What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-15 compared with 2023-03-16 · 142 added, 149 removed, 961 unchanged (23% of the section changed)

39 unchanged sentences

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

6 unchanged sentences

The information required by this item is incorporated by reference from the information contained in our Proxy Statement for the 2024 Annual Meeting of Shareholders to be filed not later than 120 days after the end of the Company’s fiscal year.

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

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We compared the cash flow models prepared by management to historical revenues and profit margins as well as third-party market data to evaluate the reasonableness of the assumptions.

We evaluated historical trends in assessing the reasonableness of growth rate assumptions and performed sensitivity analysis of certain significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in these assumptions.

We evaluated historical trends in assessing the reasonableness of growth rate assumptions and performed sensitivity analysis of significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in these assumptions.

We performed procedures to verify the mathematical accuracy of the calculations of broadcast license impairment used by management.

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Accounts payable

Accrued expenses:

Accrued payroll and payroll taxes

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Corporate general and administrative

Other operating (income) expense, net

Impairment of intangible assets

Operating income (loss)

Other operating expense (income), net

Operating income

Other (income) expenses:

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Interest income

Income (loss) before income tax expense (benefit)

Income tax provision (benefit):

Net income (loss)

Earnings (loss) per share:

Income before income tax expense

Income tax provision:

Earnings per share:

Weighted average common shares

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(In thousands)

Statement of Cash Flows

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

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

Depreciation and amortization

Deferred income tax expense (benefit)

Impairment of intangible assets

Deferred income tax expense

Amortization of deferred costs

Compensation expense related to restricted stock awards

(Gain) loss on sale of assets, net

Loss on sale of assets, net

(Gain) on insurance claims

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Redemption of short-term investments

Acquisition of property and equipment

Acquisition of property and equipment (Capital Expenditures)

Acquisition of broadcast properties

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Saga Communications, Inc.

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

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.

is a media company whose business is devoted to acquiring, developing and operating broadcast properties including opportunities complimentary to our core radio business including digital, e-commerce and non-traditional revenue initiatives.

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

Principles of Consolidation

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We perform ongoing credit evaluations of our customers and generally do not require collateral.

We maintain an allowance for doubtful accounts at a level which we believe is sufficient to cover potential credit losses.

We maintain an allowance for credit losses at a level which we believe is sufficient to cover potential credit losses.

Cash and Cash Equivalents

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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.

At December 31, 2023 and 2022, we have recorded $ 10.6 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 $ 10.6 million and $ 10.0 million respectively.

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.

Treasury Bills all have original maturity dates ranging from March 2024 to July 2024.

Saga Communications, Inc.

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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, 2023.

Allowance for Doubtful Accounts

A provision for doubtful accounts is recorded based on our judgment of the collectability of receivables.

Allowance for Credit Losses

A provision for credit losses is recorded based on our judgment of the collectability of receivables.

Amounts are written off when determined to be fully uncollectible.

Delinquent accounts are based on contractual terms.

The activity in the allowance for doubtful accounts during the years ended December 31, 2022, 2021 and 2020 was as follows:

The activity in the allowance for credit losses during the years ended December 31, 2023, 2022 and 2021 was as follows:

Uncollectible

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

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

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

Christian, passed away on August 19, 2022.

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

The Company currently intends to declare regular quarterly cash dividends, we well as variable dividends in accordance with the terms of our variable dividend policy.

The Company may also declare special dividend in future periods.

The declaration and payment of any future dividend, whether fixed, special or based on the variable policy will remain at the full discretion of the Board and will depend on the Company’s financial results, cash requirements, future expectations and other pertinent factors.

On December 7, 2023 , the Company’s Board of Directors declared a special cash dividend of $ 2.00 per share on its Classes A Common Stock.

This dividend, totaling approximately $ 12,500,000 , was paid on January 12, 2024 to shareholders of record on December 20, 2023 and is recorded in dividends payable in our Consolidated Balance Sheet at December 31, 2023.

On November 16, 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 December 15, 2023 to shareholders of record on November 27, 2023 .

