##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2007
 o
    
    Transition Report Under Section 13 or 15(d) of the Exchange Act
 For the transition period from  to
 Commission File Number 0-22439
 FISHER COMMUNICATIONS, INC.
  WASHINGTON
    
    91-0222175(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification Number)
 100 Fourth Ave. N., Suite 510
Seattle, Washington 98109
 (206) 404-7000
 þ o
  o þ o
 o þ




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##### 



PART IFINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3The following Condensed Consolidated Financial Statements (unaudited) are presented for the
Registrant, Fisher Communications, Inc., and its subsidiaries1. Condensed Consolidated Statements of Operations:
    
    
    3Three months ended March 31, 2007 and 20062. Condensed Consolidated Balance Sheets:
    
    
    4March 31, 2007 and December 31, 20063. Condensed Consolidated Statements of Cash Flows:
    
    
    5Three months ended March 31, 2007 and 20064. Condensed Consolidated Statements of Comprehensive Income:
    
    
    6Three months ended March 31, 2007 and 20065. Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Position and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures about Market Risks
    
    
    28Item 4. Controls and Procedures
    
    
    28PART II
    
    
    29OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    29Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29Item 3. Defaults upon Senior Securities
    
    
    29Item 4. Submission of Matters to a Vote of Security Holders
    
    
    29Item 5. Other Information
    
    
    29Item 6. Exhibits
    
    
    29SIGNATURES
    
    
    30EXHIBIT INDEX
    
    
    31EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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##### Table of Contents



ITEM 1  FINANCIAL STATEMENTS
 FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three months ended(in thousands, except per-share amounts)
    
    March 31(Unaudited)
    
    2007
    
    2006Revenue
    
    $
    34,243
    
    
    $
    31,081Costs and expensesDirect operating costs (exclusive of depreciation and amortization
of $2,293 and $2,076, respectively, and amortization of
program rights of $2,423 and $2,271, respectively,
reported separately below)
    
    
    14,275
    
    
    
    12,831Selling, general and administrative expenses
    
    
    14,038
    
    
    
    13,340Amortization of program rights
    
    
    2,423
    
    
    
    2,271Depreciation and amortization
    
    
    2,841
    
    
    
    2,51633,577
    
    
    
    30,958Income from operations
    
    
    666
    
    
    
    123Other income, net
    
    
    1,170
    
    
    
    886Interest expense, net
    
    
    (3,494
    )
    
    
    (3,454
    )Loss from continuing operations before income taxes
    
    
    (1,658
    )
    
    
    (2,445
    )Benefit for federal and state income taxes
    
    
    (390
    )
    
    
    (658
    )Loss from continuing operations
    
    
    (1,268
    )
    
    
    (1,787
    )Income from discontinued operations, net of income taxes
    
    
    23
    
    
    
    86Net loss
    
    $
    (1,245
    )
    
    $
    (1,701
    )Income (loss) per share:From continuing operations
    
    $
    (0.14
    )
    
    $
    (0.21
    )From discontinued operations
    
    
    
    
    
    
    0.01Basic and diluted net loss per share
    
    $
    (0.14
    )
    
    $
    (0.20
    )Shares used in computation of basic and diluted net loss per share
    
    
    8,720
    
    
    
    8,706
  3




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##### Table of Contents



FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands, except share and per-share amounts)
    
    March 31
    
    December 31(unaudited)
    
    2007
    
    2006ASSETSCurrent AssetsCash and cash equivalents
    
    $
    1,991
    
    
    $
    7,477Restricted cash
    
    
    8,630
    
    
    
    8,473Receivables, net
    
    
    27,540
    
    
    
    30,131Deferred income taxes
    
    
    686
    
    
    
    690Prepaid expenses
    
    
    4,122
    
    
    
    3,592Television and radio broadcast rights
    
    
    5,666
    
    
    
    6,676Assets held for sale
    
    
    23
    
    
    
    19Total current assets
    
    
    48,658
    
    
    
    57,058Marketable securities, at market value
    
    
    200,136
    
    
    
    188,307Cash value of life insurance and retirement deposits
    
    
    16,188
    
    
    
    15,959Television and radio broadcast rights
    
    
    1,007
    
    
    
    1,041Goodwill, net
    
    
    32,714
    
    
    
    32,714Intangible assets
    
    
    41,142
    
    
    
    41,142Investment in equity investee
    
    
    2,772
    
    
    
    2,789Deferred financing fees and other assets
    
    
    7,696
    
    
    
    7,748Assets held for sale
    
    
    2,612
    
    
    
    2,612Property, plant and equipment, net
    
    
    148,501
    
    
    
    148,207Total Assets
    
    $
    501,426
    
    
    $
    497,577LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesTrade accounts payable
    
