##### Table of Contents



UNITED STATES 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 September 30, 2006
 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 I
FINANCIAL INFORMATION
 Item 1. Financial Statements
  1.
    
    Condensed Consolidated Statements of Operations: Three and nine months ended September 30, 2006 and 20052.
    
    Condensed Consolidated Balance Sheets: September 30, 2006 and December 31, 20053.
    
    Condensed Consolidated Statements of Cash Flows: Nine months ended September 30, 2006 and 20054.
    
    Condensed Consolidated Statements of Comprehensive Income: Three and nine months ended September 30, 2006 and 20055.
    
    Notes to Condensed Consolidated Financial StatementsItem 2.
    
    Managements Discussion and Analysis of Financial Position and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures about Market RisksItem 4.
    
    Controls and ProceduresPART II
OTHER INFORMATIONItem 1.
    
    Legal ProceedingsItem 1A.
    
    Risk FactorsItem 2.
    
    Unregistered Sales of Equity Securities and Use of ProceedsItem 3.
    
    Defaults upon Senior SecuritiesItem 4.
    
    Submission of Matters to a Vote of Security HoldersItem 5.
    
    Other InformationItem 6.
    
    ExhibitsSIGNATURESEXHIBIT INDEXEXHIBIT 10.1EXHIBIT 10.2EXHIBIT 10.3EXHIBIT 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
 Nine months ended
    
    Three months endedSeptember 30
    
    September 302006
    
    2005
    
    2006
    
    2005(in thousands, except per-share amounts)(Unaudited)Revenue
    
    $
    109,983
    
    
    $
    100,813
    
    
    $
    38,712
    
    
    $
    35,635Costs and expensesCost of services sold (exclusive of depreciation
reported separately below, amounting to $6,222,
$8,599, $2,073 and $2,208, respectively)
    
    
    55,411
    
    
    
    55,792
    
    
    
    20,677
    
    
    
    19,877Selling expenses
    
    
    18,811
    
    
    
    17,579
    
    
    
    6,544
    
    
    
    6,319General and administrative expenses
    
    
    21,328
    
    
    
    22,519
    
    
    
    7,145
    
    
    
    6,493Depreciation and amortization
    
    
    7,515
    
    
    
    10,261
    
    
    
    2,488
    
    
    
    2,642103,065
    
    
    
    106,151
    
    
    
    36,854
    
    
    
    35,331Income (loss) from operations
    
    
    6,918
    
    
    
    (5,338
    )
    
    
    1,858
    
    
    
    304Other income, net
    
    
    2,814
    
    
    
    2,658
    
    
    
    1,047
    
    
    
    904Interest expense
    
    
    (10,396
    )
    
    
    (10,241
    )
    
    
    (3,574
    )
    
    
    (3,466
    )Loss from continuing operations before income taxes
    
    
    (664
    )
    
    
    (12,921
    )
    
    
    (669
    )
    
    
    (2,258
    )Provision (benefit) for federal and state income taxes
    
    
    115
    
    
    
    (5,235
    )
    
    
    115
    
    
    
    (1,140
    )Loss from continuing operations
    
    
    (779
    )
    
    
    (7,686
    )
    
    
    (784
    )
    
    
    (1,118
    )Income from discontinued operations, net of income taxes
    
    
    675
    
    
    
    738
    
    
    
    113
    
    
    
    328Net loss
    
    $
    (104
    )
    
    $
    (6,948
    )
    
    $
    (671
    )
    
    $
    (790
    )Income (loss) per share:From continuing operations
    
    $
    (0.09
    )
    
    $
    (0.89
    )
    
    $
    (0.09
    )
    
    $
    (0.13
    )From discontinued operations
    
    
    0.08
    
    
    
    0.09
    
    
    
    0.01
    
    
    
    0.04Basic and diluted net loss per share
    
    $
    (0.01
    )
    
    $
    (0.80
    )
    
    $
    (0.08
    )
    
    $
    (0.09
    )Shares used in computation of basic and diluted net loss per share
    
    
    8,711
    
    
    
    8,671
    
    
    
    8,716
    
    
    
    8,695
  3




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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30
    
    December 312006
    
    2005(in thousands, except share and per-share amounts)(Unaudited)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    1,851
    
    
    $
    19,622Receivables, net
    
    
    29,988
    
    
    
    28,166Income taxes receivable
    
    
    986
    
    
    
    986Deferred income taxes
    
    
    923
    
    
    
    665Prepaid expenses
    
    
    2,316
    
    
    
    4,295Television and radio broadcast rights
    
    
    8,848
    
    
    
    6,519Assets held for sale
    
    
    286Total current assets
    
    
    45,198
    
    
    
    60,253Marketable securities, at market value
    
    
    177,397
    
    
    
    170,053Cash value of life insurance and retirement deposits
    
    
    15,780
    
    
    
    15,303Television and radio broadcast rights
    
    
    1,052
    
    
    
    2,075Goodwill, net
    
    
    32,688
    
    
    
    38,354Intangible assets
    
    
    32,784
    
    
    
    1,244Investment in equity investee
    
    
    2,769
    
    
    
    2,759Prepaid financing fees and other assets
    
    
    6,994
    
    
    
    6,040Assets held for sale
    
    
    12,211Property, plant and equipment, net
    
    
    147,862
    
    
    
    144,312Total Assets
    
    $
    474,735
    
    
    $
    440,393LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesSenior credit facility
    
    $
    13,000
    
    
    $Trade accounts payable
    
    
    3,097
    
    
    
    3,483Accrued payroll and related benefits
    
    
    6,889
    
    
    
    7,355Interest payable
    
    
    563
    
    
    
    3,809Television and radio broadcast rights payable
    
    
    7,761
    
    
    
    5,524Obligation under asset purchase agreement
    
    
    9,800Other current liabilities
    
    
    5,170
    
    
    
    4,520Liabilities of businesses held for sale
    
    
    610Total current liabilities
    
    
    46,890
    
    
    
    24,691Long-term debt
    
    
    150,000
    
    
    
    150,000Accrued retirement benefits
    
    
    19,734
    
    
    
    19,644Deferred income taxes
    
    
    34,670
    
    
    
    31,381Other liabilities
    
    
    8,184
    
    
    
    5,056Liabilities of businesses held for sale
    
    
    48Commitments and ContingenciesStockholders EquityCommon stock, shares authorized 12,000,000, $1.25 par value; issued and outstanding
8,720,091 as of September 30, 2006 and 8,705,041 as of December 31, 2005
    
