What changed in this filing

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Item 1. Financial Statements

2021-11-09 compared with 2021-08-09 · 71 added, 48 removed, 354 unchanged (25% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

(In thousands)

18 unchanged sentences

Barter transactions

Current portion of long-term debt

Total current liabilities

14 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

31 unchanged sentences

Balance at June 30, 2020

Net loss, three months ended September 30, 2020

Compensation expense related to restricted stock awards

Purchase of shares held in treasury

Balance at September 30, 2020

Stockholders’

9 unchanged sentences

Balance at June 30, 2021

Net income, three months ended September 30, 2021

Dividends declared per common share

Compensation expense related to restricted stock awards

Balance at September 30, 2021

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

7 unchanged sentences

Other investing activities

Net cash (used in) provided by investing activities

Net cash used in investing activities

Cash flows from financing activities:

12 unchanged sentences

Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for annual financial statements.

In our opinion, the accompanying financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of June 30, 2021 and the results of operations for the three and six months ended June 30, 2021 and 2020.

Results of operations for three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

In our opinion, the accompanying financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of September 30, 2021 and the results of operations for the three and nine months ended September 30, 2021 and 2020.

Results of operations for three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

We own or operate broadcast properties in 27 markets, including 79 FM and 34 AM radio stations and 79 metro signals.

1 unchanged sentence

annual report on Form 10-K for the year ended December 31, 2020.

We have evaluated events and transactions occurring subsequent to the balance sheet date of June 30, 2021, for items that should potentially be recognized in these financial statements or discussed within the notes to the financial statements.

We have evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2021, for items that should potentially be recognized in these financial statements or discussed within the notes to these financial statements.

Earnings Per Share Information

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

7 unchanged sentences

Earnings (loss) per share:

There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the three and six months ended June 30, 2021 and 2020, respectively.

There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the three and nine months ended September 30, 2021 and 2020, respectively.

The actual effect of these shares, if any, on the diluted earnings per share calculation will vary significantly depending on the fluctuation in the stock price.

2 unchanged sentences

The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short maturities.

The carrying value of long-term debt approximates fair value as it carries interest rates that either fluctuate with the euro-dollar rate, prime rate or have been reset at the prevailing market rate at June 30, 2021.

Allowance for Doubtful Accounts

6 unchanged sentences

In the event we recover amounts previously written off, we will reduce the specific allowance for credit loss.

Our allowance for doubtful accounts was $ 446,000 and $ 648,000 at June 30, 2021 and December 31, 2020, respectively.

Our allowance for doubtful accounts was $ 385,000 and $ 648,000 at September 30, 2021 and December 31, 2020, respectively.

SAGA COMMUNICATIONS, INC.

36 unchanged sentences

Disaggregation of Revenue

Revenues from contracts with customers comprised the following for three and six months ended June 30, 2021 and 2020:

Revenues from contracts with customers comprised the following for three and nine months ended September 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

32 unchanged sentences

Amortizable intangible assets are included in other intangibles, deferred costs and investments in the consolidated balance sheets.

The Company considered the current and expected future economic and market conditions surrounding COVID-19, and other potential indicators of impairment and determined a triggering event had not occurred which would necessitate any interim impairment tests during the three and six months ended June 30, 2021.

We will continue to monitor changes in economic and market conditions, including those related to COVID-19, and if any event or circumstances indicate a triggering event has occurred, we will perform an interim impairment test of our intangible assets at the appropriate time.

8 unchanged sentences

Common Stock and Treasury Stock

The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through June 30, 2021:

The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through September 30, 2021:

Common Stock Issued

5 unchanged sentences

Balance, December 31, 2020

Balance, June 30, 2021

Balance, September 30, 2021

We have a Stock Buy-Back Program to allow us to purchase up to $ 75.8 million of our Class A Common Stock.

As of June 30, 2021, we have remaining authorization of $ 18.8 million for future repurchases of our Class A Common Stock.

As of September 30, 2021, we have remaining authorization of $ 18.8 million for future repurchases of our Class A Common Stock.

On September 14, 2017, the Board of Directors authorized the repurchase of our Class A Common Stock under our trading plan adopted pursuant to Securities and Exchange Commission Rule 10b5-1.

