What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-16 compared with 2021-03-16 · 122 added, 134 removed, 907 unchanged (22% of the section changed)

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As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”).

Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures over financial reporting were effective to ensure that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act to be recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures over financial reporting were effective to ensure that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act will be recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

Changes in Internal Control Over Financial Reporting

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The following consolidated financial statements attached hereto are filed as part of this annual report:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 1195 )

Consolidated Financial Statements:

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Interest income

Income (loss) before income tax (benefit) expense

Income tax provision:

Income (loss) before income tax expense

Income tax provision (benefit):

Net income (loss)

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Conversion of shares from Class B to Class A

Issuance of restricted stock

Forfeiture of restricted stock

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Conversion of shares from Class B to Class A

Forfeiture of restricted stock

Issuance of restricted stock

Dividends declared per common share

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(Gain) on insurance claims

Other (gain) losses

Barter (revenue) expense, net

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Cash dividends paid

Payments for debt issuance costs

Purchase of treasury shares

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is a broadcasting company whose business is devoted to acquiring, developing and operating broadcast properties.

As of December 31, 2020, we owned or operated seventy-nine FM, thirty-four AM radio stations and seventy-eight metro signals, serving twenty-seven markets throughout the United States.

As of December 31, 2021, we owned or operated seventy-nine FM, thirty-four AM radio stations and seventy-nine metro signals, serving twenty-seven markets throughout the United States.

Principles of Consolidation

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Barter Transactions

Our radio and television stations trade air time for goods and services used principally for promotional, sales and other business activities.

Our radio stations trade air time for goods and services used principally for promotional, sales and other business activities.

An asset and a liability are recorded at the fair market value of goods or services received.

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Net property and equipment

Depreciation expense for continuing operations for the years ended December 31, 2021, 2020 and 2019, was $ 5,362,000 , $ 5,711,000 and $ 5,916,000 , respectively.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Depreciation expense for continuing operations for the years ended December 31, 2020, 2019 and 2018, was $ 5,711,000 , $ 5,916,000 and $ 5,692,000 , respectively.

Intangible Assets

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Deferred Costs

The costs related to the issuance of debt are capitalized and amortized to interest expense over the life of the debt.

As a result of the Second Amendment to our Credit Facility in 2018, we incurred $ 120,000 of transaction fees related to the Credit Facility that were capitalized.

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

The costs related to the issuance of debt are capitalized and amortized to interest expense over the life of the Credit Facility.

During the years ended December 31, 2021, 2020 and 2019, we recognized interest expense related to the amortization of debt issuance costs of $ 37,000 , $ 40,000 and $ 103,000 , respectively.

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As of December 31, 2021, we had remaining authorization of $ 18.4 million for future repurchases of our Class A Common Stock.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Repurchases of shares of our Common Stock are recorded as Treasury stock and result in a reduction of Stockholders’ equity.

During 2021, 2020 and 2019, we acquired 16,577 shares at an average price of $ 26.25 per share, 24,255 shares at an average price of $ 18.51 per share and 39,505 shares at an average price of $ 29.68 per share, respectively.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Revenue Recognition

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Our effective tax rate is higher than the federal statutory rate as a result of the inclusion of state taxes in the income tax amount and permanent differences primarily relating to executive compensation.

On December 14, 2021 , the Company’s Board of Directors declared a quarterly cash dividend of $ 0.16 per share and special cash dividend of $ 0.50 per share on its Classes A and B Common Stock.

This dividend, totaling approximately $ 3,990,000 , was paid on January 14, 2022 to shareholders of record on December 27, 2021 and was recorded in dividends payable on the Company’s Condensed Consolidated Balance sheet at December 31, 2021 .

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, 2021 and was recorded in dividends payable on the Company’s Condensed Consolidated Balance sheet at June 30, 2021.

The Company had previously temporarily suspended the quarterly cash dividend in response to the uncertainty of the ongoing impact of COVID-19 as of June 18, 2020.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

On June 18, 2020, our Board of Directors announced that it was temporarily suspending the quarterly cash dividend in response to the continued uncertainty of the ongoing impact of COVID-19.

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This dividend totaling approximately $ 1.8 million was paid on January 17, 2020 to shareholders of record on December 27, 2019 and funded by cash on the Company’s balance sheet.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

On September 12, 2019, our Board of Directors declared a regular cash dividend of $ 0.30 per share on its Classes A and B Common Stock.