    
    10,900
    
    
    
    10,881Capital in excess of par
    
    
    9,331
    
    
    
    8,590Deferred compensation
    
    
    
    
    
    
    (159
    )Accumulated other comprehensive income, net of income taxes:Unrealized gain on marketable securities
    
    
    114,373
    
    
    
    109,600Minimum pension liability
    
    
    (2,172
    )
    
    
    (2,172
    )Retained earnings
    
    
    82,777
    
    
    
    82,881Total Stockholders Equity
    
    
    215,209
    
    
    
    209,621Total Liabilities and Stockholders Equity
    
    $
    474,735
    
    
    $
    440,393
  4




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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine months endedSeptember 302006
    
    2005(in thousands)(Unaudited)Cash flows from operating activitiesNet loss
    
    $
    (104
    )
    
    $
    (6,948
    )Adjustments to reconcile net loss to net cash provided by (used in)
operating activitiesDepreciation and amortization
    
    
    7,623
    
    
    
    10,445Deferred income taxes
    
    
    462
    
    
    
    (6,033
    )Equity in operations of equity investees
    
    
    (10
    )
    
    
    (20
    )Amortization of deferred loan costs
    
    
    474
    
    
    
    488Amortization of television and radio broadcast rights
    
    
    16,418
    
    
    
    17,745Payments for television and radio broadcast rights
    
    
    (15,493
    )
    
    
    (16,840
    )Other
    
    
    392
    
    
    
    389Change in operating assets and liabilitiesReceivables
    
    
    (1,821
    )
    
    
    (1,047
    )Prepaid expenses
    
    
    693
    
    
    
    616Cash value of life insurance and retirement deposits
    
    
    (477
    )
    
    
    (88
    )Other assets
    
    
    (329
    )
    
    
    (14
    )Trade accounts payable, accrued payroll and related benefits, interest
payable, and other current liabilities
    
    
    (2,838
    )
    
    
    (5,486
    )Income taxes receivable and payable
    
    
    
    
    
    
    1,036Accrued retirement benefits
    
    
    89
    
    
    
    848Other liabilities
    
    
    3,184
    
    
    
    94Net cash provided by (used in) operating activities
    
    
    8,263
    
    
    
    (4,815
    )Cash flows from investing activitiesProceeds from collection of notes receivable
    
    
    
    
    
    
    1,585Proceeds from sale of marketable securities
    
    
    
    
    
    
    247Payments for options to purchase television stations
    
    
    (1,100
    )Purchase of Seattle television station
    
    
    (16,142
    )Payments toward purchase of Oregon television stations
    
    
    (9,728
    )Purchase of property, plant and equipment
    
    
    (12,633
    )
    
    
    (6,576
    )Net cash used in investing activities
    
    
    (39,603
    )
    
    
    (4,744
    )Cash flows from financing activitiesPayments under notes payable
    
    
    
    
    
    
    (53
    )Borrowings under borrowing agreements
    
    
    15,000Payments on borrowing agreements
    
    
    (2,000
    )Excess tax benefit from exercise of stock options
    
    
    23Payment of deferred loan costs
    
    
    
    
    
    
    (87
    )Proceeds from exercise of stock options
    
    
    546
    
    
    
    3,068Net cash provided by financing activities
    
    
    13,569
    
    
    
    2,928Net decrease in cash and cash equivalents
    
    
    (17,771
    )
    
    
    (6,631
    )Cash and cash equivalents, beginning of period
    
    
    19,622
    
    
    
    16,025Cash and cash equivalents, end of period
    
    $
    1,851
    
    
    $
    9,394
  5




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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 Nine months ended
    
    Three months endedSeptember 30
    
    September 302006
    
    2005
    
    2006
    
    2005(in thousands)(Unaudited)Net loss
    
    $
    (104
    )
    
    $
    (6,948
    )
    
    $
    (671
    )
    
    $
    (790
    )Other comprehensive income (loss):Unrealized gain (loss) on marketable securities
    
    
    7,343
    
    
    
    3,382
    
    
    
    7,766
    
    
    
    (2,912
    )Effect of income taxes
    
    
    (2,570
    )
    
    
    (1,184
    )
    
    
    (2,718
    )
    
    
    1,020Less: Reclassification adjustment for gains included
in net loss
    
    
    
    
    
    
    (106
    )4,773
    
    
    
    2,092
    
    
    
    5,048
    
    
    
    (1,892
    )Comprehensive income (loss)
    
    $
    4,669
    
    
    $
    (4,856
    )
    
    $
    4,377
    
    
    $
    (2,682
    )
  6




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Stock-based Compensation
     7




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##### Table of Contents



Variable Interest Entities
   Fair
Value Measurements
 Employers Accounting for Defined Benefit Pension
and Other Postretirement Plans  An Amendment of FASB Statements No. 87, 88, 106 and 132R
  Accounting for Uncertainty in Income
Taxes  an Interpretation of FASB Statement 109 (FIN 48 or the Interpretation) Accounting for Income Taxes.
 8




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, Accounting
for Certain Hybrid Instruments,
    Nine months ended
    
    
    Three months endedSeptember 30
    
    
    September 302006
    
    
    2005
    
    
    2006
    
    
    2005(Unaudited)Revenue
    
    $
    7,830
    
    
    $
    9,070
    
    
    $
    1,781
    
    
    $
    3,169Income from discontinued operations:Discontinued operating activities
    
    $
    1,046
    
    
    $
    1,135
    
    
    $
    178
    
    
    $
    504Income tax effect
    
    
    (371
    )
    
    
    (397
    )
    
    
    (65
    )
    
    
    (176
    )$
    675
    
    
    $
    738
    
    
    $
    113
    
    
    $
    328
  Assets held for sale:Goodwill, net
    
    $
    8,683Property, plant and equipment, net
    
    
    2,284Intangible assets
    
    
    1,244Other assets
    
    
    286$
    12,497
   9




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10




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Nine months ended
    
    
    Three months endedSeptember 30
    
    
    September 302006
    
    
    2005
    
    
    2006
    
    
    2005Service cost
    
    $
    
    
    
    $
    80
    
    
    $
    
    
    
    $Interest cost
    
    
    779
    
    
    
    781
    
    
    
    259
    
    
    
    247Amortization of loss
    
    
    116
    
    
    
    247
    
    
    
    39
    
    
    
    72Recognition of remaining transition obligation, curtailment loss
    
    
    
    
    
