What changed in this filing

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Item 1. Financial Statements

2025-05-09 compared with 2024-11-12 · 141 added, 184 removed, 350 unchanged (48% of the section changed)

1 unchanged sentence

SAGA COMMUNICATIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

September 30,

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

32 unchanged sentences

Total liabilities and shareholders' equity

The balance sheet at December 31, 2024 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

See accompanying notes to unaudited condensed consolidated financial statements .

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

2 unchanged sentences

Corporate general and administrative

Depreciation and amortization

Other operating expense, net

Operating income

Operating loss

Interest expense

Interest income

Income before income tax expense

Income tax provision

Earnings per share:

Loss before income tax expense

Income tax (benefit) expense

Loss per share:

Weighted average common shares

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three and nine months ended September 30, 2024 and 2023

For the three months ended March 31, 2024 and 2023

Stockholders’

1 unchanged sentence

Balance at December 31, 2023

Net income, three months ended March 31, 2023

Net 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 income, three months ended September 30, 2023

Dividends declared per common share

Compensation expense related to restricted stock awards

Balance at September 30, 2023

Stockholders’

6 unchanged sentences

Balance at March 31, 2025

Net income, three months ended June 30, 2024

Forfeiture of restricted stock

Dividends declared per common share

Compensation expense related to restricted stock awards

Balance at June 30, 2024

Net income, three months ended September 30, 2024

Dividends declared per common share

Compensation expense related to restricted stock awards

Purchase of shares held in treasury

Balance at September 30, 2024

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:

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

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

Depreciation and amortization

Deferred income tax expense

Deferred income tax (benefit) expense

Amortization of deferred costs

Compensation expense related to restricted stock awards

Provision for credit losses

Loss on sale of assets, net

(Gain) on insurance claims

Other (gain), net

Barter (revenue) expense, net

Deferred and other compensation

Changes in assets and liabilities, net of business acquisition:

Decrease (increase) in receivables and prepaid expenses

Increase in accounts payable, accrued expenses, and other liabilities

Changes in assets and liabilities:

Decrease in receivables and prepaid expenses

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

Total adjustments

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Acquisition of property and equipment (Capital Expenditures)

Acquisition of broadcast properties

Proceeds from sale and disposal of assets

Proceeds from redemption of investments and other

Proceeds from insurance claims and other

Other investing activities

Net cash used in investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Proceeds from long-term debt

Cash dividends paid

Purchase of treasury shares

Net cash used in financing activities

9 unchanged sentences

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

In our opinion, the accompanying financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of September 30, 2024 and the results of operations for the three and nine months ended September 30, 2024 and 2023.

Results of operations for three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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, 2025 and the results of operations for the three months ended March 31, 2025 and 2024.

Results of operations for three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

We own or operate broadcast properties in 28 markets, including 82 FM and 31 AM radio stations and 79 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, 2023.

We have evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2024, 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, 2024.

We have evaluated events and transactions occurring subsequent to the balance sheet date of March 31, 2025, 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)

Income allocated to unvested participating securities

Net income available to common shareholders

Loss allocated to unvested participating securities

Net loss available to common shareholders

Denominator for basic earnings per share — weighted average shares

2 unchanged sentences

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

Earnings 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, 2024 and 2023, respectively.

Loss per share:

There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the three months ended March 31, 2025 and 2024, 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, 2024 and December 31, 2023, we have recorded $ 8.8 million and $ 10.6 million, respectively, of held-to-maturity U.S.

Treasury Bills and Treasury Notes at amortized cost basis that have a fair market value of $ 8.8 million and $ 10.6 million, respectively.

At March 31, 2025 and December 31, 2024, we have recorded $ 9.0 million and $ 8.9 million, respectively, of held-to-maturity U.S.

Treasury Bills at amortized cost basis that have a fair market value of $ 9.0 million and $ 8.9 million, respectively.

Our held-to-maturity U.S.

Treasury Bills and Treasury Notes all have original maturity dates ranging from October 2024 to March 2025.

Treasury Bills currently all have original maturity dates ranging from April 2025 to September 2025.

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 secured overnight finance rate (“SOFR”), prime rate or have been reset at the prevailing market rate at September 30, 2024.

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 credit losses was $ 1,176,000 and $ 618,000 at September 30, 2024 and December 31, 2023, respectively.

The activity in the allowance for credit losses during the nine months ended September 30, 2024 was as follows:

Our allowance for credit losses was $ 1,136,000 and $ 1,071,000 at March 31, 2025 and December 31, 2024, respectively.

