What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-10 · 91 added, 57 removed, 363 unchanged (29% of the section changed)

39 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands, except per share data)

7 unchanged sentences

Income before income tax expense

Income tax expense

Income tax provision

Earnings per share:

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three months ended March 31, 2023 and 2022

For the three and six months ended June 30, 2023 and 2022

Stockholders’

6 unchanged sentences

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

Purchase of shares held in treasury

Balance at June 30, 2022

Stockholders’

6 unchanged sentences

Balance at March 31, 2023

Net income, three months ended June 30, 2023

Forfeiture of restricted stock

Dividends declared per common share

Compensation expense related to restricted stock awards

Purchase of shares held in treasury

Balance at June 30, 2023

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

(In thousands)

Statement of Cash Flows

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Deferred income tax expense

Amortization of deferred costs

Compensation expense related to restricted stock awards

Loss on sale of assets, net

Other (gain) loss, net

Barter (revenue) expense, net

Deferred and other compensation

Changes in assets and liabilities:

(Increase) decrease in receivables and prepaid expenses

Increase (decrease) in accounts payable, accrued expenses, and other liabilities

Total adjustments

Net cash provided by operating activities

2 unchanged sentences

Redemption of short-term investments

Acquisition of property and equipment

Acquisition of property and equipment (Capital Expenditures)

Acquisition of broadcast properties

Proceeds from sale and disposal of assets

14 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 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.

In our opinion, the accompanying financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of June 30, 2023 and the results of operations for the three and six months ended June 30, 2023 and 2022.

Results of operations for three and six months ended June 30, 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 March 31, 2023, 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 June 30, 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

Six Months Ended

(In thousands, except per share data)

Income allocated to unvested participating securities

5 unchanged sentences

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.

There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the three and six months ended June 30, 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 March 31, 2023 and December 31, 2022, we have recorded $ 10.2 million and $ 10.1 million, respectively, of held-to-maturity U.S.

At June 30, 2023 and December 31, 2022, we have recorded $ 10.3 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 $ 10.3 million and $ 10 million, respectively.

Our held-to-maturity U.S.

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

Treasury Bills all have original maturity dates ranging from August 2023 to December 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 March 31, 2023.

SAGA COMMUNICATIONS, INC.

7 unchanged sentences

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

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

Our allowance for doubtful accounts was $ 476,000 and $ 519,000 at June 30, 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 months ended March 31, 2023 and 2022:

Revenues from contracts with customers comprised the following for three and six months ended June 30, 2023 and 2022:

Three Months Ended

Six Months Ended

(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 three months ended March 31, 2023.

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.

20 unchanged sentences

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.

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 stockholder, and (iii) as otherwise provided by law.

10 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 March 31, 2023:

The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through June 30, 2023:

Common Stock Issued

4 unchanged sentences

Balance, December 31, 2022

Balance, March 31, 2023

Balance, June 30, 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 March 31, 2023, we have remaining authorization of $ 18.2 million for future repurchases of our Class A Common Stock.

As of June 30, 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.

6 unchanged sentences

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.

During the three and six months ended June 30, 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 March 31, 2023, we do not have any non-cancellable operating lease commitments that have not yet commenced.

As of June 30, 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 $ 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.

ROU assets were $ 7.1 million and $ 6.5 million at June 30, 2023 and December 31, 2022 respectively.

Lease liabilities were $ 7.4 million and $ 6.8 million at June 30, 2023 and December 31, 2022, respectively.

During the six months ended June 30, 2023, we recorded additional ROU assets under operating leases of $ 1,550,000 .

Payments on lease liabilities during the three and six months ended June 30, 2023 and 2022 totaled $ 415,000 , $ 941,000 , $ 428,000 , and $ 906,000 , respectively.

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

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

For the three and six months ended June 30, 2023 and 2022, our total lease expense was $ 457,000 , $ 917,000 , $ 449,000 and $ 893,000 , 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 March 31, 2023 (in thousands):

We have no financing leases and minimum annual rental commitments under non-cancellable operating leases consisted of the following at June 30, 2023 (in thousands):

Years Ending December 31,

1 unchanged sentence

Present value of lease liabilities (d)

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

(a) Remaining payments are for the six-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 March 31, 2023.

There were no legally binding minimum lease payments for leases signed but not yet commenced at June 30, 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 4.8 % , respectively, at March 31, 2023.

(d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.8 years and 5.2 % , respectively, at June 30, 2022.

Acquisitions and Dispositions

33 unchanged sentences

Net assets acquired

On March 18, 2020, the Families First Coronavirus Response Act ("FFCR Act"), and on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") were each enacted in response to the COVID-19 pandemic.