    
    451Net periodic pension cost
    
    $
    895
    
    
    $
    1,559
    
    
    $
    298
    
    
    $
    319
  2006
    
    
    2005Discount rate
    
    
    5.48
    %
    
    
    5.02% - 5.74
    %Rate of compensation increase
    
    
    
    
    
    
    0.00% - 3.00
    %
     11




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##### Table of Contents



Stock options
 Restricted stock rights
 Determining Fair Value Under SFAS 123(R)
 Valuation and Amortization Method.
 Expected Life
 Expected Volatility
 12




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##### Table of Contents



Risk-Free Interest Rate.
 Expected Dividend Yield.
 Expected Forfeitures.
  Nine months ended
    
    Three months endedSeptember 30
    
    September 302006
    
    2005
    
    2006
    
    2005Assumptions:Weighted average risk-free interest rate
    
    
    4.8
    %
    
    
    4.1
    %
    
    
    5.0
    %Expected dividend yield
    
    
    0
    
    
    
    0
    
    
    
    0Expected volatility
    
    
    33
    %
    
    
    31
    %
    
    
    32
    %Expected life of options
    
    6 years
    
    6 years
    
    6 yearsWeighted average fair value at date of grant
    
    $
    17.43
    
    
    $
    19.74
    
    
    $
    16.77
  Stock-based Compensation Under SFAS 123(R)
   13




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Nine months ended
    
    Three months endedSeptember 30
    
    September 30Condensed consolidated statement of operations:Decrease in income from operations
    
    $
    (290
    )
    
    $
    (54
    )Increase in loss before income taxes
    
    
    (290
    )
    
    
    (54
    )Increase in net loss
    
    
    (188
    )
    
    
    (35
    )Increase in basic and diluted net loss per share
    
    
    (0.02
    )
    
    
    Condensed consolidated statement of cash flows:Decrease in net cash provided by operating activities
    
    
    (23
    )
    
    
    (13
    )Increase in net cash provided by financing activities
    
    
    23
    
    
    
    13
 Stock Award Activity
  Stock Options
    
    
    Restricted Stock RightsWeighted
    
    
    WeightedAverage
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    WeightedExercise
    
    
    Remaining
    
    
    Aggregate
    
    
    
    
    
    
    AverageNumber
    
    
    Price Per
    
    
    Contractual
    
    
    Intrinsic
    
    
    Number
    
    
    Grant-Dateof Shares
    
    
    Share
    
    
    Life
    
    
    Value
    
    
    of Shares
    
    
    Fair ValueOutstanding at December 31, 2005
    
    
    275,430
    
    
    $
    52.88
    
    
    
    
    
    
    
    
    
    
    
    4,000
    
    
    $
    46.89Options and stock rights granted
    
    
    47,100
    
    
    
    42.40
    
    
    
    
    
    
    
    
    
    
    
    6,400
    
    
    
    42.70Options exercised/stock rights vested
    
    
    (14,800
    )
    
    
    36.86
    
    
    
    
    
    
    
    
    
    
    
    (250
    )
    
    
    49.75Options expired
    
    
    (4,000
    )
    
    
    37.25Options and stock rights forfeited
    
    
    (84,305
    )
    
    
    49.94
    
    
    
    
    
    
    
    
    
    
    
    (2,250
    )
    
    
    45.05Outstanding at September 30, 2006
    
    
    219,425
    
    
    $
    53.20
    
    
    5.4 years
    
    $
    54,285
    
    
    
    7,900
    
    
    $
    43.93Exercisable at September 30, 2006
    
    
    150,600
    
    
    $
    56.85
    
    
    3.8 years
    
    $
    39,400
   14




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Pro Forma Information Under SFAS 123 and APB 25
  Nine months ended
    
    
    Three months endedSeptember 30, 2005
    
    
    September 30, 2005Net loss, as reported
    
    $
    (6,948
    )
    
    $
    (790
    )Add: stock-based compensation included in net loss, net of tax
    
    
    197
    
    
    
    Deduct: total stock-based compensation determined under fair
value method for all awards, net of tax
    
    
    (266
    )
    
    
    (85
    )Pro forma net loss
    
    $
    (7,017
    )
    
    $
    (875
    )Basic and diluted net loss per share:As reported
    
    $
    (0.80
    )
    
    $
    (0.09
    )Pro forma
    
    $
    (0.81
    )
    
    $
    (0.10
    )
    Nine months
    
    
    Three monthsended September 30
    
    
    ended September 302006
    
    
    2005
    
    
    2006
    
    
    2005Television
    
    $
    73,322
    
    
    $
    65,883
    
    
    $
    24,472
    
    
    $
    21,687Radio
    
    
    29,986
    
    
    
    29,049
    
    
    
    11,814
    
    
    
    11,958Fisher Plaza
    
    
    6,662
    
    
    
    5,998
    
    
    
    2,370
    
    
    
    2,002Corporate and eliminations
    
    
    13
    
    
    
    (117
    )
    
    
    56
    
    
    
    (12
    )$
    109,983
    
    
    $
    100,813
    
    
    $
    38,712
    
    
    $
    35,635
 15




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##### Table of Contents



Nine months
    
    
    Three monthsended September 30
    
    
    ended September 302006
    
    
    2005
    
    
    2006
    
    
    2005Television
    
    $
    12,303
    
    
    $
    3,708
    
    
    $
    3,619
    
    
    $
    2,273Radio
    
    
    (539
    )
    
    
    (1,163
    )
    
    
    (332
    )
    
    
    (95
    )Fisher Plaza
    
    
    1,602
    
    
    
    172
    
    
    
    513
    
    
    
    70Corporate and eliminations
    
    
    (3,634
    )
    
    
    (5,397
    )
    
    
    (895
    )
    
    
    (1,040
    )$
    9,732
    
    
    $
    (2,680
    )
    
    $
    2,905
    
    
    $
    1,208
  Nine months
    
    
    Three monthsended September 30
    
    
    ended September 302006
    
    
    2005
    
    
    2006
    
    
    2005Total segment income (loss) before interest and income taxes
    
    $
    9,732
    
    
    $
    (2,680
    )
    
    $
    2,905
    
    
    $
    1,208Interest expense, net
    
    
    (10,396
    )
    
    
    (10,241
    )
    
    
    (3,574
    )
    
    
    (3,466
    )$
    (664
    )
    
    $
    (12,921
    )
    
    $
    (669
    )
    
    $
    (2,258
    )
  September 30
    
    
    December 31Total assets
    
    2006
    
    
    2005Television
    
    $
    121,936
    
    
    $
    92,543Radio
    
    
    27,643
    
    
    
