##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the Quarterly Period ended March 31, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                    to
 Commission file number 1-11588
 Saga Communications, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    38-3042953(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)73 Kercheval AvenueGrosse Pointe Farms, Michigan
    
    48236(Address of principal executive offices)
    
    (Zip Code)
 (313) 886-7070  (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer
o
    
    Accelerated filer
þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ




---



##### 



INDEX
 PagePART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements (Unaudited)
    
    
    3Condensed consolidated balance sheets  March 31, 2009 and December 31, 2008
    
    
    3Condensed consolidated statements of operations  Three months ended March 31, 2009
and 2008
    
    
    4Condensed consolidated statements of cash flows Three months ended March 31, 2009
and 2008
    
    
    5Notes to unaudited condensed consolidated financial statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    22Item 4. Controls and Procedures
    
    
    22PART II OTHER INFORMATION
    
    
    22Item 1. Legal Proceedings
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 6. Exhibits
    
    
    22Signatures
    
    
    23EX-31.1 Section 302 Certification of CEO.EX-31.2 Section 302 Certification of CFO.EX-32 Section 906 Certification of CEO & CFO.
  2




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.Financial Statements
 SAGA COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (Note)(In thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    8,020
    
    
    $
    6,992Accounts receivable, net
    
    
    16,346
    
    
    
    20,091Prepaid expenses and other current assets
    
    
    3,434
    
    
    
    5,072Barter transactions
    
    
    1,804
    
    
    
    1,532Deferred income taxes
    
    
    1,118
    
    
    
    1,114Total current assets
    
    
    30,722
    
    
    
    34,801Property and equipment
    
    
    158,804
    
    
    
    157,829Less accumulated depreciation
    
    
    86,594
    
    
    
    84,446Net property and equipment
    
    
    72,210
    
    
    
    73,383Other assets:Broadcast licenses, net
    
    
    107,673
    
    
    
    107,673Other intangibles, deferred costs and investments, net
    
    
    6,242
    
    
    
    5,603Total other assets
    
    
    113,915
    
    
    
    113,276$
    216,847
    
    
    $
    221,460Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    1,374
    
    
    $
    1,447Payroll and payroll taxes
    
    
    5,430
    
    
    
    7,326Other accrued expenses
    
    
    3,181
    
    
    
    3,804Barter transactions
    
    
    2,083
    
    
    
    1,786Current portion of long-term debt
    
    
    2,350
    
    
    
    1,061Total current liabilities
    
    
    14,418
    
    
    
    15,424Deferred income taxes
    
    
    3,083
    
    
    
    3,294Long-term debt
    
    
    131,061
    
    
    
    134,350Other liabilities
    
    
    3,052
    
    
    
    3,295Stockholders equityCommon stock
    
    
    53
    
    
    
    53Additional paid-in capital
    
    
    48,292
    
    
    
    51,951Retained earnings
    
    
    45,283
    
    
    
    45,645Treasury stock
    
    
    (28,395
    )
    
    
    (32,552
    )Total stockholders equity
    
    
    65,233
    
    
    
    65,097$
    216,847
    
    
    $
    221,460
   3




---



##### Table of Contents



SAGA COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months EndedMarch 31,2009
    
    
    2008(Unaudited)(In thousands, except per share data)Net operating revenue
    
    $
    26,124
    
    
    $
    31,532Station operating expenses
    
    
    23,940
    
    
    
    25,421Corporate general and administrative
    
    
    2,067
    
    
    
    2,552Operating income
    
    
    117
    
    
    
    3,559Other expenses, net:Interest expense
    
    
    773
    
    
    
    1,995Other (income) expense, net
    
    
    (4
    )
    
    
    20Income (loss) before income tax
    
    
    (652
    )
    
    
    1,544Income tax provision (benefit)
    
    
    (290
    )
    
    
    634Net income (loss)
    
    $
    (362
    )
    
    $
    910Earnings (loss) per shareBasic
    
    $
    (.09
    )
    
    $
    .18Diluted
    
    $
    (.09
    )
    
