What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-16 compared with 2022-03-16 · 277 added, 196 removed, 833 unchanged (36% of the section changed)

18 unchanged sentences

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Saga Communications, Inc.

as of December 31, 2021 and 2020, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021 and the related notes and financial statement schedule, and our report dated March 16, 2022 expressed an unqualified opinion thereon.

as of December 31, 2022 and 2021, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022 and the related notes and financial statement schedule, and our report dated March 16, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

19 unchanged sentences

Directors, Executive Officers and Corporate Governance

The information required by this item is incorporated by reference to the information contained in our Proxy Statement for the 2022 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the Company’s fiscal year.

The information required by this item is incorporated by reference from the information contained in our Proxy Statement for the 2023 Annual Meeting of Shareholders to be filed not later than 120 days after the end of the Company’s fiscal year.

See also Item 1.

Business — Executive Officers.

Business — Information About Our Executive Officers.

Executive Compensation

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

In addition, the information contained in the “Securities Authorized for Issuance Under Equity Compensation Plan Information” subheading under Item 5 of this report is incorporated by reference herein.

Certain Relationships and Related Transactions, and Director Independence

Principal Accountant Fees and Services

7 unchanged sentences

— Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020

— Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021, 2020 and 2019

— Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2022, 2021 and 2020

— Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020

8 unchanged sentences

We have audited the accompanying consolidated balance sheets of Saga Communications, Inc.

(the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement Schedule II, Valuation and Qualifying Accounts, listed in the index at item 15(a)(2) (collectively referred to as the “financial statements”).

(the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement Schedule II, Valuation and Qualifying Accounts, listed in the index at item 15(a)(2) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of Saga Communications, Inc.

38 unchanged sentences

(In thousands, except par value)

(In thousands)

Current assets:

Cash and cash equivalents

Short-term investments

Accounts receivable, less allowance of $ 519 ($ 469 in 2021)

8 unchanged sentences

Other intangibles, right of use assets, deferred costs and investments, net of accumulated amortization of $ 15,944 ($ 15,906 in 2021)

Liabilities and stockholders’ equity

Liabilities and shareholders’ equity

Current liabilities:

Accounts payable

Accrued expenses:

Payroll and payroll taxes

Accrued payroll and payroll taxes

Dividend payable

3 unchanged sentences

Deferred income taxes

Long-term debt

Other liabilities

1 unchanged sentence

Commitments and contingencies

Stockholders’ equity:

Preferred stock, 1,500 shares authorized, none issued and outstanding Common stock:

Shareholders’ equity:

Preferred stock, 1,500 shares authorized, none issued and outstanding

Common stock:

Class A common stock, $ .01 par value, 35,000 shares authorized, 7,866 issued ( 6,835 in 2021)

Class B common stock, $ .01 par value, 3,500 shares authorized, 965 issued and outstanding ( 938 in 2020 )

Class B common stock, $ .01 par value, 3,500 shares authorized, 0 issued ( 965 in 2021)

Additional paid-in capital

Retained earnings

Treasury stock ( 1,758 shares in 2021 and 1,751 in 2020, at cost)

Total stockholders’ equity

Treasury stock ( 1,753 shares in 2022 and 1,758 shares in 2021, at cost)

Total shareholders’ equity

Total liabilities and shareholders' equity

See accompanying notes.

13 unchanged sentences

Interest income

Income (loss) before income tax expense

Income (loss) before income tax expense (benefit)

Income tax provision (benefit):

6 unchanged sentences

Saga Communications, Inc.

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Shareholders’ Equity

Years ended December 31, 2022, 2021 and 2020

Stockholders’

Shareholders’

(In thousands)

1 unchanged sentence

Conversion of shares from Class B to Class A

Issuance of restricted stock

Forfeiture of restricted stock

5 unchanged sentences

Conversion of shares from Class B to Class A

Forfeiture of restricted stock

Issuance of restricted stock

Dividends declared per common share

23 unchanged sentences

Compensation expense related to restricted stock awards

(Gain) loss on sale of assets

(Gain) loss on sale of assets, net

(Gain) on insurance claims

Other (gain) losses

Other (gain) loss, net

Barter (revenue) expense, net

6 unchanged sentences

Cash flows from investing activities:

Purchase of Short-term investments

Redemption of Short-term investments

Acquisition of property and equipment

7 unchanged sentences

Cash dividends paid

Payments for debt issuance costs

Purchase of treasury shares

10 unchanged sentences

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

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.

We currently own or operated seventy-nine FM, thirty-four AM radio stations and eighty metro signals, serving twenty-seven markets throughout the United States.

Principles of Consolidation

4 unchanged sentences

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

The full extent to which the effects of COVID-19 will directly or indirectly impact our business, results of operations and financial condition, including but not limited to our future estimates regarding our allowance for doubtful accounts and our valuation of goodwill and broadcast licenses will depend on future developments that are uncertain.

Our accounting estimates require the use of judgment as future events and the effect of these events cannot be predicted with certainty.

12 unchanged sentences

Financial Instruments

Our financial instruments are comprised of cash and cash equivalents, accounts receivable, accounts payable and long-term debt.

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 December 31, 2021.

We account for marketable securities in accordance with ASC 320, “ Investments – Debt Securities, ” which require that certain debt securities be classified into one of three categories:

held-to-maturity, available-for-sale, or trading securities, and depending upon the classification, value the security at amortized cost or fair market value.