    41,487Fisher Plaza
    
    
    119,768
    
    
    
    118,611Corporate and eliminations
    
    
    192,891
    
    
    
    187,752Continuing operations
    
    $
    462,238
    
    
    $
    440,393
  16




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17




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##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the nine months ended September 30, 2006
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Revenue
    
    $
    
    
    
    $
    110,139
    
    
    $
    (156
    )
    
    $
    109,983Costs and expensesCost of services sold
    
    
    
    
    
    
    54,171
    
    
    
    1,240
    
    
    
    55,411Selling expenses
    
    
    
    
    
    
    18,811
    
    
    
    
    
    
    
    18,811General and administrative expenses
    
    
    6,144
    
    
    
    16,580
    
    
    
    (1,396
    )
    
    
    21,328Depreciation and amortization
    
    
    184
    
    
    
    7,331
    
    
    
    
    
    
    
    7,5156,328
    
    
    
    96,893
    
    
    
    (156
    )
    
    
    103,065Income (loss) from operations
    
    
    (6,328
    )
    
    
    13,246
    
    
    
    
    
    
    
    6,918Other income, net
    
    
    2,551
    
    
    
    263
    
    
    
    
    
    
    
    2,814Equity in income of subsidiaries
    
    
    9,207
    
    
    
    
    
    
    
    (9,207
    )
    
    
    Interest expense
    
    
    (10,391
    )
    
    
    (5
    )
    
    
    
    
    
    
    (10,396
    )Income (loss) from continuing operations before income taxes
    
    
    (4,961
    )
    
    
    13,504
    
    
    
    (9,207
    )
    
    
    (664
    )Provision (benefit) for federal and state income taxes
    
    
    (4,857
    )
    
    
    4,972
    
    
    
    
    
    
    
    115Income (loss) from continuing operations
    
    
    (104
    )
    
    
    8,532
    
    
    
    (9,207
    )
    
    
    (779
    )Income from discontinued operations, net of income taxes
    
    
    
    
    
    
    675
    
    
    
    
    
    
    
    675Net income (loss)
    
    $
    (104
    )
    
    $
    9,207
    
    
    $
    (9,207
    )
    
    $
    (104
    )
 18




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the nine months ended September 30, 2005
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Revenue
    
    $
    
    
    
    $
    100,944
    
    
    $
    (131
    )
    
    $
    100,813Costs and expensesCost of services sold
    
    
    
    
    
    
    54,624
    
    
    
    1,168
    
    
    
    55,792Selling expenses
    
    
    
    
    
    
    17,579
    
    
    
    
    
    
    
    17,579General and administrative expenses
    
    
    7,569
    
    
    
    16,249
    
    
    
    (1,299
    )
    
    
    22,519Depreciation and amortization
    
    
    183
    
    
    
    10,078
    
    
    
    
    
    
    
    10,2617,752
    
    
    
    98,530
    
    
    
    (131
    )
    
    
    106,151Income (loss) from operations
    
    
    (7,752
    )
    
    
    2,414
    
    
    
    
    
    
    
    (5,338
    )Other income, net
    
    
    2,164
    
    
    
    494
    
    
    
    
    
    
    
    2,658Equity in income of subsidiaries
    
    
    2,610
    
    
    
    
    
    
    
    (2,610
    )
    
    
    Interest expense
    
    
    (10,241
    )
    
    
    
    
    
    
    
    
    
    
    (10,241
    )Income (loss) from continuing operations
before income taxes
    
    
    (13,219
    )
    
    
    2,908
    
    
    
    (2,610
    )
    
    
    (12,921
    )Provision (benefit) for federal and state income taxes
    
    
    (6,271
    )
    
    
    1,036
    
    
    
    
    
    
    
    (5,235
    )Income (loss) from continuing operations
    
    
    (6,948
    )
    
    
    1,872
    
    
    
    (2,610
    )
    
    
    (7,686
    )Income from discontinued operations, net of income taxes
    
    
    
    
    
    
    738
    
    
    
    
    
    
    
    738Net income (loss)
    
    $
    (6,948
    )
    
    $
    2,610
    
    
    $
    (2,610
    )
    
    $
    (6,948
    )
 19




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the three months ended September 30, 2006
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Revenue
    
    $
    
    
    
    $
    38,764
    
    
    $
    (52
    )
    
    $
    38,712Costs and expensesCost of services sold
    
    
    
    
    
    
    20,248
    
    
    
    429
    
    
    
    20,677Selling expenses
    
    
    
    
    
    
    6,544
    
    
    
    
    
    
    
    6,544General and administrative expenses
    
    
    1,921
    
    
    
    5,705
    
    
    
    (481
    )
    
    
    7,145Depreciation and amortization
    
    
    60
    
    
    
    2,428
    
    
    
    
    
    
    
    2,4881,981
    
    
    
    34,925
    
    
    
    (52
    )
    
    
    36,854Income (loss) from operations
    
    
    (1,981
    )
    
    
    3,839
    
    
    
    
    
    
    
    1,858Other income, net
    
    
    975
    
    
    
    72
    
    
    
    
    
    
    
    1,047Equity in income of subsidiaries
    
    
    2,543
    
    
    
    
    
    
    
    (2,543
    )
    
    
    Interest expense
    
    
    (3,574
    )
    
    
    
    
    
    
    
    
    
    
    (3,574
    )Income (loss) from continuing operations before income taxes
    
    
    (2,037
    )
    
    
    3,911
    
    
    
    (2,543
    )
    
    
    (669
    )Provision (benefit) for federal and state income taxes
    
    
    (1,366
    )
    
    
    1,481
    
    
    
    
    
    
    
    115Income (loss) from continuing operations
    
    
    (671
    )
    
    
    2,430
    
    
    
    (2,543
    )
    
    
    (784
    )Income from discontinued operations, net of income taxes
    
    
    
    
    
    
    113
    
    
    
    
    
    
    
    113Net income (loss)
    
    $
    (671
    )
    
    $
    2,543
    
    
    $
    (2,543
    )
    
    $
    (671
    )
 20




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the three months ended September 30, 2005
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Revenue
    
    $
    
    
    
    $
    35,652
    
    
    $
    (17
    )
    
    $
    35,635Costs and expensesCost of services sold
    
    
    
    
    
    
    19,487
    
    
    
    390
    
    
    
    19,877Selling expenses
    
    
    
    
    
    
    6,319
    
    
    
    
    
    
    
    6,319General and administrative expenses
    
    
    1,883
    
    
    