The FFCR Act and the CARES Act contain numerous tax provisions, such as deferring payroll payments, establishing a credit for the retention of certain employees, relaxing limitations on the deductibility of interest, and updating the definition of qualified improvement property.

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

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.

An income tax expense of $ 1,250,000 was recorded for the three months ended June 30, 2023 compared to $ 1,575,000 for the three months ended June 30, 2022.

The effective tax rate was approximately 27.2 % for the three months ended June 30, 2023 compared to 29.2 % for the three months ended June 30, 2022.

An income tax expense of $ 1,600,000 was recorded for the six months ended June 30, 2023 compared to $ 2,055,000 for the six months ended June 30, 2022.

The effective tax rate was approximately 27.3 % for the six months ended June 30, 2023 compared to 29.0 % for the six months ended June 30, 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.

3 unchanged sentences

Stock-Based Compensation

Incentive Compensation Plans

2005 Incentive Compensation Plan

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

2 unchanged sentences

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

The Second Restated 2005 Plan allows for the granting of restricted stock, restricted stock units, incentive stock options, nonqualified stock options, and performance awards to eligible employees and non-employee directors.

The number of shares of Common Stock that may be issued under the Second Restated 2005 Plan may not exceed 370,000 shares of Class B Common Stock, or 990,000 shares of Class A Common Stock of which up to 620,000 shares of Class A Common Stock may be issued pursuant to incentive stock options and 370,000 shares of Class A Common Stock may be issuable upon conversion of Class B Common Stock.

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

The Second Restated 2005 Plan allowed for the granting of restricted stock, restricted stock units, incentive stock options, nonqualified stock options, and performance awards to eligible employees and non-employee directors.

The number of shares of Common Stock that was allowed to be issued under the Second Restated 2005 Plan was not to exceed 370,000 shares of Class B Common Stock, or 990,000 shares of Class A Common Stock of which up to 620,000 shares of Class A Common Stock were to be issued pursuant to incentive stock options and 370,000 shares of Class A Common Stock were to be issued upon conversion of Class B Common Stock.

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

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 (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 options granted under the Second Restated 2005 Plan were to be for terms not exceeding ten (10) years from the date of grant and could not be exercised at a price which was less than 100% of the fair market value of shares at the date of grant .

On May 8, 2023 our shareholders approved the 2023 Incentive Compensation Plan (the “2023 Plan”).

The 2023 Plan replaces the Second Restated 2005 Plan.

The Board of Directors does not intend to make any further awards under the Second Restated 2005 Plan.

However, each outstanding award under the Second Restated 2005 Plan will remain outstanding under the Second Restated 2005 Plan and will continue to be governed under its terms and any applicable award agreement.

The 2023 Plan allows for the granting of restricted stock, restricted stock units, incentive stock options, nonqualified stock options, and performance awards, including cash to eligible employees and non-employee directors of the Company and its subsidiaries.

The number of shares of Common Stock that may be issued under the 2023 Plan may not exceed 600,000 shares of Class A Common Stock.

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 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.

therefore, there was no compensation expense related to stock options for the three and six months ended June 30, 2023 and 2022, respectively.

There were no stock options granted during 2023 or 2022 and there were no stock options outstanding as of June 30, 2023.

All outstanding stock options were exercised in 2017.

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

The following summarizes the restricted stock transactions for the three and six months ended June 30, 2023:

Outstanding at January 1, 2023

Non-vested and outstanding at March 31, 2023

Non-vested and outstanding at June 30, 2023

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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.

For the three and six months ended June 30, 2023 and 2022, we had $ 248,000 , $ 493,000 , $ 338,000 and $ 677,000 , respectively, of total compensation expense related to restricted stock-based compensation arrangements.

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

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

The associated tax benefit recognized for the three and six months ended June 30, 2023 and 2022 was $ 65,000 , $ 129,000 , $ 37,000 and $ 74,000 , respectively.

Long-Term Debt

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

The Company has no debt outstanding at December 31, 2022 or June 30, 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.

2 unchanged sentences

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

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 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 SOFR ( 4.870 % at March 31, 2023), plus 1 % to 2 % or the base rate plus 0 % to 1 % .

Interest rates under the Credit Facility are payable, at our option, at alternatives equal to SOFR ( 5.09 % at June 30, 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.

2 unchanged sentences

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.

The Credit Facility contains a number of financial covenants (all of which we were in compliance with at June 30, 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 had approximately $ 50 million of unused borrowing capacity under the Revolving Credit Facility at both June 30, 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.

2 unchanged sentences

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 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 was 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.

This dividend, totaling approximately $ 1,500,000 , was paid on April 7, 2023 to shareholders of record on March 20, 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 $ 13,800,000 , was paid on January 13, 2023 to shareholders of record on December 21, 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 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 .

24 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements