-----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, BV14wo5JQzbSRCikOZMqVx5O7g0umErMussrd3Gkl4XjOJYkzQ1tXqNgk77mX9ww X4N/l2lqifL2WdsMDoyH3A== 0001032210-98-000913.txt : 19980814 0001032210-98-000913.hdr.sgml : 19980814 ACCESSION NUMBER: 0001032210-98-000913 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FISHER COMPANIES INC CENTRAL INDEX KEY: 0001034669 STANDARD INDUSTRIAL CLASSIFICATION: GRAIN MILL PRODUCTS [2040] IRS NUMBER: 910222175 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22439 FILM NUMBER: 98685736 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-Q 1 FORM 10-Q U.S. SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1998 [ ] Transition Report Under Section 13 or 15(d) of the Exchange Act For the transition period from ________________ to _________________ Commission File Number 0-22439 FISHER COMPANIES INC. (Exact Name of Registrant as Specified in Its Charter) WASHINGTON 91-0222175 -------------------- ------------------ (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization Identification Number 1525 ONE UNION SQUARE 600 UNIVERSITY STREET SEATTLE, WASHINGTON 98101-3185 (Address of Principal Executive Offices) (Zip Code) (206) 624-2752 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---------- ---------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Stock, $1.25 par value, outstanding as of June 30, 1998: 8,541,962 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The following Consolidated Financial Statements are presented for the Registrant, Fisher Companies Inc. and wholly owned subsidiaries. 1. Consolidated Statement of Income: Three and six months ended June 30, 1998 and 1997. 2. Consolidated Balance Sheet: June 30, 1998 and December 31, 1997. 3. Consolidated Statement of Cash Flows: Six months ended June 30, 1998 and 1997. 4. Consolidated Statement of Comprehensive Income: Three and six months ended June 30, 1998 and 1997. 5. Notes to Consolidated Financial Statements. 2 ITEM 1 - FINANCIAL STATEMENTS FISHER COMPANIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME
SIX MONTHS ENDED THREE MONTHS ENDED JUNE 30 JUNE 30 1998 1997 1998 1997 -------- -------- -------- -------- (In thousands except per share amounts) (Unaudited) Sales and other revenue: Broadcasting $ 60,798 $ 56,053 $33,044 $30,835 Milling 53,281 64,344 26,814 32,760 Real estate 6,143 5,717 3,117 2,905 Corporate and other, primarily dividends and interest income 1,918 1,793 928 897 -------- -------- ------- ------- 122,140 127,907 63,903 67,397 -------- -------- ------- ------- Costs and expenses: Cost of products and services sold 76,395 81,327 38,422 41,251 Selling expenses 9,468 9,012 4,950 4,681 General, administrative and other expenses 18,676 18,194 9,197 9,251 -------- -------- ------- ------- 104,539 108,533 52,569 55,183 -------- -------- ------- ------- Income from operations Broadcasting 14,867 15,914 10,058 10,654 Milling 465 1,449 129 625 Real estate 2,058 1,705 1,076 883 Corporate and other 211 306 71 52 -------- -------- ------- ------- 17,601 19,374 11,334 12,214 Interest expense 2,474 2,790 1,197 1,408 -------- -------- ------- ------- Income before provision for income taxes 15,127 16,584 10,137 10,806 Provision for federal and state income taxes 5,195 5,668 3,580 3,771 -------- -------- ------- ------- Net income $ 9,932 $ 10,916 $ 6,557 $ 7,035 -------- -------- ------- ------- Net income per share $1.16 $1.28 $.77 $.82 Net income per share assuming dilution $1.16 $1.27 $.76 $.82 Weighted average number of shares outstanding 8,539 8,533 8,541 8,535 Weighted average number of shares outstanding assuming dilution 8,592 8,573 8,603 8,582 Dividends declared per share $.50 $.25
See accompanying notes to consolidated financial statements. 3 FISHER COMPANIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
JUNE 30 DECEMBER 31 1998 1997 ----------- ----------- (In thousands except share amounts) (Unaudited) ASSETS Current Assets: Cash and short-term cash investments $ 4,174 $ 6,337 Receivables 41,125 44,623 Inventories 13,199 14,537 Prepaid expenses 3,880 6,922 Television and radio broadcast rights 3,657 6,912 -------- -------- Total current assets 66,035 79,331 -------- -------- Marketable Securities, at market value 139,293 149,616 -------- -------- Other Assets: Cash value of life insurance and retirement deposits 12,634 10,052 Television and radio broadcast rights 212 170 Intangible assets, net of amortization 49,307 49,533 Investments in equity investees 8,692 4,478 Other 2,717 3,117 -------- -------- 73,562 67,350 -------- -------- Property, Plant and Equipment, net 143,030 142,456 -------- -------- $421,920 $438,753 -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Notes payable $ 15,403 $ 18,363 Trade accounts payable 7,658 8,117 Accrued payroll and related benefits 3,683 5,274 Television and radio broadcast rights payable 2,114 6,846 Income taxes payable 2,080 617 Other current liabilities 2,864 3,778 -------- -------- Total current liabilities 33,802 42,995 -------- -------- Long-term Debt, net of current maturities 51,964 55,615 -------- -------- Other Liabilities: Accrued retirement benefits 12,449 12,059 Deferred income taxes 56,747 60,495 Television and radio broadcast rights payable, long-term portion 130 24 Deposits and retainage payable 715 681 -------- -------- 70,041 73,259 -------- -------- Minority Interests 33 33 -------- -------- Stockholders' Equity: Common stock, shares authorized 12,000,000, $1.25 par value; issued 8,541,962 in 1998 and 8,535,432 in 1997 10,677 10,669 Capital in excess of par 603 277 Accumulated other comprehensive income - unrealized gain on marketable securities, net of deferred income taxes of $48,365 in 1998 and $51,977 in 1997 89,818 96,529 Retained earnings 164,982 159,376 -------- -------- 266,080 266,851 -------- -------- $421,920 $438,753 -------- --------
See accompanying notes to consolidated financial statements 4 FISHER COMPANIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30 1998 1997 --------- --------- (In thousands) (Unaudited) Cash flows from operating activities: Net income $ 9,932 $ 10,916 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,592 5,960 Increase in noncurrent deferred income taxes (136) (42) Issuance of stock pursuant to vested stock rights and related tax benefit 293 187 Loss on sale of property, plant and equipment 259 Change in operating assets and liabilities: Receivables 3,498 4,354 Inventories 1,338 (1,340) Prepaid expenses 3,042 2,734 Cash value of life insurance and retirement deposits (2,582) (359) Income taxes payable 1,463 670 Trade accounts payable, accrued payroll and related benefits and other current liabilities (2,964) (5,508) Other assets 400 (175) Accrued retirement benefits 390 (227) Deposits and retainage payable 34 53 Amortization of television and radio broadcast rights 5,274 4,065 Payments for television and radio broadcast rights (6,687) (5,475) -------- -------- Net cash provided by operating activities 20,146 15,813 -------- -------- Cash flows from investing activities: Proceeds from sale of property, plant and equipment 601 Investments in equity investees (4,214) (1,829) Purchase assets of radio stations (427) (3,949) Purchase of property, plant and equipment (7,373) (8,823) -------- -------- Net cash used in investing activities (11,413) (14,601) -------- -------- Cash flows from financing activities: Net borrowings under notes payable (3,008) 5,571 Payments on borrowing agreements and mortgage loans (3,603) (3,548) Proceeds from exercise of stock options 41 29 Cash dividends paid (4,326) (4,231) -------- -------- Net cash used in financing activities (10,896) (2,179) -------- -------- Net decrease in cash and short-term cash investments (2,163) (967) Cash and short-term cash investments, beginning of period 6,337 5,116 -------- -------- Cash and short-term cash investments, end of period $ 4,174 $ 4,149 -------- --------
See accompanying notes to consolidated financial statements FISHER COMPANIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
SIX MONTHS ENDED THREE MONTHS ENDED JUNE 30 JUNE 30 1998 1997 1998 1997 -------- ------- ---------- ------- (In thousands) (Unaudited) Net income $ 9,932 $10,916 $ 6,557 $ 7,035 Other comprehensive income unrealized gain on marketable securities, net of deferred income taxes (6,711) 14,348 (18,557) 13,369 ------- ------- -------- ------- Comprehensive income $ 3,221 $25,264 $(12,000) $20,404 ------- ------- -------- -------
See accompanying notes to consolidated financial statements 5 FISHER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The unaudited financial information furnished herein, in the opinion of management, reflects all adjustments which are necessary to state fairly the consolidated financial position, results of operations, and cash flows of Fisher Companies Inc. (the "Company") as of and for the periods indicated. The Company presumes that users of the interim financial information herein have read or have access to the Company's audited consolidated financial statements and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies or recent subsequent events, may be determined in that context. Accordingly, footnote and other disclosures which would substantially duplicate the disclosures contained in Form 10-K for the year ended December 31, 1997 filed on March 27, 1998 by the Company have been omitted. The financial information herein is not necessarily representative of a full year's operations. Certain prior year balances have been reclassified to conform to the 1998 presentation. 