Saga Communications (SGA) 8-K Saga Communications, Inc. Reports 4th Quarter and Year End 2008 Results

Saga Communications, Inc.
Reports 4^th Quarter and Year End 2008 Results

Contact:
Samuel D. Bush
313/886-7070

Grosse Pointe Farms, MI – March 31, 2009 – Saga Communications, Inc. (NYSE Amex-SGA) today reported free cash flow increased 17.3% to $18.9 million for the year. Net operating revenue for the year ended December 31, 2008 decreased 2.8% over the comparable period in 2007 to $140.0 million. Station operating expense decreased 0.5% to $105.8 million (station operating expense includes depreciation and amortization attributable to the stations). The Company’s net loss was $66.5 million ($14.05 per fully diluted share) for the year ended December 31, 2008 compared to a net income of $11.0 million ($2.19 per fully diluted share) for the same period last year. Results for the full year of 2008 include a pre-tax non-cash impairment charge of $116.4 million related to the Company’s review of its indefinite-lived intangible assets. There was no such charge in 2007. Without the non-cash impairment charge, the Company would have had net income of $9.9 million ($2.08 per fully diluted share) for the year. On a same station basis for the year, net operating revenue decreased 3.5% to $138.6 million, operating income (excluding the non-cash impairment charge) decreased 12.6% to $24.3 million and station operating expense decreased 1.2% to $104.8 million.

For the quarter ended December 31, 2008 free cash flow increased 42.0% to $5.9 million for the quarter. Net operating revenue decreased 7.0% from the comparable period in 2007 to $35.0 million. Station operating expense decreased 2.8% to $26.6 million (station operating expense includes depreciation and amortization attributable to the stations). The Company’s net loss was $74.0 million for the quarter ended December 31, 2008 compared to a net income of $3.1 million for the same period last year. Results for the fourth quarter of 2008 include a pre-tax non-cash impairment charge of $116.4 million related to the Company’s review of its indefinite-lived intangible assets. On a same station basis for the quarter, net operating revenue decreased 7.2% to $34.7 million, operating income (excluding the non-cash impairment charge) decreased 21.0% to $6.0 million and station operating expense decreased 3.1% to $26.4 million.

Capital expenditures in the fourth quarter of 2008 were $2.0 million. For the 2008 fiscal year total capital expenditures were $7.1 million. This compares to $3.7 million and $9.9 million for the same respective periods last year. The Company currently expects to spend approximately $3.5 million for capital expenditures during 2009.

During the year ended December 31, 2008, the Company bought back 899,601 shares of stock for a total purchase price of $19.2 million. For the three month period ended December 31, 2008 the Company bought back 378,412 shares for a total purchase price of $7.4 million.

All share and per share information has been adjusted for the Company’s January 28, 2009 1-for-4 reverse stock split.

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 2008 and 2007 acquisitions and dispositions occurred as of January 1, 2007.

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 26 markets, including 61 FM and 30 AM radio stations, 3 state radio networks, 2 farm radio networks, 5 television stations and 4 low-power television stations. For additional information, contact us at (313) 886-7070 or visit our website at www.sagacommunications.com.

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, including Item 1A of our annual report on form 10-K. 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 Months Ended
December 31, 2008 and 2007
(amounts in 000’s except per share data)
(Unaudited)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2008			2007			2008			2007
Operating Results
Net operating revenue	$	34,890		$	37,501		$	139,956		$	144,023
Station operating expense		26,550			27,316			105,805			106,302
Corporate general and administrative		2,368			2,606			9,979			9,800
Gain on asset exchange		—			—			(506	)		—
Impairment of intangible assets		116,443			—			116,443			—
Operating income (loss)		(110,471	)		7,579			(91,765	)		27,921
Interest expense		1,413			2,093			7,173			8,954
Other expense, net		49			131			76			273
Income (loss) before income tax		(111,933	)		5,355			(99,014	)		18,694
Income tax expense (benefit)		(37,974	)		2,222			(32,522	)		7,690
Net income (loss)	$	(73,959	)	$	3,133		$	(66,492	)	$	11,004
Earnings (loss) per share
Basic	$	(17.41	)	$	0.62		$	(14.05	)	$	2.19
Diluted	$	(17.41	)	$	0.62		$	(14.05	)	$	2.19
Weighted average common shares		4,249			5,030			4,734			5,023
Weighted average common shares and common shares equivalents		4,249			5,033			4,734			5,029
Free Cash Flow
Net income (loss)	$	(73,959	)	$	3,133		$	(66,492	)	$	11,004
Plus: Depreciation and amortization:
Station		2,348			2,135			8,739			7,982
Corporate		62			58			222			204
Deferred tax provision		(37,445	)		1,983			(33,879	)		5,144
Non-cash compensation		374			375			1,433			1,366
Gain on asset exchange		—			—			(506	)		—
Impairment of intangible assets		116,443			—			116,443			—
Other expense, net		49			131			76			273
Less: Capital expenditures		(1,993	)		(3,672	)		(7,127	)		(9,852	)
Free cash flow	$	5,879		$	4,143		$	18,909		$	16,121
Balance Sheet Data
Working capital							$	20,438		$	24,075
Net fixed assets								73,383			76,217
Net intangible assets and other assets								113,276			220,045
Total assets								221,460			337,644
Long term debt (including current portion of $1,061 and $0, respectively)								135,411			129,911
Stockholders’ equity								65,097			149,076

Saga Communications, Inc.
Selected Supplemental Financial Data
For the Three Months Ended
December 31, 2008 and 2007
(amounts in 000’s except per share data)
(Unaudited)

	As-Reported					Same Station					Pro Forma (1)
	Three Months Ended					Three Months Ended					Three Months Ended
	December 31,					December 31,					December 31,
	2008			2007		2008			2007		2008			2007
Consolidated
Net operating revenue	$	34,890		$	37,501	$	34,746		$	37,429	$	34,890		$	37,537
Station operating expense		26,550			27,316		26,388			27,244		26,550			27,352
Corporate general and administrative		2,368			2,606		2,368			2,606		2,368			2,606
Impairment of intangible assets		116,443			—		116,443			—		116,443			—
Operating income (loss)		(110,471	)		7,579	$	(110,453	)	$	7,579		(110,471	)		7,579
Interest expense		1,413			2,093							1,413			2,093
Other expense, net		49			131							49			131
Income tax expense (benefit)		(37,974	)		2,222							(37,974	)		2,222
Net income (loss)	$	(73,959	)	$	3,133						$	(73,959	)	$	3,133
Earnings (loss) per share:
Basic	$	(17.41	)	$	0.62						$	(17.41	)	$	0.62
Diluted	$	(17.41	)	$	0.62						$	(17.41	)	$	0.62

	As-Reported					Same Station					Pro Forma (1)
	Three Months Ended					Three Months Ended					Three Months Ended
	December 31,					December 31,					December 31,
	2008			2007		2008			2007		2008			2007
Radio Segment
Net operating revenue	$	29,756		$	32,956	$	29,612		$	32,884	$	29,756		$	32,992
Station operating expense		22,513			23,702		22,351			23,630		22,513			23,738
Impairment of intangible assets		114,979			—		114,979			—		114,979			—
Operating income (loss)	$	(107,736	)	$	9,254	$	(107,718	)	$	9,254	$	(107,736	)	$	9,254

	As-Reported					Same Station					Pro Forma (1)
	Three Months Ended					Three Months Ended					Three Months Ended
	December 31,					December 31,					December 31,
	2008			2007		2008			2007		2008			2007
Television Segment
Net operating revenue	$	5,134		$	4,545	$	5,134		$	4,545	$	5,134		$	4,545
Station operating expense		4,037			3,614		4,037			3,614		4,037			3,614
Impairment of intangible assets		1,464			—		1,464			—		1,464			—
Operating income (loss)	$	(367	)	$	931	$	(367	)	$	931	$	(367	)	$	931