    5,017
    
    
    
    (407
    )
    
    
    6,493Depreciation and amortization
    
    
    49
    
    
    
    2,593
    
    
    
    
    
    
    
    2,6421,932
    
    
    
    33,416
    
    
    
    (17
    )
    
    
    35,331Income (loss) from operations
    
    
    (1,932
    )
    
    
    2,236
    
    
    
    
    
    
    
    304Other income, net
    
    
    759
    
    
    
    145
    
    
    
    
    
    
    
    904Equity in income of subsidiaries
    
    
    1,833
    
    
    
    
    
    
    
    (1,833
    )Interest expense
    
    
    (3,466
    )
    
    
    
    
    
    
    
    
    
    
    (3,466
    )Income (loss) from continuing operations before income taxes
    
    
    (2,806
    )
    
    
    2,381
    
    
    
    (1,833
    )
    
    
    (2,258
    )Provision (benefit) for federal and state income taxes
    
    
    (2,016
    )
    
    
    876
    
    
    
    
    
    
    
    (1,140
    )Income (loss) from continuing operations
    
    
    (790
    )
    
    
    1,505
    
    
    
    (1,833
    )
    
    
    (1,118
    )Income from discontinued operations, net of income taxes
    
    
    
    
    
    
    328
    
    
    
    
    
    
    
    328Net income (loss)
    
    $
    (790
    )
    
    $
    1,833
    
    
    $
    (1,833
    )
    
    $
    (790
    )
 21




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Balance Sheet
as of September 30, 2006
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    1,481
    
    
    $
    370
    
    
    $
    
    
    
    $
    1,851Receivables, net
    
    
    534
    
    
    
    29,454
    
    
    
    
    
    
    
    29,988Due from affiliate
    
    
    8,294
    
    
    
    
    
    
    
    (8,294
    )
    
    
    Income taxes receivable
    
    
    1,538
    
    
    
    
    
    
    
    (552
    )
    
    
    986Deferred income taxes
    
    
    73
    
    
    
    850
    
    
    
    
    
    
    
    923Prepaid expenses
    
    
    255
    
    
    
    2,061
    
    
    
    
    
    
    
    2,316Television and radio broadcast rights
    
    
    
    
    
    
    8,848
    
    
    
    
    
    
    
    8,848Assets held for sale
    
    
    
    
    
    
    286
    
    
    
    
    
    
    
    286Total current assets
    
    
    12,175
    
    
    
    41,869
    
    
    
    (8,846
    )
    
    
    45,198Marketable securities, at market value
    
    
    176,960
    
    
    
    437
    
    
    
    
    
    
    
    177,397Investment in consolidated subsidiaries
    
    
    234,263
    
    
    
    
    
    
    
    (234,263
    )
    
    
    Cash value of life insurance and retirement deposits
    
    
    5,378
    
    
    
    10,402
    
    
    
    
    
    
    
    15,780Television and radio broadcast rights
    
    
    
    
    
    
    1,052
    
    
    
    
    
    
    
    1,052Goodwill, net
    
    
    
    
    
    
    32,688
    
    
    
    
    
    
    
    32,688Intangible assets
    
    
    
    
    
    
    32,784
    
    
    
    
    
    
    
    32,784Investments in equity investee
    
    
    
    
    
    
    2,769
    
    
    
    
    
    
    
    2,769Prepaid financing fees and other assets
    
    
    4,696
    
    
    
    2,298
    
    
    
    
    
    
    
    6,994Assets held for sale
    
    
    
    
    
    
    12,211
    
    
    
    
    
    
    
    12,211Property, plant and equipment, net
    
    
    888
    
    
    
    146,974
    
    
    
    
    
    
    
    147,862Total Assets
    
    $
    434,360
    
    
    $
    283,484
    
    
    $
    (243,109
    )
    
    $
    474,735LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesSenior credit facility
    
    $
    13,000
    
    
    $
    
    
    
    $
    
    
    
    $
    13,000Trade accounts payable
    
    
    795
    
    
    
    2,302
    
    
    
    
    
    
    
    3,097Payable to affiliate
    
    
    
    
    
    
    8,294
    
    
    
    (8,294
    )
    
    
    Accrued payroll and related benefits
    
    
    1,034
    
    
    
    5,855
    
    
    
    
    
    
    
    6,889Interest payable
    
    
    563
    
    
    
    
    
    
    
    
    
    
    
    563Television and radio broadcast rights payable
    
    
    
    
    
    
    7,761
    
    
    
    
    
    
    
    7,761Income taxes payable
    
    
    
    
    
    
    552
    
    
    
    (552
    )
    
    
    Obligation under asset purchase agreement
    
    
    
    
    
    
    9,800
    
    
    
    
    
    
    
    9,800Other current liabilities
    
    
    1,463
    
    
    
    3,707
    
    
    
    
    
    
    
    5,170Liabilities of businesses held for sale
    
    
    
    
    
    
    610
    
    
    
    
    
    
    
    610Total current liabilities
    
    
    16,855
    
    
    
    38,881
    
    
    
    (8,846
    )
    
    
    46,890Long-term debt
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Accrued retirement benefits
    
    
    19,649
    
    
    
    85
    
    
    
    
    
    
    
    19,734Deferred income taxes
    
    
    32,582
    
    
    
    2,088
    
    
    
    
    
    
    
    34,670Other liabilities
    
    
    65
    
    
    
    8,119
    
    
    
    
    
    
    
    8,184Liabilities of businesses held for sale
    
    
    
    
    
    
    48
    
    
    
    
    
    
    
    48Stockholders EquityCommon stock
    
    
    10,900
    
    
    
    1,131
    
    
    
    (1,131
    )
    
    
    10,900Capital in excess of par
    
    
    9,331
    
    
    
    164,234
    
    
    
    (164,234
    )
    
    
    9,331Accumulated other comprehensive income, net of income taxes:Unrealized gain on marketable securities
    
    
    114,373
    
    
    
    
    
    
    
    
    
    
    
    114,373Minimum pension liability
    
    
    (2,172
    )
    
    
    
    
    
    
    
    
    
    
    (2,172
    )Retained earnings
    
    
    82,777
    
    
    
    68,898
    
    
    
    (68,898
    )
    
    
    82,777Total Stockholders Equity
    
    
    215,209
    
    
    
    234,263
    
    
    
    (234,263
    )
    
    
    215,209Total Liabilities and Stockholders Equity
    
    $
    434,360
    
    
    $
    283,484
    
    
    $
    (243,109
    )
    