    $
    4,214
    
    
    $
    4,600Accrued payroll and related benefits
    
    
    6,621
    
    
    
    7,567Interest payable
    
    
    539
    
    
    
    3,809Television and radio broadcast rights payable
    
    
    3,492
    
    
    
    5,667Income taxes payable
    
    
    385
    
    
    
    486Other current liabilities
    
    
    4,296
    
    
    
    3,626Liabilities of businesses held for sale
    
    
    121
    
    
    
    289Total current liabilities
    
    
    19,668
    
    
    
    26,044Long-term debt
    
    
    150,000
    
    
    
    150,000Accrued retirement benefits
    
    
    19,103
    
    
    
    19,027Deferred income taxes
    
    
    58,116
    
    
    
    54,414Other liabilities
    
    
    8,464
    
    
    
    8,527Commitments and ContingenciesStockholders EquityCommon stock, shares authorized 12,000,000, $1.25 par value; issued and
outstanding 8,721,591 in 2007 and 8,720,091 in 2006
    
    
    10,902
    
    
    
    10,900Capital in excess of par
    
    
    9,629
    
    
    
    9,454Accumulated other comprehensive income  net of income taxes:Unrealized gain on marketable securities
    
    
    129,019
    
    
    
    121,441Accumulated loss
    
    
    (1,735
    )
    
    
    (1,735
    )Prior service cost
    
    
    (212
    )
    
    
    (212
    )Retained earnings
    
    
    98,472
    
    
    
    99,717Total Stockholders Equity
    
    
    246,075
    
    
    
    239,565Total Liabilities and Stockholders Equity
    
    $
    501,426
    
    
    $
    497,577
  4




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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three months ended(in thousands)
    
    March 31(Unaudited)
    
    2007
    
    2006Cash flows from operating activitiesNet loss
    
    $
    (1,245
    )
    
    $
    (1,701
    )Adjustments to reconcile net loss to net cash used in
operating activitiesDepreciation and amortization
    
    
    2,841
    
    
    
    2,582Deferred income taxes
    
    
    (374
    )
    
    
    (621
    )Equity in operations of equity investees
    
    
    17
    
    
    
    11Amortization of deferred financing fees
    
    
    158
    
    
    
    158Amortization of program rights
    
    
    2,423
    
    
    
    2,271Payments for television and radio broadcast rights
    
    
    (3,556
    )
    
    
    (3,463
    )Stock-based compensation
    
    
    147
    
    
    
    143Other
    
    
    (4
    )
    
    
    21Change in operating assets and liabilitiesReceivables
    
    
    2,591
    
    
    
    3,726Prepaid expenses
    
    
    (534
    )
    
    
    (1,052
    )Cash value of life insurance and retirement deposits
    
    
    (229
    )
    
    
    (260
    )Other assets
    
    
    (107
    )
    
    
    (188
    )Trade accounts payable, accrued payroll and related benefits, interest
payable, and other current liabilities
    
    
    (4,100
    )
    
    
    (3,887
    )Income taxes receivable and payable
    
    
    (101
    )Accrued retirement benefits
    
    
    76
    
    
    
    38Other liabilities
    
    
    (60
    )
    
    
    (170
    )Net cash used in operating activities
    
    
    (2,057
    )
    
    
    (2,392
    )Cash flows from investing activitiesPurchases of investments available-for-sale
    
    
    (172
    )Increase in restricted cash
    
    
    (157
    )Purchase of property, plant and equipment
    
    
    (3,134
    )
    
    
    (1,960
    )Net cash used in investing activities
    
    
    (3,463
    )
    
    
    (1,960
    )Cash flows from financing activitiesProceeds from exercise of stock options
    
    
    34
    
    
    
    177Excess tax benefit from exercise of stock options
    
    
    
    
    
    
    10Net cash provided by financing activities
    
    
    34
    
    
    
    187Net decrease in cash and cash equivalents
    
    
    (5,486
    )
    
    
    (4,165
    )Cash and cash equivalents, beginning of period
    
    
    7,477
    
    
    
    19,622Cash and cash equivalents, end of period
    
    $
    1,991
    
    
    $
    15,457
  5




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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 Three months ended(in thousands)
    
    March 31(Unaudited)
    
    2007
    
    2006Net loss
    
    $
    (1,245
    )
    
    $
    (1,701
    )Other comprehensive income (loss):Unrealized gain (loss) on marketable securities
    
    
    11,658
    
    
    
    (18,852
    )Effect of income taxes
    
    
    (4,080
    )
    
    
    6,598Other comprehensive income (loss)
    
    
    7,578
    
    
    
    (12,254
    )Comprehensive income (loss)
    
