##### 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 March 31, 2008
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File Number 0-22439
 FISHER COMMUNICATIONS, INC.
  WASHINGTON
    
    91-0222175(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification Number)
 100 Fourth Ave. N., Suite 510
Seattle, Washington 98109
 (206) 404-7000
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



PART I
FINANCIAL INFORMATION
   1.
    
    Condensed Consolidated Statements of Operations:Three months ended March 31, 2008 and 20072.
    
    Condensed Consolidated Balance Sheets:March 31, 2008 and December 31, 20073.
    
    Condensed Consolidated Statements of Cash Flows:Three months ended March 31, 2008 and 20074.
    
    Condensed Consolidated Statements of Comprehensive Income:Three months ended March 31, 2008 and 20075.
    
    Notes to Condensed Consolidated Financial StatementsItem 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures about Market RisksItem 4.
    
    Controls and ProceduresPART IIOTHER 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 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three months endedMarch 312008
    
    2007(in thousands, except per-share amounts)(Unaudited)Revenue
    
    $
    37,721
    
    
    $
    34,243Costs and expensesDirect operating costs (exclusive of depreciation and amortization
of $2,598 and $2,293, respectively, and
amortization of program rights of $2,446 and
$2,423, respectively, reported separately below)
    
    
    17,494
    
    
    
    15,816Selling, general and administrative expenses
    
    
    13,707
    
    
    
    12,497Amortization of program rights
    
    
    2,446
    
    
    
    2,423Depreciation and amortization
    
    
    3,127
    
    
    
    2,84136,774
    
    
    
    33,577Income from operations
    
    
    947
    
    
    
    666Other income, net
    
    
    1,026
    
    
    
    1,170Interest expense, net
    
    
    (3,358
    )
    
    
    (3,494
    )Loss from continuing operations before income taxes
    
    
    (1,385
    )
    
    
    (1,658
    )Benefit for federal and state income taxes
    
    
    (344
    )
    
    
    (390
    )Loss from continuing operations
    
    
    (1,041
    )
    
    
    (1,268
    )Income (loss) from discontinued operations, net of income taxes
    
    
    (25
    )
    
    
    23Net loss
    
    $
    (1,066
    )
    
    $
    (1,245
    )Income (loss) per share:From continuing operations
    
    $
    (0.12
    )
    
    $
    (0.14
    )From discontinued operationsBasic and diluted net loss per share
    
    $
    (0.12
    )
    
    $
    (0.14
    )Shares used in computation of basic and diluted net loss per share
    
    
    8,728
    
    
    
    8,720
  3




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##### Table of Contents



FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31
    
    December 312008
    
    2007(in thousands, except share and per-share amounts)(Unaudited)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    6,367
    
    
    $
    6,510Receivables, net
    
    
    30,062
    
    
    
    30,498Deferred income taxes
    
    
    785
    
    
    
    785Prepaid expenses and other assets
    
    
    4,291
    
    
    
    3,855Television and radio broadcast rights
    
    
    5,410
    
    
    
    5,934Assets held for sale
    
    
    65
    
    
    
    37Total current assets
    
    
    46,980
    
    
    
    47,619Restricted cash
    
    
    
    
    
    
    52,365Marketable securities, at market value
    
    
    101,910
    
    
    
    129,223Cash value of life insurance and retirement deposits
    
    
    17,010
    
    
    
    16,809Television and radio broadcast rights
    
    
    268
    
    
    
    7Goodwill
    
    
    52,293
    
    
    
    37,361Intangible assets
    
    
    78,800
    
    
    
    42,782Investment in equity investee
    
    
    2,613
    
    
    
    2,635Deferred financing fees and other assets
    
    
    6,184
    
    
    
    9,072Assets held for sale
    
    
    2,053
    
    
    
    2,053Property, plant and equipment, net
    
    
    148,507
    
    
    
    146,008Total Assets
    
    $
    456,618
    
    
    $
    485,934LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesSenior credit facility
    
    $
    8,000
    
    
    $Trade accounts payable
    
    
    4,258
    
    
    
    3,737Accrued payroll and related benefits
    
    
    6,187
    
    
    
    7,614Interest payable
    
    
    559
    
    
    
    3,773Television and radio broadcast rights payable
    
    
    3,393
    
    
    
    4,940Income taxes payable
    
    
    1,070
    
    
    