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This dividend, totaling approximately $ 1.8 million, was paid on March 29, 2019 to shareholders of record on March 12, 2019 and funded by cash on the Company’s balance sheet.

On November 28, 2018, our Board of Directors declared a quarterly cash dividend of $ 0.30 per share and a special cash dividend of $ 0.25 per share on its Classes A and B shares.

This dividend totaling approximately $ 3.3 million was paid on January 4, 2019 to shareholders of record on December 10, 2018 and funded by cash on the Company’s balance sheet.

On August 14, 2018, our Board of Directors declared a regular cash dividend of $ 0.30 per share on its Classes A and B Common Stock.

This dividend, totaling approximately $ 1.8 million was paid on September 14, 2018 to shareholders of record on August 31, 2018 and funded by cash on the Company’s balance sheet.

On May 15, 2018, our Board of Directors declared a regular cash dividend of $ 0.30 per share on its Classes A and B Common Stock.

This dividend, totaling approximately $ 1.8 million, was paid on June 22, 2018 to shareholders of record on May 31, 2018 and funded by cash on the Company’s balance sheet.

On February 28, 2018, our Board of Directors declared a regular quarterly cash dividend of $ 0.30 per share on its Classes A and B Common Stock.

This dividend, totaling approximately $ 1.8 million, was paid on March 30, 2018 to shareholders of record on March 12, 2018 and funded by cash on the Company’s balance sheet.

Stock-Based Compensation

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Net income (loss) available to common stockholders

Denominator for basic earnings (loss) per share — weighted average shares

Denominator for basic earnings per share — weighted average shares

Effect of dilutive securities:

Common stock equivalents

Denominator for diluted earnings (loss) per share — adjusted weighted-average shares and assumed conversions

Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions

Earnings (loss) per share:

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Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, “ Intangibles – Goodwill and Other (Topic 350)” (“ASU 2017-04”) which removes step 2 from the goodwill impairment test.

Under the new guidance, if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference.

The impairment charge will be limited to the amount of goodwill allocated to that reporting unit.

ASU 2017-04 will be applied prospectively and is effective for fiscal years and interim impairment tests performed in periods beginning after December 15, 2019 with early adoption permitted.

The Company adopted this standard January 1, 2020 and there was no material impact.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

In June 2016, the FASB issued ASU No.

2016-13, “ Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities.

The guidance requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires the consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

ASU 2016-13 is effective for fiscal years and interim periods beginning after December 15, 2019.

The Company adopted this standard January 1, 2020 and there was no material impact.

Recent Accounting Pronouncements – Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, “ Income Taxes (Topic 740):

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ASU 2019-12 is effective for fiscal years and interim periods beginning after December 15, 2020.

We are currently evaluating the impact of this standard on our consolidated financial statements.

The Company adopted this standard on January 1, 2021 and there was no material impact as a result of adoption.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Nature of goods and services

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Digital Advertising Revenue

We recognize revenue from our digital initiatives across multiple platforms such as targeted digital advertising, online promotions, advertising on our websites, mobile messaging, email marketing and other e-commerce.

We recognize revenue from our digital initiatives across multiple platforms such as targeted digital advertising, online promotions, advertising on our websites and digital audio streams, mobile messaging, email marketing and other e-commerce.

Revenue is recorded when each specific performance obligation in the digital advertising campaign takes place, typically within a one month period.

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Revenue is generally recognized when the event is completed, as the promotional events are completed or as each performance obligation is satisfied.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Disaggregation of Revenue

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Other Revenue

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Contract Liabilities

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Balance at January 1, 2020

Balance at December 31, 2019

Impairment charge

Balance at December 31, 2020

Balance at December 31, 2021

2021 Impairment Test

We completed our impairment annual impairment test of broadcast licenses during the fourth quarter of 2021 and determined that the fair value of the broadcast licenses was greater than the carrying value recorded for each of our markets and, accordingly, no impairment was recorded.

The following table reflects certain key estimates and assumptions used in the impairment tests during the fourth quarter ended 2021, the year ended 2020 and in the fourth quarter of 2019.

The ranges for operating profit margin and market long-term revenue growth rates vary by market.