    $
    6,333
    
    
    $
    (13,955
    )
  6




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##### Table of Contents



Reclassifications
  
    
    Direct operating costs has replaced the caption previously labeled Cost of services
sold;
    
    Amortization of program rights are now reported separately, whereas previously these
amounts were reported within Cost of services sold; and
    
    Selling, general and administrative expenses now include amounts previously reported
separately under the captions Selling expenses and General and administrative
expenses.
    Income taxes
 Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109
 7




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##### Table of Contents



The Fair Value Option for Financial Assets and Financial Liabilities 
Including an amendment to FASB Statement No. 115
 Fair Value Measurements
  Accounting for the Impairment or
Disposal of Long-Lived Assets
  Three months endedMarch 312007
    
    
    2006(Unaudited)Revenue
    
    $
    444
    
    
    $
    2,747Income from discontinued operations:Discontinued operating activities
    
    $
    35
    
    
    $
    134Income tax effect
    
    
    (12
    )
    
    
    (48
    )$
    23
    
    
    $
    86
 8




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##### Table of Contents



March 31
    
    
    December 312007
    
    
    2006Goodwill, net
    
    $
    1,129
    
    
    $
    1,129Property, plant and equipment, net
    
    
    718
    
    
    
    718Intangible assets
    
    
    765
    
    
    
    765Other assets
    
    
    23
    
    
    
    19$
    2,635
    
    
    $
    2,631Liabilities of businesses held for sale
    
    $
    121
    
    
    $
    289
       9




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##### Table of Contents



Three months endedMarch 312007
    
    
    2006Interest cost
    
    $
    266
    
    
    $
    260Amortization of loss
    
    
    11
    
    
    
    38Net periodic pension cost
    
    $
    277
    
    
    $
    298
  2007
    
    2006Discount Rate
    
    
    5.80
    %
    
    
    5.48
    %
      Three months ended March 31
    
    2007
    
    
    2006Loss from continuing operations
    
    $
    (1,268
    )
    
    $
    (1,787
    )Income from discontinued operations, net of income taxes
    
    
    23
    
    
    
    86Net loss
    
    $
    (1,245
    )
    
    $
    (1,701
    )Weighted average shares outstanding  basic
    
    
    8,720
    
    
    
    8,706Weighted effect of dilutive options and rightsWeighted average shares outstanding assuming dilution
    
    
    8,720
    
    
    
    8,706Income (loss) per share:From continuing operations
    
    $
    (0.14
    )
    
    $
    (0.21
    )From discontinued operations
    
    
    
    
    
    
    0.01Basic and diluted net loss per share
    
    $
    (0.14
    )
    
    $
    (0.20
    )
 10




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##### Table of Contents



Three MonthsEnded March 312007
    
    
    2006Television
    
    $
    24,598
    
    
    $
    22,859Radio
    
    
    6,908
    
    
    
    6,091Fisher Plaza
    
    
    2,775
    
    
    
    2,164Corporate and eliminations
    
    
    (38
    )
    
    
    (33
    )$
    34,243
    
    
    $
    31,081
 11




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##### Table of Contents



Three MonthsEnded March 312007
    
    
    2006Television
    
    $
    1,919
    
    
    $
    2,599Radio
    
    
    301
    
    
    
    (390
    )Fisher Plaza
    
    
    924
    
    
    
    510Corporate and eliminations
    
    
    (1,308
    )
    
    
    (1,710
    )$
    1,836
    
    
    $
    1,009
  Three MonthsEnded March 312007
    
    
    2006Total segment income from continuing
operations before interest and income taxes
    
    $
    1,836
    
    
    $
    1,009Interest expense
    
    
    (3,494
    )
    
    
    (3,454
    )Consolidated loss from continuing
operations before income taxes
    
    $
    (1,658
    )
    
    $
    (2,445
    )
  December 31Total assets
    
    March 31 2007
    
    
    2006Television
    
    $
    131,291
    
    
    $
    130,994Radio
    
    
    22,190
    
    
    
    24,436Fisher Plaza
    
    
    119,881
    
    
    
    119,872Corporate and eliminations
    
    
    225,429
    
    
    
    219,644498,791
    
    
    
    494,946Assets held for sale
    
    
    2,635
    
    
    
    2,631$
    501,426
    
    
    $
    497,577
  12




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13




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##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the Three Months Ended March 31, 2007
 100% Owned
    
    
    
    
    
    FisherFisher
    
    Guarantor
    
    
    
    
    
    Communications, Inc.(in thousands, except per-share amounts)
    
    Communications, Inc.
    