2. In the fourth quarter of 1997 the Company adopted Statement of Financial Accounting Standards No. 128 "Earnings per Share" (FAS 128) which changed the Company's presentation and calculation of earnings per share. Net income per share represents net income divided by the weighted average number of shares outstanding during the period. Net income per share assuming dilution represents net income divided by the weighted average number of shares outstanding including the potentially dilutive impact of the stock options and restricted stock rights issued under the Fisher Companies Incentive Plan of 1995. Common stock options and restricted stock rights are converted using the treasury stock method. Per share amounts for the three and six month periods ended June 30, 1997 have been retroactively adjusted to this new presentation. The adoption of FAS 128 did not have a material impact on the Company's earnings per share. In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (FAS 133), was issued. This pronouncement standardizes the accounting for derivative instruments by requiring that an entity recognize those items as assets or liabilities in the financial statements and measure them at fair value. FAS 133 is required to be adopted by the Company for the year ended December 31, 2000. Early adoption is permitted. The Company is currently reviewing the requirements of FAS 133 and assessing its impact on the Company's financial statements. The Company has not made a decision regarding the period of adoption. 3. Inventories are summarized as follows (in thousands): June 30 December 31 1998 1997 ------- ----------- Finished products $4,215 $ 5,114 Raw materials 8,832 9,258 Spare parts and supplies 152 165 ------- ------- $13,199 $14,537 ======= =======
4. In December 1996 an annual dividend in the amount of $.98 per share was declared, payable quarterly during 1997 at the rate of $.245 per share. In December 1997, March 1998, and April 1998 a quarterly dividend in the amount of $.25 per share was declared, payable in March, June, and September 1998, respectively. 6 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS This discussion is intended to provide an analysis of significant trends and material changes in the Company's financial position and operating results during the three and six month periods ended June 30, 1998 compared with the similar periods in 1997. CONSOLIDATED RESULTS OF OPERATIONS - ---------------------------------- SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997 - ------------------------------------------------------------------------- Sales and other revenue - ----------------------- Six months ended June 30 1998 % Change 1997 $122,140,000 -4.5% $127,907,000 Sales and other revenue increased 8.5% and 7.4% for broadcasting and real estate operations, respectively, in the six months ended June 30, 1998, while milling operations experienced a decline of 17.2%. Revenue of the corporate segment increased 7.0% as a result of increases in dividends from marketable securities. Cost of products and services sold - ---------------------------------- Six months ended June 30 1998 % Change 1997 $76,395,000 -6.1% $81,327,000 Percentage of revenue 62.5% 63.6% The decrease in cost of products and services sold in 1998 is attributable to lower cost of wheat used to produce flour and lower volume of flour sold by the milling segment, offset by increased costs to acquire, produce, and promote broadcast programming. The gross margin percentage from broadcasting operations declined as a result of increased programming costs. The gross margin percentage from milling operations remained constant. Margin from real estate operations improved due to revenue growth. Selling expenses - ---------------- Six months ended June 30 1998 % Change 1997 $9,468,000 5.1% $9,012,000 Percentage of revenue 7.8% 7.0% Selling expenses increased as a result of increased commissions and related expenses attributable to increased broadcasting revenue, partially offset by a decrease in selling expenses at the milling segment due to lower sales. 