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 .

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 .

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

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 .

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.

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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 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.

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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.

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.

On March 4, 2020, our Board of Directors declared a regular quarterly cash dividend of $ 0.32 per share on its Classes A and B Common Stock.

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.

Stock-Based Compensation

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See Note 7 — Stock-Based Compensation for further details regarding the expense calculated under the fair value based method.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

We serve twenty-seven radio markets (reporting units) that aggregate into one operating segment (Radio), which also qualifies as a reportable segment.

We operate under one reportable busines segment for which segment disclosure is consistent with the management decision-making process that determines the allocation of resources and the measuring of performance.

We operate under one reportable business segment for which segment disclosure is consistent with the management decision-making process that determines the allocation of resources and the measuring of performance.

The Chief Operating Decision Maker (“CODM”) evaluates the results of the radio operating segment and makes operating and capital investment decisions based at the Company level.

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We continually review our operating segment classification to align with operational changes in our business and may make changes as necessary.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Earnings Per Share

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The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security.

We have participating securities related to restricted stock units, granted under our Second Amended and Restated 2005 Incentive Compensation Plan, that earn dividends on an equal basis with common shares.

We have participating securities related to restricted stock units, granted under our Second Amended and Restated 2005 Incentive Compensation Plan and our 2023 Incentive Compensation Plan, that earn dividends on an equal basis with common shares.

In applying the two-class method, earnings are allocated to both common shares and participating securities.

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

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

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.

Notes to Consolidated Financial Statements — (Continued)

Recent Accounting Pronouncements

New Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which requires expanded disclosure of significant segment expenses and other segment items on an annual and interim basis.

ASU 2023-07 is effective for us for annual periods beginning after January 1, 2024 and interim periods beginning after January 1, 2025.

We are currently evaluating the impact ASU 2023-07 will have on our financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires expanded disclosure of our income rate reconciliation and income taxes paid.

ASU 2023-09 is effective for us for annual periods beginning after January 1, 2025.

We are currently evaluating the impact ASU 2023-09 will have on our financial statement disclosures .

Nature of goods and services

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

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Disaggregation of Revenue

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Other Revenue

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Contract Liabilities

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If the carrying amount of goodwill in a reporting unit is greater than the implied value of goodwill determined by completing a hypothetical purchase price allocation using estimated fair value of the reporting unit, the carrying amount of goodwill in that reporting unit is reduced to its implied value.

We evaluate amortizable intangible assets for recoverability when circumstances indicate impairment may have occurred, using an undiscounted cash flow methodology.

If the future undiscounted cash flows for the intangible asset

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

We evaluate amortizable intangible assets for recoverability when circumstances indicate impairment may have occurred, using an undiscounted cash flow methodology.

If the future undiscounted cash flows for the intangible asset are less than net book value, then the net book value is reduced to the estimated fair value.

are less than net book value, then the net book value is reduced to the estimated fair value.

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

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We completed our impairment annual impairment test of broadcast licenses during the fourth quarter of 2023 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 2022, the fourth quarter of 2021 and the year ended 2020.

The following table reflects certain key estimates and assumptions used in the impairment tests during the fourth quarter ended 2023, the fourth quarter of 2022 and the fourth quarter of 2021.

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

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(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.

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

(3) the discount rate decreased from 2021 and remained relatively consistent after that;

and (4) current year revenue projections decreased with amounts previously projected for 2023.

Discount rates

12.3 % - 12.6

12.6 % - 13.0

Operating profit margin ranges

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2021 Impairment Test

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

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

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

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

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

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

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

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

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

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

Champaign, Illinois;

Charleston, South Carolina;

Columbus, Ohio;

Harrisonburg, Virginia;

Hilton Head, South Carolina;

Mitchell, South Dakota;

and Ocala, Florida markets.

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

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

Champaign, Illinois;

Charleston, South Carolina;

Columbus, Ohio;

Harrisonburg, Virginia;

Mitchell, South Dakota;

Spencer, Iowa and Springfield, Illinois.

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.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

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.