    $
    474,735
 22




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Balance Sheet
as of December 31, 2005
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    3,660
    
    
    $
    15,962
    
    
    $
    
    
    
    $
    19,622Receivables, net
    
    
    105
    
    
    
    28,061
    
    
    
    
    
    
    
    28,166Due from affiliate
    
    
    6,184
    
    
    
    
    
    
    
    (6,184
    )
    
    
    Income taxes receivable
    
    
    1,538
    
    
    
    
    
    
    
    (552
    )
    
    
    986Deferred income taxes
    
    
    7
    
    
    
    658
    
    
    
    
    
    
    
    665Prepaid expenses
    
    
    414
    
    
    
    3,881
    
    
    
    
    
    
    
    4,295Television and radio broadcast rights
    
    
    
    
    
    
    6,519
    
    
    
    
    
    
    
    6,519Total current assets
    
    
    11,908
    
    
    
    55,081
    
    
    
    (6,736
    )
    
    
    60,253Marketable securities, at market value
    
    
    169,634
    
    
    
    419
    
    
    
    
    
    
    
    170,053Investment in consolidated subsidiaries
    
    
    225,057
    
    
    
    
    
    
    
    (225,057
    )
    
    
    Cash value of life insurance and retirement deposits
    
    
    5,115
    
    
    
    10,188
    
    
    
    
    
    
    
    15,303Television and radio broadcast rights
    
    
    
    
    
    
    2,075
    
    
    
    
    
    
    
    2,075Goodwill, net
    
    
    
    
    
    
    38,354
    
    
    
    
    
    
    
    38,354Intangible assets
    
    
    
    
    
    
    1,244
    
    
    
    
    
    
    
    1,244Investments in equity investee
    
    
    
    
    
    
    2,759
    
    
    
    
    
    
    
    2,759Prepaid financing fees and and other assets
    
    
    5,169
    
    
    
    871
    
    
    
    
    
    
    
    6,040Property, plant and equipment, net
    
    
    904
    
    
    
    143,408
    
    
    
    
    
    
    
    144,312Total Assets
    
    $
    417,787
    
    
    $
    254,399
    
    
    $
    (231,793
    )
    
    $
    440,393LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesTrade accounts payable
    
    $
    693
    
    
    $
    2,790
    
    
    $
    
    
    
    $
    3,483Payable to affiliate
    
    
    
    
    
    
    6,184
    
    
    
    (6,184
    )
    
    
    Accrued payroll and related benefits
    
    
    1,113
    
    
    
    6,242
    
    
    
    
    
    
    
    7,355Interest payable
    
    
    3,809
    
    
    
    
    
    
    
    
    
    
    
    3,809Television and radio broadcast rights payable
    
    
    
    
    
    
    5,524
    
    
    
    
    
    
    
    5,524Income taxes payable
    
    
    
    
    
    
    552
    
    
    
    (552
    )
    
    
    Other current liabilities
    
    
    2,058
    
    
    
    2,462
    
    
    
    
    
    
    
    4,520Total current liabilities
    
    
    7,673
    
    
    
    23,754
    
    
    
    (6,736
    )
    
    
    24,691Long-term debt
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Accrued retirement benefits
    
    
    19,560
    
    
    
    84
    
    
    
    
    
    
    
    19,644Deferred income taxes
    
    
    30,868
    
    
    
    513
    
    
    
    
    
    
    
    31,381Other liabilities
    
    
    65
    
    
    
    4,991
    
    
    
    
    
    
    
    5,056Stockholders EquityCommon stock
    
    
    10,881
    
    
    
    1,131
    
    
    
    (1,131
    )
    
    
    10,881Capital in excess of par
    
    
    8,590
    
    
    
    164,234
    
    
    
    (164,234
    )
    
    
    8,590Deferred compensation
    
    
    (159
    )
    
    
    
    
    
    
    
    
    
    
    (159
    )Accumulated other comprehensive income, net of income taxes:Unrealized gain on marketable securities
    
    
    109,600
    
    
    
    
    
    
    
    
    
    
    
    109,600Minimum pension liability
    
    
    (2,172
    )
    
    
    
    
    
    
    
    
    
    
    (2,172
    )Retained earnings
    
    
    82,881
    
    
    
    59,692
    
    
    
    (59,692
    )
    
    
    82,881Total Stockholders Equity
    
    
    209,621
    
    
    
    225,057
    
    
    
    (225,057
    )
    
    
    209,621Total Liabilities and Stockholders Equity
    
    $
    417,787
    
    
    $
    254,399
    
    
    $
    (231,793
    )
    
    $
    440,393
 23




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Cash Flows
for the nine months ended September 30, 2006
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Net cash provided by (used in) operating activities
    
    $
    (15,577
    )
    
    $
    23,840
    
    
    $
    
    
    
    $
    8,263Cash flows from investing activitiesPayment of options for purchase of television stations
    
    
    
    
    
    
    (1,100
    )
    
    
    
    
    
    
    (1,100
    )Purchase of Seattle television station
    
    
    
    
    
    
    (16,142
    )
    
    
    
    
    
    
    (16,142
    )Payments towards purchase of Oregon television stations
    
    
    
    
    
    
    (9,728
    )
    
    
    
    
    
    
    (9,728
    )Purchase of property, plant and equipment
    
    
    (169
    )
    
    
    (12,464
    )
    
    
    
    
    
    
    (12,633
    )Net cash used in investing activities
    
    
    (169
    )
    
    
    (39,434
    )
    
    
    
    
    
    
    (39,603
    )Cash flows from financing activitiesBorrowings under borrowing agreements
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    15,000Payments on borrowing agreements
    
    
    (2,000
    )
    
    
    
    
    
    
    
    
    
    
    (2,000
    )Excess tax benefit from exercise of stock options
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    23Proceeds from exercise of stock options
    
    
    546
    
    
    
    
    
    
    
    
    
    
    
    546Net cash provided by financing activities
    
    
    13,569
    
    
    
    
    
    
    
    
    
    
    
    13,569Net decrease in cash and cash equivalents
    
    
    (2,177
    )
    
    
    (15,594
    )
    
    
    
    
    
    
    (17,771
    )Cash and cash equivalents, beginning of period
    
    
    3,660
    
    
    
    15,962
    
    
    
    
    
    
    
    19,622Cash and cash equivalents, end of period
    
    $
    1,483
    
    
    $
    368
    
    
    $
    
    
    
    $
    1,851
 24




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##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Cash Flows
for the nine months ended September 30, 2005
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Net cash used in operating activities
    