    Subsidiaries
    
    Eliminations
    
    and SubsidiariesRevenue
    
    $
    
    
    
    $
    34,281
    
    
    $
    (38
    )
    
    $
    34,243Costs and expensesDirect operating costs
    
    
    
    
    
    
    13,809
    
    
    
    466
    
    
    
    14,275Selling, general and administrative expenses
    
    
    2,229
    
    
    
    12,313
    
    
    
    (504
    )
    
    
    14,038Amortization of program rights
    
    
    
    
    
    
    2,423
    
    
    
    
    
    
    
    2,423Depreciation and amortization
    
    
    72
    
    
    
    2,769
    
    
    
    
    
    
    
    2,8412,301
    
    
    
    31,314
    
    
    
    (38
    )
    
    
    33,577Income (loss) from operations
    
    
    (2,301
    )
    
    
    2,967
    
    
    
    
    
    
    
    666Other income, net
    
    
    980
    
    
    
    190
    
    
    
    
    
    
    
    1,170Equity in income of subsidiaries
    
    
    2,044
    
    
    
    
    
    
    
    (2,044
    )Interest expense, net
    
    
    (3,494
    )
    
    
    
    
    
    
    
    
    
    
    (3,494
    )Income (loss) from continuing operations before income taxes
    
    
    (2,771
    )
    
    
    3,157
    
    
    
    (2,044
    )
    
    
    (1,658
    )Provision (benefit) for federal and state income taxes
    
    
    (1,526
    )
    
    
    1,136
    
    
    
    
    
    
    
    (390
    )Income (loss) from continuing operations
    
    
    (1,245
    )
    
    
    2,021
    
    
    
    (2,044
    )
    
    
    (1,268
    )Income from discontinued operations, net of income taxes
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    23Net income (loss)
    
    $
    (1,245
    )
    
    $
    2,044
    
    
    $
    (2,044
    )
    
    $
    (1,245
    )
 14




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##### Table of Contents



Financial Information for Guarantors
 Condensed Consolidated Statement of Operations
 for the Three Months Ended March 31, 2006
 100% Owned
    
    
    
    
    
    FisherFisher
    
    Guarantor
    
    
    
    
    
    Communications, Inc.(in thousands, except per-share amounts)
    
    Communications, Inc.
    
    Subsidiaries
    
    Eliminations
    
    and SubsidiariesRevenue
    
    $
    
    
    
    $
    31,133
    
    
    $
    (52
    )
    
    $
    31,081Costs and expensesDirect operating costs
    
    
    
    
    
    
    12,420
    
    
    
    411
    
    
    
    12,831Selling, general and administrative expenses
    
    
    2,441
    
    
    
    11,362
    
    
    
    (463
    )
    
    
    13,340Amortization of program rights
    
    
    
    
    
    
    2,271
    
    
    
    
    
    
    
    2,271Depreciation and amortization
    
    
    62
    
    
    
    2,454
    
    
    
    
    
    
    
    2,5162,503
    
    
    
    28,507
    
    
    
    (52
    )
    
    
    30,958Income (loss) from operations
    
    
    (2,503
    )
    
    
    2,626
    
    
    
    
    
    
    
    123Other income, net
    
    
    787
    
    
    
    99
    
    
    
    
    
    
    
    886Equity in income of subsidiaries
    
    
    1,818
    
    
    
    
    
    
    
    (1,818
    )Interest expense, net
    
    
    (3,451
    )
    
    
    (3
    )
    
    
    
    
    
    
    (3,454
    )Income (loss) from continuing operations before income taxes
    
    
    (3,349
    )
    
    
    2,722
    
    
    
    (1,818
    )
    
    
    (2,445
    )Provision (benefit) for federal and state income taxes
    
    
    (1,648
    )
    
    
    990
    
    
    
    
    
    
    
    (658
    )Income (loss) from continuing operations
    
    
    (1,701
    )
    
    
    1,732
    
    
    
    (1,818
    )
    
    
    (1,787
    )Income from discontinued operations, net of income taxes
    
    
    
    
    
    
    86
    
    
    
    
    
    
    
    86Net income (loss)
    
    $
    (1,701
    )
    
    $
    1,818
    
    
    $
    (1,818
    )
    
    $
    (1,701
    )
 15




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##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Balance Sheet
as of March 31, 2007
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. and(in thousands)
    
    Inc.
    