In general, when comparing between 2021, 2020 and 2019:

(1) the market specific operating profit margin range remained relatively consistent with some decreases to our smaller markets due to the cost of operations in a small market;

(2) the market long-term revenue growth rates were relatively consistent;

(3) the discount rate increased a small percentage due to the COVID-19 pandemic;

and (4) current year revenue projections were flat with amounts previously projected for 2021.

Discount rates

12.3 % - 12.6

12.6 % - 13.0

12.2 % - 12.2

Operating profit margin ranges

17.8 % - 36.4

19.0 % - 36.4

Market long-term revenue growth rates

If actual market conditions are less favorable than those estimated by us or if events occur or circumstances change that would reduce the fair value of our broadcast licenses below the carrying value, we may be required to recognize additional impairment charges in future periods.

Such a charge could have a material effect on our consolidated financial statements.

We will continue to monitor potential triggering events and perform the appropriate analysis when deemed necessary.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

2020 Impairment Test

Due to the impact of the COVID-19 pandemic on the U.S.

economy and the related significant negative impact on our revenue for the second, third and fourth quarter of 2020 (excluding political advertising) and beyond in the majority of our markets, the Company tested its FCC License for impairment during the second quarter and again in the third quarter of 2020.

Our broadcast revenue has been significantly negatively impacted in the majority of the states where we operate, due to economic shutdowns and the related decline in advertising spending nationwide as most companies were making massive payroll cuts out of a necessity to survive with their revenues also significantly impacted.

We have experienced a significant number of cancellations of advertising on our stations, with the greatest decreases in the following industries/categories:

economy and the related significant negative impact on our revenue for the second, third and fourth quarter of 2020 (excluding political advertising) in the majority of our markets, the Company tested its FCC License for impairment during the second quarter and again in the third quarter of 2020.

Our broadcast revenue was significantly negatively impacted in the majority of the states where we operate, due to economic shutdowns and the related decline in advertising spending nationwide as most companies were making massive payroll cuts out of a necessity to survive with their revenues also significantly impacted.

We experienced a significant number of cancellations of advertising on our stations, with the greatest decreases in the following industries/categories:

Automotive, Entertainment, Home Improvement, Professional Services, Restaurants, and Retail.

The only category where we saw an increase over the prior quarters and year to date were political advertising and government/public service/issue advertising.

The only category where we saw an increase over the prior quarters and year to date in 2020 were political advertising and government/public service/issue advertising.

We also saw significant declines in our revenue related to events, venues, travel and sports as these types of businesses have been virtually shut down.

We are starting to see increased revenues from our low point in Q2 2020, however, they are not at the previously expected recovery rate.

Based on the trends we are seeing at our markets we believe that our analysis and estimates used during the third quarter 2020 analysis still remain our best estimate and we do not believe any further triggering events occurred during the fourth quarter of 2020 since the date of the previous analysis that would require any additional impairment testing for broadcast licenses.

We started to see increased revenues from our low point in Q2 2020, however, throughout 2020 they were not at the previously expected recovery rate.

Based on the trends we were seeing at our markets we believe that our analysis and estimates used during the third quarter 2020 analysis remained our best estimate and we did not believe any further triggering events occurred during the fourth quarter of 2020 since the date of the previous analysis that would require any additional impairment testing for broadcast licenses.

As a result of the quantitative impairment test performed as of June 30, 2020, the Company determined that the fair value of the broadcast licenses were less than the carrying amount on the balance sheet and recorded non-cash impairment charges totaling $ 3.8 million related to the FCC licenses in our Bucyrus, Ohio;

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The impairment charges were primarily due to a decrease in projected revenue in these markets due to the impact of the COVID-19 pandemic, an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of our FCC licenses due to certain risks specifically associated with the Company and the radio broadcasting industry, and a decrease in mature operating margins in small markets due to the cost of operations in a small market.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

As a result of the quantitative impairment test performed as of September 30, 2020, the Company determined that the fair value of the broadcast licenses were less than the carrying amount on the balance sheet and recorded non-cash impairment charges totaling $ 1.4 million for the quarter ended September 30, 2020 related to the FCC licenses in our Bellingham, Washington;

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The impairment charges were primarily due to a decrease in projected revenue in these markets due to the impact of the COVID-19 pandemic, an increase in the discount rate used in 2019 but slightly less than in the second quarter of 2020, in the discounted cash flow analyses to estimate the fair value of our FCC licenses due to certain risks specifically associated with the Company and the radio broadcasting industry, and a decrease in mature operating margins in small markets due to the cost of operations in a small market.