    3,959Current portion of accrued retirement benefits
    
    
    1,230
    
    
    
    1,230Other current liabilities
    
    
    5,187
    
    
    
    4,218Liabilities of businesses held for sale
    
    
    102
    
    
    
    100Total current liabilities
    
    
    29,986
    
    
    
    29,571Long-term debt
    
    
    150,000
    
    
    
    150,000Accrued retirement benefits
    
    
    18,562
    
    
    
    18,552Deferred income taxes
    
    
    34,377
    
    
    
    45,274Other liabilities
    
    
    8,879
    
    
    
    9,140Commitments and ContingenciesStockholders EquityCommon stock, shares authorized 12,000,000, $1.25 par value;
issued and outstanding 8,729,238 as of March 31, 2008
and 8,725,516 as of December 31, 2007
    
    
    10,912
    
    
    
    10,907Capital in excess of par
    
    
    10,374
    
    
    
    10,220Accumulated other comprehensive income, net of income taxes:Unrealized gain on marketable securities
    
    
    65,125
    
    
    
    82,818Accumulated loss
    
    
    (1,949
    )
    
    
    (1,958
    )Prior service cost
    
    
    (173
    )
    
    
    (181
    )Retained earnings
    
    
    130,525
    
    
    
    131,591Total Stockholders Equity
    
    
    214,814
    
    
    
    233,397Total Liabilities and Stockholders Equity
    
    $
    456,618
    
    
    $
    485,934
  4




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##### Table of Contents



FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three months endedMarch 312008
    
    2007(in thousands)(Unaudited)Cash flows from operating activitiesNet loss
    
    $
    (1,066
    )
    
    $
    (1,245
    )Adjustments
to reconcile net loss to net cash used in operating activitiesDepreciation and amortization
    
    
    3,127
    
    
    
    2,841Deferred income taxes
    
    
    (1,370
    )
    
    
    (374
    )Amortization of deferred financing fees
    
    
    158
    
    
    
    158Amortization of program rights
    
    
    2,446
    
    
    
    2,423Payments for television and radio broadcast rights
    
    
    (3,483
    )
    
    
    (3,556
    )Equity in operations of equity investees
    
    
    22
    
    
    
    17Stock-based compensation
    
    
    165
    
    
    
    147Other
    
    
    57
    
    
    
    (4
    )Change in operating assets and liabilitiesReceivables
    
    
    436
    
    
    
    2,591Prepaid expenses and other current assets
    
    
    (670
    )
    
    
    (534
    )Cash value of life insurance and retirement deposits
    
    
    (201
    )
    
    
    (229
    )Other assets
    
    
    (22
    )
    
    
    (107
    )Trade accounts payable, accrued payroll and related benefits, interest
payable, and other current liabilities
    
    
    (3,190
    )
    
    
    (4,100
    )Income taxes receivable and payable
    
    
    (2,889
    )
    
    
    (101
    )Accrued retirement benefits
    
    
    10
    
    
    
    76Other liabilities
    
    
    (430
    )
    
    
    (60
    )Net cash used in operating activities
    
    
    (6,900
    )
    
    
    (2,057
    )Cash flows from investing activitiesPurchase of investments available-for-sale
    
    
    (22
    )
    
    
    (172
    )Proceeds from sale of investments available-for-sale
    
    
    110(Increase) decrease in restricted cash
    
    
    52,365
    
    
    
    (157
    )Purchase of television stations
    
    
    (52,365
    )Purchase of property, plant and equipment
    
    
    (1,296
    )
    
    
    (3,134
    )Net cash used in investing activities
    
    
    (1,208
    )
    
    
    (3,463
    )Cash flows from financing activitiesBorrowings under borrowing agreements
    
    
    8,000Payment of capital lease obligation
    
    
    (35
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    34Net cash provided by financing activities
    
    
    7,965
    
    
    
    34Net decrease in cash and cash equivalents
    
    
    (143
    )
    
    
    (5,486
    )Cash and cash equivalents, beginning of period
    
    
    6,510
    
    
    
    7,477Cash and cash equivalents, end of period
    
    $
    6,367
    
    
    $
    1,991
  5




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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 Three months endedMarch 312008
    
    2007(in thousands)(Unaudited)Net loss
    
    $
    (1,066
    )
    
    $
    (1,245
    )Other comprehensive income (loss):Unrealized gain (loss) on marketable securities
    