    Subsidiaries
    
    Eliminations
    
    SubsidiariesASSETSCurrent AssetsCash and cash equivalents
    
    $
    2,664
    
    
    $
    
    
    
    $
    (673
    )
    
    $
    1,991Restricted cash
    
    
    
    
    
    
    8,630
    
    
    
    
    
    
    
    8,630Receivables, net
    
    
    846
    
    
    
    26,694
    
    
    
    
    
    
    
    27,540Due from affiliate
    
    
    
    
    
    
    32,414
    
    
    
    (32,414
    )Deferred income taxes
    
    
    106
    
    
    
    580
    
    
    
    
    
    
    
    686Prepaid expenses
    
    
    353
    
    
    
    3,769
    
    
    
    
    
    
    
    4,122Television and radio broadcast rights
    
    
    
    
    
    
    5,666
    
    
    
    
    
    
    
    5,666Assets held for sale
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    23Total current assets
    
    
    3,969
    
    
    
    77,776
    
    
    
    (33,087
    )
    
    
    48,658Marketable securities, at market value
    
    
    199,487
    
    
    
    649
    
    
    
    
    
    
    
    200,136Investment in consolidated subsidiaries
    
    
    255,677
    
    
    
    
    
    
    
    (255,677
    )Cash value of life insurance and retirement deposits
    
    
    16,188
    
    
    
    
    
    
    
    
    
    
    
    16,188Television and radio broadcast rights
    
    
    
    
    
    
    1,007
    
    
    
    
    
    
    
    1,007Goodwill, net
    
    
    
    
    
    
    32,714
    
    
    
    
    
    
    
    32,714Intangible assets
    
    
    
    
    
    
    41,142
    
    
    
    
    
    
    
    41,142Investments in equity investee
    
    
    
    
    
    
    2,772
    
    
    
    
    
    
    
    2,772Deferred financing fees and other assets
    
    
    4,396
    
    
    
    3,300
    
    
    
    
    
    
    
    7,696Assets held for sale
    
    
    
    
    
    
    2,612
    
    
    
    
    
    
    
    2,612Property, plant and equipment, net
    
    
    770
    
    
    
    147,731
    
    
    
    
    
    
    
    148,501Total Assets
    
    $
    480,487
    
    
    $
    309,703
    
    
    $
    (288,764
    )
    
    $
    501,426LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesTrade accounts payable
    
    $
    398
    
    
    $
    4,489
    
    
    $
    (673
    )
    
    $
    4,214Due to affiliate
    
    
    32,414
    
    
    
    
    
    
    
    (32,414
    )Accrued payroll and related benefits
    
    
    1,032
    
    
    
    5,589
    
    
    
    
    
    
    
    6,621Interest payable
    
    
    539
    
    
    
    
    
    
    
    
    
    
    
    539Television and radio broadcast rights payable
    
    
    
    
    
    
    3,492
    
    
    
    
    
    
    
    3,492Income taxes payable
    
    
    
    
    
    
    385
    
    
    
    
    
    
    
    385Other current liabilities
    
    
    1,032
    
    
    
    3,264
    
    
    
    
    
    
    
    4,296Liabilities of businesses held for sale
    
    
    
    
    
    
    121
    
    
    
    
    
    
    
    121Total current liabilities
    
    
    35,415
    
    
    
    17,340
    
    
    
    (33,087
    )
    
    
    19,668Long-term debt
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Accrued retirement benefits
    
    
    19,018
    
    
    
    85
    
    
    
    
    
    
    
    19,103Deferred income taxes
    
    
    29,914
    
    
    
    28,202
    
    
    
    
    
    
    
    58,116Other liabilities
    
    
    65
    
    
    
    8,399
    
    
    
    
    
    
    
    8,464Stockholders EquityCommon stock
    
    
    10,902
    
    
    
    1,132
    
    
    
    (1,132
    )
    
    
    10,902Capital in excess of par
    
    
    9,629
    
    
    
    164,234
    
    
    
    (164,234
    )
    
    
    9,629Deferred compensationAccumulated other comprehensive income  net of income taxes:Unrealized gain on marketable securities
    
    
    129,019
    
    
    
    
    
    
    
    
    
    
    
    129,019Accumulated loss
    
    
    (1,735
    )
    
    
    
    
    
    
    
    
    
    
    (1,735
    )Prior service cost
    
    
    (212
    )
    
    
    
    
    
    
    
    
    
    
    (212
    )Retained earnings
    
    
    98,472
    
    
    
    90,311
    
    
    
    (90,311
    )
    
    
    98,472Total Stockholders Equity
    
    
    246,075
    
    
    
    255,677
    
    
    
    (255,677
    )
    
    
    246,075Total Liabilities and Stockholders Equity
    
    $
    480,487
    
    
    $
    309,703
    
    
    $
    (288,764
    )
    
    $
    501,426
 16




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##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Balance Sheet
as of December 31, 2006
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. and(in thousands)
    
    Inc.
    