7 General and administrative expenses - ----------------------------------- Six months ended June 30 1998 % Change 1997 $18,676,000 2.7% $18,194,000 Percentage of revenue 15.3% 14.2% The increase in general and administrative expenses incurred in 1998 is largely attributable to provision for anticipated losses recorded in the broadcasting segment. General and administrative expenses declined at the milling segment as a result of emphasis on expense control. The corporate segment experienced an increase due to increased personnel and other administrative expense. Interest expense - ---------------- Six months ended June 30 1998 % Change 1997 $2,474,000 -11.3% $2,790,000 Interest expense declined in 1998 compared with 1997 due to lower average borrowing outstanding during 1998. The average interest rate was 7.14% in 1998 and 7.03% in 1997. Provision for federal and state income taxes - -------------------------------------------- Six months ended June 30 1998 % Change 1997 $5,195,000 -8.4% $5,668,000 Effective tax rate 34.3% 34.2% The provision for federal and state income taxes varies directly with pre-tax income. The effective tax rate is less than the statutory rate for both periods primarily due to a deduction for dividends received, offset by the impact of state income taxes, net of the federal income tax benefit. THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997 - ----------------------------------------------------------------------------- Sales and other revenue - ----------------------- Three months ended June 30 1998 % Change 1997 $63,903,000 -5.2% $67,397,000 Sales and other revenue increased 7.2% and 7.3% for broadcasting and real estate operations, respectively, in the three months ended June 30, 1998, while milling operations experienced a decline of 18.2%. Revenue of the corporate segment increased 3.5% as a result of increases in dividends from marketable securities. Cost of products and services sold - ---------------------------------- Three months ended June 30 1998 % Change 1997 $38,422,000 -6.9% $41,251,000 Percentage of revenue 60.1% 61.2% The decrease in cost of products and services sold in 1998 is attributable to lower cost of wheat used to produce flour and lower volume of flour sold by the milling segment, offset by increased 8 costs to acquire, produce, and promote broadcast programming. The gross margin percentage from broadcasting declined as a result of increased programming costs. The gross margin percentage from milling operations remained constant. Margin from real estate operations improved due to revenue growth. Selling expenses - ---------------- Three months ended June 30 1998 % Change 1997 $4,950,000 5.7% $4,681,000 Percentage of revenue 7.7% 6.9% Selling expenses increased as a result of increased commissions and related expenses attributable to increased broadcasting revenue. Selling expenses at the milling segment remained relatively constant between the two periods, notwithstanding declining revenue, as a result of efforts to increase sales at the Southern California food distribution operation. General and administrative expenses - ----------------------------------- Three months ended June 30 1998 % Change 1997 $9,197,000 -0.6% $9,251,000 Percentage of revenue 14.4% 13.7% General and administrative expenses declined at the milling segment as a result of emphasis on expense control. The broadcasting and corporate segments each experienced a modest increase due to increased personnel and other administrative expense. The increase in general and administrative expense as a percentage of revenue is due to a decline in revenue. Interest expense - ---------------- Three months ended June 30 1998 % Change 1997 $1,197,000 -14.9% $1,408,000 Interest expense declined in 1998 compared with 1997 due to lower average borrowing outstanding during 1998. As discussed above, the average interest rate in 1998 was slightly higher than in 1997. Provision for federal and state income taxes - -------------------------------------------- Three months ended June 30 1998 % Change 1997 $3,580,000 -5.1% $3,771,000 Effective tax rate 35.3% 34.9% The provision for federal and state income taxes varies directly with pre-tax income. The effective tax rate typically is lower than the statutory rate due to a deduction for dividends received, offset by the impact of state income taxes, net of the federal income tax benefit. During the second quarter of 1998, a greater proportion of pre-tax income was subject to state income tax (income earned in Washington State is not subject to state income tax) compared to second quarter 1997 and the first half of both years, with the result that the effective rate for the period exceeded the statutory rate. 9 BROADCASTING OPERATIONS SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997 - ------------------------------------------------------------------------- Sales