	As-Reported				Same Station				Pro Forma (1)
	Three Months Ended				Three Months Ended				Three Months Ended
	December 31,				December 31,				December 31,
	2008		2007		2008		2007		2008		2007
Depreciation and amortization by segment
Radio Segment	$	1,676	$	1,710	$	1,676	$	1,685	$	1,676	$	1,723
Television Segment		672		425		672		425		672		425
Corporate and Other		62		58		62		58		62		58
	$	2,410	$	2,193	$	2,410	$	2,168	$	2,410	$	2,206

(1) Pro Forma results assume all acquisitions and dispositions in 2007 and 2008 occurred as of January 1, 2007.

Saga Communications, Inc.
Selected Supplemental Financial Data
For the Twelve Months Ended
December 31, 2008 and 2007
(amounts in 000’s except per share data)
(Unaudited)

	As-Reported					Same Station					Pro Forma (1)
	Twelve Months Ended					Twelve Months Ended					Twelve Months Ended
	December 31,					December 31,					December 31,
	2008			2007		2008			2007		2008			2007
Consolidated
Net operating revenue	$	139,956		$	144,023	$	138,601		$	143,684	$	139,956		$	144,982
Station operating expense		105,805			106,302		104,782			106,039		105,805			107,159
Corporate general and administrative		9,979			9,800		9,979			9,800		9,979			9,800
Gain on asset exchange		(506	)		—		(506	)		—		(506	)		—
Impairment of intangible assets		116,443			—		116,443			—		116,443			—
Operating income (loss)		(91,765	)		27,921	$	(92,097	)	$	27,845		(91,765	)		28,023
Interest expense		7,173			8,954							7,173			8,954
Other expense, net		76			273							76			273
Income tax expense (benefit)		(32,522	)		7,690							(32,522	)		7,732
Net income (loss)	$	(66,492	)	$	11,004						$	(66,492	)	$	11,064
Earnings (loss) per share:
Basic	$	(14.05	)	$	2.19						$	(14.05	)	$	2.20
Diluted	$	(14.05	)	$	2.19						$	(14.05	)	$	2.20

	As-Reported					Same Station					Pro Forma (1)
	Twelve Months Ended					Twelve Months Ended					Twelve Months Ended
	December 31,					December 31,					December 31,
	2008			2007		2008			2007		2008			2007
Radio Segment
Net operating revenue	$	121,072		$	126,596	$	119,717		$	126,257	$	121,072		$	127,555
Station operating expense		90,540			92,162		89,517			91,899		90,540			93,019
Impairment of intangible assets		114,979			—		114,979			—		114,979			—
Operating income (loss)	$	(84,447	)	$	34,434	$	(84,779	)	$	34,358	$	(84,447	)	$	34,536

	As-Reported					Same Station					Pro Forma (1)
	Twelve Months Ended					Twelve Months Ended					Twelve Months Ended
	December 31,					December 31,					December 31,
	2008			2007		2008			2007		2008			2007
Television Segment
Net operating revenue	$	18,884		$	17,427	$	18,884		$	17,427	$	18,884		$	17,427
Station operating expense		15,265			14,140		15,265			14,140		15,265			14,140
Gain on asset exchange		(506	)		—		(506	)		—		(506	)		—
Impairment of intangible assets		1,464			—		1,464			—		1,464			—
Operating income	$	2,661		$	3,287	$	2,661		$	3,287	$	2,661		$	3,287

	As-Reported				Same Station				Pro Forma (1)
	Twelve Months Ended				Twelve Months Ended				Twelve Months Ended
	December 31,				December 31,				December 31,
	2008		2007		2008		2007		2008		2007
Depreciation and amortization by segment
Radio Segment	$	6,446	$	6,363	$	6,372	$	6,299	$	6,446	$	6,548
Television Segment		2,293		1,619		2,293		1,619		2,293		1,619
Corporate and Other		222		204		222		204		222		204
	$	8,961	$	8,186	$	8,887	$	8,122	$	8,961	$	8,371

(1) Pro Forma results assume all acquisitions and dispositions in 2007 and 2008 occurred as of January 1, 2007.