    
    (27,231
    )
    
    
    11,658Effect of income taxes
    
    
    9,531
    
    
    
    (4,080
    )Accumulated loss
    
    
    13Effect of income taxes
    
    
    (4
    )Prior service cost
    
    
    12Effect of income taxes
    
    
    (4
    )Reclassification adjustment for losses included in
net loss
    
    
    11Effect of income taxes
    
    
    (4
    )Other comprehensive income (loss)
    
    
    (17,676
    )
    
    
    7,578Comprehensive income (loss)
    
    $
    (18,742
    )
    
    $
    6,333
  6




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##### Table of Contents



Reclassifications
 Selling, general and administrative expenses Direct
operating costs
   Fair Value Measurements
 Fair Value Measurements
  Level 1
 Level 2
 7




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##### Table of Contents



Level 3
  Fair Value Measurements at Reporting Date UsingTotal
    
    
    
    
    
    
    SignificantCarrying
    
    
    Quoted Prices in
    
    
    Other
    
    
    SignificantValue as of
    
    
    Active Markets for
    
    
    Observable
    
    
    UnobservableMarch 31,
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Marketable Securities
    
    $
    101,910
    
    
    $
    101,910(see Note 13)Total
    
    $
    101,910
    
    
    $
    101,910
    
    
    $
    
    
    
    $
    
  Fair Value
Measurements
 purchase method
   8




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##### Table of Contents



Intangible assets  FCC licenses (indefinite life, non-amortizing)
    
    $
    32,200Intangible assets  Network affiliation agreement (useful life of 15 years)
    
    
    3,900Goodwill (non-amortizing, tax deductible)
    
    
    14,932Property, plant and equipment
    
    
    4,281$
    55,313
  Accounting for the
Impairment or Disposal of Long-Lived Assets
  Three months endedMarch 312008
    
    
    2007Revenue
    
    $
    360
    
    
    $
    444Income (loss) from discontinued operations:Discontinued operating activities
    
    $
    (39
    )
    
    $
    35Income tax effect
    
    
    14
    
    
    
    (12
    )$
    (25
    )
    
    $
    23
  March 31
    
    
    December 312008
    
    
    2007Goodwill, net
    
    $
    645
    
    
    $
    645Property, plant and equipment, net
    
    
    643
    
    
    
    643Intangible assets
    
    
    765
    
    
    
    765Other assets
    
    
    65
    
    
    
    37$
    2,118
    
    
    $
    2,090Liabilities of businesses held for sale
    
    $
    102
    
    
    $
    100
 9




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##### Table of Contents



Three months endedMarch 312008
    
    
    2007Interest cost
    
    $
    275
    
    
    $
    266Amortization of loss
    
    
    15
    
    
    
    11Net periodic pension cost
    
    $
    290
    
    
    $
    277
  10




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##### Table of Contents



Three monthsended March 312008
    
    
    2007Loss from continuing operations
    
    $
    (1,041
    )
    
    $
    (1,268
    )Income (loss) from discontinued operations, net of income taxes
    
    
    (25
    )
    
    
    23Net loss
    
    $
    (1,066
    )
    
    $
    (1,245
    )Shares used in computation of basic and
diluted net loss per share
    
    
    8,728
    
    
    
    8,720Income (loss) per share:From continuing operations
    
    $
    (0.12
    )
    
    $
    (0.14
    )From discontinued operationsBasic and diluted net loss per share
    
    $
    (0.12
    )
    
    $
    (0.14
    )
       11




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##### Table of Contents



Three monthsended March 312008
    
    
    2007Television
    
    $
    27,935
    
    
    $
    24,598Radio
    
    
    6,515
    
    
    
    6,908Fisher Plaza
    
    
    3,313
    
    
    
    2,775Corporate and eliminations
    
    
    (42
    )
    
    
    (38
    )$
    37,721
    
    
    $
    34,243
   Three monthsended March 312008
    
    
    2007Television
    
    $
    2,155
    
    
    $
    1,919Radio
    
    
    (330
    )
    
    
    301Fisher Plaza
    
    
    1,414
    
    
    
    924Corporate and eliminations
    
    
    (1,266
    )
    
    
    (1,308
    )$
    1,973
    
    
    $
    1,836
 12




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##### Table of Contents



Three monthsended March 312008
    
    
    2007Total segment income from continuing
operations before interest and income taxes
    