At December 31, 2022, we have recorded $ 10.1 million of held-to-maturity U.S.

Treasury Bills at amortized cost basis that have a fair market value of $ 10 million.

Our held-to-maturity U.S.

Treasury Bills all have original maturity dates ranging from February 2023 to June 2023.

We had no marketable securities at December 31, 2021.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Our financial instruments are comprised of cash and cash equivalents, short-term investments, accounts receivable, accounts payable and long-term debt.

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 secured overnight financing rate (“SOFR”), prime rate or have been reset at the prevailing market rate at December 31, 2022.

Allowance for Doubtful Accounts

22 unchanged sentences

We did not record any impairment of property and equipment during 2022, 2021 and 2020.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Property and equipment consisted of the following:

5 unchanged sentences

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 the years ended December 31, 2022, 2021 and 2020, was $ 5,133,000 , $ 5,362,000 and $ 5,711,000 , respectively.

Intangible Assets

13 unchanged sentences

At December 31, 2022 and 2021 the net book value of debt issuance costs related to our line of credit was $ 166,000 , and $ 17,000 , respectively, and was presented in other intangibles, deferred costs and investments in our Consolidated Balance Sheets.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

We determine whether a contract is or contains a lease at inception.

3 unchanged sentences

See Note 12 – Commitments and Contingencies for more information on Leases.

Our founder, Chairman, President, and former CEO, Edward K.

Christian, passed away on August 19, 2022.

As of the date of his passing, Mr.

Christian, who was also our principal shareholder, held approximately 65 % of the combined voting power of the Company’s Common Stock based on our Class B Common Stock (together with the Class A Common Stock, collectively, the “Common Stock”) generally being entitled to ten votes per share.

As a result, Mr.

Christian was generally able to control the vote on most matters submitted to the vote of shareholders and, therefore, was able to direct our management and policies, except with respect to (i) the election of two Class A directors, (ii) those matters where the shares of our Class B Common Stock were only entitled to one vote per share, and (iii) other matters requiring a class vote under the provisions of our certificate of incorporation, bylaws or applicable law.

Christian’s passing resulted in the conversion of his Class B Shares into Class A Shares that were transferred to an estate planning trust that now owns approximately 16 % of the common stock outstanding.

As a result, we no longer have any shares of Class B Common Stock issued or outstanding .

Treasury Stock

2 unchanged sentences

As of December 31, 2022, we had remaining authorization of $ 18.2 million for future repurchases of our Class A Common Stock.

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

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

During 2022, 2021 and 2020, we acquired 6,044 shares at an average price of $ 24.27 per share, 16,577 shares at an average price of $ 26.25 per share and 24,255 shares at an average price of $ 18.51 per share, respectively.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Revenue Recognition

4 unchanged sentences

104, Topic 13, Revenue Recognition Revised and Updated and The Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers .

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Local Marketing Agreements

10 unchanged sentences

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 7, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.25 per share and a special cash dividend of $ 2.00 per share on its Classes A Common Stock.

This dividend, totaling approximately $ 13,800,000 , was paid on January 13, 2023 to shareholders of record on December 21, 2022 and is recorded in dividends payable in our Consolidated Balance Sheet at December 31, 2022.

On September 20, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.25 per share and a special cash dividend of $ 2.00 per share on its Classes A Common Stock.

This dividend, totaling approximately $ 13,600,000 , was paid on October 21, 2022 to shareholders of record on October 3, 2022.

On June 6, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.20 per share on its Classes A and B Common Stock.

This dividend, totaling approximately $ 1,200,000 , was paid to our transfer agent on June 29, 2022.

The dividend was paid by our transfer agent on July 1, 2022 to shareholders of record on June 13, 2022.

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 , was paid on April 8, 2022 to shareholders of record on March 21, 2022.

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 .

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

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.

3 unchanged sentences

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.

1 unchanged sentence

This dividend, totaling approximately $ 1.9 million, was paid on April 10, 2020 to shareholders of record on March 16, 2020 and funded by cash on the Company’s balance sheet.

On December 11, 2019, our Board of Directors declared a quarterly cash dividend of $ 0.30 per share on its Classes A and B shares.

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.

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.

This dividend, totaling approximately $ 1.8 million, was paid on October 11, 2019 to shareholders of record on September 23, 2019 and funded by cash on the Company’s balance sheet.

On May 30, 2019, 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 July 5, 2019 to shareholders of record on June 14, 2019 and funded by cash on the Company’s balance sheet.

On February 26, 2019, 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 March 29, 2019 to shareholders of record on March 12, 2019 and funded by cash on the Company’s balance sheet.

Stock-Based Compensation

19 unchanged sentences

(In thousands, except per share data)

Net income (loss)

Income (loss) allocated to unvested participating securities

Net income (loss) available to common stockholders

Income allocated to unvested participating securities

Net income available to common shareholders

Denominator for basic earnings per share — weighted average shares

2 unchanged sentences

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

Earnings (loss) per share:

Earnings per share:

There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the years ended December 31, 2022, 2021, and 2020, respectively.

2 unchanged sentences

Recently Adopted Accounting Pronouncements

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

Simplifying the Accounting for Incomes Taxes” (“ASU 2019-12”) which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance regarding the tax treatment of certain franchise taxes, goodwill and nontaxable entities, among other items to improve consistent application.

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

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

Management has considered all recent accounting pronouncements issued.

The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

Saga Communications, Inc.