The activity in our allowance for credit losses during the three months ended March 31, 2025 was as follows:

Uncollectible

Accounts, Net of

Nine Months Ended

Three Months Ended

(in thousands)

September 30, 2024

March 31, 2025

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.

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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.

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

Furthermore, technological enhancements and system integration decisions are reached at the Company level and applied to all markets rather than to specific or individual markets to ensure that each market has the same tools and opportunities as every other market.

Managers at the market level do not report to the CODM and instead report to other senior management, who are responsible for the operational oversight of radio markets and for communication of results to the CODM.

The CODM is regularly provided with financial information consistent with the Condensed Consolidated Statement of Income presented within.

Specifically, the CODM utilizes consolidated operating income as profitability measures for purposes of making operating decisions and assessing financial performance.

Further, the CODM reviews and utilizes station operating expense and corporate general and administrative expenses at the consolidated level to manage the Company’s operations.

Other segment items included in the consolidated net income are interest expense, interest income, other (income) expenses, net and income tax (benefit) expense, which are reflected in the Condensed Consolidated Statement of Income.

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 UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Significant departmental expenses included in station operating expenses for the three months ended March 31, 2025 and 2024 are as follows:

Three Months Ended March 31,

(In thousands, except per share data)

Programming and Technical

Station General and Administrative

Station Operating Expense

(1) Other includes production and news departments, advertising and promotional expense.

Time Brokerage Agreements/Local Marketing Agreements

3 unchanged sentences

Assets and liabilities related to the TBAs/LMAs are included in the accompanying unaudited Condensed Consolidated Balance Sheets.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Reclassifications

Certain prior period amounts have been reclassified to conform to the current year presentation.

These reclassifications has no effect on previously reported net loss, total assets, cash flows or shareholder’s equity.

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):

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

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (DISE)” (“ASU 2024-03”), which requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses on an annual and interim basis.

ASU 2024-03 is effective for us for annual periods beginning after January 1, 2027 and interim periods beginning after January 1, 2028.

In January 2025, the FASB issued ASU 2025-01 clarifying the effective date for ASU-2024-03.

ASU 2024-03 is effective for us for annual periods beginning January 1, 2027 and interim periods beginning after January 1, 2028.

We are currently evaluating the impact ASU 2024-03 will have on our financial statement disclosures.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Nature of goods and services

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Agency commissions are calculated based on a stated percentage applied to gross billing revenue for our advertising inventory placed by an agency and are reported as a reduction of advertising revenue.

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 digital audio streams, mobile messaging, email marketing and other e-commerce.

Interactive Advertising Revenue

We recognize revenue from our digital initiatives across multiple platforms such as targeted digital advertising, search engine management, search engine optimization, online promotions, advertising on our online news sites, 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.

Digital audio stream revenue is recognized when the commercial spots have streamed.

Third-party products such as targeted display advertising are recognized over time as digital items are used for advertising content and impression targets are met each month.

The Company assesses each digital order to determine if the Company is operating as the principal or an agent.

The Company currently operates as the principal for interactive revenue.

Other Revenue

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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 UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Disaggregation of Revenue

Revenues from contracts with customers comprised the following for three and nine months ended September 30, 2024 and 2023:

Revenues from contracts with customers comprised the following for three months ended March 31, 2025 and 2024:

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Types of Revenue

9 unchanged sentences

Generally all contract liabilities are expected to be recognized within one year and are included in accounts payable in the Company’s Condensed Consolidated Financial Statements and are immaterial.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Transaction Price Allocated to the Remaining Performance Obligations

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We also evaluate goodwill for impairment annually, or more frequently if certain circumstances are present.

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.

The income approach is used and it is based upon a discounted cash flow analysis incorporating significant assumptions such as projected revenues including a projected long-term growth rate, projected operating margins, projected general and administrative expenses and a discount rate appropriate for the industry.

If the fair value of our reporting unit is less than the carrying amount, the Company will recognize an impairment charge for the amount by which the carrying amount exceeds our reporting unit’s fair value.

The loss recognized will not exceed the total amount of goodwill allocated to our reporting unit.

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

1 unchanged sentence

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

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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, 2024.

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.

5 unchanged sentences

Customer relationships are amortized over three years .

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Common Stock and Treasury Stock

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

Christian, passed away on August 19, 2022.

As of the date of his passing, Mr.

Christian, who was also our principal shareholder, held approximately 65 % of the combined voting power of the Company’s Common Stock based on Class B Common Stock (together with the Class A Common Stock, collectively, the “Common Stock”) generally being entitled to ten votes per share.