The following table reflects certain key estimates and assumptions used in the impairment tests during the year ended 2020 and in the fourth quarter of 2019, and 2018.

The ranges for operating profit margin and market long-term revenue growth rates vary by market.

In general, when comparing between 2020, 2019 and 2018:

(1) the market specific operating profit margin range remained relatively consistent with some decreases to our smaller markets due to the cost of operations in a small market;

(2) the market long-term revenue growth rates were relatively consistent;

(3) the discount rate increased a small percentage due to the COVID-19 pandemic;

and (4) current year revenue projections were 10.4 % - 21.4 % lower than previously projected for 2020 and revenue projections for 2021 were 7.6 % - 10.7 % lower than previously projected.

Discount rates

12.6 % - 13.0

12.2 % - 12.2

12.0 % - 12.0

Operating profit margin ranges

17.8 % - 36.4

19.0 % - 36.4

Market long-term revenue growth rates

Such a charge could have a material effect on our consolidated financial statements.

We will continue to monitor potential triggering events and perform the appropriate analysis when deemed necessary.

2019 Impairment Test

During the fourth quarter of 2019, we completed our annual impairment test of broadcast and determined that the fair value of the broadcast licenses was greater than the carrying value recorded for each of our markets and, accordingly, no impairment was recorded.

2018 Impairment Test

During the fourth quarter of 2018, we completed our annual impairment test of broadcast licenses and determined that the fair value of the broadcast licenses was greater than the carrying value recorded for each of our markets and, accordingly, no impairment was recorded.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

As a result of the decreased revenues associated with the COVID-19 pandemic, as mentioned above, we also reviewed our value of goodwill and other long-lived assets during the second quarter of 2020 as of June 30, 2020 and again in the third quarter of 2020 as of September 30, 2020, noting no impairment in goodwill or other long-lived assets.

During the fourth quarter of 2021, the Company performed its annual impairment test of goodwill in accordance with ASC 350 and determined that the fair value was in excess of its carrying value and, accordingly, no impairment was recorded.

We have recorded the changes to goodwill for each of the years ended December 31, 2021 and 2020 as follows:

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Total amortizable intangible assets

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Aggregate amortization expense for these intangible assets for the years ended December 31, 2021, 2020 and 2019, was $ 387,000 , $ 813,000 and $ 1,029,000 , respectively.

Our estimated annual amortization expense for the years ending December 31, 2022, 2023, 2024, 2025 and 2026 is $ 39,000 , $ 35,000 , $ 33,000 , $ 33,000 and $ 32,000 , respectively.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Long-Term Debt

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 and as such, have no debt outstanding at December 31, 2021.

Long-term debt consisted of the following:

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Amounts payable within one year

Future maturities of long-term debt are as follows:

(In thousands)

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.

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

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

On June 27, 2018, the Company entered into a Second Amendment to its Credit Facility, (the “Second Amendment”), which had first been amended on September 1, 2017, extending the revolving credit maturity date under the Credit Agreement for five years after the date of the amendment to June 27, 2023 .

On July 1, 2019, we elected to reduce our Revolving Credit Facility to $ 70 million.

On May 11, 2020 we entered into an assumption agreement and amendment of loan documents as part of our reincorporation as a Florida corporation.

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

A copy of this assumption agreement and amendment was filed as Exhibit 10(v) to our Form 10-Q for the quarter ended June 30, 2020 and incorporated by reference in our Form 10-K.

On May 11, 2020, as part of our reincorporation as a Florida corporation, we entered into an assumption agreement and amendment of loan documents.

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

On November 1, 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.

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

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Interest rates under the Credit Facility are payable, at our option, at alternatives equal to LIBOR ( 0.101 % at December 31, 2021), plus 1 % to 2 % or the base rate plus 0 % to 1 % .

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On June 7, 2019, we used $ 5,000,000 from funds generated by operations to voluntarily pay down a portion of our Revolving Credit Facility.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

On February 4, 2019, we used $ 5,000,000 from funds generated by operations to voluntarily pay down a portion of our Revolving Credit Facility, which was presented in current portion of long-term debt in our balance sheet at December 31, 2018.

We had approximately $ 60 million of unused borrowing capacity under the Revolving Credit Facility at December 31, 2020.

