FISHER COMMUNICATIONS INC FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Completion of Acquisition or Disposition of Assets, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Regulation FD Disclosure, Financial Statements and Exhibits
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Item 1.01. Entry into Material Definitive Agreement.
Fisher
In connection with the closing of the sale ofFisher Plaza , a two-building mixed-use office complex located near downtownSeattle ("Fisher Plaza "), byFisher Media Services Company to Hines Global REIT 100/140Fourth Ave LLC ("Hines Global REIT") onDecember 15, 2011 (the "Closing"),Fisher Communications, Inc. (the "Company") entered into a Lease (the "Lease") with Hines Global REIT pursuant to which the Company leased 120,969 rentable square feet ofFisher Plaza . The Lease has an initial term that expires onDecember 31, 2023 and the Company has the right to extend the term for three successive five-year periods. The Company's corporate headquarters and itsSeattle television, radio and internet operations continue to be located atFisher Plaza . In accordance with the Lease, the facility continues to be named "Fisher Plaza " and the Company has the right to use 373 parking spaces in the facility's garage. The Company's 2012 monthly base rent will be$284,178 , subject to annual increases of 3% beginning onJanuary 1, 2013 , and the Company will also pay its pro rata share ofFisher Plaza's actual common area and operating expenses (the "Pro Rata Expenses Share") during the Lease term. For 2012, the Company's Pro Rata Expenses Share is expected to be approximately$165,000 per month. During the Lease term the Company's Pro Rata Expenses Share is subject to annual increases equal to the greater of 3.5% or the percentage increase in the Consumer Price Index. Pursuant to the Lease, the Company has a right of first opportunity during the Lease term to repurchase Hines Global REIT's interest inFisher Plaza in the connection with certain potential voluntary transfers to third parties. The above description of the terms of the Lease is a summary and does not purport to be a complete description of all of its terms, and it is qualified in its entirety by reference to the Lease, a copy of which is filed as Exhibit 10.1 to this Current Report and is incorporated herein by reference.
Director and Officer Indemnification Agreements
OnDecember 20, 2011 , the Company entered into indemnification agreements withPaul A. Bible ,Colleen B. Brown ,Matthew Goldfarb ,Donald G. Graham, III ,Richard L. Hawley ,David A. Lorber ,Brian P. McAndrews ,Joseph J. Troy ,Hassan N. Natha ,Robert I. Dunlop , andChristopher J. Bellavia , all of the Company's current directors and executive officers. The same form indemnification agreement (the "D&O Agreement") was executed by each director and executive officer. The D&O Agreement supplements and clarifies existing indemnification provisions currently contained in the Company's articles of incorporation and bylaws. Along with the Company's articles of incorporation and bylaws, the D&O Agreement generally provides that the Company will indemnify and hold harmless the director or executive officer to the full extent permitted by applicable law for all damages, liabilities, claims, expenses, or losses incurred in connection with any threatened, pending or completed clams, actions, suits or proceedings brought because of the director's or executive officer's service to the Company or such individual's service to any other entity provided at the request of the Company, in each case subject to the terms, conditions and limitations contained in the D&O Agreement. In addition, the D&O Agreement establishes processes and procedures for indemnification claims, advancement of expenses and costs and other determinations with respect to indemnification. -------------------------------------------------------------------------------- The above description of the terms of the D&O Agreement is a summary and does not purport to be a complete description of all of its terms, and it is qualified in its entirety by reference to the form of the D&O Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets
OnDecember 15, 2011 , the Company's wholly-owned subsidiary,Fisher Media Services Company ("Fisher Media"), completed its previously-announced sale ofFisher Plaza to Hines Global REIT for$160,000,000 in cash (the "Transaction"). Hines Global REIT is not affiliated with the Company or its affiliates. The Transaction was consummated pursuant to the terms of a Purchase and Sale Agreement, datedNovember 17, 2011 , by and between Fisher Media and Hines Global REIT (the "PSA"), a copy of which was filed as Exhibit 10.1 to that certain Current Report on Form 8-K, filed with theSecurities and Exchange Commission onNovember 18, 2011 . The foregoing summary of the PSA and Transaction does not purport to be complete and is qualified in its entirety by reference to Exhibit 2.1 to this Current Report on Form 8-K, which is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information included in Item 1.01 of this Current Report on Form 8-K regarding the Lease is incorporated by reference into this Item 2.03.