As a result, Mr.

Christian was generally able to control the vote on most matters submitted to the vote of stockholders and, therefore, was able to direct our management and policies, except with respect to (i) the election of two Class A directors, (ii) those matters where the shares of our Class B Common Stock are only entitled to one vote per share, and (iii) other matters requiring a class vote under the provisions of our certificate of incorporation, bylaws or applicable law.

Christian’s passing resulted in the conversion of his Class B shares into Class A shares that were transferred to an estate planning trust that now owns approximately 16 % of the common stock outstanding.

As a result, we no longer have any shares of Class B Common Stock issued or outstanding.

As previously disclosed, 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.

We no longer have any shares of Class B Common Stock issued or outstanding , nor will there be any issued in the future.

Shareholders are entitled to receive such dividends as may be declared by our Board of Directors out of funds legally available for such purpose.

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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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The holders of the Common Stock, voting as a single class with each share of Class A Common Stock entitled to one vote and each share of Class B Common Stock entitled to ten votes, were entitled to elect the remaining directors.

The Board of Directors consisted of eight members at December 31, 2023.

The Board of Directors consisted of seven members on March 31, 2025.

Currently, our Board of Directors consists of seven members.

1 unchanged sentence

The holders of the Common Stock vote as a single class with respect to any proposed “going private” transaction with the principal stockholder or an affiliate of the principal stockholder, with each share of each class of Common Stock entitled to one vote per share.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Under Florida law, the affirmative vote of the holders of a majority of the outstanding shares of any class of common stock is required to approve, among other things, a change in the designations, preferences and limitations of the shares of such class of common stock.

Liquidation Rights.

Upon our liquidation, dissolution, or winding-up, the holders of Class A Common Stock (which constitute all of our outstanding Common Stock holders) are entitled to share ratably in accordance with the number of shares held in all assets available for distribution after payment in full of creditors.

The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through September 30, 2024:

Upon our liquidation, dissolution, or winding-up, the holders of Class A Common Stock are entitled to share ratably in accordance with the number of shares held in all assets available for distribution after payment in full of creditors.

The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through March 31, 2025:

Common Stock Issued

2 unchanged sentences

Issuance of restricted stock

Balance, December 31, 2023

Forfeiture of restricted stock

Balance, September 30, 2024

Balance, December 31, 2024

Balance, March 31, 2025

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, 2024, we have remaining authorization of $ 18.0 million for future repurchases of our Class A Common Stock.

As of March 31, 2025, we have remaining authorization of $ 17.7 million for future repurchases of our Class A Common

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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 nine months ended September 30, 2024, 715 shares were retained for the payment of withholding taxes for $ 11,000 related to the vesting of restricted stock.

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

During the three months ended March 31, 2025 and 2024, no shares were repurchased under the Stock Buy-Back Program.

As part of our overall capital allocation plan for fiscal year 2025, we intend to use a portion of the proceeds from the potential sale of non-core assets to fund stock buybacks under the Stock Buy-Back Program, which may include open market purchases, block trades or other forms of buybacks.

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

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

As of September 30, 2024, we do not have any non-cancellable operating lease commitments that have not yet commenced.

As of March 31, 2025, we do not have any non-cancellable operating lease commitments that have not yet commenced.

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

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

ROU assets were $ 6.2 million and $ 7.0 million at September 30, 2024 and December 31, 2023 respectively.

Lease liabilities were $ 6.5 million and $ 7.3 million at September 30, 2024 and December 31, 2023, respectively.

During the nine months ended September 30, 2024, we recorded additional ROU assets under operating

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

leases of $ 1,080,000 .

Payments on lease liabilities during the three and nine months ended September 30, 2024 and 2023 totaled $ 483,000 , $ 1,446,000 , $ 415,000 , and $ 941,000 , respectively.

ROU assets were $ 6.6 million and $ 6.9 million at March 31, 2025 and December 31, 2024 respectively.

Lease liabilities were $ 6.8 million and $ 7.3 million at March 31, 2025 and December 31, 2024, respectively.

During the three months ended March 31, 2025, we did no t record any additional ROU assets under operating leases.

Payments on lease liabilities during the three months ended March 31, 2025 and 2024 totaled $ 534,000 , and $ 528,000 , respectively.

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

For the three and nine months ended September 30, 2024 and 2023, our total lease expense was $ 483,000 , $ 1,432,000 , $ 457,000 and $ 917,000 , respectively.

