheless furnish such personnel and equipment as may be necessary to originate such cut-in announcements from your station to one or more other stations. 2. Cut-in announcements shall be broadcast only when authorized by us and then only in accordance with the instructions furnished to you. You will be supplied, as promptly as possible, with the material and instructions for these announcements. 3. We may cancel any order for cut-in announcements without liability on our part, provided we do so upon not less than twenty-four (24) hours' notice to you, failing which, we will pay you the compensation you would have received if the announcements had continued as scheduled for twenty-four (24) hours following receipt by you of such notice of cancellation. 4. For each program during which such cut-in announcements are included, we shall pay you in accordance with the applicable table set forth in Schedule B hereto and hereby made a part hereof. B. LOCAL TAG SERVICES. "Local Tag Announcements", as used herein, shall ------------------ mean a visual commercial announcement, made by you on behalf of a local dealer of a network advertiser, not exceeding ten seconds of a one-minute network commercial announcement or five seconds of a thirty-second network commercial announcement projected by means of a slide and not utilizing more than two (2) slides. 1. Upon at least twenty-four (24) hours, notice, you shall, at our request, furnish such personnel and equipment as may be necessary to broadcast "local tag announcements". 2. Local tag announcements shall be broadcast in accordance with our instructions. The network advertiser shall supply to you or purchase from you, as promptly as possible, the slide(s) for each local tag announcement. Local tag announcements shall not be accompanied by oral announcements unless the network advertiser shall make direct requests of you therefor and shall have assumed sole responsibility for payment of such oral announcements. 3. We may cancel any order for local tag announcements without liability on our part provided we do so upon not less than twenty-four (24) hours, notice to you, failing which we will pay you the compensation you would have received if the local tag announcements had continued as scheduled for twenty-four (24) hours following receipt by you of such notice of cancellation. 4. For each local tag announcement which you broadcast, we shall compensate you in accordance with the applicable table set forth in Schedule B hereto and hereby made a part hereof. 5 VI. GENERAL ------- A. We may at any time, upon notice to you, substitute for any scheduled network program another network program, except that if such other network program in our judgment involves a special event of public interest or importance, no such notice is required. No compensation will be paid to you for the scheduled program or for the substitute program unless such substitute program is a network sponsored program in which event you shall be compensated in accordance with the terms or formula, whichever is applicable, set forth in Schedule A hereof. B. Nothing contained in this Agreement shall be construed to prevent or hinder us, at any time upon notice to you as soon as practicable, from canceling one or more network programs, whether sponsored or sustaining, in which event you shall receive no compensation for any such canceled network sponsored program(s). C. With respect to network programs offered or already accepted pursuant to this Agreement, nothing herein contained shall be construed to prevent or hinder you from exercising your rights under Federal Communications Commission rules to: 1) reject or refuse network programs which you reasonably believe to be unsatisfactory, unsuitable or contrary to the public interest; or 2) substitute a program, which in your good faith opinion, is of greater local or national importance, including, but not limited to, coverage of news events and local public affairs programming. We shall not compensate you for any such program you have refused or rejected or for which you have substituted a program which is of greater local or national importance. With respect to programs already accepted hereunder, you shall give us prompt notice of any such refusal, rejection or substitution no later than fourteen (14) days prior to the air date of such programming, except where the nature of the substitute program makes such notice impracticable (e.g., coverage of breaking news or other unscheduled events), in which case you agree to give us as much advance notice as possible under the circumstances. Such notice shall include a statement of the reason(s) you believe that a rejected or refused network program is unsatisfactory, unsuitable or contrary to the public interest, and/or that a substituted program is of greater local or national importance. In addition to all other remedies, we shall have the right, upon thirty (30) days' notice, to terminate your "First Call Rights" on a series of Network programs already accepted hereunder and withdraw all future episodes of that series if one or more individual program episode(s) of such series is preempted by you for any reason other than those set forth in (a) and (b) above. We shall also have the right, upon thirty (30) days' notice, to terminate your "First Call Rights" concerning a series of Network programs already accepted hereunder and to withdraw all future episodes of that series if three or more individual program episodes of such series are pre-empted by you in any thirteen-week period, whether or not such pre-emptions are for the reasons 6 set forth in (a) and (b) above. Such thirteen-week periods shall be measured consecutively from the first broadcast date of the program series in question. We reserve the right not to offer you the "First Call Rights" for the next broadcast season on any series of Network program as to which we have terminated your "First Call Rights" and withdrawn future episodes of that series pursuant to this Paragraph and which has been placed by ABC on another station serving your market. D. You will submit to us in writing, upon forms provided by us for that purpose, such reports covering network programs broadcast by your station as ABC may request from time to time. To verify your carriage of network commercial announcements, identifications and program promotional material, we may require delivery by you, within five (5) days of our request, of copies of your official station logs, air checks or broadcast tapes. E. Neither you nor we shall incur any liability hereunder because of our failure to deliver, or your failure to broadcast, any or all network programs due to: (1) failure of facilities (2) labor disputes, or (3) causes beyond the control of the party so failing to deliver or broadcast. F. You agree to notify us of any application made to the Federal Communications Commission to modify your station's transmitter location, power, frequency or hours of operation within ten (10) days of the filing of such application. In the event that the transmitter location, power, frequency or hours of operation of your station are changed permanently at any time so that your station is of less value to us as a network outlet than it is as of the effective date of this agreement, including but not limited to, as a result of additional overlap of your station's broadcast signal with that of another ABC affiliate, we will have the right to terminate this Agreement upon thirty (30) days, advance written notice. G. Unless we exercise our right of termination set forth in this paragraph, this Agreement shall be binding on any assignee or transferee of your station's license. You agree not to assign or to transfer any of the rights or privileges granted to you under this Agreement without our prior consent in writing, which consent shall not be unreasonably withheld. You also agree that if any application is made to the Federal Communications Commission pertaining to an assignment or a transfer of control of your license, or any interest therein, you shall notify us in writing immediately of the filing of such application. Except as to assignments or transfers of control comprehended by Section 73.3540(f) of the Rules and Regulations of the Federal Communications Commission, we shall have the unilateral right to terminate this Agreement effective as of the effective date of any assignment or transfer of control (voluntary or involuntary) of your license or any interest therein, provided ABC shall have given you notice in writing of such termination within thirty (30) days after we have been advised that such application for assignment or transfer has been filed with the Federal Communications Commission. If you fail to notify us of the assignment or transfer of control of your station's license, we shall have the unilateral right, as a non-exclusive remedy, to terminate this 7 Agreement within thirty (30) days of receiving notice of said assignment or transfer or control. We shall not seek to renegotiate this Agreement or to impose upon the proposed assignee or transferee any obligations or standards of performance not provided in this Agreement as a condition to ABC's consent to the assignment or transfer of the rights and privileges granted to you under this Agreement. If ABC elects not to accept the proposed assignee or transferee, then ABC shall give you notice of termination as set forth above and such termination shall be effective upon the effective date of the assignment or transfer of control of your station's license to such assignee or transferee. If ABC elects to accept the proposed assignee or transferee, you agree that you shall not consummate any assignment or transfer of control of your station's license until you have procured and delivered to us, in form satisfactory to us, the acknowledgment of the proposed assignee or transferee that, upon consummation of the assignment or transfer of control of your station's license, the assignee or transferee will assume and perform this Agreement in its entirety without limitation of any kind. You agree that in view of the uniqueness of the plan of network cooperation set forth in this Agreement and the fact that money damages would be inadequate to compensate ABC for the breach of your obligations hereunder, in addition to all other remedies, ABC shall be entitled to obtain equitable relief to enforce the obligations set forth in this paragraph. H. Your rights under this Agreement are limited to the First Call Rights to Network Television Programs pursuant to the terms herein. You agree not to authorize, cause, permit or enable the use of any program which we supply to you herein for any purpose other than broadcasting by your station pursuant to the terms herein, in the community to which your station is licensed by the Federal Communications Commission, for reception by the general public in places to which no admission is charged. You agree when you are authorized to tape a program for subsequent broadcast that the recording will be broadcast not more than once in its entirety and will be erased within six (6) hours of use. All rights not specifically granted to you by this Agreement shall be retained by ABC. I. Except with our prior written consent and except upon such terms and conditions as we may impose, you agree not to authorize, cause, permit or enable anything to be done whereby a recording on film, tape or otherwise is made or a recording is broadcast, of a program which has been, or is being, broadcast on our network, or a rebroadcast is made of the broadcast transmission of your station during any hours when your station is broadcasting a program provided by ABC. J. With respect to any and all promotional material issued by you or under your direction or control, you agree to abide by any and all restrictions of which we advise you pertaining to the promotion of a network program(s) scheduled to be broadcast by you in your community, including, but without limitation, on-the-air promotion, billboards, and newspaper or other printed advertisements, announcements or promotions. K. You agree to maintain for your television station such licenses, including performing rights licenses as now are or hereafter may be in general use by television broadcasting stations and necessary for you to broadcast the television programs which we furnish to you hereunder. we will clear all music in the repertory of ASCAP and of BMI used in 8 our network programs, thereby licensing the broadcasting of such music in such programs over your station. You will be responsible for all music license requirements for any commercial or other material inserted by you within or adjacent to our network programs in accordance with this agreement. L. The furnishing of film or tape recorded programs hereunder is contingent upon our ability to make arrangements satisfactory to us for the film or tape recordings necessary to deliver the programs to you. Such film or tape recorded programs shall be used only for a single television broadcast over your station. Positive prints of film or tape recorded programs are to be shipped by us, shipping charges prepaid, and you agree to return to us or to forward to such television station as we designate, shipping charges prepaid, each print or copy of said film or tape recording received by you hereunder, together with the original reels and containers furnished therewith. You will return or forward all prints in the same condition as received by you, ordinary wear and tear excepted, immediately after a single TV broadcast over your station. In the event you damage a print of any film or tape recorded program which is delivered to you, or fail to return or forward the original reels and containers furnished therewith, as aforesaid, you agree to pay the cost of replacing the complete print, original reels and/or containers as and when billed by us. M. No inducements, representations or warranties except as specifically set forth herein have been made by any of the parties to this Agreement. This Agreement constitutes the entire contract between the parties hereto and no provision thereof shall be changed or modified, nor shall this Agreement be discharged in whole or in part, except by an agreement in writing, signed by the party against whom the change, modification or discharge is claimed or sought to be enforced; nor shall any waiver of any of the conditions or provisions of this Agreement be effective and binding unless such waiver shall be in writing and signed by the party against whom the waiver is asserted, and no waiver of any provision of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach of the same or of any other provision. N. All notices, demands, requests or other communications which may be or are required to be given or made by ABC or you pursuant to this Agreement (except for our program offers and your notices of acceptance or rejection, if required, of such offers and any other program information or program administration communications) shall be delivered (postage or fee prepaid) by first-class mail, express mail, express delivery service or by facsimile transmission addressed as follows: (a) If to you: Mr. Patrick Scott President and Chief Executive Officer Fisher Broadcasting Inc. 100 Fourth Avenue Seattle, WA 98109-4997 Phone: 206-443-4000 / Fax: 206-443-8272 with copies (which shall not constitute notice) to: 9 Fisher Companies Inc. Attn.: William W. Krippaehne, Jr. President and Chief Executive Officer 1525 One Union Square Seattle, WA 98101 Phone: 206-682-7733 / Fax: 206-682-3211 Clifford M. Harrington, Esq. Fisher Wayland Cooper Leader & Zaragoza 2001 Pennsylvania Avenue, N.W., Suite 400 Washington, DC 20006-1851 Phone: 202-659-3494 / Fax: 202-296-6518 (b) If to ABC: Ms. Maureen Lesourd Senior Vice President Affiliate Relations ABC Television Network 77 West 66 Street, 2nd Floor New York, NY 10023-6298 Phone: 212-456-6493 / Fax: 212-456-7450 with a copy (which shall not constitute notice) to: Roger Goodspeed, Esq. Capital Cities/ABC, Inc. Law & Regulation Department 77 West 66 Street, 16th Floor New York, NY 10023-6298 Phone: 212-456-7593 / Fax: 212-456-6202 or to such other person, address or facsimile number as you or ABC may designate by written notice. O. This Agreement and all questions relating to its validity, interpretation, performance, and enforcement (including, without limitation, provisions concerning limitations of action), shall be governed by and construed in accordance with the laws of the State of New York, notwithstanding conflict-of-laws doctrines of any state or other jurisdictions to the contrary. P. Upon termination of this Agreement, the consent theretofore granted to broadcast our network programs or use ABC logos or trademarks shall be deemed immediately withdrawn and you shall have no further rights of any nature whatsoever in such programs, logos or trademarks. 10 Q. We mutually acknowledge that, in view of the uniqueness of the plan of network cooperation set forth in this Agreement, in the event that the obligations of either party under this Agreement are not performed in accordance with its terms, the other party would not have an adequate remedy at law and therefore agree that any aggrieved party shall be entitled to specific performance of the terms hereof in addition to any other remedy to which it may be entitled at law or in equity. R. You agree to indemnify and hold ABC and its parent corporation, subsidiaries and their respective officers, directors, agents and employees, successors and assigns harmless from and against any and all claims made against us and all damages, liabilities, costs and expenses incurred as a result of such claims, including reasonable attorney's fees, arising out of the broadcast by ABC of any material supplied by you to ABC in accordance with this Agreement, and we agree to indemnify and hold you and your parent corporation, subsidiaries and their respective officers, directors, agents and employees, successors and assigns harmless from and against any and all claims made against you and all damages, liabilities, costs and expenses incurred as a result of such claims, including reasonable attorney's fees, arising out of the broadcast by you of any material provided by ABC to you in accordance with this Agreement. It is understood that the foregoing indemnities shall apply only with respect to materials that are broadcast without change from the form and content in which such materials were originally provided and in strict conformance to any instructions or limitations given by the party providing the material. The parties also agree to indemnify and hold harmless the other, as well as their parent companies, subsidiaries, officers, directors, agents and employees, successors and assigns, from and against any and all claims, or portion thereof, made and all damages, liabilities, costs and expenses incurred including reasonable attorneys fees, arising exclusively out of or solely as a result of any material editing, lead-ins, or other contextual changes made to such material without the consent of the originating party. Each party will notify the other promptly of any litigation or claim to which such indemnity applies and will cooperate fully in the defense at the other party's request. The provisions of this paragraph shall survive the expiration or sooner termination of this Agreement. S. Nothing in this Agreement shall create any partnership, association, joint venture, fiduciary or agency relationship between ABC and you. If, after examination, you find that the arrangement herein proposed is satisfactory to you, please indicate your acceptance on the copy of this letter enclosed for that purpose and return that copy to us. Very sincerely yours, AMERICAN BROADCASTING COMPANIES, INC. By: /s/ Maureen Lesourd --------------------- 11 Accepted this 21st day of April, 1995 Licensee: Fisher Broadcasting Inc. By: /s/ Patrick M. Scott --------------------- Name: Patrick M. Scott ---------------- Title: Fisher Broadcasting Inc., President & CEO ----------------------------------------- 12 RIDER ONE --------- You shall be entitled to network non-duplication protection, as defined by Rule 76.92 of the Federal Communications Commission Rules, as follows: a. The geographic zone of network non-duplication protection shall be the Area of Dominant Influence ("ADI") (as defined by Arbitron) in which your station is located, or any lesser zone pursuant to any geographic restrictions contained in the Federal Communications Commission rules and regulations, now or as subsequently modified. b. Network non-duplication protection shall extend to all ABC television network programs that you broadcast in accordance with this Agreement. Protection shall not extend to individually preempted programs of an otherwise cleared series. c. Network non-duplication protection shall begin 48 hours prior to the live time period designated by us for broadcast of that network program by your station, and shall end at 12:00 Midnight on the seventh day following that designated time period. You are under no obligation to exercise in whole or in part the network non- duplication rights granted under this Agreement. 13 SCHEDULE A ---------- STATION COMPENSATION - -------------------- (a) We will pay you within a reasonable period of time after the close of each four or five week accounting period, as the case may be, for broadcasting each network sponsored program or portion thereof hereunder, except those specified in paragraph (b) hereof, which is broadcast over your station during the live time period* therefor, the amount resulting from multiplying the following: (i) Your network station rate of $2,491.00 or such other rate applicable pursuant to the terms of Section III of the Agreement; by (ii) the percentage set forth in the table below opposite such applicable time period or such other percentage applicable pursuant to the terms of Section III of the Agreement; by (iii) the fraction of an hour substantially occupied by such program or portion thereof; by (iv) the fraction of the aggregate length of all commercial availabilities** during such program or portion thereof occupied by network commercial announcements*** * Live time period, as used herein, means the time period or periods as specified by us in our initial offer of a network program for the broadcast of such program over your station. ** Commercial availability, as used herein, means a period of time made available by us during a network sponsored program for one or more network commercial announcements or local cooperative commercial announcements. *** Network commercial announcement, as used herein, means a commercial announcement broadcast over your station during a commercial availability and paid for by or on behalf of one or more of our network advertisers, not including, however, announcements consisting of billboards, credits, public service announcements, promotional announcements, and announcements required by law. For each network sponsored program or portion thereof, except those specified in paragraph (b) hereof, which is broadcast by your station with our consent during a time period other than the live time period therefor, we will pay you as if your station had broadcast such program or portion thereof during such live time period, except that: 14 (i) if the percentage set forth above opposite the time period during which your station broadcast such program or portion thereof is less than that set forth opposite such live time period, then we will pay you on the basis of the time period during which your station broadcast such program or portion thereof. (b) Payment For Other Programs -------------------------- We will establish such compensation arrangements as we and you shall agree upon prior to the expiration of the applicable periods of time for program acceptance, as set forth in Paragraph I(B) of this affiliation agreement, for all network sponsored programs broadcast by your station consisting of: (i) Sports programs; (ii) special events programs (including, but not limited to, special news programs, awards programs, entertainment specials and miniseries); (iii) programs for which we specified a live time period, which time period straddles any of the time period categories in the table in paragraph (a) above; and (iv) any other programs which we may designate from time to time. (c) Deductions ---------- (i) From the amounts we are to pay you for station compensation hereunder, we shall throughout the term of this affiliation agreement deduct during each accounting period a sum equal to 168% of your station's network rate, or such other percentage applicable pursuant to the terms of Section III of the Agreement, for each week of said period. (ii) We will deduct a sum equal to the total of whatever fees, if any, may have mutually been agreed upon by you and us with respect to local cooperative commercial announcements broadcast during the applicable accounting period for which your station is being compensated. 15 TABLE ----- PACIFIC