Item 7.01 Regulation FD Disclosure
OnDecember 16, 2011 , the Company issued the attached press release to announce the closing of its sale ofFisher Plaza to Hines Global REIT. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(b) Pro Forma Financial Information
(1) Pro forma Condensed Consolidated Statement of Operations of the Company for the Nine Months Ended
(2) Pro forma Condensed Consolidated Statement of Operations of the Company for the Year Ended
(3) Pro forma Condensed Consolidated Balance Sheet of the Company as of
(4) Notes to pro forma consolidated financial statements.
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Fisher Communications, Inc. and Subsidiaries Unaudited Pro Forma Condensed Consolidated Financial Statements
Introduction
OnNovember 17, 2011 ,Fisher Communications, Inc. (the "Company") announced that it had entered into a definitive agreement to sell its approximately 300,000 square foot mixed-use facility inSeattle, WA ("Fisher Plaza ") toHines Global REIT, Inc. for$160 million in cash. The transaction was completed onDecember 15, 2011 . The following unaudited pro forma condensed consolidated financial statements of the Company are presented to show the effect of the sale ofFisher Plaza for$160 million and the resulting rental expense the Company will incur as it has entered into a lease arrangement withHines Global REIT, Inc.</org> The impact of the anticipated use of net proceeds to redeem the Company's 8.625% senior notes due in 2014 ("Senior Notes") is also included in the unaudited pro forma condensed consolidated statements. Collectively, these two transactions are referred to herein as the "sale of Fisher Plaza ". The following unaudited pro forma condensed consolidated statement of operations for the year endedDecember 31, 2010 and for the nine months endedSeptember 30, 2011 , are based on the assumption that the sale ofFisher Plaza was completed onJanuary 1, 2010 . The unaudited pro forma condensed consolidated balance sheet as ofSeptember 30, 2011 is based on the assumption that the sale ofFisher Plaza was completed onSeptember 30, 2011 . The historical financial information for the Company is based on the audited financial statements of the Company for the year endedDecember 31, 2010 as filed on Form 10-K datedMarch 8, 2011 , and the unaudited financial statements of the Company as ofSeptember 30, 2011 and for the nine months endedSeptember 30, 2011 , as filed on Form 10-Q datedNovember 8, 2011 . TheDecember 31, 2010 information has also been adjusted for the discontinued operations resulting from the Company entering into a definitive agreement inJune 2011 to sell its sixGreat Falls, Montana radio stations toSTARadio Corp. The unaudited pro forma condensed consolidated financial statements presented are for information purposes only. It is not intended to represent or be indicative of the consolidated results of operations or financial position that would have occurred had the sale been completed as of the dates presented nor is it intended to project our future results of operations or financial position for any future period. The unaudited pro forma adjustments are based upon presently available information and certain assumptions that management believes are reasonable. Actual adjustments may differ materially from the information presented. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the accompanying notes and the historical financial statements of the Company including notes thereto as previously filed. The unaudited pro forma condensed consolidated financial information is prepared in accordance with Article 11 of Regulation S-X. The pro forma adjustments are described in the accompanying notes are based upon information and certain assumptions available at the time of the filing of this Current Report on Form 8-K. The pro forma adjustments to the condensed consolidated statements of operations for all periods presented do not include the anticipated nonrecurring after-tax gain on the sale ofFisher Plaza or the loss on extinguishment of Senior Notes, which includes the write off of deferred financing fees, resulting from the proceeds from the sale. --------------------------------------------------------------------------------