Saga Communications, Inc.
Selected Supplemental Financial Data
Quarterly Proforma Information
December 31, 2008 and 2007
(amounts in 000’s except per share data)
(Unaudited)

	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,
	2008		2007		2008			2007		2008			2007		2008			2007
Consolidated
Net operating revenue	$	31,532	$	32,193	$	37,342		$	38,752	$	36,192		$	36,500	$	34,890		$	37,537
Station operating expense		25,421		26,284		27,246			27,284		26,588			26,239		26,550			27,352
Corporate general and administrative		2,552		2,316		2,574			2,606		2,485			2,272		2,368			2,606
Gain on asset exchange		—		—		(224	)		—		(282	)		—		—			—
Impairment of intangible assets		—		—		—			—		—			—		116,443			—
Operating income (loss)		3,559		3,593		7,746			8,862		7,401			7,989		(110,471	)		7,579
Interest expense		1,995		2,297		1,876			2,281		1,889			2,283		1,413			2,093
Other expense, net		20		35		7			47		—			60		49			131
Income tax expense (benefit)		634		509		2,403			2,686		2,415			2,315		(37,974	)		2,222
Net income (loss)	$	910	$	752	$	3,460		$	3,848	$	3,097		$	3,331	$	(73,959	)	$	3,133
Earnings (loss) per share:
Basic	$	0.18	$	0.15	$	0.70		$	0.77	$	0.65		$	0.66	$	(17.41	)	$	0.62
Diluted	$	0.18	$	0.15	$	0.70		$	0.77	$	0.65		$	0.66	$	(17.41	)	$	0.62

	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,
	2008		2007		2008		2007		2008		2007		2008			2007
Radio Segment
Net operating revenue	$	27,381	$	28,203	$	32,629	$	34,174	$	31,306	$	32,186	$	29,756		$	32,992
Station operating expense		21,913		22,802		23,398		23,723		22,717		22,756		22,513			23,738
Impairment of intangible assets		—		—						—		—		114,979			—
Operating income (loss)	$	5,468	$	5,401	$	9,231	$	10,451	$	8,589	$	9,430	$	(107,736	)	$	9,254

	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,
	2008		2007		2008			2007		2008			2007		2008			2007
Television Segment
Net operating revenue	$	4,151	$	3,990	$	4,713		$	4,578	$	4,886		$	4,314	$	5,134		$	4,545
Station operating expense		3,508		3,482		3,848			3,561		3,871			3,483		4,037			3,614
Gain on asset exchange		—		—		(224	)		—		(282	)		—		—			—
Impairment of intangible assets		—		—		—			—		—			—		1,464			—
Operating income (loss)	$	643	$	508	$	1,089		$	1,017	$	1,297		$	831	$	(367	)	$	931

	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,
	2008		2007		2008		2007		2008		2007		2008		2007
Depreciation and amortization by segment
Radio Segment	$	1,562	$	1,566	$	1,591	$	1,599	$	1,618	$	1,660	$	1,676	$	1,723
Television Segment		395		389		605		400		620		405		672		425
Corporate and Other		53		47		53		51		54		48		62		58
	$	2,010	$	2,002	$	2,249	$	2,050	$	2,292	$	2,113	$	2,410	$	2,206

(1) Pro Forma results assume all acquisitions and dispositions in 2007 and 2008 occurred as of January 1, 2007.

Saga Communications, Inc.
Selected Financial Data Non-GAAP Disclosures
For the Three Months Ended
December 31, 2008 and 2007
(amounts in 000’s)
(Unaudited)

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

				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,
	2008			Period			2008			2007		Period			2007
Consolidated
Net operating revenue	$	34,890		$	(144	)	$	34,746		$	37,501	$	(72	)	$	37,429
Station operating expense		26,550			(162	)		26,388			27,316		(72	)		27,244
Corporate general and administrative		2,368			—			2,368			2,606		—			2,606
Impairment of intangible assets		116,443			—			116,443			—		—			—
Operating income (loss)	$	(110,471	)	$	18		$	(110,453	)	$	7,579		—		$	7,579

				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,
	2008			Period			2008			2007		Period			2007
Radio Segment
Net operating revenue	$	29,756		$	(144	)	$	29,612		$	32,956	$	(72	)	$	32,884
Station operating expense		22,513			(162	)		22,351			23,702		(72	)		23,630
Impairment of intangible assets		114,979			—			114,979			—		—			—
Operating income (loss)	$	(107,736	)	$	18		$	(107,718	)	$	9,254		—		$	9,254

				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,
	2008			Period		2008			2007		Period		2007
Television Segment
Net operating revenue	$	5,134			—	$	5,134		$	4,545		—	$	4,545
Station operating expense		4,037			—		4,037			3,614		—		3,614
Impairment of intangible assets		1,464			—		1,464			—		—		—
Operating income (loss)	$	(367	)		—	$	(367	)	$	931		—	$	931

Saga Communications, Inc.
Selected Financial Data Non-GAAP Disclosures
For the Twelve Months Ended
December 31, 2008 and 2007
(amounts in 000’s)
(Unaudited)

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

				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,
	2008			Period			2008			2007		Period			2007
Consolidated
Net operating revenue	$	139,956		$	(1,355	)	$	138,601		$	144,023	$	(339	)	$	143,684
Station operating expense		105,805			(1,023	)		104,782			106,302		(263	)		106,039
Corporate general and administrative		9,979			—			9,979			9,800		—			9,800
Gain on asset exchange		(506	)		—			(506	)		—		—			—
Impairment of intangible assets		116,443			—			116,443			—		—			—
Operating income (loss)	$	(91,765	)	$	(332	)	$	(92,097	)	$	27,921	$	(76	)	$	27,845

				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,
	2008			Period			2008			2007		Period			2007
Radio Segment
Net operating revenue	$	121,072		$	(1,355	)	$	119,717		$	126,596	$	(339	)	$	126,257
Station operating expense		90,540			(1,023	)		89,517			92,162		(263	)		91,899
Impairment of intangible assets		114,979			—			114,979			—		—			—
Operating income (loss)	$	(84,447	)	$	(332	)	$	(84,779	)	$	34,434	$	(76	)	$	34,358

				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,
	2008			Period		2008			2007		Period		2007
Television Segment
Net operating revenue	$	18,884			—	$	18,884		$	17,427		—	$	17,427
Station operating expense		15,265			—		15,265			14,140		—		14,140
Gain on asset exchange		(506	)		—		(506	)		—		—		—
Impairment of intangible assets		1,464			—		1,464			—		—		—
Operating income	$	2,661			—	$	2,661		$	3,287		—	$	3,287

Saga Communications, Inc.
Selected Financial Data Non-GAAP Disclosures
For the Twelve Months Ended
December 31, 2008
(amounts in 000’s except per share data)
(Unaudited)

Reconciliation of As-Reported Net Loss to Net Income Excluding Impairment Charge

	Twelve Months Ended
	December 31, 2008
Net loss	$	(66,492	)
Impairment of intangible assets		116,443
Income tax benefit		(32,522	)
Income before income tax, excluding impairment charge		17,429
Income tax expense		7,566
Net income, excluding impairment charge	$	9,863
Weighted average common shares and common shares equivalent, diluted		4,734
Dilutive securities: Stock options		3
Weighted average common shares and common shares equivalent, diluted		4,737
Earnings per share: Diluted	$	2.08