Saga Communications, Inc. Reports 3rd Quarter 2005 Results

Saga Communications, Inc. Reports 3rd Quarter 2005 Results

GROSSE POINTE FARMS, Mich., Nov. 1 /PRNewswire-FirstCall/ -- Saga Communications, Inc. (NYSE:SGA) today reported that 3rd quarter 2005 net operating revenue increased 5.0% over the comparable period in 2004 to approximately $36.0 million and operating income decreased 5.0% to approximately $7.9 million. Net income decreased approximately $878 thousand to approximately $3.4 million ($.17 per fully diluted share) for the quarter ended September 30, 2005 compared to $4.3 million ($.20 per fully diluted share) for the comparable period in 2004. Approximately 70% of the reduction in net income for the quarter was due to increased interest expense which net of taxes, was approximately $613 thousand. For the same period, station operating expense increased 8.8% to approximately $26.1 million (station operating expense includes depreciation and amortization attributable to the stations). On a same station basis for the quarter, net operating revenue was approximately even at $34.1 million. This includes overcoming a $955 thousand reduction in gross political revenue for the period. Operating income decreased 8.0% to $7.7 million and station operating expense increased 2.0% to $24.5 million on a same station basis.

For the nine month period ended September 30, 2005, net operating revenue increased 6.9% over the comparable period in 2004 to approximately $105.4 million, operating income decreased 3.9% to approximately $21.8 million and net income was approximately $8.7 million ($.42 per fully diluted share) compared to $11.7 million ($.55 per fully diluted share) for the comparable period in 2004. For the nine month period, 68% of the reduction in net income was due to an increase in interest expense of $1.3 million, net of taxes, along with the $767 thousand charge, net of taxes, for the disposition of the Victoria tower as reported in our 2nd quarter earnings release and related documents. For the same period, station operating expense increased 10.8% to approximately $77.5 million (station operating expense includes depreciation and amortization attributable to the stations). On a same station basis for the nine months, net operating revenue increased 1.2% to approximately $97.6 million. This includes overcoming a $1.4 million reduction in gross political revenue for the period. Operating income decreased 7.1% to $20.6 million and station operating expense increased 3.9% to $70.9 million on a same station basis.

Capital expenditures in the third quarter of 2005 were approximately $1.7 million. Of that amount $116 thousand was attributable to acquisitions. Currently, we expect capital expenditures for the year to be approximately $10.5 million.

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 2005 and 2004 acquisitions and dispositions occurred as of January 1, 2004.

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 57 FM and 29 AM radio stations, 3 state radio networks, 2 farm radio networks, 5 television stations and 4 low-power television stations. As previously disclosed, Saga has entered into an agreement to acquire an FM station serving the Asheville, NC radio market. For additional information, contact us at (313) 886-7070 or visit our website at http://www.sagacommunications.com/ .

Saga's third quarter 2005 results conference call will be on Tuesday, November 1 at 11:00 a.m. The dial in number for domestic calls is 800/762-6067. For international callers the number is 480/629-9566. The call can be replayed for 7 days by calling domestically 800/475-6701 or internationally 320/365-3844 and referring to access code 799135. 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 Nine Month Periods
Ended September 30, 2005 and 2004
(amounts in 000's except per share data)

Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Operating Results
Net operating revenue $35,961 $34,262 $105,345 $98,562
Station operating expense 26,110 24,006 77,464 69,924
Corporate general and
administrative 1,934 1,927 6,060 5,938
Operating income 7,917 8,329 21,821 22,700
Interest expense 2,082 1,036 5,511 3,216
Other (income)expense, net (35) 210 1,503 283
Income before income tax 5,870 7,083 14,807 19,201
Income tax expense 2,430 2,765 6,130 7,491
Net income $3,440 $4,318 $8,677 $11,710
Earnings per share:
Basic $0.17 $0.21 $0.42 $0.56
Diluted $0.17 $0.20 $0.42 $0.55
Weighted average common shares 20,453 20,750 20,489 20,792
Weighted average common shares
and common equivalents 20,631 21,116 20,726 21,227

Free Cash Flow
Net Income $3,440 $4,318 $8,677 $11,710
Plus: Depreciation and
amortization:
Station 2,258 1,783 6,491 5,176
Corporate 50 49 149 148
Deferred tax provision 2,045 1,135 3,635 3,074
Less: Capital expenditures (1,666) (3,986) (9,054) (8,249)
Free cash flow $6,127 $3,299 $9,898 $11,859