3 unchanged sentences

The plan does not obligate us to acquire any particular amount of Class A Common Stock.

Our original purchase authorization was effective until September 1, 2018 and has been extended several times, with the most recent extension being through May 28, 2020.

Our original purchase authorization was effective until September 1, 2018 and has been extended several times, with the most recent authorization instructions extension being through May 28, 2020.

Given the unprecedented uncertainty surrounding the COVID-19 virus and the resulting economic issues we have halted the directions for any additional buybacks under our plan.

During the three and six months ended June 30, 2021 no shares were repurchased under the Stock Buy-Back Program.

During the three and six months ended June 30, 2020, approximately 800 and 1,600 shares, respectively, were repurchased for $ 21,000 and $ 41,000 , respectively, related to the Stock Buy-Back Program.

During the three and nine months ended September 30, 2021 no shares were repurchased under the Stock Buy-Back Program.

During the three and nine months ended September 30, 2020, approximately 1,000 and 2,600 shares, respectively, were repurchased for $ 22,000 and $ 63,000 , respectively, related to the Stock Buy-Back Program.

We lease certain land, buildings and equipment for use in our operations.

5 unchanged sentences

Our lease agreements do not contain any residual value guarantees or material restrictive covenants.

As of June 30, 2021, we do not have any non-cancellable operating lease commitments that have not yet commenced.

As of September 30, 2021, we do not have any non-cancellable operating lease commitments that have not yet commenced.

ROU assets are classified within other intangibles, deferred costs and investments, net on the condensed consolidated balance sheet while current lease liabilities are classified within other accrued expenses and long-term lease liabilities are classified within other liabilities.

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

ROU assets were $ 5.9 million and $ 6.6 million at June 30, 2021 and December 31, 2020, respectively.

Lease liabilities were $ 6.2 million and $ 6.9 million at June 30, 2021 and December 31, 2020, respectively.

During the three and six months ended June 30, 2021, we recorded additional ROU assets under operating leases of $ 8,000 and $ 43,000 .

Payments on lease liabilities during the three and six months ended June 30, 2021 and 2020 totaled $ 415,000 , $ 884,000 , $ 401,000 and $ 858,000 , respectively.

ROU assets were $ 5.5 million and $ 6.6 million at September 30, 2021 and December 31, 2020 respectively.

Lease liabilities were $ 5.8 million and $ 6.9 million at September 30, 2021 and December 31, 2020, respectively.

During the three and nine months ended September 30, 2021, we recorded additional ROU assets under operating leases of $ 15,000 and $ 58,000 .

Payments on lease liabilities during the three and nine months ended September 30, 2021 and 2020 totaled $ 451,000 , $ 1,335,000 , $ 401,000 and $ 858,000 , respectively.

SAGA COMMUNICATIONS, INC.

1 unchanged sentence

Lease expense includes cost for leases with terms in excess of one year.

For the three and six months ended June 30, 2021 and 2020, our total lease expense was $ 442,000 , $ 882,000 , $ 433,000 and $ 866,000 , respectively.

For the three and nine months ended September 30, 2021 and 2020, our total lease expense was $ 443,000 , $ 1,325,000 , $ 444,000 and $ 1,310,000 , respectively.

Short-term lease costs are de minimus.

We have no financing leases and minimum annual rental commitments under non-cancellable operating leases consisted of the following at June 30, 2021 (in thousands):

We have no financing leases and minimum annual rental commitments under non-cancellable operating leases consisted of the following at September 30, 2021 (in thousands):

Years Ending December 31,

1 unchanged sentence

Present value of lease liabilities (d)

(a) Remaining payments are for the six-months ending December 31, 2021

(a) Remaining payments are for the three-months ending December 31, 2021

(b) Lease payments include options to extend lease terms that are reasonably certain of being exercised.

There were no legally binding minimum lease payments for leases signed but not yet commenced at June 30, 2021.

There were no legally binding minimum lease payments for leases signed but not yet commenced at September 30, 2021.

Therefore, we must estimate our discount rate for such leases to determine the present value of lease payments at the lease commencement date.

(d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.3 years and 4.3 % , respectively, at June 30, 2021.

