-----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, NBO1asiRQo2Sn/Z2cUGZLilMs39R6ghIKJ4zsEUX+EJbKlvPnvqMnZyVjbaOYBQR Pla5OFJUAuqNEav+iGpVeA== 0001032210-98-000487.txt : 19980514 0001032210-98-000487.hdr.sgml : 19980514 ACCESSION NUMBER: 0001032210-98-000487 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 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: 98618848 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 March 31, 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 March 31, 1998: 8,540,982 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The following Consolidated Financial Statements are presented for the Registrant, Fisher Companies Inc. and wholly owned subsidiaries. 1. Consolidated Statement of Income: Three months ended March 31, 1998 and 1997. 2. Consolidated Balance Sheet: March 31, 1998 and December 31, 1997. 3. Consolidated Statement of Cash Flows: Three months ended March 31, 1998 and 1997. 4. Consolidated Statement of Comprehensive Income: Three months ended March 31, 1998 and 1997. 5. Notes to Consolidated Financial Statements. 2 ITEM 1 - FINANCIAL STATEMENTS FISHER COMPANIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME
Three months ended March 31 1998 1997 - --------------------------- ------- ------- (In thousands except per share amounts) (Unaudited) Sales and other revenue: Broadcasting $27,754 $25,217 Milling 26,467 31,585 Real estate 3,026 2,812 Corporate and other, primarily dividends and interest income 990 896 ------- ------- 58,237 60,510 ------- ------- Costs and expenses: Cost of products and services sold 37,973 40,076 Selling expenses 4,518 4,331 General, administrative and other expenses 9,479 8,943 ------- ------- 51,970 53,350 ------- ------- Income from operations Broadcasting 4,809 5,260 Milling 336 824 Real estate 982 822 Corporate and other 140 254 ------- ------- 6,267 7,160 Interest expense 1,277 1,382 ------- ------- Income before provision for income taxes 4,990 5,778 Provision for federal and state income taxes 1,615 1,897 ------- ------- Net income $ 3,375 $ 3,881 ------- ------- Net income per share $.40 $.45 Net income per share assuming dilution $.39 $.45 Weighted average number of shares outstanding 8,536 8,531 Weighted average number of shares outstanding assuming dilution 8,583 8,567 Dividends declared per share $.25
See accompanying notes to consolidated financial statements. 3 FISHER COMPANIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
March 31 December 31 1998 1997 -------- ----------- (In thousands except share amounts) (Unaudited) ASSETS Current Assets: Cash and short-term cash investments $ 2,818 $ 6,337 Receivables 35,931 44,623 Inventories 17,180 14,537 Prepaid expenses 3,839 6,922 Television and radio broadcast rights 4,105 6,912 -------- -------- Total current assets 63,873 79,331 -------- -------- Marketable Securities, at market value 167,842 149,616 -------- -------- Other Assets: Cash value of life insurance and retirement deposits 12,796 10,052 Television and radio broadcast rights 137 170 Intangible assets, net of amortization 49,206 49,533 Investments in equity investees 6,976 4,478 Other 2,859 3,117 -------- -------- 71,974 67,350 -------- -------- Property, Plant and Equipment, net 142,660 142,456 -------- -------- $446,349 $438,753 -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Notes payable $ 15,711 $ 18,363 Trade accounts payable 5,698 8,117 Accrued payroll and related benefits 3,540 5,274 Television and radio broadcast rights payable 4,201 6,846 Income taxes payable 1,401 617 Other current liabilities 3,178 3,778 -------- -------- Total current liabilities 33,729 42,995 -------- -------- Long-term Debt, net of current maturities 52,286 55,615 -------- -------- Other Liabilities: Accrued retirement benefits 12,421 12,059 Deferred income taxes 66,977 60,495 Television and radio broadcast rights payable, long-term portion 16 24 Deposits and retainage payable 693 681 -------- -------- 80,107 73,259 -------- -------- Minority Interests 33 33 -------- -------- Stockholders' Equity: Common stock, shares authorized 12,000,000, $1.25 par value; issued 8,540,982 in 1998 and 8,535,432 in 1997 10,676 10,669 Capital in excess of par 554 277 Accumulated other comprehensive income - unrealized gain on marketable securities, net of deferred income taxes of $58,356 in 1998 and $51,977 in 1997 108,375 96,529 Retained earnings 160,589 159,376 -------- -------- 280,194 266,851 -------- -------- $446,349 $438,753 -------- --------
See accompanying notes to consolidated financial statements 4 FISHER COMPANIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