and other revenue - ----------------------- Six months ended June 30 1998 % Change 1997 $60,798,000 8.5% $56,053,000 Revenue from KOMO Television in Seattle increased approximately $2,400,000 during the six months ended June 30, 1998 while revenue from KATU Television in Portland increased approximately $1,600,000. Both stations experienced increases in local and national advertising. Revenue from radio operations increased approximately $660,000, including $290,000 from the Company's Seattle radio stations (KOMO AM, KVI AM and KPLZ-FM) and $390,000 from the nineteen small market stations in Montana and Eastern Washington. Revenue from Portland radio operations (KWJJ-FM and KOTK) declined modestly from 1997. Income from operations - ---------------------- Six months ended June 30 1998 % Change 1997 $14,867,000 -6.6% $15,914,000 Percentage of revenue 24.4% 28.4% Compared with 1997, operating results during the six-months ended June 30, 1998 were mixed. Declines in operating income from Seattle television and radio operations and Portland radio operations were not entirely offset by increased income from Portland television and small market radio operations. Operating expenses at the broadcasting segment increased 13.0% in 1998 largely due to increased costs to acquire, produce and promote broadcast programming. 1998 results also include provision, recorded in the first quarter, for anticipated losses incurred from (i) the sale of former Portland radio studios, as part of obtaining new facilities for KWJJ-FM and KOTK, and (ii) an interest in Affiliate Enterprises, Inc. THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997 - ----------------------------------------------------------------------------- Sales and other revenue - ----------------------- Six months ended June 30 1998 % Change 1997 $33,044,000 7.2% $30,835,000 Revenue from both television stations increased approximately $900,000 each during the second quarter of 1998, with both stations experiencing increases in local and national advertising. Revenue from radio operations increased approximately $350,000, including $150,000 from the Company's Seattle radio stations (KOMO AM, KVI AM and KPLZ-FM) and $225,000 from the nineteen small market stations in Montana and Eastern Washington. Revenue from Portland radio operations (KWJJ-FM and KOTK) declined modestly from 1997. 10 Income from operations - ---------------------- Three months ended June 30 1998 % Change 1997 $10,058,000 -5.6% $10,654,000 Percentage of revenue 30.4% 34.5% Second quarter 1998 results were similar to results for the first half, as declines in operating income from Seattle television and radio operations and Portland radio operations were not entirely offset by increased income from Portland television and small market radio operations. Second quarter 1998 operating expenses at the broadcasting segment increased 13.4% largely due to increased costs to acquire, produce and promote broadcast programming. MILLING OPERATIONS SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997 - ------------------------------------------------------------------------- Sales and other revenue - ----------------------- Six months ended June 30 1998 % Change 1997 $53,281,000 -17.2% $64,344,000 Flour prices are largely dependent on the cost of wheat purchased to produce flour. During 1998 average wheat prices were lower than in 1997, with the result that average flour prices in 1998 were 6% lower than in 1997. Flour sales volume also declined 6% during the first half of 1998. In addition, revenue from the food distribution division declined 11%. The decline is due largely to lower sales volume in the Southern California market served by the Rancho Cucamonga Food Distribution Center where reorganization of sales territories and changes in sales personnel during the latter part of 1997, combined with strong competition, continued to negatively impact volume. Declining flour prices also impacted distribution revenue. Income from operations - ---------------------- Six months ended June 30 1998 % Change 1997 $465,000 -67.9% $1,449,000 Percentage of revenue 0.9% 2.3% Income from operations is determined by deducting operating expenses from gross margin on sales. Gross margin percentages at both the milling and food distribution divisions in 1998 were consistent with those of 1997. Operating expenses were 7% lower than in 1997, however that decline did not entirely offset the impact of lower sales volume. THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997 - ----------------------------------------------------------------------------- Sales and other revenue - ----------------------- Three months ended June 30 1998 % Change 1997 $26,814,000 -18.2% $32,760,000 Flour prices are largely dependent on the cost of wheat purchased to produce flour. As discussed above, 1998 average wheat prices were lower than in 1997, with the result that average flour prices in 1998 were lower than in 1997. Second quarter flour sales volume also declined 7.5% 11 compared with the second quarter of 1997. Revenue from the food distribution division declined 9% due to the same factors that impacted the first half of the year. Income from operations - ---------------------- Three months ended June 30 1998 % Change 1997 $129,000 -79.4% $625,000 Percentage of revenue 0.5% 1.9% Income from operations is determined by deducting operating expenses from gross margin on sales. Second quarter 1998 gross margin percentages at both the milling and food distribution divisions were consistent with those of 1997 and with the first half of 1998. Operating expenses were 7% lower than in 1997, however that decline did not entirely offset the impact of lower sales volume. REAL ESTATE OPERATIONS SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997 - ------------------------------------------------------------------------- Sales and other revenue - ----------------------- Six months ended June 30 1998 % Change 1997 $6,143,000 7.4% $5,717,000 Real estate revenue increased in 1998 due to higher occupancy levels. Average occupancy during the six months ended June 30, 1998 and 1997 was 98.7% and 96.6%, respectively. Income from operations - ---------------------- Six months ended June 30 1998 % Change 1997 $2,058,000 20.7% $1,705,000 Percentage of revenue 33.5% 29.8% The improvement in operating income is attributable to increased revenue offset by additional depreciation expense. Other operating expenses remained constant compared with 1997. THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997 - ----------------------------------------------------------------------------- Sales and other revenue - ----------------------- Three months ended June 30 1998 % Change 1997 $3,117,000 7.3% $2,905,000 Second quarter 1998 real estate revenue increased due to the higher occupancy levels discussed above. 12 Income from operations - ---------------------- Three months ended June 30 1998 % Change 1997 $1,076,000 21.9% $883,000 Percentage of revenue 34.6% 30.4% The improvement in operating income is attributable to increased revenue. Depreciation expense remained constant in the two periods. Second quarter 1998 operating expenses increased 2% ($20,000) compared with second quarter 1997. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 1998, the Company had working capital of $32,233,000 and cash and short-term cash investments totaling $4,174,000. 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. In this regard, the Company has obtained a five-year unsecured revolving line of credit from a bank in a maximum amount of $100,000,000 to finance construction of the KOMO Block Project, a new broadcast center for KOMO Television, and for working capital and other general corporate purposes. The revolving line of credit is governed by a credit agreement which provides that borrowings under the line will bear interest at a variable rate not to exceed the bank's publicly announced reference rate. The agreement also places limitations on the disposition or encumbrance of certain assets and requires the Company to maintain certain financial ratios. Net cash provided by operating activities during the six months ended June 30, 1998 was $19,887,000. 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 operating assets and liabilities. Net cash used in investing activities during the period was $11,154,000, consisting of $6,513,000 for purchase of property, plant and equipment used in operations, $427,000 to purchase assets of radio stations, and $4,214,000 for additional investment in a limited liability company formed to construct and operate a compact flour mill in Blackfoot, Idaho in which the milling subsidiary is a 50% member. Net cash used in financing activities was $10,896,000, including payment of $3,008,000 on notes payable and $3,603,000 on borrowing agreements and mortgage loans, and cash dividends paid to stockholders totaling $4,326,000 or $.25 per share. YEAR 2000 The Company is actively assessing the impact of the upcoming change in the century on its computer software and hardware, and on the Company's products, services and competitive conditions. Certain software applications have been identified for replacement prior to the year 2000. Based on its analysis to date, the Company believes that the impact of year 2000 issues will not be material to the Company's business, operations or financial condition, and that the cost of remediating such matters will not be material. However, the impact of the failure of computer systems of customers, vendors and others with whom the Company does business is uncertain and has not been assessed by the Company. 