What changed in this filing

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Item 1. Financial Statements

2024-05-10 compared with 2023-11-09 · 104 added, 156 removed, 323 unchanged (45% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

(In thousands)

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Accounts payable

Accrued expenses:

Accrued payroll and payroll taxes

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Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

2 unchanged sentences

Corporate general and administrative

Other operating (income) expense, net

Operating income

Other operating expense, net

Operating (loss) income

Interest expense

Interest income

Income before income tax expense

Income tax provision

Net income (loss)

Income (loss) before income tax expense

Income tax provision (benefit)

Net (loss) income

Earnings (loss) per share:

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

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

For the three months ended March 31, 2024 and 2023

Stockholders’

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Balance at March 31, 2023

Net income, three months ended June 30, 2022

Dividends declared per common share

Compensation expense related to restricted stock awards

Balance at June 30, 2022

Net loss, three months ended September 30, 2022

Conversion of shares from Class B to Class A

Dividends declared per common share

Compensation expense related to restricted stock awards

Purchase of shares held in treasury

Balance at September 30, 2022

Stockholders’

1 unchanged sentence

Balance at December 31, 2023

Net income, three months ended March 31, 2023

Net income (loss), three months ended March 31, 2024

Dividends declared per common share

2 unchanged sentences

Balance at March 31, 2024

Net income, three months ended June 30, 2023

Dividends declared per common share

Compensation expense related to restricted stock awards

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

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

1 unchanged sentence

Cash flows from operating activities:

Net (loss) income

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

Depreciation and amortization

Deferred income tax expense

Deferred income tax expense (benefit)

Amortization of deferred costs

1 unchanged sentence

Loss on sale of assets, net

Other (gain) loss, net

Other (gain), net

Barter (revenue) expense, net

1 unchanged sentence

Changes in assets and liabilities:

(Increase) decrease in receivables and prepaid expenses

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

Decrease in receivables and prepaid expenses

Increase in accounts payable, accrued expenses, and other liabilities

Total adjustments

4 unchanged sentences

Acquisition of property and equipment (Capital Expenditures)

Acquisition of broadcast properties

Proceeds from sale and disposal of assets

Other investing activities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Cash dividends paid

Purchase of treasury shares

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

7 unchanged sentences

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

In our opinion, the accompanying financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of September 30, 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.

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, 2024 and the results of operations for the three months ended March 31, 2024 and 2023.

Results of operations for three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

We own or operate broadcast properties in 27 markets, including 79 FM and 31 AM radio stations and 78 metro signals.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Saga Communications, Inc.

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

We have evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2023, for items that should potentially be recognized in these financial statements or discussed within the notes to these financial statements.

(the “Company”) annual report on Form 10-K for the year ended December 31, 2023.

We have evaluated events and transactions occurring subsequent to the balance sheet date of March 31, 2024, for items that should potentially be recognized in these financial statements or discussed within the notes to these financial statements.

Earnings Per Share Information

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Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

Net income (loss)

Income allocated to unvested participating securities

Net income available to common shareholders

Net (loss) income

Income (loss) allocated to unvested participating securities

Net (loss) income available to common shareholders

Denominator for basic earnings per share — weighted average shares

3 unchanged sentences

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.

There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the three months ended March 31, 2024 and 2023, 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.

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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 September 30, 2023 and December 31, 2022, we have recorded $ 10.5 million and $ 10.1 million, respectively, of held-to-maturity U.S.

At March 31, 2024 and December 31, 2023, we have recorded $ 8.6 million and $ 10.6 million, respectively, of held-to-maturity U.S.

Treasury Bills at amortized cost basis that have a fair market value of $ 8.6 million and $ 10.6 million, respectively.

Our held-to-maturity U.S.

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

Treasury Bills currently all have original maturity dates ranging from April 2024 to July 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 September 30, 2023.

The carrying value of long-term debt approximates fair value as it carries interest rates that either fluctuate with the secured overnight finance rate (“SOFR”), prime rate or have been reset at the prevailing market rate at March 31, 2024.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Allowance for Doubtful Accounts

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

Allowance for Credit Losses

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

Amounts are written off when determined to be fully uncollectible.