For the three months ended March 31, 2025 and 2024, our total lease expense was $ 480,000 , and $ 475,000 , respectively.

Short-term lease costs are de minimis in nature.

We have no financing leases and minimum annual rental commitments under non-cancellable operating leases consisted of the following at September 30, 2024 (in thousands):

We have no financing leases and minimum annual rental commitments under non-cancellable operating leases consisted of the following at March 31, 2025 (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, 2024.

(a) Remaining payments are for the nine-months ending December 31, 2025.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(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, 2024.

There were no legally binding minimum lease payments for leases signed but not yet commenced at March 31, 2025.

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 6.3 years and 5.6 % , respectively, at September 30, 2024.

(d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.0 years and 5.9 % , respectively, at March 31, 2025.

Acquisitions and Dispositions

We actively seek and explore opportunities for expansion through the acquisition of additional broadcast properties.

The consolidated statements of income include the operating results of the acquired stations from their respective dates of acquisition.

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The Company accounts for acquisitions under the provisions of FASB ASC Topic 805, Business Combinations .

Management utilizes an independent appraisal in assigning 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 (or income) approach and a market approach when appropriate.

The key assumptions used in the value of FCC licenses are revenue growth rates, market revenue shares at maturity, operating income margins at maturity and discount rate.

Goodwill fair value is the amount of the purchase price exceeding the values allocated to the tangible and identifiable intangible assets and includes the value of the assembled workforce.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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.

2025 Dispositions

On February 18, 2025, we submitted a request to the FCC to cancel our FCC license for WVAX-AM located in our Charlottesville, Virginia market.

We recorded a $ 19,000 loss on the disposal in our other operating (income) expense , net line item on our Condensed Consolidated Statement of Operations.

2024 Acquisitions and Dispositions

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

The $ 0.9 million allocated to goodwill is deductible for tax purposes.

On May 31, 2024, we closed on an agreement to sell WNDN-FM located in our Ocala-Gainesville, Florida market to Suncoast Radio, Inc.

for $ 150,000 .

We recorded a $ 20,000 loss on the sale in our other operating (income) expense , net line on our Condensed Consolidated Statement of Operations.

The $ 76,000 allocated to goodwill is deductible for tax purposes.

The fair value of the property and equipment was estimated using cost and market approaches.

The fair value of the FCC license was estimated using the discounted cash flow method.

Goodwill was equal to the amount the purchase price exceeded the values allocated to the tangible and identifiable intangible assets.

The Company finalized the fair value of the FCC license and goodwill during the fourth quarter of 2024 from the initial estimated after final determination of key assumptions used in the discounted cash flow analysis.

The key assumptions used in the discounted cash flow analysis for the fair value of the FCC license were as follows:

Discount rate

Operating profit margin ranges

Market long-term revenue growth rates

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

2023 Dispositions

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

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

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

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

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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.

Condensed Consolidated Balance Sheet of 2025 and 2024 Acquisitions:

The following unaudited condensed balance sheets represent the estimated fair value assigned to the related assets and liabilities of the 2025 and 2024 acquisitions.

The allocation of the purchase price for the 2024 acquisition is preliminary at September 30, 2024 as management is awaiting information to finalize the fair values of assets acquired and liabilities assumed.

The allocation of the purchase price for the 2024 acquisition was final at December 31, 2024.

Saga Communications, Inc.

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Pro Forma Results of Operations for Acquisitions (Unaudited)

The following unaudited pro forma results of our operations for three and nine months ended September 30, 2024 and 2023 assume the 2024 acquisitions occurred as of January 1, 2023.

The following unaudited pro forma results of our operations for the three months ended March 31, 2025 and 2024 assume the 2024 acquisitions occurred as of January 1, 2024.

The pro forma results give effect to certain adjustments including depreciation, amortization of intangible assets, increased interest expense on acquisition debt and related income tax effects.

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

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Corporate general and administrative

Other operating expense, net

Operating income

Depreciation and amortization

Other operating expense (income), net

Operating loss

Interest expense

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Other income, net

Income before income tax expense

Income tax provision

Earnings per share:

An income tax expense of $ 590,000 was recorded for the three months ended September 30, 2024 compared to $ 1,110,000 for the three months ended September 30, 2023.

The effective tax rate was approximately 31.8 % for the three months ended September 30, 2024 compared to 28.9 % for the three months ended September 30, 2023.

An income tax expense of $ 965,000 was recorded for the nine months ended September 30, 2024 compared to $ 2,710,000 for the nine months ended September 30, 2023.