13 PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The discussion above under "Year 2000" includes certain "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). This statement is included for the express purpose of availing the Company of the protections of the safe harbor provisions of the PSLRA. Management's ability to predict results or the effect of future plans is inherently uncertain, and is subject to factors that may cause actual results to differ materially from those projected. Factors that could affect the actual results include the possibility that remediation programs will not operate as intended, the Company's failure to timely or completely identify all software or hardware applications requiring remediation, unexpected costs, and the uncertainty associated with the impact of year 2000 issues on the Company's customers, vendors and others with whom it does business. 14 PART II OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual Meeting of Shareholders was held April 30, 1998. The five nominees elected to the Board of Directors for three year terms expiring in 2001 are listed below. There were no broker non-votes with respect to any of the nominees. Votes Votes For Withheld --------- -------- Carol H. Fratt 7,635,026 3,202 Donald G. Graham, Jr. 7,638,028 200 Donald G. Graham, III 7,635,826 2,402 W. W. Krippaehne, Jr. 7,637,828 400 John D. Mangels 7,635,626 2,602 In addition, the stockholders ratified the action of the Board of Directors in appointing Price Waterhouse LLP as independent accountants for 1998 with 7,639,066 shares voted in favor, 762 shares voted against, and 2,300 shares abstaining. There were no broker non-votes with respect to the proposal. The total number of shares of Common Stock $1.25 par value, outstanding as of March 13, 1998, the record date for the annual meeting, was 8,535,432. ITEM 5. OTHER INFORMATION In March, 1998 Terry Barrans, President and CEO of the Company's milling subsidiary, entered a hospital for exploratory surgery. Colon cancer was diagnosed, and Mr. Barrans was operated upon immediately. Mr. Barrans is currently undergoing chemotherapy treatment. The prognosis for Mr. Barrans and the impact of his illness on the Company or the milling subsidiary is uncertain. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit 11, Statement re Computation of Per Share Earnings Exhibit 27, Financial Data Schedule (b) Reports on Form 8-K: None 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FISHER COMPANIES INC. (Registrant) Dated August 12, 1998 /s/ William W. Krippaehne, Jr. ------------------- ------------------------------------- William W. Krippaehne, Jr. President and Chief Executive Officer Dated August 12, 1998 /s/ David D. Hillard ------------------- ------------------------------------- David D. Hillard Senior Vice President and Chief Financial Officer 16 EX-11 2 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 FISHER COMPANIES INC. COMPUTATION OF PER SHARE EARNINGS
Six Months Ended Three Months Ended June 30 June 30 1998 1997 1998 1997 ---------- ----------- ---------- ---------- Weighted average common shares outstanding during the period: 8,539,028 8,533,014 8,541,699 8,535,032 Dilutive effect of: Restricted stock rights 24,674 23,760 24,358 25,492 Stock options 27,991 16,185 37,236 20,653 ---------- ----------- ---------- ---------- Weighted average shares outstanding assuming dilution 8,591,693 8,572,959 8,603,293 8,581,177 ========== =========== ========== ========== Net income $9,932,000 $10,916,000 $6,557,000 $7,035,000 ========== =========== ========== ========== Net income per common share $ 1.16 $ 1.28 $ .77 $ .82 ========== =========== ========== ========== Net income per common share assuming dilution $ 1.16 $ 1.27 $ .76 $ .82 ========== =========== ========== ==========
Share amounts have been restated to reflect the two-for-one stock split that was effective March 6, 1998. EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 4,174 139,293 42,395 1,270 13,199 66,035 248,471 105,441 421,920 33,802 51,964 0 0 10,677 255,403 421,920 120,222 122,140 76,395 76,395 27,696 448 2,474 15,127 5,195 9,932 0 0 0 9,932 1.16 1.16
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