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Item 1. Financial Statements

2023-05-10 compared with 2022-11-09 · 96 added, 150 removed, 324 unchanged (43% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

(In thousands)

12 unchanged sentences

Other intangibles, right of use assets, deferred costs and investments, net

Liabilities and stockholders’ equity

Liabilities and shareholders’ equity

Current liabilities:

9 unchanged sentences

Commitments and contingencies

Stockholders’ equity:

Shareholders’ equity:

Additional paid-in capital

1 unchanged sentence

Treasury stock

Total stockholders’ equity

Total liabilities and stockholders' equity

Total shareholders’ equity

Total liabilities and shareholders' equity

The balance sheet at December 31, 2022 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

8 unchanged sentences

Income tax expense

Net income (loss)

Earnings (loss) per share:

Earnings per share:

Weighted average common shares

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three and nine months ended September 30, 2022 and 2021

For the three months ended March 31, 2023 and 2022

Stockholders’

2 unchanged sentences

Net income, three months ended March 31, 2022

Dividends declared per common share

Compensation expense related to restricted stock awards

1 unchanged sentence

Balance at March 31, 2022

Net income, three months ended June 30, 2021

Dividends declared per common share

Compensation expense related to restricted stock awards

Balance at June 30, 2021

Net income, three months ended September 30, 2021

Dividends declared per common share

Compensation expense related to restricted stock awards

Balance at September 30, 2021

Stockholders’

6 unchanged sentences

Balance at March 31, 2023

Net income, three months ended June 30, 2022

Dividends declared per common share

Compensation expense related to restricted stock awards

Balance at June 30, 2022

Net loss, three months ended September 30, 2022

Conversion of shares from Class B to Class A

Dividends declared per common share

Compensation expense related to restricted stock awards

Purchase of shares held in treasury

Balance at September 30, 2022

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

(In thousands)

5 unchanged sentences

Acquisition of property and equipment

Acquisition of broadcast properties

Proceeds from sale and disposal of assets

Proceeds from insurance claims

Other investing activities

2 unchanged sentences

Cash dividends paid

Purchase of treasury shares

Net cash used in financing activities

9 unchanged sentences

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

In our opinion, the accompanying financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of September 30, 2022 and the results of operations for the three and nine months ended September 30, 2022 and 2021.

Results of operations for three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

In our opinion, the accompanying financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of March 31, 2023 and the results of operations for the three months ended March 31, 2023 and 2022.

Results of operations for three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

We own or operate broadcast properties in 27 markets, including 79 FM and 33 AM radio stations and 80 metro signals.

1 unchanged sentence

annual report on Form 10-K for the year ended December 31, 2022.

We have evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2022, for items that should potentially be recognized in these financial statements or discussed within the notes to these financial statements.

We have evaluated events and transactions occurring subsequent to the balance sheet date of March 31, 2023, for items that should potentially be recognized in these financial statements or discussed within the notes to these financial statements.

Earnings Per Share Information

7 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

Net (loss) income

Income allocated to unvested participating securities

Net income available to common stockholders

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:

There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the three months ended September 30, 2022 and 2021, respectively.

Earnings per share:

There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the three months ended March 31, 2023 and 2022, respectively.

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

2 unchanged sentences

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 September 30, 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.

At March 31, 2023 and December 31, 2022, we have recorded $ 10.2 million and $ 10.1 million, respectively, of held-to-maturity U.S.

Treasury Bills at amortized cost basis that have a fair market value of $ 10.2 million and $ 10 million, respectively.

Our held-to-maturity U.S.

Treasury Bills all have original maturity dates ranging from November 2022 to June 2023.

We had no marketable securities at December 31, 2021.

Treasury Bills currently all have original maturity dates ranging from April 2023 to August 2023.

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 euro-dollar rate, prime rate or have been reset at the prevailing market rate at September 30, 2022.

SAGA COMMUNICATIONS, INC.

4 unchanged sentences

Delinquent accounts are based on contractual terms.

We have included in our calculation of our allowance for doubtful accounts, the potential impact of the COVID-19 pandemic on our customers’ businesses and their ability to pay their accounts receivable.

