Exhibit 99.1
[Logo of Fisher Communications] Fisher Communications, Inc.
600 University Street, Suite 1525
Seattle, Washington 98101-3185
tel 206.404.7000
fax 206.404.7050
www.fsci.com
November 21, 2001
Dear Shareholder:
Fisher continues to cope with the challenges presented by a weak economy and the
compounding events of September 11. As we reported on October 26, the company's
consolidated net loss for the nine months ended September 30, 2001 was
$6,501,000, or $.76 per share.
We also reported that, as of September 30, 2001, the company was not in
compliance with some of the covenants contained in a revolving line of credit
and a senior secured facility, and that we were negotiating with the lenders for
a waiver of the noncompliance. We are pleased to notify you that yesterday a
waiver was granted for our noncompliance during the fourth quarter. On September
30, 2001, $213,611,000 of principal was outstanding under the revolving line of
credit and the senior secured credit facility, all of which was classified in
current liabilities. As a result of the waiver, $205,284,000 of such amount is
no longer classified in current liabilities. The condensed consolidated balance
sheet that is included in the summary financial statements accompanying this
letter reflects the pro forma effect of the waiver on current liabilities and
long-term debt as of September 30, 2001.
Restructuring of the company is moving forward, most recently with the
announcement (please see enclosed news release) of plans to sell substantially
all of Fisher's real estate assets in order to focus on core communications and
media operations. Fisher Plaza, which serves as a digital hub and supports a
community of communications and information technology providers, will remain in
the company as a vital part of these endeavors. We also have begun
implementation of operating expense reductions that we expect will be realized
in 2002. As you may recall, our targeted figure was 10%. I believe we will meet
that goal.
The decision to sell most of our real estate assets was difficult, but I believe
entirely appropriate to and consistent with our ongoing restructuring
activities. Proceeds from the sale can be applied to debt, and should complement
our current efforts to negotiate new credit facilities. By taking these measures
now, we intend to be in a position of advantage as the effects of changing
market conditions and FCC regulations materialize.
No one can be pleased with the financial results of 2001 thus far, and the fact
that virtually every sector of the economy has been affected adversely is of
little consolation. Broadcasting revenue is down compared to 2000 and 1999
figures, and advertisers continue to be slow in placing orders. Many economists
are predicting a slow but steady economic recovery in the third or fourth
quarter of 2002. We hope they are correct.
Sincerely,
/s/ WILLIAM W. KRIPPAEHNE JR.
William W. Krippaehne Jr.
President & CEO
Some of the statements in this letter are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include all passages containing verbs such as 'aims, anticipates,
believes, estimates, expects, hopes, intends, plans, predicts, projects or
targets' or nouns corresponding to such verbs. Forward-looking statements also
include any other passages that are primarily relevant to expected future events
or that can only be fully evaluated by events that will occur in the future.
Forward-looking statements in this release include, without limitation,
management's statements and expectations that Fisher Communications, Inc. (the
``Company,'' or ``we'') expects to realize major expense reductions in 2002,
that the proceeds of the intended sale of some real estate assets will
complement the efforts to restructure loans, and that the Company hopes some
economists predictions of a slow but steady economic recovery in the third or
fourth quarter of 2002 are correct. There are many risks and uncertainties that
could cause actual results to differ materially from those predicted in our
forward-looking statements. Without limitation, these factors include the
following: The Company might scale back or stop entirely its expense reduction
effort in light of other needs of the Company's business operations. For example
and without limitation, the Company might scale back or stop entirely its
expense reduction effort if (1) expense reductions began to unacceptably degrade
our product, particularly the quality of our broadcasts; (2) expense reductions
began to otherwise unacceptably injure our ability to generate revenue (e.g., by
losing key sales personnel); (3) expense reductions unacceptably damaged
employee morale; (4) reallocation of responsibilities increased workloads to too
great an extent; or (5) expense reductions threatened to prevent the Company
from taking advantage of a business opportunity. The expense reduction
initiative itself may increase certain costs, such as (and these are only
examples and not meant to be exhaustive) severance arrangements, the resolution
of any disagreements with employees, and any outsourcing that management might
decide is necessary or desirable. There are inherent difficulties in achieving
expense reductions in a largely fixed-cost industry such as the communications
and media sector. For example and without limitation, there are certain
operating expenses that the Company does not itself directly control, such as
the cost that the owners of syndicated programming charge for that programming
and the cost of electricity. In addition, the softening economy in the Seattle
area could adversely affect the Company's ability to sell all or a part of our
properties intended for sale on attractive terms or at all. In addition, the
Company may not be able to restructure its loans, in which case the Company may
sell some assets in order to meet its short term liquidity needs. Moreover, many
factors or events could preclude an economic recovery in the third or fourth
quarter of 2002, all of which are beyond our control. Other factors that could
cause actual results to differ materially from those predicted in our
forward-looking statements are set out in the Company's reports filed with the
SEC, including its Annual Report on Form 10-K filed in March 14, 2001 and its
Quarterly Report on Form 10-Q for the third quarter of 2001, filed on November
14, 2001.
FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS Nine months ended Three months ended
September 30 September 30
(in thousands, except per share amounts) Unaudited 2001 2000 2001 2000
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Revenue
Broadcasting $ 107,161 $141,354 $ 33,399 $ 46,492
Real estate 13,034 9,633 4,427 3,386
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120,195 150,987 37,826 49,878
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Costs and expenses
Cost of products and services sold 53,367 52,987 19,165 17,288
Selling expenses 15,389 16,550 5,134 5,436
General and administrative expenses 29,043 33,311 7,949 11,024
Depreciation and amortization 18,148 14,975 6,116 5,514
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115,947 117,823 38,364 39,262
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Income (loss) from operations 4,248 33,164 (538) 10,616
Other income, net 2,508 19,549 629 17,483
Loss in equity investees (3,174) (282) (1,543) (316)
Interest expense (13,008) (16,524) (4,133) (5,658)
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Income (loss) from continuing operations before income taxes (9,426) 35,907 (5,585) 22,125
Provision for federal and state income taxes (benefit) (3,252) 13,767 (1,919) 8,806
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Income (loss) from continuing operations (6,174) 22,140 (3,666) 13,319
Loss from discontinued operations of milling businesses,
net of income tax benefit (327) (15,377) - (14,166)
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Net income (loss) $ (6,501) $ 6,763 $ (3,666) $ (847)
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Income (loss) per share:
From continuing operations $ (0.72) $ 2.59 $ (0.43) $ 1.56
From discontinued operations (0.04) (1.80) - (1.66)
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Net income (loss) $ (0.76) $ 0.79 $ (0.43) $ (0.10)
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Income (loss) per share assuming dilution:
From continuing operations $ (0.72) $ 2.58 $ (0.43) $ 1.55
From discontinued operations (0.04) (1.79) - (1.65)
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Net income (loss) $ (0.76) $ 0.79 $ (0.43) $ (0.10)
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Dividends declared per share $ 0.78 $ 0.78 $ 0.52 $ 0.26
Weighted average shares outstanding 8,569 8,555 8,585 8,558
Weighted average shares outstanding assuming dilution 8,569 8,596 8,585 8,612
CONDENSED CONSOLIDATED BALANCE SHEET September 30 December 31
(in thousands) 2001 2000
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(Pro forma
Assets Unaudited)
Current assets $ 66,678 $ 65,797
Marketable securities, at market value 94,289 102,080
Other assets 220,358 259,278
Property, plant and equipment, net 237,225 219,649
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Total assets $618,550 $646,804
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Liabilities and Stockholders' Equity
Current liabilities $ 56,180 $ 55,676
Long-term debt, net of current maturities 252,413 257,413
Deferred income taxes 50,800 53,648
Other liabilities 22,040 17,366
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Total liabilities 381,433 384,103
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Stockholders' equity 179,161 197,108
Accumulated other comprehensive income - net of income taxes 57,956 65,593
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Total stockholders' equity 237,117 262,701
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Total liabilities and stockholders' equity $618,550 $646,804
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CONSOLIDATED STATEMENT OF Nine months ended Three months ended
COMPREHENSIVE INCOME September 30 September 30
(in thousands) Unaudited 2001 2000 2001 2000
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Net income (loss) $ (6,501) $ 6,763 $ (3,666) $ (847)
Other comprehensive income (loss):
Cumulative effect of accounting change, net of
income tax benefit of $489 (907)
Unrealized gain (loss) on marketable securities (7,791) 5,060 2,077 21,981
Net (loss) on interest rate swap (2,563) (1,386)
Effect of income taxes 3,624 (1,771) (242) (7,693)
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Comprehensive income (loss) $ (14,138) $ 10,052 $ (3,217) $ 13,441
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NOTE: Certain prior year balances have been reclassified to conform to the 2001
presentation.