    $
    .18Weighted average common shares
    
    
    4,161
    
    
    
    5,020Weighted average common and common equivalent shares
    
    
    4,161
    
    
    
    5,022
  4




---



##### Table of Contents



SAGA COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedMarch 31,2009
    
    
    2008(Unaudited)(In thousands)Cash flows from operating activities:Cash provided by operating activities
    
    $
    5,053
    
    
    $
    4,042Cash flows from investing activities:Acquisition of property and equipment
    
    
    (1,065
    )
    
    
    (2,046
    )Acquisition of stations
    
    
    
    
    
    
    (10,729
    )Other investing activities
    
    
    27
    
    
    
    33Net cash used in investing activities
    
    
    (1,038
    )
    
    
    (12,742
    )Cash flows from financing activities:Payments on long-term debt
    
    
    (2,000
    )
    
    
    (1,000
    )Proceeds from long-term debt
    
    
    
    
    
    
    5,500Payments for debt issuance costs
    
    
    (967
    )
    
    
    Purchase of shares held in treasury
    
    
    (20
    )
    
    
    (1,399
    )Other financing activities
    
    
    
    
    
    
    (42
    )Net cash (used in) provided by financing activities
    
    
    (2,987
    )
    
    
    3,059Net increase (decrease) in cash and cash equivalents
    
    
    1,028
    
    
    
    (5,641
    )Cash and cash equivalents, beginning of period
    
    
    6,992
    
    
    
    13,343Cash and cash equivalents, end of period
    
    $
    8,020
    
    
    $
    7,702
  5




---



##### Table of Contents



SAGA COMMUNICATIONS, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Summary of Significant Accounting Policies
 Basis of Presentation
    Earnings Per Share Information and Reverse Stock Split
     Change in Accounting Estimate
 Accounting Changes and Error Corrections,
 6




---



##### Table of Contents



SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
 Revenue Recognition
 Revenue Recognition Revised and Updated.
 Income Taxes
  Time Brokerage Agreements
 Accounting for Leases
 Nonmonetary Asset Exchanges
  2. Recent Accounting Pronouncements
 Determination of the Useful Life of Intangible Assets
 Business Combinations
 7




---



##### Table of Contents



SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
 Fair Value Measurements
 3. Intangible Assets and Goodwill
 Accounting for Goodwill and Other Intangible Assets,
  
    
    The radio and television broadcasting licenses may be renewed indefinitely at little
cost.
    
    The radio and television broadcasting licenses are essential to our business, and we
intend to renew our licenses indefinitely.
    
    We have never been denied the renewal of a FCC broadcast license.
    
    We do not believe that there will be any compelling challenge to the renewal of our
broadcast licenses.
    
    We do not believe that the technology used in broadcasting will be replaced by another
technology in the foreseeable future.
   4. Common Stock and Treasury Stock
  Common Stock IssuedClass A
    
    
    Class B(Shares in thousands)Balance, January 1, 2008
    
    
    4,744
    
    
    
    598Exercised options
    
    
    5
    
    
    
    Conversion of shares
    
    
    1
    
    
    
    (1
    )Issuance of restricted stock
    
    
    23
    
    
    
    3Forfeiture of restricted stock
    
    
    (3
    )
    
    
    Balance, December 31, 2008
    
    
    4,770
    
    
    
    600Conversion of shares
    
    
    1
    
    
    
    (1
    )Forfeiture of restricted stock
    
    
    (1
    )
    
    
    Balance, March 31, 2009
    
    
    4,770
    
    
    
    599
  8




---



##### Table of Contents



SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
 5. Acquisitions
  2008 Acquisitions
    6. Stock-Based Compensation
 2005 Incentive Compensation Plan
  Stock-Based Compensation
 Share-Based Payment
  Weighted AverageRemaining
    
    
    AggregateNumber of
    
    
    Weighted Average
    
    
    Contractual Term
    
    
    IntrinsicOptions
    
    
    Exercise Price
    
    
    (Years)
    