Three months ended March 31 1998 1997 - --------------------------- -------- -------- (In thousands) (Unaudited) Cash flows from operating activities: Net income $ 3,375 $ 3,881 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,289 2,959 Increase in noncurrent deferred income taxes 102 (114) Issuance of stock pursuant to vested stock rights and related tax benefit 284 146 Change in operating assets and liabilities: Receivables 8,692 6,012 Inventories (2,643) (3,462) Prepaid expenses 3,083 1,090 Cash value of life insurance and retirement deposits (2,744) (38) Income taxes payable 784 837 Trade accounts payable, accrued payroll and related benefits and other current liabilities (4,753) (5,276) Other assets 258 (368) Accrued retirement benefits 362 (161) Deposits and retainage payable 12 24 Amortization of television and radio broadcast rights 2,840 2,247 Payments for television and radio broadcast rights (2,653) (1,894) ------- ------- Net cash provided by operating activities 10,288 5,883 ------- ------- Cash flows from investing activities: Investments in equity investees (2,498) (1) Purchase assets of radio stations (3,949) Purchase of property, plant and equipment (3,166) (5,840) ------- ------- Net cash used in investing activities (5,664) (9,790) ------- ------- Cash flows from financing activities: Net borrowings under notes payable 2,104 5,085 Payments on borrowing agreements and mortgage loans (8,085) (271) Proceeds from exercise of stock options 28 Cash dividends paid (2,162) (2,115) ------- ------- Net cash (used in) provided by financing activities (8,143) 2,727 ------- ------- Net increase (decrease) in cash and short-term cash investments (3,519) (1,180) Cash and short-term cash investments, beginning of period 6,337 5,116 ------- ------- Cash and short-term cash investments, end of period $ 2,818 $ 3,936 ------- -------
See accompanying notes to consolidated financial statements FISHER COMPANIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Three months ended March 31 1998 1997 - --------------------------- ------- ------- (In thousands) (Unaudited) Net income $ 3,375 $3,881 Other comprehensive income unrealized gain on securities net of deferred income taxes of $6,379 in 1998 and $527 in 1997 11,846 979 ------- ------ Comprehensive income $15,221 $4,860 ------- ------
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. 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 year. 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 months ended March 31, 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. 3. Inventories are summarized as follows (in thousands):
March 31 December 31 1998 1997 ---- ---- Finished products $ 4,786 $ 5,114 Raw materials 12,246 9,258 Spare parts and supplies 148 165 ------- ------- $17,180 $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 and March 1998 a quarterly dividend in the amount of $.25 per share was declared, payable in March and June 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 month period ended March 31, 1998 compared with the similar period in 1997. CONSOLIDATED RESULTS OF OPERATIONS Sales and other revenue - -----------------------
Three months ended March 31 1998 % Change 1997 $58,237,000 -3.8% $60,510,000
Sales and other revenue increased 10.1% and 7.6% for broadcasting and real estate operations, respectively, in the three months ended March 31, 1998, while milling operations experienced a decline of 16.2%. Revenue of the corporate segment increased 10.5% as a result of increases in dividends from marketable securities. Cost of products and services sold - ----------------------------------
Three months ended March 31 1998 % Change 1997 $37,973,000 -5.2% $40,076,000 Percentage of revenue 65.2% 66.2%
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 costs to acquire and produce broadcast programming. Constant gross margin percentages at milling operations and improved margins from real estate operations contributed to a reduction in cost of products and services sold as a percentage of revenue. Selling expenses - ----------------
Three months ended March 31 1998 % Change 1997 $4,518,000 4.3% $4,331,000 Percentage of revenue 7.8% 7.2%
Selling expenses increased as a result of increased commissions and related expenses resulting from increased broadcasting revenue, partially offset by a decrease in selling expenses at the milling segment due to lower sales. 7 General and administrative expenses - -----------------------------------
Three months ended March 31 1998 % Change 1997 $9,479,000 6.0% $8,943,000 Percentage of revenue 16.3% 14.8%
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 - ----------------
Three months ended March 31 1998 % Change 1997 $1,277,000 -7.6% $1,382,000
Interest expense declined in 1998 compared with 1997 due to lower average borrowing outstanding during 1998. The average interest rate was 7.2% in 1998 and 7.0% in 1997. Provision for federal and state income taxes - --------------------------------------------
Three months ended March 31 1998 % Change 1997 $1,615,000 -14.9% $1,897,000 Effective tax rate 32.4% 32.8%
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. BROADCASTING OPERATIONS Sales and other revenue - -----------------------
Three months ended March 31 1998 % Change 1997 $27,754,000 10.1% $25,217,000
