SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 18, 2003
Date of Report
(Date of earliest event reported)
FISHER COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Charter)
Washington | 000-22439 | 91-0222175 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File No.) | (IRS Employer Identification No.) |
100 Fourth Avenue N., Suite 440, Seattle, Washington 98109
(Address of Principal Executive Offices, including Zip Code)
(206) 404-7000
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets.
On December 18, 2003, Fisher Communications, Inc. (the “Company”) announced that Fisher Broadcasting – Portland Radio, LLC, one of its broadcasting subsidiaries, had completed the sale of substantially all of the assets of its two Portland, Oregon radio stations, KWJJ-FM and KOTK (AM), (the “Assets”) to Entercom Communications Corporation in accordance with the terms of the Asset Purchase Agreement dated as of May 29, 2003 among Fisher Broadcasting Company, Fisher Broadcasting – Portland Radio, LLC, Entercom Portland, LLC, and Entercom Portland License, LLC (the “Purchase Agreement”). The purchase price paid for the two stations was $44 million. Net proceeds after income taxes, escrow items, and closing costs were approximately $34 million. The consideration paid by Entercom Communications Corporation for the Assets was determined through arms’ length negotiations between the parties. The Company used the net proceeds to pay down corporate debt.
The foregoing description of the sales of the Assets does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which is incorporated herein by reference to Exhibit 2.2 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003 initially filed on September 15, 2003. A copy of the press release announcing the sale of the Assets is attached hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro Forma Financial Information
The pro forma financial information required to be filed pursuant to Item 7(b) of Form 8-K and prepared according to Article 11 of the United States Securities and Exchange Commission’s Regulation S-X is filed herewith and incorporated herein by reference.
Unaudited Pro Forma Financial Data
On December 18, 2003, the Company announced that Fisher Broadcasting – Portland Radio, LLC, one of its broadcasting subsidiaries, had completed the sale of substantially all of the assets of its two Portland, Oregon radio stations, KWJJ-FM and KOTK (AM), to Entercom Communications Corporation. The purchase price paid for the two stations was $44 million. Net proceeds after income taxes, escrow items, and closing costs were approximately $34 million. The Company used the net proceeds to pay down corporate debt.
The unaudited pro forma financial data presented below is based on the historical financial statements of the Company and gives effect to the disposition of the Assets accounted for as discontinued operations in accordance with Statement of Financial Accounting Standards No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets.” The following pro forma financial data and notes thereto are being filed herewith:
• | Unaudited Pro Forma Consolidated Statement of Operations Data for the nine months ended September 30, 2003, giving effect to the transaction as if it had occurred on January 1, 2003 |
• | Unaudited Pro Forma Consolidated Statement of Operations Data for the years ended December 31, 2002, December 31, 2001, and December 31, 2000, giving effect to the transaction as if it had occurred on January 1, 2000 |
• | Unaudited Pro Forma Consolidated Balance Sheet Data as of September 30, 2003, giving effect to the transaction as if it had occurred on September 30, 2003 |
The pro forma financial information represents, in the opinion of management, all adjustments necessary to present the Company’s pro forma results of operations and financial position in accordance with Article 11 of the United States Securities and Exchange Commission’s Regulation S-X and is based upon
available information and certain assumptions considered reasonable under the circumstances. The Unaudited Pro Forma Consolidated Statement of Operations Data also excludes the gain on sale, and any other non-recurring charges or credits attributable to the transaction. Such non-recurring charges or credits, consisting primarily of closing costs approximating $1,200,000 and estimated costs for environmental matters of $500,000, are included within the Unaudited Pro Forma Consolidated Balance Sheet Data to arrive at the calculated gain on sale, net of income taxes.
The pro forma financial data and notes thereto should be read in conjunction with the historical consolidated financial statements of the Company, including the financial information contained in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2002 and Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003 and the accompanying notes thereto, which are incorporated herein by reference. The unaudited pro forma financial data is based upon certain assumptions and estimates of management that are subject to change. The pro forma financial data is presented for illustrative purposes only and is not necessarily indicative of any future results of operations or the results that might have occurred if the sale of the Assets had actually occurred on the indicated dates.