15 unchanged sentences

The following table presents revenues disaggregated by revenue source:

Twelve Months Ended

(in thousands)

37 unchanged sentences

Balance at January 1, 2021

Impairment charge

Balance at December 31, 2021

2 unchanged sentences

We completed our impairment annual impairment test of broadcast licenses during the fourth quarter of 2022 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 following table reflects certain key estimates and assumptions used in the impairment tests during the fourth quarter ended 2022, the fourth quarter of 2021 and the year ended 2020.

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

In general, when comparing between 2022, 2021 and 2020:

(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.

(1) the market specific operating profit margin range remained relatively consistent;

(2) the market long-term revenue growth rates were relatively consistent with some stabilization of rates in 2022;

(3) the discount rate decreased;

and (4) current year revenue projections increased with amounts previously projected for 2022.

Discount rates

1 unchanged sentence

12.6 % - 13.0

12.2 % - 12.2

Operating profit margin ranges

9 unchanged sentences

2021 Impairment Test

During the fourth quarter of 2021, 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.

2020 Impairment Test

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

24 unchanged sentences

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.

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.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

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.

During the fourth quarter of 2022, 2021 and 2020, 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, 2022 and 2021 as follows:

23 unchanged sentences

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:

(In thousands)

Revolving credit facility

Amounts payable within one year

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.

On August 18, 2015, we entered into a 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.

5 unchanged sentences

On November 1, 2021, we elected to further reduce our Revolving Credit Facility to $ 50 million.

On December 19, 2022, we entered into a Third Amendment to our Credit Facility, (the “Third Amendment”), which extended the maturity date to December 19, 2027, reduced the lenders to JPMorgan Chase Bank, N.A., and the Huntington National Bank, established an interest rate equal to the secured overnight financing rate (“SOFR”) as administered by the SOFR Administrator (currently established as the Federal Reserve Bank of New York) as the interest base and increased the basis points.

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.

2 unchanged sentences

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

As a result of the Third Amendment, the Company incurred an additional $ 161,000 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.

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 % .

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

As previously noted, the May 11, 2020 amendment to the Credit Facility includes an alternative to LIBOR in the event LIBOR is no longer available.

Interest rates under the Credit Facility are payable, at our option, at alternatives equal to SOFR ( 4.3 % at December 31, 2022), plus 1 % to 2 % or the base rate plus 0 % to 1 % .

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

Letters of credit issued under the Credit Facility will be subject to a participation fee (which is equal to the interest rate applicable to Eurocurrency Loans, as defined in the Credit Agreement) payable to each of the Lenders and a fronting fee equal to 0.25 % per annum payable to the issuing bank.

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

Under the Third Amendment, we now pay quarterly commitment fees of 0.25 % per annum on the used portion of the Credit Facility.

We previously paid 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 December 31, 2022) 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.

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.

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, 2022.

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.

Supplemental Cash Flow Information

10 unchanged sentences

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

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

An income tax expense of $ 4,800,000 was recorded for the year ended December 31, 2022 compared to income tax expense of $ 4,260,000 for the year ended December 31, 2021.

The effective tax rate was approximately 34.3 % for the year ended December 31, 2022 compared to 27.6 % for the year ended December 31, 2021.

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.

The 2022 year to date tax rate was impacted by $ 3.8 million in expenses in the third quarter related to the compensation of our CEO upon his death, in accordance with his employment agreement that are permanent differences between our book and taxable income.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

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.

18 unchanged sentences

At December 31, 2022 and 2021, net deferred tax liabilities include a deferred tax asset of $ 1,313,000 and $ 1,270,000 , respectively, relating to deferred compensation, stock-based compensation expense, accrued compensation, the allowance for doubtful accounts, and other accrued expenses.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

The significant components of the provision for income taxes are as follows:

4 unchanged sentences

Total Income Tax Provision

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

The reconciliation of income tax at the U.S.

11 unchanged sentences

federal examinations by the Internal Revenue Service (IRS) for years prior to 2019.

During the first quarter of 2015, the IRS commenced an examination of the Company’s 2013 U.S.

federal income tax return which was completed in the first quarter of 2016 and resulted in no changes to the return.

The Company is subject to examination for income and non-income tax filings in various states.

2 unchanged sentences

For the years ended December 31, 2022, 2021 and 2020, we had $-, $-, and $ 600 , respectively, tax-related interest and penalties and had $ 0 accrued at December 31, 2022 and 2021.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Stock-Based Compensation

2005 Incentive Compensation Plan

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

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

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

4 unchanged sentences

Awards denominated in Class A Common Stock may be granted to any employee or director under the Second Restated 2005 Plan.

However, awards denominated in Class B Common Stock may only be granted to Edward K.

Christian, President, Chief Executive Officer, Chairman of the Board of Directors, and the holder of 100% of the outstanding Class B Common Stock of the Company.

Upon the passing of Mr.

Christian, we no longer have any holders of Class B Common Stock, as those awards denominated in Class B Common Stock were only able to be granted to Mr.

Stock options granted under the Second Restated 2005 Plan may be for terms not exceeding ten years from the date of grant and may not be exercised at a price which is less than 100% of the fair market value of shares at the date of grant .

On March, 1, 2023, our Board of Directors approved the 2023 Incentive Compensation Plan to be approved by our shareholders at our Annual Meeting in May 2023.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Stock-Based Compensation

11 unchanged sentences

There were no options granted during 2022, 2021 and 2020 and there were no stock options outstanding as of December 31, 2022.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

The following summarizes the restricted stock transactions for the year ended December 31:

7 unchanged sentences

Weighted average remaining contractual life (in years)

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.