After we paid down our debt and reduced our Revolving Credit Facility as noted above, we had approximately $ 50 million of unused borrowing capacity under the Revolving Credit Facility at December 31, 2021.

Supplemental Cash Flow Information

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Notes to Consolidated Financial Statements — (Continued)

An income tax expense of $ 705,000 was recorded for the year ended December 31, 2020 compared to income tax expense of $ 5.4 million for the year ended December 31, 2019.

An income tax expense of $ 4,260,000 was recorded for the year ended December 31, 2021 compared to income tax expense of $ 705,000 for the year ended December 31, 2020.

The effective tax rate was approximately 27.6 % for the year ended December 31, 2021 compared to ( 58.4 )% for the year ended December 31, 2020.

The current year to date tax rate was impacted by permanent differences primarily relating to executive compensation resulting in additional tax expense of approximately $ 1.0 million offset by the broadcast license impairment charge which was a discrete item and contributed approximately $ 1.4 million of tax benefit for the year ended December 31, 2020.

The 2020 year to date tax rate was impacted by permanent differences primarily relating to executive compensation resulting in additional tax expense of approximately $ 1.0 million offset by the broadcast license impairment charge which was a discrete item and contributed approximately $ 1.4 million of tax benefit for the year ended December 31, 2020.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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State tax expense, net of federal benefit

The 2020 effective tax rate exceeded the federal statutory rate primarily due to non-deductible compensation related expenses, book tax differences in impairments charges and state income taxes.

The 2019 and 2018 effective tax rates exceed the federal statutory rate primarily due to state income taxes.

The 2021 and 2019 effective tax rates exceed the federal statutory rate primarily due to non-deductible compensation related expenses and state income taxes.

The 2020 effective tax rate exceeded the federal statutory rate primarily due to non-deductible compensation related expenses, book tax differences in impairment charges and state income taxes.

The Company files income taxes in the U.S.

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2005 Incentive Compensation Plan

On October 16, 2013 our stockholders approved the Second Amended and Restated Saga Communications, Inc.

2005 Incentive Compensation Plan, which was amended in 2018 after approval of the amendment by our stockholders at our 2018 annual meeting (as amended, the “Second Restated 2005 Plan”).

The 2005 Incentive Compensation Plan, which replaced our 2003 Stock Option Plan, was first approved by stockholders in 2005 and subsequently this plan was re-approved by stockholders in 2010.

The changes made in 2013 in the Second Restated 2005 Plan (i) increased the number of authorized shares by 233,334 shares of Common Stock, (ii) extended the date for making awards to September 6, 2018, (iii) included directors as participants, (iv) targeted awards according to groupings of participants based on ranges of base salary of employees and/or retainers of directors, (v) required participants to retain 50 % of their net annual restricted stock awards during their employment or service as a director, and (vi) included a clawback provision.

On May 13, 2019 our stockholders approved an amendment to the Second Amended and Restated Saga Communications, Inc.

2005 Incentive Compensation Plan (as amended, The Second Restated 2005 Plan).

This plan was first approved in 2005, and subsequently re-approved in 2010 and 2013.

The amendment to the Second Restated 2005 Plan (i) extended the date for making awards to September 6, 2023 and (ii) increased the number of authorized shares under the Plan by 90,000 shares of Class B Common Stock.

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Weighted average remaining contractual life (in years)

There were no restricted stock grants awarded in 2020.

The weighted average grant date fair value of restricted stock that vested during 2021 and 2019 was $ 1,792,000 and $ 2,276,000 , respectively.

There were no restricted stock grants awarded in 2020.

The net value of unrecognized compensation cost related to unvested restricted stock awards aggregated $ 2,354,000 , $ 1,896,000 and $ 4,195,000 at December 31, 2021, 2020 and 2019, respectively.

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2021 Acquisitions

On January 8, 2021, the Company closed on an agreement to purchase WBQL and W288DQ from Consolidated Media, LLC, for an aggregate purchase price of $ 175,000 , of which $ 25,000 was paid in 2020 and the remaining $ 150,000 paid in 2021.

Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Clarksville, Tennessee market as well as synergies and growth opportunities expected through the combination with the Company’s existing stations.

The translators are start-up stations and therefore, have no pro forma revenue and expenses.

On July 12, 2021, we entered into an agreement to acquire WIZZ-AM and a translator for $ 61,800 of which $ 5,000 was paid in 2021.