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS DATA
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(in thousands, except per-share amounts) | Historical | Pro Forma Adjustments (1) | Pro Forma As Adjusted | |||||||
Revenue | $ | 103,858 | $ | 103,858 | ||||||
Costs and expenses | ||||||||||
Cost of services sold, exclusive of depreciation | 54,108 | 54,108 | ||||||||
Selling expenses | 19,082 | 19,082 | ||||||||
General and administrative expenses | 30,666 | 30,666 | ||||||||
Depreciation | 11,787 | 11,787 | ||||||||
115,643 | 115,643 | |||||||||
Loss from operations | (11,785 | ) | (11,785 | ) | ||||||
Net gain on derivative instruments | 460 | 460 | ||||||||
Other income, net | 5,737 | 5,737 | ||||||||
Equity in operations of equity investees | 9 | 9 | ||||||||
Interest expense | (9,023 | ) | (9,023 | ) | ||||||
Loss from continuing operations before income taxes | (14,602 | ) | (14,602 | ) | ||||||
Provision for federal and state income taxes (benefit) | (5,829 | ) | (5,829 | ) | ||||||
Loss from continuing operations | $ | (8,773 | ) | $ | (8,773 | ) | ||||
Basic and diluted loss per share from continuing operations | $ | (1.02 | ) | $ | (1.02 | ) | ||||
Basic and diluted weighted average shares outstanding | 8,595 | 8,595 |
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS DATA
FOR THE YEAR ENDED DECEMBER 31, 2002
(in thousands, except per-share amounts) | Historical | Pro Forma Adjustments (2) | Pro Forma As Adjusted | |||||||||
Revenue | $ | 154,088 | $ | (6,442 | ) | $ | 147,646 | |||||
Costs and expenses | ||||||||||||
Cost of services sold, exclusive of depreciation | 67,256 | (2,106 | ) | 65,150 | ||||||||
Selling expenses | 23,143 | (1,530 | ) | 21,613 | ||||||||
General and administrative expenses | 44,464 | (1,544 | ) | 42,920 | ||||||||
Depreciation | 21,097 | (248 | ) | 20,849 | ||||||||
155,960 | (5,428 | ) | 150,532 | |||||||||
Loss from operations | (1,872 | ) | (1,014 | ) | (2,886 | ) | ||||||
Net gain on derivative instruments | 1,632 | 1,632 | ||||||||||
Gain on sale of real estate | 5,442 | 5,442 | ||||||||||
Other income, net | 2,978 | 2,978 | ||||||||||
Equity in operations of equity investees | 93 | 93 | ||||||||||
Interest expense | (19,455 | ) | 1,926 | (17,529 | ) | |||||||
Loss from continuing operations before income taxes | (11,182 | ) | 912 | (10,270 | ) | |||||||
Provision for federal and state income taxes (benefit) | (4,899 | ) | 328 | (4,571 | ) | |||||||
Loss from continuing operations | $ | (6,283 | ) | $ | 584 | $ | (5,699 | ) | ||||
Basic and diluted loss per share from continuing operations | $ | (0.73 | ) | $ | (0.66 | ) | ||||||
Basic and diluted weighted average shares outstanding | 8,593 | 8,593 |
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS DATA
FOR THE YEAR ENDED DECEMBER 31, 2001
(in thousands, except per-share amounts) | Historical | Pro Forma Adjustments (2) | Pro Forma As Adjusted | |||||||||
Revenue | $ | 158,594 | $ | (5,479 | ) | $ | 153,115 | |||||
Costs and expenses | ||||||||||||
Cost of services sold, exclusive of depreciation | 71,106 | (2,375 | ) | 68,731 | ||||||||
Selling expenses | 21,179 | (1,672 | ) | 19,507 | ||||||||
General and administrative expenses | 44,292 | (1,494 | ) | 42,798 | ||||||||
Depreciation | 23,639 | (1,185 | ) | 22,454 | ||||||||
160,216 | (6,726 | ) | 153,490 | |||||||||
Loss from operations | (1,622 | ) | 1,247 | (375 | ) | |||||||
Other income, net | 3,210 | 3,210 | ||||||||||
Equity in operations of equity investees | 7 | 7 | ||||||||||
Interest expense | (16,890 | ) | 2,087 | (14,803 | ) | |||||||
Loss from continuing operations before income taxes | (15,295 | ) | 3,334 | (11,961 | ) | |||||||
Provision for federal and state income taxes (benefit) | (6,854 | ) | 1,200 | (5,654 | ) | |||||||
Loss from continuing operations | $ | (8,441 | ) | $ | 2,134 | $ | (6,307 | ) | ||||
Basic and diluted loss per share from continuing operations | $ | (0.98 | ) | $ | (0.74 | ) | ||||||
Basic and diluted weighted average shares outstanding | 8,575 | 8,575 |
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS DATA
FOR THE YEAR ENDED DECEMBER 31, 2000