(d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.2 years and 4.3 % , respectively, at September 30, 2021.

Acquisitions and Dispositions

34 unchanged sentences

This legislation currently has no material impact to the Company’s financial statements.

An income tax expense of $ 1,325,000 was recorded for the three months ended June 30, 2021 compared to an income tax benefit of $ 3,805,000 for the three months ended June 30, 2020.

The effective tax rate was approximately 28.9 % for the three months ended June 30, 2021 compared to 43.7 % for the three months ended June 30, 2020.

An income tax expense of $ 1,655,000 was recorded for the six months ended June 30, 2021 compared to an income tax benefit of $ 3,105,000 for the six months ended June 30, 2020.

The effective tax rate was approximately 29.2 % for the six months ended June 30, 2021 compared to 49.0 % for the six months ended June 30, 2020.

An income tax expense of $ 1,375,000 was recorded for the three months ended September 30, 2021 compared to $ 1,130,000 for the three months ended September 30, 2020.

The effective tax rate was approximately 28.5 % for the three months ended September 30, 2021 compared to 627.8 % for the three months ended September 30, 2020.

An income tax expense of $ 3,030,000 was recorded for the nine months ended September 30, 2021 compared to an income tax benefit of $ 1,975,000 for the nine months ended September 30, 2020.

The effective tax rate was approximately 28.9 % for the nine months ended September 30, 2021 compared to 32.1 % for the nine months ended September 30, 2020.

Income tax provisions for interim (quarterly) periods are based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e.

discrete items) occurring during the interim period.

The prior year’s tax rate was impacted by the broadcast license impairment charge which was a discrete item and contributed approximately $ 1.1 million of tax benefit for the three and six month periods ended June 30, 2020.

The prior year’s tax rate was impacted by the broadcast license impairment charge which was a discrete item and contributed approximately $ 400,000 and $ 1,500,000 of tax benefit for the three and nine month periods ended September 30, 2020, respectively.

SAGA COMMUNICATIONS, INC.

15 unchanged sentences

All stock options granted were fully vested and expensed at December 31, 2012;

therefore, there was no compensation expense related to stock options for the three and six months ended June 30, 2021 and 2020, respectively.

There were no options granted during 2021 and 2020 and there were no stock options outstanding as of June 30, 2021.

therefore, there was no compensation expense related to stock options for the three and nine months ended September 30, 2021 and 2020, respectively.

There were no options granted during 2021 and 2020 and there were no stock options outstanding as of September 30, 2021.

All outstanding stock options were exercised in 2017.

The following summarizes the restricted stock transactions for the three and six months ended June 30, 2021:

The following summarizes the restricted stock transactions for the three and nine months ended September 30, 2021:

Outstanding at January 1, 2021

Non-vested and outstanding at June 30, 2021

For the three and six months ended June 30, 2021 and 2020, we had $ 357,000 , $ 700,000 , $ 612,000 and $ 1,181,000 , respectively, of total compensation expense related to restricted stock-based compensation arrangements.

This expense is included in corporate general and administrative expenses in our results of operations.

The associated tax benefit recognized for the three and six months ended June 30, 2021 and 2020 was $ 33,000 , $ 64,000 , $ 69,000 and $ 127,000 , respectively.

Non-vested and outstanding at September 30, 2021

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the three and nine months ended September 30, 2021 and 2020, we had $ 348,000 , $ 1,048,000 , $ 618,000 and $ 1,799,000 , respectively, of total compensation expense related to restricted stock-based compensation arrangements.

This expense is included in corporate general and administrative expenses in our results of operations.

The associated tax benefit recognized for the three and nine months ended September 30, 2021 and 2020 was $ 30,000 , $ 94,000 , $ 71,000 and $ 198,000 , respectively.

Long-Term Debt

Long-term debt consisted of the following:

September 30,

(In thousands)

2 unchanged sentences

On August 18, 2015, we entered into a new credit facility (the “Credit Facility”) with JPMorgan Chase Bank, N.A., The Huntington National Bank, Citizens Bank, National Association and J.P.

Morgan Securities LLC (collectively, the “Lenders”).

