Saga Communications (SGA) 8-K Saga Communications, Inc. Reports 4th Quarter and Year End 2004 Results

Saga Communications, Inc.
Reports 4^th Quarter and Year End 2004 Results

Contact:
Samuel D. Bush
313/886-7070

Grosse Pointe Farms, MI – February 24, 2005 – Saga Communications, Inc. (NYSE-SGA) today reported net income of $4.1 million ($.20 per fully diluted share) for the quarter ended December 31, 2004 compared to $4.5 million ($.21 per fully diluted share) for 2003. For the same period, net operating revenue increased 9.6% over the comparable period in 2003 to approximately $36.1 million, operating income increased 1.4% to approximately $8.7 million and station operating expense increased 9.6% to approximately $25.0 million (station operating expense includes depreciation and amortization attributable to the stations). On a same station basis for the quarter, net operating revenue increased 4.8% to approximately $34.5 million, operating income decreased 4.1% to $8.2 million and station operating expense increased 4.8% to $23.9 million.

For the year ended December 31, 2004, net income for the twelve month period increased 14.1% to approximately $15.8 million ($.75 per fully diluted share) compared to $13.9 million ($.65 per fully diluted share) for 2003. For the same period, net operating revenue increased 11.0% over the comparable period in 2003 to approximately $134.6 million, operating income increased 9.9% to approximately $31.4 million and station operating expense increased 10.3% to approximately $94.9 million (station operating expense includes depreciation and amortization attributable to the stations). On a same station basis for the year, net operating revenue increased 5.5% to approximately $127.1 million, operating income increased 4.9% to $30.0 million and station operating expense increased 4.2% to $88.7 million.

The company closed, effective January 1, 2005 on the acquisition of WWWV-FM, WINA-AM and WQMZ-FM serving the Charlottesville, VA radio market for a purchase price of approximately $22 million.

Capital expenditures in the fourth quarter of 2004 were approximately $2.9 million with approximately $0.8 million being spent as a result of acquisitions. For the 2004 fiscal year total capital expenditures were approximately $10.2 million net of insurance proceeds with approximately $3.6 million being spent as a result of acquisitions, $1.6 million on our Victoria television tower project, and $1.1 million on our Portland tower projects.

The attached Selected Supplemental Financial Data table discloses “as reported,” “same station” and “pro forma” information by segment. The “as reported” amounts reflect our historical financial results and include the results of operations for stations that we did not own for the entire comparable period. The “same station” amounts reflect only the results of operations for stations that we owned for the entire comparable period. The “pro forma” amounts assume the 2004 and 2003 acquisitions and dispositions occurred as of January 1, 2003.

Saga Communications utilizes certain financial measures that are not calculated in accordance with generally accepted accounting principles (GAAP) to assess its financial performance. Such non-GAAP measures include same station financial information and free cash flow. These non-GAAP measures are generally recognized by the broadcasting industry as measures of performance and are used by Saga to assess its financial performance including but not limited to evaluating individual station and market-level performance, evaluating overall operations and as a primary measure for incentive based compensation of executives and other members of management. Saga’s management believes these non-GAAP measures are used by analysts who report on the industry and by investors to provide meaningful comparisons between broadcasting groups, as well as an indicator of their market value. These measures are not measures of liquidity or of performance in accordance with GAAP, and should be viewed as a supplement to and not as a substitute for the results of operations presented on a GAAP basis including net operating revenue, operating income, and net income. Reconciliations for all of the non-GAAP financial measures to the most directly comparable GAAP measure are attached in the Selected Financial Data Non-GAAP Disclosures tables.

Saga Communications, Inc. is a broadcasting company whose business is devoted to acquiring, developing and operating broadcast properties. The company owns or operates broadcast properties in 25 markets, including 55 FM and 27 AM radio stations, 3 state radio networks, 2 farm radio networks, 5 television stations and 3 low-power television stations. Saga has entered into an agreement to acquire an FM station serving the Asheville, NC radio market, and an agreement to acquire 2 FM stations and 2 AM stations serving the Ithaca, NY radio market. For additional information, contact us at (313) 886-7070 or visit our website atwww.sagacommunications.com.

Saga’s fourth quarter and year end 2004 results conference call will be on Thursday, February 24 at 2:00PM. The dial in number for domestic calls is 800/553-0358. For international callers the number is 612/332-0802. The call can be replayed for 7 days by

calling domestically 800/475-6701 or internationally 320/365-3844 and referring to access code 768301. Thereafter, a transcript of the call will be available on our website.