    
    ValueOutstanding at January 1, 2009
    
    
    450,059
    
    
    $
    54.11
    
    
    
    4.7
    
    
    $
    Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Forfeited
    
    
    (2,516
    )
    
    
    40.92Outstanding at March 31, 2009
    
    
    447,543
    
    
    $
    54.18
    
    
    
    4.4
    
    
    $
    Exercisable at March 31, 2009
    
    
    366,013
    
    
    $
    57.43
    
    
    
    3.8
    
    
    $
    
 9




---



##### Table of Contents



SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
  Weighted AverageNumber of
    
    
    Grant Date FairOptions
    
    
    ValueNon-vested at January 1, 2009
    
    
    126,325
    
    
    $
    20.13Granted
    
    
    
    
    
    
    Vested
    
    
    (42,279
    )
    
    
    20.87Forfeited/canceled
    
    
    (2,516
    )
    
    
    20.27Non-vested at March 31, 2009
    
    
    81,530
    
    
    $
    19.74
  WeightedAverageGrant DateShares
    
    
    Fair ValueOutstanding at January 1, 2009
    
    
    53,649
    
    
    $
    32.60Granted
    
    
    
    
    
    
    Vested
    
    
    (14,356
    )
    
    
    35.82Forfeited
    
    
    (1,185
    )
    
    
    31.98Non-vested and outstanding at March 31, 2009
    
    
    38,108
    
    
    $
    31.40
  1997 Non-Employee Director Stock Option Plan
    Weighted
    
    
    AggregateNumber of
    
    
    Average Price
    
    
    IntrinsicOptions
    
    
    per Share
    
    
    ValueOutstanding at January 1, 2009
    
    
    1,036
    
    
    $
    0.035
    
    
    $
    6,802Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Outstanding and exercisable at March 31, 2009
    
    
    1,036
    
    
    $
    0.035
    
    
    $
    3,911
 10




---



##### Table of Contents



SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
 7. Long-Term Debt
  March 31,
    
    
    December 31,2009
    
    
    2008(In thousands)Credit Agreement:Reducing revolver facility
    
    $
    132,350
    
    
    $
    134,350Secured debt of affiliate
    
    
    1,061
    
    
    
    1,061133,411
    
    
    
    135,411Amounts payable within one year
    
    
    2,350
    
    
    
    1,061$
    131,061
    
    
    $
    134,350
      11




---



##### Table of Contents



SAGA COMMUNICATIONS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
 8. Segment Information
   CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Three Months Ended March 31, 2009:Net operating revenue
    
    $
    22,697
    
    
    $
    3,427
    
    
    $
    
    
    
    $
    26,124Station operating expense
    
    
    20,317
    
    
    
    3,623
    
    
    
    
    
    
    
    23,940Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    2,067
    
    
    
    2,067Operating income (loss)
    
    $
    2,380
    
    
    $
    (196
    )
    
    $
    (2,067
    )
    
    $
    117Depreciation and amortization
    
    $
    1,531
    
    
    $
    666
    
    
    $
    61
    
    
    $
    2,258Total assets
    
    $
    172,280
    
    
    $
    29,587
    
    
    $
    14,980
    
    
    $
    216,847
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Three Months Ended March 31, 2008:Net operating revenue
    
    $
    27,381
    
    
    $
    4,151
    
    
    $
    
    
    
    $
    31,532Station operating expense
    
    
    21,913
    
    
    
    3,508
    
    
    
    
    
    
    
    25,421Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    2,552
    
    
    
    2,552Operating income (loss)
    
    $
    5,468
    
    
    $
    643
    
    
    $
    (2,552
    )
    
    $
    3,559Depreciation and amortization
    
    $
    1,562
    
    
    $
    395
    
    
    $
    53
    
    
    $
    2,010Total assets
    
    $
    294,777
    
    
    $
    31,582
    
    
    $
    12,096
    
    
    $
    338,455
 12




---



##### Table of Contents



Item 2.Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Results of Operations
   General
  Radio Segment
       13