    Subsidiaries
    
    Eliminations
    
    SubsidiariesASSETSCurrent AssetsCash and cash equivalents
    
    $
    8,544
    
    
    
    
    
    
    $
    (1,067
    )
    
    $
    7,477Restricted cash
    
    
    
    
    
    
    8,473
    
    
    
    
    
    
    
    8,473Receivables, net
    
    
    768
    
    
    
    29,363
    
    
    
    
    
    
    
    30,131Due from affiliate
    
    
    
    
    
    
    17,357
    
    
    
    (17,357
    )Deferred income taxes
    
    
    106
    
    
    
    584
    
    
    
    
    
    
    
    690Prepaid expenses
    
    
    438
    
    
    
    3,154
    
    
    
    
    
    
    
    3,592Television and radio broadcast rights
    
    
    
    
    
    
    6,676
    
    
    
    
    
    
    
    6,676Assets held for sale
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    19Total current assets
    
    
    9,856
    
    
    
    65,626
    
    
    
    (18,424
    )
    
    
    57,058Marketable securities, at market value
    
    
    187,833
    
    
    
    474
    
    
    
    
    
    
    
    188,307Investment in consolidated subsidiaries
    
    
    253,632
    
    
    
    
    
    
    
    (253,632
    )Cash value of life insurance and retirement deposits
    
    
    15,959
    
    
    
    
    
    
    
    
    
    
    
    15,959Television and radio broadcast rights
    
    
    
    
    
    
    1,041
    
    
    
    
    
    
    
    1,041Goodwill, net
    
    
    
    
    
    
    32,714
    
    
    
    
    
    
    
    32,714Intangible assets
    
    
    
    
    
    
    41,142
    
    
    
    
    
    
    
    41,142Investments in equity investee
    
    
    
    
    
    
    2,789
    
    
    
    
    
    
    
    2,789Deferred financing fees and other assets
    
    
    4,538
    
    
    
    3,210
    
    
    
    
    
    
    
    7,748Assets held for sale
    
    
    
    
    
    
    2,612
    
    
    
    
    
    
    
    2,612Property, plant and equipment, net
    
    
    813
    
    
    
    147,394
    
    
    
    
    
    
    
    148,207Total Assets
    
    $
    472,631
    
    
    $
    297,002
    
    
    $
    (272,056
    )
    
    $
    497,577LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesTrade accounts payable
    
    $
    1,543
    
    
    $
    4,124
    
    
    $
    (1,067
    )
    
    $
    4,600Due to affiliate
    
    
    17,357
    
    
    
    
    
    
    
    (17,357
    )Accrued payroll and related benefits
    
    
    1,841
    
    
    
    5,726
    
    
    
    
    
    
    
    7,567Interest payable
    
    
    3,809
    
    
    
    
    
    
    
    
    
    
    
    3,809Television and radio broadcast rights payable
    
    
    
    
    
    
    5,667
    
    
    
    
    
    
    
    5,667Income taxes payable
    
    
    
    
    
    
    486
    
    
    
    
    
    
    
    486Other current liabilities
    
    
    950
    
    
    
    2,676
    
    
    
    
    
    
    
    3,626Liabilities of businesses held for sale
    
    
    
    
    
    
    289
    
    
    
    
    
    
    
    289Total current liabilities
    
    
    25,500
    
    
    
    18,968
    
    
    
    (18,424
    )
    
    
    26,044Long-term debt
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Accrued retirement benefits
    
    
    18,942
    
    
    
    85
    
    
    
    
    
    
    
    19,027Deferred income taxes
    
    
    38,559
    
    
    
    15,855
    
    
    
    
    
    
    
    54,414Other liabilities
    
    
    65
    
    
    
    8,462
    
    
    
    
    
    
    
    8,527Stockholders EquityCommon stock
    
    
    10,900
    
    
    
    1,131
    
    
    
    (1,131
    )
    
    
    10,900Capital in excess of par
    
    
    9,454
    
    
    
    164,234
    
    
    
    (164,234
    )
    
    
    9,454Deferred compensationAccumulated other comprehensive income  net of income taxes:Unrealized gain on marketable securities
    
    
    121,441
    
    
    
    
    
    
    
    
    
    
    
    121,441Accumulated loss
    
    
    (1,735
    )
    
    
    
    
    
    
    
    
    
    
    (1,735
    )Prior service cost
    
    
    (212
    )
    
    
    
    
    
    
    
    
    
    
    (212
    )Retained earnings
    
    
    99,717
    
    
    
    88,267
    
    
    
    (88,267
    )
    
    
    99,717Total Stockholders Equity
    
    
    239,565
    
    
    
    253,632
    
    
    
    (253,632
    )
    
    
    239,565Total Liabilities and Stockholders Equity
    
    $
    472,631
    
    
    $
    297,002
    
    
    $
    (272,056
    )
    
    $
    497,577
 17




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##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Cash Flows
for the three months ended March 31, 2007
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. and(in thousands)
    
    Inc.
    