This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as “believes,” “expects,” “anticipates,” “guidance” and similar expressions are intended to identify forward-looking statements. Key risks, including risks associated with Saga’s ability to effectively integrate the stations it acquires and the impact of federal regulation on Saga’s business, are described in the reports Saga Communications, Inc. periodically files with the U.S. Securities and Exchange Commission. Readers should note that these statements may be impacted by several factors, including national and local economic changes and changes in the radio and television broadcast industry in general, as well as Saga’s actual performance. Results may vary from those stated herein and Saga undertakes no obligation to update the information contained here.

Saga Communications, Inc.
Selected Consolidated Financial Data
For The Three and Twelve Month Periods
Ended December 31, 2004 and 2003
(amounts in 000’s except per share data)

	Three Months Ended							Twelve Months Ended
	December 31,							December 31,
	2004				2003			2004			2003
Operating Results
Net operating revenue	$	36,082			$	32,933		$	134,644		$	121,297
Station operating expense		24,990				22,802			94,914			86,083
Corporate general and administrative		2,405				1,565			8,343			6,649
Operating income		8,687				8,566			31,387			28,565
Interest expense		1,306				1,006			4,522			4,779
Other (income) expense, net		(251	)			281			32			1,131
Income before income tax		7,632				7,279			26,833			22,655
Income tax expense		3,500				2,740			10,991			8,771
Net income	$	4,132			$	4,539		$	15,842		$	13,884
Earnings per share:
Basic	$	0.20			$	0.22		$	0.76		$	0.67
Diluted	$	0.20			$	0.21		$	0.75		$	0.65
Weighted average common shares		20,635				20,839			20,752			20,817
Weighted average common shares and common equivalents		20,983				21,293			21,167			21,301
Free Cash Flow
Net Income	$	4,132			$	4,539		$	15,842		$	13,884
Plus: Depreciation and amortization:				��
Station		1,878				1,670			7,054			6,803
Corporate		50				50			198			199
Deferred tax provision		1,063				1,466			4,137			3,594
Less: Capital expenditures		(2,849	)			(1,708	)		(11,098	)		(8,118	)
Free cash flow	$	4,274			$	6,017		$	16,133		$	16,362
Balance Sheet Data
Working capital								$	21,779		$	25,353
Net fixed assets									66,364			62,369
Net intangible and other assets									176,166			161,112
Total assets									280,154			262,343
Long term debt (including current portion of $0 and $45, respectively)									121,161			121,205
Stockholders’ equity									117,225			107,244

Saga Communications, Inc.
Selected Supplemental Financial Data
For the Three Months Ended
December 31, 2004 and 2003
(amounts in 000’s except per share data)
(Unaudited)

Consolidated

	As-Reported					Same Station				Pro Forma (1)
	Three Months Ended					Three Months Ended				Three Months Ended
	December 31,					December 31,				December 31,
	2004			2003		2004		2003		2004			2003
Net operating revenue	$	36,082		$	32,933	$	34,513	$	32,933	$	36,082		$	34,218
Station operating expense		24,990			22,802		23,894		22,802		24,990			23,954
Corporate general and administrative		2,405			1,565		2,405		1,565		2,405			1,565
Operating income		8,687			8,566	$	8,214	$	8,566		8,687			8,699
Interest expense		1,306			1,006						1,306			1,006
Other (income) expense, net		(251	)		281						(251	)		281
Income tax expense		3,500			2,740						3,500			2,787
Net income	$	4,132		$	4,539					$	4,132		$	4,625
Earnings per share:
Basic	$	0.20		$	0.22					$	0.20		$	0.22
Diluted	$	0.20		$	0.21					$	0.20		$	0.22

Radio Segment

	As-Reported				Same Station				Pro Forma (1)
	Three Months Ended				Three Months Ended				Three Months Ended
	December 31,				December 31,				December 31,
	2004		2003		2004		2003		2004		2003
Net operating revenue	$	32,194	$	29,495	$	30,625	$	29,495	$	32,194	$	30,780
Station operating expense		21,654		19,794		20,558		19,794		21,654		20,946
Operating income	$	10,540	$	9,701	$	10,067	$	9,701	$	10,540	$	9,834