The weighted average grant date fair value of restricted stock that granted during 2022 and 2021 was $ 1,902,000 and $ 1,792,000 , respectively.

There were no restricted stock grants awarded in 2020.

The net value of unrecognized compensation cost related to unvested restricted stock awards aggregated $ 2,397,000 , $ 2,354,000 and $ 1,896,000 at December 31, 2022, 2021 and 2020, respectively.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

For the years ended December 31, 2022, 2021 and 2020 we had $ 1,858,000 , $ 1,335,000 and $ 2,221,000 , respectively, of total compensation expense related to restricted stock-based arrangements.

13 unchanged sentences

The cash surrender values of these policies are in a rabbi trust and are recorded as our assets.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Split Dollar Officer Life Insurance

We provide split dollar insurance benefits to certain executive officers and records an asset equal to the cumulative premiums paid on the related policies, as we will fully recover these premiums under the terms of the plan.

We provide split dollar insurance benefits to certain executive officers and record an asset equal to the cumulative premiums paid on the related policies, as we will fully recover these premiums under the terms of the plan.

We retain a collateral assignment of the cash surrender values and policy death benefits payable to insure recovery of these premiums.

6 unchanged sentences

Management assigned fair values to the acquired property and equipment through a combination of cost and market approaches based upon each specific asset’s replacement cost, with a provision for depreciation, and to the acquired intangibles, primarily an FCC license, based on the Greenfield valuation methodology, a discounted cash flow approach.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

2022 Acquisitions

On July 12, 2021, we entered into an agreement to acquire WIZZ-AM and a translator from P.

Radio for $ 61,800 of which $ 5,000 was paid in 2021 and the remainder was paid on April 6, 2022 when we closed on the transaction.

Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Greenfield, Massachusetts 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.

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.

1 unchanged sentence

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

2 unchanged sentences

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

2019 Acquisitions

On January 9, 2019, we closed on an agreement to purchase WPVQ-AM and W222CH from County Broadcasting Company, LLC for an aggregate purchase price of $ 210 thousand.

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

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Condensed Consolidated Balance Sheet of 2022 and 2021 Acquisitions:

13 unchanged sentences

Net assets acquired

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Related Party Transactions

Principal Stockholder Employment Agreement

In June 2011, we entered into a new employment agreement with Edward K.

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”), 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.

The First Amendment also states that on each anniversary of the effective date of the employment agreement, the Compensation Committee shall determine in its discretion the amount of any annual increases (which shall not be less than the greater of 4 % or a defined cost of living increase).

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 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.

Christian’s Employment Agreement

On January 25, 2022, we entered into a third amendment (the “2022 Amendment”) to the employment agreement with Edward K.

Christian dated June 1, 2011 (the “2011 employment agreement”), which had previously been amended on February 12, 2016 (the “2016 amendment”) and on February 26, 2019 (the “2019 amendment”).

The 2011 employment agreement, as amended by the 2016 amendment, the 2019 amendment, and the 2022 amendment, is referred to herein as the “amended 2011 employment agreement.” The 2022 amendment extended Mr.

Christian’s employment with the Company from March 31, 2025 to March 31, 2027 and made certain changes to the 2011 employment agreement to cause it to be compliant with Section 409A of the Internal Revenue Code.

Pursuant to the amended 2011 employment agreement, we paid Mr.

Christian a salary at the rate of $ 860,000 per year, adjusted as discussed in the next paragraph below.

Christian was permitted to defer any or all of his annual salary.

Additionally, the Company was authorized to pay for Mr.

Christian’s tax preparation services on an annual basis, the amount of which was subject to income tax as additional compensation.

Pursuant to the 2011 employment agreement, commencing on June 1, 2012, and each anniversary thereafter, the Compensation Committee was required to determine in its discretion the amount of any increase in Mr.

Christian’s then existing annual salary;

provided, however, that such increase would not be less than the greater of 3 % or a cost of living increase based on the consumer price index.

Pursuant to the 2016 amendment, the amended 2011 employment agreement provided that such increase in Mr.

Christian’s then existing salary would not be less than the greater of 4 % or a cost of living increase based on the consumer price index.

The amended 2011 employment agreement also provided that Mr.

Christian was eligible for equity awards under the 2005 Incentive Compensation Plan as shall be approved by the Compensation Committee and bonuses in such amounts as shall be determined pursuant to the terms of the CEO Plan or as otherwise determined by the Compensation Committee in its discretion based on the performance of the Company and the accomplishments of objectives established by the Compensation Committee in consultation with Mr.

Under the amended 2011 employment agreement, Mr.

Christian was eligible to participate, in accordance with their terms, in all medical and health plans, life insurance, profit sharing, 401(k) Plan, pension, and such other employment benefits as are maintained by the Company or its affiliates for other key employees performing services.

During the term of the employment agreement, the Company was required to maintain all existing policies of insurance on Mr.

Christian’s life, including the existing split dollar policy.

The Company was also required to pay for Mr.

Christian to participate in an executive medical plan and to maintain its existing medical reimbursement policy.

Christian was also furnished with an automobile and other fringe benefits as have been afforded him in the past or as are consistent with his position.

In addition, the Company agreed to maintain an office for Mr.

Christian in Sarasota County, Florida.

The 2016 amendment increased the paid vacation time awarded to Mr.