    $
    1,973
    
    
    $
    1,836Interest expense
    
    
    (3,358
    )
    
    
    (3,494
    )Consolidated loss from continuing
operations before income taxes
    
    $
    (1,385
    )
    
    $
    (1,658
    )
  March 31
    
    
    December 312008
    
    
    2007Total assetsTelevision
    
    $
    187,628
    
    
    $
    136,341Radio
    
    
    20,713
    
    
    
    20,030Fisher Plaza
    
    
    116,257
    
    
    
    117,688Corporate and eliminations
    
    
    129,902
    
    
    
    209,785454,500
    
    
    
    483,844Assets held for sale
    
    
    2,118
    
    
    
    2,090$
    456,618
    
    
    $
    485,934
     13




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14




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##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the three months ended March 31, 2008
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. and(in thousands)
    
    Inc.
    
    Subsidiaries
    
    Eliminations
    
    SubsidiariesRevenue
    
    $
    
    
    
    $
    37,727
    
    
    $
    (6
    )
    
    $
    37,721Costs and expensesDirect operating costs
    
    
    70
    
    
    
    17,381
    
    
    
    43
    
    
    
    17,494Selling, general and administrative expenses
    
    
    2,493
    
    
    
    11,263
    
    
    
    (49
    )
    
    
    13,707Amortization of program rights
    
    
    
    
    
    
    2,446
    
    
    
    
    
    
    
    2,446Depreciation and amortization
    
    
    231
    
    
    
    2,896
    
    
    
    
    
    
    
    3,1272,794
    
    
    
    33,986
    
    
    
    (6
    )
    
    
    36,774Income (loss) from operations
    
    
    (2,794
    )
    
    
    3,741
    
    
    
    
    
    
    
    947Other income, net
    
    
    1,037
    
    
    
    (11
    )
    
    
    
    
    
    
    1,026Equity in income of subsidiaries
    
    
    2,296
    
    
    
    
    
    
    
    (2,296
    )
    
    
    Interest expense, net
    
    
    (3,335
    )
    
    
    (23
    )
    
    
    
    
    
    
    (3,358
    )Income (loss) from continuing operations before income taxes
    
    
    (2,796
    )
    
    
    3,707
    
    
    
    (2,296
    )
    
    
    (1,385
    )Provision (benefit) for federal and state income taxes
    
    
    (1,730
    )
    
    
    1,386
    
    
    
    
    
    
    
    (344
    )Income (loss) from continuing operations
    
    
    (1,066
    )
    
    
    2,321
    
    
    
    (2,296
    )
    
    
    (1,041
    )Loss from discontinued operations, net of income taxes
    
    
    
    
    
    
    (25
    )
    
    
    
    
    
    
    (25
    )Net income (loss)
    
    $
    (1,066
    )
    
    $
    2,296
    
    
    $
    (2,296
    )
    
    $
    (1,066
    )
 15




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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
    
    $
    
    
    
    $
    34,248
    
    
    $
    (5
    )
    
    $
    34,243Costs and expensesDirect operating costs
    
    
    
    
    
    
    15,766
    
    
    
    50
    
    
    
    15,816Selling, general and administrative expenses
    
    
    2,229
    
    
    
    10,323
    
    
    
    (55
    )
    
    
    12,497Amortization of program rights
    
    
    
    
    
    
    2,423
    
    
    
    
    
    
    
    2,423Depreciation and amortization
    
    
    72
    
    
    
    2,769
    
    
    
    
    
    
    
    2,8412,301
    
    
    
    31,281
    
    
    
    (5
    )
    
    
    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
    )
 16




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##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Balance Sheet
as of March 31, 2008
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. and(in thousands)
    
    Inc.
    
    Subsidiaries
    
    Eliminations
    
    SubsidiariesASSETSCurrent AssetsCash and cash equivalents
    
    $
    5,275
    
    
    $
    1,092
    
    
    $
    
    
    
    $
    6,367Receivables, net
    
    
    642
    
    
    
    29,420
    
    
    
    
    
    
    
    30,062Due from affiliate
    
    
    10,975
    
    
    
    
    
    
    
    (10,975
    )
    
    
    Deferred income taxes
    
    
    123
    
    
    
    662
    
    
    
    
    
    
    
    785Prepaid expenses and other assets
    
    
    381
    
    
    
    3,910
    
    
    
    
    
    
    
    4,291Television and radio broadcast rights
    
    
    