    $
    (2,520
    )
    
    $
    (2,295
    )
    
    $
    
    
    
    $
    (4,815
    )Cash flows from investing activitiesProceeds from collection of notes receivable
    
    
    
    
    
    
    1,585
    
    
    
    
    
    
    
    1,585Proceeds from sale of marketable securities
    
    
    73
    
    
    
    174
    
    
    
    
    
    
    
    247Purchase of property, plant and equipment
    
    
    (233
    )
    
    
    (6,343
    )
    
    
    
    
    
    
    (6,576
    )Net cash used in investing activities
    
    
    (160
    )
    
    
    (4,584
    )
    
    
    
    
    
    
    (4,744
    )Cash flows from financing activitiesPayments under notes payable
    
    
    (44
    )
    
    
    (9
    )
    
    
    
    
    
    
    (53
    )Payment of deferred loan costs
    
    
    (87
    )
    
    
    
    
    
    
    
    
    
    
    (87
    )Proceeds from exercise of stock options
    
    
    3,068
    
    
    
    
    
    
    
    
    
    
    
    3,068Net cash provided by (used in) financing activities
    
    
    2,937
    
    
    
    (9
    )
    
    
    
    
    
    
    2,928Net increase (decrease) in cash and cash equivalents
    
    
    257
    
    
    
    (6,888
    )
    
    
    
    
    
    
    (6,631
    )Cash and cash equivalents, beginning of period
    
    
    1,007
    
    
    
    15,018
    
    
    
    
    
    
    
    16,025Cash and cash equivalents, end of period
    
    $
    1,264
    
    
    $
    8,130
    
    
    $
    
    
    
    $
    9,394
 25




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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, 2005, which was filed with the Securities and Exchange Commission on March 15,
2006 and any changes thereto disclosed on our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2006, which was filed with the Securities and Exchange Commission on May 9, 2006. 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.
      26




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
  27




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##### Table of Contents



CONSOLIDATED RESULTS OF OPERATIONS
   28




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##### Table of Contents



Nine months
    
    
    
    
    
    
    
    
    
    
    Three months(dollars in thousands)
    
    ended September 30,
    
    
    Variance
    
    
    ended September 30,
    
    
    Variance(Unaudited)
    
    2006
    
    
    2005
    
    
    $
    
    
    %
    
    
    2006
    
    
    2005
    
    
    $
    
    
    %RevenueTelevision
    
    $
    73,322
    
    
    $
    65,883
    
    
    $
    7,439
    
    
    
    11.3
    %
    
    $
    24,472
    
    
    $
    21,687
    
    
    $
    2,785
    
    
    
    12.8
    %Radio
    
    
    29,986
    
    
    
    29,049
    
    
    
    937
    
    
    
    3.2
    %
    
    
    11,814
    
    
    
    11,958
    
    
    
    (144
    )
    
    
    -1.2
    %Fisher Plaza
    
    
    6,662
    
    
    
    5,998
    
    
    
    664
    
    
    
    11.1
    %
    
    
    2,370
    
    
    
    2,002
    
    
    
    368
    
    
    
    18.4
    %Corporate and eliminations
    
    
    13
    
    
    
    (117
    )
    
    
    130
    
    
    
    
    
    
    
    56
    
    
    
    (12
    )
    
    
    68Consolidated
    
    
    109,983
    
    
    
    100,813
    
    
    
    9,170
    
    
    
    9.1
    %
    
    
    38,712
    
    
    
    35,635
    
    
    
    3,077
    
    
    
    8.6
    %Cost of services soldTelevision
    
    
    33,993
    
    
    
    34,483
    
    
    
    (490
    )
    
    
    -1.4
    %
    
    
    11,741
    
    
    
    11,076
    
    
    
    665
    
    
    
    6.0
    %Radio
    
    
    17,829
    
    
    
    18,136
    
    
    
    (307
    )
    
    
    -1.7
    %
    
    
    7,587
    
    
    
    7,696
    
    
    
    (109
    )
    
    
    -1.4
    %Fisher Plaza
    
    
    2,349
    
    
    
    2,003
    
    
    
    346
    
    
    
    17.3
    %
    
    
    920
    
    
    
    715
    
    
    
    205
    
    
    
    28.7
    %Corporate and eliminations
    
    
    1,240
    
    
    
    1,170
    
    
    
    70
    
    
    
    
    
    
    
    429
    
    
    
    390
    
    
    
    39Consolidated
    
    
    55,411
    
    
    
    55,792
    
    
    
    (381
    )
    
    
    -0.7
    %
    
    
    20,677
    
    
    
    19,877
    
    
    
    800
    
    
    
    4.0
    %Selling expensesTelevision
    
    
    9,861
    
    
    
    9,024
    
    
    
    837
    
    
    
    9.3
    %
    
    
    3,276
    
    
    
    3,091
    
    
    
    185
    
    
    
    6.0
    %Radio
    
    
    8,800
    
    
    
    8,235
    
    
    
    565
    
    
    
    6.9
    %
    
    
    3,219
    
    
    
    3,121
    
    
    
    98
    
    
    
    3.1
    %Fisher Plaza
    
    
    150
    
    
    
    320
    
    
    
    (170
    )
    
    
    -53.1
    %
    
    
    49
    
    
    
    107
    
    
    
    (58
    )
    
    
    -54.2
    %Consolidated
    
    
    18,811
    
    
    
    17,579
    
    
    
    1,232
    
    
    
    7.0
    %
    
    
    6,544
    
    
    
    6,319
    
    
    
    225
    
    
    
    3.6
    %General and administrative expensesTelevision
    
    
    12,977
    
    
    
    12,445
    
    
    
    532
    
    
    
    4.3
    %
    
    
    4,453
    
    
    
    3,808
    
    
    
    645
    
    
    
    16.9
    %Radio
    
    
    3,318
    
    
    
    3,047
    
    
    
    271
    
    
    
    8.9
    %
    
    
    1,141
    
    
    
    968
    
    
    
    173
    
    
    
    17.9
    %Fisher Plaza
    
    
    241
    
    
    
    687
    
    
    
    (446
    )
    
    
    -64.9
    %
    
    
    95
    
    
    
    292
    
    
    
    (197
    )
    
    
    -67.5
    %Corporate and eliminations
    
    
    4,792
    
    
    
    6,340
    
    
    
    (1,548
    )
    
    
    -24.4
    %
    
    
    1,456
    
    
    
    1,425
    
    
    