During the fourth quarter of 2023, 2022 and 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.

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Balance at December 31, 2023

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Other Intangible Assets

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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 or 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.

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.

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.

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

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 (collectively, 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.

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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.

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

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 December 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.

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.

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

Saga Communications, Inc.

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Use of treasury shares for 401(k) match

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 $ 3,375,000 was recorded for the year ended December 31, 2023 compared to income tax expense of $ 4,800,000 for the year ended December 31, 2022.

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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.

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Deferred tax assets:

Allowance for doubtful accounts

Allowance for credit losses

Other accrued liabilities

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Net deferred tax liabilities

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

At December 31, 2023 and December 31, 2022, we do no t have a valuation allowance for net deferred tax assets.

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.

At December 31, 2023 and 2022, net deferred tax liabilities include a deferred tax asset of $ 1,350,000 and $ 1,313,000 , respectively, relating to deferred compensation, stock-based compensation expense, accrued compensation, the allowance for credit losses, and other accrued expenses.

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

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Total Income Tax Provision

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

The reconciliation of income tax at the U.S.

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The 2023, 2022 and 2021 effective tax rates exceed the federal statutory rate primarily due to non-deductible compensation related expenses and state income taxes.

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

The Company files income taxes in the U.S.

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For the years ended December 31, 2023, 2022 and 2021, we had $-, $-, and $ 600 , respectively, tax-related interest and penalties and had $ 0 accrued at December 31, 2023 and 2022.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Stock-Based Compensation

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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, 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 Class A Common Stock 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 may not exceed 370,000 shares of Class B Common Stock, 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 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 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 options granted under the Second Restated 2005 Plan were to be for terms not exceeding ten 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”).

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

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Treasury yield curve in effect at the time of grant.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

There were no options granted during 2023, 2022 and 2021 and there were no stock options outstanding as of December 31, 2023.

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The weighted average grant date fair value of restricted stock that granted during 2023, 2022 and 2021 was $ 2,850,000 , $ 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 $ 4,132,000 , $ 2,397,000 and $ 2,354,000 at December 31, 2023, 2022 and 2021, respectively.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

For the years ended December 31, 2023, 2022 and 2021 we had $ 1,116,000 , $ 1,858,000 and $ 1,335,000 , respectively, of total compensation expense related to restricted stock-based arrangements.

1 unchanged sentence

The associated tax benefit recognized for the years ended December 31, 2023, 2022 and 2021 was $ 294,000 , $ 149,000 and $ 121,000 , respectively.

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Employee Benefit Plans

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Notes to Consolidated Financial Statements — (Continued)

Pending Acquisitions

On February 13, 2024, we entered into an agreement to purchase the assets of WKOA (FM), WKHY (FM), WASK (FM), WXXB (FM), WASK (AM) and W269DJ from Neuhoff Communications, Inc.

serving the Greater Lafayette, Indiana radio market for $ 5.3 million which we expect to finance through funds generated from operations or borrowings under our credit agreement.

We expect to close on this acquisition in the second quarter of 2024.

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 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 items in our Consolidated Statement of Operations.

2022 Acquisitions

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

2020 Acquisitions

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

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

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

Saga Communications, Inc.

Notes to Consolidated Financial Statements — (Continued)

Condensed Consolidated Balance Sheet of 2023 and 2022 Acquisitions:

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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 his passing the Company was 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 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.

Christian’s estate was 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.

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

Christian earned of approximately $ 633,000 which was paid in March 2023.

Christian had approximately $ 65,000 withheld as deferred compensation that was 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.

29 unchanged sentences

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 was granted a $ 50,000 discretionary bonus for the 2022 fiscal year and a $ 245,000 discretionary bonus for the 2023 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.

26 unchanged sentences

In December 2007, Samuel D.

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

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

Bush, Senior Vice President and Chief Financial Officer, and Catherine Bobinski, Senior Vice President/Finance, Chief Accounting Officer and Corporate Controller, entered into Change in Control Agreements.

In September 2018, Christopher S.

22 unchanged sentences

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.