We expect to close on this transaction in March 2022.

2020 Acquisitions

On January 2, 2020, we closed on an agreement to purchase W295BL from Basic Holdings, LLC, for an aggregate purchase price of $ 200 thousand, of which $ 10 thousand was paid in 2019 and the remaining $ 190 thousand paid in 2020.

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The proforma results for this acquisitions are not deemed material and therefore are not presented in the footnotes.

2018 Acquisitions

On October 29, 2018, we entered into an agreement to purchase WOGK-GM, WNDT-FM, WNDD-FM and WNDN-FM, from Ocala Broadcasting Corporation, LLC for an aggregate purchase price of $ 9.3 million, subject to certain purchase price adjustments.

We closed this transaction effective December 31, 2018 using funds generated from operations of $ 9.84 million, which included the purchase price of $ 9.3 million, the purchase of $ 566 thousand in accounts receivable by certain closing adjustments and transactional costs of approximately $ 25 thousand, of which $ 553 thousand was paid in January 2019.

Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Ocala, Florida market as well as synergies and growth opportunities expected through the combination with our existing stations.

Saga Communications, Inc.

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Assets Acquired:

Current assets

Property and equipment

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Broadcast licenses

Other intangibles, deferred costs and investments

Total other assets

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Christian, Chairman, President and CEO, which became effective as of June 1, 2011, and replaced and superseded his prior employment agreement.

We entered into amendments to the agreement on February 12, 2016 (the “First Amendment”) and February 26, 2019 (the “Second Amendment”).

We entered into amendments to the agreement on February 12, 2016 (the “First Amendment”), February 26, 2019 (the “Second Amendment”) and January 25, 2022 (the “Third Amendment”).

The First Amendment extended the term of the employment agreement to March 31, 2021.

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Christian may defer any or all of his annual salary.

The Second Amendment extends the term of the employment agreement from March 31, 2021 to March 31, 2025 and also makes certain clarifying modifications to the employment agreement.

The Second Amendment extends the term of the employment agreement from March 31, 2021 to March 31, 2025 and also makes certain clarifying modifications to the employment agreement.The Third Amendment extends the term of the employment agreement from March 31, 2025 to March 31, 2027 and makes certain changes to the employment agreement pursuant to Section 409A of the Internal Revenue Code.

Under the agreement, Mr.

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Bush, Senior Vice President and Chief Financial Officer, Marcia K.

Lobaito, Senior Vice President, Corporate Secretary and Director of Business Affairs, and Catherine Bobinski, Senior Vice President/Finance, Chief Accounting Officer and Corporate Controller, entered into Change in Control Agreements.

Lobaito, at the time, Senior Vice President, Corporate Secretary and Director of Business Affairs, and Catherine Bobinski, Senior Vice President/Finance, Chief Accounting Officer and Corporate Controller, entered into Change in Control Agreements.

In September 2018, Christopher S.

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or (c) the approval of the stockholders of the Company of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of its assets.

If there is a change in control, the Company shall pay a lump sum payment within 45 days there of 1.5 times the average of the executive’s last three full calendar years of such executive’s base salary and any annual cash bonus paid.

If there is a change in control, the Company shall pay a lump sum payment within 45 days of 1.5 times the average of the executive’s last three full calendar years of such executive’s base salary and any annual cash bonus paid.

In the event that such payment constitutes a “parachute payment” within the meaning of Section 280G subject to an excise tax imposed by Section 4999 of the Internal Revenue Code, the Company shall pay the executive an additional amount so that the executive will receive the entire amount of the lump sum payment before deduction for federal, state and local income tax and payroll tax.

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Other Related Party Transactions

Saga South Communications, LL (formerly, Saga Quad States), our fully owned subsidiary, completed the acquisition from Apex Media Corporation, a South Carolina corporation (“AMC”), and Pearce Development, LLC f/k/a Apex Real Property, LLC, a South Carolina limited liability company (“ARP” and together with AMC, “Seller”), of substantially all of Seller’s assets related to the operation of certain radio and translator stations, upon the satisfaction of certain closing conditions described in the Asset Purchase Agreement dated May 9, 2017 (the “Apex Agreement”) by and among Seller, Saga South Communications, LLC, and, solely in his role as guarantor under the Apex Agreement, G.