MONDAY through FRIDAY --------------------- Sign-on to 10:00 a.m. - 7% 10:00 a.m. to 12:00 N - 16.30% 12:00 N to 3:00 p.m. - 6% 3:00 p.m. to 8:00 p.m. - 10% 8:00 p.m. to 11:00 p.m. - 30% 11:00 p.m. to Sign-off - 15%
Saturday Sunday - -------- -------- Sign-on to 9:00 AM - 5% Sign-on to 9:00 a.m. - 5% 9:00 AM to 2:00 PM - 8% 9:00 AM to 2:00 PM - 6% 2:00 PM to 6:00 PM - 15% 2:00 PM to 5:00 PM - 15% 6:00 PM to 8:00 PM - 10% 5:00 PM to 7:00 PM - 10% 8:00 PM to 11:00 PM - 30% 7:00 PM to 11:00 PM - 30% 11:00 PM to Sign-off - 15% 11:00 PM to Sign-off - 15%
All times in this paragraph are expressed in terms of your station's then current local time. 16 SCHEDULE B ---------- COMPENSATION FOR CUT-IN AND LOCAL TAG ANNOUNCEMENT(S) ----------------------------------------------------- A. CUT-IN ANNOUNCEMENTS -------------------- I. With respect to programs broadcast by you during the time period(s) ------------------------------------------------------------------- specified by us in our initial offer for such programs. ------------------------------------------------------- For each local cut-in announcement you broadcast within a program, which program is broadcast during the time period(s) specified by us in our initial offer for such program, we will pay you the amount resulting from multiplying your network station rate (set forth in Section II of the agreement) by the percentage for cut-in announcements) set forth in the applicable Table in Section C below opposite such applicable time period. II. With respect to programs broadcast by you with our consent during time ---------------------------------------------------------------------- period(s) other than that specified by us in our initial offer of such ---------------------------------------------------------------------- programs. --------- For each local cut-in announcement you broadcast within a program, which program is broadcast by you with our consent during a time period other than that specified by us in our initial offer of such program, we will pay you an amount as set forth in Section A.I. above, except that: (i) if the percentage set forth in the applicable Table in Section C below for cut-in announcement(s) opposite the time period during which your station actually broadcast the program in which you broadcast or originated such cut-in announcement(s) is less than that set forth opposite the applicable time period specified in our initial offer of such program, then we will pay you for each cut-in announcement(s) on the basis of the time period during which your station actually broadcast such program. III. With respect to programs broadcast by you in a time period which ---------------------------------------------------------------- straddles any of the time period categories set forth in the applicable ----------------------------------------------------------------------- Table in Section C below. ------------------------- In the event that we offer you a program for broadcast in a time period which straddles any of the time period categories set forth in the applicable Table in Section C below, and you broadcast such program within which you also broadcast or originate one or more cut-in announcements), we will pay you such amounts as we and you shall have agreed upon prior to your broadcast or origination of such cut-in announcement(s). LOCAL TAG ANNOUNCEMENTS - ----------------------- I. With respect to programs broadcast by you during the time period(s) ------------------------------------------------------------------- specified by us in our initial offer for such programs. ------------------------------------------------------- 17 For each local tag announcement you broadcast within a program, which program is broadcast during the time period(s) specified by us in our initial offer for such program, we will pay you the amount resulting from multiplying your network station rate (set forth in Section II of the agreement) by the percentage for each local tag announcement set forth in the applicable Table in Section C below opposite such applicable time period. II. With respect to programs broadcast by you with our consent during -time ----------------------------------------------------------------------- period(s) other than that specified by us in our initial offer of such ---------------------------------------------------------------------- programs. --------- For each local tag announcement you broadcast within a program, which program is broadcast by you with our consent during a time period other than that specified by us in our initial offer of such program, we will pay you an amount as set forth in Section B.I. above, except that: (i) if the percentage set forth in the applicable Table in Section C below for each local tag announcement opposite the time period during which your station actually broadcast the program in which you broadcast such local tag announcement is less than that set forth opposite the applicable time period specified in our initial offer of such program, then we will pay you for each local tag announcement on the basis of the time period during which your station actually broadcast such program. III. With respect to programs broadcast by you in a time period-which straddles -------------------------------------------------------------------------- any of the time period categories set forth in the applicable Table in ---------------------------------------------------------------------- Section C below. ---------------- In the event that we offer you a program for broadcast in a time period which straddles any of the time period categories set forth in the applicable Table in Section C below, and you broadcast such program within which you also broadcast one or more local tag announcement (s) , we will pay you such amounts as we and you shall have agreed upon prior to your broadcast of such local tag announcement(s). 18 C. COMPENSATION TABLE FOR CUT-IN OR LOCAL TAG ANNOUNCEMENTS -------------------------------------------------------- Cut-In Announcements -------------------- Monday through Sunday 6:00 p.m. to 11:00 p.m. - 18.75% All other times - 7.50% Local Tag Announcements ----------------------- Monday through Sunday 6:00 p.m. to 11:00 p.m. - 9.38% All other times - 3.75% All times in this paragraph are expressed in terms of your station's then- current local time. 19 EX-10.3 7 FISHER COMPANIES INC. INCENTIVE PLAN OF 1995 EXHIBIT 10.3 FISHER COMPANIES INCENTIVE PLAN OF 1995 1. PURPOSE The purpose of the Plan is to provide selected eligible key employees of Fisher Companies Inc. ("Company") or any present or future subsidiary of the Company with an inducement to remain in the employ of the Company and to participate in the ownership of the Company, and with added incentives to advance the interests of the Company and increase the value of the Company's common stock. 2. DEFINITIONS 1) "Committee" shall mean the committee described in Section 3 hereof and selected by the Company's Board of Directors to administer the Plan. b. "Nonemployee Director" has the meaning set forth in Rule 16b-3 under the Securities Exchange Act of 1934, as amended. c. "Options" means any incentive stock option or non-statutory stock option granted hereunder. d. "Rights" means any restricted stock right or performance stock right granted hereunder. e. "Subsidiary" as used in the Plan shall mean any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the broken chain, owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 3. ADMINISTRATION 1) The Plan shall be administered by a Committee appointed by the Board of Directors and to consist of not less than three members of the Board of Directors, all of whom shall be Nonemployee Directors. 2) Subject to the terms of the Plan, the Committee shall have full and final authority to determine the persons who are to be granted Options and Rights under the Plan and the number of shares subject to each Option and Right, the option price, the form, terms and conditions, including but not limited to any target stock prices or any performance goals of the Options, whether the Options granted shall be incentive stock options or non-statutory stock options, or both, the time or times when each Option becomes exercisable, the duration of the exercise period and the terms and conditions of all Rights granted hereunder, and to make such other determinations as may be appropriate or necessary for the administration of the Plan. 1 3) The Committee shall select one of its members as the Chairman, and shall hold its meetings at such times and places as it shall deem advisable. At least one-half of its members shall constitute a quorum for the conduct of business, and any decision or determination approved by a majority of members present at any meeting in which a quorum exists shall be deemed to have been made by the Committee. In addition, any decision or determination reduced to writing and signed by all of the members shall be deemed to have been made by the Committee. The Committee may appoint a Secretary, shall keep minutes of its meetings, and may make such rules and regulations for the conduct of its business and for the carrying out of the Plan as it shall deem appropriate. (d) The interpretation and construction by the Committee of any provisions of the Plan and of the Options and Rights granted thereunder shall be final and conclusive on all persons having any interest thereunder. 4. SHARES SUBJECT TO PLAN Subject to the provisions of Section 18 (relating to adjustment due to changes in capital structure), the number of shares of stock which may be issued and sold pursuant to Options and Rights granted under the Plan shall not exceed Seventy Thousand (70,000) shares of the Company's common stock (Two Hundred Eighty Thousand (280,000) shares in the event of a four-for-one stock split that will be effective May 15,1995, subject to stockholder approval of an increase in the number of authorized shares.) If any Options or Rights granted under the Plan shall terminate or expire without having been exercised in full, the stock not purchased or acquired under such Options or Rights shall be available again for the purposes of the Plan. 5. ELIGIBILITY a. Options and Rights may be granted only to salaried key management employees of the Company or a Subsidiary (including officers and directors who are also salaried employees) who, in the judgment of the Committee, will perform services of special importance in the management, operation and development of the business of the Company or the businesses of one or more of its Subsidiaries, provided: (i) The Option or Right grant date for an employee shall not occur during or after the calendar year in which the employee reaches the age of 65, and (ii) An Option or Right shall not be granted to an employee who, immediately after the Option or Right is granted, owns stock possessing more than five percent (5%) of the total combined voting power or value of all classes of stock of the Company or a Subsidiary. (b) For purposes of determining the stock owned at a given time by an individual under Section 5(a)(ii) hereof, the following rules shall apply: (i) Stock which the individual may purchase or acquire under outstanding Options or Rights shall be treated as stock owned by such individual; 2 (ii) Stock owned directly or indirectly by or for the individual's brothers, sisters, spouse, ancestors and lineal descendants shall be considered as owned by such individual; (iii)Stock owned directly or indirectly by or for a corporation, partnership, estate or trust, shall be considered as owned proportionately by or for its shareholders, partners or beneficiaries. 6. PRICE AND TERM OF OPTION 1) The exercise price under each Option will be determined by the Committee but shall not be less than 100% of the fair market value of the shares of stock covered by the Option at the time of the grant of the Option, as determined by the Committee. b. The term of each Option shall be as determined by the Committee, but not in excess of ten (10) years from the date it is granted. An Option granted for an initial term of less than ten (10) years may be extended by amendment for a period of up to ten (10) years from the date of the initial grant, provided that no such amendment of an incentive stock Option shall be made without the prior consent of the optionee. 7. LIMITATIONS ON EXERCISE OF OPTION RIGHTS a. Except as provided in Section 13 hereof, the optionee must remain in the continuous employ of the Company and/or its Subsidiaries for at least one year from the date the Option is granted before any part thereof or right thereunder may be exercised. Absence on leave or on account of illness or disability under rules established by the Committee shall not, however, be deemed an interruption of employment for purposes of the Plan. Thereafter, the Option may be exercisable in whole or in installments in accordance with its terms, as determined by the Committee. b. The minimum number of shares with respect to which option rights may be exercised in part at any time shall be determined by the Committee at the time the Option is granted. c. With respect to incentive stock Options granted to an employee under the Plan, the aggregate fair market value (determined at the time the Options are granted) of the stock with respect to which incentive stock Options are exercisable for the first time by such employee during any calendar year (including all such plans of the Company and its Subsidiaries) shall not exceed $100,000. 8. METHOD OF EXERCISE OF OPTION Each exercise of an Option granted hereunder, whether in whole or in part, shall be by written notice to the Chief Executive Officer of the Company designating the number of shares as to which the Option is exercised, and, where stock is to be purchased pursuant to such exercise, 3 shall be accompanied by payment in full for the number of shares so designated. Stock to be purchased under the Plan may be paid for in cash, in shares of the Company's common stock at their fair market value on the date of exercise, or partly in cash and partly in such shares. Fractional shares may not be purchased under an Option, and fractional shares may not be delivered to the Company for payment of the option price. No shares shall be issued until full payment thereof has been made. Each optionee who has exercised an Option shall, upon notification of the amount due and prior to or concurrently with delivery of the certificates representing the shares, pay to the Company amounts necessary to satisfy applicable federal, state and local withholding tax requirements. 9. FORM OF OPTION AGREEMENT Each Option agreement shall contain the essential terms of the Option and such other provisions as the Committee shall from time to time determine, but such Option agreements need not be identical. If the Option is an incentive stock option, the instrument evidencing such Option shall contain such terms and provisions relating to exercise and otherwise as may be necessary to render it an incentive stock option under the applicable provisions of the Internal Revenue Code of 1986, as amended (presently Section 422 thereof), and the Regulations thereunder, or corresponding provisions of subsequent laws and regulations. 10. FINANCING OF OPTIONS The Company and its Subsidiaries may not extend credit, arrange credit, guarantee obligations, or otherwise aid employees in financing their purchases of stock pursuant to Options granted under this Plan. 11. RESTRICTED STOCK RIGHTS a. The Committee may grant any eligible employee restricted stock rights which entitle such employee to receive a stated number of shares of the Company's stock if the employee for a stated number of years remains continuously employed by the Company or a Subsidiary or, following the employee's normal retirement, serves on the Board of Directors of the Company or in another capacity approved by the Committee (the "Restricted Period"). At the time the restricted stock right is issued, the Committee shall designate the length of the Restricted Period and the service that will qualify under the Restricted Period; provided, however, in no event may the Restricted Period extend beyond the fifth anniversary date of the employee's termination of employment. The Committee shall also have full and final authority to select the employees who receive restricted stock rights, to specify the number of shares of stock subject to each such right, and to establish the other terms, conditions and definitions that govern such rights. b. The Company shall pay to each holder of an unexpired restricted stock right during the Restricted Period, as additional compensation, an amount of cash equal to the dividends that would have been payable to the holder of such right during the Restricted Period if the 4 holder had owned the stock subject to the right. Such amount shall be paid as near in time as reasonably practical to the applicable dividend payment dates. c. At the expiration of each Restricted Period, the Company shall issue to the holder of the restricted stock right the shares of stock relating to such Restricted Period or at the request of the holder make a payment of an amount equal to the fair market value of such shares (or any portion thereof), provided all conditions have been met. d. Upon grant of a restricted stock right, the Company shall deliver to the recipient a document which sets forth and describes in detail the terms and conditions of the right. 12. PERFORMANCE STOCK RIGHTS 1) The Committee may grant to an eligible employee performance stock rights which entitle such employee to receive a stated number of shares of the Company's common stock if the employee attains certain specified performance goals within a stated performance period. The Committee shall have full and final authority to select the employees who receive performance stock rights, to specify the number of shares of stock subject to each such right, to establish the performance requirements, to establish the performance period and to establish the terms, conditions and definitions that govern such rights. 2) Unlike restricted stock rights, the Company shall not pay to each holder of an unexpired performance stock right during the performance period an amount of cash equal to the dividends that would have been payable to the holder during the performance period if the holder had owned the stock subject to the right. 3) At such time that the performance requirements of a performance stock right are satisfied, the Company shall issue to the holder of the performance stock right the shares of stock subject to the right. If the performance requirements are not met by the expiration of the performance period, the performance stock right shall expire and the holder thereof shall have no further rights thereunder. 4) Upon granting a performance stock right, the Company shall issue to the recipient a document which sets forth and describes in detail the terms and conditions of the right. 13. TERMINATION OF EMPLOYMENT (a) In the event the employment of an optionee by the Company or a Subsidiary shall terminate for any reason other than the optionee's normal retirement, the optionee having become age 65, physical disability as hereinafter provided or death, the Option may be exercised by the optionee at any time prior to the expiration date of the Option or the expiration of three months after the date of such termination of employment, whichever is the shorter period, but only if and to the extent the optionee was entitled to exercise the Option at the date of such termination. 