---



##### Table of Contents



14




---



##### Table of Contents



Percentage of Consolidated
    
    
    Percentage of ConsolidatedNet Operating Revenue for
    
    
    Net Operating Revenuethe Three Months Ended
    
    
    for the Years EndedMarch 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2008
    
    
    2007Market:Columbus, Ohio
    
    
    7
    %
    
    
    6
    %
    
    
    6
    %
    
    
    7
    %Manchester, New Hampshire
    
    
    5
    %
    
    
    7
    %
    
    
    6
    %
    
    
    6
    %Milwaukee, Wisconsin
    
    
    14
    %
    
    
    14
    %
    
    
    14
    %
    
    
    14
    %Norfolk, Virginia
    
    
    4
    %
    
    
    5
    %
    
    
    4
    %
    
    
    5
    %
   Percentage of Consolidated
    
    
    Percentage of ConsolidatedStation Operating Income (*)
    
    
    Station Operating Income(*)for the Three Months Ended
    
    
    for the Years EndedMarch 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2008
    
    
    2007Market:Columbus, Ohio
    
    
    5
    %
    
    
    2
    %
    
    
    4
    %
    
    
    6
    %Manchester, New Hampshire
    
    
    10
    %
    
    
    12
    %
    
    
    11
    %
    
    
    10
    %Milwaukee, Wisconsin
    
    
    25
    %
    
    
    22
    %
    
    
    20
    %
    
    
    20
    %Norfolk, Virginia
    
    
    (4
    )%
    
    
    2
    %
    
    
    2
    %
    
    
    4
    %
 
 *
    
    Operating income (excluding non-cash impairment charge) plus corporate general and
administrative expenses, depreciation and amortization. 15




---



##### Table of Contents



Television Segment
          16




---



##### Table of Contents



Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008
 Results of Operations
  Consolidated Results of Operations
 Three Months EndedMarch 31,
    
    
    $ Increase
    
    
    % Increase2009
    
    
    2008
    
    
    (Decrease)
    
    
    (Decrease)(In thousands, except percentages and per share information)Net operating revenue
    
    $
    26,124
    
    
    $
    31,532
    
    
    $
    (5,408
    )
    
    
    (17.2
    )%Station operating expense
    
    
    23,940
    
    
    
    25,421
    
    
    
    (1,481
    )
    
    
    (5.8
    )%Corporate G&A
    
    
    2,067
    
    
    
    2,552
    
    
    
    (485
    )
    
    
    (19.0
    )%Operating income
    
    
    117
    
    
    
    3,559
    
    
    
    (3,442
    )
    
    
    (96.7
    )%Interest expense
    
    
    773
    
    
    
    1,995
    
    
    
    (1,222
    )
    
    
    (61.3
    )%Other expense (income), net
    
    
    (4
    )
    
    
    20
    
    
    
    (24
    )
    
    
    N/MIncome taxes
    
    
    (290
    )
    
    
    634
    
    
    
    (924
    )
    
    
    (145.7
    )%Net income (loss)
    
    $
    (362
    )
    
    $
    910
    
    
    $
    (1,272
    )
    
    
    (139.8
    )%Earnings (loss) per share (basic and diluted)
    
    $
    (.09
    )
    
    $
    .18
    
    
    $
    (.27
    )
    
    
    (150.0
    )%
 Radio Broadcasting Segment
 Three Months EndedMarch 31,
    
    
    $ Increase
    
    
    % Increase2009
    
    
    2008
    
    
    (Decrease)
    
    
    (Decrease)(In thousands, except percentages)Net operating revenue
    
    $
    22,697
    
    
    $
    27,381
    
    
    $
    (4,684
    )
    
    
    (17.1
    )%Station operating expense
    
    
    20,317
    
    
    
    21,913
    
    
    
    (1,596
    )
    
    
    (7.3
    )%Operating income
    
    $
    2,380
    
    
    $
    5,468
    
    
    $
    (3,088
    )
    
    
    (56.5
    )%
 Television Broadcasting Segment
 Three Months EndedMarch 31,
    
    
    $ Increase
    
    
    % Increase2009
    
    
    2008
    
    
    (Decrease)
    