The effective tax rate was approximately 30.6 % for the nine months ended September 30, 2024 compared to 27.9 % for the nine months ended September 30, 2023.

Loss before income tax expense

Income tax (benefit) expense

Loss per share:

An income tax benefit of $ 585,000 was recorded for the three months ended March 31, 2025 compared to an income tax benefit of $ 580,000 for the three months ended March 31, 2024.

The effective tax rate was approximately 27.1 % for the three months ended March 31, 2025 compared to 26.9 % for the three months ended March 31, 2024.

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.

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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, 2024 and 2023, respectively.

There were no stock options granted during 2024 or 2023 and there were no stock options outstanding as of September 30, 2024.

therefore, there was no compensation expense related to stock options for the three months ended March 31, 2025 and 2024, respectively.

There were no stock options granted during 2025 or 2024 and there were no stock options outstanding as of March 31, 2025.

All outstanding stock options were exercised in 2017.

The following summarizes the restricted stock transactions for the three months ended March 31, 2025:

Outstanding at January 1, 2025

Non-vested and outstanding at March 31, 2025

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following summarizes the restricted stock transactions for the nine months ended September 30, 2024:

Outstanding at January 1, 2024

Non-vested and outstanding at September 30, 2024

For the three and nine months ended September 30, 2024 and 2023, we had $ 474,000 , $ 1,447,000 , $ 250,000 and $ 743,000 , respectively, of total compensation expense related to restricted stock-based compensation arrangements.

For the three months ended March 31, 2025 and 2024, we had $ 527,000 and $ 453,000 , 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 nine months ended September 30, 2024 and 2023 was $ 125,000 , $ 381,000 , $ 66,000 and $ 195,000 , respectively.

The associated tax benefit recognized for the three months ended March 31, 2025 and 2024 was $ 139,000 and $ 119,000 , respectively.

Long-Term Debt

Long-term debt consisted of the following:

September 30,

(In thousands)

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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 to our Credit Facility, 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.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Interest rates under the Credit Facility are payable, at our option, at alternatives equal to SOFR ( 5.16 % at September 30, 2024), 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 ( 4.41 % at March 31, 2025), 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.

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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 September 30, 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 had approximately $ 45 million and $ 50 million of unused borrowing capacity under the Revolving Credit Facility at September 30, 2024 and December 31, 2023, respectively.

The Credit Facility contains a number of financial covenants (all of which we were in compliance with at March 31, 2025) 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 $ 45 million of unused borrowing capacity under the Revolving Credit Facility at both March 31, 2025 and December 31, 2024.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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.

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

These dividends totaling $ 1.35 per share and approximately $ 8.5 million were paid or accrued as of September 30, 2024.

During 2023, the Company’s Board of Directors declared four quarterly cash dividends and one special dividend on its Class A Common Stock.

These dividends totaling $ 3.00 per share and approximately $ 18.6 million were accrued or paid during 2023.

During 2025, the Company’s Board of Directors declared a quarterly cash dividend on its Class A Common Stock.

This dividend totaling approximately $ 1.6 million was paid during the first quarter of 2025.

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

These dividends totaling $ 1.60 per share and approximately $ 10.0 million were paid during 2024.

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 implement stock buybacks in future periods.

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.

SAGA COMMUNICATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Other Income and Loss

During the nine months ended September 30, 2024, we had weather-related damages to properties in Ohio and Florida.

The Company’s insurance policy provides coverage for repairs and replacements.

As a part of the insurance settlement during the third quarter of 2024, the Company received cash proceeds of $ 78,000 , resulting in a gain of $ 78,000 , which is recorded in other (income) expense, net, in the Company’s Consolidated Statements of Income.

During the second quarter of 2024, the Company received $ 1,133,000 related to the sale of an investment in Broadcast Music, Inc.

(“BMI”) and recorded a gain of $ 1,133,000 .

The gain on sale of investment is recorded in other (income) expense, net in the Company’s Condensed Consolidated Statement of Operations.

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

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

We do not anticipate receiving any additional reimbursements.

Commitments and Contingencies

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

However, under the agreement, the Company will be responsible to pay the estate’s income tax obligation relating to the payout of the life insurance policy.

The estimate of the possible loss related to that tax obligation cannot be made at this time due to uncertainties related to the timing of the transfer.

Under the agreement, the Company is responsible to pay the estate’s income tax obligation relating to the payout of the life insurance policy and as such, recorded $ 500,000 in the fourth quarter of 2024 when the transfer of the policy occurred.

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