5 (b) If an optionee retires under the normal retirement policies of the Company or a Subsidiary having become age 65, the Option may be exercised by the optionee at any time prior to the expiration date of the Option but in any event no later than the fifth anniversary date of the optionee's termination of employment. (c) If an optionee dies while in the employ of the Company or a Subsidiary, or dies following termination of employment but during the period that the Option could have been exercised by the optionee, the optionee's Option rights may be exercised at any time by the person or persons to whom such rights under the Option shall pass by will or by the laws of descent and distribution, and, with respect to such decedents, such Options may be exercised without regard to the limitation provided in Section 7(a) (relating to one year of employment) or installment limitations, if any, that would otherwise apply. But with respect to a decedent whose employment was terminated for any reason other than normal retirement, death or disability within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, such Option rights may be exercised only to the extent exercisable on the date of termination of employment. (d) In the event of the termination of the optionee's employment because of the disability within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, the Option may be exercised by the optionee at any time prior to the expiration date of the Option or the expiration of one year after the date of such termination, whichever is the shorter period, but only if and to the extent the optionee was entitled to exercise the Option at the date of such termination. (e) In the event a holder of restricted stock rights issued under the provisions of Section 11 hereof fails to satisfy the employment or service requirements for the issuance of stock under such rights for any reason other than death or disability as herein defined, such holder shall lose all rights to receive stock under the provisions of the restricted stock rights. In the event a holder of a restricted stock right is unable to satisfy the requirements of a restricted stock right because of death or disability within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, then, with respect to each group of restricted stock rights granted at a given time, the holder or the personal representative of the holder's estate, as the case may be, either shall be issued a number of shares of the Company's common stock which, when added to all shares theretofore issued to such holder as a result of restricted stock rights issued at such given time, produces a sum (i) which bears the same ratio to the total number of all shares covered by restricted stock rights granted at such time, as (ii) the period that elapsed from the grant of the restricted stock rights to the time the holder ceased to satisfy the employment or service requirements for the issuance of stock under such rights bears to the longest Restricted Period contained in such restricted stock rights or in lieu thereof at the request of such holder or personal representative an amount equal to the fair market value of such shares. f) In the event the employment of an employee who holds a performance stock right granted under the provisions of Section 12 hereof terminates for any reason prior to the expiration of the performance period specified in the performance stock right, then, except to the extent 6 the Committee may decide otherwise in select situations, such employee shall lose all rights to thereafter receive any stock under such performance stock right. (g) To the extent that the Option of any deceased optionee or of any optionee whose employment is terminated shall not have been exercised within the time periods provided above, all further rights to purchase shares pursuant to such Option or to exercise stock appreciation rights shall cease and terminate at the expiration of such period. (h) If a corporation ceases to be a Subsidiary of the Company, employees of such corporation shall be deemed to have terminated their employment with the Company or a Subsidiary of the Company for purposes of this Plan. 14. OPTIONS AND RIGHTS NOT TRANSFERABLE Any Option or Right granted hereunder shall not be transferable except by will or by the laws of descent and distribution of the state or country of the employee's domicile at the date of death, and, during the lifetime of the person to whom the Option or Right is granted, only the optionee or the guardian of the optionee may exercise it. 15. RIGHTS AS STOCKHOLDER Neither a person to whom an Option or Right is granted, nor such person's legal representative, heir, legatee or distributee, shall be deemed to be the holder of, or to have any rights of a holder with respect to, any shares subject to such Option or Right, until after the stock is issued. 16. AMENDMENTS TO THE PLAN The Company's Board of Directors may from time to time make such amendments to the Plan as it may deem proper and in the best interests of the Company or a Subsidiary, provided that - (a) No amendment shall be made which (i) would impair, without the consent of the applicable employee, any Option or Right theretofore granted under the Plan or deprive any employee of any shares of stock of the Company which he may have acquired through or as a result of the Plan, or (ii) would withdraw the administration of the Plan from a Committee of Directors of the Company meeting the qualifications set forth in Section 3(a) hereof. (b) Any such amendment which would -- (i) Materially increase the benefits accruing to participants under the Plan, (ii) Increase the number of securities which may be issued under the Plan, or (iii)Materially modify the requirements as to eligibility for participation in the Plan 7 shall be submitted to the shareholders of the Company for their approval at the next annual or special meeting after adoption by the Board of Directors, and if such shareholder approval is not obtained, the amendment, together with any actions taken under the Plan on the necessary authority of such amendment, shall be null and void. 17. TERMINATION OF THE PLAN Options and Rights may be granted under the Plan at any time prior to the seventh (7th) anniversary date of the effective date of the Plan, on which anniversary date the Plan will expire except as to those Options and Rights then outstanding thereunder, which Options and Rights shall remain in effect until they have been exercised or have expired in accordance with their terms. The Plan may be abandoned or terminated at any time by the Company's Board of Directors, except with respect to Options and Rights then outstanding under the Plan. 18. CHANGES IN CAPITAL STRUCTURE a. Except as provided in subparagraph (b), in the event that the outstanding shares of Common Stock of the Company are hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation, by reason of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares, dividend payable in shares, rights offering, change in the corporate structure of the Company, or otherwise appropriate adjustment shall be made in the number and kind of shares for which Options and Rights may be granted under the Plan. In addition, an appropriate adjustment shall be made in the number and kind of shares as to which outstanding Options and Rights, or portions thereof then unexercised, shall be exercisable, to the end that the proportionate interest of the existing holder of an Option or Right shall be maintained as before the occurrence of such event. Such adjustment in outstanding Options and Rights shall be made without change in the total price applicable to the unexercised portion of the Option and Right and with a corresponding adjustment in the exercise price per share. Any such adjustment made by the Board of Directors shall be conclusive. b. In the event of dissolution or liquidation of the Company or a reorganization, merger or consolidation with one or more corporations, in lieu of providing for Options and Rights as provided for above in this Section 18, the Board of Directors of the Company may, in its sole discretion, provide a 30-day period immediately prior to such event during which optionees shall have the right to exercise Options in whole or in part without any limitations on exercisability. 19. APPROVALS The obligation of the Company under this Plan shall be subject to the approval of such state or federal authorities or agencies, if any, as may have jurisdiction in the matter. Shares shall not be issued with respect to an Option or Right unless the exercise and the issuance and delivery of the shares shall comply with all relevant provisions of law, including, without limitation, any 8 applicable state securities laws, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Internal Revenue Code of 1986, as amended, the respective rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. Inability of the Company to obtain from any regulatory body having jurisdiction authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability for the nonissuance or sale of such shares. The Board may require any action or agreement by an employee holding an Option or Right as may from time to time be necessary to comply with the federal and state securities laws. The Company shall not be obliged to register Options or Rights, or stock granted or purchased under the Plan. 20. EMPLOYMENT RIGHTS Nothing in this Plan or any Option or Right granted pursuant thereto shall confer upon any employee any right to be continued in the employment of the Company or any Subsidiary of the Company, or to interfere in any way with the right of the Company, in its sole discretion, to terminate such employee's employment at any time. 21. EFFECTIVE DATE OF THE PLAN The effective date of this Plan is April 27, 1995. 9 EX-10.4 8 FISHER COMPANIES INC. SUPPLEMENTAL PENSION PLAN EXHIBIT 10.4 SUPPLEMENTAL PENSION PLAN THIS Plan is established, and is to be effective as of the 29th day of February, 1996, by FISHER COMPANIES INC., a Washington corporation (the "Company"), for the benefit of a select group of management employees (the "Participants"). A. The Participants in this Plan shall be as determined from time to time by the Board of Directors of the Company. B. The ability and experience of the Participants are of such value to the Company that the Company wishes to more adequately compensate the Participants for their past and future services by providing special retirement and survivorship income benefits to them. C. The funds accumulated in Company-sponsored qualified retirement plans may be inadequate in amount to provide the Participants with a retirement benefit commensurate with the anticipated value of their past and future services to the Company. D. This Plan is intended to supersede any and all Supplementary Pension Agreements and all amendments thereto previously entered into between the Company and the Participants who were employed by the Company as of the effective date hereof. NOW, THEREFORE, the Company hereby agrees as follows: 1. Retirement Benefits. (a) Entitlement/Payment. If a Participant is in the employ of the Company when the Participant attains sixty-five (65) years of age, then the Company shall thereafter pay to the Participant monthly retirement income as determined pursuant to paragraph (b) immediately below, commencing with a payment on the first day of the month coincident with or next following the Participant's attainment of sixty-five (65) years of age (hereinafter referred to as the "Retirement Date") and continuing with a like payment on the first day of each month thereafter throughout the Participant's lifetime. if, while receiving said monthly retirement income, the Participant dies prior to the expiration of a period of one hundred twenty (120) months from and after his Retirement Date, then the Company shall thereafter pay said amount to the beneficiary designated in paragraph 6 below, continuing until the expiration of said one hundred twenty (120) month period; provided, however, that if (i) the primary beneficiary designated in paragraph 6 below is the Participant's surviving spouse; (ii) the Participant was married to said spouse on the Participant's Retirement Date, and (iii) said spouse is living at the end of the aforesaid one hundred twenty (120) month period, said payments shall thereafter continue until the death of said surviving spouse. 1 (b) Amount. A participant's monthly retirement income under this paragraph (b) shall be equal to seventy percent (70%) of the participant's average compensation less the following amounts: i) One-half of the Participant's monthly Primary Social Security amount determined as if the Participant commenced receiving Social Security benefits as of the Participant's Retirement Date; ii) The monthly amount payable to the Participant as the normal form of benefit pursuant to any qualified pension plan maintained by the Company. Such amount shall be determined as of the Participant's Retirement Date, as if the Participant remained in the employ of the Company until that date. the amount of the reduction under this subparagraph (b)(ii) shall not include any benefit attributable to Participant contributions and earnings thereon; and iii) The monthly amount payable to the Participant in the form of a single life annuity pursuant to any qualified profit sharing (including 401(k)) plan maintained by the Company. Such amount shall be determined as of the Participant's Retirement Date, as if the participant remained in the employ of the Company until that date. Further, the monthly amount payable as a single life annuity shall be determined by converting the Participant's account balance to a single life annuity as of the Participant's Retirement Date using the interest rate and mortality assumptions set forth in paragraph 7(e) hereof. The amount of the reduction under this subparagraph (b)(iii) shall not consider any portion of the Participant's account balance attributable to Participant contributions and earnings thereon. In determining the amount of the reduction attributable to employer contributions and earnings thereon, the following assumptions shall be used: a) Employer contributions shall equal actual employer contributions; b) Historical earnings shall equal actual earnings on employer contributions; and c) Hypothetical future earnings shall be projected at the average of the dividend (interest) rates of the Plan's money market option determined as of December 31 of each of the prior three (3) years. (c) Average Compensation. A Participant's Average Compensation shall be the average of the Participant's Plan Compensation for the Averaging Period in the Participant's Compensation History which results in the highest Average Compensation, divided by 12. A Participant's Compensation History is the Participant's entire period of employment with the Employer. The Averaging Period is 3 consecutive Compensation periods (or the entire period of employment, if shorter). A Compensation Period is the 12-month period ending on the last day of the Plan Year. A Participant's Compensation History does not include the 12-month Compensation period in which the Participant terminates employment. Average Compensation shall not include 2 long-term and short-term incentive compensation, bonuses, commissions and taxable and non-taxable fringe benefits. i) Total Compensation. All wages for federal income tax withholding purposes, as defined under Code (S)3401(a) (for purposes of income tax withholding at the source), disregarding any rules limiting the remuneration included as wages based on the nature or location of the employment or the services performed. Total Compensation also includes all other payments to an employee in the course of the Employer's trade or business, for which the Employer must furnish the Employee a written statement under Code (S)(S)6041, 6051 and 6052. As long as the instructions to the "wages, tips, other compensation" box of Form W-2 (or a corresponding box on a later released Form W-2), are consistent with the instructions for the 1991 Form W-2 (Box 10), the Employer may treat the amount reported in the "wages, tips, other compensation" as satisfying this definition. Total Compensation does not include elective contributions. ii) Plan Compensation. Plan Compensation means Total Compensation described in subparagraph (c)(i)), but excluding reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, bonuses, long-term and short-term incentive compensation, deferred compensation and welfare benefits, and including elective contributions. Plan Compensation applies to determine a Participant's benefit formula and Accrued Benefit under Article V. iii) Elective Contributions. Elective contributions are amounts excludable from the Employee's gross income under Code (S)(S)125 or 402(e)(3), and contributed by the Employer, at the Employee's election, to a Code (S)401(k) arrangement or cafeteria plan. iv) Plan Year. Plan year means the fiscal year of the Plan, a twelve (12) consecutive month period ending every june 30. A Participant's Plan Compensation for each of the three Plan Years ending prior to July 1, 1996, shall be equal to the Participant's Plan Compensation for the Plan Year ended June 30, 1996. (d) Late Retirement. In the event that Participant continues in the employ of the Company beyond the Participant's Retirement Date such continued employment shall not be taken into account under this Plan inasmuch as the Participant's monthly retirement income commences as of his Retirement Date. 2. Termination Benefit. If a Participant's employment with the Company is terminated, other than voluntarily, prior to attaining age sixty-five (65), for any reason other than death or total and permanent disability, such Participant's accrued benefit shall be determined as follows: 3 Total actual years of service with the Company after first becoming a Participant in the Plan and prior to attaining age sixty-five (65) Total possible years of service with the Company Projected Monthly after first becoming a Retirement Benefit Participant's Participant in the Plan and as contemplated by Accrued Benefit prior to attaining age x Paragraph 1 of = (payable monthly sixty-five (65) this Plan commencing at age sixty-five (65)
For purposes of determining a Participant's accrued benefit, the term "years of service" shall include all calendar years in which the Participant completes at least 1,000 hours of service and the term "hours of service" shall have the same meaning as it does under the qualified pension plan of the Company. Furthermore, "total possible years of service with the Company after first becoming a Participant in the Plan and prior to attaining age sixty-five (65)" shall be determined by computing the maximum number of years of service that the Participant could possibly complete with the Company between the date the Participant first becomes a Participant in the Plan and the date on which the Participant attains age sixty-five (65). The Participant's accrued benefit under this paragraph 2 shall never exceed the Participant's retirement benefit as contemplated by paragraph 1 of this Plan. If a Participant's employment with the Company is terminated, other than voluntarily, prior to attaining age sixty-five (65), for any reason other than death or total and permanent disability, the Participant's accrued benefit shall normally be paid in the form of a monthly annuity commencing at age sixty-five (65), but may, in the sole discretion of the Company, be paid to the Participant as a reduced annuity commencing prior to age sixty-five (65) or as a lump sum. Any annuity shall be payable under the same terms and conditions as contemplated by paragraph 1 of this Plan; provided, however, that payments shall only continue until the death of the Participant's surviving spouse if: (i) the beneficiary designated in paragraph 6 below is the Participant's surviving spouse and (ii) the Participant was married to said spouse on the Participant's termination date. Any present value calculations required in connection with the payment of a lump sum shall be made using the 1983 Group Annuity Mortality Table (GAM 83) adjusted as provided in Rev. Rul. 95-6, 1995-4 I.R.B. 22, and the annual rate of interest on 30-year Treasury securities, as prescribed by the Secretary, for the month of May preceding the Plan Year in which the distribution occurs, or 6% interest per annum, whichever is greater. 4 If the Participant dies prior to receiving the entirety of the benefits contemplated by this paragraph 2, such benefits shall thereafter be paid to the beneficiary designated in paragraph 6 below. 3. Death Benefit. (a) If a Participant dies prior to his Retirement Date while in the employ of the Company, then the Company shall thereafter pay to the beneficiary designated in paragraph 6 below a monthly death benefit amount as determined pursuant to paragraph (b) below commencing with a payment on the first day of the month next following the Participant's death and continuing with a like payment on the first day of each month thereafter for a total of one hundred twenty (120) months; provided, however, that if the primary beneficiary designated in paragraph 6 below is the Participant's surviving spouse, and said spouse is living at the end of the aforesaid one hundred twenty (120) month period, said payments shall continue until the death of said surviving spouse. (b) A Participant's monthly death benefit amount under this paragraph (b) shall be equal to the greater of: (i) The Participant's Accrued Benefit under paragraph 2 of this Plan determined as if the Participant's employment had been involuntarily terminated on the day preceding the Participant's death, or (ii) Thirty-five percent (35%) of the Participant's Average Compensation less the following amounts: a) One-Half of the Participant's monthly Primary Social Security amount determined as if the Participant commenced receiving Social Security benefits as of the Participant's Retirement Date annuitized over the payment period set forth in paragraph 3(a); b) The greater of the present value of the monthly amount payable to the Participant as the normal form of benefit pursuant to any qualified pension plan maintained by the Company or the present value of the death benefit under any such plan, annuitized over the payment period set forth in paragraph 3(a). Such amount shall be determined as of the Participant's date of death. The amount of the reduction under this subparagraph (b)(ii)b) shall not include any benefit attributable to Participant contributions and earnings thereon; c) The Participant's account balance in any qualified profit sharing (including 401(k)) plan maintained by the Company annuitized over the payment period set forth in paragraph 3(a). Such amount shall be determined as of the Participant's date of death. The amount of the reduction under this subparagraph (b)(iii)c) shall not consider any portion of the Participant's account balance attributable to Participant contributions and earnings thereon; and 5 d) The proceeds from any life insurance policy on the life of the Participant under any Company sponsored Group Life Insurance Plan, annuitized over the payment period set forth in paragraph 3(a). 4. Disability Benefit. (a) If the Participant becomes totally and permanently disabled prior to his retirement date and while in the employ of the Company and such disability continues for a period of six (6) months, then the Company shall thereafter pay the Participant a monthly disability payment in the amount as determined pursuant to paragraph (b) below commencing with a payment on the first day of the month next following the expiration of the six- (6-) month period (hereinafter referred to as the "Disability Date") and continuing with a like payment on the first day of each month thereafter until the Participant attains sixty-five (65) years of age or ceases to be disabled, whichever occurs first. If the Participant continues to be disabled until he is sixty-five (65) years of age, then the monthly payments to the Participant thereafter shall be equal to the monthly amount of retirement income specified in paragraph 1, and shall be paid pursuant to the terms and conditions of paragraph 1. If, while receiving disability payments under this paragraph the Participant dies prior to attaining the age of sixty-five (65) years, such disability payments shall cease, and the Company shall thereafter pay to the beneficiary designated in paragraph 6 the amount of the death benefit specified in paragraph 3, in the manner and for the period of time provided in said paragraph. (b) A Participant's monthly disability benefit amount under this paragraph (b) shall be equal to sixty percent (60%) of the Participant's Average Compensation less the following amounts: (i) The monthly amount payable to the Participant pursuant to the Company sponsored Group Long-Term disability Plan determined prior to any reduction for the Participant's monthly disability Social Security amount, if any; and (ii) One-half of the Participant's monthly disability Social Security amount, determined as of the Participant's Disability Date. 5. Voluntary Termination. If a the Participant voluntarily terminates employment with the Company prior to attaining age sixty-five (65) for any reason other than total and permanent disability, the Participant shall be entitled to no benefit under this Plan. 6. Beneficiary. 6 For purposes of paragraphs 1, 2, 3, and 4, the Participant's beneficiary shall be as follows: (a) The spouse of the Participant shall be the primary beneficiary. (b) If said spouse fails to survive the Participant, then any remaining payments under this Plan shall be made in accordance with the Participant's beneficiary designation form then on file with the Company, or if none to the Participant's estate. (c) If said spouse survives the Participant and thereafter dies before receiving all payments hereunder, such remaining payments shall be made to such persons in such amounts as said spouse designates in a validly executed beneficiary designation form on file with the Company. If said spouse fails to exercise this power of appointment, such remaining payments shall be made to such persons in such amounts as provided in paragraph 6(b) immediately above. 7. Conditions and Other Provisions. (a) The benefits under paragraphs 1, 2, 3, and 4 are conditioned upon the Participant having been continuously in the employ of the Company from the date of becoming a Participant in this Plan until the happening of the event that would qualify the Participant (or his beneficiary) for such benefits; provided, however, that the employment of the Participant shall not be deemed to have ceased because of or during (i) any period of involuntary military service of the Participant or (ii) a leave of absence granted the Participant by the Company which does not exceed a period of one (1) year. (b) Upon the death of the Participant, if monthly benefits become payable to a beneficiary by virtue of the provisions of paragraphs 1, 2, 3, or 4, the Company may then, or at any time thereafter, at its sole option and discretion and without the consent of any beneficiary, elect to pay the current beneficiary, in one lump sum, the present value of the monthly payments remaining unpaid at the time of such election. Any present value calculations required in connection with the payment of such a lump sum shall be made using the 1983 Group Annuity Mortality Table (GAM 83) adjusted as provided in REV. RUL. 95-6, 1995-4 I.R.B. 22, and the annual rate of interest on 30-year Treasury securities, as prescribed by the Secretary, for the month of May preceding the plan year in which the distribution occurs, or 6% interest per annum, whichever is greater. (c) Except as specifically provided herein, benefits under this Plan shall not be payable to the Participant or any beneficiary under more than one of the first four paragraphs of this Plan. (d) For the purpose of determining any and all benefits payable under this Plan, it shall be assumed that the Participant's spouse is no more than fifteen (15) years younger than the Participant. In the event that a Participant's spouse is more than fifteen years younger than the Participant, the monthly amount payable to the spouse hereunder shall be a reduced amount, actuarially determined. Such reduced amount shall be calculated by first determining the present 7 value of the benefits payable to the surviving spouse over his or her life expectancy as if he or she were exactly fifteen (15) years younger than the Participant, and then determining the monthly benefit that could be paid over the surviving spouse's actual life expectancy, using the present value amount so determined. (e) Except as otherwise specifically provided herein, for purposes of determining present values and/or alternative forms of benefits hereunder, the 1983 Group Annuity Mortality Table (GAM 83) adjusted as provided in REV. RUL. 95-6, 1995-4 I.R.B. 22, and 6% interest per annum shall be used. 8. Termination of Participation/Benefits. Participation in this Plan may be terminated by the Company, and all accrued benefits hereunder may at any time be forfeited, either before or after benefits become payable hereunder, notwithstanding any provision in this Plan to the contrary, if the Board of Directors of the Company, acting in its sole and absolute discretion, shall find that at any time before or after the Participant's termination, retirement or disability and before the Participant's death: (a) The Participant induces or attempts to induce a client or customer of the Company to curtail or cancel any business dealing with the Company, (b) The Participant induces or attempts to induce any other employee of the Company to terminate employment with the Company, (c) The Participant fails to cooperate in the procurement or maintenance of any policies of insurance as contemplated by paragraph 9 below, or (d) The Participant commits a violation of the Statement on Ethics of Fisher Companies Inc., and such violation results in the termination of the Participant's employment with the Company. 9. Insurance. (a) It is further a condition of participation in this Plan that, if the Company at its sole option shall at any time wish to own, sponsor and/or maintain any policy of life or disability insurance on the Participant the proceeds of which are payable to either the Participant or the Company: (i) The Participant shall fully cooperate with the Company in its application for such insurance, including, without limiting the generality of the foregoing, submitting to physical examinations and answering truthfully and completely, without mental reservation or concealment, any questions or requests for information in connection therewith; and 8 (ii) The Participant shall not, by act or omission, give cause for any insurance company to restrict or cancel any policy of insurance on the Participant owned by the Company or give cause for such insurance company's refusal to pay the full proceeds to the Company, including refusal to pay the full proceeds because of the suicide of the Participant. (b) an individual shall not become a participant in this plan unless and until: (i) The Company has procured a policy of life insurance and a policy of disability insurance on that individual adequate in amount to fund the life and disability benefits contemplated by this Plan assuming no further increases in the individual's Average Compensation; (ii) The Company has specifically waived such requirement in writing; or (iii) The Company has, by separate agreement entered into between the Company and the individual, limited the benefits payable to that individual under this Plan. it is contemplated that such an agreement may be entered into if an individual is uninsurable, uninsurable against certain risks or uninsurable at standard rates. Any such agreement shall be deemed to be part of this Plan with respect to the Participant to whom it applies. (c) All determinations made by the insurance company with regard to the question of death, disability, waiver of premium and/or pre-existing conditions shall be accepted as conclusive by the Company, the Participant and any beneficiary. 10. ERISA. Participation in this Plan may be terminated by the Company if the Department of Labor issues regulations under ERISA which indicate that the Participant is no longer eligible for continued participation in the Plan. This determination shall be made by the Board of Directors of the Company acting in its sole and absolute discretion. In the event of a termination of this Agreement pursuant to this paragraph 10, the Participant shall be entitled to receive a termination benefit pursuant to the terms and conditions of paragraph 2. 11. No Current Benefit. The benefits to be paid pursuant to the terms of this Plan are granted by the Company as additional benefits to the Participants and are not part of any salary reduction plan or an arrangement deferring a bonus or a salary increase. The Participants have no option to receive any current payment or bonus in lieu of these additional benefits. 12. No Trust Agreement. (a) Nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind, or a fiduciary relationship 9 between the Company, or any employee or agent thereof, and the Participants or any other person. (b) The rights of the Participants or beneficiaries under this Plan are purely contractual and shall not be funded or secured in any way. Payments to the Participants or their beneficiaries hereunder shall be made only from the general assets of the Company, and no person, other than the company, shall have, by virtue of this Plan, any interest in such assets. such assets are available to satisfy the claims of the Company's general creditors and, to the extent any person acquires a right to receive payments from the Company under the terms of this Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. (c) The Company, at its discretion, may acquire an annuity or insurance policy insuring the life of the Participants from which it can satisfy its obligation to make benefit payments pursuant to this Plan. However, it is expressly understood that such contract (or contracts), if acquired, does not create any account or fund separate from the ordinary assets of the Company, and neither the Participants nor their beneficiaries may look to any such contract as the fund from which benefits under this plan are to be paid. Any such contract so acquired for the convenience of the Company shall be the sole and exclusive property of the Company, with the Company named as applicant, owner, and beneficiary of any life insurance contract payments; provided, further, that any such contract shall not be held in trust or collateral security for the benefit of the Participants or beneficiaries, nor is any representation made herein that such contract, if acquired, will be used to provide benefits under this plan. Neither the Participants nor their beneficiaries shall have any beneficial ownership interest in, or preferred or other claim against, the life insurance contract, if acquired by the Company. 13. No Assignment. No right of a Participant or any other person to the payment of deferred compensation or other benefits under this Plan shall be assigned, transferred, pledged, hypothecated, or encumbered. No right of a Participant under this Plan shall be subject to garnishment, attachment, or other legal process, whether by the Participant or any beneficiary named herein, any heir or creditor of the Participant, or any other person. Any attempted assignment of any right hereunder by a Participant or a beneficiary shall, at the Company's option, cause all rights of the Participant hereunder to terminate. 14. Incapacity of Beneficiary. If the Company shall determine that a Participant is unable to care for his or her affairs because of illness, accident, or other incapacity, any payment due may be paid to the Participant's spouse or to any other person considered by the Company to have incurred expense for the Participant or to be otherwise responsible for the Participant or his or her affairs, in such manner and proportions as the Company may determine (unless a prior claim therefor shall have been made by a duly appointed guardian, committee, or other legal representative). Any such payment 10 made in good faith by the Company shall be a complete discharge of the liabilities of the Company under this Plan. 15. Company's Powers and Liabilities. The Company shall have the full power and authority to interpret, construe, and administer this Plan, and the Company's interpretation and construction hereof and action hereunder shall be binding and conclusive on all persons for all purposes. Neither the Company, its officers, directors, employees, or agents shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan unless attributable to his own willful misconduct or lack of good faith. Any notice, consent, or demand required or permitted to be given under the terms of this Plan shall be in writing and shall be signed by the party giving or making the same. The date of such notice, consent, or demand shall be the date of receipt by the addressee. 16. Binding Effect. This Plan shall be binding upon and inure to the benefit of the Company, its successors and assigns, and the Participant, his heirs, executors, administrators and legal representatives. 17. Continued Employment. Nothing contained herein shall be construed as conferring upon a Participant the right to continue in the employ of the Company as an executive or in any other capacity. The Participant or the Company may terminate the Participant's employment at will, with or without cause. Upon termination of the Participant's employment with the Company, all rights of the Participant hereunder shall terminate, except as otherwise provided herein. 18. Governing Law. This Plan shall be construed and governed in accordance with the laws of the State of Washington. 19. Qualified Plan. Any deferred compensation payable under this Plan shall not be deemed salary or other compensation to the Participants for purposes of computing benefits to which they may be entitled under any pension plan or other arrangement of the Company for the benefit of its employees. 20. Amendment; Entire Agreement. No modification of this Plan shall be effective unless communicated in writing to the Participant. With respect to the subject matter hereof, this Plan constitutes the entire agreement and understanding of the Company and the Participant and shall supersede any prior agreement 11 or understanding including any and all Supplemental Pension Plan Agreements and amendments thereto previously entered into between the Company and the Participant. Further, the Company may, from time to time, furnish the Participant with information containing estimates of the projected benefits available under this Plan. This information will be provided simply as a tool to assist the Participant in planning for his or her retirement, and not as a definitive statement of the benefits that will be available to the Participant upon retirement or in the event of death or disability. This is because the estimates of projected benefits are affected by a number of variables that are constantly changing which include, but are not limited to salary levels, interest rates, qualified plan benefits, group life and disability benefits and Social Security benefits. In certain circumstances the benefits payable to a Participant under this Plan may be adjusted based upon that Participant's individual circumstances. Adjustments resulting in a reduction of benefits will generally be prospective in application, whereas adjustments resulting in an increase in benefits may be retroactive. 21. Severability. If any provision of this Plan is rendered invalid or unenforceable, the remaining provisions of this Plan shall continue to be fully effective. 22. Participation in Other Participant Benefit Plans. Nothing herein shall, in any manner, modify, impair, or affect the existing or future rights or interests of the Participants (i) to receive any employee benefits to which he would otherwise be entitled; or (ii) as participants in the present or any future incentive or bonus plan, stock option plan, pension plan, or profit sharing plan of the Company, applicable generally to salaried employees. The rights and interests of the Participants to any employee benefits or as a participant or beneficiary in or under any or all such plans shall continue in full force and effect unimpaired, and this Plan shall not act to deny the Participant the right at any time hereafter to become a participant or beneficiary under or pursuant to any and all such plans. 23. Legal and Tax Consequences to Participants. The Company does not represent or guarantee that any particular income or other tax consequences will occur under the Plan. The Participant acknowledges that he has been advised to consult with professional tax and other advisors regarding all benefits, burdens, risks, and consequences arising in connection with this Plan. 24. FICA/Medicare/Federal Income Tax Withholding. Any benefits payable to a Participant and/or a beneficiary hereunder shall be subject to FICA, Medicare, and Federal and State Income Tax withholding to the extent required by law. IN WITNESS WHEREOF, the undersigned has executed this Plan as of the date first above written. 12 FISHER COMPANIES INC. By: /s/ William W. Krippaehne, Jr. ------------------------------ William W. Krippaehne, Jr. Its President & CEO 13 EX-10.5 9 FISHER BROADCASTING INC. SUPPLEMENTAL PENSION PLAN EXHIBIT 10.5 SUPPLEMENTAL PENSION PLAN THIS Plan is established, and is to be effective as of the 7th day of March, 1996, by FISHER BROADCASTING INC., a Washington corporation (the "Company"), for the benefit of a select group of management employees (the "Participants"). A. The Participants in this Plan shall be as determined from time to time by the Board of Directors of the Company. B. The ability and experience of the Participants are of such value to the Company that the company wishes to more adequately compensate the Participants for their past and future services by providing special retirement and survivorship income benefits to them. C. The funds accumulated in Company-sponsored qualified retirement plans may be inadequate in amount to provide the Participants with a retirement benefit commensurate with the anticipated value of their past and future services to the Company. D. This plan is intended to supersede any and all Supplementary Pension Agreements and all amendments thereto previously entered into between the Company and the Participants who were employed by the Company as of the effective date hereof. NOW, THEREFORE, the Company hereby agrees as follows: 1. Retirement Benefits. (a) Entitlement/Payment. If a Participant is in the employ of the Company when the Participant attains sixty-five (65) years of age, then the Company shall thereafter pay to the Participant monthly retirement income as determined pursuant to paragraph (b) immediately below, commencing with a payment on the first day of the month coincident with or next following the Participant's attainment of sixty-five (65) years of age (hereinafter referred to as the "Retirement Date") and continuing with a like payment on the first day of each month thereafter throughout the Participant's lifetime. If, while receiving said monthly retirement income, the Participant dies prior to the expiration of a period of one hundred twenty (120) months from and after his Retirement Date, then the Company shall thereafter pay said amount to the beneficiary designated in paragraph 6 below, continuing until the expiration of said one hundred twenty (120) month period; provided, however, that if (i) the primary beneficiary designated in paragraph 6 below is the Participant's surviving spouse; (ii) the Participant was married to said spouse on the Participant's Retirement Date, and (iii) said spouse is living at the end of the aforesaid one hundred twenty (120) month period, said payments shall thereafter continue until the death of said surviving spouse. 