Christian on the anniversary date of the 2011 employment agreement from four weeks to six weeks of paid vacation.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Payments Under the Principal Shareholder Employment Agreement

The amended 2011 employment agreement terminated upon Mr.

Christian’s death on August 19, 2022.

As a result of his passing the Company is required to make several payments to his estate as outlined in his employment agreement, and described above.

In accordance with ASC 712-10-25, Nonretirement Postemployment Benefits , we have accrued all necessary expenses as of September 30, 2022.

As a result of our contractual obligations under the Mr.

Christian’s agreement, Mr.

Christian’s estate is the beneficiary of a gross amount of approximately $ 5.8 million in cash, common stock and a life insurance policy of which $ 3.9 million was recorded upon his passing in the third quarter of 2022, and $ 1.9 million had been accrued for in previous periods.

The estate was the beneficiary of a lump-sum payment of his current base salary plus accrued unused vacation time totaling $ 1.9 million which was paid in October 2022.

Christian’s estate will also be provided with a prorated bonus that Mr.

Christian earned of approximately $ 633,000 to be paid in March 2023.

Christian had approximately $ 65,000 withheld as deferred compensation that will be paid to the estate in January 2023.

Additionally, under the agreement, any award previously granted under the Company’s 2005 Incentive Compensation Plan were immediately vested and provided to the estate.

At the date of Mr.

Christian’s passing, he had approximately 55,000 shares of unvested restricted stock that immediately vested at a price of $ 24.80 for a total of $ 1.4 million in common stock received by the estate.

Christian’s estate is now the beneficiary of the Split Dollar life insurance policy that has a cash surrender value of approximately $ 971,000 .

Under the agreement, the Company will be responsible to pay the estate’s income tax obligation relating to the payout of the life insurance policy.

The estimate of the possible loss related to that tax obligation cannot be made at this time due to uncertainties related to the timing of the transfer.

Lastly, under the agreement, the Company shall continue to pay for the healthcare coverage and life insurance premiums for Mr.

Christian’s spouse for ten years which totals approximately $ 800,000 .

Lada’s Letter Agreement

On August 21, 2022, we entered into a letter employment agreement with Warren S.

Lada, a member of our Board, to serve as our Interim President and CEO following the death of Mr.

Christian, to serve in this capacity while the Company conducted a formal search for a permanent successor to Mr.

Under the terms of the letter agreement we paid Mr.

Lada an annualized base salary of $ 750,000 during his service as Interim President and CEO;

provided local transportation to the Company offices for up to three days a week and he was eligible to participate in the Company’s benefit plans, including the 401(k) plan, as an employee, upon completion of the eligibility requirements.

Forgy’s Employment Agreement

On November 16, 2022, we entered into an employment agreement with Christopher S.

Forgy, who was appointed as our President and CEO effective December 7, 2022.

Forgy’s employment agreement has an initial term of three years , and we and Mr.

Forgy may mutually agree to extend the term for an additional two years.

Either party may provide written notice of its intent not to extend the initial term at least one year prior to the end of the initial term.

Under the agreement, Mr.

Christian is eligible for discretionary and performance bonuses, stock options and/or stock grants in amounts determined by the Compensation Committee and will continue to participate in our benefit plan.

We will maintain insurance policies, will furnish an automobile, will pay for an executive medical plan and will maintain an office for Mr.

Christian at our principal executive offices and in Sarasota County, Florida.

The First Amendment adds that we are authorized to pay for Mr.

Christian’s tax preparation services on an annual basis and that this amount will be subject to income tax as additional compensation.

The agreement provides certain payments to Mr.

Christian in the event of his disability, death or a change in control.

Upon a change in control, Mr.

Christian may terminate his employment.

The agreement also provides generally that, upon a change in control, we will pay Mr.

Christian an amount equal to 2.99 times the average of his total annual salary and bonuses for each of the three immediately preceding periods of twelve consecutive months, plus an additional amount for tax liabilities, related to the payment.

For the three years ended December 31, 2021 Mr.

Christian’s average annual compensation, as defined by the employment agreement, was approximately $ 1,943,000 .

Forgy’s base salary is set at $ 670,000 for the first year and will increase 4 % annually.

If the Company and Mr.

Forgy mutually agree to renew the term of Mr.

Forgy’s employment for an additional two years , Mr.

Forgy’s base salary would increase in the fourth and fifth year by 4 % as well.

Forgy will have the opportunity to earn an annual performance bonus under the CEO Plan.

His bonus in any fiscal year will be in a minimum of 35 % and a maximum of 100 % of his annual base salary as of January 1 of the fiscal year, and will be based on his performance and the achievement of performance goals established by the Compensation Committee within the first 90 days of the fiscal year.

The Board may instead grant Mr.

Forgy a discretionary bonus in the case of a financial, national or global occurrence, or a generally difficult year.

Forgy was granted a $ 50,000 discretionary bonus for the 2022 fiscal year.

Forgy is also eligible for equity awards under the 2005 Incentive Compensation Plan, or any successor equity incentive plan, in accordance with the provisions of that plan that apply to the CEO.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

In addition, if Mr.

Christian’s employment is terminated for any reason, other than for cause, we will continue to provide health insurance and medical reimbursement and maintain existing life insurance policies for a period of ten years , and the current split dollar life insurance policy shall be transferred to Mr.

Christian and his wife, and we shall reimburse Mr.

Christian for any tax consequences of such transfer.