    
    (Decrease)(In thousands, except percentages)Net operating revenue
    
    $
    3,427
    
    
    $
    4,151
    
    
    $
    (724
    )
    
    
    (17.4
    )%Station operating expense
    
    
    3,623
    
    
    
    3,508
    
    
    
    115
    
    
    
    3.3
    %Operating income (loss)
    
    $
    (196
    )
    
    $
    643
    
    
    $
    (839
    )
    
    
    (130.5
    )%
 
 N/M = Not Meaningful 17




---



##### Table of Contents



Reconciliation
of segment operating income (loss) to consolidated operating income:
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Three Months Ended March 31, 2009:Net operating revenue
    
    $
    22,697
    
    
    $
    3,427
    
    
    $
    
    
    
    $
    26,124Station operating expense
    
    
    20,317
    
    
    
    3,623
    
    
    
    
    
    
    
    23,940Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    2,067
    
    
    
    2,067Operating income (loss)
    
    $
    2,380
    
    
    $
    (196
    )
    
    $
    (2,067
    )
    
    $
    117
 CorporateRadio
    
    
    Television
    
    
    and Other
    
    
    Consolidated(In thousands)Three Months Ended March 31, 2008:Net operating revenue
    
    $
    27,381
    
    
    $
    4,151
    
    
    $
    
    
    
    $
    31,532Station operating expense
    
    
    21,913
    
    
    
    3,508
    
    
    
    
    
    
    
    25,421Corporate general and administrative
    
    
    
    
    
    
    
    
    
    
    2,552
    
    
    
    2,552Operating income (loss)
    
    $
    5,468
    
    
    $
    643
    
    
    $
    (2,552
    )
    
    $
    3,559
 Consolidated
    18




---



##### Table of Contents



Radio Segment
    Television Segment
    19




---



##### Table of Contents



Forward-Looking Statements
   Liquidity and Capital Resources
 Debt Arrangements and Debt Service Requirements
     20




---



##### Table of Contents



Sources and Uses of Cash
    Summary Disclosures About Contractual Obligations and Commercial Commitments
    Critical Accounting Policies and Estimates
  Inflation
  21




---



##### Table of Contents



Item 3.Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4.Controls and Procedures
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number of
    
    
    Approximate DollarShares Purchased
    
    
    Value of SharesTotal Number
    
    
    
    
    
    
    as Part of Publicly
    
    
    that May Yet beof Shares
    
    
    Average Price
    
    
    Announced
    
    
    Purchased Under thePeriod
    
    Purchased
    
    
    Paid per Share
    
    
    Program
    
    
    Program(a)January 1  January 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    14,538,204February 1  February 28, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    14,538,204March 1  March 31, 2009
    
    
    5,682
    
    
    $
    3.50
    
    
    
    5,682
    
    
    $
    14,518,317Total
    
    
    5,682
    
    
    $
    3.50
    
    
    
    5,682
    
    
    $
    14,518,317
 
 (a)
    
    On August 7, 1998 our Board of Directors approved a Stock Buy-Back Program of up to
$2,000,000 of our Class A Common Stock. Since August 1998, the Board of Directors has
authorized several increases to the Stock Buy-Back Program, the most recent occurring in
January 2008, which increased the total amount authorized for repurchase of our Class A Common
Stock to $60,000,000. 
 Item 6. Exhibits
 31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the
Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the
Securities Exchange Act1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32
    
    Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350 and Rule 13-14(b) of the Securities Exchange Act of 1934, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 22




---



##### Table of Contents



SIGNATURES
  SAGA COMMUNICATIONS, INCDate: May 11, 2009
    /s/ SAMUEL D. BUSHSamuel D. BushSenior Vice President, Chief Financial Officer and
Treasurer (Principal Financial Officer)Date: May 11, 2009
    /s/ CATHERINE A. BOBINSKICatherine A. BobinskiVice President, Corporate Controller and Chief
Accounting Officer (Principal Accounting Officer) 23