1 (b) Amount. A Participant's monthly retirement income under this paragraph (b) shall be equal to seventy percent (70%) of the Participant's average compensation less the following amounts: i) One-half of the Participant's monthly Primary Social Security amount determined as if the Participant commenced receiving Social Security benefits as of the Participant's Retirement Date; ii) The monthly amount payable to the Participant as the normal form of benefit pursuant to any qualified pension plan maintained by the Company. such amount shall be determined as of the Participant's Retirement Date, as if the Participant remained in the employ of the Company until that date. The amount of the reduction under this subparagraph (b)(ii) shall not include any benefit attributable to Participant contributions and earnings thereon; and iii) The monthly amount payable to the Participant in the form of a single life annuity pursuant to any qualified profit sharing (including 401(k)) plan maintained by the company. Such amount shall be determined as of the Participant's Retirement Date, as if the Participant remained in the employ of the Company until that date. Further, the monthly amount payable as a single life annuity shall be determined by converting the Participant's account balance to a single life annuity as of the Participant's Retirement Date using the interest rate and mortality assumptions set forth in paragraph 7(e) hereof. The amount of the reduction under this subparagraph (b)(iii) shall not consider any portion of the Participant's account balance attributable to Participant contributions and earnings thereon. In determining the amount of the reduction attributable to Employer contributions and earnings thereon, the following assumptions shall be used: a) Employer contributions shall equal actual Employer contributions; b) Historical earnings shall equal actual earnings on Employer contributions; and c) Hypothetical future earnings shall be projected at the average of the dividend (interest) rates of the Plan's money market option determined as of December 31 of each of the prior three (3) years. (c) Average Compensation. A Participant's Average Compensation shall be the average of the Participant's Plan Compensation for the Averaging Period in the Participant's Compensation History which results in the highest Average Compensation, divided by 12. A Participant's Compensation History is the Participant's entire period of employment with the Employer. The Averaging Period is 3 consecutive Compensation periods (or the entire period of employment, if shorter). A Compensation period is the 12-month period ending on the last day of the Plan Year. A Participant's Compensation History does not include the 12-month Compensation period in which the Participant terminates employment. Average Compensation shall not include 2 long-term and short-term incentive compensation, bonuses, commissions and taxable and non-taxable fringe benefits. i) Total Compensation. All wages for federal income tax withholding purposes, as defined under Code (S)3401(a) (for purposes of income tax withholding at the source), disregarding any rules limiting the remuneration included as wages based on the nature or location of the employment or the services performed. Total Compensation also includes all other payments to an Employee in the course of the Employer's trade or business, for which the Employer must furnish the Employee a written statement under Code (S)(S)6041, 6051 and 6052. As long as the instructions to the "wages, tips, other compensation" box of Form W-2 (or a corresponding box on a later released Form W-2), are consistent with the instructions for the 1991 Form W-2 (Box 10), the Employer may treat the amount reported in the "wages, tips, other compensation" as satisfying this definition. Total Compensation does not include elective contributions. ii) Plan Compensation. Plan Compensation means Total Compensation described in subparagraph (c)(i)), but excluding reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, bonuses, long-term and short-term incentive compensation, deferred compensation and welfare benefits, and including elective contributions. Plan Compensation applies to determine a Participant's benefit formula and Accrued Benefit under Article V. iii) Elective Contributions. Elective contributions are amounts excludable from the Employee's gross income under Code (S)(S)125 or 402(e)(3), and contributed by the Employer, at the Employee's election, to a Code (S)401(k) arrangement or cafeteria plan. iv) Plan Year. Plan year means the fiscal year of the Plan, a twelve (12) consecutive month period ending every June 30. A Participant's Plan Compensation for each of the three Plan Years ending prior to July 1, 1996, shall be equal to the Participant's Plan Compensation for the Plan Year ended June 30, 1996. (d) Late Retirement. In the event that Participant continues in the employ of the company beyond the Participant's Retirement Date such continued employment shall not be taken into account under this Plan inasmuch as the Participant's monthly retirement income commences as of his Retirement Date. 2. Termination Benefit. If a Participant's employment with the Company is terminated, other than voluntarily, prior to attaining age sixty-five (65), for any reason other than death or total and permanent disability, such Participant's accrued benefit shall be determined as follows: 3 Total actual years of service with the Company after first becoming a Participant in the Plan and prior to attaining age sixty-five (65) Total possible years of service with the Company Projected Monthly after first becoming a Retirement Benefit Participant's Participant in the Plan and as contemplated by Accrued Benefit prior to attaining age x Paragraph 1 of = (payable monthly sixty-five (65) this Plan commencing at age sixty-five (65)
For purposes of determining a Participant's accrued benefit, the term "years of service" shall include all calendar years in which the Participant completes at least 1,000 hours of service and the term "hours of service" shall have the same meaning as it does under the qualified pension plan of the Company. Furthermore, "total possible years of service with the Company after first becoming a Participant in the Plan and prior to attaining age sixty-five (65)" shall be determined by computing the maximum number of years of service that the Participant could possibly complete with the Company between the date the Participant first becomes a Participant in the Plan and the date on which the Participant attains age sixty-five (65). The Participant's accrued benefit under this paragraph 2 shall never exceed the Participant's retirement benefit as contemplated by paragraph 1 of this Plan. If a Participant's employment with the Company is terminated, other than voluntarily, prior to attaining age sixty-five (65), for any reason other than death or total and permanent disability, the Participant's accrued benefit shall normally be paid in the form of a monthly annuity commencing at age sixty-five (65), but may, in the sole discretion of the Company, be paid to the Participant as a reduced annuity commencing prior to age sixty-five (65) or as a lump sum. Any annuity shall be payable under the same terms and conditions as contemplated by paragraph 1 of this Plan; provided, however, that payments shall only continue until the death of the Participant's surviving spouse if: (i) the beneficiary designated in paragraph 6 below is the Participant's surviving spouse and (ii) the Participant was married to said spouse on the Participant's termination date. Any present value calculations required in connection with the payment of a lump sum shall be made using the 1983 Group Annuity Mortality Table (GAM 83) adjusted as provided in Rev. Rul. 95-6, 1995-4 I.R.B. 22, and the annual rate of interest on 30-year Treasury securities, as prescribed by the Secretary, for the month of May preceding the Plan Year in which the distribution occurs, or 6% interest per annum, whichever is greater. 4 If the Participant dies prior to receiving the entirety of the benefits contemplated by this paragraph 2, such benefits shall thereafter be paid to the beneficiary designated in paragraph 6 below. 3. Death Benefit. (a) If a Participant dies prior to his Retirement Date while in the employ of the Company, then the Company shall thereafter pay to the beneficiary designated in paragraph 6 below a monthly death benefit amount as determined pursuant to paragraph (b) below commencing with a payment on the first day of the month next following the Participant's death and continuing with a like payment on the first day of each month thereafter for a total of one hundred twenty (120) months; provided, however, that if the primary beneficiary designated in paragraph 6 below is the Participant's surviving spouse, and said spouse is living at the end of the aforesaid one hundred twenty (120) month period, said payments shall continue until the death of said surviving spouse. (b) A Participant's monthly death benefit amount under this paragraph (b) shall be equal to the greater of: (i) The Participant's Accrued Benefit under paragraph 2 of this Plan determined as if the Participant's employment had been involuntarily terminated on the day preceding the Participant's death, or (ii) Thirty-five percent (35%) of the Participant's Average Compensation less the following amounts: a) One-half of the Participant's monthly Primary Social Security amount determined as if the Participant commenced receiving Social Security Benefits as of the Participant's Retirement Date annuitized over the payment period set forth in paragraph 3(a); b) The greater of the present value of the monthly amount payable to the Participant as the normal form of benefit pursuant to any qualified pension plan maintained by the Company or the present value of the death benefit under any such plan, annuitized over the payment period set forth in paragraph 3(a). Such amount shall be determined as of the Participant's date of death. The amount of the reduction under this subparagraph (b)(ii)b) shall not include any benefit attributable to Participant contributions and earnings thereon; c) The Participant's account balance in any qualified profit sharing (including 401(k)) plan maintained by the Company annuitized over the payment period set forth in paragraph 3(a). Such amount shall be determined as of the participant's date of death. The amount of the reduction under this subparagraph (b)(iii)c) shall not consider any portion of the Participant's account balance attributable to participant contributions and earnings thereon; and 5 d) The proceeds from any life insurance policy on the life of the Participant under any Company sponsored Group Life Insurance Plan, annuitized over the payment period set forth in paragraph 3(a). 4. Disability Benefit. (a) If the Participant becomes totally and permanently disabled prior to his retirement date and while in the employ of the Company and such disability continues for a period of six (6) months, then the Company shall thereafter pay the Participant a monthly disability payment in the amount as determined pursuant to paragraph (b) below commencing with a payment on the first day of the month next following the expiration of the six- (6-) month period (hereinafter referred to as the "Disability Date") and continuing with a like payment on the first day of each month thereafter until the Participant attains sixty-five (65) years of age or ceases to be disabled, whichever occurs first. If the Participant continues to be disabled until he is sixty-five (65) years of age, then the monthly payments to the Participant thereafter shall be equal to the monthly amount of retirement income specified in paragraph 1, and shall be paid pursuant to the terms and conditions of paragraph 1. If, while receiving disability payments under this paragraph the Participant dies prior to attaining the age of sixty-five (65) years, such disability payments shall cease, and the Company shall thereafter pay to the beneficiary designated in paragraph 6 the amount of the death benefit specified in paragraph 3, in the manner and for the period of time provided in said paragraph. (b) A Participant's monthly disability benefit amount under this paragraph (b) shall be equal to sixty percent (60%) of the Participant's Average Compensation less the following amounts: (i) The monthly amount payable to the Participant pursuant to the Company sponsored Group Long-term Disability Plan determined prior to any reduction for the Participant's monthly disability Social Security amount, if any; and (ii) One-half of the Participant's monthly disability Social Security amount, determined as of the Participant's Disability Date. 5. Voluntary Termination. If a the Participant voluntarily terminates employment with the Company prior to attaining age sixty-five (65) for any reason other than total and permanent disability, the Participant shall be entitled to no benefit under this Plan. 6 6. Beneficiary. For purposes of paragraphs 1, 2, 3, and 4, the Participant's beneficiary shall be as follows: (a) The spouse of the Participant shall be the primary beneficiary. (b) If said spouse fails to survive the Participant, then any remaining payments under this Plan shall be made in accordance with the Participant's beneficiary designation form then on file with the Company, or if none to the Participant's estate. (c) If said spouse survives the Participant and thereafter dies before receiving all payments hereunder, such remaining payments shall be made to such persons in such amounts as said spouse designates in a validly executed beneficiary designation form on file with the Company. If said spouse fails to exercise this power of appointment, such remaining payments shall be made to such persons in such amounts as provided in paragraph 6(b) immediately above. 7. Conditions and Other Provisions. (a) The benefits under paragraphs 1, 2, 3, and 4 are conditioned upon the Participant having been continuously in the employ of the Company from the date of becoming a Participant in this plan until the happening of the event that would qualify the Participant (or his beneficiary) for such benefits; provided, however, that the employment of the Participant shall not be deemed to have ceased because of or during (i) any period of involuntary military service of the Participant or (ii) a leave of absence granted the Participant by the Company which does not exceed a period of one (1) year. (b) Upon the death of the Participant, if monthly benefits become payable to a beneficiary by virtue of the provisions of paragraphs 1, 2, 3, or 4, the Company may then, or at any time thereafter, at its sole option and discretion and without the consent of any beneficiary, elect to pay the current beneficiary, in one lump sum, the present value of the monthly payments remaining unpaid at the time of such election. Any present value calculations required in connection with the payment of such a lump sum shall be made using the 1983 Group Annuity Mortality Table (GAM 83) adjusted as provided in Rev. Rul. 95-6, 1995-4 I.R.B. 22, and the annual rate of interest on 30-year Treasury securities, as prescribed by the Secretary, for the month of May preceding the Plan Year in which the distribution occurs, or 6% interest per annum, whichever is greater. (c) Except as specifically provided herein, benefits under this Plan shall not be payable to the Participant or any beneficiary under more than one of the first four paragraphs of this Plan. (d) For the purpose of determining any and all benefits payable under this plan, it shall be assumed that the participant's spouse is no more than fifteen (15) years younger than the participant. in the event that a participant's spouse is more than fifteen years younger than the participant, the monthly amount payable to the spouse hereunder shall be a reduced amount, 7 actuarially determined. Such reduced amount shall be calculated by first determining the present value of the benefits payable to the surviving spouse over his or her life expectancy as if he or she were exactly fifteen (15) years younger than the Participant, and then determining the monthly benefit that could be paid over the surviving spouse's actual life expectancy, using the present value amount so determined. (e) Except as otherwise specifically provided herein, for purposes of determining present values and/or alternative forms of benefits hereunder, the 1983 Group Annuity Mortality Table (GAM 83) adjusted as provided in Rev. Rul. 95-6, 1995-4 I.R.B. 22, and 6% interest per annum shall be used. 8. Termination of Participation/Benefits. Participation in this Plan may be terminated by the Company, and all accrued benefits hereunder may at any time be forfeited, either before or after benefits become payable hereunder, notwithstanding any provision in this Plan to the contrary, if the Board of Directors of the Company, acting in its sole and absolute discretion, shall find that at any time before or after the Participant's termination, retirement or disability and before the Participant's death: (a) The participant induces or attempts to induce a client or customer of the Company to curtail or cancel any business dealing with the Company, (b) The Participant induces or attempts to induce any other employee of the Company to terminate employment with the Company, (c) The Participant fails to cooperate in the procurement or maintenance of any policies of insurance as contemplated by paragraph 9 below, or (d) The Participant commits a violation of the Statement on Ethics of Fisher Companies Inc., and such violation results in the termination of the Participant's employment with the Company. 9. Insurance. (a) It is further a condition of participation in this Plan that, if the Company at its sole option shall at any time wish to own, sponsor and/or maintain any policy of life or disability insurance on the Participant the proceeds of which are payable to either the Participant or the Company: (i) The Participant shall fully cooperate with the Company in its application for such insurance, including, without limiting the generality of the foregoing, submitting to physical examinations and answering truthfully and completely, without mental reservation or concealment, any questions or requests for information in connection therewith; and 8 (ii) The Participant shall not, by act or omission, give cause for any insurance company to restrict or cancel any policy of insurance on the Participant owned by the Company or give cause for such insurance company's refusal to pay the full proceeds to the Company, including refusal to pay the full proceeds because of the suicide of the Participant. (b) An individual shall not become a participant in this plan unless and until: (i) the Company has procured a policy of life insurance and a policy of disability insurance on that individual adequate in amount to fund the life and disability benefits contemplated by this Plan assuming no further increases in the individual's Average Compensation; (ii) the Company has specifically waived such requirement in writing; or (iii) the Company has, by separate agreement entered into between the Company and the individual, limited the benefits payable to that individual under this Plan. it is contemplated that such an agreement may be entered into if an individual is uninsurable, uninsurable against certain risks or uninsurable at standard rates. Any such agreement shall be deemed to be part of this Plan with respect to the Participant to whom it applies. (c) All determinations made by the insurance company with regard to the question of death, disability, waiver of premium and/or pre-existing conditions shall be accepted as conclusive by the Company, the Participant and any beneficiary. 10. ERISA. Participation in this Plan may be terminated by the Company if the Department of Labor issues regulations under ERISA which indicate that the Participant is no longer eligible for continued participation in the Plan. This determination shall be made by the Board of Directors of the Company acting in its sole and absolute discretion. In the event of a termination of this Agreement pursuant to this paragraph 10, the Participant shall be entitled to receive a termination benefit pursuant to the terms and conditions of paragraph 2. 11. No Current Benefit. The benefits to be paid pursuant to the terms of this Plan are granted by the Company as additional benefits to the Participants and are not part of any salary reduction plan or an arrangement deferring a bonus or a salary increase. The Participants have no option to receive any current payment or bonus in lieu of these additional benefits. 12. No Trust Agreement. (a) Nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind, or a fiduciary relationship 9 between the Company, or any employee or agent thereof, and the Participants or any other person. (b) The rights of the Participants or beneficiaries under this Plan are purely contractual and shall not be funded or secured in any way. Payments to the Participants or their beneficiaries hereunder shall be made only from the general assets of the Company, and no person, other than the Company, shall have, by virtue of this Plan, any interest in such assets. Such assets are available to satisfy the claims of the Company's general creditors and, to the extent any person acquires a right to receive payments from the Company under the terms of this Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. (c) The Company, at its discretion, may acquire an annuity or insurance policy insuring the life of the Participants from which it can satisfy its obligation to make benefit payments pursuant to this Plan. However, it is expressly understood that such contract (or contracts), if acquired, does not create any account or fund separate from the ordinary assets of the Company, and neither the Participants nor their beneficiaries may look to any such contract as the fund from which benefits under this Plan are to be paid. Any such contract so acquired for the convenience of the Company shall be the sole and exclusive property of the Company, with the Company named as applicant, owner, and beneficiary of any life insurance contract payments; provided, further, that any such contract shall not be held in trust or collateral security for the benefit of the Participants or beneficiaries, nor is any representation made herein that such contract, if acquired, will be used to provide benefits under this Plan. Neither the Participants nor their beneficiaries shall have any beneficial ownership interest in, or preferred or other claim against, the life insurance contract, if acquired by the Company. 13. No Assignment. No right of a Participant or any other person to the payment of deferred compensation or other benefits under this Plan shall be assigned, transferred, pledged, hypothecated, or encumbered. No right of a Participant under this Plan shall be subject to garnishment, attachment, or other legal process, whether by the Participant or any beneficiary named herein, any heir or creditor of the Participant, or any other person. Any attempted assignment of any right hereunder by a Participant or a beneficiary shall, at the Company's option, cause all rights of the Participant hereunder to terminate. 14. Incapacity of Beneficiary. If the Company shall determine that a Participant is unable to care for his or her affairs because of illness, accident, or other incapacity, any payment due may be paid to the Participant's spouse or to any other person considered by the Company to have incurred expense for the Participant or to be otherwise responsible for the Participant or his or her affairs, in such manner and proportions as the Company may determine (unless a prior claim therefor shall have been made by a duly appointed guardian, committee, or other legal representative). Any such payment 10 made in good faith by the Company shall be a complete discharge of the liabilities of the Company under this Plan. 15. Company's Powers and Liabilities. The Company shall have the full power and authority to interpret, construe, and administer this Plan, and the Company's interpretation and construction hereof and action hereunder shall be binding and conclusive on all persons for all purposes. Neither the Company, its officers, directors, employees, or agents shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan unless attributable to his own willful misconduct or lack of good faith. Any notice, consent, or demand required or permitted to be given under the terms of this Plan shall be in writing and shall be signed by the party giving or making the same. The date of such notice, consent, or demand shall be the date of receipt by the addressee. 16. Binding Effect. This Plan shall be binding upon and inure to the benefit of the Company, its successors and assigns, and the Participant, his heirs, executors, administrators and legal representatives. 