We maintain a specific allowance for estimated losses resulting from the inability of certain customers to make required payments.

1 unchanged sentence

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

Our allowance for doubtful accounts was $ 392,000 and $ 469,000 at September 30, 2022 and December 31, 2021, respectively.

Our allowance for doubtful accounts was $ 526,000 and $ 519,000 at March 31, 2023 and December 31, 2022, respectively.

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 related to the compensation of our CEO.

31 unchanged sentences

Disaggregation of Revenue

Revenues from contracts with customers comprised the following for three and nine months ended September 30, 2022 and 2021:

Revenues from contracts with customers comprised the following for three months ended March 31, 2023 and 2022:

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Types of Revenue

30 unchanged sentences

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

The Company considered the current and expected future economic and market conditions, and other potential indicators of impairment and determined a triggering event had not occurred which would necessitate any interim impairment tests during the nine months ended September 30, 2022.

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

11 unchanged sentences

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 Class B Common Stock generally being entitled to ten votes per share.

Christian, who was also our principal shareholder, held approximately 65 % of the combined voting power of the Company’s Common Stock based on 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 stockholders 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 are 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 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.

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’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.

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.

6 unchanged sentences

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

Currently, our Board of Directors consists of seven members.

Currently, our Board of Directors consists of eight members.

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

5 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through September 30, 2022:

The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through March 31, 2023:

Common Stock Issued

4 unchanged sentences

Balance, December 31, 2022

Conversion of shares from Class B to Class A

Balance, September 30, 2022

Balance, March 31, 2023

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

As of September 30, 2022, we have remaining authorization of $ 18.4 million for future repurchases of our Class A Common Stock.

As of March 31, 2023, we have remaining authorization of $ 18.2 million for future repurchases of our Class A Common Stock.

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

4 unchanged sentences

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

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

During the three and nine months ended September 30, 2022, we repurchased 273 shares for approximately $ 7,000 for payment of withholding taxes related to the vesting of restricted stock.

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

We halted the directions for any additional buybacks under our plan in 2020.

We continue to monitor economic conditions to determine if and when it makes sense to make additional buybacks under our plan.

During the three months ended March 31, 2023 and 2022, no shares were repurchased under the Stock Buy-Back Program.

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

5 unchanged sentences

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

As of September 30, 2022, we do not have any non-cancellable operating lease commitments that have not yet commenced.

As of March 31, 2023, we do not have any non-cancellable operating lease commitments that have not yet commenced.

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

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

ROU assets were $ 5.1 million and $ 6.1 million at September 30, 2022 and December 31, 2021 respectively.

Lease liabilities were $ 5.4 million and $ 6.4 million at September 30, 2022 and December 31, 2021, respectively.

During the nine months ended September 30, 2022, we recorded additional ROU assets under operating leases of $ 445,000 .

Payments on lease liabilities during the three and nine months ended September 30, 2022 and 2021 totaled $ 466,000 , $ 1,372,000 , $ 451,000 , and $ 1,335,000 , respectively.

ROU assets were $ 6.2 million and $ 6.5 million at March 31, 2023 and December 31, 2022 respectively.

Lease liabilities were $ 6.4 million and $ 6.8 million at March 31, 2023 and December 31, 2022, respectively.

During the three months ended March 31, 2023, we recorded additional ROU assets under operating leases of $ 255,000 .

Payments on lease liabilities during the three months ended March 31, 2023 and 2022 totaled $ 526,000 , and $ 478,000 , respectively.

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

For the three and nine months ended September 30, 2022 and 2021, our total lease expense was $ 450,000 , $ 1,343,000 , $ 443,000 and $ 1,325,000 , respectively.

For the three months ended March 31, 2023 and 2022, our total lease expense was $ 460,000 , and $ 444,000 , respectively.

Short-term lease costs are de minimis in nature.

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

We have no financing leases and minimum annual rental commitments under non-cancellable operating leases consisted of the following at September 30, 2022 (in thousands):

We have no financing leases and minimum annual rental commitments under non-cancellable operating leases consisted of the following at March 31, 2023 (in thousands):

Years Ending December 31,

1 unchanged sentence

Present value of lease liabilities (d)

(a) Remaining payments are for the three-months ending December 31, 2022

(a) Remaining payments are for the nine-months ending December 31, 2023

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

There were no legally binding minimum lease payments for leases signed but not yet commenced at September 30, 2022.