    Subsidiaries
    
    Eliminations
    
    SubsidiariesNet cash provided by (used in) operating activities
    
    $
    (5,885
    )
    
    $
    3,434
    
    
    $
    394
    
    
    $
    (2,057
    )Cash flows from investing activitiesPurchases of investments available-for-sale
    
    
    
    
    
    
    (172
    )
    
    
    
    
    
    
    (172
    )Increase in restricted cash
    
    
    
    
    
    
    (157
    )
    
    
    
    
    
    
    (157
    )Purchase of property, plant and equipment
    
    
    (29
    )
    
    
    (3,105
    )
    
    
    
    
    
    
    (3,134
    )Net cash used in investing activities
    
    
    (29
    )
    
    
    (3,434
    )
    
    
    
    
    
    
    (3,463
    )Cash flows from financing activitiesProceeds from exercise of stock options
    
    
    34
    
    
    
    
    
    
    
    
    
    
    
    34Net cash provided by financing activities
    
    
    34
    
    
    
    
    
    
    
    
    
    
    
    34Net increase (decrease) in cash and cash equivalents
    
    
    (5,880
    )
    
    
    
    
    
    
    394
    
    
    
    (5,486
    )Cash and cash equivalents, beginning of period
    
    
    8,544
    
    
    
    
    
    
    
    (1,067
    )
    
    
    7,477Cash and cash equivalents, end of period
    
    $
    2,664
    
    
    $
    
    
    
    $
    (673
    )
    
    $
    1,991
 18




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##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Cash Flows
for the three months ended March 31, 2006
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. and(in thousands)
    
    Inc.
    
    Subsidiaries
    
    Eliminations
    
    SubsidiariesNet cash provided by (used in) operating activities
    
    $
    83
    
    
    $
    (2,475
    )
    
    $
    
    
    
    $
    (2,392
    )Cash flows from investing activitiesPurchase of property, plant and equipment
    
    
    (202
    )
    
    
    (1,758
    )
    
    
    
    
    
    
    (1,960
    )Net cash used in investing activities
    
    
    (202
    )
    
    
    (1,758
    )
    
    
    
    
    
    
    (1,960
    )Cash flows from financing activitiesProceeds from exercise of stock options
    
    
    177
    
    
    
    
    
    
    
    
    
    
    
    177Excess tax benefit from exercise of stock options
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    10Net cash provided by financing activities
    
    
    187
    
    
    
    
    
    
    
    
    
    
    
    187Net increase (decrease) in cash and cash equivalents
    
    
    68
    
    
    
    (4,233
    )
    
    
    
    
    
    
    (4,165
    )Cash and cash equivalents, beginning of period
    
    
    3,660
    
    
    
    15,962
    
    
    
    
    
    
    
    19,622Cash and cash equivalents, end of period
    
    $
    3,728
    
    
    $
    11,729
    
    
    $
    
    
    
    $
    15,457
 19




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS
 The following discussion and analysis should be read in conjunction with the Financial Statements
and related Notes thereto included elsewhere in this quarterly report on Form 10-Q . Some of the
statements in this quarterly report 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. There are many risks and
uncertainties that could cause actual results to differ materially from those predicted in our
forward-looking statements, including, without limitation, those factors discussed under the
caption Risk Factors in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2006, which was filed with the Securities and Exchange Commission on March 14,
2007. Readers are cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this report. We undertake no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may subsequently arise. Readers are
urged to carefully review and consider the various disclosures made in this report and in our other
reports filed with the Securities and Exchange Commission that attempt to advise interested parties
of the risks and factors that may affect our business, prospects and results of operations. As used
herein, unless the context requires otherwise, when we say we, us, our, or the Company, we
are referring to Fisher Communications, Inc. and its consolidated subsidiaries.
  Overview
    20




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##### Table of Contents



Critical Accounting Policies
  Income taxes. Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109
 21




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##### Table of Contents



Consolidated Results of Operations
  22




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##### Table of Contents



Three Months(dollars in thousands)
    
    Ended March 31,
    
    
    Variance(Unaudited)
    
    2007
    
    
    2006
    
    
    $
    
    
    %RevenueTelevision
    
    $
    24,598
    
    
    $
    22,859
    
    
    $
    1,739
    
    
    
    7.6
    %Radio
    
    
    6,908
    
    
    
    6,091
    
    
    
    817
    
    
    
    13.4
    %Fisher Plaza
    
    
    2,775
    
    
    
    2,164
    
    
    
    611
    
    
    
    28.2
    %Corporate and eliminations
    
    
    (38
    )
    
    
    (33
    )
    
    
    (5
    )Consolidated
    
    
    34,243
    
    
    