Balance Sheet Data
Working capital $21,945 $20,425
Net fixed assets 72,977 65,404
Net intangible and other assets 205,980 174,857
Total assets 322,547 275,847
Long term debt (including
current portion of $8,061
and $0, respectively) 155,911 121,161
Stockholders' equity 123,770 115,912

Saga Communications, Inc.
Selected Supplemental Financial Data
For the Three Months Ended
September 30, 2005 and 2004
(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
September 30, September 30, September 30,
2005 2004 2005 2004 2005 2004
Consolidated
Net operating
revenue $35,961 $34,262 $34,072 $34,262 $35,961 $36,071
Station operating
expense 26,110 24,006 24,473 24,006 26,110 25,506
Corporate general
and administrative 1,934 1,927 1,934 1,927 1,934 1,927
Operating income 7,917 8,329 $7,665 $8,329 7,917 8,638
Interest expense 2,082 1,036 2,082 1,369
Other (income)
expense, net (35) 210 (35) 202
Income tax expense 2,430 2,765 2,430 2,759
Net income $3,440 $4,318 $3,440 $4,308
Earnings per share:
Basic $0.17 $0.21 $0.17 $0.20
Diluted $0.17 $0.20 $0.17 $0.20

As-Reported Same Station Pro Forma (1)
Three Months Ended Three Months Ended Three Months Ended
September 30, September 30, September 30,
2005 2004 2005 2004 2005 2004
Radio Segment
Net operating
revenue $32,263 $30,616 $30,374 $30,616 $32,263 $32,425
Station operating
expense 22,728 20,781 21,091 20,781 22,728 22,281
Operating income $9,535 $9,835 $9,283 $9,835 $9,535 $10,144

As-Reported Same Station Pro Forma (1)
Three Months Ended Three Months Ended Three Months Ended
September 30, September 30, September 30,
2005 2004 2005 2004 2005 2004
Television Segment
Net operating
revenue $3,698 $3,646 $3,698 $3,646 $3,698 $3,646
Station operating
expense 3,382 3,225 3,382 3,225 3,382 3,225
Operating income $316 $421 $316 $421 $316 $421

As-Reported Same Station Pro Forma (1)
Three Months Ended Three Months Ended Three Months Ended
September 30, September 30, September 30,
2005 2004 2005 2004 2005 2004
Depreciation and
amortization
by segment
Radio Segment $1,812 $1,361 $1,385 $1,361 $1,812 $1,785
Television Segment 446 422 446 422 446 422
Corporate and
Other 50 49 50 49 50 49
$2,308 $1,832 $1,881 $1,832 $2,308 $2,256

(1) Pro Forma results assume all acquisitions and dispositions in 2004
and 2005 occurred as of January 1, 2004.

Selected Supplemental Financial Data
For the Nine Months Ended
September 30, 2005 and 2004
(amounts in 000's except per share data)
(Unaudited)

As-Reported Same Station Pro Forma (1)
Nine Months Ended Nine Months Ended Nine Months Ended
September 30, September 30, September 30,
2005 2004 2005 2004 2005 2004
Consolidated
Net operating
revenue $105,345 $98,562 $97,553 $96,367 $106,358 $104,698
Station operating
expense 77,464 69,924 70,869 68,222 78,421 75,215
Corporate general
and administrative 6,060 5,938 6,060 5,938 6,060 5,938
Operating income $21,821 $22,700 $20,624 $22,207 $21,877 $23,545
Interest expense 5,511 3,216 5,731 4,215
Other expense, net 1,503 283 1,488 258
Income tax expense 6,130 7,491 6,073 7,449
Net income $8,677 $11,710 $8,585 $11,623
Earnings per share:
Basic $0.42 $0.56 $0.42 $0.55
Diluted $0.42 $0.55 $0.41 $0.54

As-Reported Same Station Pro Forma (1)
Nine Months Ended Nine Months Ended Nine Months Ended
September 30, September 30, September 30,
2005 2004 2005 2004 2005 2004
Radio Segment
Net operating
revenue $94,240 $87,997 $86,448 $85,802 $95,253 $94,133
Station operating
expense 67,453 60,399 60,858 58,697 68,410 65,690
Operating income $26,787 $27,598 $25,590 $27,105 $26,843 $28,443