Television Segment

	As-Reported				Same Station				Pro Forma (1)
	Three Months Ended				Three Months Ended				Three Months Ended
	December 31,				December 31,				December 31,
	2004		2003		2004		2003		2004		2003
Net operating revenue	$	3,888	$	3,438	$	3,888	$	3,438	$	3,888	$	3,438
Station operating expense		3,336		3,008		3,336		3,008		3,336		3,008
Operating income	$	552	$	430	$	552	$	430	$	552	$	430

Depreciation and amortization by segment

	As-Reported				Same Station				Pro Forma (1)
	Three Months Ended				Three Months Ended				Three Months Ended
	December 31,				December 31,				December 31,
	2004		2003		2004		2003		2004		2003
Radio Segment	$	1,424	$	1,232	$	1,327	$	1,232	$	1,424	$	1,257
Television Segment		454		438		454		438		454		438
Corporate and Other		50		50		50		50		50		50
	$	1,928	$	1,720	$	1,831	$	1,720	$	1,928	$	1,745

(1) Pro Forma results assume all acquisitions and dispositions in 2003 and 2004 occurred as of January 1, 2003.

Saga Communications, Inc.
Selected Supplemental Financial Data
For the Twelve Months Ended
December 31, 2004 and 2003
(amounts in 000’s except per share data)
(Unaudited)

Consolidated

	As-Reported				Same Station				Pro Forma (1)
	Twelve Months Ended				Twelve Months Ended				Twelve Months Ended
	December 31,				December 31,				December 31,
	2004		2003		2004		2003		2004		2003
Net operating revenue	$	134,644	$	121,297	$	127,072	$	120,450	$	135,499	$	128,269
Station operating expense		94,914		86,083		88,699		85,160		95,668		92,237
Corporate general and administrative		8,343		6,649		8,343		6,649		8,343		6,649
Operating income	$	31,387	$	28,565	$	30,030	$	28,641	$	31,488	$	29,383
Interest expense		4,522		4,779						4,522		4,996
Other expense, net		32		1,131						32		1,131
Income tax expense		10,991		8,771						11,036		9,008
Net income	$	15,842	$	13,884					$	15,898	$	14,248
Earnings per share:
Basic	$	0.76	$	0.67					$	0.77	$	0.68
Diluted	$	0.75	$	0.65					$	0.75	$	0.67

Radio Segment

	As-Reported				Same Station				Pro Forma (1)
	Twelve Months Ended				Twelve Months Ended				Twelve Months Ended
	December 31,				December 31,				December 31,
	2004		2003		2004		2003		2004		2003
Net operating revenue	$	120,191	$	109,065	$	113,764	$	108,317	$	121,046	$	116,037
Station operating expense		82,053		74,914		76,830		74,330		82,807		81,068
Operating income	$	38,138	$	34,151	$	36,934	$	33,987	$	38,239	$	34,969

Television Segment

	As-Reported				Same Station				Pro Forma (1)
	Twelve Months Ended				Twelve Months Ended				Twelve Months Ended
	December 31,				December 31,				December 31,
	2004		2003		2004		2003		2004		2003
Net operating revenue	$	14,453	$	12,232	$	13,308	$	12,133	$	14,453	$	12,232
Station operating expense		12,861		11,169		11,869		10,830		12,861		11,169
Operating income	$	1,592	$	1,063	$	1,439	$	1,303	$	1,592	$	1,063

Depreciation and amortization by segment

	As-Reported				Same Station				Pro Forma (1)
	Twelve Months Ended				Twelve Months Ended				Twelve Months Ended
	December 31,				December 31,				December 31,
	2004		2003		2004		2003		2004		2003
Radio Segment	$	5,337	$	5,229	$	4,957	$	5,204	$	5,466	$	5,572
Television Segment		1,717		1,574		1,655		1,530		1,717		1,574
Corporate and Other		198		199		198		199		198		199
	$	7,252	$	7,002	$	6,810	$	6,933	$	7,381	$	7,345

(1) Pro Forma results assume all acquisitions and dispositions in 2003 and 2004 occurred as of January 1, 2003.