    
    
    
    5,410
    
    
    
    
    
    
    
    5,410Assets held for sale
    
    
    
    
    
    
    65
    
    
    
    
    
    
    
    65Total current assets
    
    
    17,396
    
    
    
    40,559
    
    
    
    (10,975
    )
    
    
    46,980Marketable securities, at market value
    
    
    100,997
    
    
    
    913
    
    
    
    
    
    
    
    101,910Investment in consolidated subsidiaries
    
    
    273,012
    
    
    
    
    
    
    
    (273,012
    )
    
    
    Cash value of life insurance and retirement deposits
    
    
    17,010
    
    
    
    
    
    
    
    
    
    
    
    17,010Television and radio broadcast rights
    
    
    
    
    
    
    268
    
    
    
    
    
    
    
    268Goodwill
    
    
    
    
    
    
    52,293
    
    
    
    
    
    
    
    52,293Intangible assets
    
    
    
    
    
    
    78,800
    
    
    
    
    
    
    
    78,800Investment in equity investee
    
    
    
    
    
    
    2,613
    
    
    
    
    
    
    
    2,613Deferred financing fees and other assets
    
    
    3,752
    
    
    
    2,432
    
    
    
    
    
    
    
    6,184Assets held for sale
    
    
    
    
    
    
    2,053
    
    
    
    
    
    
    
    2,053Property, plant and equipment, net
    
    
    958
    
    
    
    147,549
    
    
    
    
    
    
    
    148,507Total Assets
    
    $
    413,125
    
    
    $
    327,480
    
    
    $
    (283,987
    )
    
    $
    456,618LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesNotes payable
    
    $
    8,000
    
    
    $
    
    
    
    $
    
    
    
    $
    8,000Trade accounts payable
    
    
    896
    
    
    
    3,362
    
    
    
    
    
    
    
    4,258Due to affiliate
    
    
    
    
    
    
    10,975
    
    
    
    (10,975
    )
    
    
    Accrued payroll and related benefits
    
    
    901
    
    
    
    5,286
    
    
    
    
    
    
    
    6,187Interest payable
    
    
    559
    
    
    
    
    
    
    
    
    
    
    
    559Television and radio broadcast rights payable
    
    
    
    
    
    
    3,393
    
    
    
    
    
    
    
    3,393Income taxes payable
    
    
    
    
    
    
    1,070
    
    
    
    
    
    
    
    1,070Current portion of accrued retirement benefits
    
    
    1,230
    
    
    
    
    
    
    
    
    
    
    
    1,230Other current liabilities
    
    
    799
    
    
    
    4,388
    
    
    
    
    
    
    
    5,187Liabilities of businesses held for sale
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    102Total current liabilities
    
    
    12,385
    
    
    
    28,576
    
    
    
    (10,975
    )
    
    
    29,986Long-term debt
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Accrued retirement benefits
    
    
    18,562
    
    
    
    
    
    
    
    
    
    
    
    18,562Deferred income taxes
    
    
    17,364
    
    
    
    17,013
    
    
    
    
    
    
    
    34,377Other liabilities
    
    
    
    
    
    
    8,879
    
    
    
    
    
    
    
    8,879Stockholders EquityCommon stock
    
    
    10,912
    
    
    
    1,131
    
    
    
    (1,131
    )
    
    
    10,912Capital in excess of par
    
    
    10,374
    
    
    
    164,234
    
    
    
    (164,234
    )
    
    
    10,374Accumulated other comprehensive income, net of income taxes:Unrealized gain on marketable securities
    
    
    65,125
    
    
    
    
    
    
    
    
    
    
    
    65,125Accumulated loss
    
    
    (1,949
    )
    
    
    
    
    
    
    
    
    
    
    (1,949
    )Prior service cost
    
    
    (173
    )
    
    
    
    
    
    
    
    
    
    
    (173
    )Retained earnings
    
    
    130,525
    
    
    
    107,647
    
    
    
    (107,647
    )
    
    
    130,525Total Stockholders Equity
    
    
    214,814
    
    
    
    273,012
    
    
    
    (273,012
    )
    
    
    214,814Total Liabilities and Stockholders Equity
    
    $
    413,125
    
    
    $
    327,480
    
    
    $
    (283,987
    )
    
    $
    456,618
 17




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##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Balance Sheet
as of December 31, 2007
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. and(in thousands)
    
    Inc.
    