    31
    
    
    
    2.2
    %Consolidated
    
    
    21,328
    
    
    
    22,519
    
    
    
    (1,191
    )
    
    
    -5.3
    %
    
    
    7,145
    
    
    
    6,493
    
    
    
    652
    
    
    
    10.0
    %Depreciation and amortizationTelevision
    
    
    4,361
    
    
    
    6,397
    
    
    
    (2,036
    )
    
    
    -31.8
    %
    
    
    1,426
    
    
    
    1,489
    
    
    
    (63
    )
    
    
    -4.2
    %Radio
    
    
    649
    
    
    
    879
    
    
    
    (230
    )
    
    
    -26.2
    %
    
    
    207
    
    
    
    284
    
    
    
    (77
    )
    
    
    -27.1
    %Fisher Plaza
    
    
    2,321
    
    
    
    2,800
    
    
    
    (479
    )
    
    
    -17.1
    %
    
    
    795
    
    
    
    819
    
    
    
    (24
    )
    
    
    -2.9
    %Corporate and eliminations
    
    
    184
    
    
    
    185
    
    
    
    (1
    )
    
    
    -0.5
    %
    
    
    60
    
    
    
    50
    
    
    
    10
    
    
    
    20.0
    %Consolidated
    
    
    7,515
    
    
    
    10,261
    
    
    
    (2,746
    )
    
    
    -26.8
    %
    
    
    2,488
    
    
    
    2,642
    
    
    
    (154
    )
    
    
    -5.8
    %Income (loss) from operationsTelevision
    
    
    12,130
    
    
    
    3,534
    
    
    
    8,596
    
    
    
    
    
    
    
    3,577
    
    
    
    2,223
    
    
    
    1,354Radio
    
    
    (610
    )
    
    
    (1,248
    )
    
    
    638
    
    
    
    
    
    
    
    (340
    )
    
    
    (111
    )
    
    
    (229
    )Fisher Plaza
    
    
    1,601
    
    
    
    188
    
    
    
    1,413
    
    
    
    
    
    
    
    511
    
    
    
    69
    
    
    
    442Corporate and eliminations
    
    
    (6,203
    )
    
    
    (7,812
    )
    
    
    1,609
    
    
    
    
    
    
    
    (1,890
    )
    
    
    (1,877
    )
    
    
    (13
    )Consolidated
    
    
    6,918
    
    
    
    (5,338
    )
    
    
    12,256
    
    
    
    
    
    
    
    1,858
    
    
    
    304
    
    
    
    1,554Other income, net
    
    
    2,814
    
    
    
    2,658
    
    
    
    156
    
    
    
    
    
    
    
    1,047
    
    
    
    904
    
    
    
    143Interest expense
    
    
    (10,396
    )
    
    
    (10,241
    )
    
    
    (155
    )
    
    
    
    
    
    
    (3,574
    )
    
    
    (3,466
    )
    
    
    (108
    )Loss from continuing operations
before income taxes
    
    
    (664
    )
    
    
    (12,921
    )
    
    
    12,257
    
    
    
    
    
    
    
    (669
    )
    
    
    (2,258
    )
    
    
    1,589Provision (benefit) for federal and state
income taxes
    
    
    115
    
    
    
    (5,235
    )
    
    
    5,350
    
    
    
    
    
    
    
    115
    
    
    
    (1,140
    )
    
    
    1,255Loss from continuing operations
    
    
    (779
    )
    
    
    (7,686
    )
    
    
    6,907
    
    
    
    
    
    
    
    (784
    )
    
    
    (1,118
    )
    
    
    334Income from discontinued operations,
net of income taxes
    
    
    675
    
    
    
    738
    
    
    
    (63
    )
    
    
    
    
    
    
    113
    
    
    
    328
    
    
    
    (215
    )Net loss
    
    $
    (104
    )
    
    $
    (6,948
    )
    
    $
    6,844
    
    
    
    
    
    
    $
    (671
    )
    
    $
    (790
    )
    
    $
    119
 29




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##### Table of Contents



Comparison of Fiscal Nine and Three-Month Periods Ended September 30, 2006, and September 30,
2005
 Revenue
    Cost of services sold
     30




---



##### Table of Contents



Selling expenses
   General and administrative expenses
    Depreciation
  Other income, net
  Interest expense
  31




---



##### Table of Contents



Provision (benefit) for federal and state income taxes
  Liquidity and capital resources
       32




---



##### Table of Contents



33




---



##### Table of Contents



ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
  Interest Rate Exposure
  Marketable Securities Exposure
  
 ITEM 4  CONTROLS AND PROCEDURES
   34




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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
  10.1
    
    Joint Sales Agreement dated July 1, 2006 between La Grande Broadcasting, Inc., Fisher
Broadcasting  Portland TV, L.L.C. and Equity Broadcasting Company.10.2
    
    Amendment No. 2 to Purchase and Sale Agreement dated August 24, 2006 by and among
Cherry Creek Radio LLC, Fisher Communications, Inc. and Fisher Radio Regional Group Inc.10.3
    
    Second Amendment and Agreement Regarding Asset Purchase Agreement dated September 22,
2006 by and among Fisher Radio Regional Group Inc., Equity Broadcasting Corporation, La
Grande Broadcasting, Inc., EBC Boise, Inc. and EBC Pocatello, Inc.31.1
    
    Certification of Chief Executive Officer.31.2
    
    Certification of Acting Chief Financial Officer.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 Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 35




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##### Table of Contents



SIGNATURES
  FISHER COMMUNICATIONS, INC.
      (Registrant)Dated: November 8, 2006
    /s/ Jodi A. ColliganJodi A. ColliganVice President Finance

Acting Chief Financial Officer 36




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description10.1
    
    Joint Sales Agreement dated July 1, 2006 between La Grande Broadcasting, Inc., Fisher
Broadcasting  Portland TV, L.L.C. and Equity Broadcasting Company.10.2
    
    Amendment No. 2 to Purchase and Sale Agreement dated August 24, 2006 by and among
Cherry Creek Radio LLC, Fisher Communications, Inc. and Fisher Radio Regional Group Inc.10.3
    
    Second Amendment and Agreement Regarding Asset Purchase Agreement dated September 22,
2006 by and among Fisher Radio Regional Group Inc., Equity Broadcasting Corporation, La
Grande Broadcasting, Inc., EBC Boise, Inc. and EBC Pocatello, Inc.31.1
    
    Certification of Chief Executive Officer.31.2
    
    Certification of Acting Chief Financial Officer.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 Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 37