There were no legally binding minimum lease payments for leases signed but not yet commenced at March 31, 2023.

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

(d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.1 years and 4.3 % , respectively, at September 30, 2022.

(d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.1 years and 4.8 % , respectively, at March 31, 2023.

Acquisitions and Dispositions

5 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.

2023 Dispositions

On February 28, 2023, we closed on an agreement to sell WPVQ-AM located in our Greenfield, Massachusetts market to Hampden Communications Corp for $ 2,000 .

We recorded a $ 43,000 loss on the sale in our other operating (income) expense, net line item on our Condensed Consolidated Statement of Operations.

On March 20, 2023, we submitted a request to the FCC to cancel our FCC license for WHMQ-AM located in our Greenfield, Massachusetts market.

We recorded a $ 22,000 loss on the disposal in our other operating (income) expense, net line item on our Condensed Consolidated Statement of Operations.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2022 Acquisitions

3 unchanged sentences

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

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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.

Condensed Consolidated Balance Sheet of 2023 and 2022 Acquisitions:

17 unchanged sentences

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

An income tax expense of $ 1,295,000 was recorded for the three months ended September 30, 2022 compared to $ 1,375,000 for the three months ended September 30, 2021.

The effective tax rate was approximately 108.7 % for the three months ended September 30, 2022 compared to 28.5 % for the three months ended September 30, 2021.

An income tax expense of $ 3,350,000 was recorded for the nine months ended September 30, 2022 compared to $ 3,030,000 for the nine months ended September 30, 2021.

The effective tax rate was approximately 40.5 % for the nine months ended September 30, 2022 compared to 28.9 % for the nine months ended September 30, 2021.

An income tax expense of $ 350,000 was recorded for the three months ended March 31, 2023 compared to $ 480,000 for the three months ended March 31, 2022.

The effective tax rate was approximately 27.6 % for the three months ended March 31, 2023 compared to 28.5 % for the three months ended March 31, 2022.

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

discrete items) occurring during the interim period.

The current quarter tax rate was impacted by $ 3.8 million in expenses 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.

1 unchanged sentence

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.

Incentive Compensation Plans

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”).

7 unchanged sentences

Stock options granted under the Second Restated 2005 Plan may be for terms not exceeding ten (10) 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 Saga Communications, Inc.

2023 Incentive Compensation Plan.

At our Annual Meeting on May 8, 2023 this plan was approved by our shareholders.

Stock-Based Compensation

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

therefore, there was no compensation expense related to stock options for the three and nine months ended September 30, 2022 and 2021, respectively.

There were no stock options granted during 2022 or 2021 and there were no stock options outstanding as of September 30, 2022.

therefore, there was no compensation expense related to stock options for the three months ended March 31, 2023 and 2022, respectively.

There were no stock options granted during 2023 or 2022 and there were no stock options outstanding as of March 31, 2023.

All outstanding stock options were exercised in 2017.

The following summarizes the restricted stock transactions for the three and nine months ended September 30, 2022:

The following summarizes the restricted stock transactions for the three months ended March 31, 2023:

Outstanding at January 1, 2023

Non-vested and outstanding at September 30, 2022

Non-vested and outstanding at March 31, 2023

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

For the three and nine months ended September 30, 2022 and 2021, we had $ 1,049,000 , $ 1,726,000 , $ 348,000 and $ 1,048,000 , respectively, of total compensation expense related to restricted stock-based compensation arrangements.

For the three months ended March 31, 2023 and 2022, we had $ 245,000 and $ 339,000 , respectively, of total compensation expense related to restricted stock-based compensation arrangements.

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

The increase in the expense for the three and nine months ended September 30, 2022 is due to the immediate vesting of Mr.

Christian’s restricted stock upon his death per his employment agreement of approximately $ 700,000 .

The associated tax benefit recognized for the three and nine months ended September 30, 2022 and 2021 was $ 41,000 , $ 115,000 , $ 30,000 and $ 94,000 , respectively.