As-Reported Same Station Pro Forma (1)
Nine Months Ended Nine Months Ended Nine Months Ended
September 30, September 30, September 30,
2005 2004 2005 2004 2005 2004
Television Segment
Net operating
revenue $11,105 $10,565 $11,105 $10,565 $11,105 $10,565
Station operating
expense 10,011 9,525 10,011 9,525 10,011 9,525
Operating income $1,094 $1,040 $1,094 $1,040 $1,094 $1,040

As-Reported Same Station Pro Forma (1)
Nine Months Ended Nine Months Ended Nine Months Ended
September 30, September 30, September 30,
2005 2004 2005 2004 2005 2004
Depreciation and
amortization
by segment
Radio Segment $5,181 $3,913 $4,020 $3,804 $5,411 $5,315
Television Segment 1,310 1,263 1,310 1,263 1,310 1,263
Corporate and Other 149 148 149 148 149 148
$6,640 $5,324 $5,479 $5,215 $6,870 $6,726

(1) Pro Forma results assume all acquisitions and dispositions in 2004
and 2005 occurred as of January 1, 2004.

Saga Communications, Inc.
Selected Supplemental Financial Data
Quarterly Proforma Information
As of September 30, 2005
(amounts in 000's except per share data)
(Unaudited)

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
March 31, June 30,
2005 2004 2005 2004
Consolidated
Net operating revenue $32,397 $31,605 $38,000 $37,022
Station operating expense 25,281 24,308 27,030 25,401
Corporate general and
administrative 1,778 1,732 2,348 2,279
Operating income 5,338 5,565 8,622 9,342
Interest expense 1,755 1,428 1,894 1,418
Other (income) expense, net 57 (1) 1,466 57
Income tax expense 1,447 1,623 2,196 3,067
Net income $2,079 $2,515 $3,066 $4,800
Earnings per share:
Basic $0.10 $0.12 $0.15 $0.23
Diluted $0.10 $0.12 $0.15 $0.22

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
March 31, June 30,
2005 2004 2005 2004
Radio Segment
Net operating revenue $28,939 $28,451 $34,051 $33,257
Station operating expense 21,992 21,272 23,690 22,137
Operating income $6,947 $7,179 $10,361 $11,120

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
March 31, June 30,
2005 2004 2005 2004
Television Segment
Net operating revenue $3,458 $3,154 $3,949 $3,765
Station operating expense 3,289 3,036 3,340 3,264
Operating income $169 $118 $609 $501

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
March 31, June 30,
2005 2004 2005 2004
Depreciation and amortization
by segment
Radio Segment $1,791 $1,749 $1,808 $1,781
Television Segment 442 415 422 426
Corporate and Other 50 49 49 50
$2,283 $2,213 $2,279 $2,257

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
September 30, December 31
2005 2004 2004
Consolidated
Net operating revenue $35,961 $36,071 $38,045
Station operating expense 26,110 25,506 26,526
Corporate general and
administrative 1,934 1,927 2,405
Operating income 7,917 8,638 9,114
Interest expense 2,082 1,369 1,639
Other (income) expense, net (35) 202 (259)
Income tax expense 2,430 2,759 3,539
Net income $3,440 $4,308 $4,195
Earnings per share:
Basic $0.17 $0.20 $0.20
Diluted $0.17 $0.20 $0.20

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
September 30, December 31
2005 2004 2004
Radio Segment
Net operating revenue $32,263 $32,425 $34,157
Station operating expense 22,728 22,281 23,190
Operating income $9,535 $10,144 $10,967

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
September 30, December 31
2005 2004 2004
Television Segment
Net operating revenue $3,698 $3,646 $3,888
Station operating expense 3,382 3,225 3,336
Operating income $316 $421 $552

Pro Forma (1) Pro Forma (1)
Three Months Ended Three Months Ended
September 30, December 31
2005 2004 2004
Depreciation and amortization
by segment
Radio Segment $1,812 $1,785 $1,837
Television Segment 446 422 454
Corporate and Other 50 49 50
$2,308 $2,256 $2,341

(1) Pro Forma results assume all acquisitions and dispositions in 2004
and 2005 occurred as of January 1, 2004.