Saga South Communications, LLC (formerly, Saga Quad States), our fully owned subsidiary, completed the acquisition from Apex Media Corporation, a South Carolina corporation (“AMC”), and Pearce Development, LLC f/k/a Apex Real Property, LLC, a South Carolina limited liability company (“ARP” and together with AMC, “Seller”), of substantially all of Seller’s assets related to the operation of certain radio and translator stations, upon the satisfaction of certain closing conditions described in the Asset Purchase Agreement dated May 9, 2017 (the “Apex Agreement”) by and among Seller, Saga South Communications, LLC, and, solely in his role as guarantor under the Apex Agreement, G.

Dean Pearce, as further described in the Form 8-K filed by Saga on May 10, 2017.

Pearce is President of AMC and ARP, and currently serves on the Board of Directors of Saga.

Pearce is President of AMC and ARP, and served on the Board of Directors of Saga from May 8, 2017 through May 9, 2021.

The purchase price under the Apex Agreement was $ 23,000,000 , subject to certain purchase price adjustments, payable in cash.

14 unchanged sentences

The holders of the Common Stock, voting as a single class with each share of Class A Common Stock entitled to one vote and each share of Class B Common Stock entitled to ten votes, are entitled to elect the remaining directors.

The Board of Directors consisted of seven members at December 31, 2020.

The Board of Directors consisted of eight members at December 31, 2021.

Holders of Common Stock are not entitled to cumulative voting in the election of directors.

The holders of the Common Stock vote as a single class with respect to any proposed “going private” transaction with the principal stockholder or an affiliate of the principal stockholder, with each share of each class of Common Stock entitled to one vote per share.

Under Delaware law, the affirmative vote of the holders of a majority of the outstanding shares of any class of common stock is required to approve, among other things, a change in the designations, preferences and limitations of the shares of such class of common stock.

Under Florida law, the affirmative vote of the holders of a majority of the outstanding shares of any class of common stock is required to approve, among other things, a change in the designations, preferences and limitations of the shares of such class of common stock.

Saga Communications, Inc.

19 unchanged sentences

Lease liabilities were $ 6.4 million and $ 6.9 million at December 31, 2021 and 2020, respectively.

Payments on lease liabilities during the year ended December 31, 2020 totaled $ 1,737,000 .

During the year ended December 31, 2021, we recorded additional ROU assets under operating leases of $ 1,039,000 , which is a non-cash transaction.

Payments on lease liabilities during the year ended December 31, 2021 and 2020 totaled $ 1,777,000 and $ 1,737,000 ,respectively.

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

14 unchanged sentences

We incur fees from performing rights organizations (“PRO”) to license our public performance of the musical works contained in each PRO’s repertory.

The Radio Music Licensing Committee, of which we are a represented participant, (1) entered into an industry-wide settlement with American Society of Composers, Authors and Publishers that was effective January 1, 2017 for a five-year term;

(2) is currently seeking reasonable industry-wide fees from Broadcast Music, Inc.

effective January 1, 2017;

The Radio Music Licensing Committee (“RMLC”), of which we are a represented participant, (1) entered into an Interim License Agreement with American Society of Composers, Authors and Publishers that was effective January 1, 2022 and will remain in effect until the date on which the parties reached agreement as to, or there is court determination of, new interim or final fees, terms, and conditions of a new license for the five year period commencing on January 1, 2022 and concluding on December 31, 2026;

(2) is negotiating and will enter into, on behalf of the participating members, an Interim License Agreement with Broadcast Music, Inc.;

(3) reached an agreement with the Society of European Stage Authors and Composers that is retroactive to January 1, 2016;

and (4) filed in November 2016 a motion in the U.S.

District Court in Pennsylvania against Global Music Rights (“GMR”) arguing that GMR is a monopoly demanding monopoly prices and asking the Court to subject GMR to an antitrust consent decree.

In January 2017, we obtained an interim license from GMR for fees effective January 1, 2017 to avoid any infringement claims by GMR for using GMR’s repertory without a license.

and (4) in January 2022, RMLC and Global Music Rights (“GMR”) reach a conditional settlement of the GMR-RMLC antitrust and/or unfair competition litigations and we have entered into an agreement with GMR.

Contingencies

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We have certain assets that are measured at fair value on a non-recurring basis under the circumstances and events described in Note 3 — Broadcast Licenses, Goodwill and Other Intangibles, and are adjusted to fair value only when the carrying values are more than the fair values.