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

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.

Our allowance for credit losses was $ 913,000 and $ 618,000 at March 31, 2024 and December 31, 2023, 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 executive compensation.

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.

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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.

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.

SAGA COMMUNICATIONS, INC.

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Digital Advertising Revenue

We recognize revenue from our digital initiatives across multiple platforms such as targeted digital advertising, online promotions, advertising on our websites and online streams, mobile messaging, email marketing and other e-commerce.

We recognize revenue from our digital initiatives across multiple platforms such as targeted digital advertising, online promotions, advertising on our websites and digital audio streams, mobile messaging, email marketing and other e-commerce.

Revenue is recorded when each specific performance obligation in the digital advertising campaign takes place, typically within a one month period.

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Disaggregation of Revenue

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

Revenues from contracts with customers comprised the following for three months ended March 31, 2024 and 2023:

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Types of Revenue

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

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

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Common Stock and Treasury Stock

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

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

Christian, passed away on August 19, 2022.

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Voting Rights.

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.

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.

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.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through March 31, 2024:

Common Stock Issued

1 unchanged sentence

Balance, January 1, 2023

Conversion of shares

Issuance of restricted stock

Balance, December 31, 2023

Balance, September 30, 2023

Balance, March 31, 2024

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

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

As of March 31, 2024, we have remaining authorization of $ 18.0 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.

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

During the three months ended March 31, 2024 and 2023, no shares were repurchased under the Stock Buy-Back Program.

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

5 unchanged sentences

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

As of September 30, 2023, we do not have any non-cancellable operating lease commitments that have not yet commenced.

As of March 31, 2024, 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 $ 7.0 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.

ROU assets were $ 6.6 million and $ 7.0 million at March 31, 2024 and December 31, 2023 respectively.

Lease liabilities were $ 6.8 million and $ 7.3 million at March 31, 2024 and December 31, 2023, respectively.

During the three months ended March 31, 2024, we did not record any additional ROU assets under operating leases.

Payments on lease liabilities during the three months ended March 31, 2024 and 2023 totaled $ 528,000 , and $ 526,000 , respectively.

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

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.

For the three months ended March 31, 2024 and 2023, our total lease expense was $ 475,000 , and $ 460,000 , respectively.

Short-term lease costs are de minimis in nature.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

We have no financing leases and minimum annual rental commitments under non-cancellable operating leases consisted of the following at March 31, 2024 (in thousands):

Years Ending December 31,

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Present value of lease liabilities (d)

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

(a) Remaining payments are for the nine-months ending December 31, 2024.

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

There were no legally binding minimum lease payments for leases signed but not yet commenced at September 30, 2023.

There were no legally binding minimum lease payments for leases signed but not yet commenced at March 31, 2024.

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 6.6 years and 5.3 % , respectively, at September 30, 2023.

(d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.3 years and 5.5 % , respectively, at March 31, 2024.

Acquisitions and Dispositions

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

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.

During the first quarter of 2024, we have placed an escrow deposit of $ 250,000 for this acquisition.

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

2024 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 .

On March 29, 2024, we closed on an agreement to sell WYSE-AM, W275CP translator and W248CM translator located in our Asheville, North Carolina market to EZ Radio LLC for $ 10,000 .

We recorded a $ 147,000 loss on the sale in our other operating (income) expense , net line item on our Condensed Consolidated Statement of Operations.

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

On March 22, 2024, we submitted a request to the FCC to cancel our FCC license for KBAI-AM located in our Bellingham, Washington market.

We recorded a $ 800,000 loss on the disposal in our other operating (income) expense, net line item on our Condensed Consolidated Statement of Operations.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2022 Acquisitions

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

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

Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Greenfield, Massachusetts market as well as synergies and growth opportunities expected through the combination with the Company’s existing stations.

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

Condensed Consolidated Balance Sheet of 2023 and 2022 Acquisitions:

The following unaudited condensed balance sheets represent the estimated fair value assigned to the related assets and liabilities of the 2023 and 2022 acquisitions.