17. Continued Employment. Nothing contained herein shall be construed as conferring upon a Participant the right to continue in the employ of the Company as an executive or in any other capacity. The Participant or the Company may terminate the Participant's employment at will, with or without cause. Upon termination of the Participant's employment with the Company, all rights of the Participant hereunder shall terminate, except as otherwise provided herein. 18. Governing Law. This Plan shall be construed and governed in accordance with the laws of the State of Washington. 19. Qualified Plan. Any deferred compensation payable under this Plan shall not be deemed salary or other compensation to the Participants for purposes of computing benefits to which they may be entitled under any pension plan or other arrangement of the Company for the benefit of its employees. 20. AMENDMENT; ENTIRE AGREEMENT. No modification of this Plan shall be effective unless communicated in writing to the Participant. With respect to the subject matter hereof, this Plan constitutes the entire agreement and understanding of the Company and the Participant and shall supersede any prior agreement 11 or understanding including any and all Supplemental Pension Plan Agreements and amendments thereto previously entered into between the Company and the Participant. Further, the Company may, from time to time, furnish the Participant with information containing estimates of the projected benefits available under this Plan. This information will be provided simply as a tool to assist the Participant in planning for his or her retirement, and not as a definitive statement of the benefits that will be available to the Participant upon retirement or in the event of death or disability. This is because the estimates of projected benefits are affected by a number of variables that are constantly changing which include, but are not limited to salary levels, interest rates, qualified plan benefits, group life and disability benefits and Social Security benefits. In certain circumstances the benefits payable to a Participant under this Plan may be adjusted based upon that Participant's individual circumstances. Adjustments resulting in a reduction of benefits will generally be prospective in application, whereas adjustments resulting in an increase in benefits may be retroactive. 21. Severability. If any provision of this Plan is rendered invalid or unenforceable, the remaining provisions of this Plan shall continue to be fully effective. 22. Participation in Other Participant Benefit Plans. Nothing herein shall, in any manner, modify, impair, or affect the existing or future rights or interests of the Participants (i) to receive any employee benefits to which he would otherwise be entitled; or (ii) as participants in the present or any future incentive or bonus plan, stock option plan, pension plan, or profit sharing plan of the Company, applicable generally to salaried employees. The rights and interests of the Participants to any employee benefits or as a participant or beneficiary in or under any or all such plans shall continue in full force and effect unimpaired, and this Plan shall not act to deny the Participant the right at any time hereafter to become a participant or beneficiary under or pursuant to any and all such plans. 23. Legal and Tax Consequences to Participants. The Company does not represent or guarantee that any particular income or other tax consequences will occur under the Plan. The Participant acknowledges that he has been advised to consult with professional tax and other advisors regarding all benefits, burdens, risks, and consequences arising in connection with this Plan. 24. FICA/Medicare/Federal Income Tax Withholding. Any benefits payable to a Participant and/or a beneficiary hereunder shall be subject to FICA, Medicare, and Federal and State Income Tax withholding to the extent required by law. 12 IN WITNESS WHEREOF, the undersigned has executed this Plan as of the date first above written. FISHER BROADCASTING INC. By:/s/ Patrick M. Scott -------------------- Patrick M. Scott Its President & CEO 13 EX-10.6 10 FISHER MILLS INC. SUPPLEMENTAL PENSION PLAN EXHIBIT 10.6 SUPPLEMENTAL PENSION PLAN THIS Plan is established, and is to be effective as of the 1st day of March, 1996, by FISHER MILLS INC., a Washington corporation (the "Company"), for the benefit of a select group of management employees (the "Participants"). A. The Participants in this Plan shall be as determined from time to time by the Board of Directors of the Company. B. The ability and experience of the Participants are of such value to the Company that the Company wishes to more adequately compensate the Participants for their past and future services by providing special retirement and survivorship income benefits to them. C. The funds accumulated in Company-sponsored qualified retirement plans may be inadequate in amount to provide the Participants with a retirement benefit commensurate with the anticipated value of their past and future services to the Company. D. This Plan is intended to supersede any and all Supplementary Pension Agreements and all amendments thereto previously entered into between the Company and the Participants who were employed by the Company as of the effective date hereof. NOW, THEREFORE, the Company hereby agrees as follows: 1. RETIREMENT BENEFITS. (a) ENTITLEMENT/PAYMENT. If a Participant is in the employ of the Company when the Participant attains sixty-five (65) years of age, then the Company shall thereafter pay to the Participant monthly retirement income as determined pursuant to paragraph (b) immediately below, commencing with a payment on the first day of the month coincident with or next following the Participant's attainment of sixty-five (65) years of age (hereinafter referred to as the "Retirement Date") and continuing with a like payment on the first day of each month thereafter throughout the Participant's lifetime. If, while receiving said monthly retirement income, the Participant dies prior to the expiration of a period of one hundred twenty (120) months from and after his Retirement Date, then the Company shall thereafter pay said amount to the beneficiary designated in paragraph 6 below, continuing until the expiration of said one hundred twenty (120) month period; provided, however, that if (i) the primary beneficiary designated in paragraph 6 below is the Participant's surviving spouse; (ii) the Participant was married to said spouse on the Participant's Retirement Date, and (iii) said spouse is living at the end of the aforesaid one hundred twenty (120) month period, said payments shall thereafter continue until the death of said surviving spouse. 1 (b) AMOUNT. A Participant's monthly retirement income under this paragraph (b) shall be equal to fifty percent (50%) of the Participant's Average Compensation less the following amounts: i) One-half of the Participant's monthly Primary Social Security amount determined as if the Participant commenced receiving Social Security Benefits as of the Participant's Retirement Date; ii) The monthly amount payable to the Participant as the normal form of benefit pursuant to any qualified pension plan maintained by the Company. Such amount shall be determined as of the Participant's Retirement Date, as if the Participant remained in the employ of the Company until that date. The amount of the reduction under this subparagraph (b)(ii) shall not include any benefit attributable to Participant contributions and earnings thereon; and iii) The monthly amount payable to the Participant in the form of a single life annuity pursuant to any qualified profit sharing (including 401(k)) plan maintained by the Company. Such amount shall be determined as of the Participant's Retirement Date, as if the Participant remained in the employ of the Company until that date. Further, the monthly amount payable as a single life annuity shall be determined by converting the Participant's account balance to a single life annuity as of the Participant's Retirement Date using the interest rate and mortality assumptions set forth in paragraph 7(e) hereof. The amount of the reduction under this subparagraph (b)(iii) shall not consider any portion of the Participant's account balance attributable to Participant contributions and earnings thereon. In determining the amount of the reduction attributable to Employer contributions and earnings thereon, the following assumptions shall be used: a) Employer contributions shall equal actual Employer contributions; b) Historical earnings shall equal actual earnings on Employer contributions; and c) Hypothetical future earnings shall be projected at the average of the dividend (interest) rates of the Plan's money market option determined as of December 31 of each of the prior three (3) years. (c) AVERAGE COMPENSATION. A Participant's Average Compensation shall be the average of the Participant's Plan Compensation for the Averaging Period in the Participant's Compensation History which results in the highest Average Compensation, divided by 12. A Participant's Compensation History is the Participant's entire period of employment with the Employer. The Averaging Period is 3 consecutive Compensation periods (or the entire period of employment, if shorter). A Compensation period is the 12-month period ending on the last day of the Plan Year. A Participant's Compensation History does not include the 12-month Compensation period in which the Participant terminates employment. Average Compensation shall not include 2 long-term and short-term incentive compensation, bonuses, commissions and taxable and non-taxable fringe benefits. i) TOTAL COMPENSATION. All wages for federal income tax withholding purposes, as defined under Code (S)3401(a) (for purposes of income tax withholding at the source), disregarding any rules limiting the remuneration included as wages based on the nature or location of the employment or the services performed. Total Compensation also includes all other payments to an Employee in the course of the Employer's trade or business, for which the Employer must furnish the Employee a written statement under Code (S)(S)6041, 6051 and 6052. As long as the instructions to the "wages, tips, other compensation" box of Form W-2 (or a corresponding box on a later released Form W-2), are consistent with the instructions for the 1991 Form W-2 (Box 10), the Employer may treat the amount reported in the "wages, tips, other compensation" as satisfying this definition. Total Compensation does not include elective contributions. ii) PLAN COMPENSATION. Plan Compensation means Total Compensation described in subparagraph (c)(i)), but excluding reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, bonuses, long-term and short-term incentive compensation, deferred compensation and welfare benefits, and including elective contributions. Plan Compensation applies to determine a Participant's benefit formula and Accrued Benefit under Article V. iii) ELECTIVE CONTRIBUTIONS. Elective contributions are amounts excludable from the Employee's gross income under Code (S)(S)125 or 402(e)(3), and contributed by the Employer, at the Employee's election, to a Code (S)401(k) arrangement or cafeteria plan. iv) PLAN YEAR. Plan year means the fiscal year of the Plan, a twelve (12) consecutive month period ending every June 30. A Participant's Plan Compensation for each of the three Plan Years ending prior to July 1, 1996, shall be equal to the Participant's Plan Compensation for the Plan Year ended June 30, 1996. (d) LATE RETIREMENT. In the event that Participant continues in the employ of the company beyond the Participant's Retirement Date such continued employment shall not be taken into account under this plan inasmuch as the Participant's monthly retirement income commences as of his Retirement Date. 2. TERMINATION BENEFIT. If a Participant's employment with the Company is terminated, other than voluntarily, prior to attaining age sixty-five (65), for any reason other than death or total and permanent disability, such Participant's accrued benefit shall be determined as follows: 3 Total actual years of service with the Company after first becoming a Participant in Projected Monthly Participant's the Plan and prior to Retirement Benefit Accrued Benefit attaining age sixty-five as contemplated by (payable monthly ---------- (65) Total possible years Paragraph 1 of commencing at age - ---- of service with the Company x this Plan = sixty-five (65)) after first becoming a Participant in the Plan and prior to attaining age sixty-five (65) For purposes of determining a Participant's accrued benefit, the term "years of service" shall include all calendar years in which the Participant completes at least 1,000 hours of service and the term "hours of service" shall have the same meaning as it does under the qualified pension plan of the Company. Furthermore, "total possible years of service with the Company after first becoming a Participant in the Plan and prior to attaining age sixty-five (65)" shall be determined by computing the maximum number of years of service that the Participant could possibly complete with the Company between the date the Participant first becomes a Participant in the Plan and the date on which the Participant attains age sixty-five (65). The Participant's accrued benefit under this paragraph 2 shall never exceed the Participant's retirement benefit as contemplated by paragraph 1 of this Plan. If a Participant's employment with the Company is terminated, other than voluntarily, prior to attaining age sixty-five (65), for any reason other than death or total and permanent disability, the Participant's accrued benefit shall normally be paid in the form of a monthly annuity commencing at age sixty-five (65), but may, in the sole discretion of the Company, be paid to the Participant as a reduced annuity commencing prior to age sixty-five (65) or as a lump sum. Any annuity shall be payable under the same terms and conditions as contemplated by paragraph 1 of this Plan; provided, however, that payments shall only continue until the death of the Participant's surviving spouse if: (i) the beneficiary designated in paragraph 6 below is the Participant's surviving spouse and (ii) the Participant was married to said spouse on the Participant's termination date. Any present value calculations required in connection with the payment of a lump sum shall be made using the 1983 Group Annuity Mortality Table (GAM 83) adjusted as provided in Rev. Rul. 95-6, 1995-4 I.R.B. 22, and the annual rate of interest on 30-year Treasury securities, as prescribed by the Secretary, for the month of May preceding the Plan Year in which the distribution occurs, or 6% interest per annum, whichever is greater. 4 If the Participant dies prior to receiving the entirety of the benefits contemplated by this paragraph 2, such benefits shall thereafter be paid to the beneficiary designated in paragraph 6 below. 3. DEATH BENEFIT. (a) If a Participant dies prior to his Retirement Date while in the employ of the Company, then the Company shall thereafter pay to the beneficiary designated in paragraph 6 below a monthly death benefit amount as determined pursuant to paragraph (b) below commencing with a payment on the first day of the month next following the Participant's death and continuing with a like payment on the first day of each month thereafter for a total of one hundred twenty (120) months; provided, however, that if the primary beneficiary designated in paragraph 6 below is the Participant's surviving spouse, and said spouse is living at the end of the aforesaid one hundred twenty (120) month period, said payments shall continue until the death of said surviving spouse. (b) A Participant's monthly death benefit amount under this paragraph (b) shall be equal to the greater of: (i) The Participant's Accrued Benefit under paragraph 2 of this Plan determined as if the Participant's employment had been involuntarily terminated on the day preceding the Participant's death, or (ii) Thirty-five percent (35%) of the Participant's Average Compensation less the following amounts: a) One-half of the Participant's monthly Primary Social Security amount determined as if the Participant commenced receiving Social Security Benefits as of the Participant's Retirement Date annuitized over the payment period set forth in paragraph 3(a); b) The greater of the present value of the monthly amount payable to the Participant as the normal form of benefit pursuant to any qualified pension plan maintained by the Company or the present value of the death benefit under any such plan, annuitized over the payment period set forth in paragraph 3(a). Such amount shall be determined as of the Participant's date of death. The amount of the reduction under this subparagraph (b)(ii)b) shall not include any benefit attributable to Participant contributions and earnings thereon; c) The Participant's account balance in any qualified profit sharing (including 401(k)) plan maintained by the Company annuitized over the payment period set forth in paragraph 3(a). Such amount shall be determined as of the Participant's date of death. The amount of the reduction under this subparagraph (b)(iii)c) shall not consider any portion of the Participant's account balance attributable to Participant contributions and earnings thereon; and 5 d) The proceeds from any life insurance policy on the life of the Participant under any Company sponsored Group Life Insurance Plan, annuitized over the payment period set forth in paragraph 3(a). 4. DISABILITY BENEFIT. (a) If the Participant becomes totally and permanently disabled prior to his retirement date and while in the employ of the Company and such disability continues for a period of six (6) months, then the Company shall thereafter pay the Participant a monthly disability payment in the amount as determined pursuant to paragraph (b) below commencing with a payment on the first day of the month next following the expiration of the six- (6-) month period (hereinafter referred to as the "Disability Date") and continuing with a like payment on the first day of each month thereafter until the Participant attains sixty-five (65) years of age or ceases to be disabled, whichever occurs first. If the Participant continues to be disabled until he is sixty-five (65) years of age, then the monthly payments to the Participant thereafter shall be equal to the monthly amount of retirement income specified in paragraph 1, and shall be paid pursuant to the terms and conditions of paragraph 1. If, while receiving disability payments under this paragraph the Participant dies prior to attaining the age of sixty-five (65) years, such disability payments shall cease, and the Company shall thereafter pay to the beneficiary designated in paragraph 6 the amount of the death benefit specified in paragraph 3, in the manner and for the period of time provided in said paragraph. (b) A Participant's monthly disability benefit amount under this paragraph (b) shall be equal to sixty percent (60%) of the Participant's Average Compensation less the following amounts: (i) The monthly amount payable to the Participant pursuant to the Company sponsored Group Long-Term Disability Plan determined prior to any reduction for the Participant's monthly disability Social Security amount, if any; and (ii) One-half of the Participant's monthly disability Social Security amount, determined as of the Participant's Disability Date. 5. VOLUNTARY TERMINATION. If a the Participant voluntarily terminates employment with the Company prior to attaining age sixty-five (65) for any reason other than total and permanent disability, the Participant shall be entitled to no benefit under this Plan. 6 6. BENEFICIARY. For purposes of paragraphs 1, 2, 3, and 4, the Participant's beneficiary shall be as follows: (a) The spouse of the Participant shall be the primary beneficiary. (b) If said spouse fails to survive the Participant, then any remaining payments under this Plan shall be made in accordance with the Participant's beneficiary designation form then on file with the Company, or if none to the Participant's estate. (c) If said spouse survives the Participant and thereafter dies before receiving all payments hereunder, such remaining payments shall be made to such persons in such amounts as said spouse designates in a validly executed beneficiary designation form on file with the Company. If said spouse fails to exercise this power of appointment, such remaining payments shall be made to such persons in such amounts as provided in paragraph 6(b) immediately above. 7. CONDITIONS AND OTHER PROVISIONS. (a) The benefits under paragraphs 1, 2, 3, and 4 are conditioned upon the Participant having been continuously in the employ of the Company from the date of becoming a Participant in this Plan until the happening of the event that would qualify the Participant (or his beneficiary) for such benefits; provided, however, that the employment of the Participant shall not be deemed to have ceased because of or during (i) any period of involuntary military service of the participant or (ii) a leave of absence granted the Participant by the Company which does not exceed a period of one (1) year. (b) Upon the death of the Participant, if monthly benefits become payable to a beneficiary by virtue of the provisions of paragraphs 1, 2, 3, or 4, the Company may then, or at any time thereafter, at its sole option and discretion and without the consent of any beneficiary, elect to pay the current beneficiary, in one lump sum, the present value of the monthly payments remaining unpaid at the time of such election. Any present value calculations required in connection with the payment of such a lump sum shall be made using the 1983 Group Annuity Mortality Table (GAM 83) adjusted as provided in Rev. Rul. 95-6, 1995-4 I.R.B. 22, and the annual rate of interest on 30-year Treasury securities, as prescribed by the Secretary, for the month of May preceding the Plan Year in which the distribution occurs, or 6% interest per annum, whichever is greater. (c) Except as specifically provided herein, benefits under this Plan shall not be payable to the Participant or any beneficiary under more than one of the first four paragraphs of this Plan. (d) For the purpose of determining any and all benefits payable under this Plan, it shall be assumed that the Participant's spouse is no more than fifteen (15) years younger than the Participant. In the event that a Participant's spouse is more than fifteen years younger than the Participant, the monthly amount payable to the spouse hereunder shall be a reduced amount, 7 actuarially determined. Such reduced amount shall be calculated by first determining the present value of the benefits payable to the surviving spouse over his or her life expectancy as if he or she were exactly fifteen (15) years younger than the Participant, and then determining the monthly benefit that could be paid over the surviving spouse's actual life expectancy, using the present value amount so determined. (e) Except as otherwise specifically provided herein, for purposes of determining present values and/or alternative forms of benefits hereunder, the 1983 Group Annuity Mortality Table (GAM 83) adjusted as provided in Rev. Rul. 95-6, 1995-4 I.R.B. 22, and 6% interest per annum shall be used. 8. TERMINATION OF PARTICIPATION/BENEFITS. Participation in this Plan may be terminated by the Company, and all accrued benefits hereunder may at any time be forfeited, either before or after benefits become payable hereunder, notwithstanding any provision in this Plan to the contrary, if the Board of Directors of the Company, acting in its sole and absolute discretion, shall find that at any time before or after the Participant's termination, retirement or disability and before the Participant's death: (a) The Participant induces or attempts to induce a client or customer of the Company to curtail or cancel any business dealing with the Company, (b) The Participant induces or attempts to induce any other employee of the Company to terminate employment with the Company, (c) The Participant fails to cooperate in the procurement or maintenance of any policies of insurance as contemplated by paragraph 9 below, or (d) The Participant commits a violation of the Statement on Ethics of Fisher Companies Inc., and such violation results in the termination of the Participant's employment with the Company. 