The agreement contains a covenant not to compete restricting Mr.

Christian from competing with us in any of our markets if he voluntarily terminates his employment with us or is terminated for cause, for a three year period thereafter.

The first amendment also entitles Mr.

Christian to receive severance pay equal to 100 % of his then base salary for 24 months payable in equal monthly installments and after the date upon which notice of termination is given, any unvested or time-vested stock options previously granted to Mr.

Christian by us become immediately one hundred percent ( 100 %) vested to the extent permitted by law.

On December 6, 2019, Mr.

Christian agreed to defer approximately $ 100,000 of his 2020 salary to be paid 100 % on January 15, 2021.

On December 16, 2020, Mr.

Christian agreed to defer approximately $ 100,000 of his 2021 salary to be paid 100 % on January 15, 2022.

On December 16, 2021, Mr.

Christian agreed to defer approximately $ 100,000 of his 2022 salary which will be paid 100 % on January 13, 2023.

Forgy will continue to participate in our employee benefit plans, including the medical reimbursement plan, 401(k) plan, deferred compensation plan, and other health and welfare benefit plans.

He will be entitled to five weeks of paid vacation days per calendar year.

The Company will furnish him with an automobile, pay the initiation fee and monthly dues for a non-golf country club membership and provide Mr.

Forgy with a split dollar life insurance agreement with premiums payable by the Company.

Either the Company or Mr.

Forgy may terminate the employment term for any reason generally with 30 days advance notice.

Forgy’s employment is terminated by us for cause, if he resigns without good reason, or if his employment terminates by reason of death or disability, he will receive any accrued but unpaid base salary and any benefits under the Company’s benefit plans (the “accrued amounts.”)

Forgy’s employment is terminated by us without cause or if he resigns for good reason, he will receive the accrued amounts;

continuation of his base salary for the longer of 18 months or the remainder of the three year initial term or the two-year renewal term, as applicable;

any awarded but unpaid annual bonus with respect to any completed fiscal year preceding the termination date;

immediate and full vesting of any unvested shares of restricted stock then held by Mr.

and payment or reimbursement of COBRA premiums for Mr.

Forgy and his spouse for up to 18 months .

Forgy consents to the renewal term and the Company does not consent, Mr.

Forgy will be entitled to the accrued amounts;

an amount equal to 150 % of the sum of (i) Mr.

Forgy’s base salary paid in the prior calendar year plus (ii) his annual bonus earned for the previous fiscal year, immediate and full vesting of any unvested shares of restricted stock then held by Mr.

and payment or reimbursement of COBRA premiums for Mr.

Forgy and his spouse for up to 18 months .

Forgy agreed that, for a period of 12 months after the termination of his employment, he will not (i) solicit business of the type performed by the Company anywhere in the United States;

(ii) solicit from any person who has purchased services from the Company during the three years preceding his termination for business of the type performed by the Company in the United States, or in any other location;

or (iii) offer employment to any person employed by the Company, or entice any such person to leave employment with the Company.

The employment agreement also contains customary confidentiality and non-disparagement covenants.

Change in Control Agreements

4 unchanged sentences

Forgy, Senior Vice President of Operations entered into a Change in Control Agreement.

In July 2020, Eric Christian, Vice President of Digital Strategies entered into a Change in Control Agreement.

In July 2020, Eric Christian, Chief Marketing Officer entered into a Change in Control Agreement.

Eric Christian is the son of Edward K.

Christian, our President, CEO and Chairman.

Christian, our former President, CEO and Chairman.

A change in control is defined to mean the occurrence of (a) any person or group becoming the beneficial owner, directly or indirectly, of more than 30 % of the combined voting power of the Company’s then outstanding securities and Mr.

1 unchanged sentence

(b) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which results in the voting securities of the Company outstanding immediately prior thereto continuing to represent more than 50 % of the combined voting securities of the Company or such surviving entity;

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.

or (c) the approval of the shareholders 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.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

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.

5 unchanged sentences

In addition, if the executive’s employment is terminated by the Company without cause within six months prior to the consummation of a change in control, then the executive shall be paid the lump sum payment within 45 days of such change in control.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Other Related Party Transactions

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 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.

The purchase price was determined through arm’s-length negotiations, and was approved by the Saga Board, and Finance and Audit Committee, in accordance with the requirements of Saga’s Corporate Governance Guidelines for the review of related party transactions.

In connection with this agreement, we received 500 hours of service from New Pointe Systems, a subsidiary of Pearce Development and have agreed to provide 1,000, 30 second, spots of airtime to Pearce Development.

As of December 31, 2020, the obligations from this agreement have been fulfilled.

During 2021, 2020 and 2019, we also paid approximately $ 4,200 , $ 4,100 and $ 4,400 rent per month, respectively to Pearce Development for our Hilton Head studio and office space beginning September 1, 2017.

Effective June 19, 2019, we employed Eric Christian, son of Edward K.

Christian, our President, CEO and Chairman, as our Director of Solution Architecture.

The Audit Committee approved the employment of Mr.

Christian and in July 2020 approved his promotion to Vice President of Digital Strategies.

Stockholders are entitled to receive such dividends as may be declared by our Board of Directors out of funds legally available for such purpose.

Christian, our President, CEO and Chairman at the time, as our Director of Solution Architecture.

Eric Christian was promoted to Vice President of Digital Solutions in July 2020 and was subsequently was promoted to Chief Marketing Officer in February 2023.

