What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-09 · 79 added, 54 removed, 400 unchanged (25% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

(In thousands)

35 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

8 unchanged sentences

Income tax provision

Earnings per share:

Net income (loss)

Earnings (loss) per share:

Weighted average common shares

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

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

For the three and nine months ended September 30, 2023 and 2022

Stockholders’

9 unchanged sentences

Compensation expense related to restricted stock awards

Purchase of shares held in treasury

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

Stockholders’

7 unchanged sentences

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

Net loss, three months ended September 30, 2023

Dividends declared per common share

Compensation expense related to restricted stock awards

Balance at September 30, 2023

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

25 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 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.

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, 2023 and the results of operations for the three and nine months ended September 30, 2023 and 2022.

Results of operations for three and nine months ended September 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 June 30, 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 September 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

Nine Months Ended

September 30,

(In thousands, except per share data)

Net income (loss)

Income allocated to unvested participating securities

4 unchanged sentences

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

Earnings per share:

There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the three and six months ended June 30, 2023 and 2022, respectively.

Earnings (loss) per share:

There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the three and nine months ended September 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 June 30, 2023 and December 31, 2022, we have recorded $ 10.3 million and $ 10.1 million, respectively, of held-to-maturity U.S.

At September 30, 2023 and December 31, 2022, we have recorded $ 10.5 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 $ 10.5 million and $ 10.0 million, respectively.

Our held-to-maturity U.S.

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

Treasury Bills all have original maturity dates ranging from October 2023 to February 2024.

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 June 30, 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 $ 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.

Our allowance for doubtful accounts was $ 497,000 and $ 519,000 at September 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 former CEO.

We have historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period.

30 unchanged sentences

Disaggregation of Revenue

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

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

32 unchanged sentences

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

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

8 unchanged sentences

Common Stock and Treasury Stock

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

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

Christian, passed away on August 19, 2022.

22 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 June 30, 2023:

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

Common Stock Issued

4 unchanged sentences

Balance, December 31, 2022

Balance, June 30, 2023

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

As of September 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 and six months ended June 30, 2023 and 2022, no shares were repurchased under the Stock Buy-Back Program.

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

As of September 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 $ 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.

ROU assets were $ 7.0 million and $ 6.5 million at September 30, 2023 and December 31, 2022 respectively.

Lease liabilities were $ 7.3 million and $ 6.8 million at September 30, 2023 and December 31, 2022, respectively.

During the nine months ended September 30, 2023, we recorded additional ROU assets under operating leases of $ 1,778,000 .

Payments on lease liabilities during the three and nine months ended September 30, 2023 and 2022 totaled $ 470,000 , $ 1,411,000 , $ 466,000 , and $ 1,372,000 , respectively.

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

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.

For the three and nine months ended September 30, 2023 and 2022, our total lease expense was $ 472,000 , $ 1,389,000 , $ 450,000 and $ 1,343,000 , 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 June 30, 2023 (in thousands):

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

Years Ending December 31,

1 unchanged sentence

Present value of lease liabilities (d)

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

(a) Remaining payments are for the three-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 June 30, 2023.

There were no legally binding minimum lease payments for leases signed but not yet commenced at September 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 6.8 years and 5.2 % , respectively, at June 30, 2022.

(d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.6 years and 5.3 % , respectively, at September 30, 2023.

Acquisitions and Dispositions

33 unchanged sentences

Net assets acquired

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 .

An income tax expense of $ 1,110,000 was recorded for the three months ended September 30, 2023 compared to $ 1,295,000 for the three months ended September 30, 2022.

The effective tax rate was approximately 28.9 % for the three months ended September 30, 2023 compared to 108.7 % for the three months ended September 30, 2022.

An income tax expense of $ 2,710,000 was recorded for the nine months ended September 30, 2023 compared to $ 3,350,000 for the nine months ended September 30, 2022.

The effective tax rate was approximately 27.9 % for the nine months ended September 30, 2023 compared to 40.5 % for the nine months ended September 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.

discrete items) occurring during the interim period.

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

SAGA COMMUNICATIONS, INC.

12 unchanged sentences

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 .

2023 Incentive Compensation Plan

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

4 unchanged sentences

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.

The Form of Restricted Stock Option Agreements for Employees and Directors under the 2023 Plan have been filed as exhibits to this Form 10-Q are incorporated by reference.

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 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.

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

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

All outstanding stock options were exercised in 2017.

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 June 30, 2023

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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.

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

Outstanding at January 1, 2023

Non-vested and outstanding at September 30, 2023

For the three and nine months ended September 30, 2023 and 2022, we had $ 250,000 , $ 743,000 , $ 1,049,000 and $ 1,726,000 , respectively, of total compensation expense related to restricted stock-based compensation arrangements.

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

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

The three and nine months ended September 30, 2022 results were impacted by the immediate vesting of Mr.

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

The associated tax benefit recognized for the three and nine months ended September 30, 2023 and 2022 was $ 66,000 , $ 195,000 , $ 41,000 and $ 115,000 , respectively.

Long-Term Debt

The Company has no debt outstanding at December 31, 2022 or June 30, 2023.

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

5 unchanged sentences

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

Interest rates under the Credit Facility are payable, at our option, at alternatives equal to SOFR ( 5.09 % at June 30, 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 ( 5.31 % at September 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 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.

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.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

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 27, 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 November 3, 2023 to shareholders of record on October 11, 2023 and is recorded in dividends payable in our Condensed Consolidated Balance Sheet at September 30, 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.

4 unchanged sentences

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.

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 .

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