Fisher Communications, Inc. and Subsidiaries Pro Forma Condensed Consolidated Statement of Operations (Unaudited) Nine months ended September 30, 2011 (in thousands, except per-share Less: Fisher Pro Forma Pro Forma amounts) As reported Plaza (b) Adjustments Adjusted Revenue $ 117,602 $ 11,361 $ - $ 106,241 Operating expenses Direct operating costs 52,595 4,112 - 48,483 Selling, general and administrative expenses 40,809 311 3,685 (d) 44,183 Amortization of broadcast rights 8,324 - - 8,324 Depreciation and amortization 8,027 3,608 - 4,419 Gain on sale of real estate, net (4,089 ) - - (4,089 ) Plaza fire reimbursements, net (223 ) (223 ) - - Total operating expenses 105,443 7,808 3,685 101,320 Income from continuing operations 12,159 3,553 (3,685 ) 4,921 Loss on extinguishment of senior notes, net (1,356 ) - - (1,356 ) Other income, net 214 22 - 192 Interest expense (5,697 ) - 5,658 (c) (39 ) Income from continuing operations before income taxes 5,320 3,575 1,973 3,718 Provision for income taxes 1,978 1,330 691 (e) 1,339 Income from continuing operations, net of income taxes $ 3,342 $ 2,245
$ 1,283
Income per share from continuing operations $ 0.38 $ 0.25
$ 0.15
Income per share assuming dilution from continuing operations $ 0.38 $ 0.25
$ 0.14
Weighted average shares outstanding 8,827 8,827 8,827 8,827 Weighted average shares outstanding assuming dilution 8,898 8,898 8,898 8,898 See Notes to Pro Forma Condensed Consolidated Financial Statements
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Fisher Communications, Inc. and Subsidiaries Pro Forma Condensed Consolidated Statement of Operations (Unaudited) Year ended December 31, 2010 Less: Fisher Radio Adjusted for (in thousands, except per-share Regional discontinued Less: Fisher Pro Forma Pro Forma amounts) As reported Group (a) operations Plaza (b) Adjustments Adjusted Revenue $ 175,926 $ 1,524 $ 174,402 $ 14,400 $ - $ 160,002 Operating expenses Direct operating costs 70,929 313 70,616 3,680 - 66,936 Selling, general and administrative expenses 58,624 984 57,640 280 4,913 (d) 62,273 Amortization of broadcast rights 11,877 - 11,877 - - 11,877 Depreciation and amortization 14,448 56 14,392 4,947 - 9,445 Plaza fire reimbursements, net (3,363 ) - (3,363 ) (3,363 ) - - Gain on asset exchange, net (2,054 ) - (2,054 ) - - (2,054 ) Total operating expenses 150,461 1,353 149,108 5,544 4,913 148,477 Income (loss) from continuing operations 25,465 171 25,294 8,856 (4,913 ) 11,525 Loss on extinguishment of senior notes, net (160 ) - (160 ) - - (160 ) Other income, net 217 - 217 (106 ) - 323 Interest expense (9,954 ) - (9,954 ) - 9,890 (c) (64 ) Income (loss) from continuing operations before income taxes 15,568 171 15,397 8,750 4,977 11,624 Provision (benefit) for income taxes 5,822 29 5,793 3,043 1,742 (e) 4,492 Income (loss) from continuing operations, net of income taxes $ 9,746 $ 142
$ 9,604 $ 5,707 $ 3,235
Income per share from continuing operations $ 1.11 $ 0.02
$ 1.09 $ 0.65 $ 0.37
Income per share assuming dilution from continuing operations $ 1.10 $ 0.02
$ 1.09 $ 0.65 $ 0.37
Weighted average shares outstanding 8,796 8,796 8,796 8,796 8,796 8,796 Weighted average shares outstanding assuming dilution 8,843 8,843 8,843 8,843 8,843 8,843 See Notes to Pro Forma Condensed Consolidated Financial Statements
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Fisher Communications, Inc. and Subsidiaries Pro Forma Condensed Consolidated Balance Sheet (Unaudited) September 30, 2011 (in thousands, except per-share Less: Fisher Pro Forma Pro Forma amounts) As reported Plaza (1) Adjustments Adjusted ASSETS Current Assets Cash and cash equivalents $ 27,286 $ - $ 85,785 (2) $ 113,071 Receivables, net 28,992 - - 28,992 Income taxes receivable 92 - - 92 Deferred income taxes, net 1,649 - - 1,649 Prepaid expenses and other 2,072 270 (723 )(2) 1,079 Television broadcast rights 9,325 - - 9,325 Assets held for sale 23 - - 23 Total current assets 69,439 270 85,062 154,231 Cash surrender value of life insurance and annuity contracts 17,077 - - 17,077 Goodwill, net 13,293 - - 13,293 Intangible assets, net 40,366 - - 40,366 Deferred income taxes, net - - 7,986 (3) 7,986 Other assets 6,439 1,417 - 5,022 Assets held for sale 611 - - 611 Property, plant and equipment, net 140,119 102,873 - 37,246 Total Assets $ 287,344 $ 104,560 $ 93,048 $ 275,832 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 2,686 $ - $ - $ 2,686 Accrued payroll and related benefits 5,035 - - 5,035 Interest payable 240 - (240 )(4) - Television broadcast rights payable 8,970 - - 8,970 Income taxes payable 1,250 - 22,764 (3) 24,014 Current portion of accrued retirement benefits 1,117 - - 1,117 Other current liabilities 7,239 1,143 730 (5) 6,826 Liabilities of business held for sale 28 - - 28 Total current liabilities 26,565 1,143 23,254 48,676 Long-term debt 66,834 - (66,834 )(4) - Accrued retirement benefits 18,956 - - 18,956 Deferred income taxes, net 448 - (448 )(3) 0 Other liabilities 4,953 1,754 9,524 (6) 12,723 Total liabilities 117,756 2,897 (34,504 ) 80,355 Stockholders' Equity Common stock, shares authorized 12,000,000,$1.25 par value; issued and outstanding 8,737,281 11,037 - - 11,037 Capital in excess of par 14,195 - - 14,195 Accumulated other comprehensive income (loss), net of income taxes: - Accumulated loss (2,147 ) - - (2,147 ) Prior service cost (71 ) - - (71 ) Retained earnings 146,574 - 25,889 (7) 172,463 Total Stockholders' Equity 169,588 - 25,889 195,477 Total Liabilities and Stockholders' Equity $ 287,344 $ 2,897 $ (8,615 ) $ 275,832
See Notes to Pro Forma Condensed Consolidated Financial Statements --------------------------------------------------------------------------------Fisher Communications, Inc. and Subsidiaries
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
OnNovember 17, 2011 ,Fisher Communications, Inc. (the "Company") announced that it had entered into a definitive agreement to sell its approximately 300,000 square foot mixed-use facility inSeattle, WA ("Fisher Plaza ") toHines Global REIT, Inc. for$160 million in cash. The transaction was completed onDecember 15, 2011 . The impact of the anticipated use of net proceeds to redeem the Company's 8.625% senior notes due in 2014 ("Senior Notes") is also included in the unaudited pro forma condensed consolidated statements. The unaudited pro forma condensed consolidated financial statements are intended to reflect the impact of the sale ofFisher Plaza on the Company's historical financial position and results of operations through adjustments that are directly attributed to the transaction, that are factually supportable and, with respect to the pro forma statements of operations that are expected to have a continuing impact. The unaudited pro forma condensed consolidated statement of operations for the year endedDecember 31, 2010 and for the nine months endedSeptember 30, 2011 are based on the assumption that the sale ofFisher Plaza was completed onJanuary 1, 2010 . The unaudited pro forma condensed consolidated balance sheet as ofSeptember 30, 2011 is based on the assumption that the sale ofFisher Plaza and redemption of the Senior Notes was completed onSeptember 30, 2011 . In order to accomplish this, the Company eliminated the historical results ofFisher Plaza from the Company's historical financial position and results of operations. The pro forma adjustments to the condensed consolidated statements of operations for all periods presented do not include the anticipated nonrecurring after-tax gain on the sale ofFisher Plaza or the loss on extinguishment of debt resulting from the proceeds from the sale. TheDecember 31, 2010 information has also been adjusted for the discontinued operations resulting from the Company entering into a definitive agreement inJune 2011 to sell its sixGreat Falls, Montana radio stations toSTARadio Corp.