    Subsidiaries
    
    Eliminations
    
    SubsidiariesASSETSCurrent AssetsCash and cash equivalents
    
    $
    5,804
    
    
    $
    706
    
    
    $
    
    
    
    $
    6,510Receivables, net
    
    
    582
    
    
    
    29,916
    
    
    
    
    
    
    
    30,498Due from affiliate
    
    
    
    
    
    
    40,567
    
    
    
    (40,567
    )Deferred income taxes
    
    
    123
    
    
    
    662
    
    
    
    
    
    
    
    785Prepaid expenses and other assets
    
    
    237
    
    
    
    3,618
    
    
    
    
    
    
    
    3,855Television and radio broadcast rights
    
    
    
    
    
    
    5,934
    
    
    
    
    
    
    
    5,934Assets held for sale
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    37Total current assets
    
    
    6,746
    
    
    
    81,440
    
    
    
    (40,567
    )
    
    
    47,619Restricted cash
    
    
    52,365
    
    
    
    
    
    
    
    
    
    
    
    52,365Marketable securities, at market value
    
    
    128,201
    
    
    
    1,022
    
    
    
    
    
    
    
    129,223Investment in consolidated subsidiaries
    
    
    270,717
    
    
    
    
    
    
    
    (270,717
    )Cash value of life insurance and retirement deposits
    
    
    16,809
    
    
    
    
    
    
    
    
    
    
    
    16,809Television and radio broadcast rights
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    7Goodwill
    
    
    
    
    
    
    37,361
    
    
    
    
    
    
    
    37,361Intangible assets
    
    
    
    
    
    
    42,782
    
    
    
    
    
    
    
    42,782Investments in equity investee
    
    
    
    
    
    
    2,635
    
    
    
    
    
    
    
    2,635Deferred financing fees and other assets
    
    
    3,913
    
    
    
    5,159
    
    
    
    
    
    
    
    9,072Assets held for sale
    
    
    
    
    
    
    2,053
    
    
    
    
    
    
    
    2,053Property, plant and equipment, net
    
    
    1,030
    
    
    
    144,978
    
    
    
    
    
    
    
    146,008Total Assets
    
    $
    479,781
    
    
    $
    317,437
    
    
    $
    (311,284
    )
    
    $
    485,934LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesTrade accounts payable
    
    $
    924
    
    
    $
    2,813
    
    
    $
    
    
    
    $
    3,737Due to affiliate
    
    
    40,567
    
    
    
    
    
    
    
    (40,567
    )Accrued payroll and related benefits
    
    
    1,656
    
    
    
    5,958
    
    
    
    
    
    
    
    7,614Interest payable
    
    
    3,773
    
    
    
    
    
    
    
    
    
    
    
    3,773Television and radio broadcast rights payable
    
    
    
    
    
    
    4,940
    
    
    
    
    
    
    
    4,940Income taxes payable
    
    
    
    
    
    
    3,959
    
    
    
    
    
    
    
    3,959Current portion of accrued retirement benefits
    
    
    1,230
    
    
    
    
    
    
    
    
    
    
    
    1,230Other current liabilities
    
    
    1,033
    
    
    
    3,185
    
    
    
    
    
    
    
    4,218Liabilities of businesses held for sale
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    100Total current liabilities
    
    
    49,183
    
    
    
    20,955
    
    
    
    (40,567
    )
    
    
    29,571Long-term debt
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Accrued retirement benefits
    
    
    18,552
    
    
    
    
    
    
    
    
    
    
    
    18,552Deferred income taxes
    
    
    28,590
    
    
    
    16,684
    
    
    
    
    
    
    
    45,274Other liabilities
    
    
    59
    
    
    
    9,081
    
    
    
    
    
    
    
    9,140Stockholders EquityCommon stock
    
    
    10,907
    
    
    
    1,131
    
    
    
    (1,131
    )
    
    
    10,907Capital in excess of par
    
    
    10,220
    
    
    
    164,234
    
    
    
    (164,234
    )
    
    
    10,220Accumulated other comprehensive income  net of income taxes:Unrealized gain on marketable securities
    
    
    82,818
    
    
    
    
    
    
    
    
    
    
    
    82,818Accumulated loss
    
    
    (1,958
    )
    
    
    
    
    
    
    
    
    
    
    (1,958
    )Prior service cost
    
    
    (181
    )
    
    
    
    
    
    
    
    
    
    
    (181
    )Retained earnings
    
    
    131,591
    
    
    
    105,352
    
    
    
    (105,352
    )
    
    
    131,591Total Stockholders Equity
    
    
    233,397
    
    
    
    270,717
    
    
    
    (270,717
    )
    
    
    233,397Total Liabilities and Stockholders Equity
    
    $
    479,781
    
    
    $
    317,437
    
    
    $
    (311,284
    )
    
    $
    485,934
 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, 2008
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. and(in thousands)
    
    Inc.
    