The Board of Directors approved the employment of Eric Christian and subsequent promotions.

As previously disclosed, Edward K.

Chrisian passed away in August 2022 and resulted in the converstion of his Class B Shares into Class A Shares that were transferred to an estate planning trust, of which Edward K.

Christian’s surviving spouse, and Eric Christian’s mother is the trustee of.

The estate owns approximately 16 % of the Common Stock outstanding.

As previously disclosed, as a result of the passing of our founder, Chairman, President and CEO, Edward K.

Christian and the resultant transfer of his Class B shares into an estate planning trust resulted in an automatic conversion of each Class B share he held into one fully paid and non-assessable Class A share.

We no longer have any shares of Class B Common Stock issued or outstanding, nor will there be any issued in the future.

Shareholders are entitled to receive such dividends as may be declared by our Board of Directors out of funds legally available for such purpose.

However, no dividend may be declared or paid in cash or property on any share of any class of Common Stock unless simultaneously the same dividend is declared or paid on each share of the other class of common stock.

1 unchanged sentence

Voting Rights.

Holders of shares of Common Stock vote as a single class on all matters submitted to a vote of the stockholders, with each share of Class A Common Stock entitled to one vote and each share of Class B Common Stock entitled to ten votes, except (i) in the election for directors, (ii) with respect to any “going private” transaction between the Company and the principal stockholder, and (iii) as otherwise provided by law.

In the election of directors, the holders of Class A Common Stock, voting as a separate class, are entitled to elect twenty-five percent, or two, of our directors.

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.

Holders of shares of Common Stock vote as a single class on all matters submitted to a vote of the shareholders, with each share of Class A Common Stock entitled to one vote.

Christian’s passing, each share of Class B Common Stock was entitled to ten votes, except (i) in the election for directors, (ii) with respect to any “going private” transaction between the Company and the principal shareholder, and (iii) as otherwise provided by law.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Christian’s passing, in the election of directors, the holders of Class A Common Stock, voting as a separate class, were entitled to elect twenty-five percent, or two, of our directors.

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, were entitled to elect the remaining directors.

The Board of Directors consisted of eight members at December 31, 2022.

Currently, our Board of Directors consists of eight members.

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.

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

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.

Notes to Consolidated Financial Statements — (Continued)

Liquidation Rights.

Upon our liquidation, dissolution, or winding-up, the holders of Class A Common Stock are entitled to share ratably with the holders of Class B Common Stock in accordance with the number of shares held in all assets available for distribution after payment in full of creditors.

In any merger, consolidation, or business combination, the consideration to be received per share by the holders of Class A Common Stock and Class B Common Stock must be identical for each class of stock, except that in any such transaction in which shares of common stock are to be distributed, such shares may differ as to voting rights to the extent that voting rights now differ among the Class A Common Stock and the Class B Common Stock.

Other Provisions.

Each share of Class B Common Stock is convertible, at the option of its holder, into one share of Class A Common Stock at any time.

One share of Class B Common Stock converts automatically into one share of Class A Common Stock upon its sale or other transfer to a party unaffiliated with the principal stockholder or, in the event of a transfer to an affiliated party, upon the death of the transferor.

Upon our liquidation, dissolution, or winding-up, the holders of Class A Common Stock are entitled to share ratably in accordance with the number of shares held in all assets available for distribution after payment in full of creditors.

Commitments and Contingencies

27 unchanged sentences

(c) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.3 years and 4.8 % , respectively, at December 31, 2022.

Performance Fees

Performance Fees and Royalties

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

3 unchanged sentences

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

In 2003, in connection with our acquisition of one FM radio station, WJZK-FM serving the Columbus, Ohio market, we entered into an agreement whereby we would pay the seller up to an additional $ 1,000,000 if we obtain approval from the FCC for a city of license change.

To secure the rights to stream music content over the Internet, we also must obtain performance rights licenses and pay public performance royalties to copyright owners of sound recordings (typically, performing artists and record companies).

We pay the applicable royalty rates to SoundExchange, the organization designated by the Copyright Royalty Board (“CRB”) to collect and distribute royalties under these statutory licenses.

From time to time, SoundExchange notifies us that certain calendar years are subject to routine audits of our royalty payments.

The results of such audits could result in higher royalty payments for the subject years.

There is no guarantee that the licenses and associated royalty rates that currently are available to us will be available to us in the future.

In addition, Congress may consider and adopt legislation that would require us to pay royalties to sound recording copyright owners for broadcasting those recordings on our terrestrial radio stations.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Contingencies

Fair Value Measurements

7 unchanged sentences

Cash and cash equivalents

Short-term investments

Revolving Credit Facility

Our financial instruments are comprised of cash and cash equivalents, and long-term debt.

Our financial instruments are comprised of cash and cash equivalents, short-term investments and long-term debt.

The carrying value of cash and cash equivalents approximate fair value due to their short maturities.

The fair value of cash and cash equivalents is derived from quoted market prices and are considered a level 1.

The fair value of cash and cash equivalents and short-term investments are derived from quoted market prices and are considered a level 1.

Interest on the Credit Facility is at a variable rate, and as such the debt obligation outstanding approximates fair value and is considered a level 2.

1 unchanged sentence

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.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

During the fourth quarter of 2022, 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 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.

1 unchanged sentence

(See Note 3 for the disclosure of certain key assumptions used to develop the unobservable inputs.)