Saga Communications, Inc.
Selected Supplemental Financial Data
Quarterly Proforma Information
December 31, 2004 and 2003
(amounts in 000’s except per share data)
(Unaudited)

Consolidated

	Pro Forma (1)					Pro Forma (1)					Pro Forma (1)				Pro Forma (1)
	Three Months Ended					Three Months Ended					Three Months Ended				Three Months Ended
	March 31,					June 30,					September 30,				December 31,
	2004		2003			2004		2003			2004		2003		2004			2003
Net operating revenue	$	29,954	$	27,811		$	35,201	$	34,048		$	34,262	$	32,192	$	36,082		$	34,218
Station operating expense		22,802		22,295			23,871		23,879			24,005		22,109		24,990			23,954
Corporate general and administrative		1,732		1,295			2,279		1,945			1,927		1,844		2,405			1,565
Operating income		5,420		4,221			9,051		8,224			8,330		8,239		8,687			8,699
Interest expense		1,095		1,607			1,085		1,229			1,036		1,154		1,306			1,006
Other (income) expense, net		8		(8	)		65		(357	)		210		1,215		(251	)		281
Income tax expense		1,691		1,044			3,080		2,807			2,765		2,370		3,500			2,787
Net income	$	2,626	$	1,578		$	4,821	$	4,545		$	4,319	$	3,500	$	4,132		$	4,625
Earnings per share:
Basic	$	0.13	$	0.08		$	0.23	$	0.22		$	0.21	$	0.17	$	0.20		$	0.22
Diluted	$	0.12	$	0.07		$	0.23	$	0.21		$	0.20	$	0.16	$	0.20		$	0.22

Radio Segment

	Pro Forma (1)				Pro Forma (1)				Pro Forma (1)				Pro Forma (1)
	Three Months Ended				Three Months Ended				Three Months Ended				Three Months Ended
	March 31,				June 30,				September 30,				December 31,
	2004		2003		2004		2003		2004		2003		2004		2003
Net operating revenue	$	26,800	$	25,195	$	31,436	$	30,933	$	30,616	$	29,129	$	32,194	$	30,780
Station operating expense		19,766		19,619		20,607		21,068		20,780		19,435		21,654		20,946
Operating income	$	7,034	$	5,576	$	10,829	$	9,865	$	9,836	$	9,694	$	10,540	$	9,834

Television Segment

	Pro Forma (1)					Pro Forma (1)				Pro Forma (1)				Pro Forma (1)
	Three Months Ended					Three Months Ended				Three Months Ended				Three Months Ended
	March 31,					June 30,				September 30,				December 31,
	2004		2003			2004		2003		2004		2003		2004		2003
Net operating revenue	$	3,154	$	2,616		$	3,765	$	3,115	$	3,646	$	3,063	$	3,888	$	3,438
Station operating expense		3,036		2,676			3,264		2,811		3,225		2,674		3,336		3,008
Operating income (loss)	$	118	$	(60	)	$	501	$	304	$	421	$	389	$	552	$	430

Depreciation and amortization by segment

	Pro Forma (1)				Pro Forma (1)				Pro Forma (1)				Pro Forma (1)
	Three Months Ended				Three Months Ended				Three Months Ended				Three Months Ended
	March 31,				June 30,				September 30,				December 31,
	2004		2003		2004		2003		2004		2003		2004		2003
Radio Segment	$	1,325	$	1,488	$	1,357	$	1,475	$	1,360	$	1,352	$	1,424	$	1,257
Television Segment		415		392		426		391		422		353		454		438
Corporate and Other		49		50		50		49		49		50		50		50
	$	1,789	$	1,930	$	1,833	$	1,915	$	1,831	$	1,755	$	1,928	$	1,745

(1) Pro Forma results assume all acquisitions and dispositions in 2003 and 2004 occurred as of January 1, 2003.

Saga Communications, Inc.
Selected Financial Data Non-GAAP Disclosures
For the Three Months Ended
December 31, 2004 and 2003
(amounts in 000’s except per share data)
(Unaudited)

Reconciliation of As-Reported (historical) information to Same Station Operating Income

Consolidated

			Adjustment							Adjustment
	As-Reported		For Acquisitions			Same Station		As-Reported		For Acquisitions		Same Station
	Three Months		and Dispositions			Three Months		Three Months		and Dispositions		Three Months
	Ended		Not Included in			Ended		Ended		Not Included in		Ended
	December 31,		Entire Comparable			December 31,		December 31,		Entire Comparable		December 31,
	2004		Period			2004		2003		Period		2003
Net operating revenue	$	36,082	$	(1,569	)	$	34,513	$	32,933		—	$	32,933
Station operating expense		24,990		(1,096	)		23,894		22,802		—		22,802
Corporate general and administrative		2,405		—			2,405		1,565		—		1,565
Operating income	$	8,687	$	(473	)	$	8,214	$	8,566		—	$	8,566