    31,081
    
    
    
    3,162
    
    
    
    10.2
    %Direct operating costsTelevision
    
    
    10,116
    
    
    
    9,081
    
    
    
    1,035
    
    
    
    11.4
    %Radio
    
    
    2,798
    
    
    
    2,551
    
    
    
    247
    
    
    
    9.7
    %Fisher Plaza
    
    
    895
    
    
    
    788
    
    
    
    107
    
    
    
    13.6
    %Corporate and eliminations
    
    
    466
    
    
    
    411
    
    
    
    55
    
    
    
    13.4
    %Consolidated
    
    
    14,275
    
    
    
    12,831
    
    
    
    1,444
    
    
    
    11.3
    %Selling, general and administrative expensesTelevision
    
    
    8,850
    
    
    
    7,699
    
    
    
    1,151
    
    
    
    14.9
    %Radio
    
    
    3,335
    
    
    
    3,543
    
    
    
    (208
    )
    
    
    -5.9
    %Fisher Plaza
    
    
    127
    
    
    
    106
    
    
    
    21
    
    
    
    19.8
    %Corporate and eliminations
    
    
    1,726
    
    
    
    1,992
    
    
    
    (266
    )
    
    
    -13.4
    %Consolidated
    
    
    14,038
    
    
    
    13,340
    
    
    
    698
    
    
    
    5.2
    %Amortization of program rightsTelevision
    
    
    2,146
    
    
    
    2,069
    
    
    
    77
    
    
    
    3.7
    %Radio
    
    
    277
    
    
    
    202
    
    
    
    75
    
    
    
    37.1
    %Consolidated
    
    
    2,423
    
    
    
    2,271
    
    
    
    152
    
    
    
    6.7
    %Depreciation and amortizationTelevision
    
    
    1,715
    
    
    
    1,471
    
    
    
    244
    
    
    
    16.6
    %Radio
    
    
    225
    
    
    
    223
    
    
    
    2
    
    
    
    0.9
    %Fisher Plaza
    
    
    829
    
    
    
    760
    
    
    
    69
    
    
    
    9.1
    %Corporate and eliminations
    
    
    72
    
    
    
    62
    
    
    
    10
    
    
    
    16.1
    %Consolidated
    
    
    2,841
    
    
    
    2,516
    
    
    
    325
    
    
    
    12.9
    %Income (loss) from operationsTelevision
    
    
    1,771
    
    
    
    2,539
    
    
    
    (768
    )Radio
    
    
    273
    
    
    
    (428
    )
    
    
    701Fisher Plaza
    
    
    924
    
    
    
    510
    
    
    
    414Corporate and eliminations
    
    
    (2,302
    )
    
    
    (2,498
    )
    
    
    196Consolidated
    
    
    666
    
    
    
    123
    
    
    
    543Other income, net
    
    
    1,170
    
    
    
    886
    
    
    
    284Interest expense
    
    
    (3,494
    )
    
    
    (3,454
    )
    
    
    (40
    )Loss from continuing operations
before income taxes
    
    
    (1,658
    )
    
    
    (2,445
    )
    
    
    787Benefit for federal and state income taxes
    
    
    (390
    )
    
    
    (658
    )
    
    
    268Loss from continuing operations
    
    
    (1,268
    )
    
    
    (1,787
    )
    
    
    519Income from discontinued operations,
net of income taxes
    
    
    23
    
    
    
    86
    
    
    
    (63
    )Net loss
    
    $
    (1,245
    )
    
    $
    (1,701
    )
    
    $
    456
 23




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##### Table of Contents



Comparison of Fiscal Three-Month Periods Ended March 31, 2007 and March 31, 2006
 Revenue
     Direct operating costs
      24




---



##### Table of Contents



Selling, general and administrative expenses
     Amortization of program rights
   Depreciation and amortization
  Other income, net
  Interest expense, net
  Benefit for federal and state income taxes
  25




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##### Table of Contents



Liquidity and Capital Resources
         26




---



##### Table of Contents



Recent Accounting Pronouncements
 The Fair Value Option for Financial Assets and Financial Liabilities 
Including an amendment to FASB Statement No. 115
 Fair Value Measurements
 27




---



##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
  Interest Rate Exposure
  Marketable Securities Exposure
  
 ITEM 4  CONTROLS AND PROCEDURES
   28




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##### Table of Contents



PART II
 OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 (a)
    
    Exhibits:
 31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 29




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##### Table of Contents



SIGNATURES
  FISHER COMMUNICATIONS, INC.(Registrant)Dated: May 9, 2007
    
    /s/ S. Mae Fujita Numata

S. Mae Fujita NumataSenior Vice PresidentChief Financial Officer and Corporate Secretary
 30




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 31