9. INSURANCE. (a) It is further a condition of participation in this Plan that, if the Company at its sole option shall at any time wish to own, sponsor and/or maintain any policy of life or disability insurance on the Participant the proceeds of which are payable to either the Participant or the Company: (i) the Participant shall fully cooperate with the Company in its application for such insurance, including, without limiting the generality of the foregoing, submitting to physical examinations and answering truthfully and completely, without mental reservation or concealment, any questions or requests for information in connection therewith; and 8 (ii) The Participant shall not, by act or omission, give cause for any insurance company to restrict or cancel any policy of insurance on the Participant owned by the Company or give cause for such insurance company's refusal to pay the full proceeds to the Company, including refusal to pay the full proceeds because of the suicide of the Participant. (b) An individual shall not become a Participant in this Plan unless and until: (i) the Company has procured a policy of life insurance and a policy of disability insurance on that individual adequate in amount to fund the life and disability benefits contemplated by this Plan assuming no further increases in the individual's Average Compensation; (ii) the Company has specifically waived such requirement in writing; or (iii) the Company has, by separate agreement entered into between the Company and the individual, limited the benefits payable to that individual under this Plan. It is contemplated that such an agreement may be entered into if an individual is uninsurable, uninsurable against certain risks or uninsurable at standard rates. Any such agreement shall be deemed to be part of this Plan with respect to the Participant to whom it applies. (c) All determinations made by the insurance company with regard to the question of death, disability, waiver of premium and/or pre-existing conditions shall be accepted as conclusive by the Company, the Participant and any beneficiary. 10. ERISA. Participation in this Plan may be terminated by the Company if the Department of Labor issues regulations under ERISA which indicate that the Participant is no longer eligible for continued participation in the Plan. This determination shall be made by the Board of Directors of the Company acting in its sole and absolute discretion. In the event of a termination of this Agreement pursuant to this paragraph 10, the Participant shall be entitled to receive a termination benefit pursuant to the terms and conditions of paragraph 2. 11. NO CURRENT BENEFIT. The benefits to be paid pursuant to the terms of this Plan are granted by the Company as additional benefits to the Participants and are not part of any salary reduction plan or an arrangement deferring a bonus or a salary increase. The Participants have no option to receive any current payment or bonus in lieu of these additional benefits. 12. NO TRUST AGREEMENT. (a) Nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind, or a fiduciary relationship 9 between the Company, or any employee or agent thereof, and the Participants or any other person. (b) The rights of the Participants or beneficiaries under this Plan are purely contractual and shall not be funded or secured in any way. Payments to the Participants or their beneficiaries hereunder shall be made only from the general assets of the Company, and no person, other than the Company, shall have, by virtue of this Plan, any interest in such assets. Such assets are available to satisfy the claims of the Company's general creditors and, to the extent any person acquires a right to receive payments from the Company under the terms of this Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. (c) The Company, at its discretion, may acquire an annuity or insurance policy insuring the life of the Participants from which it can satisfy its obligation to make benefit payments pursuant to this Plan. However, it is expressly understood that such contract (or contracts), if acquired, does not create any account or fund separate from the ordinary assets of the Company, and neither the Participants nor their beneficiaries may look to any such contract as the fund from which benefits under this Plan are to be paid. Any such contract so acquired for the convenience of the Company shall be the sole and exclusive property of the Company, with the Company named as applicant, owner, and beneficiary of any life insurance contract payments; provided, further, that any such contract shall not be held in trust or collateral security for the benefit of the Participants or beneficiaries, nor is any representation made herein that such contract, if acquired, will be used to provide benefits under this Plan. Neither the Participants nor their beneficiaries shall have any beneficial ownership interest in, or preferred or other claim against, the life insurance contract, if acquired by the Company. 13. NO ASSIGNMENT. No right of a Participant or any other person to the payment of deferred compensation or other benefits under this Plan shall be assigned, transferred, pledged, hypothecated, or encumbered. No right of a Participant under this Plan shall be subject to garnishment, attachment, or other legal process, whether by the Participant or any beneficiary named herein, any heir or creditor of the Participant, or any other person. Any attempted assignment of any right hereunder by a Participant or a beneficiary shall, at the Company's option, cause all rights of the Participant hereunder to terminate. 14. INCAPACITY OF BENEFICIARY. If the Company shall determine that a Participant is unable to care for his or her affairs because of illness, accident, or other incapacity, any payment due may be paid to the Participant's spouse or to any other person considered by the Company to have incurred expense for the Participant or to be otherwise responsible for the Participant or his or her affairs, in such manner and proportions as the Company may determine (unless a prior claim therefor shall have been made by a duly appointed guardian, committee, or other legal representative). Any such payment 10 made in good faith by the Company shall be a complete discharge of the liabilities of the Company under this Plan. 15. COMPANY'S POWERS AND LIABILITIES. The Company shall have the full power and authority to interpret, construe, and administer this Plan, and the Company's interpretation and construction hereof and action hereunder shall be binding and conclusive on all persons for all purposes. Neither the Company, its officers, directors, employees, or agents shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan unless attributable to his own willful misconduct or lack of good faith. Any notice, consent, or demand required or permitted to be given under the terms of this Plan shall be in writing and shall be signed by the party giving or making the same. The date of such notice, consent, or demand shall be the date of receipt by the addressee. 16. BINDING EFFECT. This Plan shall be binding upon and inure to the benefit of the Company, its successors and assigns, and the Participant, his heirs, executors, administrators and legal representatives. 17. CONTINUED EMPLOYMENT. Nothing contained herein shall be construed as conferring upon a Participant the right to continue in the employ of the Company as an executive or in any other capacity. The Participant or the Company may terminate the Participant's employment at will, with or without cause. Upon termination of the Participant's employment with the Company, all rights of the Participant hereunder shall terminate, except as otherwise provided herein. 18. GOVERNING LAW. This Plan shall be construed and governed in accordance with the laws of the State of Washington. 19. QUALIFIED PLAN. Any deferred compensation payable under this Plan shall not be deemed salary or other compensation to the Participants for purposes of computing benefits to which they may be entitled under any pension plan or other arrangement of the Company for the benefit of its employees. 20. AMENDMENT; ENTIRE AGREEMENT. No modification of this Plan shall be effective unless communicated in writing to the Participant. With respect to the subject matter hereof, this Plan constitutes the entire agreement and understanding of the Company and the Participant and shall supersede any prior agreement 11 or understanding including any and all Supplemental Pension Plan Agreements and amendments thereto previously entered into between the Company and the Participant. Further, the Company may, from time to time, furnish the Participant with information containing estimates of the projected benefits available under this Plan. This information will be provided simply as a tool to assist the Participant in planning for his or her retirement, and not as a definitive statement of the benefits that will be available to the Participant upon retirement or in the event of death or disability. This is because the estimates of projected benefits are affected by a number of variables that are constantly changing which include, but are not limited to salary levels, interest rates, qualified plan benefits, group life and disability benefits and Social Security benefits. In certain circumstances the benefits payable to a Participant under this Plan may be adjusted based upon that Participant's individual circumstances. Adjustments resulting in a reduction of benefits will generally be prospective in application, whereas adjustments resulting in an increase in benefits may be retroactive. 21. SEVERABILITY. If any provision of this Plan is rendered invalid or unenforceable, the remaining provisions of this Plan shall continue to be fully effective. 22. PARTICIPATION IN OTHER PARTICIPANT BENEFIT PLANS. Nothing herein shall, in any manner, modify, impair, or affect the existing or future rights or interests of the Participants (i) to receive any employee benefits to which he would otherwise be entitled; or (ii) as participants in the present or any future incentive or bonus plan, stock option plan, pension plan, or profit sharing plan of the Company, applicable generally to salaried employees. The rights and interests of the Participants to any employee benefits or as a participant or beneficiary in or under any or all such plans shall continue in full force and effect unimpaired, and this Plan shall not act to deny the Participant the right at any time hereafter to become a participant or beneficiary under or pursuant to any and all such plans. 23. LEGAL AND TAX CONSEQUENCES TO PARTICIPANTS. The Company does not represent or guarantee that any particular income or other tax consequences will occur under the Plan. The Participant acknowledges that he has been advised to consult with professional tax and other advisors regarding all benefits, burdens, risks, and consequences arising in connection with this Plan. 24. FICA/MEDICARE/FEDERAL INCOME TAX WITHHOLDING. Any benefits payable to a Participant and/or a beneficiary hereunder shall be subject to FICA, Medicare, and Federal and State Income Tax withholding to the extent required by law. 12 IN WITNESS WHEREOF, the undersigned has executed this Plan as of the date first above written. FISHER MILLS INC. By: /s/ Terry L. Barrans --------------------- Terry L. Barrans Its President & CEO 13 EX-10.7 11 FISHER PROPERTIES INC. SUPPLEMENTAL PENSION PLAN EXHIBIT 10.7 SUPPLEMENTAL PENSION PLAN THIS Plan is established, and is to be effective as of the 1st day of March, 1996, by FISHER PROPERTIES INC., a Washington corporation (the "Company"), for the benefit of a select group of management employees (the "Participants"). A. The Participants in this Plan shall be as determined from time to time by the Board of Directors of the Company. B. The ability and experience of the Participants are of such value to the Company that the Company wishes to more adequately compensate the Participants for their past and future services by providing special retirement and survivorship income benefits to them. C. The funds accumulated in Company-sponsored qualified retirement plans may be inadequate in amount to provide the Participants with a retirement benefit commensurate with the anticipated value of their past and future services to the Company. D. This Plan is intended to supersede any and all Supplementary Pension Agreements and all amendments thereto previously entered into between the company and the participants who were employed by the Company as of the effective date hereof. NOW, THEREFORE, the Company hereby agrees as follows: 1. Retirement Benefits. (a) Entitlement/Payment. If a Participant is in the employ of the Company when the Participant attains sixty-five (65) years of age, then the Company shall thereafter pay to the Participant monthly retirement income as determined pursuant to paragraph (b) immediately below, commencing with a payment on the first day of the month coincident with or next following the Participant's attainment of sixty-five (65) years of age (hereinafter referred to as the "Retirement Date") and continuing with a like payment on the first day of each month thereafter throughout the Participant's lifetime. If, while receiving said monthly retirement income, the Participant dies prior to the expiration of a period of one hundred twenty (120) months from and after his Retirement Date, then the Company shall thereafter pay said amount to the beneficiary designated in paragraph 6 below, continuing until the expiration of said one hundred twenty (120) month period; provided, however, that if (i) the primary beneficiary designated in paragraph 6 below is the participant's surviving spouse; (ii) the participant was married to said spouse on the Participant's Retirement Date, and (iii) said spouse is living at the end of the aforesaid one hundred twenty (120) month period, said payments shall thereafter continue until the death of said surviving spouse. 1 (b) Amount. A Participant's monthly retirement income under this paragraph (b) shall be equal to sixty percent (60%) of the Participant's Average Compensation less the following amounts: i) One-half of the Participant's monthly Primary Social Security amount determined as if the Participant commenced receiving Social Security Benefits as of the Participant's Retirement Date; ii) The monthly amount payable to the Participant as the normal form of benefit pursuant to any qualified pension plan maintained by the Company. Such amount shall be determined as of the Participant's Retirement Date, as if the Participant remained in the employ of the Company until that date. the amount of the reduction under this subparagraph (b)(ii) shall not include any benefit attributable to Participant contributions and earnings thereon; and iii) The monthly amount payable to the Participant in the form of a single life annuity pursuant to any qualified profit sharing (including 401(k)) plan maintained by the Company. Such amount shall be determined as of the Participant's Retirement Date, as if the Participant remained in the employ of the Company until that date. Further, the monthly amount payable as a single life annuity shall be determined by converting the Participant's account balance to a single life annuity as of the Participant's Retirement Date using the interest rate and mortality assumptions set forth in paragraph 7(e) hereof. The amount of the reduction under this subparagraph (b)(iii) shall not consider any portion of the Participant's account balance attributable to Participant contributions and earnings thereon. In determining the amount of the reduction attributable to Employer contributions and earnings thereon, the following assumptions shall be used: a) Employer contributions shall equal actual Employer contributions; b) Historical earnings shall equal actual earnings on Employer contributions; and c) Hypothetical future earnings shall be projected at the average of the dividend (interest) rates of the Plan's money market option determined as of December 31 of each of the prior three (3) years. (c) Average compensation. A Participant's Average Compensation shall be the average of the Participant's Plan Compensation for the Averaging Period in the Participant's Compensation History which results in the highest Average Compensation, divided by 12. A Participant's Compensation History is the Participant's entire period of Employment with the Employer. The Averaging Period is 3 consecutive Compensation periods (or the entire period of employment, if shorter). A Compensation period is the 12-month period ending on the last day of the Plan Year. A Participant's Compensation History does not include the 12-month Compensation period in which the Participant terminates employment. Average Compensation shall not include 2 long-term and short-term incentive compensation, bonuses, commissions and taxable and non-taxable fringe benefits. i) Total Compensation. All wages for federal income tax withholding purposes, as defined under Code (s)3401(a) (for purposes of income tax withholding at the source), disregarding any rules limiting the remuneration included as wages based on the nature or location of the employment or the services performed. Total Compensation also includes all other payments to an Employee in the course of the Employer's trade or business, for which the Employer must furnish the Employee a written statement under Code (s)(s)6041, 6051 and 6052. As long as the instructions to the "wages, tips, other compensation" box of form W-2 (or a corresponding box on a later released Form W-2), are consistent with the instructions for the 1991 form W-2 (Box 10), the Employer may treat the amount reported in the "wages, tips, other compensation" as satisfying this definition. Total Compensation does not include elective contributions. ii) Plan Compensation. Plan Compensation means Total Compensation described in subparagraph (c)(i)), but excluding reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, bonuses, long-term and short-term incentive compensation, deferred compensation and welfare benefits, and including elective contributions. Plan Compensation applies to determine a Participant's benefit formula and Accrued Benefit under Article V. iii) Elective Contributions. Elective contributions are amounts excludable from the Employee's gross income under Code (S)(S)125 or 402(e)(3), and contributed by the Employer, at the Employee's election, to a code (S)401(k) arrangement or cafeteria plan. iv) Plan Year. Plan year means the fiscal year of the Plan, a twelve (12) consecutive month period ending every June 30. A Participant's Plan Compensation for each of the three Plan Years ending prior to July 1, 1996, shall be equal to the Participant's Plan Compensation for the Plan Year ended June 30, 1996. (d) Late Retirement. In the event that Participant continues in the employ of the company beyond the Participant's Retirement Date such continued employment shall not be taken into account under this Plan inasmuch as the Participant's monthly retirement income commences as of his Retirement Date. 2. TERMINATION BENEFIT. If a Participant's employment with the Company is terminated, other than voluntarily, prior to attaining age sixty-five (65), for any reason other than death or total and permanent disability, such Participant's accrued benefit shall be determined as follows: 3 Total actual years of service with the Company after first becoming a Participant in the Plan and prior to attaining age sixty-five (65) Total possible years of service with the Company Projected Monthly after first becoming a Retirement Benefit Participant's Participant in the Plan and as contemplated by Accrued Benefit prior to attaining age x Paragraph 1 of (payable monthly sixty-five (65) this Plan commencing at age sixty-five (65)