Revenue from KOMO Television in Seattle increased approximately $1,500,000 during the three months ended March 31, 1998 while revenue from KATU Television in Portland increased approximately $700,000. Both stations experienced increases in local and national advertising. Revenue from radio operations increased approximately $310,000, including $140,000 from the Company's Seattle radio stations (KOMO AM, KVI AM and KPLZ-FM) and $170,000 from the nineteen small market stations in Montana and Eastern Washington. Revenue from Portland radio operations (KWJJ-FM and KOTK) was essentially unchanged from 1997. 8 Income from operations - ----------------------
Three months ended March 31 1998 % Change 1997 $4,809,000 -8.6% $5,260,000 Percentage of revenue 17.3% 20.9%
The decline in operating income is principally due to provision 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. Operating expenses at the broadcasting segment increased 13.2% in 1998 largely the result of increased costs to acquire and produce broadcast programming. MILLING OPERATIONS Sales and other revenue - -----------------------
Three months ended March 31 1998 % Change 1997 $26,467,000 -16.2% $31,585,000
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 5% during the first quarter of 1998. In addition, revenue from the food distribution division declined $1,590,000 or 13%. 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. Income from operations - ----------------------
Three months ended March 31 1998 % Change 1997 $336,000 -59.3% $824,000 Percentage of revenue 1.3% 2.6%
Income from operations is determined by deducting operating expenses from gross margin on sales. Gross margin declined at both the milling and food distribution divisions in 1998. Operating expenses were 6% lower than in 1997, however that decline did not offset the impact of lower sales volume. REAL ESTATE OPERATIONS Sales and other revenue - -----------------------
Three months ended March 31 1998 % Change 1997 $3,026,000 7.6% $2,812,000
Real estate revenue increased in 1998 due to higher occupancy levels. Average occupancy during the three months ended March 31, 1998 and 1997 was 98.4% and 95.7%, respectively. 9 Income from operations - ----------------------
Three months ended March 31 1998 % Change 1997 $982,000 19.4% $822,000 Percentage of revenue 32.4% 29.2%
The improvement in operating income is attributable to increased revenue offset by additional depreciation expense. Operating expenses declined modestly from 1997. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 1998, the Company had working capital of $30,144,000 and cash and short-term cash investments totaling $2,818,000. 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 commitment letter from a bank for a five-year unsecured revolving line of credit in a maximum amount of $100,000,000 to finance construction of the KOMO Block Project, a new broadcast center for KOMO Television. The revolving line of credit will be governed by a credit agreement, the terms of which have not yet been negotiated. Net cash provided by operating activities during the three months ended March 31, 1998 was $10,288,000. 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 $5,664,000, consisting of $3,166,000 for purchase property, plant and equipment used in operations and $2,498,000 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 $8,143,000, including payment of $8,085,000 due on borrowing agreements and mortgage loans, and cash dividends paid to stockholders totaling $2,162,000 or $.25 per share. $2,104,000 was borrowed under lines of credit and notes from shareholders and directors. 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. 10 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. 11 PART II OTHER INFORMATION 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 12 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 May 12, 1998 /s/ William W. Krippaehne, Jr. ---------------- ------------------------------ William W. Krippaehne, Jr. President and Chief Executive Officer Dated May 12, 1998 /s/ David D. Hillard ---------------- -------------------- David D. Hillard Senior Vice President and Chief Financial Officer 13 EXHIBIT INDEX Exhibit 11, Statement re Computation of Per Share Earnings Exhibit 27, Financial Data Schedule EX-11 2 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 FISHER COMPANIES INC. COMPUTATION OF PER SHARE EARNINGS
Three Months Ended March 31 1998 1997 ---- ---- Weighted average of common shares outstanding during the period 8,536,357 8,530,995 Dilutive effect of: Restricted stock rights 24,990 22,029 Stock options 21,799 14,113 ---------- ---------- Weighted average shares outstanding assuming dilution 8,583,146 8,567,137 ========== ========== Net income $3,375,000 $3,881,000 ========== ========== Net income per common share $.40 $.45 ==== ==== Net income per common share assuming dilution $.39 $.45 ==== ====
Share amounts have been adjusted to reflect the two-for-one stock split that was effective March 6, 1998. EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 2,818 167,842 37,212 1,281 17,180 63,873 246,035 103,375 446,349 33,729 52,286 0 0 10,676 269,518 446,349 57,247 58,237 37,973 37,973 13,792 205 1,277 4,990 1,615 3,375 0 0 0 3,375 .40 .39
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