The associated tax benefit recognized for the three months ended March 31, 2023 and 2022 was $ 64,000 , and $ 37,000 , respectively.

Long-Term Debt

On October 27, 2021, we used $ 10 million from funds generated by operations to voluntarily pay down the remaining amounts on our Revolving Credit Facility and as such, have no debt outstanding at September 30, 2022.

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

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, 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 in the event LIBOR is no longer available.

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

We are currently working on extending our credit agreement with similar terms and conditions as the existing facility.

The Company has no debt outstanding at December 31, 2022 or March 31, 2023.

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 (the “Lenders”), 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.

1 unchanged sentence

These debt issuance costs are included in other assets, net in the consolidated balance sheets.

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

As a result of the Second Amendment to our Credit Facility (the “Second Amendment”), the Company 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 ( 3.065 % at September 30, 2022), 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 benchmark 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 ( 4.870 % at March 31, 2023), 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.

The Credit Facility contains a number of financial covenants (all of which we were in compliance with at September 30, 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.

We had approximately $ 50 million of unused borrowing capacity under the Revolving Credit Facility at September 30, 2022.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Under the Third Amendment, we now pay quarterly commitment fees of 0.25 % per annum on the unused 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 March 31, 2023) which, among other things, require us to maintain specified financial ratios and impose certain limitations on us with respect to investments, additional indebtedness, dividends, distributions, guarantees, liens and encumbrances.

We have approximately $ 50 million of unused borrowing capacity under the Revolving Credit Facility at both March 31, 2023 and December 31, 2022.

From time to time, the Company may be involved in various legal proceedings that are incidental to the Company’s business.

In management’s opinion, the Company is not a party to any current legal proceedings that are material to its financial condition, either individually or in the aggregate.

On September 20, 2022 , the Company’s Board of Directors declared a quarterly cash dividend of $ 0.25 per share and 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 and is recorded in dividends payables in our Condensed Consolidated Balance Sheet at September 30, 2022.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Subsequent to the quarter ending March 31, 2023, on May 9, 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 June 16, 2023 to shareholders of record on May 22, 2023 .

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 , was paid on April 7, 2023 to shareholders of record on March 20, 2023 and is recorded in dividends payables in our Condensed Consolidated Balance Sheet at March 31, 2023.

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 Class 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 Condensed 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 special cash dividend of $ 2.00 per share on its Class 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.

3 unchanged sentences

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 .

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 .

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 which was recorded in other (income) expense, net in the Company’s Condensed Consolidated Statements of Income at March 31, 2021.

We received additional cash proceeds of $ 290,000 in the third quarter of 2021, resulting in a gain of $ 290,000 .

The total gain of $ 540,000 was recorded in other (income) expense, net, at December 31, 2021 in the Company’s Consolidated Statements of Income in our most recent Form 10-K.

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 , resulting in a gain of $ 445,000 which is recorded in the other (income) expense, net, in the Company’s Consolidated Statements of Income in our annual report on Form 10-K for the year ended December 31, 2022.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Related Party Transactions

Payments Under the Principal Stockholder Employment Agreement

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.

The 2018 Reimbursement Expansion Act, appropriated $1 billion in additional funds for the Reimbursement Fund and expanded eligible 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 in our annual report on Form 10-K for the year ended December 31, 2022.

During the first quarter of 2023, we received approximately $ 115,000 in reimbursement for our FM stations, which is recorded in other (income), expense, net, in the Company’s Condensed Consolidated Statement of Operations.

We do not anticipate receiving any additional reimbursements related to this.

Commitments and Contingencies

As previously disclosed Mr.

Christian passed away 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, as described in our annual report on Form 10-K for the year ended December 31, 2021.

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 $ 6.0 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 $ 2.1 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 $ 2.1 million which was paid in October 2022.

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

Christian earned of approximately $ 700,000 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 spouse is now the beneficiary of the Split Dollar life insurance policy that has a cash surrender value of approximately $ 975,000 .

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 .

As a result of his passing the Company was required to make several payments to his estate as outlined in his employment agreement, as described in our annual report on Form 10-K for the year ended December 31, 2022.

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

However, 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.

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

What changed 10-Q

Item 1. Financial Statements