Income Statement
The following adjustments correspond to those included in the unaudited pro forma condensed consolidated statements of operations for all periods presented:
(a) These adjustments represent the reclassification of the
stations for the year ended
to discontinued operations as a result of theJune 2011 entry into a definitive agreement to sell the radio stations.
(b) These adjustments represent the elimination of the historical results of
Fisher Plaza .
(c) These adjustments reflect the effect of paying in full the Senior Notes
outstanding during the respective periods with proceeds from the sale of
Fisher Plaza . The effect of paying off all of the Senior Notes was to reduce interest expense on the Senior Notes.
(d) These adjustments reflect the base rent expense and the estimated common
area maintenance charge as stipulated in the lease agreement with the
buyer. The rental expense is offset by annual amortization of
the deferred gain resulting from the sale on Plaza that is being amortized
equally over the lease term of 12 years.
(e) The results of the pro forma adjustments have been tax impacted at the
Company's statutory rate of 35%.
Balance Sheet
The following adjustments correspond to those included in the unaudited pro forma condensed consolidated balance sheet as of
(1) These adjustments represent the elimination of the historical balances of
Fisher Plaza .
(2) This adjustment reflects the net cash proceeds of
sale of
million and the write off of the deferred financing fees as discussed in
footnote (4) below.
(3) This adjustment represents the estimated tax impact on the gain on sale of
Fisher Plaza allocated between deferred and current tax payable.
(4) This adjustment represents the payoff of all of the Senior Notes and the
write off of the deferred financing fees. There is also a prepayment
redemption premium which is reflected in the loss on extinguishment as
disclosed in footnote (7) below. The premium is based on the redemption
rate of 101.4375% (expressed as percentage of principal amount), is the rate as ofSeptember 30, 2011 .
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(5) This adjustment represents the short term portion of the deferred income
related to a deferral of a portion of the gain on sale of
to the Company's continuing involvement from the leaseback of a portion of
Fisher Plaza .
(6) This adjustment represents the long term portion of the deferred income
related to a deferral of a portion of the gain on sale of
to the Company's continuing involvement from the leaseback of a portion of
costs may be incurred.
(7) This adjustment reflects the after-tax gain of
of
the loss on extinguishment of
Notes, which includes the write off of the deferred financing fees. This
net gain may not be representative of what will actually be recorded
during the three months ended
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(d) Exhibits
2.1 Purchase and Sale Agreement, by and between
and Hines Global REIT 100/140
(incorporated by reference to Exhibit 10.1 to the Company's Current Report
on Form 8-K, filed with the Commission onNovember 18, 2011 ). 10.1 Lease, by and betweenFisher Communications, Inc. and Hines Global REIT 100/140Fourth Ave LLC , datedDecember 15, 2011 . 10.2 Form of Director and Executive Officer Indemnification Agreement.
99.1 Press Release issued on
sale of
Fourth Ave LLC . Forward-Looking Statements This Current Report on Form 8-K includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. Forward-looking statements include information preceded by, followed by, or that includes the words "guidance," "believes," "expects," "intends," "anticipates," "could," or similar expressions. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The forward-looking statements contained in this Current Report, . . .
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