Saga Communications, Inc.

Condensed Consolidated Balance Sheet of 2023 and 2022 Acquisitions

Acquisitions in

(In thousands)

Assets Acquired:

Property and equipment

Other assets:

Broadcast licenses

Total other assets

Total assets acquired

Liabilities Assumed:

Current liabilities

Total liabilities assumed

Net assets acquired

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.

2023 Dispositions

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

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

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

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

An income tax benefit of $ 580,000 was recorded for the three months ended March 31, 2024 compared to income tax expense of $ 350,000 for the three months ended March 31, 2023.

The effective tax rate was approximately 26.9 % for the three months ended March 31, 2024 compared to 27.6 % for the three months ended March 31, 2023.

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.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Stock-Based Compensation

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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.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Stock-Based Compensation

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

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

therefore, there was no compensation expense related to stock options for the three months ended March 31, 2024 and 2023, respectively.

There were no stock options granted during 2024 or 2023 and there were no stock options outstanding as of March 31, 2024.

All outstanding stock options were exercised in 2017.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

The following summarizes the restricted stock transactions for the three months ended March 31, 2024:

Outstanding at January 1, 2024

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.

Non-vested and outstanding at March 31, 2024

For the three months ended March 31, 2024 and 2023, we had $ 453,000 and $ 245,000 , 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 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.

The associated tax benefit recognized for the three months ended March 31, 2024 and 2023 was $ 119,000 and $ 64,000 , respectively.

Long-Term Debt

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

The Company has no debt outstanding at December 31, 2023 or March 31, 2024.

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.

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

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

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

As a result of the Third Amendment, the Company incurred an additional $ 161,000 of transaction fees related to the Credit Facility that were capitalized.

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

Interest rates under the Credit Facility are payable, at our option, at alternatives equal to SOFR ( 5.31 % at September 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 ( 5.34 % at March 31, 2024), plus 1 % to 2 % or the base rate plus 0 % to 1 % .

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

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

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.

Under the Third Amendment, we now pay quarterly commitment fees of 0.25 % per annum on the unused portion of the

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.

Credit Facility.

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

The Credit Facility contains a number of financial covenants (all of which we were in compliance with at March 31, 2024) 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, 2024 and December 31, 2023.

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.

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 .

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 .

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

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

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

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

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

On March 1, 2022 , the Company’s Board of Directors declared a quarterly cash dividend of $ 0.16 per share on its Classes A and B Common Stock.

This dividend, totaling approximately $ 970,000 , was paid on April 8, 2022 to shareholders of record on March 21, 2022 .

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

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

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

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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").

During 2024, the Company’s Board of Directors declared a quarterly cash dividend and a variable cash dividend on its Class A Common Stock.

These dividends totaling approximately $ 5.3 million were accrued or paid during the first quarter of 2024.

During 2023, our Board of Directors declared four quarterly cash dividends and one special dividend totaling $ 3.00 per share on our Class A shares.

These dividends totaling approximately $ 18.6 million were accrued or paid during 2023.

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

As previously reported, our Board adopted a variable dividend policy for the allocation of available cash aligned with the goals of maintaining a strong balance sheet, increasing cash returns to shareholders, and continuing to grow the Company through strategic acquisitions.

The Company may also declare special dividends and implementation of stock buybacks in future periods.

The declaration and payment of any future dividend, whether fixed, special, or based on the variable policy, or the implementation of any stock buyback program 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.

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

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

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

The 2018 Reimbursement Expansion Act, appropriated $1 billion in additional funds for the Reimbursement Fund and expanded eligible entities for reimbursement to include FM stations affected by the repack.

During 2022, the Company received approximately $ 116,000 in reimbursement for our FM stations, which is recorded in the other (income), expense, net, in the Company’s Consolidated Statements of Income in our annual report on Form 10-K for the year ended December 31, 2022.

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

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

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

This reimbursements was recorded in other (income), expense, net, in the Company’s Condensed Consolidated Statement of Operations.

We do not anticipate receiving any additional reimbursements.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Commitments and Contingencies

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What changed 10-Q

Item 1. Financial Statements