Radio Segment

			Adjustment							Adjustment
	As-Reported		For Acquisitions			Same Station		As-Reported		For Acquisitions		Same Station
	Three Months		and Dispositions			Three Months		Three Months		and Dispositions		Three Months
	Ended		Not Included in			Ended		Ended		Not Included in		Ended
	December 31,		Entire Comparable			December 31,		December 31,		Entire Comparable		December 31,
	2004		Period			2004		2003		Period		2003
Net operating revenue	$	32,194	$	(1,569	)	$	30,625	$	29,495		—	$	29,495
Station operating expense		21,654		(1,096	)		20,558		19,794		—		19,794
Operating income	$	10,540	$	(473	)	$	10,067	$	9,701		—	$	9,701

Television Segment

			Adjustment						Adjustment
	As-Reported		For Acquisitions		Same Station		As-Reported		For Acquisitions		Same Station
	Three Months		and Dispositions		Three Months		Three Months		and Dispositions		Three Months
	Ended		Not Included in		Ended		Ended		Not Included in		Ended
	December 31,		Entire Comparable		December 31,		December 31,		Entire Comparable		December 31,
	2004		Period		2004		2003		Period		2003
Net operating revenue	$	3,888		—	$	3,888	$	3,438		—	$	3,438
Station operating expense	$	3,336		—	$	3,336	$	3,008		—	$	3,008
Operating income	$	552		—	$	552	$	430		—	$	430

Saga Communications, Inc.
Selected Financial Data Non-GAAP Disclosures
For the Twelve Months Ended
December 31, 2004 and 2003
(amounts in 000’s except per share data)
(Unaudited)

Reconciliation of As-Reported (historical) information to Same Station Operating Income

Consolidated

			Adjustment							Adjustment
	As-Reported		For Acquisitions			Same Station		As-Reported		For Acquisitions			Same Station
	Twelve Months		and Dispositions			Twelve Months		Twelve Months		and Dispositions			Twelve Months
	Ended		Not Included in			Ended		Ended		Not Included in			Ended
	December 31,		Entire Comparable			December 31,		December 31,		Entire Comparable			December 31,
	2004		Period			2004		2003		Period			2003
Net operating revenue	$	134,644	$	(7,572	)	$	127,072	$	121,297	$	(847	)	$	120,450
Station operating expense		94,914		(6,215	)		88,699		86,083		(923	)		85,160
Corporate general and administrative		8,343		—			8,343		6,649		—			6,649
Operating income	$	31,387	$	(1,357	)	$	30,030	$	28,565	$	76		$	28,641

Radio Segment

			Adjustment							Adjustment
	As-Reported		For Acquisitions			Same Station		As-Reported		For Acquisitions			Same Station
	Twelve Months		and Dispositions			Twelve Months		Twelve Months		and Dispositions			Twelve Months
	Ended		Not Included in			Ended		Ended		Not Included in			Ended
	December 31,		Entire Comparable			December 31,		December 31,		Entire Comparable			December 31,
	2004		Period			2004		2003		Period			2003
Net operating revenue	$	120,191	$	(6,427	)	$	113,764	$	109,065	$	(748	)	$	108,317
Station operating expense		82,053		(5,223	)		76,830		74,914		(584	)		74,330
Operating income	$	38,138	$	(1,204	)	$	36,934	$	34,151	$	(164	)	$	33,987

Television Segment

			Adjustment							Adjustment
	As-Reported		For Acquisitions			Same Station		As-Reported		For Acquisitions			Same Station
	Twelve Months		and Dispositions			Twelve Months		Twelve Months		and Dispositions			Twelve Months
	Ended		Not Included in			Ended		Ended		Not Included in			Ended
	December 31,		Entire Comparable			December 31,		December 31,		Entire Comparable			December 31,
	2004		Period			2004		2003		Period			2003
Net operating revenue	$	14,453	$	(1,145	)	$	13,308	$	12,232	$	(99	)	$	12,133
Station operating expense		12,861		(992	)		11,869		11,169		(339	)		10,830
Operating income	$	1,592	$	(153	)	$	1,439	$	1,063	$	240		$	1,303