For purposes of determining a Participant's accrued benefit, the term "years of service" shall include all calendar years in which the Participant completes at least 1,000 hours of service and the term "hours of service" shall have the same meaning as it does under the qualified pension plan of the Company. Furthermore, "total possible years of service with the Company after first becoming a Participant in the Plan and prior to attaining age sixty-five (65)" shall be determined by computing the maximum number of years of service that the Participant could possibly complete with the Company between the date the Participant first becomes a Participant in the Plan and the date on which the Participant attains age sixty-five (65). The Participant's accrued benefit under this paragraph 2 shall never exceed the Participant's retirement benefit as contemplated by paragraph 1 of this Plan. If a Participant's employment with the Company is terminated, other than voluntarily, prior to attaining age sixty-five (65), for any reason other than death or total and permanent disability, the Participant's accrued benefit shall normally be paid in the form of a monthly annuity commencing at age sixty-five (65), but may, in the sole discretion of the Company, be paid to the Participant as a reduced annuity commencing prior to age sixty-five (65) or as a lump sum. Any annuity shall be payable under the same terms and conditions as contemplated by paragraph 1 of this Plan; provided, however, that payments shall only continue until the death of the Participant's surviving spouse if: (i) the beneficiary designated in paragraph 6 below is the Participant's surviving spouse and (ii) the Participant was married to said spouse on the Participant's termination date. Any present value calculations required in connection with the payment of a lump sum shall be made using the 1983 Group Annuity Mortality Table (GAM 83) adjusted as provided in Rev. Rul. 95-6, 1995-4 I.R.B. 22, and the annual rate of interest on 30-year Treasury securities, as prescribed by the Secretary, for the month of May preceding the Plan Year in which the distribution occurs, or 6% interest per annum, whichever is greater. 4 If the Participant dies prior to receiving the entirety of the benefits contemplated by this paragraph 2, such benefits shall thereafter be paid to the beneficiary designated in paragraph 6 below. 3. Death Benefit. (a) If a Participant dies prior to his Retirement Date while in the employ of the Company, then the Company shall thereafter pay to the beneficiary designated in paragraph 6 below a monthly death benefit amount as determined pursuant to paragraph (b) below commencing with a payment on the first day of the month next following the Participant's death and continuing with a like payment on the first day of each month thereafter for a total of one hundred twenty (120) months; provided, however, that if the primary beneficiary designated in paragraph 6 below is the Participant's surviving spouse, and said spouse is living at the end of the aforesaid one hundred twenty (120) month period, said payments shall continue until the death of said surviving spouse. (b) A Participant's monthly death benefit amount under this paragraph (b) shall be equal to the greater of : (i) The participant's Accrued Benefit under paragraph 2 of this Plan determined as if the Participant's employment had been involuntarily terminated on the day preceding the Participant's death, or (ii) Thirty-five percent (35%) of the Participant's Average Compensation less the following amounts: a) One-half of the Participant's monthly Primary Social Security amount determined as if the Participant commenced receiving Social Security Benefits as of the Participant's Retirement Date annuitized over the payment period set forth in paragraph 3(a); b) The greater of the present value of the monthly amount payable to the Participant as the normal form of benefit pursuant to any qualified pension plan maintained by the Company or the present value of the death benefit under any such plan, annuitized over the payment period set forth in paragraph 3(a). Such amount shall be determined as of the Participant's date of death. The amount of the reduction under this subparagraph (b)(ii)b) shall not include any benefit attributable to Participant contributions and earnings thereon; c) The participant's account balance in any qualified profit sharing (including 401(k)) plan maintained by the Company annuitized over the payment period set forth in paragraph 3(a). Such amount shall be determined as of the Participant's date of death. The amount of the reduction under this subparagraph (b)(iii)c) shall not consider any portion of the Participant's account balance attributable to participant contributions and earnings thereon; and 5 d) the proceeds from any life insurance policy on the life of the participant under any company sponsored group life insurance plan, annuitized over the payment period set forth in paragraph 3(a). 4. Disability Benefit. (a) If the participant becomes totally and permanently disabled prior to his retirement date and while in the employ of the Company and such disability continues for a period of six (6) months, then the Company shall thereafter pay the Participant a monthly disability payment in the amount as determined pursuant to paragraph (b) below commencing with a payment on the first day of the month next following the expiration of the six- (6-) month period (hereinafter referred to as the "Disability Date") and continuing with a like payment on the first day of each month thereafter until the Participant attains sixty-five (65) years of age or ceases to be disabled, whichever occurs first. If the Participant continues to be disabled until he is sixty-five (65) years of age, then the monthly payments to the Participant thereafter shall be equal to the monthly amount of retirement income specified in paragraph 1, and shall be paid pursuant to the terms and conditions of paragraph 1. If, while receiving disability payments under this paragraph the participant dies prior to attaining the age of sixty-five (65) years, such disability payments shall cease, and the Company shall thereafter pay to the beneficiary designated in paragraph 6 the amount of the death benefit specified in paragraph 3, in the manner and for the period of time provided in said paragraph. (b) a participant's monthly disability benefit amount under this paragraph (b) shall be equal to sixty percent (60%) of the participant's average compensation less the following amounts : (i) The monthly amount payable to the Participant pursuant to the Company sponsored Group Long-Term Disability Plan determined prior to any reduction for the Participant's monthly disability Social Security amount, if any; and (ii) One-half of the Participant's monthly disability Social Security amount, determined as of the Participant's Disability Date. 5. Voluntary Termination. If a the Participant voluntarily terminates employment with the Company prior to attaining age sixty-five (65) for any reason other than total and permanent disability, the Participant shall be entitled to no benefit under this Plan. 6 6. Beneficiary. For purposes of paragraphs 1, 2, 3, and 4, the Participant's beneficiary shall be as follows: (a) the spouse of the Participant shall be the primary beneficiary. (b) If said spouse fails to survive the Participant, then any remaining payments under this plan shall be made in accordance with the Participant's beneficiary designation form then on file with the Company, or if none to the Participant's estate. (c) If said spouse survives the Participant and thereafter dies before receiving all payments hereunder, such remaining payments shall be made to such persons in such amounts as said spouse designates in a validly executed beneficiary designation form on file with the Company. If said spouse fails to exercise this power of appointment, such remaining payments shall be made to such persons in such amounts as provided in paragraph 6(b) immediately above. 7. Conditions and Other Provisions. (a) The benefits under paragraphs 1, 2, 3, and 4 are conditioned upon the Participant having been continuously in the employ of the Company from the date of becoming a Participant in this Plan until the happening of the event that would qualify the Participant (or his beneficiary) for such benefits; provided, however, that the employment of the Participant shall not be deemed to have ceased because of or during (i) any period of involuntary military service of the Participant or (ii) a leave of absence granted the Participant by the Company which does not exceed a period of one (1) year. (b) Upon the death of the Participant, if monthly benefits become payable to a beneficiary by virtue of the provisions of paragraphs 1, 2, 3, or 4, the Company may then, or at any time thereafter, at its sole option and discretion and without the consent of any beneficiary, elect to pay the current beneficiary, in one lump sum, the present value of the monthly payments remaining unpaid at the time of such election. Any present value calculations required in connection with the payment of such a lump sum shall be made using the 1983 Group Annuity Mortality Table (GAM 83) adjusted as provided in Rev. Rul. 95-6, 1995-4 I.R.B. 22, and the annual rate of interest on 30-year Treasury securities, as prescribed by the Secretary, for the month of May preceding the Plan Year in which the distribution occurs, or 6% interest per annum, whichever is greater. (c) Except as specifically provided herein, benefits under this Plan shall not be payable to the Participant or any beneficiary under more than one of the first four paragraphs of this Plan. (d) For the purpose of determining any and all benefits payable under this Plan, it shall be assumed that the Participant's spouse is no more than fifteen (15) years younger than the Participant. In the event that a Participant's spouse is more than fifteen years younger than the Participant, the monthly amount payable to the spouse hereunder shall be a reduced amount, 7 actuarially determined. such reduced amount shall be calculated by first determining the present value of the benefits payable to the surviving spouse over his or her life expectancy as if he or she were exactly fifteen (15) years younger than the Participant, and then determining the monthly benefit that could be paid over the surviving spouse's actual life expectancy, using the present value amount so determined. (e) except as otherwise specifically provided herein, for purposes of determining present values and/or alternative forms of benefits hereunder, the 1983 Group Annuity Mortality table (GAM 83) adjusted as provided in Rev. Rul. 95-6, 1995-4 I.R.B. 22, and 6% interest per annum shall be used. 8. Termination of Participation/Benefits. Participation in this Plan may be terminated by the Company, and all accrued benefits hereunder may at any time be forfeited, either before or after benefits become payable hereunder, notwithstanding any provision in this Plan to the contrary, if the Board of Directors of the Company, acting in its sole and absolute discretion, shall find that at any time before or after the Participant's termination, retirement or disability and before the Participant's death : (a) The Participant induces or attempts to induce a client or customer of the Company to curtail or cancel any business dealing with the Company, (b) The Participant induces or attempts to induce any other employee of the Company to terminate employment with the Company, (c) The Participant fails to cooperate in the procurement or maintenance of any policies of insurance as contemplated by paragraph 9 below, or (d) The Participant commits a violation of the statement on Ethics of Fisher Companies Inc., and such violation results in the termination of the Participant's employment with the Company. 9. Insurance. (a) It is further a condition of participation in this Plan that, if the Company at its sole option shall at any time wish to own, sponsor and/or maintain any policy of life or disability insurance on the Participant the proceeds of which are payable to either the Participant or the Company: (i) The Participant shall fully cooperate with the Company in its application for such insurance, including, without limiting the generality of the foregoing, submitting to physical examinations and answering truthfully and completely, without mental reservation or concealment, any questions or requests for information in connection therewith; and 8 (ii) The Participant shall not, by act or omission, give cause for any insurance company to restrict or cancel any policy of insurance on the Participant owned by the Company or give cause for such insurance company's refusal to pay the full proceeds to the Company, including refusal to pay the full proceeds because of the suicide of the Participant. (b) An individual shall not become a Participant in this Plan unless and until: (i) the Company has procured a policy of life insurance and a policy of disability insurance on that individual adequate in amount to fund the life and disability benefits contemplated by this Plan assuming no further increases in the individual's Average Compensation; (ii) the Company has specifically waived such requirement in writing; or (iii) the company has, by separate agreement entered into between the Company and the individual, limited the benefits payable to that individual under this Plan. It is contemplated that such an agreement may be entered into if an individual is uninsurable, uninsurable against certain risks or uninsurable at standard rates. Any such agreement shall be deemed to be part of this Plan with respect to the Participant to whom it applies. (c) All determinations made by the insurance company with regard to the question of death, disability, waiver of premium and/or pre-existing conditions shall be accepted as conclusive by the Company, the Participant and any beneficiary. 10. ERISA. Participation in this Plan may be terminated by the Company if the Department of Labor issues regulations under ERISA which indicate that the Participant is no longer eligible for continued participation in the Plan. This determination shall be made by the Board of Directors of the Company acting in its sole and absolute discretion. In the event of a termination of this Agreement pursuant to this paragraph 10, the Participant shall be entitled to receive a termination benefit pursuant to the terms and conditions of paragraph 2. 11. No Current Benefit. The benefits to be paid pursuant to the terms of this Plan are granted by the Company as additional benefits to the Participants and are not part of any salary reduction plan or an arrangement deferring a bonus or a salary increase. The Participants have no option to receive any current payment or bonus in lieu of these additional benefits. 12. No Trust Agreement. (a) Nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind, or a fiduciary relationship 9 between the company, or any employee or agent thereof, and the participants or any other person. (b) The rights of the Participants or beneficiaries under this Plan are purely contractual and shall not be funded or secured in any way. Payments to the Participants or their beneficiaries hereunder shall be made only from the general assets of the Company, and no person, other than the Company, shall have, by virtue of this Plan, any interest in such assets. Such assets are available to satisfy the claims of the Company's general creditors and, to the extent any person acquires a right to receive payments from the Company under the terms of this Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. (c) The Company, at its discretion, may acquire an annuity or insurance policy insuring the life of the Participants from which it can satisfy its obligation to make benefit payments pursuant to this Plan. However, it is expressly understood that such contract (or contracts), if acquired, does not create any account or fund separate from the ordinary assets of the Company, and neither the Participants nor their beneficiaries may look to any such contract as the fund from which benefits under this Plan are to be paid. Any such contract so acquired for the convenience of the Company shall be the sole and exclusive property of the Company, with the Company named as applicant, owner, and beneficiary of any life insurance contract payments; provided, further, that any such contract shall not be held in trust or collateral security for the benefit of the Participants or beneficiaries, nor is any representation made herein that such contract, if acquired, will be used to provide benefits under this Plan. Neither the Participants nor their beneficiaries shall have any beneficial ownership interest in, or preferred or other claim against, the life insurance contract, if acquired by the Company. 13. No Assignment. No right of a Participant or any other person to the payment of deferred compensation or other benefits under this Plan shall be assigned, transferred, pledged, hypothecated, or encumbered. No right of a Participant under this Plan shall be subject to garnishment, attachment, or other legal process, whether by the Participant or any beneficiary named herein, any heir or creditor of the Participant, or any other person. Any attempted assignment of any right hereunder by a Participant or a beneficiary shall, at the Company's option, cause all rights of the Participant hereunder to terminate. 14. Incapacity of Beneficiary. If the Company shall determine that a Participant is unable to care for his or her affairs because of illness, accident, or other incapacity, any payment due may be paid to the Participant's spouse or to any other person considered by the Company to have incurred expense for the Participant or to be otherwise responsible for the Participant or his or her affairs, in such manner and proportions as the Company may determine (unless a prior claim therefor shall have been made by a duly appointed guardian, committee, or other legal representative). Any such payment 10 made in good faith by the Company shall be a complete discharge of the liabilities of the Company under this Plan. 15. Company's Powers and Liabilities. The Company shall have the full power and authority to interpret, construe, and administer this Plan, and the Company's interpretation and construction hereof and action hereunder shall be binding and conclusive on all persons for all purposes. Neither the Company, its officers, directors, employees, or agents shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan unless attributable to his own willful misconduct or lack of good faith. Any notice, consent, or demand required or permitted to be given under the terms of this Plan shall be in writing and shall be signed by the party giving or making the same. The date of such notice, consent, or demand shall be the date of receipt by the addressee. 16. Binding Effect. This Plan shall be binding upon and inure to the benefit of the Company, its successors and assigns, and the Participant, his heirs, executors, administrators and legal representatives. 17. Continued Employment. Nothing contained herein shall be construed as conferring upon a Participant the right to continue in the employ of the Company as an executive or in any other capacity. The Participant or the Company may terminate the Participant's employment at will, with or without cause. Upon termination of the Participant's employment with the Company, all rights of the Participant hereunder shall terminate, except as otherwise provided herein. 18. Governing Law. This Plan shall be construed and governed in accordance with the laws of the State of Washington. 19. Qualified Plan. Any deferred compensation payable under this Plan shall not be deemed salary or other compensation to the Participants for purposes of computing benefits to which they may be entitled under any pension plan or other arrangement of the Company for the benefit of its employees. 20. Amendment; Entire Agreement. No modification of this Plan shall be effective unless communicated in writing to the Participant. With respect to the subject matter hereof, this Plan constitutes the entire agreement and understanding of the Company and the Participant and shall supersede any prior agreement 11 or understanding including any and all Supplemental Pension Plan Agreements and amendments thereto previously entered into between the Company and the Participant. Further, the Company may, from time to time, furnish the Participant with information containing estimates of the projected benefits available under this Plan. This information will be provided simply as a tool to assist the Participant in planning for his or her retirement, and not as a definitive statement of the benefits that will be available to the Participant upon retirement or in the event of death or disability. This is because the estimates of projected benefits are affected by a number of variables that are constantly changing which include, but are not limited to salary levels, interest rates, qualified plan benefits, group life and disability benefits and Social Security benefits. In certain circumstances the benefits payable to a Participant under this Plan may be adjusted based upon that Participant's individual circumstances. Adjustments resulting in a reduction of benefits will generally be prospective in application, whereas adjustments resulting in an increase in benefits may be retroactive. 21. Severability. If any provision of this Plan is rendered invalid or unenforceable, the remaining provisions of this Plan shall continue to be fully effective. 22. Participation in other participant Benefit Plans. Nothing herein shall, in any manner, modify, impair, or affect the existing or future rights or interests of the Participants (i) to receive any employee benefits to which he would otherwise be entitled; or (ii) as participants in the present or any future incentive or bonus plan, stock option plan, pension plan, or profit sharing plan of the Company, applicable generally to salaried employees. The rights and interests of the Participants to any employee benefits or as a participant or beneficiary in or under any or all such plans shall continue in full force and effect unimpaired, and this Plan shall not act to deny the Participant the right at any time hereafter to become a participant or beneficiary under or pursuant to any and all such plans. 23. Legal and Tax Consequences to Participants. The Company does not represent or guarantee that any particular income or other tax consequences will occur under the Plan. The Participant acknowledges that he has been advised to consult with professional tax and other advisors regarding all benefits, burdens, risks, and consequences arising in connection with this Plan. 24. FICA/Medicare/Federal Income Tax Withholding. Any benefits payable to a Participant and/or a beneficiary hereunder shall be subject to FICA, Medicare, and Federal and State Income Tax withholding to the extent required by law. 12 IN WITNESS WHEREOF, the undersigned has executed this Plan as of the date first above written. FISHER PROPERTIES INC. BY:/s/ Mark A. Weed ------------------- Mark A. Weed Its President & CEO 13 EX-22 12 SUBSIDIARIES OF THE REGISTRANT Exhibit No. 22 FISHER COMPANIES INC. SUBSIDIARIES
Subsidiary State of Incorporation - ---------- ---------------------- Fisher Broadcasting Inc. Washington Fisher Mills Inc. Washington Fisher Properties Inc. Washington Technovators Inc. Washington Fisher Communications Inc. (1) Washington Sunbrook Communications, Inc. (1) Washington Sam Wylde Flour Co., Inc. (2) Washington Valley Milling Co. (2) Washington Fisher Baking Supply Limited (2) Canada Trotwood Inc. (3) Washington
_____________________________ (1) Wholly owned by Fisher Broadcasting Inc. (2) Wholly owned by Fisher Mills Inc. (3) Wholly owned by Fisher Properties Inc. EX-27 13 FINANCIAL DATA SCHEDULE
5 1,000 12-MOS DEC-31-1996 JAN-01-1996 DEC-31-1996 5,116 121,545 44,759 1,418 13,199 76,316 134,594 91,487 394,149 33,895 65,713 0 0 10,663 221,466 394,149 261,220 265,220 170,016 170,016 0 1,522 5,671 39,461 13,375 26,086 0 0 0 26,086 6.12 0
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