During the fourth quarter of 2021, we reviewed the fair value of the assets that are measured at fair value on a non-recurring basis and concluded that these assets were not impaired as the fair value of these assets equaled or exceeded their carrying values.

During 2020, as a result of our interim impairment tests, we wrote down broadcast licenses with a carrying value of $ 51,448,000 to their fair value of $ 46,299,000 , resulting in a non-cash impairment charge of $ 5,149,000 , which is included in net income for the year ended December 31, 2020.

2 unchanged sentences

During the fourth quarter of 2019, we reviewed the fair value of the assets that are measured at fair value on a non-recurring basis and concluded that these assets were not impaired as the fair value of these assets equaled or exceeded their carrying values.

During the fourth quarter of 2018, we reviewed the fair value of the assets that are measured at fair value on a non-recurring basis and concluded that these assets were not impaired as the fair value of these assets equaled or exceeded their carrying values.

Saga Communications, Inc.

14 unchanged sentences

Income before income taxes

Income tax provision

Income tax provision (benefit)

Net income (loss)

5 unchanged sentences

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.

During the first quarter of 2021, there was weather-related damage to an antenna in our Des Moines, Iowa market.

The Company’s insurance policy provided coverage for removal and replacement of the antenna and related equipment.

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 .

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, we sold land and a building on one of our tower sites in our Bellingham, Washington market for approximately $ 1,700,000 to Talbot Real Estate, LLC resulting in a $ 1,400,000 gain on the sale of assets.

5 unchanged sentences

Subsequent Events

On January 8, 2021, we closed on an agreement to purchase WBQL and W288DQ from Consolidated Media, LLC, for an aggregate purchase price of $ 175 thousand, of which $ 25 thousand was paid in 2020 and the remaining $ 150 thousand paid in 2021.

These stations will join our Clarksville, Tennessee market.

On March 1, 2022 , 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 $ 970,000 , will be paid on April 8, 2022 to shareholders of record on March 21, 2022 .

EXHIBIT INDEX

16 unchanged sentences

Bush dated as of December 28, 2007.

Change in Control Agreement of Warren S.

Lada dated as of December 28, 2007 .

Change in Control Agreement of Marcia K.

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Change in Control Agreement of Eric Christian dated as of July 6, 2020 .

Third Amendment to Employment Agreement dated January 25, 2022 between Saga Communications, Inc, and Edward K.

Subsidiaries.

4 unchanged sentences

Section 1350 and Rule 13-14(b) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

Filed herewith.

Exhibit filed with Company’s Form 10-K for the year ended December 31, 1998 and incorporated by reference herein.

Exhibit filed with the Company’s Registration Statement on Form S-1 (File No.

33-47238) filed on December 10, 1992 and incorporated by reference herein.

Exhibit filed with the Company’s Registration Statement on From 8-A (File No.

333-107686) filed on August 5, 2003 and incorporated by reference herein.

Exhibit filed with the Company’s Post-Effective Amendment No.1 to Form S-8 (File No.

333-125361) filed on May 20, 2020 and incorporated by reference herein.

Exhibit filed as Appendix A to the Company’s Consent Solicitation (Filed No:

001-11588) filed on September 17, 2013 and incorporated by reference herein.

Exhibit filed with the Company’s Form 8-K filed on January 4, 2008 and incorporated by reference herein.

3 unchanged sentences

Exhibit filed with the Company’s Form 8-K filed on August 18, 2015 and incorporated by reference herein.

Exhibit filed with the Company’s Form 8-K filed on February 17, 2016 and incorporated by reference herein.

Exhibit filed with the Company’s Form 8-K/A filed on April 8, 2016 and incorporated by reference herein.

Exhibit filed with the Company’s Form 10-K for the year ended December 31, 2015 and incorporated by reference herein.

8 unchanged sentences

Exhibit filed with the Company’s Form 10-Q for the quarter ended June 30, 2020 and incorporated by reference herein.

Exhibit filed with the Company’s Form 10-K for the year ended December 31, 2020 and incorporated by reference herein.

Exhibit filed with the Company’s Form 8-K filed on January 27, 2022 and incorporated by reference herein.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 16, 2022.

12 unchanged sentences

Corporate Controller

/s/ Michael J.

/s/ Clarke R.

1 unchanged sentence

/s/ Warren Lada

/s/ Marcia K.

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-K

Item 9A. Controls and Procedures