Saga Communications, Inc.
Selected Financial Data Non-GAAP Disclosures
For the Three Months Ended
September 30, 2005 and 2004
(amounts in 000's except per share data)
(Unaudited)

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

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Ended Not Included in Ended
September 30, Entire Comparable September 30,
2005 Period 2005
Consolidated
Net operating revenue $35,961 ($1,889) $34,072
Station operating expense 26,110 (1,637) 24,473
Corporate general and
administrative 1,934 - 1,934
Operating income $7,917 ($252) $7,665

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Ended Not Included in Ended
September 30, Entire Comparable September 30,
2005 Period 2005
Radio Segment
Net operating revenue $32,263 ($1,889) $30,374
Station operating expense 22,728 (1,637) 21,091
Operating income $9,535 ($252) $9,283

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Ended Not Included in Ended
September 30, Entire Comparable September 30,
2005 Period 2005
Television Segment
Net operating revenue $3,698 - $3,698
Station operating expense $3,382 - $3,382
Operating income $316 - $316

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Ended Not Included in Ended
September 30, Entire Comparable September 30,
2004 Period 2004
Consolidated
Net operating revenue $34,262 - $34,262
Station operating expense 24,006 - 24,006
Corporate general and
administrative 1,927 - 1,927
Operating income $8,329 - $8,329

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Ended Not Included in Ended
September 30, Entire Comparable September 30,
2004 Period 2004
Radio Segment
Net operating revenue $30,616 - $30,616
Station operating expense 20,781 - 20,781
Operating income $9,835 - $9,835

Adjustment
As-Reported For Acquisitions Same Station
Three Months and Dispositions Three Months
Ended Not Included in Ended
September 30, Entire Comparable September 30,
2004 Period 2004
Television Segment
Net operating revenue $3,646 - $3,646
Station operating expense $3,225 - $3,225
Operating income $421 - $421

Saga Communications, Inc.
Selected Financial Data Non-GAAP Disclosures
For the Nine Months Ended
September 30, 2005 and 2004
(amounts in 000's except per share data)
(Unaudited)

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

Adjustment
As-Reported For Acquisitions Same Station
Nine Months and Dispositions Nine Months
Ended Not Included in Ended
September 30, Entire Comparable September 30,
2005 Period 2005
Consolidated
Net operating revenue $105,345 ($7,792) $97,553
Station operating expense 77,464 (6,595) 70,869
Corporate general and
administrative 6,060 - 6,060
Operating income $21,821 ($1,197) $20,624

Adjustment
As-Reported For Acquisitions Same Station
Nine Months and Dispositions Nine Months
Ended Not Included in Ended
September 30, Entire Comparable September 30,
2005 Period 2005
Radio Segment
Net operating revenue $94,240 ($7,792) $86,448
Station operating expense 67,453 (6,595) 60,858
Operating income $26,787 ($1,197) $25,590

Adjustment
As-Reported For Acquisitions Same Station
Nine Months and Dispositions Nine Months
Ended Not Included in Ended
September 30, Entire Comparable September 30,
2005 Period 2005
Television Segment
Net operating revenue $11,105 $0 $11,105
Station operating expense 10,011 0 10,011
Operating income $1,094 $0 $1,094

Adjustment
As-Reported For Acquisitions Same Station
Nine Months and Dispositions Nine Months
Ended Not Included in Ended
September 30, Entire Comparable September 30,
2004 Period 2004
Consolidated
Net operating revenue $98,562 ($2,195) $96,367
Station operating expense 69,924 (1,702) 68,222
Corporate general and
administrative 5,938 - 5,938
Operating income $22,700 ($493) $22,207

Adjustment
As-Reported For Acquisitions Same Station
Nine Months and Dispositions Nine Months
Ended Not Included in Ended
September 30, Entire Comparable September 30,
2004 Period 2004
Radio Segment
Net operating revenue $87,997 ($2,195) $85,802
Station operating expense 60,399 (1,702) 58,697
Operating income $27,598 ($493) $27,105

Adjustment
As-Reported For Acquisitions Same Station
Nine Months and Dispositions Nine Months
Ended Not Included in Ended
September 30, Entire Comparable September 30,
2004 Period 2004
Television Segment
Net operating revenue $10,565 $0 $10,565
Station operating expense 9,525 0 9,525
Operating income $1,040 $0 $1,040

Source: Saga Communications, Inc.

CONTACT: Samuel D. Bush of Saga Communications, Inc., +1-313-886-7070

Web site: http://www.sagacommunications.com/

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