(in thousands, except per-share amounts) | Historical | Pro Forma Adjustments (2) | Pro Forma As Adjusted | |||||||||
Revenue | $ | 206,824 | $ | (6,613 | ) | $ | 200,211 | |||||
Costs and expenses | ||||||||||||
Cost of services sold, exclusive of depreciation | 71,502 | (2,266 | ) | 69,236 | ||||||||
Selling expenses | 22,791 | (1,793 | ) | 20,998 | ||||||||
General and administrative expenses | 44,901 | (1,537 | ) | 43,364 | ||||||||
Depreciation | 20,873 | (1,239 | ) | 19,634 | ||||||||
160,067 | (6,835 | ) | 153,232 | |||||||||
Income from operations | 46,757 | 222 | 46,979 | |||||||||
Gain on sale of real estate | 852 | 852 | ||||||||||
Gain on sale of KJEO TV | 15,722 | 15,722 | ||||||||||
Other income, net | 4,625 | 4,625 | ||||||||||
Equity in operations of equity investees | 121 | 121 | ||||||||||
Interest expense | (20,393 | ) | 2,861 | (17,532 | ) | |||||||
Income from continuing operations before income taxes | 47,684 | 3,083 | 50,767 | |||||||||
Provision for federal and state income taxes | 16,286 | 1,110 | 17,396 | |||||||||
Income from continuing operations | $ | 31,398 | $ | 1,973 | $ | 33,371 | ||||||
Income per share from continuing operations | $ | 3.67 | $ | 3.90 | ||||||||
Income per share from continuing operations, assuming dilution | $ | 3.65 | $ | 3.88 | ||||||||
Weighted average shares outstanding | 8,556 | 8,556 | ||||||||||
Weighted average shares outstanding, assuming dilution | 8,593 | 8,593 |
UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET DATA
AS OF SEPTEMBER 30, 2003
(in thousands) | Historical | Pro Forma Adjustments (3) | Pro Forma As Adjusted | |||||||||
ASSETS | ||||||||||||
Current Assets | ||||||||||||
Cash and short-term cash investments | $ | 10,182 | $ | $ | 10,182 | |||||||
Receivables | 28,468 | 1,000 | 29,468 | |||||||||
Deferred income taxes | 7,956 | 7,956 | ||||||||||
Prepaid expenses | 4,888 | 4,888 | ||||||||||
Television and radio broadcast rights | 8,601 | 8,601 | ||||||||||
Assets held for sale | 2,645 | 2,645 | ||||||||||
Total current assets | 62,740 | 1,000 | 63,740 | |||||||||
Marketable Securities, at market value | 106,133 | 106,133 | ||||||||||
Other Assets | ||||||||||||
Cash value of life insurance and retirement deposits | 13,978 | 13,978 | ||||||||||
Television and radio broadcast rights | 4,566 | 4,566 | ||||||||||
Goodwill, net | 38,354 | 38,354 | ||||||||||
Intangible assets | 1,232 | 1,232 | ||||||||||
Investments in equity investees | 2,807 | 2,807 | ||||||||||
Other | 10,262 | 10,262 | ||||||||||
Assets held for sale | 109,153 | (29,899 | ) | 79,254 | ||||||||
180,352 | (29,899 | ) | 150,453 | |||||||||
Property, Plant and Equipment, net | 161,258 | 161,258 | ||||||||||
$ | 510,483 | $ | (28,899 | ) | $ | 481,584 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current Liabilities | ||||||||||||
Notes payable | $ | 7,151 | $ | $ | 7,151 | |||||||
Trade accounts payable | 4,654 | 4,654 | ||||||||||
Accrued payroll and related benefits | 10,241 | 10,241 | ||||||||||
Television and radio broadcast rights payable | 8,234 | 8,234 | ||||||||||
Other current liabilities | 1,275 | 500 | 1,775 | |||||||||
Liabilities of businesses held for sale | 3,372 | 3,372 | ||||||||||
Total current liabilities | 34,927 | 500 | 35,427 | |||||||||
Long-term Debt, net of current maturities | 224,651 | (33,339 | ) | 191,312 | ||||||||
Other Liabilities | ||||||||||||
Accrued retirement benefits | 17,656 | 17,656 | ||||||||||
Deferred income taxes | 31,450 | (4,049 | ) | 27,401 | ||||||||
Television and radio broadcast rights payable, long-term portion | 110 | 110 | ||||||||||
Other liabilities | 2,661 | 2,661 | ||||||||||
Liabilities of businesses held for sale | 37,541 | 37,541 | ||||||||||
89,418 | (4,049 | ) | 85,369 | |||||||||
Commitments and Contingencies | ||||||||||||
Stockholders’ Equity | ||||||||||||
Common stock | 10,760 | 10,760 | ||||||||||
Capital in excess of par | 4,030 | 4,030 | ||||||||||
Deferred compensation | (2 | ) | (2 | ) | ||||||||
Accumulated other comprehensive income - net of income taxes: | ||||||||||||
Unrealized gain on marketable securities | 68,325 | 68,325 | ||||||||||