Chrisian passed away in August 2022 and resulted in the conversion 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.

As previously disclosed, as a result of the passing of our founder and former 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.

20 unchanged sentences

We recognize lease expense for these leases on a straight-line basis over the lease term and combine lease and non-lease components for all leases.

Right-of-use ("ROU") assets and lease liabilities are recorded on the balance sheet for all leases with an expected term of at least one year.

Some leases include one or more options to renew .

26 unchanged sentences

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

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

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

and (4) 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.

(2) entered into an Interim License Agreement with Broadcast Music, Inc.

that was effective January 1, 2022 and will remain in effect until the date on which the parties reached agreement as to, or there is court determination of, new interim or final fees, terms, and conditions of a new license for the five year period commencing on January 1, 2022 and concluding on December 31, 2026;

(3) reached an agreement with the Society of European Stage Authors and Composers that is retroactive to January 1, 2016 and is currently on an interim license at the rate that was in place at the end of 2022 and (4) in February 2022, RMLC and Global Music Rights (“GMR”) announced that the conditions of their agreement to settle the GMR-RMLC antitrust and/or unfair competition litigations had been reached and we have entered into an agreement with GMR.

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).

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

During the fourth quarter of 2023, 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.

2 unchanged sentences

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.

The categorization of the framework used to price the assets is considered a level 3, due to the subjective nature of the unobservable inputs used to determine the fair value.

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

Quarterly Results of Operations (Unaudited)

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Notes to Consolidated Financial Statements — (Continued)

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 billon 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.

During the first quarter of 2023, we received approximately $ 115,000 in reimbursement for our FM stations.

Both of these reimbursements are recorded in other (income) expense, net in the Company’s Consolidated Statement of Operations.

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

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").

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.

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.

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

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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.

The gain is recorded in the other operating (income) expense, net in the Company’s Consolidated Statements of Income.

During the first quarter of 2020, there was weather related damage to an antenna in our Keene, New Hampshire market.

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

The insurance settlement was finalized during the first quarter and we received cash proceeds of $ 208,000 , resulting in a gain of $ 208,000 .

The gain is recorded in other (income) expense, net in the Company’s Consolidated Statements of Income.

Subsequent Events

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.

On February 7, 2024 , 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 $ 1,600,000 , will be paid on March 8, 2024 to shareholders of record on February 20, 2024 .

On March 6, 2024 the Company’s Board of Directors declared a variable cash dividend of $ 0.60 per share on its Class A Common Stock.

This dividend, totaling approximately $ 3,800,000 , will be paid on April 5, 2024 to shareholders of record on March 18, 2024 .

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Bush dated as of December 28, 2007.

Change in Control Agreement of Marcia K.

Lobaito dated as of December 28, 2007 .

Change in Control Agreement of Catherine A.

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

Saga Communications, Inc.

2023 Incentive Compensation Plan

Form of Restricted Stock Option Agreement for Employees under the Saga Communications, Inc.

2023 Incentive Compensation Plan

Form of Restricted Stock Option Agreement for Directors under the Saga Communications, Inc.

2023 Incentive Compensation Plan

Subsidiaries.

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

Saga Communications, Inc.

Policy for Recovery of Erroneously Awarded Compensation

Inline XBRL Instance Document

23 unchanged sentences

Exhibit filed with the Company’s Form 8-K filed on March 1, 2019 and incorporated by reference herein.

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-K for the year ended December 31, 2019 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.

Exhibits filed with the Company’s Form 8-K filed on November 16, 2022 and incorporated by reference herein.

Exhibit filed wit the Company’s Form 10-K for the year ended December 31, 2022 and incorporated by reference herein.

Exhibit filed with the Company’s Form S-8 filed on August 10, 2023 and incorporated by reference herein.

Exhibits filed with the Company’s Form 10-Q for the quarter ended September 30, 2023 and incorporated by reference herein.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 15, 2024.

14 unchanged sentences

Corporate Controller

/s/ Michael J.

/s/ Clarke R.

3 unchanged sentences

/s/ Marcia K.

/s/ Michael W.

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