    Subsidiaries
    
    Eliminations
    
    SubsidiariesNet cash provided by (used in) operating activities
    
    $
    (8,369
    )
    
    $
    1,469
    
    
    $
    
    
    
    $
    (6,900
    )Cash flows from investing activitiesPurchase of investments available-for-sale
    
    
    
    
    
    
    (22
    )
    
    
    
    
    
    
    (22
    )Proceeds from sale of investments
available-for-sale
    
    
    
    
    
    
    110
    
    
    
    
    
    
    
    110Decrease in restricted cash
    
    
    52,365
    
    
    
    
    
    
    
    
    
    
    
    52,365Purchase of television stations
    
    
    (52,365
    )
    
    
    
    
    
    
    
    
    
    
    (52,365
    )Purchase of property, plant and equipment
    
    
    (160
    )
    
    
    (1,136
    )
    
    
    
    
    
    
    (1,296
    )Net cash used in investing activities
    
    
    (160
    )
    
    
    (1,048
    )
    
    
    
    
    
    
    (1,208
    )Cash flows from financing activitiesBorrowings under borrowing agreements
    
    
    8,000
    
    
    
    
    
    
    
    
    
    
    
    8,000Payment of capital lease obligation
    
    
    
    
    
    
    (35
    )
    
    
    
    
    
    
    (35
    )Net cash provided by (used in) financing activities
    
    
    8,000
    
    
    
    (35
    )
    
    
    
    
    
    
    7,965Net increase (decrease) in cash and cash equivalents
    
    
    (529
    )
    
    
    386
    
    
    
    
    
    
    
    (143
    )Cash and cash equivalents, beginning of period
    
    
    5,804
    
    
    
    706
    
    
    
    
    
    
    
    6,510Cash and cash equivalents, end of period
    
    $
    5,275
    
    
    $
    1,092
    
    
    $
    
    
    
    $
    6,367
 19




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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
 20




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##### Table of Contents



ITEM 2   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 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, 2007, which was filed with the Securities and Exchange Commission on March 14,
2008. 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
     21




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##### Table of Contents



Critical Accounting Policies
   22




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##### Table of Contents



Consolidated Results of Operations
  23




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##### Table of Contents



Three monthsended March 31
    
    
    Variance(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    $
    
    
    %RevenueTelevision
    
    $
    27,935
    
    
    $
    24,598
    
    
    $
    3,337
    
    
    
    13.6
    %Radio
    
    
    6,515
    
    
    
    6,908
    
    
    
    (393
    )
    
    
    -5.7
    %Fisher Plaza
    
    
    3,313
    
    
    
    2,775
    
    
    
    538
    
    
    
    19.4
    %Corporate and eliminations
    
    
    (42
    )
    
    
    (38
    )
    
    
    (4
    )Consolidated
    
    
    37,721
    
    
    
    34,243
    
    
    
    3,478
    
    
    
    10.2
    %Direct operating costsTelevision
    
    
    13,064
    
    
    
    11,445
    
    
    
    1,619
    
    
    
    14.1
    %Radio
    
    
    3,020
    
    
    
    3,010
    
    
    
    10
    
    
    
    0.3
    %Fisher Plaza
    
    
    927
    
    
    
    895
    
    
    
    32
    
    
    
    3.6
    %Corporate and eliminations
    
    
    483
    
    
    
    466
    
    
    
    17
    
    
    
    3.6
    %Consolidated
    
    
    17,494
    
    
    
    15,816
    
    
    
    1,678
    
    
    
    10.6
    %Selling, general and administrative expensesTelevision
    
    
    8,723
    
    
    
    7,521
    
    
    
    1,202
    
    
    
    16.0
    %Radio
    
    
    3,137
    
    
    
    3,123
    
    
    
    14
    
    
    