Minimum pension liability | (1,773 | ) | (1,773 | ) | ||||||||
Retained earnings | 80,147 | 7,989 | 88,136 | |||||||||
161,487 | 7,989 | 169,476 | ||||||||||
$ | 510,483 | $ | (28,899 | ) | $ | 481,584 | ||||||
(1) | Operating results for the Portland radio stations for the nine-months ended September 30, 2003 had been previously reported as discontinued operations in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003; therefore, no pro forma adjustments were required to reflect the impact of the transaction on continuing operations. |
(2) | The pro forma adjustments give effect to the elimination of revenues, cost of services sold, selling expenses, general and administrative expenses, depreciation, interest expense, and income taxes associated with the Assets in the period indicated. The pro forma adjustment for interest expense consists of an allocation of interest expense relating to corporate debt that is required to be repaid from the net proceeds from the sale of the Assets. A non-recurring gain on sale of the Assets of $7,989,000 has not been included in the Unaudited Pro Forma Consolidated Statement of Operations Data but will be reflected in the Company’s financial statements in the period in which the transaction was consummated. |
(3) | Certain assets and liabilities relating to the Portland radio stations had been previously reported as assets and liabilities of businesses held for sale in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003. The pro forma adjustments give effect to the following items: |
• | Sale of property, plant, and equipment, with a net book value of $1,668,000 included within long-term assets held for sale in the Unaudited Pro Forma Consolidated Balance Sheet Data. |
• | Elimination of goodwill totaling $28,231,000 included within long-term assets held for sale in the Unaudited Pro Forma Consolidated Balance Sheet Data. |
• | Recognition of a $1,000,000 receivable representing an agreed-upon amount held back from the purchase price for certain environmental matters, and the separate recognition of a preliminary estimated liability of $500,000 to resolve such matters. |
• | Application of sale proceeds to pay down corporate debt as required by the Company’s debt agreements. |
• | A non-recurring gain on sale of $7,989,000, net of income taxes of $4,447,000 has been determined assuming that the sale occurred on September 30, 2003 and has been reflected in the Unaudited Pro Forma Consolidated Balance Sheet Data. The non-recurring gain was calculated as net proceeds less closing costs, estimated environmental costs arising in the sale transaction, income taxes calculated on the sale, and certain assets as reflected in the Unaudited Pro Forma Consolidated Balance Sheet Data. |
(c) Exhibits
2.1 Asset Purchase Agreement dated as of May 29, 2003 among Fisher Broadcasting Company, Fisher Broadcasting – Portland Radio, LLC, Entercom Portland, LLC, and Entercom Portland License, LLC (incorporated by reference to Exhibit 2.2 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003 initially filed on September 15, 2003).
2.2 Closing Date Agreement dated as of December 18, 2003 among Fisher Broadcasting Company, Fisher Broadcasting – Portland Radio, LLC, Entercom Portland, LLC, and Entercom Portland License, LLC.
99.1 Press Release of Fisher Communications, Inc. issued December 18, 2003.
SIGNATURE
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 hereunto duly authorized.
FISHER COMMUNICATIONS, INC. | ||||
Dated: December 31, 2003 | By | /s/ David D. Hillard | ||
David D. Hillard | ||||
Senior Vice President | ||||
Chief Financial Officer |
Index to Exhibits
Exhibit Number | Description | |
2.1 | Asset Purchase Agreement dated May 29, 2003 (incorporated by reference to Exhibit 2.2 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003 initially filed on September 15, 2003). | |
2.2 | Closing Date Agreement dated as of December 18, 2003 among Fisher Broadcasting Company, Fisher Broadcasting – Portland Radio, LLC, Entercom Portland, LLC, and Entercom Portland License, LLC. | |
99.1 | Press Release issued December 18, 2003. |