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.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Quarterly Results of Operations (Unaudited)

5 unchanged sentences

Other operating expense (income), net

Impairment of broadcast licenses

Operating income (loss)

12 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.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

During the first quarter of 2022, there was fire damage to a transmission line in our Des Moines, Iowa market.

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

As part of the insurance settlement during the fourth quarter of 2022, the Company received cash proceeds of $ 445,000 , resuling in a gain of $ 445,000 which is recorded in the other (income) expense, net, in the Company’s Consolidated Statements of Income.

In 2012, Congress mandated that the FCC conduct an incentive auction of broadcast television spectrum as set forth in the Middle Class Tax Relief and Job Creation Act of 2012 ("Spectrum Act").

The Spectrum Act authorized the FCC to conduct incentive auctions in which licensees could voluntarily relinquish their spectrum usage rights in order to permit the assignment by auction of new initial licenses subject to flexible use service rules, in exchange for a portion of the resulting auction proceeds.

The Spectrum Act appropriated $1.75 billion to the TV Broadcaster Relocation Fund ("Reimbursement Fund") for costs reasonably incurred by Full Power and Class A broadcast television licensees reassigned to new channels ("repack"), as well as Multichannel Video Programming Distributors ("MVPDs") that incurred costs related to continuing to carry the signals of reassigned broadcast stations.

As part of the FCC’s 2018 Reimbursement Expansion Act, which appropriated $1 billon in additional funds for the Reimbursement Fund and expanded eliglibe entities for reimbursement to include FM stations affected by the repack.

During 2022, the Company received approximately $ 116,000 in reimbursement for our FM stations, which is recorded in the other (income), expense, net, in the Company’s Consolidated Statements of Income.

We may receive additional reimbursements and will record in other (income), expense, net, if we receive anything additional.

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

2 unchanged sentences

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.

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

On March 1, 2023 , the Company’s Board of Directors declared a quarterly cash dividend of $ 0.25 per share on its Class A Common Stock.

This dividend, totaling approximately $ 1,500,000 , will be paid on April 7, 2023 to shareholders of record on March 20, 2023 .

23 unchanged sentences

Christian dated as of February 12, 2016 .

Credit Agreement dated August 18, 2015 entered into between the Company and JPMorgan Chase Bank, N.A., The Huntington National Bank and Citizens Bank .

Asset Purchase Agreement by and among Saga Broadcasting, LLC, Saga Quad States Communications, LLC, Saga Communications, Inc.

and Evening Telegram Company d/b/a Morgan Murphy Media, dated May 9, 2017 .

Asset Purchase Agreement by and among Apex Media Corporation, Pearce Development, LLC f/k/a Apex Real Property, LLC, Saga Quad States Communications, LLC and G.

Dean Pearce, dated May 9, 2017.

Amendment to the Second Amendment and Restated Saga Communications, Inc.

2005 Incentive Compensation Plan as of April 16, 2018.

First Amendment to Credit Agreement dated September 1, 2017 entered into between the Company and JPMorgan Chase Bank, N.A., The Huntington National Bank and Citizens Bank.

Letter of Employment for Christopher S.

Forgy, Senior Vice President / Operations effective May 28, 2018 .

Second Amendment to Credit Agreement dated June 27, 2018 entered into between the Company and JPMorgan Chase Bank, N.A., The Huntington National Bank and Citizens Bank .

Change in Control Agreement of Christopher Forgy dated as of September 28, 2018 .

1 unchanged sentence

Christian dated as of February 26, 2019 .

Assumption Agreement and Amendment of Loan Documents dated May 11, 2020 entered into between the Company and JPMorgan Chase Bank, N.A., The Huntington National Bank, and Citizens Bank .

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.

Letter of Agreement regarding employment of Warren S.

Lada as Interim President and CEO dated August 21, 2022.

Employment Agreement of Christopher Forgy dated as of November 16, 2022.

Letter of Employment of Wayne Leland dated as of November 16, 2022.

Third Amendment to Credit Agreement dated December 19, 2022 between the Company and JPMorgan Chase Bank, N.A., and The Huntington National Bank.

Subsidiaries.

22 unchanged sentences

Exhibit filed with the Company’s Form 8-K filed on October 16, 2013 and incorporated by reference herein.

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/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.

Exhibit filed with the Company’s Form 8-K filed on May 10, 2017 and incorporated by reference herein.

Exhibit filed as Appendix A to the Corporation’s Definitive Proxy Statement (File No.

1 unchanged sentence

Exhibit filed with the Company’s Form 10-Q for the quarter ended June 30, 2018 and incorporated by reference herein.

Exhibit filed with the Company’s Form 8-K filed on June 27, 2018 and incorporated by reference herein.

Exhibit filed with the Company’s Form 8-K filed on September 28, 2018 and incorporated by reference herein.

1 unchanged sentence

Exhibit filed with the Company’s Form 10-K filed on March 13, 2020 and incorporated by reference herein.

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.

Exhibit filed with the Company’s Form 8-K filed on August 25, 2022 and incorporated by reference herein.

Exhibits filed with the Company’s Form 8-K filed on November 16, 2022 and incorporate 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, 2023.

SAGA COMMUNICATIONS, INC.

/s/ Edward K.

/s/ Christopher S.

Christopher S.

President, Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 16, 2023.

/s/ Edward K.

/s/ Christopher S.

President, Chief Executive Officer and

Chairman of the Board

Christopher S.

/s/ Samuel D.

9 unchanged sentences

/s/ Warren Lada

Chairman of the Board and Director

/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