    0.4
    %Fisher Plaza
    
    
    140
    
    
    
    127
    
    
    
    13
    
    
    
    10.2
    %Corporate and eliminations
    
    
    1,707
    
    
    
    1,726
    
    
    
    (19
    )
    
    
    -1.1
    %Consolidated
    
    
    13,707
    
    
    
    12,497
    
    
    
    1,210
    
    
    
    9.7
    %Amortization of program rightsTelevision
    
    
    1,991
    
    
    
    2,146
    
    
    
    (155
    )
    
    
    -7.2
    %Radio
    
    
    455
    
    
    
    277
    
    
    
    178
    
    
    
    64.3
    %Consolidated
    
    
    2,446
    
    
    
    2,423
    
    
    
    23
    
    
    
    0.9
    %Depreciation and amortizationTelevision
    
    
    1,987
    
    
    
    1,715
    
    
    
    272
    
    
    
    15.9
    %Radio
    
    
    233
    
    
    
    225
    
    
    
    8
    
    
    
    3.6
    %Fisher Plaza
    
    
    832
    
    
    
    829
    
    
    
    3
    
    
    
    0.4
    %Corporate and eliminations
    
    
    75
    
    
    
    72
    
    
    
    3
    
    
    
    4.2
    %Consolidated
    
    
    3,127
    
    
    
    2,841
    
    
    
    286
    
    
    
    10.1
    %Income (loss) from operationsTelevision
    
    
    2,170
    
    
    
    1,771
    
    
    
    399Radio
    
    
    (330
    )
    
    
    273
    
    
    
    (603
    )Fisher Plaza
    
    
    1,414
    
    
    
    924
    
    
    
    490Corporate and eliminations
    
    
    (2,307
    )
    
    
    (2,302
    )
    
    
    (5
    )Consolidated
    
    
    947
    
    
    
    666
    
    
    
    281Other income, net
    
    
    1,026
    
    
    
    1,170
    
    
    
    (144
    )Interest expense, net
    
    
    (3,358
    )
    
    
    (3,494
    )
    
    
    136Loss from continuing
operations before income taxes
    
    
    (1,385
    )
    
    
    (1,658
    )
    
    
    273Benefit for federal and state
income taxes
    
    
    (344
    )
    
    
    (390
    )
    
    
    46Loss from continuing operations
    
    
    (1,041
    )
    
    
    (1,268
    )
    
    
    227Income (loss) from discontinued
operations, net of income taxes
    
    
    (25
    )
    
    
    23
    
    
    
    (48
    )Net loss
    
    $
    (1,066
    )
    
    $
    (1,245
    )
    
    $
    179
 Reclassifications
 Selling, general and administrative
expenses Direct operating costs
 24




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##### Table of Contents



Comparison of the Three-Month Periods Ended March 31, 2008 and March 31, 2007
 Revenue
     Direct operating costs
     Selling, general and administrative expenses
   25




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##### Table of Contents



Amortization of program rights
   Depreciation and amortization
   Other income, net
  Interest expense, net
  Benefit for federal and state income taxes
  Income (loss) from discontinued operations, net of income taxes
  Liquidity and capital resources
  26




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##### Table of Contents



Recent Accounting Pronouncements
 Fair Value
Measurements
 27




---



##### Table of Contents



purchase method
 28




---



##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
  Interest Rate Exposure
  Marketable Securities Exposure
  
 ITEM 4. CONTROLS AND PROCEDURES
   29




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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*
    
    Fisher Communications, Inc. Management Short-Term Incentive Plan.10.2*
    
    Target Bonuses for Named Executive Officers under Fisher Communications, Inc.
Management Short-Term Incentive Plan.31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    
    Certification of Acting 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 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.
 
 *
    
    Management contract or compensatory plan or arrangement. 30




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##### Table of Contents



SIGNATURES
  FISHER COMMUNICATIONS, INC.
(Registrant)Dated: May 9, 2008
    /s/ Jodi A. ColliganJodi A. ColliganVice President Finance and Chief Accounting Officer 31




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description10.1*
    
    
    Fisher Communications, Inc. Management Short-Term Incentive Plan.10.2*
    
    
    Target Bonuses for Named Executive Officers under Fisher Communications, Inc.
Management Short-Term Incentive Plan.31.2
    
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    
    
    Certification of Acting 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 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.
 
 *
    
    Management contract or compensatory plan or arrangement. 32