Morgan Securities LLC (collectively, the “Lenders”) pursuant to a credit agreement of even date (the “Credit Agreement”).

The Credit Facility consists of a $ 100 million five-year revolving facility (the “Revolving Credit Facility”) and originally matured on August 18, 2020 .

3 unchanged sentences

The amendment also included an alternative benchmark rate as a replacement to LIBOR.

On November 2, 2021, we elected to further reduce our Revolving Credit Facility to $ 50 million.

We have pledged substantially all of our assets (excluding our FCC licenses and certain other assets) in support of the Credit Facility and each of our subsidiaries has guaranteed the Credit Facility and has pledged substantially all of their assets (excluding their FCC licenses and certain other assets) in support of the Credit Facility.

3 unchanged sentences

The cumulative transaction fees are being amortized over the remaining life of the Credit Facility.

Interest rates under the Credit Facility are payable, at our option, at alternatives equal to LIBOR ( 0.1250 % at June 30, 2021), plus 1 % to 2 % or the base rate plus 0 % to 1 %.

Interest rates under the Credit Facility are payable, at our option, at alternatives equal to LIBOR ( 0.1250 % at September 30, 2021), plus 1 % to 2 % or the base rate plus 0 % to 1 %.

The spread over LIBOR and the base rate vary from time to time, depending upon our financial leverage.

2 unchanged sentences

We also pay quarterly commitment fees of 0.2 % to 0.3 % per annum on the unused portion of the Revolving Credit Facility.

The Credit Facility contains a number of financial covenants (all of which we were in compliance with at June 30, 2021) which, among other things, require us to maintain specified financial ratios and impose certain limitations on us with respect to investments, additional indebtedness, dividends, distributions, guarantees, liens and encumbrances.

We had approximately $ 60 million of unused borrowing capacity under the Revolving Credit Facility at June 30, 2021.

The Credit Facility contains a number of financial covenants (all of which we were in compliance with at September 30, 2021) which, among other things, require us to maintain specified financial ratios and impose certain limitations on us with respect to investments, additional indebtedness, dividends, distributions, guarantees, liens and encumbrances.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

On October 27, 2021, we used $ 10 million from funds generated by operations to voluntarily pay down the remaining amount on our Revolving Credit Facility, which was presented in the current portion of long-term debt on our balance sheet at September 30, 2021.

We had approximately $ 60 million of unused borrowing capacity under the Revolving Credit Facility at September 30, 2021.

After we paid down the debt and reduced our Revolving Credit Facility as noted above, we have $ 50 million of unused borrowing capacity at the date of filing this Form 10-Q.

The Company is subject to various outstanding claims which arise in the ordinary course of business and to other legal proceedings.

Management anticipates that any potential liability of the Company, which may arise out of or with respect to these matters, will not materially affect the Company’s financial statements.

On June 18, 2021 , the Company’s Board of Directors declared a quarterly cash dividend of $ 0.16 per shares on its Classes A and B Common Stock.

On September 28, 2021 , the Company’s Board of Directors declared a quarterly cash dividend of $ 0.16 per share on its Classes A and B Common Stock.

This dividend, totaling approximately $ 960,000 , was paid on October 22, 2021 to shareholders of record on October 8, 2021 .

On June 18, 2021 , the Company’s Board of Directors declared a quarterly cash dividend of $ 0.16 per share on its Classes A and B Common Stock.

This dividend, totaling approximately $ 960,000 , was paid on July 16, 2021 to shareholders of record on June 30, 2020 .

5 unchanged sentences

As part of the initial insurance settlement during the first quarter of 2021, the Company received cash proceeds of $ 250,000 , resulting in a gain of $ 250,000 .

The gain is recorded in other (income) expense, net, in the Company’s Condensed Consolidated Statements of Income.

We anticipate recording an additional $ 290,000 in cash proceeds and gain in other (income) expense, net in the third quarter of 2021.

We received additional cash proceeds of $ 290,000 in the third quarter, resulting in a gain of $ 290,000 .

The total gain of $ 540,000 is recorded in other (income) expense, net, in the Company’s Condensed Consolidated Statements of Income.

During the first quarter of 2020, there was weather-related damage to an antenna in our Keene, New Hampshire market.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements